PSD Blog - The World Bank Group

iPhones for all!

The Economist has an interesting prediction for east Africa: "In a couple of years even fairly poor east Africans may be getting knowledge, news and entertainment on robust versions of existing Apple iPhone and Palm Pre models." This prediction comes just after Kenya's president connected the first of three planned fiber-optic submarine cables. For a bit of background on what all this means and what it took to get to this point, see this post on All things Africa and ICT. 

Michela Wrong's turn at the World Bank

Michela Wrong, the author of It's Our Turn to Eat: The Story of a Kenyan Whistle-Blower and a former journalist at the Financial Times, has been making the rounds promoting her new book. It's Our Turn to Eat tells the story of John Githongo, a Kenyan anti-corruption crusader who was eventually forced into exile. Wrong has kindly to agreed to give a talk on June 29 at the World Bank, and I think this is an event not to be missed. 

For useful reviews of the book, check out Chris Blattman, the Financial Times, and the Economist. Also check out this recent interview with Wrong on NPR.   

The beef with Dambisa

A few months ago Dambisa Moyo came to the World Bank to present her new book, Dead Aid. I had a favorable impression from her talk, but quickly became aware of a host of criticisms of the book (see, for instance, Owen Barder or Dani Kaufmann). 

Now that I've had a chance to read the book myself, I appreciate what the critics are getting at. Their criticism focuses on the first half of the book, where Moyo argues not only that aid has not worked, but that it is really an obstacle to development. (I should be quick to add that she is talking about what she terms "systematic aid" and not humanitarian or charity-based aid.) I summarize the main criticisms of her argument here briefly:

1. Correlation does not equal causality: Moyo points out that "over the past thirty years, the most aid-dependent countries have exhibited growth rates averaging minus 0.2 per cent per annum." However, critics of the book rebut that just because much of Africa remains poor and has received lots of aid does not mean aid was the cause. Kevin Watkins puts it well: "Using her logic, you could argue that fire engines cause fires because you find them near burning houses."
   
2. It really does depend on the context: Moyo attacks the notion that aid works even in good policy environments. Kaufmann counters that "the reality is more complicated and less PR-sexy, I am afraid: ‘Aid Can Work’, yet it can also fail miserably, as it has done in many countries. The mediating factor for aid effectiveness is governance and corruption."
   
3. Cherrypicking: Moyo cites selective data points to support her arguments, e.g. the democracy agenda is oversold because Senegal has been growing slowly but Sudan has grown quickly. However, a more systematic approach to the data (e.g. Do Democratic Transitions Produce Bad Economic Outcomes?) reveals that democracy does have a positive effect on growth, even in low-income countries. (This particular example is my own, but others also make this general point.)  

ICT reality check

Great advances in mobile telephony and internet access seem to promise a revolution in development. But Chris Kreutz on the crisscrossed blog reminds us just how big the constraints are. Among other things, Chris reports on a presentation at the Web4dev conference, and even in South Africa the obstacles are large:

• There is virtually no access to computers
• There is limited access to knowledge and information
• A child’s potential to learn is directly proportional to the knowledge of the teacher
• Many people have never even typed their names on a keyboard
• Where the edge of your world is as far as you can walk in a day

Check out the original post for the full reality check. 

What prevents informal firms from becoming formal?

An earlier post on this blog talked about the benefits to informal or unregistered firms from registering. Using data on informal firms in Côte d’Ivoire, Madagascar and Mauritius (Enterprise Surveys), I argued that a majority of the informal firms believe that registration brings real benefits, especially those associated with better access to finance and markets.

The question that arises then is why don’t firms register? Clearly, there must be some costs or impediments to registering and these costs outweigh the expected gains to firms from registering. I discuss below the sorts of costs that the informal firms associate with becoming formal.

The worst NGO, with smiles like that?

Chris Blattman has been carrying on a war against clowns on his blog, claiming that Clowns Without Borders could very well be the worst NGO on the planet. (Full disclosure: I know some of the folks who help organize their events, but haven't been personally involved.) His reasoning?

...it's worth pointing out that people who wear masks and perform magic tricks in Africa are not, as a rule, objects of fun and merriment. Traditions vary from place to place, but my sense is that clowns = devilry in more places than not.

