Stealing an Education in Fairfield County

The most unequal town in America.

Today, I work for a company that is trying to establish a floor of education for every child in the world, regardless of income status. Children should have access to a basic education, regardless of socioeconomic status. And what motivates people at this company is the very real prospect of achieving just that. We have 60 schools today. In a year, we will have countless more. If this experiment works, every child, no matter how poor, will have access to a decent education for cheap. That is what drives people.

The accused.

So when I heard about a homeless woman who was arrested for “stealing education” in Bridgeport, it upset me. The ironically-named Stamford Advocate has the story:

NORWALK — A homeless woman from Bridgeport who enrolled her 6-year-old son at a Norwalk elementary school has become the first in the city to be charged with stealing more than $15,000 for the cost of her child’s education.

Tonya McDowell, 33, whose last known address was 66 Priscilla St., Bridgeport, was charged Thursday with first-degree larceny and conspiracy to commit first-degree larceny for allegedly stealing $15,686 from Norwalk schools. She was released after posting a $25,000 bond.

McDowell’s babysitter, Ana Rebecca Marques, was also evicted from her Roodner Court public housing apartment for providing documents to enroll the child at Brookside Elementary School.

This is despicable. Fairfield County, to me, symbolizes everything that is wrong with America today. It presents the most egregious example of raw inequality that is at the heart of our society today. On this blog, your correspondent lamented the fact that the Bridgeport County, which has some of both the poorest and richest towns in America, has a Gini coefficient – the measure of income inequality – that is higher than that of Zimbabwe. In this county, housing projects and yacht clubs share the same area code. In an article titled, “Gap of Luxury,” Benjamin Carlson explains the situation:

Traveling the few miles between Bridgeport proper and its suburbs can feel like crossing into different worlds.

On one side of the proverbial tracks, there are 50-foot sailboats, vintage Ferraris and quaint New England streets lined by immaculate colonial mansions. On the other, a quarter of the population lives in poverty, unemployment is 14 percent, and 95 percent of the kids in public schools qualify for free or reduced-price lunches.

In Fairfield, a quaint town bordering Bridgeport, there are the obvious markers of American affluence: white picket fences, jewelry boutiques and a Whole Foods with parking spots reserved for electric cars.

But a few steps from the main drag, a homeless shelter called Operation Hope caters to those lying on the opposite side of the wealth divide.

The travesty of Fairfield County

The United States has been growing steadily more unequal over the past two decades. Some of this has to do with globalization and a global market for labor has rendered certain jobs obsolete or uncompetitive in the United States. Some of this also has to do with the irresponsibility and recklessness within the financial system in the United States. And it is here that I find some of the greatest irony.

The median income for a family in Norwalk is about $85,000. In contrast, the same number in Bridgeport – the town from which Ms. McDowell hails – is $39,000, or less than half. Fairfield County, which encompasses both communities, has been called a “hedge fund ghetto” because of the high concentration of investment management funds in the area. Some of the financial engineering that lay at the heart of the economic crisis took place in Fairfield County.

To date, not a single person has been prosecuted for crimes committed during the financial crisis. Many of them continue to live comfortably in Fairfield County. Yet a woman who falsified her place of residence to gain access to the better public education system that is largely funded by the very source of revenue that has made things worse for people in Bridgeport has been sent to jail for 12 years for her crimes. Why such a harsh penalty? Richard Moccia, the mayor of Norwalk, has the answer:

“This now sends a message to other parents that may have been living in other towns and registering their kids with phony addresses,” he said.

Fairfield County should take a hard look at itself and ask itself whether this is the way they want to treat their own. And the United States should think about the way that it is educating its children. The U.S. – one of the wealthiest countries in the world – is rated “average” in terms of education in the OECD’s most recent PISA report, including a below-average 25^th in mathematics. Making the best education accessible only to those who can afford it is a losing formula for competing in a global economy. How bad of an idea is it really? The Harvard Business Review doesn’t mince words:

By practically any measure, the quality of public K–12 education in the United States is dismal. Of the high school seniors who in 2009 took the biennial National Assessment of Educational Progress (NAEP) tests, administered by the U.S. Department of Education, fully 74% scored below proficient in mathematics, 62% in reading, and 79% in science. Within those sorry aggregate scores lay the familiar disparities among black and Hispanic Americans, who lag behind their fellow students on the exams by as much as 20 to 30 points. Poor K–12 achievement has a direct impact on success in higher education. Even though U.S. students have been getting into college in ever increasing numbers over the past 20 years, the college graduation rate has not risen. Over the past 30 years, nearly every labor-intensive service industry in the U.S. has seen dramatic increases in productivity, while public education has become roughly half as productive—spending twice the money per student to achieve the same results.

Thanks, Mayor Moccia and Fairfield County, for costing the rest of us $1.2 trillion in revenue. Aside from the GDP concerns, on a more human level, making a good education contingent on the wealth of the parents is wrong, morally and ethically.

A classroom at Bridge International Academies

Today I am surrounded by people who are passionate about making sure that every kid gets a chance, regardless of their place of birth or poverty status. When I read stories like this about Fairfield County, I shake my head. Fortunately, Fairfield County is hardly representative of the rest of the country (a better comparison is Zimbabwe). If it was, then the American dream would truly be dead.

