UK Aid, accountability and optimal logo placement

DFID has just produced a new version of its UK Aid logo. While there is general grumbling about the jingoistic addition of the Union Jack and its similarity to the USAID logo – the current iteration is not vastly different than the original – introduced three years ago (one of the first things I blogged about) by the previous government.

These sort of emblems have always made me uneasy. When I worked as a civil servant in Malawi, my printer was branded with a “from the American people” sticker (as was my USB stick). The presence of the sticker made me feel like I should be worshipping some unseen god who delivered me office supplies which only ran on 120 volts.

Douglas Alexander, DFID’s last minister under the Labour government, once said¬†that he wished every DFID-funded classroom would have some notice telling children and their parents that the UK was responsible, and that this would help accountability. The rest of us¬†ridiculed¬†that idea, dismissing it as a Trojan horse for self-promotion.

However, perhaps Mr. Alexander was correct in his assumption that¬†emblazoning¬†everything with “UK Aid” could – in theory – increase accountability. If DFID funded something which utterly failed, then it would be incredibly obvious to everyone around. Just one photo of a derelict Union Jack-stamped school would make for pretty poor press. This might create incentives to make aid more effective.

Yet, if the folks at DFID realize this and are rational – instead of trying to be more effective, it’s much easier just to be more careful with sticker placement. Put stickers on high-profile, “successful” ventures (think bags of food rather than say, good governance) and avoid putting stickers on anything that looks like it might fail. So DFID won’t need to be more effective, just more discerning with their stickers.

A Cost-Effective New Initiative That Puts Power in Poor People’s Hands

By Daniel Altman

One of the ideas making waves in global development has been that poor people know better than anyone else how to improve their standards of living.  Some experts have recommended replacing conditional cash transfer programs (rewarding poor people for behaviors such as vaccinating their children) with unconditional cash transfer programs (just giving money to the poor).  But to make real change happen, there is a more direct route.

The poor will only be able to raise their own standards of living if they have power.¬† Giving them a few dollars here and there may help them to invest in small businesses or improve their access to education, but they still won’t become powerful agents of change.¬† Perhaps not by coincidence, many poor people live in countries where power is centralized amongst a small elite.

Poor people will only be able to change their lives in a long-term, sustainable way if they have real power in their societies.  Clearly, no government or foreign donor is willing to give them enough money, without any conditions, for this to happen.  Yet there is another, comparatively inexpensive way to do it.

A new development initiative would just give guns to the poor.  As evidence from around the world has suggested, guns are a fast track to power.  Several developing countries have conducted randomized controlled trials of this concept by giving guns to poor villagers in a non-systematic way.  In almost every case, villagers with guns have been empowered to change their living standards much more than villagers without guns.

This kind of initiative has shown promise even in wealthy countries such as the United States.  Here, poor people with guns are disproportionately powerful in society, wielding influence at both the local and national levels.  Moreover, many gun owners have come to believe that their living standards are higher than they actually are, adding psychic benefits to the concrete benefits of gun ownership.

With funding for development programs becoming scarcer every day, the emphasis must be on cost-effectiveness and accountability.  Just giving guns to the poor scores highly on both of these criteria.  After all, what better way to guarantee accountability than at the end of the barrel of a gun?

Daniel Altman is founder and president of North Yard Economics, a non-profit consulting firm serving developing countries, and an adjunct associate professor of economics at the Stern School of Business.

In which Malawi’s government decides to ignore the constitution

Update: despite earlier signs that the Government would try and block her constitutionally-mandated succession, Joyce Banda has been sworn in as the new president of Malawi, so crisis averted (well, for now). 

It has been over a day since Bingu wa Mutharika suffered a heart attack, and while the Government has still refused to release official confirmation that he has died, the public instead received a chilling indication that Mutharika’s regime will not go out without a fight.

As Kim Yi Dionne pointed out yesterday Malawi’s constitution clearly specifies that the Vice President is first in line for succession in the event that the president dies or is incapacitated. Malawi’s VP, Joyce Banda fell out of favor with the ruling party DPP some time ago, making the prospect of her assuming power unpalatable for Mutharika and the rest of the president’s Cabinet

For a long time the Government remained silent, both on the state of Bingu’s health (despite an alarming number of reports that he is dead, perhaps even before he made it to the hospital) and on the matter of his succession. This has made everyone uneasy – stalling on the Government’s part suggests that they are planning an strategy to block Banda’s succession. Perhaps to put a little bit of pressure on the Government to behave, both the British and American governments announced that they expected Banda to assume the office ASAP.

