Africa – Page 12 – artdiamondblog.com

“The More Sweatshops the Better”

JACQUELINE NOVOGRATZ, a veteran of the Rockefeller Foundation and a former consultant to the World Bank, talks enthusiastically about the development of a company in Africa where some 2,000 women earn, on average, $1.80 a day producing antimalarial bed netting. With the assistance of a $350,000 loan from an American investor, the business started making the nets nearly three years ago and is likely to add 1,000 more jobs within the next year.

”They’re in the process of building a real company town there,” Ms. Novogratz said.

Ms. Novogratz is not an outsourcing executive at a multinational company. Rather, she is the chief executive of the Acumen Fund, a philanthropic start-up based in New York that uses donations to make equity investments and loans in both for-profit and nonprofit companies in impoverished countries. One of the stars of her small portfolio is the bed-netting maker, A to Z Manufacturing, a family-owned company in Tanzania — a country where 80 percent of the population makes less than $2 a day.

. . .

”To put it in the baldest possible terms, the more sweatshops the better,” said William Easterly, professor of economics at New York University and author of ”The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good.” Professor Easterly is not advocating the deliberate creation of workplaces with miserable conditions. ”As you increase the number of factories demanding labor, wages will be driven up,” he said, and eventually such factories will not be sweatshops.

Ms. Novogratz says it can be difficult to tell well-off, philanthropy-minded Westerners that what Africa really needs is more $2-a-day jobs. But when they understand the alternatives, she said, such concerns tend to melt away. Before they found work at the netting factory in Tanzania, for example, many of the women were street vendors or domestic workers and earned less than $1 a day. A to Z’s wages place the women in Tanzania’s top quartile of earners, Ms. Novogratz said.

For the full commentary, see:

DANIEL GROSS. "ECONOMIC VIEW; Fighting Poverty With $2-a-Day Jobs." The New York Times Section 3, (Sunday, July 16, 2006): 4.

Buffett and Gates Should Strengthen Foundations of Free-Market

If Warren Buffett is as serious about doing good with his wealth, as he was in becoming wealthy, he would ponder the Wall Street Journal‘s sage editorial page advice:

We can’t think of two people less in need of our two cents than Messrs. Buffett and Gates. But since giving free advice is our business, we’d suggest that they put at least a smidgen of their money back into strengthening the foundations of the free-market system that has allowed them to become so fabulously rich. There’s something to be said for reinvesting in the moral capital of a free society and trying to sustain and export free-enterprise policies.

Capitalism has done very well not just by Mr. Buffett but also by the world’s poor, as several hundred million Chinese and Indians might attest. African nations in particular need property rights and a rule of law as badly as they need vaccines. On that score we were encouraged by a report this week that the Gateses thanked Mr. Buffett for his gift by presenting him with a book from their personal library: Adam Smith’s "The Wealth of Nations."

For the full editorial, see:

"Mr. Buffett’s Gift." The Wall Street Journal (Weds., June 28, 2006): A14.

Foreign Aid Is Harmful to African Countries: More on Why Africa is Poor

Source of book image: online version of WSJ article cited below.

As Robert Calderisi makes clear in "The Trouble With Africa," foreign aid is usually mismanaged, wasted or simply diverted to various precincts of the continent’s busy kleptocracies, subverting the evolution of normal markets.

Africa is by no means the only region in the world where corruption seems endemic. Paul Wolfowitz, the head of the World Bank, addressed the problem of corruption on a trip to Indonesia earlier this year. Even building a new baseball stadium in the Bronx can involve community-outreach efforts that might better be called payoffs. But Africa seems to find it especially difficult to set up a legal system that can enforce contracts and compel transparency.

Mr. Calderisi says more explicitly than anyone — except perhaps George B.N. Ayittey and the late British economist P.T. Bauer — that foreign aid is almost always harmful to the African counties that receive it. The fault, he notes, is not in the stars but in the behavior of Africans themselves, especially the leaders who have pocketed so much of the money intended for their citizens.

For the full review, see:

Roger Kaplan. "Bookmarks." Wall Street Journal (Fri., June 2, 2006): W7.