The other side of Fairfield County

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The Link Between Poverty and Terrorism

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The link between poverty and terrorism is well-known. In theory, one of the purposes of organizations like USAID is to complement the other “D’s” of the foreign policy apparatus – diplomacy and defense – to improve conditions for people most likely to be driven to desperation: the poor. It is not surprising that the hotbeds of terrorism today – Afghanistan, Yemen, Somalia, Pakistan, Indonesia – happen to be some of the poorest countries in the world. Nor is it surprising that many of these countries receive the lion’s share of foreign aid from the U.S. government, despite their apparent animosity toward the country. The Nesaji cotton-and-wool factory in Kandahar is a perfect metaphor for the complex forces working against development efforts. Built by Iran and the Soviet Union in 1971 and maintained by a motley crew of warlords and foreign countries, including its current steward, the United States, the factory has operated for only 60 days throughout its 40-year history. Governments are not the only ones concerned about the causal relationship between poverty and terrorism.

Here in Kenya, an organization called Nuru International, founded by former special ops marine Jake Harriman, is pilot-testing a holistic community-based development model. Its mission is to end terrorism by ending extreme poverty. The connection is not difficult to make. For people living hand-to-mouth, life is a series of struggles often ending in tragedy. Anger, resentment, and despair are a volatile combination in the minds of young men and women who see little hope for escaping their situation. For recruiters of organizations like Boko Haram and the Al-Shabab – literally translated as “The Youth” – these young minds can be manipulated to pick up arms. By stoking latent frustrations at the injustice of poverty and promising a sense of a community, brotherhood, and commitment to a higher cause, a recruiter can more easily convince a teenager to become a suicide bomber.

A member of Boko Haram.

This anger and frustration is compounded by a sense of injustice. When the gap between rich and poor is vast, the impoverished majority are more likely to consider their situation as a function of either indifference or criminality by those controlling the wealth. It is under these circumstances that the fledgling Nigerian terrorist group, Boko Haram, has grown.

Boko Haram has killed more than 900 people since 2009, including perpetrating a massacre last month that left 300 people dead in Kano, the capital of the Kano state in Northern Nigeria. As an Islamic fundamentalist group with ties to Al-Qaeda in the Islamic Maghred, the North African faction of the jihad organization, Boko Haram is a growing concern for Western security analysts. But according to some on the ground in Kano, the group’s motivations are simpler. In an article titled, “In Nigeria, a Deadly Group’s Rage Has Local Roots,” Adam Nossiter explains the situation on the ground:

For now, Boko Haram’s targets remain largely local, despite its bombing of a United Nations headquarters in Abuja, the capital, last summer. The Nigerian state is typically the enemy, and many analysts see the nation’s enduring poverty as one reason. This month figures were released in Abuja indicating that poverty has increased since 2004, despite the nation’s oil wealth; in the north, Boko Haram’s stronghold, about 75 percent of the population is considered poor. Overall, 60 percent live on less than $1 a day. Every citizen appears aware of the glaring contrast between his or her own life and those of the elite.

Ado Ibrahim, a 22-year-old sugar cane vendor wearing a yellow soccer jersey, suspected more violence could be ahead. “Injustice, and misgovernance by officials,” he said, adding, “It’s possible, as long as injustice persists, it’s possible to have another flare-up.”

Down the street, squatting in his open-air stall where he sells cooked yams, Abdullahi Dantsabe had a similar point of view. Why had the attacks occurred? “Injustice,” he said. “The leaders are not concerned about the common man.”

A Yemeni man sits by the wreckage of tourists' cars at the site of a suspected al-Qaeda car bomb attack in Marib in July 2007. Photograph: Khaled Abdullah/Reuters

Nigeria is one of the most corrupt countries in the world. The Corrupt Perceptions Index, which is a measurement of how people view their government, ranks Nigeria 143 out of 180. A Nigerian friend of mine once explained to me the concept of “bunkering,” which is when a businessman – usually someone with military connections at the highest levels or a general himself – connects a pipe to a much larger oil pipeline in order to siphon the product and sell it on the black market. Add to this dynamic massive income inequality and ethnic tensions throughout the country (but mainly on situated on a north-south divide), and the elements that typically fuel the growth of groups like Boko Haram seem to be in place.

In fact, most of the countries today where Islamic fundamentalism is on the rise are generally poor and massively unequal with highly corrupt governments. In Africa, Chad (168), Sudan (177), Niger (134), and Somalia (180), which holds the dubious distinction of last place, are all areas where for terrorist organizations have flourished. In the Middle East and South Asia, Pakistan (134) and Yemen (164) are considered some of the most dangerous countries in the world.

I am not saying that terrorist organizations develop due to circumstances alone. At the highest levels of these organizations are typically rich and educated planners, who are misguided, at best, or sociopathic. Osama bin Laden was the son of a wealthy Saudi construction magnate, and many of Al-Shabab’s top leadership hail from countries outside Somalia – including one, Omar Hammami, AKA Abu-Mansoor al-Amriki, who grew up in Alabama. But the soldiers – the grunts on the ground who are blowing themselves up along with innocents around them – are disproportionately drawn from the poor underclass, the idle youth with few prospects for employment.

It is these people who economic development programs aim to help. Whether they are successful is a different question. In the case of the Nesaji cotton-and-wool factory in Kandahar, the answer is clearly no.

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Pushing Back on the Millenium Villages

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When you want to know how someone in international development views the world, there is no surer way than asking them whether they identify with Jeffrey Sachs and Bill Easterly. On this blog, your correspondent has made his proclivities known on multiple occasions – even once being persecuted from doing so by a former employer and being recognized by Mr. Easterly himself for his martyrdom.

Jeffrey Sachs, the pre-eminent economist, is generally associated with the top-down school of development economics, advocated substantial public investment to improve the broader systems – water, health, sanitation, education, etc. – that contribute to poverty. In contrast, Bill Easterly, the roguish author of The Elusive Quest for Growth and White Man’s Burden, supports bottom-up interventions, preferring to search for solutions that develop organically and take into account local contexts. Most people find themselves on one side or the other, except for the deliberators in the middle, like Abhijit Banerjee and Esther Duflo. If Bill Easterly is 50 Cent, then Jeffrey Sachs is surely Ja Rule.

