Should AGOA Be Expanded?

Former Assistant Secretary of State for African Affairs, Jendai Frazer, had an op-ed in the Wall Street Journal last week discussing Hilary Clinton's recent trip to Africa.

She applauds Secretary of State Clinton for visiting the strategically important countries of Kenya, South Africa, and Nigeria. She also welcomes Mrs. Clinton's emphasis on women's rights -- a message most clearly expressed near the Rwandan border with Congo in the city of Goma. But, Ms. Frazer is less satisfied that the trip did much to advance "core" US interests: promoting economic growth and trade, combating terrorism, and improving governance.

She offers four policy initiatives that would help to "translate the rhetoric of love into policies that advance the mutual U.S. and African interests." I'm only going to discuss one of her recommendations, which is this: do not extend AGOA trade preferences to a small subset of developing nations that includes some south Asian and some Islamic nations. Ms. Frazer argues: "extending the same trade preferences to hypercompetitive Cambodia and Bangladesh—each of which individually exports more apparel to the U.S. than all of sub-Saharan Africa combined—will undermine the program's success in Africa." Here's a link to the proposed legislation that would expand the trade bill -- it's currently in committee.

But note that the success Ms. Frazer identifies is based on playing favorites. Maybe African producers should be favored over Bangladeshi producers, but on what grounds? A different version of this question would be: "why should African manufacturers be shielded from competition from other developing world producers?"

A policy of favoritism is problematic is because it encourages investment in less competitive African industries. Duty-free products have a "leg up" in the marketplace: they can be sold for a lower price than can products that have an import duty/tax. What Ms. Frazer is saying is that if you take the tariffs off Bangladeshi or Cambodian apparel American consumers will prefer them (because they're now cheaper) and buy more of them which means we'll buy less African-made apparel. This may be true for clothing, but Africans will have an advantage in other industries (eco-tourism, solar energy, telecom) and it is into these industries that investment rand, naira, schillings, etc. should flow if African apparel manufacturers are truly less competitive.

Is protectionism a strategy for creating sustainable economic growth in Africa? No, it's a strategy in which short-term gains in employment and export opportunities are traded for longer-term growth in the form of truly competitive industries. Are there different policies the US could adopt to help promote economic growth and development in Africa? A couple of things: end or limit our own agricultural subsidies to encourage developing-world farmers to compete with US farmers, expand AGOA rules to allow more processed agricultural products to come into the US duty/quota free, and continue to encourage African governments to reduce intra-regional trade barriers. These steps, coupled with much-needed improvements in governance, will help spur economic growth and development in Africa -- promoting favoritism will not.

- Karol

Notes from the Field: Training Value of Making Toast

This past Sunday all six of our Orphans of Rwanda interns, plus our two Rwandan staff and current Princeton volunteer, crowded into my living room to participate in a training of trainers on lesson planning. The goal was to get them thinking about how to make training curricula engaging for the cooperatives through solid planning and participatory techniques. Our interns had asked for this training because they want to become better trainers for the cooperatives—something I find particularly admirable given that these are 20-30 year old college students with full class and activity schedules.

The basis of participatory training methodology is ‘tell, show, do’, wherein you encourage participation by minimizing lecturing and encouraging interaction, demonstration and active engagement. One of the activities I use to demonstrate this technique involves assigning small groups to design and carry out a training on totally random skills. In my experience this focused the participants on the training techniques as opposed to the substance of what is being trained.

This Sunday I chose ‘making tea’, ‘using a toaster’ and ‘operating a remote control’ as the skills to be taught. The groups enthusiastically engaged with the activity, excited to employ the new training techniques. That is, until I heard a small giggily murmur arise. As it turned out I had committed culturally insensitive training faux pas # 1-- few of our interns actually knew how to use a toaster. However, instead of making this a stumbling block to our overall objective, they cheerfully assigned our Rwandan staff member and Princeton volunteer, along with one brave intern, to develop the training. The group scampered off to the kitchen in search of ‘training tools’ (i.e. bread) to be used for their session.