Straight talk on combatting fraud in mobile payments

Some months ago I saw Nick Hughes of Vodaphone speak about the success of M-Pesa in Kenya. One of the lingering questions from the meeting was how secure a client's money is when it's en route. An interview (below the jump) with Simon Cavall of Mi-Pay Ltd. provides some insight into the steps mobile operators are taking to prevent fraud from tainting an innovative industry.

More on the benefits of formalization

Mohammad Amin gave us a post on new results from a survey of informal firms. Good data from informal firms is indeed an exciting innovation.

I want to focus on his results from Côte d'Ivoire. It turns out that 95% of informal firms in Côte d'Ivoire believe that their access to credit would improve if they became formal firms. This result prompts Mohammad to ask “why don’t firms register then?”

I wanted to take a shot at answering. First, what does access to finance look like in the formal sector? I did a quick analysis using the custom query tool from the Enterprise Surveys web site.

Weather insurance via SMS

And now for a more positive example of Dev 2.0 in action. Giulio Quaggiotto pointed me to a very cool use of technology in the service of private sector development - weather insurance via SMS. According to Eric Seuret of 3S Mobile, SMS technology has sufficiently brought down the cost of providing insurance for farmers in Kenya against droughts to make it a viable business model. (Apologies for the cheesy intro music - you can safely skip over the first 20 seconds.)

Update: For some unknown reason, the video interview with Eric Seuret was taken down. But you can check out plenty of other interesting Dev 2.0-ish videos on Jonathan Mark's vimeo page (the source of the Seuret video). 

What are the benefits to firms from formalization?

The Enterprise Surveys recently launched an ambitious project to survey informal firms around the globe. Results from three surveys conducted in Ivory Coast, Madagascar and Mauritius are now available. Informal firms surveyed were asked if getting registered would help them or not through better access to finance, raw materials, less bribes, etc. This is an important question given that so much talk on bringing the informal sector within the fold of the formal sector hinges on the supposed benefits of formality but with little hard data to support it. Are these benefits real and how big are they?

The table below shows the percentage of firms that believe that a becoming registered would bring better access to finance, etc. Overall, a substantial number of firms believe that registration provides real benefits - confirming the general perception on this issue. An overwhelming 85.1% of the firms perceive better access to finance and 68% better access to markets from registration. Across countries, benefits are less pronounced in Mauritius relative to the other two countries but still substantial.

Dutch Disease vs. Nigerian Disease

Prior to the 1980s, it was believed that natural resource abundance would enable developing countries to make the transition from underdevelopment to industrial “take off”, just as it had done for countries such as Australia and the U.S (Rostow, 1961; Stages of Economic Growth). This view now stands challenged by a number of studies that demonstrate the existence of a “resource curse” – slower growth and poorer economic performance in natural resource rich countries.

The traditional explanation for the resource curse is the Dutch Disease or “deindustrialization”. That is, revenue from natural resources hurts traditional manufacturing through an increase in the exchange rate; also, resources such as labor and capital need to be moved from manufacturing to natural resource production. Most studies on the Dutch Disease stop here although the argument is far from complete.

The other dirty secret on the banks' balance sheets

On 28 May 2005, Denis Christel Sassou Nguesso, son of the president of Republic of Congo, went shopping in Paris. He spent €2,375 in Dolce & Gabbana, followed by €6,700 in Aubercy Bottier, a high-end bootmaker. Less than three weeks later, on 14 June, he was back: another €4,250 on shoes at Aubercy and €1,450 at a designer handbag shop. A month later, on 15 July, he burned another €2,000 at Aubercy, apparently his favourite shoe shop at the time.

According to a new report from the NGO Global Witness, Nguesso managed to pay for all of this using Congo's oil funds, along with some help from the Bank of East Asia and a front company in Anguilla. In Undue Diligence: How banks do business with corrupt regimes, Global Witness takes a close look at the dark underbelly of international finance, pointing fingers at giants like Barclays, HSBC, Citibank, and Deutsche Bank. All of these banks stand accused of helping venal politicians steal wealth from their citizens. Given that the idea of self-regulation of the financial industry is now in tatters, it is perhaps an opportune moment to push for greater transparency in the management of the natural resource wealth of the world's poorest countries. 