The flagship of the Sachs camp is the Millenium Villages project, a $150 million, multi-country intervention that exemplifies the concept of “the big push.” The systems that underlie the poverty trap are extraordinarily complex, layered, and multi-faceted. According to the top-down school of thought, it is possible to change the entire system only by changing its key components. The Economist explains the thinking behind the idea:

In development, it seems, you cannot do anything until you can do everything. That is the idea behind the “big push” theory. Outlined by Paul Rosenstein-Rodan in 1943, this says that even the simplest activity requires a network of other activities and that individual firms cannot organise such a large network, so the state or some other giant agency must step in.

The big push came to grief in the 1970s and 1980s as evidence accumulated that, in Africa at least, public investment and foreign aid had produced no perceptible change in productivity, not least because so much of it was stolen. Recently, though, the idea has come back into vogue. The UN talks constantly about its millennium development goals (eight goals, 21 targets). Jeffrey Sachs of Columbia University argues that if public investment and foreign aid are big enough, they will boost household incomes, spurring savings and boosting local investment. They should also “crowd in” external investment by improving infrastructure.

In order to do anything, you have to do everything. Being on the ground, you see the complexities of the system at work. Everything is interrelated and connected in a complex web. Change an input here or there and you can transform the system. But, more often, well-reasoned tweaks to the system have unintended consequences. What is more, it is question whether even the smartest economists can truly comprehend that sheer magnitude of the forces at play. They are, after all, global by nature.

These are the criticisms of Sachs and his “big push” school. Today, randomized controlled trials – the same tests used by the pharmaceutical industry to test the efficacy of new drugs – can actually tell us a lot about whether interventions like the Millenium Villages actually work. And, according to recent studies, it appears that they don’t. Back to the Economist:

Now a Kenyan economist, Bernadette Wanjala of Tilburg University in the Netherlands, has raised further doubts about the project. She interviewed 236 randomly selected households in Sauri who had been offered the benefits and 175 randomly selected ones who had not. In a study with Roldan Muradian of Radboud University, she concluded the first group had raised their agricultural productivity by an impressive 70%. Yet she found that the impact on household income was “insignificant”, and that there had been little extra saving or investment. The villagers had grown more food—and eaten it. They became better nourished, but this did not affect the wider economy.

Better nutrition is important, of course. But the aim of the project is to boost income, investment and economic diversification. It is not clear that these goals are being achieved. For $60 per person per year (which increases the income of the poorest villagers by well over 25%) the project has improved village life only a little more than it would have improved anyway. So far, the project provides little evidence that “big push” development—advancing on all fronts, flags flying—is better than the alternative: gradual, step-by-step changes to remove specific barriers to growth.

The answer, as Easterly puts it, is elusive. But certain interventions – providing an affordable education by lowering operating costs or leveraging social networks to distribute capital – affect the systems that influence poverty in a very real way. And these, to me, are the most exciting interventions of all.

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Design for Social Innovation at the iHub

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When I moved to Nairobi, I did not really know what to expect. I’d been here once before and moved on a whim. Fortunately, in the first week, I discovered the iHub. The iHub was started a few years ago by Eric Hersmann, the founder of Ushahidi, a crisis mapping organization whose roots can be traced to the post-election violence that rocked Kenya in 2008, and a TED Global fellow. It is a co-working space for software developers, entrepreneurs, researchers, and others who want to utilize the space. More importantly, it is a vibrant community of innovators, technologists, and ambitious folks who like being surrounded by a fast-moving and intellectually-stimulating environment.

After working at the space for a few months, I was lucky enough to be accepted as a green member, allowing me to use the space whenever I want. Today, on a Saturday morning, I came to the iHub to sit at the Pete’s Coffee bar and crank out some work. And I was pleasantly surprised to see a group of speakers leading a workshop on “Design for Social Innovation,” a topic I find interesting. The speakers included Cheryl Heller, a communication design strategist, Just a Band, a super-creative Kenyan house/funk/disco band, and others. The topic du jour was how to apply design thinking to innovate in the social sector.

Design thinking is sort of a nebulous concept. Here is how Wikipedia describes it:

Design Thinking refers to the methods and processes for investigating ill-defined problems, acquiring information, analyzing knowledge, and positing solutions in the design and planning fields. As a style of thinking, it is generally considered the ability to combine empathy for the context of a problem, creativity in the generation of insights and solutions, and rationality to analyze and fit solutions to the context.

I actually think that these principles are not only intuitive, but really fundamental to solving any problems. In a social innovation context, the most basic example of how design thinking is not applied is in stereotypical top-down development projects that seek to apply theoretical generalities in addressing a problem, while ignoring the local context. Some might claim that Millennium Villages project is the ultimate example this concept:

It is an approach to ending extreme poverty and meeting the Millennium Development Goals–eight globally endorsed targets that address the problems of poverty, health, gender equality, and disease. Initiating a paradigm shift, the Millennium Villages promote an integrated approach to rural development, using evidence-based technologies and strategies in each sector, with sufficient investment over a sufficient period. This approach also combines a critical cost-sharing and planning partnership with local and national governments, and rural, African communities, while focusing on capacity building and community empowerment. By improving access to clean water, sanitation and other essential infrastructure, education, food production, basic health care, and environmental sustainability, Millennium Villages ensures that communities living in extreme poverty have a real, sustainable opportunity to lift themselves out of the poverty trap.[1]

The idea is good in principle, but, in practice, there are a lot of idiosyncrasies about community dynamics and macro-economic factors that lead to unintended consequences. So you can invest in training people and giving them skills, like sewing or carpentry, to become an entrepreneur. But without a market for their products, they won’t be able to monetize those skills. This is a classic example of applying a solution to problem without actually thinking through the consequences.

