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USAID Book Club: A Farewell to Alms

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As part of USAID’s Fall Semester, we will host an online book club for our readers this fall. The Impact Blog will post suggestions from our senior experts at USAID to suggest a book on important issues in international development.  We’ll provide you and your book club with the reading suggestions and discussion questions, and you tell us what you think! Our fall reading list will  explore solutions to the most pressing global challenges in international development—mobile solutions, poverty, hunger, health, economic growth, and agriculture.

This week’s choice comes from: USAID Administrator Rajiv Shah

Dr. Rajiv Shah serves as the 16th Administrator of USAID and leads the efforts of more than 8,000 professionals in 80 missions around the world.

Dr. Rajiv Shah serves as the 16th Administrator of USAID and leads the efforts of more than 8,000 professionals in 80 missions around the world.

Book: A Farewell to Alms: A Brief Economic History of the World, by Gregory Clark

Synopsis: The source of human progress has long been a subject of debate. What makes rich countries rich, and poor countries poor? In the this book,  University of California, Davis, Economist Gregory Clark offers a provocative take on the age-old question, arguing that it was culture—rather than geography, natural resources or centuries of exploitation—that left some parts of the globe behind.

According to Clark, relative stability and effective workforces enabled certain societies to take better advantage of the Industrial Revolution’s new technologies and opportunities. Those countries with lax systems or undisciplined workers lost ground, and stayed there.

Clark’s book is skeptical of whether the poorest parts of the world will ever achieve real progress. For development professionals, it offers up a challenge to the belief that outside intervention can help bridge the vast economic divide between rich and poor.

Review:  This book impacted me because it shows how for hundreds, or even thousands, of years basic economic progress was largely stagnant. You didn’t have rapid compound increases in living standards until the Industrial Revolution when some countries and some societies got on a pathway towards growth – towards better health, longer life expectancy, higher income per person and more investment in education. Others remained on a slower-moving pathway.

That great divergence, and the study of it, is at the core of development. It is that divergence that we try to learn from and correct for. We define success in development as helping communities and countries get on that pathway towards improved health and education, and greater wealth creation.

I didn’t choose this book because I think it is the definitive story on development, but rather because I share its focus on core economic growth as the driver of divergence.

I disagree where Clark concludes that some societies failed to take advantage of the availability of modern technology because their cultures were antagonistic to development. With the right conditions in place, you can unlock a formidable work ethic from a range of different cultures and communities. The last 50 years have shown us that. By investing in local capacity and local institutions, we can leave a legacy of economic infrastructure, strong and capable leadership, and transparent, effective public and private sector institutions.

USAID’s partnerships in Latin America helped country after country develop strong institutions. The same can be said for South Korea. Unfortunately, there have been examples where aid and assistance have been provided in a manner that was not as sensitive to building lasting local capacity and institutions. This is true for all partners, not just our Agency. That’s why we’ve launched a program called USAID Forward, to refocus on working in a way that will create durable and sustained progress.

Administrator Shah is on Twitter at @rajshah. You  can also “Ask the Administrator” your questions on Crowdhall

Discussion Questions

1. Do you agree with Clark that some societies failed to take advantage of the availability of modern technology because their cultures were antagonistic to development?

2. The Nobel prize-winning economist Robert Solow has said Clark does not take into account how institutional factors, such as cronyism, inequitable taxation and ineffectual government cripple development. What role do you think these institutional factors play?

3. Clark challenges how effective outside intervention can be in helping poor nations progress. Do you agree?

4. Regardless of why some nations have fallen behind, how do you think they can bridge that gap today?

5. Has your world view changed after reading this book and how?

Get Involved: Use the comments section of this blog post to share your answers, or tweet them to us at #fallsemester

Taking PRIDE in Putting Local Wealth to Work

On a crowded street in the Kariakoo District of Dar es Salaam it is easy to overlook the unassuming building that houses PRIDE Tanzania’s local branch. Nestled among endless shops and lost amongst the excitement of the day’s activity, the largest of PRIDE’s 58 branches is modest and nondescript. It isn’t until you step inside the orange stucco walls that you are able to understand what makes this building more remarkable then the rest.

In the branch’s waiting area, you are immediately hit with an atmosphere of activity. Hundreds of Tanzanian entrepreneurs have come for their weekly check-in with one of the country’s most effective and innovative microfinance institutions, PRIDE Tanzania. PRIDE, which stands for Promotion of Rural Initiatives and Development Enterprises Limited, also happens to be supported by a USAID credit guarantee which has helped it maintain and increase microcredit activities.