Dead Aid at the World Bank

Dambisa Moyo is a formidable critic - this much I learned from her presentation at the World Bank earlier this week. Moyo is the author of Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa, a book critical of the aid industry that the Economist recently dismissed with the following words: "her arguments are scarcely original and her plodding prose makes her the least stylish of the critics." After hearing her speak, I realized that the Economist had completely missed the point.

At the beginning of her presentation, Moyo made clear that the point of her book was not to develop new arguments as to why aid has failed. Those arguments have already been made quite rigorously in any number of academic papers. Her goal is to get this point across to a mass audience, and then to propose alternative strategies for development. Seen in this light, Moyo's book can't be judged simply on its own arguments, but rather on the degree to which it helps move public discourse on the aid industry - and by public discourse, I don't mean rarely read academic journals - in the right direction.

David and Goliath: Dambisa Moyo at the World Bank Group

Who's the newest aid critic in town? This time it's not another white guy from Oxford (or New York University). Dambisa Moyo - a Zambian, an employee of Goldman Sachs, a recipient of a PhD in economics from Oxford, and a woman (in no particular order) - has gained a lot of notoriety for her recently published book Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa, which (surprise, surprise) takes a less than sanguine view of the aid industry. She'll be giving a talk at the IFC Auditorium April 20, 10:30 to 11:30. Unfortunately, there's no live feed for this event, but I plan on attending and reporting back here on the blog.

African bloggers make some noise

Can blogging transform societies? More provocatively, can it speed up the process of development? We're about to find out: the African Bloggers Conference will be taking place in Nairobi this August. This will be the first of what the organizers are hoping will become an annual event. And they're looking for sponsors. Hello, Bill Gates? Are you listening? The antics at the TED2009 conference were fun, but this is your chance to support homegrown change.

(Thanks to Giulio Quaggiotto for the pointer.)  

Could access to finance help reduce risky sexual behaviors?

If access to savings accounts helps the poor manage risk better, the answer may very well be "yes". A new working paper on Transactional sex as a response to risk in western Kenya reports that sex workers engage in better compensated but riskier sex acts following unexpected health shocks. From the abstract:

Development 2.0 - idle hands are still the work of the devil

Waiting for the bus and have nothing better to do than play around with your phone? Games are no longer the only options - now you can volunteer. The Extraordinaires (hat tip: Chris Kreutz) "delivers micro-volunteer opportunities to mobile phones that can be done on-demand and on-the-spot." Here's some examples of what you could do while waiting for your doctor's appointment: translate micro-finance loan applications (Kiva); transcribe subtitles for human rights videos (Witness) or help immigrants improve their English (Phone ESL). A nice example of tapping into the collective "cognitive surplus" for social innovation purposes.

Big news in mobile banking

Zain has announced the roll-out of Zap, an initiative to bring mobile banking to millions in Africa. It looks like Safaricom will now have some serious competition. AllAfrica.com has the details:

Providing the most comprehensive and accessible package of mobile banking features currently available on the African continent, Zap will be initially available in Kenya and Tanzania prior to the launch in Uganda.

Zap represents the most comprehensive mobile banking service ever launched and will provide millions of people with access to banking for the very first time.

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.

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.

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.

Where does it pay to be a politician?

Apparently, the answer is Kenya. According to an article in allAfrica.com:

Members of Parliament each receive total monthly salary, allowances and benefits of Sh 1,435,846. This is an average figure. Some MPs may get more, some may get less. Considering it is mostly tax free, this equates to monthly remuneration in excess of Sh 2,000,000.

The Sh 2,000,000 figure amounts to roughly USD25,000 per month. I don't think I'd be going out on a limb to say that it would be difficult to attain that kind of income in Kenya's private sector.

Update: Chris Blattman makes some interesting points about the potential upside of paying politicians well.  

Google as development agency ctd.

Is Google the newest development agency? They keep impressing me with their new initiatives. This time it's an SMS service that allows mobile phone users to request and receive information off the web free of charge. This could prove to be of huge benefit to the now vast number of mobile phone users in the developing world who don't have access to an internet connection. From Joe Mucheru writing on the Google Africa Blog:

In Africa, we've learned that mobile phones are easier to get to than internet connections and PCs, and that working towards our mission means working through mobile phones. At the beginning of 2008, there were over a quarter of a billion mobile subscribers on the continent. Mobile penetration has risen from just one in 50 people at the beginning of this century to almost one third of the population today. To that end, we are excited to launch a test of Google SMS Search in Ghana and Nigeria.