I was a bit nervous about how this activity would work out—given the apparent weakness of my original intent. With this group I needn’t have worried. As the group dutifully moved through the steps ‘tell’, ‘show’ and ‘do’, the rest of the interns crowded around the toaster—full of questions and comments about toast production and eager to have a go. We all had a laugh and emphasized the importance of ‘do’ in the steps of training when one intern failed to toast and another reminded him of the importance of plugging in the toaster before operation.

The next group, assigned ‘making tea’ gave me a lighthearted taste of my own cultural ignorance when they decided to use a faux charcol stove for their training. (faux given my desire not to burn down my living room) They accurately predicted that I had never used a charcol stove. It was my turn to realize the value of the training steps ‘tell’, ‘show’, ‘do’ as I became the demonstrative guinea pig on the effectiveness of their training.

During our debrief the feedback the interns gave was particularly thoughtful precisely because they measured their and my understanding post-training as part of the evaluation. Many of them thought they could actually make toast post training—from setting the time dials to unplugging the unit before stuck toast removal with a fork. To their minds this made it a relatively effective use of ‘tell’, ‘show’, ‘do’.

I used my own experience with ‘making toast’ to explain that good trainers are always learning and adapting to their training environment. As a trainer you often learn more from your trainees than they do from you—especially if they are engaged and excited about what they are learning. This past Sunday our interns made my cultural faux pas into an opportunity to make the training even more effective. At Indego Africa we are lucky to have such innovative and enthusiastic youth working together to train our cooperatives. They build the program's sustainability and commitment to using local systems. And now they know how to make toast.

- Amity

TED and Development

I love the TED series, it's like an incredible university that's totally open access. It enables interesting, wildly creative people to share their ideas and makes them (the ideas/people) accessible via the internet. Multidisciplinary -- there are great talks on technology, philosophy, art, economics, and science -- and accommodating many visions and viewpoints, TED is an amazing marketplace of ideas.

In case you haven't experienced TED yet, go here. There are quite a number of talks on development topics (look under Global Issues). Among the most popular are Hans Rosling's talks (very engaging).

More recently, economist Paul Romer spoke on the idea of charter cities, which is creating a buzz in some development circles. And here's an older talk by Paul Collier on helping the Bottom Billion.

Just poke around -- see what they've got (among other things my GMU colleague Alex Tabbarok on economic crises) -- I'm sure you'll find something of interest.

- Karol

Cashing In: Transfers to Alleviate Poverty?

Most people would agree that official development assistance (transfers from one government or multilateral aid agency to another government) has failed to live up to its expectations. While there are some aid projects that have helped people on the ground lead better, healthier lives, overall, with billions of dollars spent over the past 6 decades, too little progress has been made eliminating poverty in the developing world.

And so, the debate about what might work better continues. Here's a story about a new effort in Namibia to alleviate poverty by providing small direct cash grants to every person in a particular town in the eastern part of the country. The loans are non-conditional, so different from the well-known Bolsa Familia program in Brazil, which require parents who receive the payments to keep their children in school and get them vaccinated, among other conditions. Here's a BBC story describing the Brazilian program.

In Namibia, a group of NGOs have joined forces to supply funding for every person in the village of Otjivero. Each villager (rich or poor) receives 100 Namibian dollars a month to do with as they wish. While some skeptics predicted an increase in alcohol consumption and crime, what's reported is that some of the recipients have started small businesses (such as bakeries), others are sending their children to school or improving their homes. These are the sorts of things people do when they receive remittances from family and friends, so it's not surprising they do similar things with these transfers. Interesting to me, the new entrepreneurs who are interviewed for this story are women -- not sure what the men are up to :-)

Are cash transfers a better form of aid? If managed effectively they do at least get money into the hands of the poor but they also raise concerns: will politicians use them to influence voting? do they create unhelpful incentives? and are the programs scalable? To sound an old note, without a reasonably stable and secure institutional environment (which Namibia has) they're unlikely to be a new silver bullet.

