Author Archive

Mobiles for Impoverishment?

15 January, 2009

By Richard Heeks

If you had to choose three words to sum up the future of ICT4D, they might well be “mobiles, mobiles, mobiles”. And the way to that future is being more clearly indicated as the promise of mobiles-for-development research comes to fruition; reflected, for example, in the recent 1st “m4d” international research conference.

But such research is starting to throw up some perplexing – even worrying – findings about mobiles. At its bluntest, such research suggests mobiles are doing more economic harm than good, and sometimes making poor people poorer. Let’s have a look:-

a) Kurt DeMaagd’s “Pervasive versus Productive” paper analyses country-level data on mobiles and national productivity as measured by GDP. He finds that, short-term, there is a negative association between investment in mobiles and GDP in developing countries, possibly because “mobiles represent a diversion of resources away from other productive uses”.

b) Kathleen Diga’s “Mobile Cell Phones and Poverty Reduction” dissertation (Ch.5) shows at the micro-level that some rural Ugandan households are sacrificing expenditure on purchased food (e.g. sugar, milk, flour) so they can pay for mobile airtime. This includes households that “admit to some days of hunger in order to maintain the mobile phone”. They are also diverting savings into mobile phone purchase and saving for airtime by foregoing attendance at social functions.

c) Hosea Mpogole, Hidaya Usanga and Matti Tedre’s “Mobile Phones and Poverty Allevation” paper at the m4d conference researches mobile use in rural Tanzania. “48% of respondents reported that they sometimes substitute important needs (e.g. education, buying food, and clothes) for mobile phone ownership/usage”. Modal monthly costs of mobile phone maintenance and use were US$10-20: around 30% of respondents’ monthly income. And, in a digital variant on the workload of water-carrying in rural Africa, many respondents were undertaking 3-7 kilometer walks 2-3 times per week in order to recharge their mobile batteries.

Very interesting research. To which one might offer four responses. (more…)

The WTO’s war on the African, Caribbean and Pacific countries: Part 2

3 June, 2008

In a previous post I examined the recent ruling from the WTO Dispute Settlement Body over the EC’s banana quotas for ACP countries. This was simply the latest in a number of issues that have been damaging to the interests of ACP countries. Another concerns the dispute between Brazil, Australia and Thailand on one side and the EC on the other over sugar. This had the positive effect of reducing the EC’s colossal sugar subsidies. In the latest year reported to the WTO these were reported to be €5.6 billion, on a crop of sugar worth a total of €4.8 billion. But the ruling also had a strongly negative effect on ACP countries because it removed the preferential market access quotas that they previously had. These quotas allowed ACP countries to export a certain amount of unrefined sugar to the EC at the EC’s high internal price rather than the much lower world price. The effect of removing this was estimated to cost the ACP countries $352 million a year.

Finally, there is the issue of Economic Partnership Agreements (EPAs) currently being negotiated by the EU. These result from the expiry at the end of 2007 of the previous Cotonou Agreement that granted preferential market access to ACP countries into the EC market. The Cotonou Agreement was not compliant with WTO rules since it did not include any reciprocal preferential market access for EC exports into ACP countries, but was entirely one-way. As such, it could be challenged by other developing countries that were not part of the ACP group that felt that their exports were harmed by the arrangment. In order to prevent this, the EU (more…)

The WTO’s war on the African, Caribbean and Pacific countries: part 1

28 May, 2008

Last week, the WTO’s Dispute Settlement Body issued its decision on whether or not the EC had complied with the previous ruling in the long running banana dispute. In brief, the EC allows 775,000 tonnes of bananas to be imported from the African, Caribbean and Pacific (ACP) countries duty-free each year, while imports from other countries have to pay a (fairly substantial) tariff. The US has challenged this, leading to a seemingly endless dispute.

The ruling is that the EC’s preferences are inconsistent with WTO rules on non-discrimination. The Dispute Panel appeared to accept the EC’s contention that the preferences did not reduce the value of US banana exports in any way, but nevertheless the US has faced diminished ‘competitive opportunities’ due to the EC banana rules. That is, the handful of banana growers in the US were unfairly affected by not having full access to the EC market.

