Archives For aid

This quote from acclaimed film Director and Producer Steven Soderbergh struck me as immensely applicable to the fields of entrepreneurship and social impact.

The quote recalls another, by John Galsworthy, “Idealism increases in direct proportion to one’s distance from the problem.”

Passion without pragmatism is often ineffective…at worse reckless. We may all have our ideas on how things should work, but those who do successfully change things do work do so by embracing things that an idealist cannot, because by definition to an idealist compromise represents a form of defeat.

The lesson here for entrepreneurs (social or otherwise) is that it’s important to check your own ego when attempting to confront the challenges before you. Deconstruct your assumptions, validate your own opinions, and be willing to consider that at some point on your journey you’ve been wrong and that you’ll likely be wrong again.

A few months back I wrote an article responding to people who were comparing the economy of SecondLife to that of developing countries like Burundi, Liberia, DRC and Zimbabwe. My argument was that there is simply no scarcity in a virtual world, making any comparison null and void. This article from VentureBeat echoes my point, that virtual economies simply defy the realities of real world economics.

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Bill Gates responds to the idea that ‘aid is bad’ in this interview with Newsweek. Although, he doesn’t reference Dambisa Moyo or or her book DEAD AID directly, some of his comments do make arguments against the meme (of aid doing more harm than good) while defending the Bill & Melinda Gates Foundation approach to global development:

Of the countries that donors give aid to, there’s a number, like Brazil, Mexico, and Thailand, that have graduated, and what we’re left with is a very tough group. But health aid is probably the least controversial because it brings down population growth…A vaccine is not that attractive to a dictator. Even in the toughest countries–Congo, Somalia–vaccinations work. If you’re getting into building roads, you may have to stay away.

It speaks to our value of equality. It speaks to our belief that preserving the environment is important, by making sure there is not severe overpopulation. The tools that we have now are better than ever. Think of children’s lives saved, going from the 20 million that died per year in the 1960s to the fewer than 9 million today, to the goal of fewer than 5 million deaths within 15 years. That’s a pretty appealing story when you’re talking about a quarter of a percent of the federal budget.

Read the full interview

The Future of Giving

Jon Gosier —  August 12, 2009 — 4 Comments

Does the future of field research lie in augmented reality?

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future of philanthropy

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The Millennium Challenge Corporation (MCC) just launched a new part of their website that allows readers to browse their performance by country and sector. While data is not yet complete, it’s clearly an effort to introduce more transparency into the aid sector.

mcc_monitoring_evaluation_progress

Particularly interesting are the contrasts between studies completed and recommendations adopted, such as those dealing with property and land rights policies. Benin: 15 studies, 0 reforms adopted. Nicaragua: 4 studies, 0 adopted. Mongolia: 2 studies, 0 reforms adopted. Total studies completed: 34. Total regulatory reforms adopted: 7. Hmmmmm.

The info graphics are well done—they’re a good way to communicate the work the MCC is actually accomplishing. Bill Easterly postulates that this new wave of accountability is a public relations gambit for the Bush administration initiative . Maybe so, but I’d like to see more like it.

Fresh off of her appearance on Colbert Report, DEAD AID author Dambisa Moyo was interviewed by Fastcompany’s Jeff Chu. Here’s some highlights…

FastCompany: Do you have an example of a country that has done well in the capital markets, where it has been a major component of its development?

Moyo: Ghana. Ghana has done well. It’s been against the wishes of the donor community. I saw a letter from the World Bank saying they shouldn’t go to the capital markets. It said, “It’s cheaper to borrow from us.” It’s cheaper in the financial sense, but the stigma associated with continuing to be a borrower from the World Bank as opposed to having a transparent credit rating where you can price your risk–it’s enormous. Nobody wants to invest in a basketcase. If you say, they’re dependent on aid from the World Bank, most investors will say thanks but no thanks.

FastCcompany: Another reader question: What one or two government policies are the biggest barriers to African economic independence?

Moyo: Dependence on aid. I’d actually call it an obsession with aid. South Africa is already a member of the G20, but they decided to invite three other representatives from Africa to speak on behalf of the continent. The whole thesis is, Give us more aid. They’ve got aid on the mind. It irritates me. We can be sympathetic for bailout aid: Eastern Europe has a balance-of-payments crisis and they’re asking for money. That’s fine. We understand that when the crisis is over they’re going to be going back to a free-market model. That’s not Africa. Africa is asking for an open-ended commitment with no cancellation. The other side of that is a lack of motivation to create an environment that’s conducive to investment.

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Restating the Case Against Aid

Jon Gosier —  September 7, 2008 — 6 Comments

In “Is Developmental Aid Stifling Africa’s Growth?” I presented Andrew Mwenda’s argument that the key to Africa’s future growth will be free trade and responsible governance, not developmental aid. It seems that this meme is getting more popular by the day.

