Living On Pennies

Zell Karvinsky

2009-01-26T22:29:00.000-08:00

http://articles.latimes.com/2003/nov/30/news/adna-giver30

Zell Kravinsky doesn’t get it. He has tried, he says, to live a moral life. How could he be the bad guy?
Starting from nothing, he made millions – and then gave millions away to save human lives.
Then, this summer, he relinquished something more precious. He donated one of his kidneys to a complete stranger, a poor woman who had struggled through life.
And yet, he has suffered insults and attacks – by Internet posters, like the man who called him “a nut job.” By newspaper columnists, like the one who questioned his motives.
“Generous man or heartless lunatic?” read the headline.
Kravinsky is befuddled. “I’m not generous and I’m not insane,” he says. “Maybe the sanest thing I do is to give things away.”
Perhaps the hostility has something to do with the way Kravinsky sneaked out of the house and to the hospital on that July morning so that his wife, Emily, could not stop him. She feared that he was risking his life and that one of their four children might need that kidney someday. His actions imperiled his marriage.
Perhaps it has something to do with some of the inflammatory things Kravinsky said in the spotlight’s glare. No one should have two houses when people were homeless, he said, and no one should have two kidneys while others struggled to live without one. And he suggested that he might consider giving his other kidney to someone who would better serve humanity.
Which would, of course, be the end of Zell Kravinsky.
“I should just give all of me to those who need me, whether it is my body, my money or myself,” he says.
The things Kravinsky does, the things he says, make some people uncomfortable. He is somewhere out there alone on the far outreaches of altruism, and logic leads to one of two conclusions: Either he’s crazy, or everyone else is selfish.
“Maybe it’s a kind of rationalization, but at some point, we get comfortable with what we’re doing for other people and we say, ‘That’s enough,’ ” says Barry Katz, a friend of Kravinsky’s.
Kravinsky has never reached that point. Katz says his friend’s very existence forces the question:
“If you could do more, and you’re not doing it, why not?”
*
Donnell Reid cannot understand the criticism – but then, Zell Kravinsky’s kidney is at work inside her, allowing her a normal life after eight years of dialysis. To her mind, her benefactor is a hero, while his detractors “aren’t willing to put their neck out for someone they don’t know.”
But she, like nearly everyone else, doesn’t understand what drives Zell Kravinsky. “It baffles me,” she says.
“Zell’s a very complex man,” says James Kahn, a friend since 1969, when they were sophomores at Philadelphia’s Central High School. “You talk to him for just a little while, you realize that he has all kinds of interesting facets, some of them seemingly contradictory.”
When Kravinsky was 12, he picketed Philadelphia’s City Hall, demanding that low-income housing be built in the city’s very white Northeast, where his family lived. “It didn’t endear me to my neighbors,” he says.
Coincidentally, that same year, Kravinsky bought his first shares in the stock market.
His mother was a teacher, his father a printer with radical leanings. Their son skipped a year of high school and a year at Dartmouth, where he got a degree in south Asian studies; at the University of Pennsylvania, he got doctorates in rhetoric and Renaissance literature.
He would teach at Penn, but only after spending seven years in the slums of North Philadelphia educating emotionally disturbed kids.
But by then, he was taking a capitalist path as well. He bought a small apartment building in the Northeast and rented it to blacks, although he says neighbors broke its windows and defaced it with graffiti. Still, he made “a small profit” and began buying, fixing and selling properties around the Penn campus in West Philadelphia.
“He always lived in the worst apartment of his worst building,” Katz says.
Eventually, he would buy and sell other, larger properties and invest in sophisticated real estate instruments.
“The fellow who puts a dollar in and gets two out is very excited. What excites me is to put $1 in and get $1.01 out” over and over again, at little or no risk, he says.
He bought and sold shopping malls, large parking lots, distribution centers. “I was on a tear, I was shooting the moon.”
The millions piled up, but the Kravinskys do not act like millionaires. They live in an older twin home. Kravinsky drove a battered ‘86 Toyota, giving it up for a minivan only when friends expressed fears for his children’s safety.
“We were constantly encouraging him to spend a little more of his money and make his life and his family’s life a little more comfortable,” Katz says. “Buy a new house, a new car, go on a vacation, buy his wife a present.”
He wouldn’t listen. From the very beginning, Kravinsky says, he had a grand plan: He would make millions, and then give them away.
He was steeled in his resolve by the death of a beloved sister, Adria, to cancer in 1984. “She was a rare soul, exceptionally good-natured, not a mean bone in her body,” he says.
So in the last two years, Kravinsky and his wife:
* Made a large donation to the Wordsworth Academy, a school for special-needs children.
* Created a $6.2-million Adria Kravinsky Endowment for Public Health at the CDC Foundation, to support the work of the federal Center for Disease Control and Prevention. Kravinsky didn’t have a suit to wear at the announcement; he purchased one for $20 at a thrift shop.