This particular branch services over 2,000 clients a day, some of whom travel for hours to meet with their lending groups and pay back the next installment of their loans.

Gertrude used a local microfinance loan, made possible thanks to a USAID guarantee, to open a second clothing and shoe store in Tanzania. Photo credit: Mike Muldoon, USAID

As someone lucky enough to engage with these entrepreneurs, I was immediately struck by the drive and charisma with which they approach their businesses (in addition of course to the charm that all Tanzanians naturally possess). While intrigued by their visitor and more than willing to share their stories, they are clearly anxious to complete their meeting and get back to what brought them here in the first place – their businesses.

Just a short distance down the road I was able to visit some of these businesses firsthand, starting at Fatema’s print shop. A client of PRIDE for over six years, Fatema started her business as a one-person operation with a $3,000 loan. Fatema now has four employees, was able to buy a plot of land for her home and can afford to send her children to school. Recently becoming an agent for the popular M-PESA mobile banking service, Fatema’s business continues to grow, as evidenced by the $11,400 loan she recently received.

Deeper into the Kariakoo market, I met Gertrude, the owner of two local clothing and shoe stores. Formerly on her own, Gertrude recently opened her second store, employs four employees and is able to source her products from suppliers throughout the region – greatly reducing her input costs and boosting her profits.

This trend continues for the rest of the afternoon, for Fatema and Gertrude are just two of the thousands of entrepreneurs that PRIDE supports through its micro-loan products.

One of the things that makes PRIDE special is its relationship with USAID’s Development Credit Authority (DCA). DCA uses risk-sharing agreements known as credit guarantees to mobilize local financing in developing countries.

In 2010, PRIDE utilized a guarantee from DCA to support a bond offering, the first of its kind for a microfinance institution in Tanzania. The guaranteed bond enabled PRIDE to raise $10,000,000 from local capital markets. As a result, PRIDE vastly expanded its portfolio and the number of borrowers it supports. This activity is part of a much wider effort by the U.S. Government to stimulate local capital markets in Tanzania.

Meeting these individuals firsthand, both the borrowers and the staff of PRIDE, reinvigorated my drive to provide them with the local capital they desperately need to grow their businesses, provide for their families and develop an economy that is supported entirely by the local community.

Fly-Tying Deals Bring Sweet Success

I grew up along the swampy shores of Lake Victoria in Western Kenya, where fish is our favorite meal.

When I travel home to my village, over 300 miles from Nairobi, I enjoy watching rural family members hook worms or other insects to a fishing line before casting it out into a local stream and reeling in tilapia, trout, catfish, mudfish, and more.

But around Lake Victoria, villagers fish for food and income—not for fun. It amuses them to think that people might fish as a hobby.

At a recent USAID event though, I met an entrepreneur named Carol Mbutura who showed me that some Kenyans also make a good living from this hobby—supplying lures to the leisure-fishing industry. Carol was showing off a large display of dainty, hand-tied fishing flies created in Kenya and destined for overseas markets.

I knew there was a story here: Fly-tying is not a traditional Kenyan craft.  How on earth did Carol get into the fly-tying business?

She told me the cottage industry dates from the 1930s when a young Englishman came to Kenya to recover from a broken back. Mad about fishing, he taught some local Kenyans to tie fishing lures. They then started selling to British settlers—for catching trout imported from Britain, which still inhabit highland streams today.

More recently, an American company called Flydeal began buying flies from Kenya.  Carol Mbutura had developed a shipping company based in Nairobi—and Flydeal hired her to send the products to the United States.

Keeping up quality and production numbers from 10,000 miles away, however, proved increasingly difficult. So four years ago, the Flydeal asked Carol to step in, manage production, and become a business partner.

USAID has helped Mbutura and other African entrepreneurs take advantage of the African Growth and Opportunity Act (AGOA), which allows duty-free imports of some African products to the United States. In 2011, training provided by USAID AGOA Resource Centers has sparked millions of dollars in new trade deals, which benefit both U.S. and African businesses and spur economic growth.

With Carol to supervise, sales have grown several times; Flydeal now provides jobs for approximately100 full-time and 50 part-time Kenyan workers in ten factories around Nairobi.  Together they produce 7,000-8,000 dozen of lures a month. The company sells mainly online and exports worldwide, though United States is the primary market.

The delicate but tough, hand-made lures resemble little creatures that fish might eat: flies of course, but also frogs, tiny fish, baby mice, cockroaches, grasshoppers, butterflies, mosquitos… Recently, the factories have begun making jewelry, too, from the feathers, beads, and wires used for lures.

