Week 14: Women and Equality

The Convention on the Elimination of All Forms of Discrimination against Women was adopted by the UN General Assembly in 1979. This international bill is often described as a bill of rights for women. CEDAW defines what constitutes as discrimination against women and sets up an agenda for national action to end such discrimination.

PYKYeFgWjBCuwnu-556x313-noPad

By accepting the Convention, States commit themselves to undertake a series of measures to end discrimination against women in all forms, including:

  • to incorporate the principle of equality of men and women in their legal system, abolish all discriminatory laws and adopt appropriate ones prohibiting discrimination against women;
  • to establish tribunals and other public institutions to ensure the effective protection of women against discrimination; and
  • to ensure elimination of all acts of discrimination against women by persons, organizations or enterprises.

The Convention is the only human rights treaty, which affirms the reproductive rights of women and targets culture and tradition as influential forces shaping gender roles and family relations. By signing this treaty, state parties also agree to take appropriate measures against all forms of trafficking women and the exploitation of women.

The gaps that still exist among men and women include multiple different aspects of life. Women have a harder time finding leadership opportunities if employed. Men are more likely to get paid more for doing the exact same job as women, or even less work than what a women would be expected to do. There are also many lost opportunities for educating women compared to men. In sub-Saharan Africa, 81% of boys were enrolled at primary school during 2005-2009, compared to only 77% of girls (UNESCO Institute for Statistics – UIS).

Though many governments are committed to providing equal education for girls, in practice girls are more likely to drop out of school than boys.

The reasons for girls’ lower enrollment in primary and secondary schooling include:

  • the tendency of poor families to spend available money on the education of boys, because males are viewed as the future breadwinners
  • the expectation that girls will carry out domestic and household work
  • the pressure in some cultures for girls to marry young, particularly where they are seen as an economic burden on families
  • the lack of separate toilet facilities for girls in many schools.

Health challenges are also something women have to deal with versus men. Because women are expected to take care of the household, this makes them more likely to be around illness, since they are the caretakers. This is also why there is such a widespread problem with the Ebola virus effecting women. The ladies in Sub-Saharan Africa do not know the proper ways to protect themselves from catching the virus, and therefore more likely to catch it.

SIERRA-LEONE---WHO-Ebola-poster-(200)

Another health issue affecting African women includes genital mutilation. This causes long term damage and raises the risk of complications during childbirth. Childbirth is also an issue among the young women in Africa who are married off while they are still teenagers. The United Nations Children’s Fund (UNICEF) estimates that two-fifths of all African girls are married before the age of 18. In some countries the proportion is much higher. For example, in Chad and Niger, a third of young women (20-24) said they were married by the age of 15.

Polices that need to be implemented in order to sustain gender equality is a much bigger issues than the law. Yes, there can be more laws in place, but the activity taking place in these countries towards women needs to be more closely monitored. The punishment for acting violent towards women should be more publicly displayed, and the current members in power need to implement these equality laws. As more African women are becoming elected in positions of power I think there is hope for the inequality to stop. This is a long-term goal that must be consistently worked on in order to reach the results women deserve.

After watching the YouTube video, I learned that maternal health, lack of legal rights, and illiteracy create hardship for girls in Chad for economic empowerment. In southern Chad, women are stepping out and undertaking a variety of entrepreneurial projects, including a restaurant.

Some other challenges women face is that the female labor force has remained lower than the male participation even though women make up a little over half the world’s population. If women are employed in paid work, they are overrepresented in the informal sector among the poor. Senior positions and entrepreneurship still remains low among women.

According to Women, Work, and the Economy, there is ample evidence that when women are able to develop their full labor market potential, there can be significant macroeconomic gains. Another benefit society would gain from allowing women to achieve their full economic viability would be because of the better opportunities for women to earn and control income, they can contribute to broader economic development in developing countries, for instance through higher levels of school enrollment for girls. Equal access to inputs would raise the productivity of female owned companies.

Advertisements

Empowering Women

The social importance of empowering young girls in Africa is an issue that needs a lot of focus. In general, there are many issues with gender equality in the world today, especially Africa. Women are much more likely to be poor and illiterate compared to men. There are many opportunities that women cannot receive the benefits of, like owning their own property, credit, training and employment. In order to achieve gender equality, we need to look at the opportunities, education, power and influence and financial independence that are granted to men, and emphasize those same rights for women. Empowering women will benefit the overall feeling of worth, the women’s families and will continue to affect the future generations once favorable changes are made.

