October 2008

A well-known musician from Mozambique, Feliciano Dos Santos, was recently featured in a New York Times article  on his use of pop music toward changing people’s sanitation habits, especially in far-flung rural villages.  His songs include messages regarding boiling water to prevent diarrhea and washing one’s hands before leaving the bathroom.  His band, Massukos gained international fame via a combination of pop and socially relevant songs, while his nonprofit Estamos (“We are”) installs latrines and provides services to AIDS patients.

Note from the Editor: The following post initiates an online discussion on private education that will take place on the PSD blog between November 3-14. The discussion will be moderated by the IFC's Health and Education Department and will include posts from guest commentators from outside of the World Bank Group.   

Background

In May 2008, IFC, in conjunction with the Human Development Network at the World Bank, hosted a Colloquium focusing on ‘The Evolving Regulatory Context for Private Education in Emerging Economies’. This event brought together a wide range of participants including government representatives, regulatory organizations, private providers, commentators and World Bank Group representatives. The Colloquium’s purpose was to initiate a ‘conversation’ between stakeholders involved in the regulation of private education to facilitate an open exchange of ideas and to share experiences. The online discussion provides the opportunity to extend the conversation with a wider audience.

The Online Discussion

The purpose of the online discussion is to provide a forum for stakeholders to discuss key questions relating to the evolving nature of regulation of private education.  It will provide an opportunity to share experiences and examples of good practice to facilitate informed policy development and implementation.

Nick Hughes, the head of Vodafone's international mobile payment solutions, recently gave a talk at CGAP about the company's work in Kenya, Afghanistan, and Tanzania. If I might sum up the talk in just a few words: KISS (Keep It Simple, Stupid). Less than two years ago, Vodafone rolled out M-PESA, a mobile payments service in Kenya. M-Pesa now has some 4 million subscribers and 3,500 frontline agents. Nick made it pretty clear that this rapid uptake far exceeded any expectations that Vodafone had when they started offering this service. 

The key to Vodafone's success? They focused entirely on offering a single service, and doing it well. M-PESA does not offer any banking services - no credit, no microloans, no savings. Rather, they simply offer a way to transfer money between two people. M-PESA didn't even originally plan to create payments for things like utilities or school fees - they discussed the possibility and decided to leave that to a later date. M-PESA makes its money by charging commissions on money transfers rather than on investing money.

Image credit: rreichle at Flickr under a Creative Commons license.

Mongolia's steppes are especially beautiful in October. A light dusting of snow on the gentle rolling hills makes them look like a rumpled white blanket. A large share of Mongolia's population still lives a nomadic lifestyle, herding livestock from one grazing area to another and living in the traditional ger, Mongolia's version of the central Asian yurt.

In this beatific landscape, the financial crisis and collapse of global stock markets seem far away -- but Mongolia will be sharply affected. In recent years the government has introduced a host of programs that have made herders' lives less vulnerable and difficult: livestock insurance to protect herders from losses in the terrible freezes that occur every few winters; expansion of cell phone coverage throughout the countryside; and expansion of rural education. The global economic crisis, however, threatens the sustainability of these programs.

The OECD has just released a massive report on inequality - see the press release, data and related materials, and the report itself, Growing Unequal? (gated). Now that a recession is beating at the gates of most of the rich countries, questions will undoubtedly be raised about how the pain is metted out to various income groups. Calls for re-regulation of many sectors of the rich economies will likely follow. And there's no doubt that financial sector regulation is due for a very close examination.

But it's worth looking at some of the countries that have liberalized the most in the past two decades to see what the consequences have been. Two things strike me in the figure below (taken from the report) concerning inequality in the post-communist countries of eastern Europe.