Google SMS Search provides access to information through a mobile phone without internet. You simply create an SMS message about what you are looking for and send it to the Google number (4664 or "GOOG") and wait for a response by SMS.

So far it looks like Google is only offering the service in Ghana and Nigeria. Maybe an enteprising PhD student could talk to Google about implementing a randomized evaluation when it's extended further?   

E-Money – Mobile Money – Mobile Banking – What’s the Difference?

When I speak at conferences or with people interested in the use of mobile phones for financial service delivery, I am often asked what is the difference between e-money, mobile money, mobile banking, and a range of other terms that are often used wily-nily in reference to this emerging business opportunity.  It is a good question.  People are confused.  And rightfully so.  There are no universally accepted definitions.  While this lack of uniformity may not be important much of the time, it does become critical at the regulatory level as well as when potential players are trying to have a meaningful conversation with each other. 

In an attempt to create some clarity around terminology, I researched documents from thought leaders in the e-money and branchless banking space to see if I could find any consistency among the terms used.  The definitions provided below are the result of that effort.  Writings from CGAP, the GSM Association, and the European Union were all leveraged heavily.   (You can find links to all terms that have been taken directly from source material.) 

Do you think having some consensus around terminology would be an important step for the industry?  How would you change the definitions that I have complied to make them more universally acceptable?  Your comments and thoughts are welcomed.

M-Pesa update

My colleague Jim Rosenberg at CGAP points me to a very useful post on the debate taking place around M-Pesa, the highly successful mobile payments service in Kenya. (See my earlier post on Disruptive technologies: M-Pesa vs. the banks for a bit of background.) It seems the banks in Kenya are threatened by the success of M-Pesa and are clamoring for a regulatory crackdown from the Central Bank.

All of this brings up the difficult question of how to regulate companies that provide financial services to the previously under- or unserved. Is this a case where regulation will serve a legitimate public interest in protecting consumers or where it will protect incumbent firms but masquerade as consumer protection? Let's hope it turns out to be the former. For more on the controversy, check out the East African Standard and the Business Daily.

(Hat tip: Mark Pickens)

Can randomized evaluations defeat economic gangsters?

I just finished reading Economic Gangsters, an excellent little book that summarizes in popular form a lot of recent evaluation work on corruption and violence. (See earlier posts here and here.) Although the book covers a hodgepodge of topics, from witchcraft in Tanzania to smuggling in China, it is held together by a particular approach to international development - namely, a call for randomized evaluations or one of its close kin to assess the utility of development interventions. Authors Raymond Fisman and Edward Miguel put it rather bluntly when discussing the particular case of the Millennium Village Project:

We genuinely hope that the Sauri [millennium village] model proves to be the great innovation that solves the problem of global poverty...But a serious program evaluation is needed to understand how and why its successes did (or did not) take place. Otherwise, we'll have learned little, and Sauri and the other Millennium Villages will likely join the long list of well-intentioned but ultimately inconclusive (and quickly forgotten) attempts to make poverty history.

I agree with their critique, but I wonder in turn what the limits are to their approach when looking at the particular issue of corruption. As Fisman and Miguel point out in the book, randomized evaluations have been invaluable in judging the merits of certain types of interventions. They provide examples of two interventions in Busia, a district in Kenya. One intervention provided deworming pills for children, while another supplied textbooks to classrooms. Since both interventions were randomly assigned, researchers were able to figure out after the fact that the deworming pills did a good job of boosting school attendance, while the additional textbooks had at best a negligible effect. Fisman and Miguel maintain that a similar approach can be used to learn how to fight corruption.