The full reference to the Calderisi book is:

Calderisi, Robert. The Trouble with Africa. Palgrave Macmillan, 2006. (249 pages, $24.95)

Kenyan Lawmakers Nearly Double Their Mercedes Mileage Allowances: More on Why Africa is Poor

The relatively modest vehicle of Francis Ole Kaparo, the speaker of Kenya’s National Assembly, contrasts with other Kenyan lawmakers’ "Mercedeses, Land Rovers and other typically sleek rides." Source of photo: the online version of the NYT article cited below.

NAIROBI, Kenya, May 21 — It has been a trying year in Kenya, one of the worst in decades, as a severe drought killed off crops and cattle and left millions with empty stomachs and uncertain futures.

In such suffering, members of Parliament have been roused to action as seldom before, finding common ground on an issue so pressing that they threatened to stonewall the budget until it was addressed: another big increase in their compensation.

The move last month to reward themselves in a time of crisis infuriated Kenyan voters, most of whom eke out a living on a fraction of what their elected officials earn. It also reinforced the notion that this was a political drought, one that owed its origins as much to mismanagement in a country that should be able to feed itself as to the vagaries of nature.

. . .

. . . , some say legislators have lost touch with the poor districts they represent. Per capita income is about $463 a year, which nobody here would expect a lawmaker to survive on. Minimum wage is $924 a year, still far too little, in most Kenyans’ view, for someone taking care of the nation’s business.

But the base compensation that legislators earn is about $81,000 a year, tax free, plus a variety of allowances and perks, which can effectively double their take-home pay. That means those public servants earn more than most Kenyan corporate executives and outstrip the salaries of many of their counterparts in the developed world.

"They are behaving like we are rich and as if there’s no famine and poverty in the country," Maina Kiai, the chairman of the Kenya National Commission of Human Rights, complained recently to the newspaper The Daily Nation. "They want to make as much money as they can."

The latest increase, which cost the country $2.78 million, nearly doubled the mileage allowances that lawmakers receive for their Mercedeses, Land Rovers and other typically sleek rides.

For the full story, see:

MARC LACEY. "Nairobi Journal; Crisis Swirls in Kenya, and Politicians Reward Themselves." The New York Times (Mon., May 22, 2006):

Mugabe’s Hyperinflation: More on Why Africa is Poor

(p. A1) HARARE, Zimbabwe, April 25 — How bad is inflation in Zimbabwe? Well, consider this: at a supermarket near the center of this tatterdemalion capital, toilet paper costs $417.

No, not per roll. Four hundred seventeen Zimbabwean dollars is the value of a single two-ply sheet. A roll costs $145,750 — in American currency, about 69 cents.

The price of toilet paper, like everything else here, soars almost daily, spawning jokes about an impending better use for Zimbabwe’s $500 bill, now the smallest in circulation.

But what is happening is no laughing matter. For untold numbers of Zimbabweans, toilet paper — and bread, margarine, meat, even the once ubiquitous morning cup of tea — have become unimaginable luxuries. All are casualties of the hyperinflation that is roaring toward 1,000 percent a year, a rate usually seen only in war zones.

. . .

(p. A11) Those with spare cash put it not in banks, which pay a paltry 4 to 10 percent annual interest on savings, but in gilt-edged investments like bags of corn meal and sugar, guaranteed not to lose their value.

”There’s a surrealism here that’s hard to get across to people,” Mike Davies, the chairman of a civic-watchdog group called the Combined Harare Residents Association, said in an interview. ”If you need something and have cash, you buy it. If you have cash you spend it today, because tomorrow it’s going to be worth 5 percent less.

”Normal horizons don’t exist here. People live hand to mouth.”

. . .

. . . , Mr. Mugabe’s government has printed trillions of new Zimbabwean dollars to keep ministries functioning and to shield the salaries of key supporters — and potential enemies — against further erosion. Supplemental spending proposed early in April would increase the 2006 spending limits approved last November by fully 40 percent, and more such emergency spending measures are all but certain before the year ends.

. . .

Hyperinflation is a cradle-to-grave experience here. The government recently announced that the price of childbirth, now $7 million, would rise 463 percent by October. Funeral costs are to double over the same period.

