Culture and Development

Poor but happy?

A common belief in rich countries is that people in Africa are poor but happy. This image is time and again confirmed by popular reality shows on Western television, in which the rich-and-famous visit little-known tribes in the most remote villages of rural Africa, only to concede, in front of a dozen cameras, that despite all their hardship, the people they visited really seemed happier than the average burnt-out desk-warrior in their home countries.

Are the poor in Africa really happier? In recent years economists started focusing on happiness and its measurement, a field long considered too trivial to pay much attention to. Recent research on the topic gives conflicting, and sometimes surprising, results. In 2012, an Ipsos poll measuring the degree of happiness in 24 countries found that self-reported levels of happiness were higher in poor and middle-income countries than in rich ones, seemingly confirming popular beliefs. In contrast, the first World Happiness Report, also published in 2012, finds that the rich countries in Scandinavia are the happiest on earth, while four poor Sub-Saharan African countries are at the bottom of the list. The Gross National Happiness (GNH) index, pioneered by the Kingdom of Bhutan, comes up with a number of surprises of its own: the GNH is highest among the young and the unemployed (and also-perhaps less surprising-among the unmarried), which seems at odds with today’s television images of the streets of Madrid and Athens.

From almost every point of view, Rwanda’s performance over the past decade has been an unambiguous success story.

Between 2001 and 2011, Rwanda’s economy grew by 8.2 percent per annum, earning the country a spot on the list of the ten fastest growing countries in the world. Poverty rates fell by 14 percentage points, effectively lifting more than one million Rwandans out of poverty. Social indicators followed the general trend: Net enrolment in primary school increased to almost 100 percent, completion rates tripled, and child mortality decreased more than threefold, hitting the mark oftwo-thirds reduction as targeted by the Millennium Development Goals.

Yet buried under all this good news lays another maybe even more important evolution. After a decade-and-a-half stall, total fertility rates in Rwanda dropped from 6.1 in 2005 to 4.6 in 2010. This means that during a period of five years, the average number of children a woman of childbearing age can expect to have, has declined by 1.5.

HIV/Aids remains one of the deadliest diseases in sub-Saharan Africa, causing misery and suffering to millions of affected people and their families. But there are also signs of hope, as new infections and the number of Aids-related deaths have come down significantly since the mid-2000s. Similar to the broader trend in the region, Tanzania has achieved some success in reducing HIV/Aids:

- HIV prevalence among adults declined from its peak in 1996 (8.4 per cent of those aged 15-49 years) to 5.8 per cent in 2007, though it has stagnated since then.
- The number of people dying from Aids has fallen by about one third, from 130,000 in 2001 to 84,000 in 2011.

Let's think together: Every Sunday the World Bank in Tanzania in collaboration with The Citizen wants to stimulate your thinking by sharing data from recent official surveys in Tanzania and ask you a few questions.

For many Tanzanians the fear of crime is a daily reality, especially for those living in urban areas. It negatively affects their quality of life as it makes them feel insecure and vulnerable as they go about otherwise normal activities. A few facts:

- In 2010/11 about 390,000 households (four per cent) reported that they had been severely affected by hijacking, robbery, burglary or assault (over the previous year).
- Residents of urban areas are about three times more likely than those in rural areas to be victims of these crimes.

This is the time of year when we make resolutions and you may be wondering what you can do better and more efficiently in 2013.A lot of books have been written on the topic but one of the best is 7 Habits of Highly Effective People by Stephen Covey who died in 2012. The 7 habits are: Be proactive; Begin with the end in mind; Put first things first; Think win-win; Seek first to understand, then to be understood; Synergize; Renew yourself.

Covey’s son – also called Stephen – wrote another remarkable book called The Speed of Trust, which includes this noteworthy statement: “You need to trust yourself before you can trust others.”

What falls outside the standard assumptions and models of economics? How does that matter for development? Last week, the Africa Chief Economist’s Office and the Development Economics Research Group of the World Bank sponsored a star-studded course exploring exactly this issue.

Nobel Prize winner George Akerlof highlighted how, because of all the advantages of markets, we ignore the traps that come along with them. Sellers can deceive buyers and prey on their unconscious biases, lack of self-control, and naiveté.