Disruptive technologies: M-Pesa vs. the banks

Mobile payment systems are turning out to be a truly disruptive technology in Kenya. The great success of M-Pesa, the now prototypical example of mobile payments, has the banks frightened, at least according to an article in the Nairobi Star. But Kenyan blogger Bankele calls for a truce: "Banks need to change and embrace M-Pesa as it is able to do some things they can't or won't do." According to Bankele, the alternative is not pretty:

...take away m-pesa and people will go back to stuffing cash in tins, rolling them in blankets and mailing them in cartons on buses. They will not go back to open new bank accounts or queue at western union.

(Hat tip: Elia Varela Serra at Global Voices Online)

Entrepreneurship - the key to prosperity ctd.

World Bank data show a strong correlation between measures of entrepreneurship and income. But how does this relationship come about, and what drives what? Abhijit Banerjee, of Poverty Action Lab fame, gives his take:

It turns out that the businesses of the poor are also poor businesses: The typical business has zero paid employees and no machines in almost every country where we have data and where we have the information to be able to calculate this, what the household earns from the business is less than what they would earn on the lowest end of the labor market. They are in effect buying a job and not [a] particularly good job at that...

How to defeat witchcraft ctd.

I finally found the time to pick up a copy of Economic Gangsters and find out exactly how coauthors Raymond Fisman and Edward Miguel propose to defeat witchcraft. (See my earlier post on Fisman's presentation at the World Bank for background):

[W]e think more foreign aid should explicitly play an insurance role for poor countries. We call this new type of aid Rapid Conflict Prevention Support (RCPS). RCPS aid would kick in for countries experiencing temporary income drops, in much the same way that it's better to see a doctor when you start getting sick rather than waiting for the infection to spread. By the time you've got pneumonia, it's already too late...

...Since sharp and unexpected income drops are the symptoms of conflict vulnerability, donors should time foreign aid to provide relief when these circumstances arise. And this is when RCPS aid would kick in. When underlying economic factors return to normal—for example, when the rains improve the following year, or world coffee prices rebound—RCPS aid could quickly be scaled back as the state's own revenues pick up...

Web 2.0 and disaster management

There's been quite a lot of attention in the media recently about the role of Web 2.0 in disaster management. Spurred by the Mumbai attacks, Jeremiah Owyang, a specialist in web strategy and social media, wrote an interesting article on "How Municipalities Should Integrate Social Media Into Disaster Planning." (For a different but also fascinating take on what municipalities can achieve through the web, see "a city that thinks like the web").

And it's not just man-made disasters that are getting attention. Aftershock is a website entirely devoted to "the world’s first massively collaborative disaster simulation about a major earthquake affecting much of Southern California." Even if you don't live on the West Coast you can still chip in: "you can imagine your life outside of the region, and we’ll help you understand how the earthquake would affect you. A major earthquake in Southern California will disrupt normal patterns of life for millions of people in the U.S. and the world."

A cracked head no obstacle to social media

Erik Hersman at the White African blog reports on a conference on social media currently being run by Plan International, an NGO that supports children in developing countries. Hersman explains the rationale behind the conference:

Tony and I were on our way out of Nairobi for a meeting by Plan International on how social media can be used for social change (SM4SC). They do a lot of work with youth all over Africa, so it makes sense that they’re trying to get a handle on how they can use the mobile phone and the web to connect better and have a greater impact with that demographic.

Unfortunately, Hersman managed to crack his head on a door frame just before leaving for the conference. He still made it to the conference though - social media must really be a big draw. I hope it heals quickly!

Bonus: Check out Hersman's Flickr photostream. Also have a look at Plan International's Youth, Media and Development website. 

Markets and trust in Zambia

Thulasy B, an aid worker in Zambia, discovers the importance of trust. Working for Engineers Without Borders, she discusses the difficulties of building markets for small farm holders:

Functional markets are built on trust. Think about it: You implicitly trust that you’ll get the perfect non-fat, extra-hot, half-sweet venti chai latte from the stranger behind the counter mere seconds after you order it (at least I do). The barista, in turn, trusts that you will front the cash before you indulge in your afternoon pick-me-up.

Protests...demanding more student loans?

I had to read the article twice before I could believe it, but it seems to be the case in Tanzania (Hat tip: University World News). From The Citizen:

Seven campuses of public universities and constituent colleges were closed over a week ago, sending home some 30,000 students after protests, some of which turned violent. The students were attempting to force the Government to order the Higher Education Students Loans Board (HESLB) to fully pay for their tuition and accommodation...