Design thinking is similar to systems thinking, which entails looking at individual problems and components as part of a larger system:

Systems Thinking has been defined as an approach to problem solving, by viewing “problems” as parts of an overall system, rather than reacting to specific part, outcomes or events and potentially contributing to further development of unintended consequences. Systems thinking is not one thing but a set of habits or practices[2] within a framework that is based on the belief that the component parts of a system can best be understood in the context of relationships with each other and with other systems, rather than in isolation. Systems thinking focuses on cyclical rather than linear cause and effect.

Again, this is something that seems intuitive to me. Nothing happens in isolation, so we should not try to solve problems in isolation. Still, it is worth thinking about these principles when you are trying to develop solutions to difficult problems.

Brain Gain: The Upside of Losing Talent Abroad

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Human capital flight – otherwise known as “brain drain” – presents a challenge for developing countries. In countries with a lower per-capita GDP, wages are also typically lower. So highly-skilled labor immigrate to richer nations where their specialized talents yield a salary several times what they could earn in their home countries. Frequently, these professionals – doctors, lawyers, computer scientists – have been educated at the expense of the government, and losing them is a big hit to the country. For this reason, people often see brain drain as a problem, and try to incentivize top talent to stay in-country.

But there is another theory about international labor mobility that posits the opposite. The Economist explains the thinking behind “brain gain”:

Several economists reckon that the brain-drain hypothesis fails to account for the effects of remittances, for the beneficial effects of returning migrants, and for the possibility that being able to migrate to greener pastures induces people to get more education. Some argue that once these factors are taken into account, an exodus of highly skilled people could turn out to be a net benefit to the countries they leave. Recent studies of migration from countries as far apart as Ghana, Fiji, India and Romania have found support for this “brain gain” idea.

The most obvious way in which migrants repay their homelands is through remittances. Workers from developing countries remitted a total of $325 billion in 2010, according to the World Bank. In Lebanon, Lesotho, Nepal, Tajikistan and a few other places, remittances are more than 20% of GDP. A skilled migrant may earn several multiples of what his income would have been had he stayed at home. A study of Romanian migrants to America found that the average emigrant earned almost $12,000 a year more in America than he would have done in his native land, a huge premium for someone from a country where income per person is around $7,500 (at market exchange rates).

Living in the Philippines, where international remittances from Asia, the Middle East, and the United States have brought an incredible amount of foreign exchange into the country, I saw the dramatic effect Filipinos abroad had (and still have) on the economy. I have also met many Kenyans, Ghanaians, and Filipinos who pursue degrees in engineering and computer science to develop a competitive skillset for a global economy. Most of them want to go to the U.S. or Europe to make a small fortune. And once they have had enough of the rat race and have built up a nest egg that will allow them to buy a house and raise a family comfortably, many want to return to their country of origin and spend the rest of their lives back home.

Putting aside the fact that global diasporas are good for the world, I want to discuss a benefit that the Economist article leaves out. When skilled talent from developing countries move abroad to work for international companies, they gain valuable work experience that they could not get in their home countries. When a software engineer comes to Seattle to work for Microsoft, he or she experiences work in a fast-paced environment, surrounded by talented people with different skills, managers who become valuable mentors throughout their careers, and, most importantly, a demand for quality that is often absent from companies that do not compete in a global marketplace. After 10-15 years in this type of environment, they return to their home countries, where they mentor a new generation of young talent, teaching them the Microsoft way.

Microsoft is only one example. The company and industry are secondary to the work environment, which emphasizes the importance of intangibles, like time management, prioritization of tasks, and quality control. Working for an American company like General Electric, for example, might teach someone the importance of optimization in manufacturing, while working for Target shows them the importance of customer service in maintaining client relationships. Then, when they return to their home countries and start their own business, they bring with them those industry-specific best practices. As a result, they are more competitive in the domestic market, forcing competitors to either adapt or die. Ultimately the economy becomes stronger and more competitive.

This is not simply a theoretical framework for the benefits of brain gain. I see it in action every day. Senior software developers in Kenya have often spent years working for tech companies in the United States. Leading managers in nearly every type of business, from coffee shops to breweries, manufacturers to telecoms, have spent some time working in Europe, Asia, Canada, or, most often, the United States. Often, they are the decision-makers. And decision-makers drive innovation in any industry.

Clearly, brain drain is not ideal

I am not trying to say that brain drain is necessarily a good thing. Most immigrants probably choose not to every return to their home countries. For most, leaving the comfort of a well-paying job, a decent healthcare system, and a Western education for their children is not an appealing option. But, I will say that experience working for a multi-national, or, frankly, any company, in the U.S is going to teach any young professional – including Develop Economies – a thing or two about how to succeed in business.

In a perfect world, financial incentives would keep talent from moving abroad. Unfortunately, that simply is not the case. But the upside of this movement is that, when they do come back, returning ex-patriates are far more capable than they would have been had they decided to stay.

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Mitigating Political Risk for Investors in Africa

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Cote D'Ivoire, one year ago.

According to the global thought leaders in finance, Africa is primed for growth. McKinsey, the global management consultancy, released a report a few months ago titled “Lions on the Move” highlighting the collective buying power of the continent – $1.6 billion, or roughly equivalent to the GDP of Brazil or Russia – and its uniform growth, with 27 out of the 30 largest economies growing quickly. The Economist is quick to point out that, in its projections, seven out of ten of the fastest-growing economies between 2011 and 2020 will come from Africa. Africa, according to Citigroup’s managing director for Europe, Africa, and the Middle East, is becoming “more and more competitive.”