Carol’s advice for other would-be entrepreneurs:  “With your own work you must have patience, perseverance and tolerance; don’t ever quit if someone lets you down, be it a customer or supplier.”

Next time I visit home, I’m going to bring some Flydeal flies with me. I want to see if Kenyan fish go for them—and what my cousins say about using these artsy artifacts instead of an old-fashioned worm.

Developers for Development: The Evolution of the Food Security Open Data Challenge

Geeks, Coders, Hackers, Developers, Computer Scientists, Technologists- whichever term you choose, people with technical acumen have proven to be some of the most prolific volunteers for social good.  It is not hyperbole to state that on any given weekend, in nearly every major city around the world, volunteers can be found gathering together to create products that benefit education, security, economic, and other social interests. Participants cobble together the vision, team, the code, and the experts over 48 hours, and present themselves for judging by Sunday evening.  These gatherings are dubbed “hackathons,” “codeathons” or “codesprints” and they have found success: out of the Disrupt Hackathon, which is hosted by TechCrunch and connects developers and entrepreneurs, the Docracy team formed to make legal and business documents more free and accessible, and went on to raise $650,000 over the next year to expand its operations.  StartupWeekend, a hackathon targeting entrepreneurs, claims hundreds of new startups including Reddit, a widely popular user-generated news aggregator.  In 2010, the State Department and iHub launched the Apps4Africa challenge  to connect local developers and global mentors to local NGOs to learn and solve local problems.  The winner, iCow,  is a successful mobile-phone application that tracks cows’ hormone cycles to inform better breeding, milk production, and nutrition information to Kenyan dairy farmers.

Indian woman arranges a display of grains and seeds at Millet Fest 2012, in Hyderabad on March 24, 2012. The three day event aims to promote use and increase knowledge of the nutritional benefits of millet seeds when used as part of a daily diet. Photo Credit: AFP

If you’re not familiar with the hackathon model, you’re not alone.  Government engagement with the tech community, though expanding, is limited.  And though hackathons bring together widely diverse communities to contribute their time and expertise to solve problems, they are not a flawless solution.  Rare is the startup that can convene and be commercially viable in 48 hours.  To increase the impact of the products of these hackathons, and ensure that those volunteering their time are doing so wisely, we have to improve on the existing model.

Enter White House Chief Technology Officer Todd Park, and his bold concept for public sector improvement of the hackathon model to connect developers directly to the people who will ultimately use their product, and to incubate solutions to be attractive to investors.  Under his model, weekend sessions are stretched across at least ninety days and buttress the hackathon with brainstorming and planning session weeks prior and an incubation period of the successful products for weeks following.  He outlines this model as an endeavor of the White House’s “Open Data Initiative” and, following on the successful implementation at HHS, has taken it to various other agencies including the Department of Energy, Department of Veterans Affairs, Department of Education, and USAID. Through his leadership, each agency has taken up the mantle of instituting their own open data initiatives.

USAID is  building its first data initiative around food security, and I encourage anyone who is curious to get involved.  All backgrounds and interests are welcome; participants need not be an expert in food security nor in software, a willingness to contribute to the efforts of innovative solutions and commercially viable products is all that’s required.  Writers, designers, networkers, and creative thinkers from all walks are welcome.  As access to information increases globally, so does the potential for innovation and great ideas to be borne and fomented across borders.  USAID is convening a global community to engage more directly with those who are willing to volunteer their time and expertise to the cause of development, and who want to work together to “hack” new and creative solutions to long-standing development priorities.  Just yesterday, Secretary Clinton observed “Data not only measures progress, it inspires it.” At USAID we want to build and support the platform for those who are inspired to create and sustain lasting progress.

For more information and to participate, visit agrilinks.org/openagdata and contact OpenAgData@USAID.Gov

With a Little Help from the Crowd, USAID Increases Government Transparency

At USAID we’re fortunate to work on an incredible mission. But it’s an impossible one to achieve on our own. That’s why we’re always looking for creative ways to engage new problem solvers and develop new partnerships.

One of the best ways to engage the public is to open up our data. Set it free. Make it accessible. By opening up seemingly boring reams of spreadsheets to outside analysis, we have an opportunity to discover new trends, opportunities, and yes, inefficiencies.

In March, Administrator Shah wrote about how effective aid is transparent and accountable aid. This June, we took this commitment one step further when USAID’s GeoCenter and Development Credit Authority (DCA) hosted the Agency’s first-ever crowdsourcing event to open and map loan guarantee data.

