Monthly Archives: October 2014

Grameen Model, Moyo and a wrap of the debate: Aid or no Aid?


Graph by Lewis Garvin University of Michigan

Graph by Lewis Garvin University of Michigan

The Grameen Bank model boast the motto: “Bank for the Poor.” It was initially started by Professor Mohammad Yunus who was awarded the Nobel Peace Prize in 2006 for his work. He began the practice of microcredit loans for those without the credit for traditional loans.

The model is based on collective responsibility because they give loans to groups but only allow one or two of the members in the group to take out a loan at a time with the rest becoming eligible as the loans are repaid.

I found this article on Yunus and controversy over whether the Grameen Bank model could maintain its independence interesting.

Photo by OnPhilanthropy

Photo by OnPhilanthropy


Since 2008, Grameen has used mobile technology such as apps and the Ghana Mobile Technology for Community Health initiative. MOTECH has helped improve accessibility to maternal and neonatal health care information by developing interactive apps used by both patients and the nurses. There is a Mobile Midwife Application that gives mothers and their families medical alerts regarding their pregnancy and childcare and gives the medical caregivers an easy way to track a patients’ care. Grameen published an updated report on the progress of MOTECH in 2012.

The initial project was funded by the Bill and Melinda Gates Foundation but has recently expanded. The expansion of this program is going to be funded by organizations such as USAID, the Government of Norway, Grand Challenges Canada, and the World Bank (in addition to the Bill and Melinda Gates Foundation).


In Kenya, Grameen has focused less on maternal health and more on agriculture and finance. Aside from their banking services, they also offer farmers updates on caring for crops post-harvest and connecting them with the financial markets to sell their products. This is called the e-Warehouse initiative.


Kiva is an organization I am familiar with. Similar to the Grameen model of micro financing, Kiva offers micro credit to projects and entrepreneurs. The sorting button wasn’t working so I am not sure all of the African countries that they operate in but I scrolled through the list and found Rwanda, Kenya and Uganda as a few Sub-Saharan Countries they have projects currently in.



TED Talk by Andrew Mwenda,

 TED Talk by Simon Anholt,

Dead Aid, by Dambisa Moyo

The End of Poverty by Jeffrey Sachs


Sach’s and His Proposed Solutions


In Jeffrey Sach’s “The End of Poverty,” he argues that in order to meet the United States’ “share of the MDG needs,” they should impose a special 10 percent tax on the top 400 wealthiest individuals and impose increased taxes on anyone earning an income over $200,000.

While I am in favor of honoring all promises, such as the MDG funding requirements that our country and many others have made towards these goals, I don’t think this is as realistic or simple as he makes it sound. I don’t agree with his simplistic argument for taxation on Americans and I’m not sure who he is intending to address in his argument in Chapter 16. No one could impose these sweeping tax reforms as easily as he is suggesting. At the end of the chapter he then claims that he has found the solution… Now everyone else just has to implement it.

His solutions are flawed in its assumption that huge tax changes (especially for the purposes of foreign aid and investment) would be easy to implement. Does he think it is as simple as the Secretary of State filling out a form?

Even when a new city tax is being discussed, the City Council meeting is packed, journalists swarm and it makes the front page:

Where is the money going? Is it absolutely necessary? Who will it impact?

Taxes are controversial and I felt like he posed his solutions with a wave of a hand implying that they were no big deal.

I don’t take his proposal seriously because it isn’t practical unless he is also considering the breadth of work needed to implement the tax reform. It is also far from a sustainable solution if it can’t be implemented in the first place.

I looked at India and their need because Sach’s referenced it specifically in our reading. India’s aid package was relatively small and Sachs said it will diminish soon if we use his equation of accounting for the domestic revenue that should be spent internally on a nation’s own people.

Sach’s argued that if these costs were met (‘they have already been promised,’) there would be a 20 percent decline in extreme poverty. Malawi is in Sub Saharan Africa that has seen some reduction in their extreme poverty between 2004 and currently. However, when I looked at the World Bank’s Poverty Reduction Strategy Paper by the Malawi Growth and Development Strategy, it still reported 50.7 percent of the population in poverty in their last data check (2010). In 2004 this number was 52.4 percent. In fact, the country made much more progress in reducing poverty between 1998 and 2004.