A confluence of inter-connected forces over the last decade explains the continent’s growth spurt. Better leadership and more transparent governance have led to more effective allocation of resources and greater domestic investment. Regional cooperation, in terms of labor, trade, and security, through economic blocs like ECOWAS in the West and the EAC in the East has created mutual benefits for markets. Innovations in technology have improved communication and access to information by orders of magnitude. Ten years ago, you were lucky to have a cell phone signal in a city in Africa. Today, mobile phones are ubiquitous and the myriad technologies that have piggy-backed on their success, like mobile money and Internet, have changed the way people do business. Lastly, in-kind infrastructure loans from China in exchange for access to minerals and other natural resources are changing transportation (roads, bridges) and energy (hydro-electric dams) on the continent.

These changes have not been lost on China and India, which see economic opportunity in Africa where others see conflict and disease. Both countries have invested heavily in the continent, while the West has relied on foreign aid to build influence. If Africa “is a wonderful place to make money,” in the words of entrepreneur Mo Ibrahim, then why do so few private equity firms and investment funds in the West have a presence here? There are a few explanations – few viable investments beyond natural resources, too few mature companies to purchase. But one main reason is political instability. Let me explain.

I have lived in Africa now for a year and change. When I lived in Ghana, I had friends to the West in Cote D’Ivoire who were evacuated after the election that saw Laurent Gbagbo unseated turned violent. To the north, I had other friends who left Burkina Faso when riots erupted after President Compaore failed to quell a mutiny. To the east in Nigeria, Boko Haram, the fundamentalist Islamist group began bombing churches in the Northern part of the country. Since I moved to Kenya, 36 people were killed in an attack on a bar in Burundi, and violent protests marred the recent elections in the Congo. And, in the coup de grace, the country in which I currently reside, Kenya, recently invaded Somalia, otherwise known as the most dangerous place on earth.

China’s state-run capitalism allows it to play the long game. It has the size to negotiate with the worst dictators in Africa. It doesn’t matter which party is in power – both have an interest in maintaining cordial economic ties with China. A private equity firm, on the other hand, has no such clout. Not even the oil companies have been able to find a way not to be nationalized (though Shell has come pretty close in Nigeria). So, when there is a threat that they might not just lose their shirt, but their entire wardrobe, investors look for more stable risky plays in other parts of the world.

But now, there is a solution to that problem, compliments of the Overseas Private Investment Corporation, the development finance arm of the U.S. government. Led by Elizabeth Littlefield, a veteran microfinance leader who I used to read and write about on this blog, OPIC has created a political risk insurance product for investors wary of the threats to their investments in historically unstable places, like Africa. The East African has the story:

A new insurance product has been launched to cover private equity fund investments in Africa and other emerging markets against political risk.

It aims at shielding investors from the political uncertainty that characterises doing business in the emerging markets and damages arising from violence related to political activity.

East Africa has, in recent years, witnessed several incidents of politically instigated chaos leading to destruction of property.

Besides providing protection against such eventuality, the new product also targets offering cover from other unforeseen circumstances that may affect deals.

“For example, OPIC is developing insurance products for the renewable resources sector, specifically to protect investors against a government’s change in the feed-in tariff that the investor has relied upon to structure its project; and to cover investment in forestry projects, including Reducing Emissions from Deforestation and Forest Degradation (REDD) projects,” PIC said in a statement.

Now, funds can hedge against those risks by purchasing insurance. This is great news from both an economic development perspective and that of the United States and its position in the world. The longer the West delays, the more China will secure a political and economic foothold in the region. And with more money flowing into the continent, the capital constraints that held back growth will be freed up.

Hopefully we will see a boom in investment from Western investment funds in Africa. But, with ample untapped investment opportunity in Latin America, Southeast Asia, North Africa, and other regions, Sub-Saharan Africa may be at the end of a long line.

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Crowdsourcing Funding for Projects in Africa

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For the first time today, I gave some cash to two very cool causes through organizations that allow start-ups and projects to crowdsource funding from a lot of different people.

The first is being run by a friend and former Kiva Fellow, Rebecca Corey who worked for a microfinance institution in Dar es Salaam, the capital city of Tanzania. She is back again for a way-cool music festival in Zanzibar that I hope to attend, but that isn’t the only reason she is visiting the eastern coast of Africa. The music archive at the Ministry of Culture in Tanzania has a deep wealth of great music in reel-to-reel format, which could be lost to the elements. To prevent that from happening, Rebecca and her team are going to save the archives before it is too late.

Here is the project description:

More than 100,000 hours of music like this is sitting idle and all but forgotten on deteriorating reel-to-reel tapes at the headquarters for the Tanzanian Broadcasting Corporation in Dar es Salaam. The Radio Tanzania archives are running out of time and it’s our goal to digitize and preserve them before it’s too late. Remarkably, our project coincides with the 50th anniversary of Tanzania’s independence from colonial rule. It’s the perfect time to celebrate Tanzanian culture by preserving and reviving this treasure of national heritage.

The Kickstarter funds will be used to purchase equipment for the digitization, to pay royalty fees to musicians and the Tanzanian government, and to produce a “Best of Radio Tanzania” compilation CD with extensive liner notes, photographs, and lyric translations. In order to make the digitization sustainable and directly beneficial to the local community, we are going to establish a Radio Tanzania Digitization workshop that will train Tanzanians in the digitization process and will employ locals to run the workshop in our absence.

The roots of music can be traced back to the continent, where traditional African music spread across the world and morphed into jazz, rock, hip-hop, and everything in between. When I lived in Ghana, I used to buy gospel CDs from pick-up trucks riding through the streets with speakers blaring the music and practically went deaf listening to highlife and hiplife at outdoor bars and clubs, where having a conversation is difficult, if not impossible. Music is an important part of the culture and historical tradition of African life. Preserving it is a noble cause.

