Yunus on Microfinance: Commercialization is Code Word

For my non-microfinance readers, the number one debate in microfinance right now is whether or not organizations should be charging higher interest rates (or improving their operating efficiency) in order to access the capital markets, which opens the doors to huge amounts of money, but also an obligation to generate returns for your investors.  Over at the Big Think, a very cool site full of interviews with thought leaders, Muhammad Yunus shares his thoughts on the commercialization of microfinance:

Commercialization is a kind of code word. In plain, simple English it means “make money” by doing that. My position has always been microcredit should be an area for social business where you want to help poor people get out of poverty by doing business. You don’t lose money. You get your money back, but you don’t make profit out of it. Because with that money you want to give to the poor people so that they get out of poverty faster. That’s where the interest is. (more…)

Development Economics

Aid in Haiti: Walk, Don’t Run

The devastation of the earthquake in Haiti left millions homeless and hungry.  The world rallied behind the cause, pledging billions of dollars of assistance (mostly from the United States), with private donors like you and me giving money for charities that offered services to the country in the aftermath of the disaster.  But it turns out much of that aid money never got to its intended destination, not because it was stolen, but rather that the organizations in charge of utilizing it are slow and cumbersome.  In a recent report from an organization tracking transparency among aid organizations, many of the 200 NGOs investigated have had sub-par records when in comes to effectiveness and transparency:

Of 197 organizations that the group found had solicited money for activities in Haiti, it found (among other things): (more…)

Development Economics

China in Africa: Maybe the West Is Wrong

For decades, the Western world has viewed Africa as a basket case in need of charity, giving huge amounts of aid to corrupt dictators who steal much of the money and squander the rest.  Critics of aid say it creates dependence, undermines the competitiveness of local industries, and keeps cruel dictators in power by giving them the financial wherewithal to secure their position.  Aid is a $40 billion a year business in Africa, and there isn't too much to show for it.

China, on the other hand, has taken a different approach.  By investing in Africa to gain access to its rich natural resources, China might be helping Africa in a more dignified and some might say effective way:

Development Economics

Pastor Rod: A Christian Evangelist’s Strange Role in the Sudan

A month ago I got cable television for the first time in 8 months so that I could watch the World Cup, which airs in the Philippines at 2:30 AM.  And lately, I find myself stopping at Daystar - "faith-based TV for today's generation" - for a lot of different reasons.  For one thing, it is difficult to comprehend just how easy it is for these guys to ask for huge amounts of money.  For another, whenever I see these guys I can't help but think of Bill Paxton, AKA Simon, in True Lies ("let's face it Harry - the 'vette gets 'em wet").  There is one in particular, a fellow by the name of Pastor Rod Parsley, who is particularly intriguing, in part because of what he is doing in southern Sudan. (more…)

Travel and Culture

Interlude: Cool Discoveries in Nature

In nature news, there have been two major firsts discovered in animal kingdom.  In my previous life, I was a biologist, making this post a logical tangent.  An immortal jellyfish and a photosynthetic sea slug.  It is a banner year for fans of evolution. 1.  Immortality: Take It, It's Yours The turritopsis nutricula species of jellyfish may be the only animal in the world to have truly discovered the fountain of youth. Since it is capable of cycling from a mature adult stage to an immature polyp stage and back again, there may be no natural limit to its life span. Scientists say the hydrozoan jellyfish is the only known animal that can repeatedly turn back the hands of time and revert to its polyp state (its first stage of life). The key lies in a process called transdifferentiation, where one type of cell is transformed into another type of cell. Some animals can undergo limited transdifferentiation and regenerate organs, such as salamanders, which can regrow limbs. Turritopsi nutricula, on the other hand, can regenerate its entire body over and over again. Researchers are studying the jellyfish to discover how it is able to reverse its aging process. Because they are able to bypass death, the number of individuals is spiking. They're now found in oceans around the globe rather than just in their native Caribbean waters.  "We are looking at a worldwide silent invasion," says Dr. Maria Miglietta of the Smithsonian Tropical Marine Institute. (more…)

Development Economics

The Value Proposition of Microfinance

"The value proposition of microfinance doesn't lie in it's being the strongest tool against poverty that we can possibly imagine.  The value proposition lies in the fact that it is very helpful to cope with poverty, and it's a very good value for money." - Richard Rosenberg

The narrative of microfinance reads that it provides money to the poor to start businesses and, in doing so, lift themselves out of poverty.  The idea that everyone is an entrepreneur plays into this understanding of microfinance.  Perhaps the leading beneficiary of this narrative is my former employer, Kiva since people generally like the idea of empowering these proto-entrepreneurs to go out and change their situation.  People struggle to make an impact in their approach to philanthropy, but microfinance and Kiva specifically allows them to be a mini-venture capital firm.  But this narrative is, at least, an oversimplification of the reality on the ground. (more…)

Development Economics

The Awareness Dilemma: How Nicholas Kristof Gets Us to Care

For those who do not know, Nicholas Kristof is an incurable optimist who writes a column for the New York Times on aid, development, foreign policy, and all things related.  In a video posted to his blog, he took questions from readers.  The author of one development blog point out that most of Kristof's articles follow a standard narrative that: "one that often focused on the foreign, typically American "savior" helping the poor Africans in need, to the exclusion of efforts of black Africans themselves to bring about change on the ground."  It is a good question, since most of the development workers in this world making things happen are locals, not foreigners.  Here is Mr. Kristof's response:

I do take your point. That very often I do go to developing countries where local people are doing extraordinary work, and instead I tend to focus on some foreigner, often some American, who’s doing something there. And let me tell you why I do that. The problem that I face -- my challenge as a writer -- in trying to get readers to care about something like Eastern Congo, is that frankly, the moment a reader sees that I'm writing about Central Africa, for an awful lot of them, that's the moment to turn the page. It's very hard to get people to care about distant crises like that. One way of getting people to read at least a few paragraphs in is to have some kind of a foreign protagonist, some American who they can identify with as a bridge character. And so if this is a way I can get people to care about foreign countries, to read about them, ideally, to get a little bit more involved, then I plead guilty.
I think this is a pretty thoughtful and right-on response.  (more…)