Key issues that are addressed when dealing with the empowerment of women:

  • Reproductive health
    • Allowing women to plan their families and fertility will lead to success. Women that don’t have the option of controlling their reproductive health is an issue that can and will hinder the opportunities available in order to reach gender equality.
    • Complications during pregnancy or childbirth is the number two killer of women of reproductive age.
  • Economic empowerment
    • Six out of 10 of the world’s poorest people are women.
  • Educational empowerment
    • 2/3rds of the worlds illiterate adults are women
    • Higher education for women leads to infant mortality and lower fertility, as well as better outcomes for their children.
  • Political empowerment
    • Men occupy the majority of positions in legal and political authority
    • Only 22% of women make up the parliamentary positions
    • Most laws against domestic violence are not enforced on the behalf of women

ActionAid USA is one of the many organizations that is working towards empowering women as a global movement. ActionAid has been working in Africa for over 40 years. Key themes in the work they accomplish include:

  • HIV/AIDS prevention
  • Care and treatment
  • Peace building
  • Famine relief and food rights
  • Education

in2eastafrica.net_wp-content_uploads_2011_10_actionaid

A current issue that ActionAid is dealing with is the Ebola outbreak in Sierra Leone. Many of the caretakers in the community are women, which makes them the most vulnerable to catching the virus. Because the literacy rate is so poor in this area, ActionAid is taking the next step with an awareness campaign so women know more about the disease and what to do when they come in contact with the virus. Educating these women is an important part of the campaign due to the educational challenges that are common throughout the entire population in Sierra Leone. Only 25% of women are literate, and 37% of the entire population is literate. Most of the strategies for the protection and empowerment of young women are done by non-for-profits. ActionAid is working with community leaders and partners knocking on everybody’s doors in two districts Bo and Kono, where ActionAid sponsored children live in order to spread the word and educate the community. They are also spreading the message on the radio through discussion groups and playing jingles. Here is an example of a jingle they have been using: Our jingle says: “don’t eat bush meat, wash your hands constantly with chlorine, and avoid direct contact with body fluids like blood, saliva, vomit, stool, semen, vaginal fluids and urine”

I think this campaign is effectively spreading the word about the dangers and threats of the Ebola virus. The ActionAid community is overcoming the literacy challenges in creative ways and I believe that progress will be made in educating and empowering the women of Sierra Leone.

Eastern and Southern Africa continues to have the highest number of young HIV-infected people between the ages of 15 and 24 out of all regions. The total number of infected girls and young women that age is more than twice as high as among their male counterparts – 1.9 million compared to 780,000.

UNICEF works in partnership with the UN Population Fund, UNESCO and the World Health Organization to empower adolescent girls and boys to take informed decision about their sexuality. These interventions offer young people gender-specific, age-appropriate information on HIV and the steps they can take to prevent infection including:

  • delayed sexual debut
  • correct and consistent condom use
  • mutual faithfulness
  • the reduction in age difference between partners as well as in the number of partners
  • the use of testing and counseling services for HIV and other sexually transmitted illnesses

UNICEF has been developing a program to educate young women from the ages of 15-17 called Sister to Sister. This intensive 3-day risk reduction education is organized in schools in Malawi, Tanzania, Lesotho and Namibia. The girls will be learning this new material outside of their normal school schedule.

UNICEF

The issues in Nigeria are caused by the Boko Haram in Chibok, who have kidnapped 276 school girls that were preparing for their final exams last April. More than 200 have remained missing. There have been multiple false alarms about getting the girls safely home to their families. The current leader of Nigeria, Goodluck Jonathan, has made no progress on the issue. The Boko Haram just made a public statement saying they have converted the girls to Islam and have been married off. There has been reported sightings of the girls, but none have been found.

Women and Equality

Women have often been marginalized from the workforce. This is occurring because women, as a group, make up over half of the world’s population, but their contribution to measured economic activity, growth, and well being is far below its potential leading to serious macroeconomic consequences.

