Archive for the ‘Microfinance’ Category

The Monfort Plan

28 October, 2009

The Monfort Plan is a modest proposal that describes the new architecture of capitalism. Jonathan Swift wrote his Modest Proposal in 1729, in which he identified three classes of readers: the superficial, the ignorant and the learned. According to Swift “the superficial reader will be strangely provoked to laughter”, whereas “the ignorant reader will find himself disposed to stare”. For years the diagnose of extreme poverty targeted Swift’s truly learned readers and forgot the superficial and the ignorant.

In a recent article on This is Africa, Columbia Professor Jeffrey Sachs wondered if the world leaders would be “brave enough to invent new programmes and institutions that have the legitimacy and commitment to pull the world through this crisis to a fairer and more sustainable future”. A new architecture is the only path to the world of 2050, a world of cornucopia (food abundance) and eutopia (universal welfare). A new architecture is the only approach to building up new programs and institutions that have Sachs’ legitimacy.

Extreme poverty continues to perpetuate because we have failed to eliminate its causes. Extreme poverty is originated and perpetuated because developed countries have failed to reform in six areas that represent the Axis of Feeble, an Axis that has to be defeated in an intellectual war with Weapons of Mass Persuasion. The six components of the Axis of Feeble are agriculture, trade and labor rights, small arms trade, extractive industries, financial architecture and brain drain.

Past wars defeated the Axis Powers and current wars aim at defeating the Axis of Evil. Past and current wars had to identify and defy the enemy and the opposition forces to be defeated. The Axis of Feeble is maintained and perpetuated by the Pirates of Heartless Capitalism and the Bretton Woods Elites, who will use their propaganda tools to oppose a paradigm shift.

In the first part of his autobiography, the American diplomat George F. Kennan pointed out that “We of this generation did not create the civilization of which we are part and, only too obviously, it is not we who are destined to complete it. We are not the owners of the planet we inhabit; we are only its custodians”. The Axis of Feeble will not be defeated unless all custodians become passengers of a Journey of no return, and not simple spectators.

My forthcoming book may be appealing to the truly learned readers. We must all become passengers of the Journey of our lifetime. The Monfort Plan is designed having in mind every audience. It proposes new content with the ability to entertain every audience. It is through entertainment that the average citizen in Europe and North America can be educated in issues that are vital for the future of our planet and the humankind. It is through education that the average citizen can raise his or her level of awareness. Only if we, as a society, raise our level of awareness, will we welcome reform in the six components of the Axis of Feeble.

For decades we lived with an architecture that played its role, an architecture that has become a caricature of what it once was, a vintage architecture not designed for the challenges of the twenty-first century.

We live the best world we have ever inhabited. We are approaching our tipping point as a global society. We must become men and women of stature. I identified the One Hundred Expert Dreamers that will become the best team of experts that has ever been put together to serve the global public interest. With their combined wisdom and intellectual strength the Expert Dreamers will defeat the Axis of Feeble and the Pirates of Heartless Capitalism.

We are not the dwellers of the blue planet, only its custodians. We must recuperate the courage of the visionaries of the 1940s and 1950s who created an architecture that changed the world for good. The Expert Dreamers are the disciples of Marshall and Truman, of Clayton and Kennan, of Monnet and Schuman. The orthodox thinkers and the current political leaders condemned the imagination and creativity in the policy-making process to perpetuate in the cage of the orthodox. We must start living a life in full color. We must again love and dream. The Sleeping Beauty must wake up and embrace the forgotten continent. The American friends will fall in love, one more time, with the Sleeping Beauty.

It is time. It is our time. Let’s move ahead.

Jaime Pozuelo-Monfort is Author of The Monfort Plan (Wiley Finance, April 2010). More information can be found at http://themonfortplan.com

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Gateway to Microfinance

17 September, 2008

If you have never visited the microfinance gateway, visit it here. It has the latest news in the microfinance area. Recent headlines include:

  • African Union urges politicians to stay away from microfinance (i.e. don’t engage in political meddling)
  • Record Bank expansion in Kenya ( the number of Kenyans with bank and savings accounts tripled last year, from 3.3 million to 10.1 million)
  • The Asian Development Bank has set a new poverty line (the new estimates show a fall in poverty across the region).

There is also an interview with Fazle Abed, founder and chair of BRAC. He describes BRAC’s approach as not just ‘microfinance-plus’, but ‘microfinance multiplied’. Abed sums up this approach as:

“At the heart of BRAC’s approach to development is organizing the poor. Organizing the poor into microfinance groups builds community and enables them to address the constraints they face. BRAC’s “multiplied” approach leverages the power within these groups to develop a sustainable, social entrepreneurial approach to deliver essential services to the poor. BRAC helps the group build essential linkages that integrate members into the society and market while ensuring they receive fair treatment, prices and practices”.

The micro-financiers amongst you should also check out the latest BWPI working papers, including Farhad Hossain and Tonya Knight on ‘Financing the Poor: Can Microcredit Make a Difference’, which takes an in depth look at Bangladesh. We have papers on microfinance in Barbados and India, as well.

Why so Many Malnourished Children?

