PSD Blog - The World Bank Group

Another OLPC complaint

OLPC is looking for college students to take on summer internships setting up XO laptops in Africa. Chris Blattman is not impressed:

One thing is for sure, this kind of internship strains my patience. $10,000 for 10 weeks of work delivering laptops? (1) That's 100 laptops right there; (2) $10,000 goes a LONG way in Rwanda; and (3) this strikes me as a job an African would benefit from doing.

Mobile banking takes WING in Cambodia

One of the enterprises that IFC has been working with in Cambodia is WING, a subsidiary of the Australia and New Zealand Banking Group (ANZ). In late January, WING launched a mobile payments business that targets unbanked customers. Last week, I had the opportunity to visit WING’s offices, meet their team, participate in their rollout, and travel to remote areas to visit agent locations. I was impressed by the high energy and creativity of WING’s staff, their incredible progress in a relatively short period of time, their willingness to adapt to new lessons quickly, and the unique aspects of their solution. 

WING’s USSD-based service will allow customers to save, make purchases, transfer money to both WING and non-WING users, and perform a range of other financial services – all through mobile phones. Since WING account numbers do not have to be tied to a customer’s mobile phone number, the service is also available to people who do not own phones. In a country like Cambodia, this feature is extremely important because a large percentage of the population still does not own mobile phones but have easy access via family and friends.

Prior to designing their product, WING performed extensive market research to ensure that they understood the target market and its financial needs. The resultant service was developed in response to those findings. Product development occurred over a 9-month period during which the company performed iterative testing and redesign, mapping their solution closer and closer to the needs of the market.

Why don’t women rule the world?

Last week I wrote about the need for greater gender diversity in the financial sector, and ever since then I haven’t been able to escape it. Not so much the post itself, but the topic. It started off simply enough, with two comments and an email. That got me thinking, though – in journalism doesn’t three constitute a trend? Apparently the same holds true for blog topics, as I recently saw a story about the scientific benefits of having more women in finance on the front page of Yahoo. The piece, originally from ABC News, was entitled Should Women Rule the World? Putting aside that thoughtfully posed question, to which my response is: why not? I am forced to pose a question of my own: Why don’t women rule the world?

From mobile banking to mobile money making

What can't a mobile phone do? First, it was mobile payments, then mobile banking, and now mobile phones have become a source of income, at least in rural Kenya. An article in The New Scientist describes a company called txteagle that pays people to complete short tasks via text message:

DAVID, a Masai herdsman from Kisumu in Kenya, answers a call on his cellphone. After listening to the message, he repeats a short phrase in his Masai dialect. He then listens to another short message, and repeats the new phrase. After 30 minutes, he ends the call, having earned enough for a week's worth of personal cellphone airtime.

David is working for txteagle, a service that allows rural Kenyans to earn airtime and money by performing small tasks such as translation and transcription using their cellphones.

Smackdown of the OLPC smackdown

Last month I wrote a post called OLPC smackdown, for which I received a number of critical comments. The item pointed to an article by Jon Evans in The Walrus Magazine criticizing the One Laptop Per Child program. Commentor Osimod thought the article wasn't even worth discussing: "I was never really convinced by OLPC, but that article is so *superficial* that I don't think it's worth publicizing it." I'll grant that the article was a superficial analysis, although I still think it brought up some valid points. (And I just pointed to the article - you should see the reaction that Jon Evans got!)

But if you're looking for rigorous analysis, I'm glad to oblige. A new working paper on The Use and Misuse of Computers in Education looks at the results of a randomized evaluation of the use of computers in classrooms in Colombia. (I should note that the computers in this particular evaluation were not provided by OLPC, but the evaluation should still tell us something about the utility of computers in the classroom.) The results were underwhelming, to say the least:

Evaluating Doing Business

Theory and much empirical evidence have suggested that Doing Business reforms are good for the business environment, and, consequently, good for employment and poverty reduction. But Doing Business reforms had never been subjected to the strictest kind of empirical test - until now. Recent evidence from Mexico based on a matched difference-in-difference evaluation - not too different from a randomized evaluation - has found that reducing the number of days to register a business does make a significant difference in the business environment. The second in the FPD Impact series of newsletters has the details:

A lottery to beat all lotteries

The Armenians have gotten creative. It's no secret that many post-communist countries suffer from high rates of tax evasion. How can a government promote tax compliance without being too heavy-handed with small businesses? The answer: print lottery numbers for a state-sponsored lottery on the back of store receipts. That way consumers demand receipts and merchants are obliged to print them (conveniently leaving a paper trail for the tax office). From Notes from Hairenik:

On the back of each check is an eight-digit number which ends with an Armenian letter. Apparently at some time in the near future these numbers will be called, like in a lottery, and if the number called matches the one on your receipt you can win money–up to $16,000 if you're lucky enough… I am not ashamed to admit that I am indeed saving all the receipts that I receive, in case I happen to win enough cash to put down towards the payment of an apartment. You never know...What's the excuse of thousands of citizens who make money but refuse to pay [taxes]?

(Hat tip: Global Voices Online)

Trade not aid?

First, America must remove trade barriers on exports from the poorest countries, regardless of trade policies in those countries. With global market access, poor countries would automatically attract private investment, despite their institutional weaknesses. These institutions would become stronger over time as businesses flourish. Private investments capitalizing on access to global markets would necessarily employ low-cost labor, thus creating jobs.

This is according to Iqbal Quadir, co-founder of Grameenphone, writing last month in the Wall Street Journal.* Quadir argues for an overhaul in rich-country foreign aid policies, with entrepreneurship taking center stage. While I agree that a reduction in trade barriers would be helpful, something about the word "automatically" strikes the wrong chord. Can it really be so simple to attract private investment, despite the challenges of good governance, infrastructure, or human capital?

[*Correction: I incorrectly spelled Iqbal Quadir's name in the original post. Thanks for the correction go to Asif Dowla, who also pointed out that Quadir was not the sole founder of Grameenphone.]

Microsavings for microentrepreneurs

Just what does it take to make a successful female entrepeneur in the developing world? At least part of the answer is that a woman needs a relatively effective way to save money. A new paper on Savings Constraints and Microenterprise Development reports on the results of an experiment in Kenya that provided zero-interest savings accounts to village microentreprenuers:

...formal savings accounts had substantial positive impacts on business investment for women, but no effect for men...roughly a 40% increase in average investment, four to six months after the opening of the account.

Apparently, women who keep their savings at home - either in the form of cold, hard cash or assets like livestock - have a more difficult time than men at turning that money into a productive investment. Although the problem could be that women may be "present-biased" - economists' jargon for have-to-have-the-new-handbag-now behavior - I am more inclined toward another explanation:

...many women in developing countries face constant demands on their income (from relatives or neighbors), and it may be difficult to refuse requests for money if the cash is readily available in the house.

Whichever explanation you prefer, the results are compelling: access to savings vehicles is probably just as important as credit in facilitating the development of female-owned microenterprises.

Too much testosterone on Wall Street

Editor's Note: Sarah Iqbal is a consultant at the World Bank, currently working on the Doing Business Gender Law Library. Previously, she worked as an attorney in California.

Writing in the New York Times columnist Nicholas Kristof opines on the benefits of having greater gender diversity in the financial sector:

At the recent World Economic Forum in Davos, Switzerland, some of the most interesting discussions revolved around whether we would be in the same mess today if Lehman Brothers had been Lehman Sisters. The consensus (and this is among the dead white men who parade annually at Davos) is that the optimal bank would have been Lehman Brothers and Sisters.

Wall Street is one of the most male-dominated bastions in the business world; senior staff meetings resemble a urologist’s waiting room. Aside from issues of fairness, there’s evidence that the result is second-rate decision-making.

The basis of his argument comes from studies pointing to greater gender diversity as mitigating increased risk-taking behavior. According to one such study peer pressure leads to male herding behavior in financially pressurized situations resulting in high risk bets. Women’s propsensity for risk-taking, however, seems immune to this type of pressure. So is it just me, or does the crux of Kristof’s argument boil down to there being too much testosterone on Wall Street?