In rural areas, said one official of a foreign-based charity who declined to be named, fearing consequences from the government, even the barest funeral costs at least $6 million, or about $28.50 — well beyond most families’ means. The dead are buried in open fields at night, she said. Recently, she watched one family dismantle their home’s cupboard to construct a makeshift coffin.

”I’ll never forget that,” she said. ”The incredible sadness of it all.”

Critics say that Zimbabwe’s rulers are oblivious to such suffering — last year, Mr. Mugabe completed his own 25-bedroom mansion in a gated suburb north of town, close by the mansions of top ministers and military allies.

For the full story, see:

MICHAEL WINES. "Zimbabwe’s Prices Rise 900%, Turning Staples Into Luxuries." The New York Times (Tues., May 2, 2006): A1 & A11.

Ethanol Serves Agricultural Lobby

The U.S. imposes a 54-cent-a-gallon tariff on Brazilian ethanol, to discourage competition with domestic ethanol, which receives a 54-cent subsidy from taxpayers. The European Union just slapped new duties on Pakistani ethanol.

This should lay bare the fraud that what’s going here has anything to do with energy security. It has only to do with the agricultural lobby masquerading its interests behind foolish and misleading rhetoric about energy security.

Take the pressure for flex-fuel mandates, requiring auto companies to build cars capable of running on 85% ethanol. Unmodified cars can already burn fuel comprised 10% of ethanol. If we were honestly keen on diversifying supply and squeezing out imported oil, we’d throw open our dense coastal markets to ethanol producers in Brazil, India, Pakistan, Nigeria and Thailand, displacing perhaps 10 billion gallons of current gasoline use without any vehicle modification or taxpayer subsidy at all.

For the full story, see:

HOLMAN W. JENKINS, JR. "BUSINESS WORLD; What’s Wrong with Free Trade in Biofuels?" The Wall Street Journal (Weds., February 22, 2006): A15.

Missing the Boat: More on Why Africa Is Poor

Source of photo: online version of the NYT article cited below.

KHARTOUM, Sudan, Jan. 30 — Sudan’s government pulled out all the stops for the heads of state who swept into town for the African Union summit conference last week. Streets were scrubbed and welcome signs erected. Elegant new villas, outfitted with fancy linen and china, were put up along the Nile.

And then there was the fancy presidential yacht that was supposed to ferry the dignitaries up and down the river for evening soirees. Much like Sudan’s hopes of assuming the chairmanship of the African Union at the conference, though, the boat never materialized.
Even after the presidents had come and gone, the yacht was nowhere to be found. It was not on the White Nile, which flows northward from Lake Victoria. Nor was it on the Blue Nile, which swoops into Khartoum from Ethiopia.
But Ibrahim Khalfalla never lost sight of the hulking craft, which has two decks and is 118 feet long and 32 feet wide. He was the man charged with getting the boat from Slovenia, where it was built for an estimated $4.5 million, to Sudan, where President Omar Hassan al-Bashir planned to inaugurate it. And although he missed his deadline, Mr. Khalfalla said he did the best he could under the circumstances.
“This is difficult, so difficult,” he said, as the huge tractor-trailer that had been carrying the boat from Port Sudan to Khartoum by road inched close to its destination the other day. “You don’t know how difficult.”
It was actually rather easy to see how challenging a job this was. Even with the boat a mere 200 feet from the water’s edge, serious obstacles remained, like the building that the precious cargo struck while Mr. Khalfalla motioned wildly at the man behind the wheel of the truck.
As the yacht scraped against a brick wall, onlookers let out a groan. Soon workers were atop the boat, prying away bricks.
. . .
But even before the craft hit the water, it was taking on criticism from those who viewed it as an extravagant symbol of just how far removed the government is from the people.
Disparaged in newspapers as “Bashir’s boat” and a “million-dollar toy,” the craft, with its sophisticated satellite technology, elaborate presidential suite and dining facilities for 76 guests, left critics unimpressed.
The Juba Post, saying the government had “missed the boat,” called on officials to donate it to the Red Cross as a floating hospital ship. “Children scrounge for food in Khartoum North,” the paper said, not far from “the president’s expensive shipwreck.”
Another newspaper, The Khartoum Monitor, lamented that the government was using barges to take people displaced from the long war in the south back to their homes while the government imported a luxurious vessel for partying.