Women are also treated like they are insignificant because:

  • Women account for most unpaid work
  • Female labor force participation has remained lower than male participation
  • When women are employed in paid work, they are overrepresented in the informal sector and among the poor
  • The salary earned by women is far less than a male who is completing the same tasks
  • In many countries, the paid work options for women are slim
  • Literacy rates for women lag those of men

Women are also marginalized in the workforce because of the way their role is viewed in the family structure. In many societies women are seen as the one responsible for raising the children, cleaning, cooking and taking care of the household. The male is viewed as the worker, who will go out and seek work.

d9bcb667c5

Changes that could be made in order to increase female contribution to the workforce positively can start in so many different areas. Equal access to inputs would raise the productivity of female owned companies. If companies owned by women were allowed equal access to these resources, the productivity gap between the male and female owned companies would be decreased. Employing women on an equal basis would allow companies to seek out different options for the talent pool and allow more opportunities, which could potential increase growth. Another change that could be made would be to remove the disincentives for secondary earners in households. This would encourage women to find work outside of the home without worrying about any financial consequences. In general, women are offered fewer opportunities just because of their gender.

Sudan is the country I am choosing to focus on for the final project. Women presence in the workforce has been consistent. For the past four years only 31% of women are involved in the workforce, with no real improvement.

suda-MMAP-md

Unemployment in the Sudan particularly affects young people and women. For young women, the unemployment rate is 44.8% and for adult women it is twenty eight percent. However, 52% of health workers in the Sudan are female, which is not a good reflection of the overall participation of women in the workforce at 25.5%.

Female labor force in the Sudan was at its highest value over the past 21 years with 28% in 2011, and the lowest value was 25.80% in 1993.

Sudan is also one of the two countries in the MENA region, other than Iran, that has not ratified the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW). The formal legal system in Sudan does not grant women equal rights to men in matters of personal marriage, inheritance and divorce.

I believe that micro financing women in order to allow them to start up their own business, and make money for their family can eventually have a positive impact. This allows them to be self-sufficient and provide for their families and communities. However, there needs to be proof of economic development and growth. In the certain cases where growth is prevalent, micro financing can be successful.

Giving the poor an opportunity to prove themselves as entrepreneurs can and will improve the economic status of these countries. These loans create opportunities for the communities to learn a new business, make their own money and support their family without asking the village leaders for help. Because there are so many problems in Sub-Saharan Africa with corruption and discrimination against women, I think it is important to stay involved and support the idea of micro loans. The system does need improvement, but in the long term the idea can generate success and jobs.

img_2911-1-3

South Sudan currently utilizes the benefits of micro loans. Finance Sudan Limited currently operates in South Sudan. It was established in 2006 by the American Refugee Committee. The mission of Finance Sudan Limited is to contribute to the economic rebuilding and stabilization of South Sudan by providing quality financial services to low-income borrowers through sustainable microfinance with a national scope. The targeted group is comprised of small-scale traders, produce dealers and salaried workers. However, the market in the South Sudan is highly underdeveloped when dealing with micro financing.

Three types of loans are offered through Finance Sudan Limited:

  1. Group loans (FSSL Group Loan & Nuswan/Women Development Loans) that are administered through the group guarantee system.

    2. SME loans offered to small and medium-scale businesses with formal collateral.

    3. Salary loans offered to employees at reputable organizations operating in South Sudan.

Week 11: A Focus on Poverty Aid through Mobile Technologies

Out of the forty three countries that have adopted the Yunus’ Grameen Bank model, I have chosen to take a closer look at Ghana and Kenya.

They Grameen Foundation has been working with Ghana Health Service since 2008. Some improvements they have contributed is to the maternal and neonatal care in rural communities through mobile use. The program they are specifically using is called the Mobile Technology for Community Health initiative (MOTECH). MOTECH reaches out to the users by providing information on sexual reproductive health to youth and information on farming techniques and weather reports to smallholder famers.

cropped-new-motech-banner-2-1-11

MOTECH was developed in 2009 with the help of Columbia University’s Mailman School of Public Health. Funding for the program was provided from the Bill and Melinda Gates Foundation.

Two applications were developed:

  • The Mobile Midwife Application
  • Nurses Application

The Mobile Midwife Application enables pregnant women, new mothers and their families to receive SMS or voice messages that provide time-specific information about their pregnancies and child care each week.