2 February, 2008

Maternal and child undernutrition is the cause of 3.5 million deaths, 35% of the disease burden in the under-fives and 11% of the total global disease burden — according to a new study by Robert Black and team in The Lancet (go here). Vitamins, minerals and a daily feed of breast milk could prevent a third of these deaths (lack of Vitamin A alone accounts for 600,000 deaths every year).

Improved nutrition in early life also makes for more productive adults — enabling them to earn higher wages (see this paper by John Hoddinott et al.). They can then afford to better feed their children. So, reducing maternal and child malnutrition can help break the transmission of poverty across the generations (see Kate Bird’s recent CPRC overview).

These numbers makes a powerful case for investing more in child (and mother) nutrition to defeat chronic poverty. But what to do exactly? The 2004 Copenhagen Consensus decided that providing micronutrients had the best cost-benefit ratio of all nutrition interventions. And this intervention was No.2 in the experts ranking of 17 possible ways to improve the world (control of HIV/AIDS was No.1).

Although malnutrition kills about 2 million under-fives every year, the world spends only $250 million on nutrition aid — according to UNICEF’s Bruce Cogill. This compares with the $3 billion spent on HIV/AIDS, which kills about 380,000 children (under 15) (Report here). It’s hard to make these resource allocation decisions, but clearly donors need to step up nutrition support — and be creative in raising the funds (increase taxes on foods associated with obesity in the rich world? Its one possibility. Generates a ‘double dividend’: more money for hungry kids, and less diabetes and heart disease in the North).

Those working with the micro-finance revolution will be pleased to know that women’s access to micro-credit improves the nutrition of young girls (see this UNU-WIDER paper by Basudeb Guha-Khasnobis and Gautam Hazarika). It helps women earn an income to feed their families, especially girls who often get less priority when times are hard. So that’s another tick in the box of micro-finance.

So far so good. But these great interventions are now pushing against a countervailing force: the recent and rapid run-up in world food prices. What is this doing to child nutrition? Let us know.

Reasons to be Cheerful, Part 1

20 January, 2008

The late, great, Ian Dury, had a hit with his song ‘Reasons to be Cheerful‘ back in the 1970s. So, with the start of the new year, and in the spirit of the song, lets list some reasons to be cheerful in the first month of 2008:

1. The One Laptop Per Child is now shipping — over a quarter of a million to Peru alone; it sells at $188, and a new commercial venture aims to get these computers down to $50 (see our recent post).

2. The World Bank’s soft-loan arm (the International Development Association) got replenished late last year — after worries that the Wolfowitz debacle would sink the Bank’s funding, the donors rallied round, and Britain became IDA’s biggest contributor (giving the Americans pause for thought: see ‘Bested by the Brits’ in the NYT here).

3. More Americans started to treat climate change seriously. And the Europeans got their act together, and pressed the US hard at the Bali meeting in December (see a summing-up on the CDG blog here). The Republicans ended their state of denial about climate change, finally catching up with the big shift in public opinion (see The Economist here).

4. Economic growth in the developing world keeps motoring, despite the US buckling under the sub-prime mortgage crisis. The South — or at least the Asian part of it — might be decoupling from the North, for the first time.

5. Remittances from North to South continue to rise. Africans living in the UK send home some $400 million a year to relatives (but African governments need to do more to help these transactions, and the resulting investments).

6. The Micro-finance game just keeps getting bigger. What used to be a minority sport has now gone main stream. Lots of product innovation going on, with micro-insurance now starting to catch up. ASA of Bangladesh comes top in a recent Forbes ranking of Microfinance institutions.

7. The Ghanains are punching above their weight in the world of diplomacy. Ghana’s President John Kufuor (also chairman of the African Union) and Kofi Annan are trying to bang heads together in Nairobi to resolve the elections crisis — in the pleasant but firm way only Ghanains can.

8. Iain Duncan Smith, ex leader of the Conservatives, gave a barnstorming performance at the Blackpool party conference on the theme of Britain’s ‘broken society’. And he’s highlighted the Manchester of poverty alongside wealth.

9. More young people than ever want to get involved with development. Why? Maybe its all the travelling during those gap years or older siblings burnt out by the corporate world. Check out the BOND (British Overseas NGOs for Development) site here. If you are a young economist take a look at the ODI Fellowship scheme.

10. The Web makes it possible to find almost any piece of poverty research you want. For those of us who started out in the days of type-written manuscripts this is still amazing.

er, that’s it…. but I’ll try and think of more, and return with Part 2 soon

Incidentally, Ian Dury was one of UNICEF’s childrens ambassadors in his last days. There’s a great pic of him here with a Zambian boy on one of his Africa trips. He campaigned tirelessly to eradicate polio having been disabled by the disease when a child (relatively common in Britain of the late 194os when he got it).

eBay moves into microfinance

31 October, 2007

Last week eBay launched a web-site (www.microplace.com) to allow small investors (from $100) to put money into micro-finance. Other micro-finance sites exist (such as http://www.kiva.org) but this is the first one that is aimed at ordinary investors. More can be read here.

The investments apparently mature in around 2 to 4 years and pay a return of 1.5 – 3%. The interest rates charged on microfinance loans are, of course, quite high, often around 40% but sometimes significantly higher. An explanation for the high interest rates associated with microfinance loans can be found from the Consultative Group to Assist the Poor, here.