For the full story, see:
MARC LACEY. “Khartoum Journal: Sudan Leader Waits, and Waits, for His Ship to Come In.” The New York Times (Tues., January 31, 2006): A4.
(Note: ellipsis added.)

Source of photo: online version of the NYT article cited above.

Using a T-shirt to Tell the Story of Progress

Source of image: Amazon.com

The protests occurred on ”a cold day in February 1999.” Ms. Rivoli was watching as students gathered at the gothic centerpiece of Georgetown to demonstrate against the International Monetary Fund, the World Trade Organization, and other putative villains of international trade. The crowd, Ms. Rivoli noticed with characteristic acuity, had ”a moral certainty, a unity of purpose” that permitted it to distinguish black from white and good from evil ”with perfect clarity.” One woman seized the microphone and asked: ”Who made your T-shirt? Was it a child in Vietnam? Or a young girl from India earning 18 cents per hour? Did you know that she lives 12 to a room? That she shares her bed and has only gruel to eat?”
Ms. Rivoli did not know these things, and she wondered how the woman at the microphone knew. But she decided to find out. In the rest of her narrative, the author tells the story of ”her” T-shirt, which she purchased for $5.99 by the exit of a Walgreen’s in Fort Lauderdale, Fla. ”It was white and printed with a flamboyantly colored parrot, with the word ‘Florida’ scripted beneath.” A company in Miami had engraved the front, after buying the shirt from a factory in China. The Chinese manufacturer had purchased the cotton used to make the shirt from Texas. Eventually it will end up as part of a large but little-known market for used clothing destined for resale in East African ports.
. . .
By looking across history to the shifting center of textile manufacturing from Manchester, England, to Lowell, Mass., to South Carolina to Japan and, finally, the developing nations of Asia, Ms. Rivoli discovers a universal truth. Without making light of the horrors experienced by workers, she asserts that their jobs were a little better than other available options (usually farm work) and, what’s more, that textile factories led to advances in industrialization and, just as dependably, in living standards. It is not too much to say that she uses the T-shirt to tell the story of progress.

For the full commentary on Rivoli’s book, see:
ROGER LOWENSTEIN. “OFF THE SHELF; Travels With My Florida Parrot T-Shirt.” The New York Times, Section 3 (Sun., August 21, 2005): 7.
The book is:
Pietra Rivoli. The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade. John Wiley & Sons, 2005. ISBN: 0471648493

“Sachs Aid Model Has Financed Tyranny”: More on Why Aftrica is Poor

Famine in Niger is no surprise — desert wastes, locusts and decades of Marxist rule keep it second-to-last on the world poverty list. Famine in the fertile climes of southern and eastern Africa, however, seems more shocking. But there’s a common thread: centralized state rule — incompetent at best — marked by corruption and sustained by aid. These are the shackles that keep Africans poor: It would be nice if EU and U.S. trade barriers were removed at trade talks in Hong Kong this week, but exports are a distant notion to the 75% of Africans who live off the land.
Niger is little-blessed by nature, but it has also spent its postcolonial era trying various forms of failed government, with Marxism reigning longest. A quarter of the population — 2.5 million people — faces starvation. Yet more temperate southern and eastern African countries are on the edge of famine, too, with 10 million affected in southern Africa alone. Again, we find the same economic profile: Zimbabwe, Malawi, Zambia, Mozambique, Swaziland and Lesotho all lack economic freedom and property rights; all have economies mismanaged by the state; all depend on aid. All these countries have a history of utopian schemes that failed to produce everlasting manna. State farms, marketing boards, land redistribution, price controls and huge regional tariffs left few incentives or opportunities for subsistence farmers to expand. Despite torrents of aid, these cruel social experiments could not turn sands verdant or prevent the granaries of southern and eastern Africa from rotting.
Ethiopia’s Prime Minister Meles Zenawi believes that allowing Ethiopians to own their land would make them sell out to multinationals. He seems to have overlooked a basic market principle: It demands a willing seller and a willing buyer at an agreed price. If that price is worth selling for, the farmer might have some money to reinvest elsewhere; if that price is worth buying for, the purchaser must have plans to make the land profitable. If there is no sale, owners might have an incentive to invest in their own land and future, having, at last, the collateral of the land on which to get a loan. After decades of socialism, Ethiopia’s agricultural sector — the mainstay of the economy — is less productive per capita than 20 years ago when Band Aid tried to defeat famine. Although 60% of the country is arable, only 10% has been cultivated. Ethiopia is entirely dependent on donations; but instead of grasping reality, Mr. Zenawi, a member of Tony Blair’s “Commission for Africa,” is forcing resettlement on 2.2 million people.
In Zimbabwe, the murderous kleptocrats of Robert Mugabe’s regime deny that land seizure has pushed their rich and fertile country into famine: Some three million people face starvation today.
. . .
African leaders must be pushed to reduce economic intervention, free financial markets, remove bureaucratic obstacles to setting up businesses, establish property rights and enforce contract law. These are the forces that release entrepreneurial energy. But the ruling cliques will do none of these unless forced to do so as a condition of aid. The Sachs aid model has financed tyranny and corruption for 40 years, leaving Africans destitute. The world trade meeting in Hong Kong will hear cries for “Trade Justice” for Africa, representing more protectionism and more state-run, aid-fueled schemes. What we really need is economic freedom and the rule of law at home: We are perfectly capable of improving our own lot if only allowed to do so.