Poverty Headcount

Regarding Chapter 16, I have heard some of his “myths” used as arguments by classmates, friends and family. I think humanitarians, economists, governments and citizens who all have experience and expertise in the subject matter disagree. For a few of these “myths,” I found that it is just experts and stakeholders looking at the isse with different numbers, arguments and perspectives.

One of the arguments I am speaking of is the “Money Down the Drain” argument used in his chapter, which is also an argument made by economists like Moyo. While they both have the intentions to spur economic growth and reduce extreme poverty in the region, they concluded two very different solutions. Sach’s responds to this argument with a conclusion that we just have given enough aid and Moyo says to eliminate it all together.

Class Reflection: This video of a Ghanaian entrepreneur we watched in class I found extremely powerful. I am surprised that is has so few views. However, I wish they had also interviewed anyone involved in the selection of software providers. Was there any reason other than the provided foreign aid that they accepted the European bid? Would it have been possible to accept the European contract for locations where this existing, locally-run organization was not servicing. I wonder if that was proposed and shot down.

I wrote that in my notes immediately after the video and later in the class, I was surprised to hear Giorgi wondered some of the same questions. Dr. Fischer questioned whether it was a bias against Africans ability that he would automatically question if this Ghanaian was legitimate? I asked myself: Am I unintentionally being biased as well?

Regarding the question: ‘Is it a bias that we don’t take these claims as truth at first hand?’ I explored it a little.

1. Perhaps we are. There is a possibility that these questions come from biased notions of African entrepreneurship. I’d like to think as a journalist I would have wondered about these gaps no matter who was speaking but bias certainly affects us all and is something to consider.

2. Perhaps we are unfamiliar with the idea of a government doing something that does not help the interests of its citizens. I automatically thought, ‘Why would a government do this? Could it be that the European company was better and could provide better service to Ghanaians that would outweigh the harm done to this one company?’

I think this automatically because of my own context and upbringing of what a government could be. One of my arguments against Sach’s taxation of Americans was that it would not happen because of its huge breadth and impact to citizens without directly benefiting U.S. citizens. It would be extremely unpopular and wouldn’t get very far through legislation.

This idea that the Ghanaian government would deliberately drive a Ghanaian company to do more laborious work for less profit seems very foreign to me and has a surrounding context that is very different than what I might experience if I suddenly wanted to start a business myself.

I would not have to compete with an influx of aid and would likely be given the benefit of the doubt when speaking about business struggles. Something for me to think about and I’m glad Dr. Fisher shared it with the class.

Week 9: Combatting Poverty by Working Together


Sachs suggests that “…the richest of the rich, not the average taxpayers, but taxpayers with incomes at the very top of the charts,” (289) should be taxed higher or “a burst of large-scale philanthropy commensurate,” (289). I agree with this. Sure, they may have worked hard for that money, but the small increase that Sachs is talking about isn’t anything that will cause a huge dent in their wallet, or really any sort of dent at all.

According to Sustainable Governance Indicators, “higher taxes tend to coincide with lower deficits and low debt.” The article used public data of Western Europe, North America, Oceania and Japan to study the connection between tax levels and public debt-to-GDP. It even goes so far to say that there is a strong correlation between countries with higher income inequality and their likeliness to have unstable budgetary policies. Willy says that there are many reasons that there are correlations between high taxes/income equality and fiscal sustainability. One is that high-tax countries may be less prone to dramatic boom-and-bust cycles because there is added friction to monetary activities. He says that if political leaders want budgetary sustainability for the long-term, they should promote income equality and higher taxes for the rich.

From SGI Article

From SGI Article (listed in references)

Sachs discusses how specific needs of individual countries require specific costs. For example, Tanzania looks for about 45% of funding to go toward health and population. Their other major needs include “other social sectors”, economic infrastructure and services, production and multisector. The U.S. is the biggest source of international aid to Tanzania, but I don’t think it’s fair to answer how long the U.S. can sustain Tanzania for when we can’t even sustain ourselves completely. In 2004 when Sachs wrote his book, predicted for 2015 that “…most of the world will have been freed from the poverty trap onto a path of self-sustaining growth,” (303). He says that the poverty level in SSA will drop from 40 percent to 20 percent by 2015.