* Donated 1 million square feet of Ohio commercial real estate worth $30 million to Ohio State University’s School of Public Health.
He would retain some money for his family’s needs – funds were set aside for the education of his children, who are all under 13. But otherwise, the aim was to give away his fortune.
Some of his friends thought that this was excessive. But Kravinsky was adamant. He knew, he says, that he could always make more money – although he’d give that away too.
He knew too that the donations were just a prelude to a more vital gift.
Some time ago, he read an article in the Wall Street Journal about kidney donations. According to the National Kidney Foundation, 59,255 Americans are on the waiting list for a kidney donation; 3,641 died last year while they waited. Blacks are especially in need – they represent about a third of those on the list.
Kravinsky took the clipping, folded it up and put it in a drawer next to his computer. He decided that he would donate a kidney when his round of philanthropy had ended.
“I thought of it as a treat to myself,” he says. “To give a kidney would be vastly satisfying” – a profoundly moral act that would save a life.
He wanted to donate his kidney to a low-income black person, so he chose Albert Einstein Medical Center, which serves heavily black North Philadelphia. But he says the hospital tried to dissuade him – because it feared lawsuits if something went wrong, he theorizes.
Not so, says Dr. Radi Zaki, who performed the surgery. The reason Kravinsky was grilled by the doctors and sent to a psychiatrist was to ensure that he really wanted to do this.
Yes, he kept insisting, he was sure.
Zaki had performed 200 kidney transplants, but he had never taken a kidney from a living donor and placed it in the body of an unrelated recipient.
“To me, when I first saw him, I thought this person must be a communist,” Zaki recalls.
In early July, hospital officials introduced him to Donnell Reid. They talked for two hours, and she told him the story of a hard life – orphaned by age 8, she had suffered through an abusive relationship, then worked as a counselor for a hotline for abused women. She learned that she suffered from hypertension only when her kidneys shut down. Eight years of dialysis had taken its toll.
They talked about how they both liked to read, and how they both liked poetry. At no point did he give any indication that he was wealthy. She thanked him, but he said he deserved no thanks because he should be doing far more.
“She’s quite infinitely a better person than I am,” he says. “Less vain and self-centered.”
On July 22, Kravinsky left his house in the early morning, long before his family awakened, and went to the hospital. The surgery lasted three hours.
Kravinsky’s wife learned about it that day at the supermarket, when a newspaper headline caught her eye. By then, her husband’s right kidney was attached to another woman.
*
To Kate Fratti, columnist for the Bucks County Courier Times, Kravinsky is selfish.
“From my vantage point,” she wrote, “Zell Kravinsky is no better than any person who’d consider turning his back on his or her young family to fill a personal need – another partner, an addiction, the need to ‘find himself’ in midlife or, in Zell’s case, self-glorification.”
Kravinsky sighs. A slight man of 49 with close-cropped hair that is fading from red to gray, he speaks quietly but intensely as he ticks off his defenses.
First, the danger was slight – only one in 4,000 donors suffers any complications. Second, the chances that his children might need a kidney someday – and that a sibling wouldn’t have a better kidney to contribute – are minuscule.
Besides, he asks, how could he refuse to help a woman suffering from a very real, very serious illness because his children might someday be sick? And why are his children’s lives more important than other people’s?
“They say charity begins in the home. I don’t know why it ends at home,” he says.
He has gone public with his donation only because he hopes that it will inspire others to donate organs, he says. Any glory, he says, was outweighed by the criticism he has faced and by the anger of his wife, who threatened to leave him.
Emily Kravinsky, a psychiatrist, did not return a call seeking comment. “We’re working things out,” her husband says.
Singer Pat Boone is trying to help. Boone, who champions an American blood-donor registry through the Web site usblooddonors.org, contacted Kravinsky after he heard about his donation. And he wrote to Emily Kravinsky, urging that she reconcile with her husband.
Zell Kravinsky, he says, “is an American hero.”
The Pennsylvania House of Representatives agrees; it passed a resolution describing Kravinsky as “a shining example of humanity and beacon of compassion.”
Letters arrive daily praising him. Among them, of course, are pleas for help from people who have maxed out on their credit cards or fallen behind on mortgage payments. He’s written a few checks, he admits.
The praise, he says, is “disproportionate to my insufficient charity” – and he means it.
He could never give enough, he could never be good enough. Sometimes, he believes that there is a thin membrane – the thickness of cellophane – separating him from a perfectly moral life, and if he just pushed a little harder, he could press through it and love everyone and be totally self-sacrificing.
Still, he probably will not try to donate his other kidney, in deference to his wife and children – “It’s a strong temptation, but I don’t think I’ll act on it.”
Instead, he’s looking into other donations: his bone marrow, a lobe of a lung, perhaps part of his liver, anything he can give, anything someone might need.

