Sunday, February 24, 2008

Street Entrepreneur vs Ugly American

New York Times columnist Nicholas Kristof's column on Barack Obama's Kenyan connection caught my eye and reminded me of some things that happened during a research trip to Africa for Heart of Diamonds.

Read my comment here. It was posted at 5:54 AM on 2/24/08.

One day, I watched an American Wall Street type haggle over the price of a carved mask with a vendor in a market in Lusaka. He finally persuaded the Zambian to cut his price to the ridiculous level he wanted--50,000 Zwacha (about $13.50 US)--and agreed to buy the mask. Then, clever fellow that he was, the American titan of finance offered a flat $13 US in payment, which the Zambian vendor graciously accepted.

As the Master of the Universe walked away, I heard him chortle to his wife, "I beat the bastard on the exchange rate, too." I must admit, it didn't make me very proud to be an American right at that moment.
Dave Donelson, author of Heart of Diamonds

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Saturday, February 23, 2008

Foreign Aid or Ailment?

Foreign aid is the first thing most people think of when they see the condition of many African economies. It's falling out of favor in many circles, however. The reasons vary, of course, but the biggest single factor is that much of it just doesn’t work very well. A strong case is made by William Easterly in The White Man’s Burden; Why the West’s Efforts to Aid the Rest have Done So Much Ill and so Little Good, (Penguin Press, 2006).

Economic aid is often a sinkhole designed as often to advance the economic interests of the donor country as it is to help the recipient. Short story: I once ran a company who was subcontractor to another US firm that was building a communications network in the Cote d’Ivoire. Most of the work in our portion of the contract could have been done by local laborers (we were refurbishing radio towers—cleaning and painting, mostly) at less than a tenth of the cost we charged. The reason? The U.S. aid contract specified nearly 100% of the contract value go to American firms. We weren’t gouging, by the way, but it’s darned expensive to send American workers and all their equipment across the Atlantic.

Then there is humanitarian aid. I cut some slack here, because long-term corrosive problems like malaria and HIV/AIDS aren’t going to go away because the free market says so. There are also crises where hundreds of thousands of innocent people are forced to flee their farms and jobs by genocidal violence or natural disasters like drought and flood. Public-sector efforts like the Bush-backed malaria net program and private undertakings like many of those from the Gates Foundation are well-thought out. Plus, it’s hard to argue with results.

Again, though, there is a huge amount of waste built into many humanitarian aid programs. I talked to several farmers in Zambia while researching Heart of Diamonds, and they pointed out that the jobs they provide are the only sources of cash income for the people in the region. When food aid must—by law—come from U.S. stockpiles, it costs the U.S. taxpayer more and undermines the local economies at the same time. A bad bargain.

Dave Donelson, author of Heart of Diamonds

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Friday, February 22, 2008

No Power To The People In South Africa

As the lights flicker in South Africa, the fragile economies of sub-Saharan Africa are seriously endangered. South Africa is the continent’s wealthiest state, both in GDP per capita and total GDP, so serious repercussions are felt by many countries when the giant falters.

And falter it is, as rolling blackouts and brownouts cut into every facet of life—and the economic development—of the country. Failure to plan for and construct adequate electric power generating capacity has caused leading gold, diamond and platinum mines to stop production, not only sending world gold and platinum prices to record highs but adding thousands of workers to the already-high (25%) unemployment rate.

I wrote many pages of notes by lantern light and headlamp while doing on-site research in Africa for Heart of Diamonds. Power in many nations in the region is generated and delivered through chewing-gum-and-paper-clip networks, with South Africa’s heretofore adequate capacity filling in the gaps. The failure of the S.A. system to keep up with rising demand has further crippled an tottering system that the World Bank estimates has already clipped 2% off the region’s growth rate.

The S.A. government monopoly Eskom, was warned in a 1998 report that it would run short of power in 2007, but bureaucratic intransigence and financial problems stalled upgrades. Even by the most optimistic estimates, it will take at least seven years for new capacity to come on line and begin to make a dent in the situation.

Dave Donelson, author of Heart of Diamonds

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Thursday, February 21, 2008

Glimmers of Hope for Africa

Among all the crises plaguing Central Africa, there seem to be glimmers of progress in several ugly situations. The grief is far from over, and simmering pots are ready to boil over in other places, but there are positive signs in some of the most recent trouble spots. Having visited many of these places while researching Heart of Diamonds, I’m cautiously optimistic.

In Uganda, the Ugandan government and the Lord's Resistance Army (LRA) agreed to set up a special division of the country's high court to try war crimes committed during the 21-year-old conflict. There are still huge hurdles to be jumped, but at least there is some movement toward a permanent ceasefire.

Kenya lurches tentatively toward peace, although it may be generations before the damage to inter-tribal relations can be erased. President Mwai Kibaki and opposition leader Raila Odinga may announce a joint-governance agreement as early as tomorrow.

Zimbabwe may actually hold an election that matters next month. Simba Makoni, a senior member of President Robert Mugabe’s own ruling party, the Zimbabwe African National Union-Patriotic Front (ZANU-PF), has announced he will run against the 83-year-old despot. The opposition party couldn’t unite behind a viable candidate, and Mugabe may still well coast to victory, but the presence of an opponent from his own party is a welcome sign.

Darfur remains a shameful open sore, of course, and unrest festers in the Democratic Republic of the Congo, Chad, and many other places, but there may be glimmers of hope for some.

Dave Donelson, author of Heart of Diamonds

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