Looking at Nigeria, their poverty level was 48.4 percent in 2004 and when it was last measured in 2010, according to the World Bank, it was still at 46 percent. I doubt in four years that that level is around the area of 20 percent.

In Chapter 16, Sachs discussed the “myth” that extreme poverty will eventually take care of itself because the growth of the global economy. He proves this wrong by saying how if one thinks globally, they will see that poverty is a global issue, not just something that should be faced by individual countries. I wouldn’t necessarily say that it’s a global issue, but it is something that wealthier nations should help poorer countries with, while simultaneously helping out their own poor populations. Thinking globally is pushing nationalism aside and trying to have a symbiotic relationship with the world around us.


Willy, C.J., 2013, ‘Tax The Rich, Give To The Poor,” Sustainable Governance Indicators,

World Bank,

Week Eight: PRSP, Poverty Reduction Strategy Papers or (African) Populations Rely on Serious Philanthropy?


Part I

After looking at each plan mentioned by Jeffrey Sachs (Ghana’s Poverty Reduction Strategy (GPRS), Ethiopia’s Sustainable Development and Poverty Reduction Program (SDPRP), Kenya’s Economic Recovery Strategy for Wealth and Employment Creation (ERS), Senegal’s Poverty Reduction Strategy Paper (PRSP), and Uganda’s Poverty Eradication Action Plan (PEAP)), the first thing that I noticed was that the reading was very inaccessible. Even before the actual plans or strategies began their proposals, there was a list of between fifty and two hundred and fifty acronyms that are used throughout the poverty reduction strategy plans (PRSP). Even the names of plans are acronyms that are difficult to remember. If these plans are difficult for me to understand before the bulk of the plans even begin, I cannot imagine that the residents of the countries, for which the plans were created for, would be able to understand them either. I think a huge component for successful poverty reduction in African countries is the involvement of the people. More and more plans involve incorporating the community into their plan to help improve the country’s economy and the local community’s standard of living. The video below shows a plan for smart farming and agriculture in Uganda that incorporates local involvement.

Moyo discusses bonds (which she says are essentially loans or IOUs on page 77) that are given to African countries. She explains that international investors are only allowed to buy bonds for their portfolios from certain approved lists, such as the J.P. Morgan Emerging Market Bond Index, or EMBI. Because I had no idea what the J.P. Morgan EMBI was or measures, I did some research.

The Emerging Markets Bond Index Plus (EMBI+) tracks total returns for traded external debt instruments (external meaning foreign currency denominated fixed income) in the emerging markets. The regular EMBI index covers U.S.dollar-denominated Brady bonds, loans and Eurobonds. The EMBI+ expands upon J.P.Morgan’s original Emerging Markets Bond Index (EMBI), which was introduced in 1992 and covered only Brady bonds. An external debt version, the EMBI+ is the JPMorgan EMBI Global Index

In addition to serving as a benchmark, the EMBI+ provides investors with a definition of the market for emerging markets external-currency debt, a list of the instruments traded, and a compilation of their terms (Wikipedia).

Below is a graph showing the J.P. Morgan EMBI for SubSaharan Africa.

J.P. Morgan EMBI for SubSaharan Africa

     J.P. Morgan EMBI for SubSaharan Africa

Some countries from SubSaharan Africa, as Moyo points out, might not be included in indexes such as the J.P. Morgan EMBI because they might choose to leave the international bond market for domestic bonds, savings, or taxes. Other countries, however, might be forcibly removed from the list if they default on loans or debt. I was curious to see how much money my countries, Liberia and Namibia, had received in loans. According to the World Bank, Liberia has received $626 million and has another $11.7 million that still needs to be distributed. In 2008, Namibia received a $7.5 million Second Development Policy Loan.