What Can You Buy for a Dollar?

2008-11-22T14:09:00.000-08:00

Published on World Resources Institute (http://www.wri.org/)

What can you buy for a dollar?

Country $1 buys

Bangladesh (Chittagong) 1 Dozen Eggs
Kenya 8 Cups of Milk
Ghana 2 1/3 Bottles of Palm Oil
Ghana 4 1/3 Bottles of Coke
Philippines 4/5 of a Big Mac
USA 1/3 of a Starbucks Tall Latte
Uganda 1/46 of a Bicycle
Bangladesh 1/3 of a Sari
Ghana 1 1/2 Pairs Rubber Sandals
Bangladesh 7 Bars of Soap
Ghana 87 Tablets of Penicillin
India (Andhra Pradesh) 1/2 Unit of Blood for a Transfusion
USA 1/150 of the Average Daily Cost of Nursing Home Care
Tanzania (Nzanza) 1/3 of a Liter of Pesticide
Ghana 4 1/3 Rolls of Toilet Paper
Ecuador (Quito) 1/500 of a Washing Machine
India (Andhra Pradesh) 2-3 Pieces Bamboo for Building
Uganda (Mbale) 1/1500 of the Cost of Building a New Home
India (Mumbai) 1/3 of a Regular Price Evening Movie Ticket

A family of four interviewed in rural Bangladesh calculated that they spent roughly 80 cents a day on food and fuel, allowing them to buy and cook two meals of rice and beans, as well as an occasional piece of meat.

Medical costs came to 3.3 cents a day ($12 per year), mainly on medicines for the husband's coughs and colds.

Other family expenses included 4.1 cents per day on clothes ($15 per year), 1.6 cents on school books ($6 per year), and 2.2 cents ($8 per year) visiting and giving presents to relatives. Family health and food costs thus accounted for more than 90 percent of the household's basic expenses (Rutherford 2002:10 [1]).