(HT: Jennifer Zambone; the photo is one of mine from near Swakopmund, Namibia.)

- Karol

Interview with Chair of Chicago Regional Board

Casey Brazeal of the blog North and Clark recently conducted a wonderful interview with Indego Africa's Chair of the Chicago Regional Board, Josh Lebowitz (far left in photo), about Indego Africa's mission and model. You can listen to the interview here:

North and Clark interview with Josh Lebowitz

Since February 2009, Josh has lead a passionate team in Chicago, not only hosting a wildly successful kick-off event in June, but also planning yet another great event in Chicago next week (LEARN MORE HERE).

And speaking of Regional Boards . . . are you or anyone you know in the LA or San Francisco area interested in helping us expand our ground-breaking Regional Boards to the West Coast? If so, simply visit this link: Regional Board Expansion.

- Ben

New Legal Form for Social Enterprises

Illinois recently passed a law that will allow for-profit companies that primarily pursue social enterprise goals to incorporate under a new form: as a a limited-liability, low-profit company or L3C. The "low-profit" terminology means that the pursuit of profit is not the primary function of the company. Here's a description of the form from Gene Takagi's Nonprofit Law Blog and a later post from the same blog on more recent developments. There's a good deal of info about these on the web, especially in blogs.

Rather than relying the sale of goods or services and on donations from foundations and other charitable givers that meet program-related investment rules for giving to for-profit operations, an L3C would be a vehicle for such charitable givers to more easily invest in appealing ideas that have the potential to make a profit. This funding wouldn't be tax deductible, as charitable gifts are, but having an L3C option would help foundations to spend the 5% of endowment that they are required by law to pay out each year. The key idea is that this incentive, and structure, would attract more financial support for such ventures.

In this story, I learned that Vermont, Wyoming, Utah and North Dakota already have L3C laws. Legislation is pending in several other states. In Vermont, more than 60 companies are registered.

- Karol

Need Your Vote for Fair Trade Photo Contest!

First things first, after a year-long application process which included essays, surveys, letters of recommendation, interviews, and countless emails, Indego Africa is now a proud member of the Fair Trade Federation. More on this in a subsequent post.

In the meantime, we are now able to enter the First Annual Fair Trade 2010 Calendar Photo Contest. We have submitted five Indego Africa photographs that "relate to the theme of Fair Trade and accurately reflect the ideals and mission of the Fair Trade movement." The 12 photographs in the contest with the most votes will be featured in the Fair Trade Federation's 2010 Calendar, distributed worldwide.

We're getting in somewhat late in the game -- voting ends in 4 days! -- but I think we can come from behind as long as you take two minutes to cast your vote! (It literally just takes two minutes). You can vote for up to five photos (conveniently), so please vote today!

CLICK HERE TO VOTE FOR INDEGO AFRICA'S SUBMISSIONS.

Thank you for your support! (And please share with your friends!)

- Ben

Property Rights, Conflict & Rwanda

Some critics have argued that one of the main driving forces behind Rwanda's 1994 genocide was extensive conflict over land (Jared Diamond is one example, in his book Collapse). Rwanda is extremely densely populated and very poor. As families in Rwanda grew, children had less and less land to farm. Because 90% of the country was involved in agriculture (and still is) this made it exceptionally difficult for people to sustain themselves by farming. So, to put things bluntly, people might have engaged in violence during the genocide in order to get access to scarce land held by their neighbors (I take issue with this interpretation here).

The role land conflict played in the Rwandan genocide is debatable. Less debatable is the importance of property reform after conflicts. In fact, one of the most important policy reforms a post-conflict government can undertake is to try to clarify rights to land: rights to own, use, inherit, and dispose of land. In Rwanda, the government has owned most of the land for the past century (both colonial governments and post-independence governments). Now, the country is trying to move towards a policy of creating clearer, more individualized rights to land. This is a contentious, problematic process generally and will be in Rwanda also given how many people moved around, into, and out of the country between 1959 and 1994.