For the full commentary, see:
FRANKLIN CUDJOE. “The Terms of Trade: Africa Needs Freer Markets — and Fewer Tyrants.” The Wall Street Journal (Weds., December 14, 2005): A20.
(Note: ellipses added.)
(Note: The WSJ identifies Mr. Cudjoe as “director of Imani, a policy think tank in Ghana.”)

Researchers Want PhDs, “We want development”: More on Why Africa is Poor

Researcher asks Kenyans their reaction to a Western men’s health magazine. Image source: online version of article cited below.
(p. 1) LEWOGOSO LUKUMAI, Kenya – The rugged souls living in this remote desert enclave have been poked, pinched and plucked, all in the name of science. It is not always easy, they say, to be the subject of a human experiment.
. . .
(p. 6) Over the years, the Ariaal have had hairs pulled not just from their heads, but also chins and chests. They have spat into vials to provide saliva samples. They have been quizzed about how often they urinate. Sometimes the questioning has become even more intimate.
Mr. Garawale recalls a visiting anthropologist measuring his arms, back and stomach with an odd contraption and then asking him how often he got erections and whether his sex life was satisfactory. ” It was so embarrassing,” recalled the father of three, breaking out in giggles even years later.
Not all African tribes are as welcoming to researchers, even those with the necessary permits from government bureaucrats. But the Ariaal have a reputation for cooperating — in exchange, that is, for pocket money.
. . .
The Ariaal have no major gripes about the studies, although the local chief in Songa, Stephen Lesseren, who wore a Boston University T-shirt the other day, said he wished their work would lead to more tangible benefits for his people.
”We don’t mind helping people get their Ph.D.’s,” he said. ”But once they get their Ph.D.’s, many of them go away. They don’t send us their reports. What have we achieved from the plucking of our hair? We want feedback. We want development.”
For the full story, see:
MARC LACEY. “Remote and Poked, Anthropology’s Dream Tribe.” The New York Times, Section 1 (Sun., December 18, 2005): 1 & 6.

Ethiopian Comparative Advantage Squandered through Graft and Corruption: More on Why Africa is Poor

The source for the image of the book is: http://nasw.org/users/markp/grounds.html

One theory of how countries acquire a comparative advantage in a commodity ties the comparative advantage to some natural resource, climate or other "endowment" advantage the country has. This partially ‘explains’ some comparative advantages, but leaves many others unexplained (like why Japan has a comparative advantage in cars).

But even on the endowment theory’s own terms, it would seem that an initial comparative advantage can be squandered. Consider Ethiopia, which is the country in which coffee beans were first discovered, many centuries ago.

(p. 153) . . . Ethiopia, the birthplace of coffee, now exported a negligible amount of the bean, largely due to graft and corruption extending from King Menelik down to the country’s customs agents, . . .

(King Menelek II ruled Ethiopia from 1889 until his death in 1911.)

The quotation is from:

Pendergrast, Mark. Uncommon Grounds: The History of Coffee and How It Transformed Our World. New York: Basic Books, 2000.