2008-09-11T20:07:00.001-07:00

Millions for Millions

This year’s Nobel Peace Prize winner and some high-tech entrepreneurs are competing to provide credit to the world’s poor.
by Connie Bruck October 30, 2006

Over the Labor Day weekend of 1995, a ponytailed, bearded young software engineer named Pierre Omidyar wrote a code that enabled people to buy and sell items on the Internet. In the first few weeks after the program was introduced, items ranging from a Maxx comic book to a 1952 Rolls-Royce Silver Dawn changed hands. That program eventually became eBay. Not long after the company went public, in 1998, Omidyar’s share of the stock offering was roughly ten billion dollars, and he became the richest thirty-two-year-old in the world. He found the experience slightly unsettling—he told friends that he had never planned to get rich—and he continued driving his Volkswagen Golf. With his wife, Pam, he started a foundation to give away large sums of money, but he was frustrated by the constraints and inefficiencies of the nonprofit world. Omidyar was searching for a way to change things on a grand scale, and, like many other highly successful young West Coast entrepreneurs, he became interested in a field called microfinance, or microcredit. In November, 2004, he and Sergey Brin and Larry Page, the co-founders of Google, and other leaders of the high-tech community gathered at the San Francisco home of the venture capitalist John Doerr for a weekend session with Muhammad Yunus, who is considered the godfather of microcredit.

Yunus, a silver-haired man of sixty-six with a round, luminous countenance, is a highly gifted interlocutor between the extremely poor in the developing world and the West, and for years he had been seen as a candidate for the Nobel Peace Prize. (This December, he will go to Oslo to receive it.) During the famine of 1974 in Bangladesh, when the dying lined the doorsteps of the better-off in Dhaka, Yunus, an economics professor at Chittagong University, found the theories he was teaching maddeningly irrelevant; so he went into a neighboring village and began talking to the poor. He experimented with ways of helping them—initially, he lent twenty-seven dollars to a group of forty-two villagers—and before long he became convinced that he had a remedy for their condition: providing very small individual loans to the impoverished to start activities ranging from making bamboo stools to buying a dairy cow.

In 1976, after local banks refused his entreaties to make the loans, he resolved to do it himself, and he founded the Grameen Bank.

Yunus is a mesmerizing salesman. In the eighties and early nineties, the Grameen Bank received close to a hundred and fifty million dollars in soft loans and grants; today, funded by savings deposits from borrowers and others, it essentially supports itself. It has disbursed more than $5.3 billion to nearly seven million borrowers who have no collateral; ninety-six per cent of them are groups of women, who meet once a week and, through incentives, help to insure their individual loan repayments. (Traditionally, Third World banks lend only to men. Yunus says that he developed the policy of lending mainly to women not only because they were more responsible about re-paying the loans but because families benefitted more when the women controlled the money.) To cover the high cost of servicing these small loans, borrowers pay interest rates of up to twenty per cent, and Grameen claims that it recovers ninety-eight per cent of the loans. Some of Grameen’s numbers have been challenged, but no one disputes Yunus’s assertion that, contrary to traditional banking doctrine, the poor can be reliable borrowers, even at high rates of interest. These days, Yunus raises money for the Grameen Foundation, a global nonprofit group that supports microcredit institutions around the world. Many are related to the Grameen Bank, but only loosely; Yunus believes in locally designed, run, and controlled institutions.

As microcredit has changed in the past thirty years, achieving broad recognition and even some early commercial success, Yunus has modified his methods, but he has never wavered from his goal. He insists that microcredit can lead to a world in which poverty has been extinguished and that eventually, as he puts it, there will be “poverty museums.” He told his audience at Doerr’s home that more than fifty per cent of the Grameen Bank’s borrowers who have been in the program for more than five years have risen out of poverty, according to a simple measurement system that he himself had devised. (To have graduated from poverty, a family must have, among other things, a house with a tin roof; clean drinking water; a sanitary latrine; warm clothes for winter and mosquito netting for summer; about seventy-five dollars in a savings account; and schooling for the children.)