...Yesterday, Ms Kabaka said it would be unwise for the Government to provide full loans because thousands of other deserving students would be locked out of higher learning. Through the current loan policy, Ms Kabaka added, nearly 60,000 students had benefited. Should the Government yield to the whims of the protesting students, less than 40,000 students would still benefit, she said.

Of course, it would be useful to know what the default rate is on those loans...

Web 2.0: Ignore it at your peril

As the Global Environmental Management Initiative releases its Guide to Successful Corporate-NGO Partnerships, the Economist recently reminded us that in a Development 2.0 world, the balance of power in environmental campaigning is shifting. Thanks to the viral nature of tools such as blogs and Youtube, local issues can gain visibility and quickly become global. Here's my favourite example from the Economist article, Revolutions Coloured Green:

Take the fallout from a deal between the Russian aluminium concern Rusal and the government of Guinea to mine bauxite. Green protests were the last thing Rusal expected. But Kamara Secu, a leader of the Guinean community in Russia, was undaunted. He rang Rusal’s press officers and taped their response; they were dismissive and mocked his accent. Mr Secu then posted a recording of the exchange on YouTube, the video-sharing site; it was picked up by green bloggers, and helped to rally support for a demonstration against Rusal.

How to defeat witchcraft

If you're a fan of Monty Python and the Holy Grail, you'll know how. Since a witch burns, she must be made of wood, and since wood floats and ducks also float, logically a witch will weigh the same as a duck (or something like that). And if you have no idea what I'm talking about, this video clip from the absurd 1975 film should clear it up:

While witchcraft might seem to be the stuff of medieval legend, it is actually a tricky sociological - and, as it turns out, economic - question in some developing countries. Last week Raymond Fisman, a rising star at Colombia Business School, came to the World Bank to speak about his new book Economic Gangsters (coauthored with Edward Miguel). One of the stories from the book that Fisman related concerned witch killing, which is apparently not an uncommon phenomenon in some countries, Tanzania in particular.   

Crunch time for microfinance - final thoughts

CGAP ran a virtual conference last week on microfinance and the financial crisis. (See their website for details and an earlier post on the first round of emails from the conference.) There was a ton of interest in this topic, reflected in the extraordinary volume of communication from all over the globe. To make things easy for you, I pored over the emails to bring you more highlights from the first half of the conference, which focused on MFIs and their clients:

Daniel Mensah from Ghana:

I am a member of the credit union movement in Ghana, West Africa. At a recent meeting of some of the credit union executives, it was reported that the number of members taking loans or withdrawing their savings is going up. Among the many reasons given was that the financial crisis has reduced the inflow of remittances from citizens/relations abroad and so many members now have to fall on their savings or take loans.

Vodafone: Keep It Simple, Stupid

Nick Hughes, the head of Vodafone's international mobile payment solutions, recently gave a talk at CGAP about the company's work in Kenya, Afghanistan, and Tanzania. If I might sum up the talk in just a few words: KISS (Keep It Simple, Stupid). Less than two years ago, Vodafone rolled out M-PESA, a mobile payments service in Kenya. M-Pesa now has some 4 million subscribers and 3,500 frontline agents. Nick made it pretty clear that this rapid uptake far exceeded any expectations that Vodafone had when they started offering this service. 

The key to Vodafone's success? They focused entirely on offering a single service, and doing it well. M-PESA does not offer any banking services - no credit, no microloans, no savings. Rather, they simply offer a way to transfer money between two people. M-PESA didn't even originally plan to create payments for things like utilities or school fees - they discussed the possibility and decided to leave that to a later date. M-PESA makes its money by charging commissions on money transfers rather than on investing money.

What to watch for at the Annual Meetings

Robert Zoellick leads off with the opening press conference of the Annual Meetings of the Boards of Governors of the World Bank and IMF (video after the jump). Zoellick argues that developing countries now face a triple hit: "In July, at the G8 summit, I said that developing countries were facing a double jeopardy from the impact of high food and fuel prices. But what was then a double jeopardy is now a triple hit--food, fuel, and finance--threatening not just to knock the poorest people down, but to hold them down." Check out more coverage of the Annual Meetings at the Annual Meetings Briefing Center. 