There is an old Zimbabwean proverb quoted in a Talib Kweli song called African Dream that goes, “If you can talk, you can sing. If you can walk, you can dance.” Unfortunately, anyone who has witnessed me do either of those things knows that the saying has little bearing on reality. But still, I can do my part to help. I urge you to do the same.

The second project I supported is a fledgling Kenyan start-up called M-Farm, started by three Kenyan ladies here in Nairobi. The company helps farmers gain access to markets through their mobile phones. They are raising money to attend the Unreasonable Institute, a start-up accelerator in the United States. Here is the description from the Unreasonable Marketplace:

M-Farm enables farmers inquire about the current prices of different crops in specific markets throughout Kenya. Up-to-date market information empowers farmers as they bargain for a fair price with middlemen and purchasers.

The M-Farm system provides farmers a group selling service where they can connect with other farmers from the neighborhood to jointly market crops in greater volume, helping rural farmers access large-scale local and international markets. Farmers often need to have large quantities of produce available in a short time frame in order to sell to exporters and large-scale retailers.

We’ve more than 2000 farmers,from the pilot test we carried out,already subscribed to the system and are paying for the service. During the pilot test,73 farmers working with M-Farm who have benefited by having a 50% increase in their profits and a 30% saving on the cost of input. M-Farm has achieved this by creating direct market linkages with local exporters and international buyers who have ensured stable prices for these farmers.

They are growing fast and providing a valuable service to Kenyan farmers, who suffer from a serious information assymetry that leaves them at the whim of middlemen who use their ignorance about market prices to low-ball them on prices. Using mobile technology, they connect those farmers with markets around the country. In doing so, the supply chain becomes more efficient, food becomes cheaper, and farmers become richer.

A start-up accelerator is the kind of thing that gives young social enterprises a platform to grow and expand. So, if you have some time, support a real homegrown startup out here in Nairobi.

Kenya

Tanzania

Yes to Industrial Agriculture in Tanzania

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Agrisol, an American agriculture company, is considering investing $100 million in purchasing and developing 325,000 acres of farmland in Tanzania. This development has raised the ire of the Sierra Club, an environmental group that is concerned with the impact on the smallholder farmers that will be displaced by project and the inequity of repatriating money out of the country. They are concerned that the move amounts to a land grab – developing land in Tanzania to the detriment of Tanzanians. From the East African:

Opponents charge that the deal amounts to a “land grab” that would result in the displacement of 160,000 refugees from Burundi, some of whom have lived on the land for 40 years. “Very productive smallholders” would be replaced by “large mechanised farms” growing genetically modified maize to be used as biofuels in developed countries, says Anuradha Mittal, a researcher with the California-based Oakland Institute.

The company denies that it plans to grow crops for biofuel production. It adds, however, that “as crop production increases over time, excess crops that are not needed for valued-added food products could become available for other uses.

Agrisol says its $100 million investment over the next 10 years is intended to produce staple crops and livestock that “will help stabilise local food supplies, create jobs and economic opportunity for local populations, spur investment in local infrastructure improvements.”

I have somewhat strong feelings about agriculture developments like this one. When I was working in Ghana, I was involved with the rice sector, and spent a lot of time trying to understand why West Africa imports more rice as a share of consumption than most regions in the world. I asked my boss at the time – a veteran of African agriculture who cut his teeth in the soybean industry in Zambia – what Ghana needs to eliminate its dependence on rice imports from Thailand, Vietnam, the U.S., and other countries. “Give me 125,000 hectares of irrigated land near Lake Volta,” he said, “trucks to transport the rice south to Accra, a warehouse in Tema for storage, and I will feed of all of Accra.” In other words, economies of scale.

The Sierra Club might say that this is also tantamount to a land grab. But, unfortunately, the reality of the rice sector in Ghana is that large-scale industrial farming is essential to substituting the rice imports from around the world. The fact is that people in Ghana will eat rice. It is not a staple like maize, cassava, or yams, but, as the country has increased in socioeconomic status, the demand for rice has increased. In the early 80’s, the country produced 100% of its rice – about 80,000 tons per year. After a structural adjustment program imposed by the IMF decimated the industry, local rice production atrophied, leaving the vacuum to be filled by the U.S. and, ultimately, Southeast Asia. The rice that was imported – jasmine long-grain – quickly supplanted the local variety, and people developed a taste for rice from the outside. Unfortunately, smallholder farmers were unable to bring jasmine long-grain to the seed – either due to regulatory issues or cost – and could not compete.

Today, most Ghanaians in Accra, the capital city, would take some rice imported from Thailand over local rice any day. One day I went to the field with Andrew, the rice guy on the team. We went to see a subsidiary company of an American agribusiness that had set up an industrial rice mill outside of Accra. They had 1,000 acres and a large industrial mill that produced nearly impeccable rice with little breakage, as compared to the small local mills. While there, we heard about another Brazilian operation that planted 1,000 acres of jasmine long grain. They were fairly industrialized, supported by the Brazilian government agriculture organization, and had remarkably high yields, compared with local smallholders.

The smallholder rice farmers, on the other hand, were farming by hand and had limited access to irrigation. They could often only plant one season per year instead of two, due to the fact that they couldn’t access the abundant waters of the Volta River. As a result, the local variety of rice grown was often milled in small mills with poor equipment that broke the rice into small pieces and commanded a much lower price at the market than the imported variety, or the Brazilian crop for that matter.