This week, the Rwandan government launched a program, funded by the British government, to create a database that clarifies who has rights to which land. There are so many metaphorical landmines involved in a project like this but hopefully, it will help accomplish several worthwhile goals: (a) clarify rights (b) encourage the development of a more formalized land market and (c) increase incentives for investment and entrepreneurship. On the other hand, a poorly executed project will entrench elites, limit the ability of women to use and protect land, and exacerbate conflict. Only time will tell.

- Karol

Creating More Opportunities Under AGOA

This week the news out of Africa is focusing on the 8th annual AGOA conference, just coming to an end in Nairobi.

This story captures the main messages of Secretary of State Hillary Clinton: the need to improve and expand intra-regional trade; the need to improve the climate for doing business in Africa (which includes strengthening governance and the rule of law); the desirability of more bilateral trade agreements with African countries, as well as a focus on improving opportunities for Africans to export agricultural products.

AGOA is the African Growth and Opportunity Act. It was passed under the Clinton Administration and designed to create positive incentives for Africans to export more to the US. To date, the Act has been a disappointment. Although African exports to the US have tripled, just over 90% AGOA imports are oil and petroleum products. The idea was that expanded trade would help develop a more vibrant and competitive private sector in Africa. But because African governments ultimately control sub-surface minerals such as oil, and because oil production often generates substantial conflict (as in Nigeria), the boost in African exports helps oil-producing governments most -- not local entrepreneurs -- and helping these governments is, by no means, the same thing as helping citizens on the ground.

How might this problem be addressed? As this story from the Kenyan paper Business Daily makes clear, African countries and their industries need to become more competitive. But, in addition, the US could make it easier and less costly for Africans to export agricultural products that compete with protected US-produced commodities such as sugar. Or, allow more value-added/processed ag products into the US duty free. Currently, US peanut growers, sugar farmers, dairy and beef farmers face less competition than they otherwise would if AGOA's duty-free provisions were extended to these products; same with canned fruits or cocoa that has been processed with sugar.

Secretary of State Clinton is absolutely correct that more expansive intra-regional trade is essential for economic growth in Africa. But there's still also a good deal the US government can do to make it easier for Africa's farmers to compete in our markets.

- Karol

Indego Africa in The Forecaster

Many thanks to Perry Newman -- the President of Atlantica Group (a fantastic international business consulting firm based in Portland, Maine) -- for penning such a generous column about Indego Africa. Enjoy!

"Global Matters: From Raymond to Rwanda," The Forecaster, by Perry Newman (July 27, 2009)

The unstoppable father-son duo, Matt and Tom Mitro, inspecting a plateau basket at Covanya.

(Click here to read more Indego Africa media features!)

Creative Communities: Art Aiding Development?

This story from The Economist describes a new project in Uganda: the Ruwenzori Sculpture Foundation has commissioned the building of a bronze foundry to provide a new home for African sculptors. In its early stages, the project is designed, at least in part, to "improve the quality of sculpture in Uganda and elsewhere in Africa." Here's a related article by one of the founders of Ruwenzori.

Philanthropists in the west have supported artists for centuries as patrons or as donors to foundations. Much less of this kind of support is available in Africa -- not surprising given that donors who focus on the continent are naturally drawn to projects that meet more immediate needs such as famine relief, health care, and improved sanitation.

But much of what appeals to the rest of the world about Africa is its art: music, textiles, dance, and sculpture. Can this demand help to spur development? Globalized markets increasingly bring the rich heritage of African art to consumers around the world (for example, while I'm typing this I'm listening to a Toumani Diabate album I downloaded today -- not sure how many Malians that's helping to employ though).

The story says that the goal of the project is two-fold: train a cadre of world-class African sculptors while providing local employment opportunities "for hundreds." Will it work? Maybe; maybe not. Some creative communities spark economic development but ultimately, sculptors will need to appeal to some consumers somewhere (and the sculptures need to get to those consumers through effective market linkages) otherwise local people won't have sustainable jobs. For now, Ugandans have to wait and see how the market responds to this new social enterprise.

- Karol