Africa Can End Poverty - The Blog

If you haven't seen it, you should check out the newest addition to the World Bank Group family of blogs: Africa Can End Poverty. Spearheaded by Shanta Devarajan, the blog promises to introduce some debate on the pressing issues of development in Africa. Want to know how to promote exports or whether Africa is growing too fast? This is the place to go. Welcome to the blogosphere! 

Not satisfied with your college? Just call the secret police...

Apparently, degree mills - unaccredited universities - are a national security concern in Nigeria. The authorities mean business:

[The National Council on Education] is partnered with the Department of State Services—Nigeria's secret service—in locating, arresting, and prosecuting operators of unapproved universities and satellite campuses.

Google as development agency

Google just released its own browser, Chrome, to compete with Internet Explorer. Daniel Altman on the International Herald Tribune blog argues that it may just turn out to be the developing world's browser. Now, Google has just announced it is supporting the development of a system of satellites to provide internet access to regions without fast fiber networks. Apparently, the bottom of the pyramid can be targeted from outerspace...

Text messaging - the real revolution in telecommunications?

While we may not be ready to announce victory in the digital war on poverty, there are definitely battles that are being won. And the most recent battle is that over text messaging. Cell phones have spread like wildfire across Africa and many other parts of the world. But these are basic handsets - no internet access, no videos, no maps. These phones do, however, have short message service (SMS), aka text messaging. And while the capacity to send 160 characters by phone may not be a revolution, it is definitely having a positive impact.

Jim Witkin, writing at Triple Pundit, discusses one of the most interesting efforts to apply this technology to the developing world (Hat tip: Giulio Quaggiotto). Kiwanja.net, a non-profit, has developed a program called FrontlineSMS that allows NGOs to communicate with their field workers through text messaging. As Witkin explains:

...the [NGO] administrator can compose a message once in FrontlineSMS and send it simultaneously to hundreds of volunteers. The program has been used by NGOs in over forty countries for a wide range of activities including blood donor recruitment, assisting human rights and conservation workers, election monitoring, and coordinating healthcare workers. 

Alphabet soup - AED, AAP, PDA

Perhaps in contrast to my post on the digital war on poverty, I just noticed an interesting article on the website of AED - the Academy for Educational Development. They are using a technology called the African Access Point (AAP) in combination with personal digital assistants (PDAs). From the article:

...to increase connectivity, AED is employing a new technology, called the African Access Point, or AAP. This technology links inexpensive PDAs to a computer hundreds or even thousands of miles away using an existing wireless telecommunications network.

Universities and development

Every year around this time, the Shanghai Jiao Tong University makes waves with its Academic Ranking of World Universities. As always, North America dominates in the short list of top 100 universities, with the Ivy League universities occupying most of the top slots. And as always, aggrieved parties produce howls of pain along with numerous complaints about methodological flaws - see a few examples here and here.

While there are certainly flaws, part of the problem lies in the inherent impossibility of ranking universities. These institutions devote themselves to many different tasks, while the Jiao Tong rankings examine only one task - research. (For an excellent discussion of the debate around rankings, see this commentary from Alex Usher of the Educational Policy Institute.) Jiao Tong ranks research output by aggregating a bunch of data on things like the number of Nobel prizes awarded to faculty and the number of articles cited in Nature and Science. (A full description of the methodology can be found here.) Given that these rankings tell us about the distribution of research output around the world, what might we be able to glean about the prospects for development?

All things Africa and ICT

I've just run across a spate of items on the development of ICT in Africa; although it could just be coincidence, I suspect there's been a growing interest in this topic in the development community.

First off, Africa Telecom News has just come out with an Africa Mobile Factbook (Hat tip: White African). The report is free - well, if you discount the time needed to take a required survey - but the factbook offers up some interesting statistics. Figure 1 (below) shows that mobile penetration has grown markedly, and they're predicting continuing growth in this sector. White African also points out much of this development is local: "Most of the mobile operators are home-grown. In 2005, the continent’s seven largest investors controlled 53% of the African mobile market."