This, for better or for worse, is the reality. Brazil pioneered the revolution in agriculture that Africa would do well to replicate. The Economist had an article two years ago about Brazil’s admirable approach to farming titled “How to Feed the World.” Here it discusses the innovation:

Brazil has followed more or less the opposite of the agro-pessimists’ prescription. For them, sustainability is the greatest virtue and is best achieved by encouraging small farms and organic practices. They frown on monocultures and chemical fertilisers. They like agricultural research but loathe genetically modified (GM) plants. They think it is more important for food to be sold on local than on international markets. Brazil’s farms are sustainable, too, thanks to abundant land and water. But they are many times the size even of American ones. Farmers buy inputs and sell crops on a scale that makes sense only if there are world markets for them. And they depend critically on new technology. As the briefing explains, Brazil’s progress has been underpinned by the state agricultural-research company and pushed forward by GM crops. Brazil represents a clear alternative to the growing belief that, in farming, small and organic are beautiful.

That alternative commands respect for three reasons. First, it is magnificently productive. It is not too much to talk about a miracle, and one that has been achieved without the huge state subsidies that prop up farmers in Europe and America. Second, the Brazilian way of farming is more likely to do good in the poorest countries of Africa and Asia. Brazil’s climate is tropical, like theirs. Its success was built partly on improving grasses from Africa and cattle from India. Of course there are myriad reasons why its way of farming will not translate easily, notably that its success was achieved at a time when the climate was relatively stable whereas now uncertainty looms. Still, the basic ingredients of Brazil’s success—agricultural research, capital-intensive large farms, openness to trade and to new farming techniques—should work elsewhere.

These last three ingredients are what the Agrisol investment could potentially bring to the agriculture sector in Tanzania. As much as the Sierra Club would like to think that “very productive” smallholder farmers could bring about this kind of revolution, 160,000 smallholders cannot compete with one 160,000 acre farm (or a 325,000 acre one for that matter).

And the problem of food insecurity in sub-Saharan Africa will continue to be a problem without the innovations of industrial agriculture. People will certainly be displaced. But the Tanzanian economy, hopefully aided by woefully-lacking good governance, can capitalize on this investment to produce much of the food for the region. In doing so, it, along with its people, will become richer in the process.

So when organizations like the Sierra Club oppose such investments, I understand where they are coming from, but my realipolitik radar starts to register abnormal activity. To denounce the benefits of industrial agriculture, which clearly provide huge benefits in the form of cheaper food, more efficient supply chains, better seed varieties, higher yields, employment, and tax revenue, seems impractical.

In a perfect world, cooperatives of smallholders could function perfectly and produce the same yields as the Agrisols of the world. Unfortunately, we live in a world where economies of scale simply offer better results. So I support the company’s acquisition of 325,000 acres, for better or for worse. But hopefully for better.

Non-Profit Career Advice: Urban Development

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Photo credit: Digital Slide Theater

This is the first post in an ongoing series offering advice to people interested in learning more about international development work. Mandy Goodgoll, a Masters Candidate in International Affairs at the New School, offers advice on urban development in developing countries and emerging markets.

First of all, let me say that urban development is a great field to get into. It can be analytical, creative, big, small, international, local… essentially, whatever you want it to be. Having said that, I would highly recommend narrowing the search a little. By that I mean, narrowing down to a sub-field you think you might want to try out.
Some examples:

Water (from infrastructure like sewage management, to conservation, to increasing access to potable water for the urban poor… I’m currently writing my thesis on water management)
Forestry (a variety of important issues in forestry like conservation… not something I know too much about)
Low-income housing (could be in an urban environment in a big city in the US, or it could be related to ‘slum upgrading’ in any developing city around the world).
Urban management (working with local governments to make service provision (like water works, or roads) more accessible or managed more sustainably
Urban farming (this is kind of a big deal as of recently, not only in cities like NYC. It’s also being written about in Argentina and Tanzania – reducing the footprint of cities and eating local)
Renewable energy (from solar panels in India to wind farms in Eastern Africa… it’s one of the hottest topics right now, and extremely relevant in the developing world)
Transportation (another really hot topic that mostly centers around public transportation, bike lanes, and other new forms of transportation – death to the car!)

So that’s a very brief rundown of topical areas you may want to delve into. I would recommend thinking about what kind of experience you want. Large and internationally recognized organizations may look great on the resume, but in actuality, you may not have such an exciting experience sitting in the head office of some organization doing research on the internet.

Here, I suggest – go local! There are a lot of opportunities to volunteer for 3-4 months at local NGOs, so that’s why narrowing it down to a sub-field you’re interested in will help in your hunt. Then I would recommend narrowing down on a region. South-East Asia? East Africa? South Africa? Central or South America? There are very unique issues in each of these areas, pertaining to urban issues and urbanization in general.

Latin America is heavily urbanized. Look at Bogota, Carracas, Santiago, Sao Paolo, Rio, Buenos Aires… mega urban cities with big divides between rich and poor – making urban issues very complicated to answer.

In Africa, urban development is much less advanced. You have the cities of South Africa, which present unique problems in respect to the rest of the continent; you have Lagos which is essentially a huge mess of poverty, bad-governance, zero infrastructure, and corruption (don’t go there); and Nairobi, which is this complicated urban metropolis that essentially makes no sense at all, from an urban perspective.

Kibera, the largest slum in Kenya

Then there’s Asia – which I don’t know as much about as my focus and experience has been Latin America/Africa. But in cities like Bangkok, you have crazy issues with water management, alternative forms of transportation, sustainability issues, green-building, and urban poverty overlapping to create a melange of a city that is really exciting.