In reality it is not bananas grown in Florida and Puerto Rico that motivated the US to challenge the EC preferences. Rather it is the very many more bananas grown by US corporations in Ecuador, Columbia, the Philippines, Costa Rica and other countries that it is concerned about. Over 50% of total banana exports are controlled by just two companies, both of which are American, grown mostly in those four countries. That these countries already account for around 60% of EU banana imports doesn’t seem to matter.

The US’s ‘competitive opportunities’ that the WTO is steadfastly protecting come at the expense of some of the poorest countries in the world. Estimates made by the FAO have suggested that if the EU abandons the quota, as they have been instructed to do by the WTO, and replaces it with a tariff of €75 per tonne with ACP countries given duty-free access, exports from Caribbean ACP countries will decline by 30% by 2010. For (more…)

Where did all the aid go?

8 April, 2008

The latest figures on aid released by the OECD are less than encouraging. The overall levels of aid fell for a second year running, from US$104.4bn in 2006 to US$95.6bn in 2007 (adjusting for inflation), representing a fall of 8.5% in real terms. Part of the reason for this is the particularly high levels of aid over the previous few years as large amounts of debt for Iraq and Nigeria were written off. The UK’s figures do not make good reading, with aid standing at $9.9bn in 2006 (once debt relief is removed) falling to US$8.8bn in real terms in 2007. This despite the pound rising against the dollar, which will serve to inflate the dollar value of the UK’s 2007 figures.

This pushes us further away from the target of aid reaching 0.7% of GDP. Some countries continue to do well, notably Norway at 0.95%, Sweden at 0.93% and Luxembourg at 0.90%. The UK has reached half-way, at 0.36% of GDP. Though they give the most in absolute terms (at $21.8bn), the US languishes at the bottom of the chart with only 0.16% of GDP given to aid. A number of European countries have pledged to reach the 0.7% target, notably Belgium (by 2010), Finland (2010), France (2012), Spain (2012) and the UK (2013), but on current trends this may seem like empty words. Furthermore, as Oxfam have pointed out, the G8 countries pledged at the Gleneagles summit in 2005 to give an additional $50bn in aid by 2010, but look likely to miss this target by as much as $30bn.

If there is to be any hope of achieving the Millennium Development Goals, aid budgets will need to increase. The UN is currently organising a follow-up conference to examine progress since the Monterrey Conference of 2002 on finance for development. Perhaps the opening session should ask why, when only one of eight regional groups is on track to meet all the MDGs, aid from the rich countries is declining.

US ruled to be non-compliant over cotton subsidies at the WTO

19 December, 2007

The WTO Dispute Settlement Panel issued its ruling yesterday on whether the US had complied with the previous decision against US cotton subsidies. It found that generally the US had failed to make its cotton regime consistent with its WTO obligations.

This comes as the latest episode in an ongoing dispute between Brazil and the US that was launched in 2002, when Brazil took the US to the WTO’s Dispute Settlement Body over the subsidies paid to cotton producers. These subsidies, around $3.9 billion a year, have been argued to depress world cotton prices by up to 26%, which has had a catastrophic impact on the cotton producers of West and Central Africa. The original ruling was given in 2004 and went largely in favour of Brazil. This required the US to make substantial alterations to its subsidy regime to make it consistent with WTO obligations.

Yesterday’s ruling is the follow-up report on whether the changes the US made had been sufficient to bring it into compliance with the original panel’s findings. Its key points found that:

  • US marketing loans and counter-cyclical payments  continued to have a significant suppression effect on prices that was inconsistent with the Subsidies and Countervailing Measures agreement of the Uruguay Round, and the US had therefore failed “to take appropriate steps  to remove the adverse effects or … withdraw the subsidy” as was required by the original ruling against them.
  • US export subsidies continue to be in excess of the commitments made in the Agreement on Agriculture. Export credit guarantees were also ruled to be inconsistent with the Subsidies and Countervailing Measures agreement.

The panel therefore ruled that the US must withdraw the prohibited subsidies without delay and bring its measures into conformity with the Agreement on Agriculture.