Using his famous “lemons” market example, Akerlof showed that, instead of there being no equilibrium, naïve buyers will in equilibrium buy poor-quality used cars. He calls this phenomenon “Phishing for Phools”.

Let's think together: Every week the World Bank team in Tanzania wants to stimulate your thinking by sharing data from recent official surveys in Tanzania and ask you a couple of questions. This post is also published in the Tanzanian Newspaper The Citizen every Sunday.

Tourism is among the world’s most lucrative industries. The latest figures from 2009 show that the industry generated US$852 billion in export earnings worldwide, accommodated more than 800 million travelers, and accounted for more than 255 million jobs or nearly 11 per cent of the global workforce in that year. It is no surprise then that this industry is considered a major driver for employment, growth and development.

My colleague Jim Kim has launched a social media campaign on what it will take to end global poverty (please send your solutions via twitter to #ittakes.) I was reminded of a blog post I did about four years ago entitled “Ending poverty in Africa and elsewhere”.

My answer then and now is: Overcome government failure. By “government failure,” I don’t mean that governments are evil or even that they are incompetent or ill-intentioned. Analogous to “market failure,” government failure refers to a situation where the particular incentives in government lead to a situation that is worse than what was intended with the intervention.

For instance, governments finance and provide primary education so that poor children can have access to learning. But if teachers are paid regardless of whether they show up for work, and politicians rely on teachers to run their political campaigns, the result is absentee teachers and poor children who don’t know how to read or write—precisely the opposite of what was intended. We see similar government failures in health care, water supply, sanitation, electricity, transport, labor markets and trade policy.

In development circles, people talk about “countries that are too big to fail and too small to succeed”. The jury may be out on the former but a new book by Shahid Yusuf and Kaoru Nabeshima, “Some Small Countries Do It Better” dispels the notion that countries can be too small to succeed.

Three small countries studied in the book - SIFIRE (SIngapore, FInland, IREland) – not only grew at high rates but were able to sustain them.

The book – which concludes with a section on implications for African countries – contends that growth recipes for SIFIRE were not tightly bound to the East Asian model of extremely high rates of savings and investment (although arguably, Singapore was in many ways the epitome of that model, thanks to its mandatory savings scheme which led to gross national savings in the neighborhood of 50 percent for decades).

The larger point is that these three countries augmented physical investment with healthy doses human capital and knowledge; by “opening their windows and letting it [knowledge in various forms, for example, that embodied in FDI] stream in”. And even though the book does not explicitly discuss it, they did so without massive infusions of foreign aid. Or perhaps it was the lack of aid that forced them to be nimble, agile, and forward-looking?

What precisely did SIFIRE get right?

Jakarta Recently, a friend from Indonesia visited me in Nairobi. He is one of the world’s leading experts on social development and a long-term Jakarta resident. One of his observations stuck in my mind: “Kenya is just like Indonesia ten years ago”, he said.

Comparing Kenya with Indonesia is counterintuitive—except perhaps when it comes to traffic jams—because of the many differences between the two countries. Indonesia is the world largest island state with more than 17.000 islands and a demographic heavyweight with 240 million people (six times more than Kenya). It is also 85 percent Muslim, while Kenya is about 85 percent Christian. Indonesia has massive natural resources – coal and gas (and some oil) – that it exports to other Asian countries, especially China, while Kenya’s economy is fuelled by a strong service sector.

There are many more reasons to challenge a comparison between these two countries but when one digs below the surface, there are also some similarities. Economically my friend was spot on: in GDP per capita terms, Kenya is roughly at the level of Indonesia a decade ago (about US$800 per capita). Today Indonesia is far ahead, but I don’t see any reason why Kenya couldn’t follow suit. Indeed, Indonesia is a good benchmark case for Kenya because it was never a “star reformer”, but instead a consistently strong performer.

Culture and Development

Poor but happy?

Is Rwanda Set to Reap the Demographic Dividend?

HIV/Aids: Still Claiming Too Many Lives

Law and Order: Countering the threat of crime in Tanzania

What can we learn from successful companies and teams?

When people don’t behave according to economic models

Is Tanzania attracting enough tourists?

What will it take to end poverty in Africa?

Do small countries do it better?

Can Kenya replicate Indonesia’s turnaround?

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