At lunch, Janet McKinley, a Grameen Foundation donor who used to run a major mutual fund and retired at the age of forty-nine to concentrate on microfinance, told the group that in 1995 she had visited a small program run by the Vietnam Women’s Union, and saw how a loan of twenty dollars could change a woman’s life. Her companion, George Miller (now her husband), gave the union a five-year grant of a million dollars, enabling it to expand from five hundred women to ten thousand, so that the more successful participants could get bigger loans and hire other women. McKinley and Miller returned each year. “There was a woman who started out with a mud hut,” McKinley recalled. “When we came back, she had a three-room house with a cement floor, and the pigs were in the hut she had stayed in before.” When the women first came for loans, “they sat hunched, looking down into their laps. They would take the money and fold it into a hairpin behind their ears, looking so frightened—because, they said, they were afraid they couldn’t pay it back. Two or three years later, these same women were running businesses, and were often involved in politics in their village.” She continued, “Does everyone succeed? No. But it is the same in the investment business. You don’t want to take a lot of risk? Buy some ducks. But the more risk-taking borrowers will pool their loans and buy a baby water buffalo and rent it to men for farming. And then there are those who blow right past livestock and build a brick factory.”

That afternoon, the participants broke into discussion groups, and were given forty-five minutes to devise a solution to end world poverty. The entrepreneurs weren’t humbled by the challenge. “The inner graduate student in all these people came out,” Alex Counts, the Grameen Foundation’s president, said later. “They were all rushing up, taking turns at the whiteboard. And they took it so seriously!”

None, perhaps, more than Pierre Omidyar. Born in Paris to Iranian parents, Omidyar came to this country as a child in the nineteen-seventies, and viewed himself as a truly transformative capitalist. His purpose in creating the program for what became eBay was to create a perfect market, something realized only in economics textbooks, where buyers and sellers would all have equal access to information and opportunity. And microfinance, after all, was about equal access to capital.

Counts recalled that Omidyar, who is given to phrases like “Wow!” and “That’s neat!,” kept refining the numbers throughout the day. Omidyar was struck by Yunus’s statement that the poor are natural entrepreneurs, essentially because their business activities are a matter of survival. “By giving them the tools, you unleash the entrepreneurial instinct,” Omidyar told me. Janet McKinley said, “All these wealthy entrepreneurs loved it, because they say, ‘This woman is an entrepreneur—just smaller scale.’ ”

The event at Doerr’s home had been billed as a learning session, not a fund-raiser, but several participants insisted that they be given a chance to contribute. Alex Counts introduced an idea that had been discussed at the Grameen Foundation for some time: a guarantee fund. If the guests would each guarantee a certain amount of money, the combined pledged funds would constitute a letter of credit, which Grameen could present to banks in various countries to induce them to loan to local microfinance institutions—in larger amounts and at a lower rate than they otherwise would. The donors’ money could continue to work in their portfolios and would be called upon only if an institution defaulted on its loan. According to Counts, John Doerr declared that everyone should commit no less than 0.1 per cent of his net worth. “It was kind of awkward,” Counts recalled, “but finally some raised their hands and said they would do it.” Ultimately, nine people committed a total of thirty-one million dollars to the guarantee fund, which aims to reach fifty million dollars.

Omidyar, however, wasn’t among them. As much as he admired Yunus’s belief that anyone, provided the means, can become self-sufficient—even successful—he has a different idea about the future of microfinance. Yunus is now seen by Omidyar and many others as the archetypal founder, too wedded to his original vision. In recent years, younger and nimbler players have been taking microfinance—their preferred term—toward the idea of building a fully commercial, profit-making sector. This conflict, between pure do-gooders and profit-minded do-gooders, has come to define the current debate in the microfinance world.