I would highly recommend looking into NGOs in different places that get you working at the local level. It doesn’t necessarily have to be linked to the urban specifically, because any exposure you get to how the city works (or doesn’t work) from a local level will give you insights on how citizens (or non-citizens) are affected by the decision made in the city. How are people excluded from infrastructure? How do they view their urban environment? How do the flows in a city impact society, economies, the environment? I would recommend this avenue because it can give you more insight into the structure at the bottom, rather than the top – which will inform you in a different way in the future.

On the other hand, you can go dig wells in West Africa, or work with a Sanitation Activist Group in Cape Town… That would give you access to very specific topics, and would also allow you to work at the local level.

Regarding where to find such NGOs… you could look at organizations that have partnered with UNICEF or UN-Habitat in the past. Also, idealist.org has volunteer opportunities. One organization which comes to mind as a good hub of information is the African Center for Cities. It’s run out of the University of Cape Town, and is led by Edgar Pieterse – guru of African urban development in general. I like the work they do, and a lot of it is really on- trend: http://africancentreforcities.net/.

Okay, hope that helps.

Mandy’s Music Recommendation

A Tale of Two Education Systems: Finland & India

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A private school serving Muslim students in India. (Kuni Takahashi for The New York Times)

Two interesting articles in the Atlantic and the New York Times highlight two very unique approaches to education.

The first, “Many of India’s Poor Turn to Private Schools,” discusses the prevalence of private schooling at every socioeconomic level in urban and rural communities. These private schools, many of which are low-cost and bare-bones, provide a comparable education to government schools and offer an English-language curriculum – something highly valued by the low-income populations who see English as a path to a higher-paying job and a path out of the slums.

The second, “What Americans Keep Ignoring About Finland’s School Success,” discusses the Finnish government’s reliance on exclusively public schools to train its young people. Rather than pushing rote memorization of letters and numbers, the Finnish public education system gives less homework tries to foster creativity among students. Its teachers must have a master’s degree to teach, and the job is highly coveted. As a result, Finland ranks among the highest in the world on standardized test scores. By focusing on equality across all socioeconomic strata, rather than school choice, which is the revolutionary approach to education being pushed in the United States, Finland has managed to provide its children a top-notch education.

A low-cost private school in India. (Mukesh Gupta/Reuters)

In India, the government is taking a similar tack. In April 2010, India passed the Right to Education Act, which guarantees every child, age 6-14, an opportunity to receive an education. The program is clearly a step in the right direction, but could have some unintended consequences. Private primary schools exist because of inherent inequality in the education system. For whatever reason, parents who send their children to private schools feel the quality of education at the government schools is inferior. Some do not appreciate the emphasis on local languages. Others feel the government schools are overcrowded, preventing their children from receiving the level of teacher interaction they feel is necessary. And others believe the teachers, with no incentive to perform, do not take their job seriously.

These are all very real concerns. In India, like Kenya or the United States, people send their kids to private schools when they think they could do better somewhere else. The Right to Education Act, which will increase the presence of public schools and government spending on education, tries to address those achievement gaps. But the strict regulations imposed on private schools as a result may cause them to close. From the New York Times:

Few disagree with the law’s broad, egalitarian goals or that government schools need a fundamental overhaul. But the law also enacted new regulations on teacher-student ratios, classroom size and parental involvement in school administration that are being applied to government and private schools. The result is a clash between an ideal and the reality on the ground, with a deadline: Any school that fails to comply by 2013 could be closed.

Kapil Sibal, the government minister overseeing Indian education, has scoffed at claims that the law will cause mass closings of private schools. Yet in Hyderabad, education officials are preparing for exactly that outcome. They are constructing new buildings and expanding old ones, partly to comply with the new regulations, partly anticipating that students will be forced to return from closing private institutions.

“Fifty percent will be closed down as per the Right to Education Act,” predicted E. Bala Kasaiah, a top education official in Hyderabad.

This is unfortunate, and the repercussions could be severe. If the government is not able to provide a good quality education, the children whose parents would normally pull the kids from school and send them to a private school will be stuck. They will underperform, with little recourse.

Perhaps more importantly, the education sector in any country is often the most corrupt. Not even the United States is immune, as the Atlanta testing scandal made clear. With so much money going toward public education, it could very well become a piggy bank for corrupt officials, undermining the efforts of the program. These points bring me to the second article, and the success of the Finnish education system.

Educators worldwide look to Finland’s model for guidance. How is it that a purely socialist, egalitarian model to primary education could produce such amazing results? Well, there are a few reasons. First of all, the teachers are highly educated and incentivized to perform. The Atlantic:

For Sahlberg, what matters is that in Finland all teachers and administrators are given prestige, decent pay, and a lot of responsibility. A master’s degree is required to enter the profession, and teacher training programs are among the most selective professional schools in the country. If a teacher is bad, it is the principal’s responsibility to notice and deal with it.

Finally, in Finland, school choice is noticeably not a priority, nor is engaging the private sector at all. Which brings us back to the silence after Sahlberg’s comment at the Dwight School that schools like Dwight don’t exist in Finland.

“Here in America,” Sahlberg said at the Teachers College, “parents can choose to take their kids to private schools. It’s the same idea of a marketplace that applies to, say, shops. Schools are a shop and parents can buy whatever they want. In Finland parents can also choose. But the options are all the same.”

By investing heavily in education, and ensuring that all schools provide the same level of quality, Finland has created a more equitable system that produces results across the board. In India, that simply will not be the case. The schools in the major cities, where educated teachers are more likely to settle, will have a disproportionate advantage. Schools in slums and rural areas will almost certainly suffer from a lack of resources and qualified personnel. And the prospect of a fully equitable public education system similar to that of Finland is very unlikely.

If the private schools serving the poorest segments of the Indian population are forced to close as a result of the Right to Education Act, it will be a tragedy. And, as is usually the case in these situations, the children caught in the middle will be the ones who suffer.