The African Executive writes in “Aid: Losing Global Popularity?“…

The world seems to be warming up to the fact that free and open trade is better than aid. In the recent Turkish-African CSOs Forum at Istanbul, Prof. Ali Engin Oba (Ambassador Rtd. And Representative of TASAM Ankara office) observed that “it is now widely accepted that trade is better than aid.”

In another meeting where some 120 members of parliament drawn from different countries and regional blocs gathered in Nairobi for a seminar to discuss among other issues, aid effectiveness, Moses Wetangula, Kenya’s foreign minister said that African countries must shun aid dependency and embark on trade and harnessing of their resources. The meeting aimed at scrutinizing the role of parliament in donor negotiations as well as sensitizing parliamentarians in East and Central Africa on the Paris declaration in promoting development.

Members drawn from 100 countries now gathered in Accra, Ghana to review how effective aid is in helping developing nations deal with poverty seem to be warming up to the view that the answer lies in freeing up trade. A major World Bank report on growth and development in May observes that trade “is an important factor behind poverty alleviation.” Will trade soon take center stage?

and Arthur Okwemba’s piece, “Africa: Continent Tells Off Donors On Aid” states…

Delegates to an Aid forum in Accra, Ghana have accused donor countries of not being accountable on utilization of development funds.

Several speakers have said between 60 per cent and 75 per cent of the donor money do not get to the recipient countries, but remain in the donating country.

“You cannot demand or expect us to produce results or alleviate poverty when only 25 per cent of the donated money gets to us,” said Patrice Bemba, an official from the Democratic Republic of Congo Ministry of Finance.

He said a lot of the donor funds meant for programs to help uplift vulnerable groups such as women and children from poverty or manage diseases, end up as fees and salaries to experts from the donating country. Other monies are lost as overhead costs.

“Much of the aid remains in the hands of consultants and companies in Europe, America and Asia, or is just tied aid,” said Robert Fox, of Oxfam Canada and Head of Oxfam International delegation to Accra talks.

“Donors cannot run away from this fact when two thirds of the money goes back to their countries as technical assistance and transaction overhead costs and less than 20 percent gets to developing countries as aid,” said representatives from Catholic and Protestant participants at the Accra forum.

A Kenya government official, who sought anonymity, said at times the donors send highly paid experts from their countries to offer services even in areas that do not need such assistance or where the country has enough technical experts.

“If you raise this issue, they tell you provision of such services was part of the contract the government signed with them, and as an officer, there is nothing you can do.”

There is a growing sense that ‘cradling’ the African continent has made for little progress over the past thirty years. At least not enough progress relative to the amount of Aid being given. Meanwhile, increased investment from the Asias [1] [2] is helping to push an economic boom of sorts throughout the region. One simple matter of economics: aid is (by nature) not sustainable, free trade is. Despite the growing concerns over the lack of accountability tied to the funds acquired from trade with Asia, that trade is increasing and it’s changing the continent for better or for worse.

Where do you stand on the issue?

Thilo Thielke makes a bold statement in this recent piece from Spiegel Online: “No one has to starve in Africa. Hunger there results from the failures of unscrupulous rulers — and their friends in the West. Paradoxically, it is the aid workers who are standing in the way of progress.” Obviously, I wouldn’t have started Appfrica if I didn’t believe in the power of personal perseverance, free market competition and entrepreneurship. These things are hard to nurture in an environment where everything is handed to you before you ask. Thilo goes on to make a strong case against Aid programs and what he perceives to be the end result:

These developmental aid workers, whose reports largely shape our image of Africa, behave this way to a certain extent out of an instinct for self-preservation that they believe the Africans don’t have. Without help, they say, all the Africans will starve. And, indeed, without aid, all the helpers would also be out of a job.

And what happens when the help comes? First the merchants complain because the cost of food drops through the floor. Nor is it worth it, under the status quo, to build up any surplus stocks. Then, the farmers complain because their crops become worthless. The people who cozy up with the aid workers are the ones following better advice. You can get everything for free there and you don’t even have to lift a finger.

He’s not alone, you might remember that Andrew Mwenda passionately echoed this thought on stage in Jun 2007 at TED. He famously got into something of an argument with U.S. singer turned philanthropist, Bono who is well known for his efforts to champion aid program in Africa.

It really is an interesting dichotomy: the more aid, the less African governments have to do for themselves while the less intervention from outside nations the more unrest and civil conflict. Listen to Andrew Mwende speak below, listen to his argument and then post a comment.

http://static.videoegg.com/ted/flash/loader.swf

Tell us, what do you think?