Links: GPRS, ERS, JPMorgan EMBI Wikipedia

Part I Poverty Reduction Plans, Capital Solutions and Financial Strategies, Oh My!


Part I

The Ministry of Finance and Economic Development in Ethiopia sent the Managing Director of the International Monetary Fund the Ethiopia’s Sustainable Development and Poverty Reduction Program (SDPRP) in August of 2002. Those can be found here.

The first thing that stood out to me about these document is the size. It’s a book. Over 200 pages of carefully researched statistics and monitoring would have taken time and money to do As one of Moyo’s many points, she states in Dead Aid that limited accountability is one of the (numerous) reasons for the failure of aid.

The second thing that stood out to me was the initial statement that economic growth is not the primary policy goal in order to achieve a reduction in poverty.

I was instantly curious as to what their main goal was, if not economic growth.

The documents said that their main strategies that they would be suggested are focused on rural, agricultural development. They also said that a free-market economic system was the primary goal in that it would help the economy develop rapidly, decrease the need for aid dependency (specifically food) and focus on the poor as the primary targets for economic growth to benefit.

Photo: University of Stanford

Photo: University of Stanford

The article’s focus on rural, agricultural practices reminded me of Rosamond Naylor’s response to Edward Miguel’s article, Africa’s Turn? She said:

“Although the overall economic situation in sub-Saharan Africa appears to have improved in recent years, any discussion about a sustained turnaround for the region must consider the rural sector and the role of agricultural development in improving the livelihood of the poor. Even as better macroeconomic management and higher export commodity prices have in recent years led to per capita income growth in several countries, the poorest rural populations—the landless or small landowners who are net consumers of food—remain desperately poor. According to World Bank statistics, over half of sub-Saharan Africa’s rural population still lives in poverty, and the depth of poverty is greater than in any other region of the world, with many surviving on roughly $0.60 per day.”

I also looked at Senegal’s Poverty Reduction Strategy Plan (PRSP), which was completed much more recently. This one was much shorter than Ethiopia’s report, less than half the size actually.

I noticed from the beginning that they broke the report off into time periods, allowing the reader to understand the context of the policy report, which was informative and helpful.

The first thing I found interesting was No. 4 in the context portion. It reads:

“It was formulated in a difficult international economic context, marked by the surge in the prices of food and energy products, combined with an uncertainty triggered by the likelihood that it might rapidly change. Besides, the persistence of the financial crisis illustrated by the turmoil in financial markets as well as the difficulties encountered by the advanced economies should, most probably, increase the risks of slow‐down in world economic growth, but could on the other hand redirect part of the FDI flows.”

I didn’t know what FDI flows were off-hand until I Googled and found it meant the Foreign Direct Investment inflows and outflows.

The inflows are the amount of investment the country gets by non-resident investors and the outflows are the amount of investments made by residents of, in this case, Senegal, into other nations.

The second thing that stood out was that about 2/3rds of the Senegalese population is under 25 years old! Also, that half of the population lives in rural areas, which was a little less surprising. With so many young people, I can’t imagine there would even be enough teachers in Senegal to teach the population, even if that were financially possible. I found those numbers to be really interesting fact about Senegal and I’m sure since 2010, those number have changed dramatically many times more.

Check out some more recent statistics on their population in this Youtube video byYouth Heroes:

Week 8 Parts 1 & 2: Poverty Reduction Strategies, SSA Economies and More Moyo


On page 270, Sachs points out the poverty reduction strategy plans of Ghana, Ethiopia, Kenya, Senegal and Uganda. I wanted to look at Ghana and Kenya’s plans in more details.


Ghana: Ghana’s poverty reduction strategy plan is called Ghana’s Poverty Reduction Strategy (GPRS). This plan stresses to reduce poverty through agriculture and rural development, focusing on agriculture, fisheries, small and medium-sized businesses and sanitation. This article notes other important aspects to look at:

  • Food security and emergency preparedness
  • Improved growth in incomes
  • Increased economic competitiveness and enhanced integration into domestic and international markets
  • Sustainable management of land and the environment
  • Applied sciences and technology in food and agriculture development
  • Enhanced institutional coordination.