That silence was broken today when a subset of the cabinet, led by Information Minister and all-around-nefarious-person Patricia Kaliati, announced that Joyce Banda was ineligible due to her behavior while in office (video here – hat tip to Kim), including starting her own political party (which she did after she was thrown out by Mutharika). While they did not announce who the actual successor would be and would not reveal any information about Bingu wa Mutharika himself, this is a clear indication that the Government plans to circumvent the constitution.

It’s getting late in Denmark, so I’ll just offer a few thoughts before signing off:

Normally, I am wary of donors getting to involved in the decisions of recipient governments which are democratically elected, for fear that donor commitments will crowd out the natural accountability generated at the polls. This is quite different – we have a government which is very clearly going to choose to abandon its democratic principles and the international community might have the ability to make that decision too painful to bear.

Here are some options: donors could immediately and credibly rally behind Joyce Banda, not necessarily because she is the best candidate for president, but because Malawi’s constitution makes it clear that she is is the successor. Credible support can come in the form of donor dollars – no government which does not respect this succession should receive aid – the aim should be to make the decision very, very stark for the DPP. If this was combined with the threat of an odious debt sanction – where no new contracts signed by the Government will be enforced in courts, the squeeze might be even tighter.

What donors should not do is fall back on simple rhetoric about accountability. It has to be a clear choice – money flows if Banda succeeds. Money stops if she doesn’t. For it to be credible, donors need to be prepared to walk away – I fear that they won’t be.

On the death of presidents and ignoring the averages

"Perhaps this is an awkward time to talk about the line of succession"

While it is still unclear exactly what has happened, it is looking more and more likely that Malawi’s president, Bingu wa Mutharika, has either died or been severely incapacitated by heart failure.

As Kim Yi Dionne points out, the constitution clearly identifies the vice president , Joyce Banda, as successor. This is where things get a little awkward, as Kim points out:

Shortly after Mutharika and Banda won office (by large margins), President Mutharika had plans for his brother, Peter Mutharika to succeed him in office. Banda was marginalized and eventually expelled from the ruling party. She was also removed from ministerial posts and government attempted to have her removed from office (which is unconstitutional). Facing antagonism from the government, she later formed a new party, the People’s Party.

Whether or not the top brass at the the DPP (Bingu’s party) decide to swallow this bitter pill and embrace Banda remains to be seen.

An equally interesting question which has been bothering me all morning: why hadn’t anyone considered this in advance? Bingu wa Mutharika was a frail 78 year old whose increasingly autocratic rants were seen by many as a sign of impending dementia. The probability that he would die or become severely disabled during a five year term were significant enough to warrant some extra planning.

This isn’t an infrequent occurrence – looking back ten years reveals a startling number of African presidents falling off their perches: Zambia, Chad, Togo, Guinea, Guinea-Bissau, Gabon and Nigeria all had presidents die of poor health whilst in office, all from heart attacks, strokes or cancer. Most of these led to periods of political uncertainty and instability. Even the near-misses are problematic: Mwai Kibaki’s stroke in 2003 led to a substantial shift in both policy and personality – Michela Wrong suggested it drastically hampered the government’s ability to deal with corruption.

Unless the Government of Malawi soon reveals some cunning plan to prevent Joyce Banda from becoming president, it will be obvious that they never really considered this as a potential outcome. Was this sheer stupidity or hubris? Perhaps presidents can’t imagine their own deaths, so do little to prepare for it. There are a few shining outliers out there that might be biasing the results: both Teodoro Obiang in Equatorial Guinea and Mugabe in Zimbabwe have shown a remarkable ability to endure, despite cancer and general evilness.

Voters often associate old-age with wisdom and power, substantially more so in countries like Malawi. Yet these preferences constantly expose political systems to new risks. During the US elections in 2008, an actuarial firm rightly pointed out that John McCain only had a 75% chance of living through a full 8 year term. Despite these unnerving numbers (especially considering who would have been next in line), very little was made of McCain’s age-related morbidity or mortality.