The Community nurses utilize the Nurses Application to collect patient data and upload records to a centralized database, which helps track the care of their patients and identify those who are due for care.

These applications are available in five languages in four regions of Ghana. Expansion planned for this program is supported by the Saving Lives at Birth Partners: United States Agency for International Development (USAID), the Government of Norway, the Bill & Melinda Gates Foundation, Grand Challenges Canada, and the World Bank. I would consider the donations from these organizations as an example of microlending.

In Kenya, the mobile technology they have taken advantage the e-warehouse initiative that is used to improve access to financial services and information on agriculture. A mobile based system is also being developed to help smallholder maize farmers properly store their crops post-harvest, and connect them to financial services and markets for final sale. The e-warehouse initiative is in collaboration with the Grameen Foundation and Farmers Concern Internation with support from USAID.

Musoni Kenya is an example of a microfinancing institution that provides fully automated, mobile phone-based banking services. Musoni Kenya is currently being expanded into the rural areas of the country.

The M-PESA system is helping Kenya lead the world in mobile money. It was a program launched in 2007 by Safaricom, the country’s largest mobile-network operator. Twenty five percent of the country’s gross national product flows through this.

indeex

M-PESA allows people to:

  • Transfer cash by using their phone
  • Offer loans and savings products
  • To disburse salaries or pay bills

KIVA is active in the Sub Saharan Africa in Kenya through the SMEP Microfinance bank for the past 68 months. Their focus in Kenya is anti-poverty, family and community empowerment, client voice, facilitation of savings and innovation through technology. Uganda also utilizes KIVA through the UGAFODE Microfinance Limited for the past 35 months. The focus in Uganda is anti-poverty, client voice, facilitation of savings and innovation through technology.

index

Three interlinked staged Moyo talks about in Chapter 10:

  • Economic plan which reduces a country’s reliance on aid
  • Choose a finance alternative
  • Strengthening of institutions
    • Accountability and transparency

Sachs’ proposal is different from Moyo’s because it includes the idea of Enlightened Globalization through these nine steps:

  • A commitment to ending poverty-halving poverty by 2015 and ending extreme poverty by 2025
  • Adopt a plan of action
  • Raise the voice of the poor
  • Redeem the role of the US in the world
  • Rescue the IMF and the World Bank
  • Strengthen the United Nations
  • Harness a global service
  • Promote sustainable development
  • Make a personal commitment

Poverty abroad can hurt Western economies through the impact of war, disease and corruption. Just this past year there was an Ebola scare in the United States. If there was more help with these suffering countries, the spread of disease would be less likely. The impact of HIV/AIDS also affects the Western nations. Even though the disease is a much greater problem in the SSA, the prevention of spreading the disease in any area should be a top priority for any nation. Corruption also affects the Western areas because of the responsibility the United States, in particular, feels to involve themselves and stop the wrong doings that are occurring in nations like Libya and the Middle East.

Esther Duflo talks about social experiments used to fight poverty.

This video talks about the mobile technology currently being used all over Africa called Health eVillages

Week 9: Sachs’ vs Moyo

In Chapter 15 of The End of Poverty, Sachs’ suggests that the wealthier nations help out the countries in extreme poverty. He states that the cost now is likely to be small compared to any relevant measure—income, taxes, the cost of further delay, and the benefits from acting. Sachs’ explains that the tasks can be achieved within the limits that the rich world has already committed: 0.7 percent of the gross national product of the high income world, a mere 7 cents out of every $10 in income. I do agree with him. I think that it is important for the wealthy to help out the poor. The amount of money it would cost is so minimal, that it should be expected for the privileged people to help out those in need. The world needs to work together in order to fight off the current problems and help to reach the Millennium Development Goals.

MDGs

Yes, I think that his suggestion is sustainable. However, I think there would have to be an outline of exactly how much the rich would have to donate, and a possibility for growth in the developing countries. It would be difficult to convince some of the wealthier parties because people in the world can be greedy and less likely to share the wealth. In order to have a convincing argument, an ample amount of information would need to be presented in an orderly way specifically pointing out the details of the future plans. Once this is achieved, the wealthy would continue to donate until sustainable growth can be measured in the suffering countries.