Specifically, the plan points out how important it is to invest in:

  • Enhancing the competitiveness of Ghana’s private sector
  • Accelerating agricultural development and natural resource management
  • Improving infrastructure, human resource development and job creation
  • Consolidating transparent, accountable and efficient governance.


Kenya Map

 Kenya: According to the World Bank, Kenya’s economy saw a growth rate of 5.7 percent in 2013, solid number that “is attributed to a stable macroeconomic environment, the peaceful elections in March 2013 and smooth transition of political power. Still, Kenya does face issues that the Bank urges the country to fix. For example, Kenya’s poverty issue, in which the World Bank suggests the government to focus on job creations, enhanced productivity in agriculture and targeted public spending programs in order to improve education, water, sanitation and access to electricity for the poor in rural areas.

Kenya’s specific poverty reduction strategy, called Kenya Economic Recovery Strategy Support Credit (ERSSC), is summed up in this article:

The Kenya Economic Recovery Strategy Support Credit (ERSSC) aims to:
1. Expand fiscal space for public infrastructure and health. Towards that end, reform budgeting and execution to ensure that public expenditure is well aligned with explicitly stated national priorities and is efficient;
2. Further improve economic governance by strengthening financial management, procurement and audit institutions and ERS monitoring and evaluation;
3. Improve agricultural productivity and food security; and
4. Lower the cost of private business and barriers to investment.

The project has three components:
Component 1. Budgetary and financial management;
Component 2. Rural Development; and
Component 3. Private sector competitiveness.

The World Bank (WB) estimates the total project cost at US$ 75 million.

The IFC’s website discusses the financial strategy of SSA as a whole by explaining the role they have played there. The IFC made $4 billion in investments in 2012 for projects across the region. They center their efforts on the ideas of improving the investment climate, encouraging entrepreneurship and transforming key markets and industries.

The World Bank’s Africa’s Pulse reported that, “the regions’ economy grew at 4.5 percent per year on average between 1995 and 2013. Its medium-term prospects are positive, with GDP growth projected to rise from 4.7 percent in 2013 to 5.2 percent in 2014, strengthening further to 5.4 percent in both 2015 and 2016.”

In 2013, net foreign direct investment in SSA grew by 16 percent to add up to $43 billion.

On page 82 of Moyo’s book, she referred to the J.P. Morgan Emerging Market Bond Index, so I wanted to take a look at it myself. This links to a table showing SSA’s Bond Index growth.

I wish I knew how to understand the data better, but there is a definite, noticeable increase from where the table begins in 1993 at 100, to 2014 at 564.995.

On another website I looked at GDP growth rates. The only SSA countries it listed were Kenya, Tunisia, Ghana, Angola and Nigeria. Luckily, both of my countries were listed, presumably due to their natural resources. Nigeria’s GDP growth rate was 4.18 percent and Angola’s was 7.4 percent.

Moyo discusses that African countries could benefit from FDI, and in order to receive it, they must “woo” investors. They also need to build a regulatory and legal structure that supports businesses (99-102).

She also talks about the fact China needs natural resources that are in Africa in order to continue achieving their industrial success. Moyo does critique China’s approach to invest with no strings attached. By doing this, African leaders can keep ruling with their own, corrupt, motives, rather than trying to compromise with Western policy makers. Chinese investment is making an impact in the minds of African civilizations though. Moyo says how many Africans have a more positive view toward China than they do toward the U.S.


“Rural poverty approaches, policies & strategies in Ghana”, Rural Poverty Portal,

“Time for Kenya to Shift Gears to Accelerate Growth and Reduce Poverty,” The World Bank,

“Kenya Economic Recovery Strategy Support Credit (ERSSC)”, devex,

“Strategy”, IFC,

Week 7: Exploring Moyo Part 2


I was surprised at how young Moyo is, according to the picture posted on her website. For a young woman, she has an extremely impressive resume that includes: an undergraduate chemistry degree and MBA in finance from American University; a masters degree from Harvard and PhD in economics from Oxford University; contributing editor to CNBC and contributing writer to the Financial Times and the Wall Street Journal; obviously, an author; a board member of Barclays Bank, the financial services group, SABMiller, the global brewer, and Barrick Gold, the global miner; an economist at Golman Sachs; consultant to the World Bank; and was named by TIME Magazine one of the “100 Most Influential People in the World”. This gave me more trust in what she said in her book, even though it seems like it stems from political views opposite of mine.