Crowdsourcing is a distributed problem-solving process whereby tasks are outsourced to a network of people known as “the crowd.” Without the staff or resources to comb through 117,000 loan records on our own, we turned to the crowd for help in opening our data to the public.

The idea that the public would be willing to volunteer their time to geocode data – that is, to pinpoint the location of USAID loan guarantee activities – raised some eyebrows.  Yet what we anticipated would take an entire weekend sorting through 10,000 hard to identify data points, only took 16 hours thanks to an incredible outpouring of support from the online volunteer communities Standby Task Force and GIS Corps. Social media tools helped bring many more people to the virtual table.

Ultimately, volunteers wanted to meet like-minded people, plug into USAID, and make a difference. And they did. DCA utilizes partial credit guarantees to encourage private financial institutions in developing countries to lend their own money for local development. The released data represents an anonymized 117,000 loans made by these institutions thanks to risk-sharing agreements with the U.S. Government.   While this data was extremely valuable, we couldn’t map it until all of the location records were standardized.

With the release of DCA’s data and associated map, entrepreneurs in developing countries can discover existing lending facilities in the sectors in which they work, USAID Missions can analyze guaranteed loans across borders for a more complete picture of development impact, and  donors can overlay their guarantee data onto USAID’s to increase future opportunities for collaboration. These are just a few of the immediate impacts of opening up our data.

This event also marked the first time that data.gov was used as a crowdsourcing platform.  And thanks to partnerships with private companies like Socrata and Esri, we were able to customize the event at no additional cost to the Agency. By thinking outside of the box, we were able to put existing tools to use in new and innovative ways.

The complete dataset, associated map, and case study can all be accessed on USAID’s website.  These materials were presented at the Woodrow Wilson Center for International Scholars on June 28th and available via livestream.

We invite you to explore the data, draw your own conclusions and add your analysis.

We’ll continue to explore unique ways to engage the public in our work.  Development isn’t something that happens overnight. But with increased transparency, we can start working together to solve development challenges in a more efficient – and fun – way.

Celebrating the 150th Anniversary of the Morrill Act

Dr. Rajiv Shah serves as the 16th Administrator of USAID and leads the efforts of more than 8,000 professionals in 80 missions around the world.

Dr. Rajiv Shah serves as the 16th Administrator of USAID and leads the efforts of more than 8,000 professionals in 80 missions around the world.

Today we celebrate the visionary leadership of President Abraham Lincoln in signing the Morrill Act 150 years ago.  Even as our nation prepared to enter one of the most brutal and challenging periods of its existence, President Lincoln demonstrated a powerful understanding that America’s success would depend on investment in the agricultural development of its new frontier. His foresight led to the creation of the most productive science- and engineering-based agricultural economy the world has ever seen. The new U.S. land-grant system democratized American access to education, graduating young scientists and engineers who have continued to transform the American economy through generations as no other single investment has.

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Video of the Week: A Visit to Candlenut Farmers

This week’s video comes from our USAID Mission in Timor-Leste. USAID works with candlenut farmers and their communities to teach them how to increase yields and reach new markets.

Powering Energy to Face the Challenges of World Hunger

Feeding the world’s hungry and access to energy are typically viewed as separate development goals. But it is becoming abundantly clear to those of us here in Rio de Janiero at the UN Conference on Sustainable Development (RIO+20) that they are intertwined. The facts speak for themselves:

  • An estimated 850 million people go to bed each night hungry;
  • The world population grows by 77 million people each year, and by 2050 the population will be an estimated nine billion;
  • To meet this demand, global food production must increase by 70 percent by 2050.

PoweringAg, USAID’s new Grand Challenge, invites ideas and innovation on powering up energy in developing countries. The effort is expected to help women with 43 percent of the world’s farmers estimated to be female.

To feed nine billion people, we will need to increase food production on the land already growing today’s food supply, and access to sustainable energy is key.

The magnitude of the challenge is illustrated in Sub-Sahara Africa (SSA) where only fourteen percent of people in rural areas have access to electricity.  Post-harvest losses have risen as high as fifty percent in SSA, but with the introduction of cold storage, refrigerated transport, and business models to store produce could dramatically reduce levels of hunger. 

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Pressures on the Plundered Planet

Director, Centre for the Study of African Economies, Oxford University

Director, Centre for the Study of African Economies, Oxford University

Paul Collier, Professor of Economics at Oxford University, spoke earlier today at USAID’s Frontiers in Development Forum, and will speak again tomorrow morning. Below is an excerpt from his contribution to the Frontiers in Development essays.