    

From brain drain to brain circulation

Of all sub-Saharan countries, Malawi comes dead last in the number of physicians per 1,000 inhabitants. According to the 2004 World Development Indicators (the last year for which data is available for most countries), Malawi had only .02 physicians per 1,000 inhabitants, tying Niger and well behind Uganda at .8 and Ghana at 1.5. Obviously, there is room for improvement.

The Scottish University of Dundee in cooperation with Scotland's International Development Fund is taking a step toward remedying this. The University is establishing a satellite campus in Malawi that will partner with Kamuzu Central Hospital. (Apparently, Scotland has a longstanding relationship with Malawi.) This is according to a recent article from University World News. Jon Dowell of Dundee Univesity said this about the collaboration:

This will help Dundee students but, of critical importance, also their Malawian colleagues and the hospital as a whole...It is hoped that the partnership between the University of Malawi college of medicine and Kamuzu Central Hopsital will act as a catalyst for other hospital and university links."

While it may just be a first step, it's particularly welcome considering the high rates at which doctors emigrate from Malawi, according to this World Bank dataset on physicians' emigration rates.

Rising food prices, climate change, and a dire prediction

While rising food prices threaten to increase poverty, they are not quite the unmitigated disaster that they are sometimes represented to be, at least according to Dani Rodrik. Rodrik points out that the effect of rising food prices on the world's poor depends on whether the poor are net producers or consumers of foodstuffs:

The fact is that millions of very poor growers of rice and other food products are much better off as a result [of rising prices]. The poor that are affected the worst are the urban poor, not the rural poor.

Nevertheless, the net effect of rising food prices on global poverty in the short term is probably still negative, given the number of urban poor. But in the longer run, it's more of an open question. A permanent rise in food prices might prompt a shift in the allocation of labor to the agricultural sector. (This is the kind of thing that may already be happening in Brazil and could spread to other emerging markets.) Increased demand for agricultural labor could help reduce poverty, but it is not without risks.

Baobab, the tragedy of the commons, and international trade

Just recently, the EU approved the extract of the baobab fruit as an ingredient in foods in the European market. If you're like me, until today you had never heard of the boabab fruit (pictured right). According to the proprietor of the African Kitchen Gallery Restaurant in central London, "It is very nutritious, full of vitamin C and vitamin A. It has a very special flavour, but the closest I can get to it is jackfruit, which is like melon." That doesn't sound too bad to me.

Over at the Cheetah Index, blogger Chido Makunike has a mixed reaction to the EU's approval (Hat tip: Global Voices Online): 

What can Google do for Africa?

For one, they can start a Google Africa Blog (Hat tip: Giulio Quaggiotto). Google announced the release of this blog earlier this month. So far there are stories on an open source prize, World Environment Week, and a gadget competition (in English and French, of course). From Google's announcement:

We believe that the Internet is a transformational force for societies. And it's making us all much more powerful as individuals, regardless of whether one is in New York, Stockholm, Bujumbura, Ouagadougou, or Cape Town. Regardless of background, education, social status, gender, age or economic situation, online access to information enables people to create opportunities for themselves. Seeing a student in a cybercafe doing his research using a search engine, a businessman chatting with a colleague abroad with instant messaging, or a young woman posting her photos to a social networking site - it's clear the extent to which academic, business and social life is fundamentally changing all over Africa.

Reactions from the blogosphere at White African and do good well.

Update: Fellow PSD blogger Giulio Quaggiotto pointed out to me that that's not all Google is doing in Africa. The company opened a development office in Nairobi last September. The New York Times notes that

[t]o be truly creative in a technological backwater is to defeat geography. Even as powerful a technological force as Google might not succeed. But dreaming of greatness, Kenyans are pushing Google to expand into completely new areas.

Africa SMME awards

The Africagrowth Institute has announced a conference to be held in October 2008 in Cape Town that will recognize outstanding small, medium, and micro (SMME) African enterprises (Hat tip: Timbuktu Chronicles). The conference website describes what kind of businesses they're looking for:

The Africa SMME Awards are presented to businesses that strive for excellence in order to be competitive in national, regional, and international markets. These businesses are well established, in good financial shape and enjoy a reputation for quality, integrity and service. Furthermore, they act in a socially responsible manner and create a work environment in which their employees can learn and grow.

The Africagrowth Institute is looking for nominees until the end of July, so you still have time to make a submission.