Moyo conducting a TED Talk

When Moyo quotes a critic of the western aid model and says, “my voice can’t compete with an electric guitar.” (27), the issue she is discussing is about the rise of glamour aid, or aid when celebrities or other prominent people like the Pope or philanthropists, which people use to be credited to an influx in aid to Africa. Moyo sees this as a problem because these people don’t live in Africa, they merely go visit, donate money and get to leave, while the people effected stay there and have to suffer. As we had seen in George Ayittey’s TED talk, the government in Africa at the moment is ineffective and corrupt. So, what good is it going to be for celebrities to hand off money to these “governments” when they’re so bad at functioning? Rwanda’s President, Paul Kagme, agrees with Moyo and Ayittey. He said that aid went toward “geopolitical and strategic rivalries and economic interests,” and not used for “developmental outcomes” in Africa. When he mentions geopolitical rivalries, I think he means that aid causes more conflict and rivalry between African economies, instead of making them get along and work better together.

Moyo says geography, history and climate (among other things) for aid not working. Two reasons she says that aid hasn’t worked is because:

  1. People believe SSA countries are rich in natural resources, but don’t realize that this doesn’t mean innate success for the countries. It just gives the countries another reason to be more corrupt and have an influx in crime. Think of my oil-rich countries, Angola and Nigeria. In Adrian Gonzalez’s journal, “Petroleum and its Impact on Three Wars in Africa: Angola, Nigeria and Sudan”, Gonzalez studies how wars within those countries are directly effected by their oil supplies. He says:

“Firstly, it will portray how oil has prolonged the Angolan civil war through one side’s control and subsequently the revenue of this resource. Secondly, through an examination of Nigeria it will explore how oil has precipitated a low-intensity clash between local people’s claims to oil revenues on the one hand and the national government and multi-national oil corporations on the other.”

  1. It is not the first time in history that Africans are being blamed for not being able to develop their own countries. Moyo describes what seems like is the same idea as Cheetahs vs. Hippos. She said aid will keep Africans in their perpetual hippo-like state, with waiting for others to give aid and doing the work for them.

A couple weeks ago, when I discussed the Cheetah leaders in both Africa and Angola, it seems like more of those types of people are what SSA countries need, to bind together, and work for the greater good of their countries, without getting so many outside sources involved.

Sachs describes the poverty trap as something that should have a clear end in sight and lumps Africa together in one group, rather than different groups or different countries. That, indeed, is a fault of his theories, but I think his ideas with aid, at this time given the current state of Africa, is more viable than Moyo’s. He quotes Moyo in this Huffington Post article, saying:

“Finally, with respect to Mr. Sachs’ remark that I would see nothing wrong with denying US$10 in aid to an African child for an anti-malarial bed net — even labeling me as cruel; I say, if working towards a sustainable solution where Africans can make their own anti-malaria bed-nets (thereby creating jobs for Africans and a real chance for continents economic prospects) rather than encouraging all and sundry to dump malaria nets across the continent (which incidentally, put Africans out of business), then I am guilty as charged. Don’t forget that the over 60 percent of Africans that are under the age of 24 need jobs not sympathy.”

I’m not really certain that Moyo’s suggestion is a viable alternative for breaking the poverty trap Africa faces at this point. Sure, Africans can be physically capable of working a job, but there aren’t enough jobs in SSA to work right now given the size of the countries’ populations. She is posing a right-wing view, with no stable economies to work with.

Sources (besides Dead Aid by Moyo):

Gonzalez, Adrian, “Petroleum and its Impact on Three Wars in Africa: Angola, Nigeria and Sudan”, 2010,

Sachs, Jeffery, McArthur, John. “Moyo’s Confused Attack on Aid for Africa,” 2011.