As a 61-year-old-woman, Joyce Banda’s prospects of reaching the end of the current presidential term without succumbing to illness, senility or death are significantly higher than Bingu’s evidence successor, his 72-year-old brother Peter Mutharika. If the Government does find a way to thwart the constitution, and Bingu’s wishes are granted posthumously – likely guaranteeing his brother two terms in office – Malawi’s chances of suffering yet another presidential death rise substantially.

For all debts public and private

"You see, THIS is what happens when we lose our credit line to the Hutts"

Odious debt is a fairly simple legal concept: public debt accrued by illegitimate regimes should not be passed on to successive governments. As described by the folks at the Center for Global Development, one of the best ways to make sure this happens is for the institutions responsible for enforcing international contracts to declare that all future loans to the current regime are unenforceable. Faced with the prospect of a higher chance of default by the current government  (and an automatic default by the next), potential lenders would be dissuaded from doing business, thus preventing excessive debt.

In response to the growing violence in Syria, CGD’s Kim Elliot and Owen Barder have revived the idea (here and here), not just as a method for preventing excessive debt, but as a way of putting more pressure on the current regime – if Assad’s remaining lines of credit are dropped, then we might expect his position to crumble even faster.

Let’s break the idea down a little further. There seems to be an implicit model working in the background here, and I think it looks something like this: a rational investor knows the best deal it can get from the Galactic Empire is a rate of return of r¬†on a loan. Based on this, the investor decides how much to loan, conditional on its outside options. The investor knows that, even if the Empire falls to the Rebel Alliance, it is still guaranteed its return¬†r.

Now, assume that an outside party has declared all future debt incurred by the Empire as¬†unenforceable. If the Rebel Alliance wins (with probability P), then the investor won’t receive any return at all, and now there is also a smaller chance the Empire will pay them back even if it remains in power (this probability of repayment¬†E). The investor’s expected rate of return is now significantly lower [(1-P)Er < r], so it will disinclined to lend as much – and might even choose to disengage completely.

This is all pretty intuitive and sensible – although there a few reasons why it might not be that straight forward. These should be thought more as possible (general) caveats rather than criticisms:

 

  • Expectations over the value of P¬†are important here – we can expect the impact of an odious debt declaration to be stronger as it looks more and more likely the Rebels will win. Fortunately, the Syrian army might¬†already¬†be signalling its views on P.
  • It’s very likely that the probability the Empire stays in power is a function of the amount of money lent to it – that is, potential investors know that they can directly affect¬†P¬†when choosing how much to lend. While most assumptions over the functional form of¬†P¬†would lead us to the same conclusion, I’m still a bit worried that there could be identifiable thresholds here (if we lend them enough for a Death Star, the probability of winning converges to 1). This is why it is really important that odious debt declarations only affect future contracts (as the CGD suggests) – we don’t want investors given the incentive to prop up bad governments so they can avoid sunk costs.
  • Another assumption is that there is symmetry in the way contracts are enforced: in reality, the financial and legal institutions responsible for¬†international; contract enforcement are much more likely to be binding when a¬†legitimate¬†government takes over and wants to rid itself of odious debt, but the same is not¬†necessarily¬†true if the illegitimate government wins. When dodgy governments (or firms) trade with others of the same ilk, different, more informal mechanisms are likely¬†underlying¬†enforcement. These types of governments are inherently riskier anyway, so potential investors might already be relying on these alternative mechanisms. Again, these wouldn’t reverse the expected results, but they might dampen it.
  • Related to this point – we assume that countries that do business with awful regimes are only interested in profit. Once you add in preferences for that regime staying in power (democratic governments don’t usually buy as many weapons + it’s good to have another evil dictator in the¬†neighborhood), the picture gets even murkier.

Caveats aside, I’m excited that this idea is finally getting the attention it deserves.

UNESCO and evil dictators

In response to complaints about our Emperor Palpatine Award, Aid Thoughts has relabeled it the Death Star Award for Research in the Life Sciences

A few years ago there was a¬†kerfuffle over UNESCO’s plan to create a Life Sciences award named after (and funded by) Equatorial Guinean¬†dictator and all-around-evil-person¬†Teodoro Obiang. Many were worried that the award would undermine UNESCO’s credibility make Obiang’s position more legitimate. At the time,¬†I felt that denying him an award like this was peanuts compared to the many other ways the world routinely legitimizes his¬†never-ending¬†grip on the country. It seems that UNESCO has finally decided to move forward with the award:

After almost two years of debate and hand-wringing, the executive board of Unesco approved a scientific award on Thursday sponsored by a repressive West African dictator, despite the pleadings of Western nations and a finding by the organization’s lawyers that the prize would violate internal bylaws.