The 2008 presidential election in the United States has been touted as an epic battle over many things – over whether and how to continue US military involvement in Iraq, over whether and how to boost private companies’ efforts to dig their way out of a global financial markets crisis, over whether and how to change the overarching course of the country from the trajectory it has been on for the past eight years.  These contours of the fight are demonstrably in evidence.  Perhaps the most divisive aspect of 2008, however, has been a soul-searching struggle over who is the “American public” and which candidate best represents that imagined electorate. 

Last week, we released a new brief, "Protecting Temporary Workers: Migrant Welfare Funds from Developing Countries."  This note describes how countries of origin governments can play a major role in protecting their migrants abroad through migrant welfare funds.  It shows that a welfare fund operated from the origin country and financed by migrants or their employers can offer a potential efficient solution to protecting migrants from vulnerable situations abroad.  Protecting migrant workers through welfare funds also comes with some challenges: finding the right balance of services, creating meaningful partnerships, building accountability with its members, and involving destination countries.  

The second meeting of the Global Forum on Migration and Development is now taking place in Manila from October 27th to the 30th.  The theme of this year's forum is "Protecting and Empowering Migrants for Development."  One of the topics of discussion will be on how governments can share the responsibility of protecting migrants.  This topic begs the question on how governments can find ways of funding such activities. 

Like Sina, I too was recently in Cape Town as part of a team of trainers delivering a course titled 'People, Politics and Change: Communication Approaches for Governance Reform'. The participants were 29 senior government officials from 10 different African countries. The thoughts Sina expressed in his post reflect well the rich learning experience for all involved. What strikes me in hindsight is how this learning, and the country participants’ enthusiasm for it, verified the complex skill set required of communication in support of governance reform efforts. Here is what I mean.

There is widespread consensus that financial development is critical to economic growth, globally, and in Africa. Yet Mozambique, a country with very low levels of financial development (in a recent survey, only 13 percent of firms had obtained credit from the banking sector, rural credit is almost nonexistent), registered a GDP growth rate of over 8 percent a year over the last decade.

On a recent visit to Mozambique, I tried to understand this apparent paradox, but ended up with even more puzzles. A group of prominent bankers said the problem was that enterprises lacked managerial and accounting skills, which is why they didn’t want to lend to them. They insisted that subsidizing credit will not solve this problem. In a separate meeting, one of the most successful entrepreneurs in Mozambique said that even he has trouble getting credit; he needs to put up his factories as collateral, and even then it takes about seven months. Finally, the government’s plan to stimulate agricultural production includes a program of credit subsidies to farmers to buy tractors and other inputs.

So, while everybody seems to agree that access to finance is a constraint (which begs the question of how Mozambique grew so fast), there are different views on how to relax that constraint. I look forward to your comments and suggestions.

From Raj Nallari and Breda Griffith's lecture notes.

Gender Budgeting - Why and How (cont.)

Stotsky (2006) presents two hypothetical examples of gender analysis in a national budget that explicitly addresses the gender dimension of the policy objective, the means by which it will be executed, the resources needed and the indicators necessary to identify performance. This approach goes beyond the general assumption that expanding primary education, for example, will be distributed equally across the population. It represents a gender mainstreaming approach and is a gender responsive budget, responding to the inequalities that exist in primary education for girls and outlining the potential of reducing these inequalities in improving earning power for girls because of better education and other social benefits. 

Hypothetical examples of gender analysis in a national budget

Source:   Stotsky (2006).

One of the factors often pointed to as a cause of the Great Depression was a series of competitive devaluations - 'beggar-thy-neighbor' policies that turned into a lose-lose proposition for industrialized countries. A similar downward spiral has revealed itself during the current financial crisis.

Many countries are competing for scare capital through a variety of means, for instance, through bank deposit guarantees. Once one country makes a guarantee, others feel the pressure to do the same or see deposits depart their country. A diplomatic row broke out between Britain and Iceland over this issue just a few weeks ago. But most high-income countries have mechanisms that can help coordinate and limit the potential damage of 'beggar-thy-neighbor' policies: witness the recent EU summit on the financial crisis.