The country I am focusing on is Zambia. Their main needs consist of other social infrastructure and health and population. The United States is by far the largest donor to this country.

logooecd_en

In 2003-2010 time period, Zambia had the highest annual average poverty rate at 68.5%.

However, Zambia has had strong growth in the last decade and the country has reached lower middle-income status. Even though the country has made positive steps towards economic growth, 60% of the nation still lies below the poverty line and 42% are considered to be in extreme poverty.

In Chapter 16, Sachs’ mentions “myths and magic bullets.” These myths include:

  • Money down the drain
  • Aid programs would fail in Africa
  • The absence of democracy leads to corruption in Africa
  • Africa lacks modern values
  • Market economies outperform centrally planned economies, Africa needs economic freedom
  • The AIDS pandemic has led to long standing assumptions about sexual licentiousness and irresponsibility in Africa that has led many to presume that a crisis of culture and morality lies at the core of Africa’s problems
  • Helping Africans would lead to a population explosion
  • The remaining problems of extreme poverty will take care of themselves because economic development spreads everywhere
  • Social Darwinist myth, holds that economic progress is the story of competition and survival of the fittest

I have heard of these myths, and learned more in depth about them as I advance in this course. I agree with his evaluation of the myths. I think these are reasons that the population is coming up with in order to make an excuse as to why more help isn’t being offered to Africa. Sachs’ states that eliminating poverty at the global scale is a global responsibility that will have global benefits, and I think this sums up the defense to all of these myths.

images

Thinking globally refers to the fact that not one country alone can help achieve the goals we have to fight against poverty. Everyone needs to be aware of the problems going on in Africa, and we need to world together in order to improve the situation occurring in the impoverished nations. A myth that would combat these conventional rich world wisdoms about Africa that could be counteracted by thinking globally would be that extreme poverty will take care of themselves because economic development will spread everywhere. Because this “rising tide” does not reach most countries in Africa, due to being land locked, it makes it much harder for them to create sustainable growth. These countries will need some amount of help initially in order to improve their current situations. We can achieve this by thinking globally. We need to be more aware of the situation and geographic location of these African countries in order to make progress in economic growth. The countries that are not in poverty can help them out by making more opportunities to export and import goods to and from these landlocked areas.

In Dead Aid, Moyo identifies objections about China’s involvement on governance and human rights. She mentions the Western liberal consensus, who believe that it is their responsibility to look after Africa. The underlying political fear that China will use Africa as a stepping stone on relentless march towards world aggrandizement was also mentioned. China’s record on governance and human rights, and the suggestion that Africans are getting a raw deal. However, the Chinese trumped a World Bank deal for aid to Nigeria by providing $9 billion dollars in order to improve the railroads. In nearly all African countries surveyed, more people view China’s influence positively. I think China’s approach to invest with no strings attached is productive in the short term, but these developing countries need to know they are being held accountable for these donations. The developing countries need to understand that this is not going to be something they should depend on, and should make sure they are using their resources correctly in order to create sustainable growth on their own.

News_Approf_04_Detail_img1_Eng

Week 8: Poverty in Africa

Sachs’ poverty reduction strategy plans mentioned in The End of Poverty, seemed to all have commonalities. The two countries I am focusing on are Ghana and Uganda.

Ghana’s Poverty Reduction Strategy (GPRS)

Ghana has pursued several programs to accelerate the growth of the economy. In 1995, the government presented “Ghana: Vision 2020,” aimed at making Ghana a middle-income country in 25 years. Vision 2020 focused on human development, economic growth, rural development, urban development, infrastructure development, and an enabling environment. It was followed by the Ghana Poverty Reduction Strategy. One of the main challenges to economic growth is the unemployment problem. The recent discoveries of oil and gas create tremendous opportunities for stimulating national development.

Ghana_Vision_2020

The plan Ghana is currently pursuing is called the Better Ghana Agenda. in the contexts of the constitutional requirement and the Better Ghana Agenda, the GSGDA is anchored on the following themes:

  • Ensuring and sustaining macroeconomic stability;
  • Enhanced competitiveness of Ghana’s private sector;
  • Accelerated agricultural modernization and natural resource management;
  • Oil and gas development;
  • Infrastructure, energy and human settlements development;
  • Human development, employment and productivity; and
  • Transparent and Accountable Governance.