But there was one notable change. While the prize originally bore the name of the sponsor, Teodoro Obiang Nguema Mbasogo, who has ruled over oil-rich Equatorial Guinea since 1979, the award will now be called the Unesco-Equatorial Guinea International Prize for Research in the Life Sciences.

In the same NYT article, there are hints that the debate hasn’t yet ended. I wish it would – if the Western world wants to show it doesn’t much care for Obiang’s rule, then we need to hit him where it hurts: his oil revenue.

Malawi’s president and the art of diplomacy

From the BBC:

Mr Mutharika said he has intelligence reports that some Western donor nations were working with local non-governmental groups (NGOs) to hold street demonstrations and vigils against his rule.

“I will not accept this nonsense any more,” Mr Mutharika said as he opened a road in his home tea-growing district of Thyolo in southern Malawi.

“If donors say this is not democracy, to hell with you… yes, I’m using that word, tell them to go to hell,” he said on Sunday.

In all seriousness, the media and donors often fail to acknowledge that local NGOs are often headed by members of the opposition or those with close ties to it. While Mutharika’s response is absurdly vitriolic, if outside forces are supporting these NGOs then¬†his concerns aren’t entirely unfounded.

Time inconsistency, Malawi edition

In The Guardian on Wednesday, Bingu Mutharika responds to claims he is becoming autocratic:

“What they are trying to do is to draw a parallel between the leadership of Zimbabwe and Malawi. There is no basis for that. That is totally unfair and uncalled for. I have been very democratic.

“From 2004 until now, there is no single political prisoner in a Malawian jail. Is that consistent with the restriction of democracy in this country? We have been very democratic, we have been very patient. I have asked the opposition to come and see me but they refuse.

“It is simply not true. Because if it were true, all these people would have been rounded up. None of them have. They are free now. If indeed Malawi was starting to be a police state, would they still be walking free? That’s the question.”

In the Guardian today:

A prominent critic of¬†Malawi’s president has been jailed in what activists say is the latest sign that the country is¬†turning into a police state.

Ralph Kasambara, a human rights lawyer and former attorney general, has spent three nights behind bars after a fracas at his law practice in Blantyre.

A man of no importance

Are men being left out of the development equation?

Over at Global Dashboard, Mark Weston reviews a new book on men, masculinity and development:

The problem lies in the expectations society has of men. In West Africa, for example, men are expected to set up a home, marry at least one wife, and accumulate and provide for children and other dependents. Those who fail to perform these duties forfeit the respect of their elders, women and their peers; they cannot become ‚Äúreal men‚ÄĚ.

When the breadwinner role becomes impossible to fulfil ‚Äď as it did for millions of men across Africa during the economic crises of the 1980s and 1990s ‚Äď men have other facets of masculinity on which to draw in order to recover their self-esteem. Some of these alternative masculinities are positive……. ¬† but many traditional expressions of manliness are socially destructive

This is a difficult subject to discuss – one needs to be critical about the interaction between economic and social forces without sounding like an apologist for the worst aspects of masculinity [Disclaimer: I am male]. A particularly shrill example is David Willletts’s numbskull comment that feminism was to blame for the lack of working class jobs for men. It sounds like Men and Development¬†avoids these tropes:

Legal and institutional changes can embed or trigger cultural shifts, but in many cases the latter exacerbate gender inequality by entrenching harmful masculinity norms. As Andrea Cornwall notes in Men and Development, for example, laws that oblige divorced men to pay alimony without also obliging them to provide child care cement the notion that men should be breadwinners above all else, and that women should take responsibility for caring. Microfinance programs’ targeting of women reinforces the idea of the reckless, irresponsible man who cannot be trusted to invest in his family. And the criminalisation of sex workers’ clients, itself based on a misleading perception that all such men are perverted or violent, perpetuates the stereotype of men as aggressors and women as helpless victims.

I have written before about the dangers of taking men out of the question (Tim Ogden also has some good thoughts). Our tendency to do so is a natural reaction to the relative plight of women in developing countries. Yet, despite the fact that men are the cause of so much woe, we can’t ignore them as part of the solution .