The Grameen Bank and Aid Effectiveness [Week 11]

  1. Maize
    Fertilizing Maize, photo credit to B. Das/CIMMYT, used under Creative Commons

    In Kenya, the Grameen Foundation is utilizing mobile technology to assist farmers in access to information and financial assistance. This is done through the e-Warehouse system, which allows farmers to preserve their crops to make optimum profits, as well as receive loans to get those crops started.

In Ghana, mobile technologies are being used to improve maternal health across the nation. Utilizing Mobile Technology for Community Health (MOTECH) , two phone applications were created to keep expecting and new mothers updated on the proper child and health care. This same system is also used to keep records, enabling better and more direct maternal care.

One of the best things about these applications is that if a expecting or new mother doesn’t own a phone, they can still be given an ID number that will be used to get information specific to their circumstances. With this number they can use any phone, thereby creating an even bigger channel for this kind of knowledge to reach communities in need.

The Grameen Bank and the M-Pesa money system are well-functioning systems of micro-lending. There are also institutions such as the Women’s World Banking, which focuses on allotting microloans to women in developing nations, the result of which can give these women more economic and social control over their own lives. KIVA has several projects going on in SSA. They are pursuing microfinance projects in countries like Kenya and Uganda, as well as other projects directly tailored towards women. I did notice that there were some projects that could not be completed due to insufficient funds.

2. Moyo proposes three interlinked stages:

  1. Stage 1: An aid-dependency reducing economic plan to push the country in a more financially stable and independent direction.
  2. Stage 2: Adhering to rules and regulations to ensure that the revenue called for in the economic plan can be found.
  3. Stage 3: Public institutions must be strengthened, as well as held responsible for their actions and maintain transparency.

As Moyo points out, poverty from abroad can have very direct effects on developed nations. Developing nations lack security and are often stricken with civil unrest due to weak national and regional institutions. These kinds of elements can often create a perfect scenario for terror organizations. Specifically pertaining to Africa, the U.S and other developed countries are not immune to these effects as some might believe.

For example, Boko Haram is currently present in quite a few developing nations in Africa. In many of these nations, young people are at a disadvantage–there is little work, little opportunity, and little money or resources to be had. In this way, the group appeals to young people, especially those in poverty.

Sachs, however, proposes nine steps he believes are the beginning of eliminating poverty. However, I noticed that his approach isn’t as specific. He outlines some general guidelines, such as the promotion of sustainable development, but this is different for every country. To me, Moyo takes a more direct approach at creating not only sustainable solutions, but removing developing nations’ reliance on foreign aid, which is ultimately a more sound future goal.

3. While Sangu Delle’s approach seems quite worthy in the long run, I personally think that it is worrisome in the long term. Delle suggests that rather than utilizing micro-financing to grow Africa’s economy, investors need to focus on larger entrepreneurs that can grow, expand, and hire on more Africans. He has a valid point–not every African is setting out to innovate and create–and most are just

Return on Investment, taken by LendingMemo.com, used under Creative Commons
Return on Investment, taken by LendingMemo.com, used under Creative Commons

trying to live day-to-day and feed their families. But the problem with Delle’s strategy is that once you grow a few large entrepreneurs, they’ll just remain at the top.  Many developing nations in Africa struggle with stable infrastructure, and before you can go about investing capital in just a few people, the infrastructure must be strong enough to ensure that they won’t become barriers to entry later on in the market.

Andrew Mwenda presents a different view, in which the media is used to create a specific image of Africa. He says in his TED talk that the image appeal to people’s charity, therefore inspiring not only the aid that the region receives but the lack of initiative it has to become less dependent on it. The media is such a powerful tool in constructing the image of a nation, and I feel like in the same way it is used to sell Africa’s weaknesses to potential donors, it can be used to sell their growth and strength to investors as well.

From a different point of view, foreign aid can do substantial damage to local business owners and manufacturers. Herman Chinery-Hesse, a entrepreneur from Ghana, gives his point of view on what aid does to these businesses and how difficult it is to compete with NGOs when they are focused on giving what local merchants are attempting to sell for free. Malik Fal also speaks in favor of local businesses and the conclusion of aid to Africa.

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