32690028_732387

Uganda’s Poverty Eradication Action Plan (PEAP)

The PEAP has guided the formulation of government policy since its inception in 1997, and is currently being revised. Under this plan, Uganda is being transformed into a modern economy in which people in all sectors can participate in economic growth. This implies a number of conditions:

  • The economy requires structural transformation, including the modernization of agriculture, the development of industries, which build on demand and supply linkages from agriculture, and continued institutional development in the legal and financial sectors.
  • Poor people must be able to participate in this growth, both by expanding smallholder agriculture and by increasing employment in industry and services.
  • Economic growth must be sustainable, high quality and broadly based.
  • The non-material aspects of poverty must be addressed; participatory studies have shown that insecurity, illness, isolation, and disempowerment are as important to the poor as low incomes.

Uganda’s Poverty Eradication Action Plan (PEAP) is established on four major pillars:

  • Creating a framework for economic growth and transformation
  • Ensuring good governance and security
  • Directly increasing the ability of the poor to raise their incomes
  • Directly increasing the quality of the life of the poor.

index

Both plans with these nations seemed hopeful for their future as a developing country. In each plan, it is explicitly mentioned that these two nations can and will work their way out of poverty. As Sachs’ mentions in the reading, these plans lay out the country’s goals, targets, policies and strategies to cut poverty.

According to Moyo, Africa is addicted to aid. However, the market for African countries to issue bonds exists, but only for those countries serious intent on transforming their economies for the better. In 2007, emerging market bonds returned some 35% and JP Morgan’s EMBI+ index of such bonds performed better against American government bonds by 15%. Over a longer timeframe—say an 18 month to two year window—experienced portfolio managers can make significant returns averaging 25-30% per annum. Choosing to invest in the bonds of relatively underdeveloped economies instead of home bonds has paid off. The evidence of ten countries suggest that investors made high returns on bon lending to foreign countries than in safer home governments; despite the former’s wars and recessions, foreign bondholders got a net return premium of .44 percent per annum on all bonds outstanding at any time between 1850 and 1970. This also enhances portfolio diversification.

Dead Aid also states that emerging market debt has the advantage of being counter-cyclical to the developed business cycle, since, in a global recession, poor countries can find it cheaper to repay their debts. As global interest rates decline, which often occurs on the back of a global economic slowdown, the debt service costs for poor countries goes down.

Moyo mentions that as countries mature they may choose to reduce the number of bonds they issue in the international market in favor of domestic bond issues or relying on domestic savings and tax. South Africa is one example. Over time, as its issuance of international bonds declined, its position in the JP Morgan EMBI league table fell and eventually it was dropped.

Since 2003, fifteen African countries have obtained credit ratings, including Lesotho, all of which have rating high enough to tap the bond market.

Moyo states that in order for a country to receive an FDI the labor costs are low, its investable opportunities are high, and even theoretically, as home to some of the poorest countries in the world, Africa should be FDI’s natural suitor.

Lesotho is committed to private investment and generally open to foreign direct investment (FDI). The country does not have a specific FDI policy. The policy instruments guiding FDI are the Companies Act of 1967, updated by the Companies Act of 2011, as well as various sector-specific pieces of legislation. These covered mining, tourism, and the industrial sector, with a particular focus on textile manufacturing. The lack of strong local entrepreneurs has meant the government of Lesotho (GOL) has received no pressure to exclude foreign investment to the advantage of local investors. Therefore virtually all business sectors are open to foreign investors that are screened in a routine, non-discriminatory manner. No government approval is required, and there are almost no restrictions on the form or extent of foreign investment beyond the ownership of small-scale retail and services businesses, which are restricted to domestic ownership only. No foreign ownership, or even board directorship, by a non-citizen is permitted at any level in these restricted businesses. These restrictions on small-scale services and manufacturing businesses are instruments of immigration control. Lesotho is sensitive to the entry of small business owner-operators from abroad, especially from China and West Africa. Controlling such businesses is a means of controlling economic migration. Residents and non-residents may hold foreign exchange accounts with some restrictions. Some payments and transfers are subject to prior government approval and limitations. Many capital transactions face restrictions or quantitative limits.