As the world economy grows, it increasingly faces natural constraints. These provide both new opportunities and new risks for the poorest countries; managing them well will be central to their exit from poverty. These were the themes of The Plundered Planet. Here I bring out some of the key current issues. Industry needs natural resources, for energy and material inputs, but many of the natural resources we use for these purposes have a fixed endowment, which we are depleting. A growing global population needs food, and food needs land, but land suitable for agriculture is finite.

Both industry and agriculture emit carbon dioxide into the atmosphere, but the stock that can be safely absorbed by the atmosphere is finite, and as it builds up it gradually changes the climate. How concerned should we be about these constraints, and what do they imply for development?

I think that the concerns about industrialization grinding to a halt because of shortages of vital natural-resource inputs are misplaced. As any particular resource becomes depleted, its price rises. In turn, this induces fresh investment in prospecting and so furthers discoveries, and ultimately research into innovation. This has happened so many times across such a wide range of activities that we can be fully confident of it. The past decade of rising prices for natural resources has already triggered these waves of investment. Currently, by far the highest-valued natural resource is carbon-based energy, from oil, coal, and gas. The high prices of the past decade have triggered an astonishing wave of new technologies that enable us to tap into endowments that were previously inaccessible: The United States has already discovered enough additional resources through these new technologies to be self-sufficient for several decades. Beyond technology-based discoveries are technology-based
substitutes: For example, in the 19th century, nitrates were considered vital and finite; then we discovered modern fertilizers.

Similarly, the global population will not face hunger because of land shortages. There are still huge areas of grossly underutilized fertile land; beyond that are drip-feed and greenhouse technologies that open up lands that are currently too dry or cold. Nor will we face a stark choice between energy shortage and overheating. Although global supplies of carbon-based energy are finite, there are many non-carbon sources of energy waiting to be developed. Indeed, modern physics tells us that the endowment of other forms of energy is infinite: The challenge of permanently sustained energy supply is entirely technological, and we can be confident that innovations will be forthcoming. But although we are not facing a natureimposed Armageddon, natural resources, climate, and food are interconnected in ways that pose new opportunities and new risks for the poorest developing countries.

Read the full article in USAID’s Frontiers in Development publication.

Broadband Partnership of the Americas

Eric Postel is the Assistant Administrator for USAID’s Economic Growth, Agriculture, and Trade Bureau. 

President Obama, while attending the Summit of the Americas in Colombia, announced a new Broadband Partnership of the Americas (BPA), with a focus on expanding access to the Internet.  This Partnership is the first region-wide extension of the Global Broadband and Innovations (GBI) program, originally launched by USAID in the fall of 2010.

Within the international development community there is growing recognition of the value of information and communication technologies (ICTs) in advancing economic growth, and in enhancing the delivery of health, education, agriculture, and other services.  For that reason, ICTs are essential to achieving several of the Millennium Development Goals (MDGs) and MDG Goal 8: Develop a Global Partnership for Development has a target of making available new technologies, especially information and communications. In 2005, the United Nations World Summit on Information Services (WSIS) established ten priority ICT-related targets.  Of these ten targets, “connect villages” is the first.  2010 data show progress against this target with mobile subscriptions reaching just under 70 percent of the population in developing countries, and the Internet reaching just over 20 percent.  Clearly there is more work to be done, however.

A key component for leveraging ICTs within USAID’s development portfolio is expanding access of both mobile and broadband networks.  While much progress has been made, three constraints remain.  First, there is still a rural population of more than one billion people who do not have mobile coverage.  Second, most of the mobile networks put into place during the last decade are capable only of voice and text, but do not support full Internet access.  And third, there is the issue of affordability. Even where networks are available, pricing is often beyond the reach of the lower-income populations that are often the focus of USAID’s programs, especially in rural areas where connection costs are high.

The GBI program is addressing these constraints by providing technical assistance to universal service funds (USFs).  USFs are created from taxes placed on telecommunication carriers for the purpose of supporting rural build-outs.  In addition, the GBI is working with private sector equipment manufacturers and carriers to deploy innovative, affordable and scalable solutions appropriate for small, rural communities.

The most exciting aspect of the new Broadband Partnership of the Americas announced by the President, from my perspective, is the fact that it focuses on the Americas — that is, on countries in our own hemisphere.  It builds on earlier successes and melds the expansion of telecommunications with clean-energy solutions.  BPA also pulls together a rich partnership of local and international public and private sector entities with a specific focus.  This approach, especially in our hemisphere, underscores once again that working together we can make a difference.

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