So what happens now? Within 30 days of the report’s publication, the US must state its intention to comply with the findings. They will then be given ‘reasonable time’ to change the measures. If it still fails to change the measures within this time, Brazil can seek compensation in the form of raising duties on US exports. These can continue until the US brings itself into compliance with the panel’s ruling. Brazil is a sufficiently large economy with sufficient trade with the US for this to be an effective measure.

For the cotton exporters of Africa things are less positive. While the ruling is clearly good news for them in that it continues the pressure on the US to remove its cotton subsidies, there will still be no quick end to US subsidies. There is a long way to go before their cotton growers will see any improvement in world prices.

UK contribution helps to give the World Bank its largest ever budget

17 December, 2007

Britain has pledged more than £2 bn ($4.2 bn) over the next three years to the World Bank, an increase in its support of 50%. This made the UK overtake the US as the biggest contributor to the Bank’s budget, despite the US also increasing its donation by 30% (to $3.7 bn).

A couple of years ago I seem to remember the UK withheld its money to the World Bank to express concern over the conditionality attached to Bank loans and the dubious track-record these policies have had in reducing poverty. Perhaps it’s just me, but I was unaware that anything had changed with respect to Bank conditionality, which makes Britain’s huge increase in support rather hard to square with their supposed concern about the Bank’s policies. Other countries continue to express concern. Norway has withheld 25% of its increase in funding in protest over conditionality.

You can read more about it at Forbes, and in the Guardian.

Social mobility in the UK: poor but not getting worse

14 December, 2007

The Sutton Trust yesterday released a report (available here) on social mobility in the UK, which concluded that the UK continues to perform poorly on measures of social mobility. Between 1958 and 1970 there was a well documented decline in social mobility. For example, as the report states, for sons in the bottom quartile the proportion remaining in the bottom quartile is 30 per cent for children born in 1958 and 38 per cent for those born in 1970. (Sons are used to remove the effect of changing levels of women’s labour market participation). Also, there was less likelihood of those born in 1970 making large movements in economic group, with the percentage rising from the bottom quintile to the top quintile at 18 per cent in 1958, declining to 11 per cent in 1970. A significant factor in explaining this fall in social mobility is the rising association between family income and accessing higher education.

Evaluations of more recent data finds that since 1970 there has been little change in intergenerational mobility. Social immobility ‘appears to have flattened out’, although it has not started to improve the report concludes. Britains comparatively high level of social immobility therefore continues. This has a major impact on the attainment different groups can expect. The report says: ‘Children in the poorest fifth of households but in the brightest group drop from the 88th percentile on cognitive tests at age three to the 65th percentile at age five’. By contrast, those from the richest households who were among the least able at three moved up from the 15th percentile to the 45th percentile by the age of five. If this trend were to continue, they would overtake the gifted children from poor backgrounds by the age of seven.

Government recommits to UK Child Poverty targets

11 December, 2007

Ed Balls gave a speech yesterday on child poverty before launching his Children’s Plan today in the Commons. He recommitted to the aim of halving child poverty in the UK by 2010 and eradicating it by 2020. Meanwhile, research by the Department for Work and Pensions has shown that 41% of the British public believe that there is ‘very little’ child poverty in Britain (approximately 3 million children are classified as being in poverty – roughly a third of the total). Around 52% think that there is quite a lot of poverty. Voters are also increasingly likely to blame the poor themselves.

There are a couple of articles in the Guardian about it, one on Ed Ball’s speech here, and a comment by Polly Toynbee here.

China in Angola

11 December, 2007

This week’s Crossing Continents on BBC Radio 4 is an interesting examination of China’s much discussed relationship with Africa using China’s investment in and aid to Angola as a casestudy. It will be available online here until only Thursday the 13th for download or podcast, so if you’re interested get in there soon.

Poverty in Zimbabwe

7 December, 2007

I’m sure that everyone is well aware of the problems Zimbabwe is facing but I thought this report from Harare by Martin Fletcher of the Times was worth a quick read if you want to remind yourself of the dreadful situation faced by people there.