Week 7: Dead Aid

Dead Aid states the four alternative sources for funding for African economies according to Moyo are foreign direct investment, international trade, microfinance and sovereign and private bond markets. In Lesotho and Zambia the best option would be to microfinance. International trade is difficult for these countries because of the international tariffs and seeing as they are both land locked.

dead-aid1

The Washington Consensus refers to a set of broadly free market economic ideas, supported by prominent economists and international organizations, such as the IMF, the World Bank, the EU and the US.

Essentially, the Washington consensus advocates, free trade, floating exchange rates, free markets and macroeconomic stability.

The ten principles originally stated by John Williamson in 1989, includes ten sets of relatively specific policy recommendations.

  1. Low government borrowing. Avoidance of large fiscal deficits relative to GDP;
  2. Redirection of public spending from subsidies (“especially indiscriminate subsidies”) toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment;
  3. Tax reform, broadening the tax base and adopting moderate marginal tax rates;
  4. Interest rates that are market determined and positive (but moderate) in real terms;
  5. Competitive exchange rates;
  6. Trade liberalization: liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by low and relatively uniform tariffs;
  7. Liberalization of inward foreign direct investment;
  8. Privatization of state enterprises;
  9. Deregulation: abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudential oversight of financial institutions;
  10. Legal security for property rights.

The Washington consensus was important for determining policy towards economic development in Latin America, South East Asia and other countries. Some implications of the Washington consensus.

Moyo is alluding to Bono when she quotes a critic of the western aid model saying “my voice can’t compete with an electric guitar.” In this section of the book, she refers to this type of aid as the agenda of the 2000s, glamour aid. In the new millennium, crusades like Jubilee Debt Campaign capitalized on people’s desperate desire to be a part of something that would give aid and development policy another dimension. This paved the way for the army of moral campaigners—pop stars, movie stars, new philanthropists and even Pope John Paul II. However, it is scarcely seen that any policymakers in Africa are charged with the development portfolio or to offer an opinion on what should be done in order to save the continent from regression.

Rwanda’s President Kagame’s remark about geopolitical rivalries is in context of post second world war economic interests, much of this aid was spent on creating and sustaining client regimes of one type or another, with minimal regard to developmental outcomes of the continent.

Aid is not working in Africa. According to Moyo, one argument, advanced by geographical determinists such as Jared Diamond, is that a country’s wealth and success depend on its geographical environment and topography. Certain environments are easier to manipulate tan others and, as such, societies that can domesticate plants and animals with relative ease are likely to be more prosperous. At a minimum a country’s climate, location, flora, fauna and terrain affect the ability of people to provide food for consumption and for export, which ultimately has an impact on a country’s economic growth. Diamond notes that all societies and cultures have had approximately similar abilities to manipulate nature, but the raw materials with which they had to start were different.

Dead Aid also states that the historical factors, such as colonialism, have often been put forward as explanations for Africa’s underachievement; the idea being that colonial powers delineated nations, established political structures and fashioned bureaucracies that were fundamentally incompatible with the way of life of indigenous populations. Colonialism forced traditionally rival groups to live together under the same flag, which makes building a nation difficult.

  • The Berlin Conference is an example of this
    • In 1885, the gathering of 14 nations produced a map of Africa littered with small nations whose arbitrarily drawn borders would make it difficult for them to stand on their own two feet—economically and politically

africa2

Democracy is a solution suggested by Moyo in Dead Aid. She states that democracy is seen as Africa’s economic salvation, erasing corruption, economic cronyism, and anticompetitive and inefficient practicing, and removing once and for all the ability for a sitting incumbent to capriciously seize wealth. Democracies pursue more equitable and transparent economic policies, the types of policies that are conducive to sustainable economic growth in the long run. Lesotho would benefit from changing to a democracy, but Zambia is already a republic.

Sachs refers to the poverty trap as the people who are currently in that state has no opportunities for growth and are stuck in the social class with not many solutions. A poverty trap makes it impossible for sustainable growth. He suggests using the ODA in order to break this problem. Moyo states that aid is not benign—it’s malignant. No longer part of the potential solution, it is part of the problem—in fact aid is the problem.

51z4bqcsU7L._SL300_