During that weekend at Doerr’s, Omidyar told me later, he was most impressed by the notion of “sustainability,” and by the idea that microfinance could help millions of poor people. “I was asking questions—‘How much does it cost to reach a new borrower? How much does it cost to open a new branch?’ What I was hearing back from Professor Yunus was very encouraging. So if you do the math, say it’s two hundred dollars per client—and that includes initial loan capital and the cost of the loan officer and the branch. This is cocktail-napkin math, right? But multiply the two hundred dollars by the three hundred million poorest people.” He estimated that three hundred million heads of household represented the world’s 1.2 billion poorest people. It would cost sixty billion dollars. “And then you’re done! It’s not an annual number. Once it’s scaled”—that is, once it has expanded to its full potential—“it’s a self-sustaining, profitable model, which opens the door to reaching large numbers of people who need to be reached by this tool of access to capital.” Microfinance institutions would eventually be able to raise money in the capital markets, and no longer have to rely perpetually on donor funding. “Rather than saying it’s going to cost forty-five billion dollars a year, this year, next year, and forever, you can think of it as an initial investment—but there’s a cap to how much you’re ever going to put in. That’s the difference between microfinance and the typical sort of government aid or charity, which is an ongoing thing.”

Yunus, too, believes in sustainability, and he certainly wants to reach all the world’s poor, but he is convinced that the traditional goal of business—maximization of profit—is inappropriate when dealing with the poor. “I had a long debate with Pierre,” Yunus told me, referring to Omidyar. “He says people should make money. I said, Let them make money—but why do you want to make money off the poor people? You make money somewhere else. Here, you come to help them. When they have enough flesh and blood in their bodies, go and suck them, no problem. But, until then, don’t do that. Whatever money you are taking away, keep it with them instead, so they can come out more quickly from poverty.”

The discussions at the Doerr event, Omidyar told me, led him to “a little epiphany.” He and his wife are alumni of Tufts University, to which they had already made substantial contributions; but a capital campaign was starting soon, and the president of Tufts, Lawrence Bacow, “was sort of circling,” Omidyar said. “I was hearing, ‘You’re a pretty successful alumnus—you may have to step up.’ ” Typically, when a donor makes a gift to a university endowment, the principal goes into an investment pool, and the annual return on that capital is what the donor can direct to a specific use. “I said, Wait a minute! Instead of making a gift to an endowment and having it go into this pool, why not use that capital to further the mission of microfinance? Kill two birds with one stone—support the alma mater and support the mission. That’s pretty neat!” Several months later, Omidyar gave a hundred million dollars to Tufts—the largest gift in its history. But he stipulated that the principal be dedicated to a fund to invest in microfinance—specifically, in investments that would promote microfinance’s commercialization.

The idea of reaching billions of the poor by achieving “scale”—a word invoked ceaselessly in the microfinance community—has enticed foundations, rich individuals, even investors into channelling millions into microfinance. The $1.2-billion Michael and Susan Dell Foundation—established by the founder of one of the world’s largest computer manufacturers—has begun making grants to microfinance institutions in India, a country of 1.1 billion people, most of whom have no access to financial services. In October, 2005, Google established a philanthropic entity called Google.org, with seed money of about a billion dollars, to fight disease, global warming, and poverty; microfinance is expected to be a key component of its poverty portfolio. And last April the Bill and Melinda Gates Foundation announced that it would devote an undisclosed amount of money to expanding financial services for the poor in developing countries. Dr. Rajiv Shah, who oversees the new Gates program, said of microfinance, “This can reach hundreds of millions of people, and do so in a way that helps them move out of poverty and that sustains over time.”
In 1990, Carmen Velasco, a Bolivian psychologist, and Lynne Patterson, an American then living in Bolivia, founded an organization called Pro Mujer. It is, in many ways, a classic microcredit N.G.O., inspired by the Yunus model, and its clients are predominantly very poor women. It provides credit for income-producing activities, but, unlike a bank, it also offers its clients training in health care, family planning, child development, and self-esteem. Velasco, who still runs the organization, says, “If you give them a loan and don’t see that their other needs are met, perhaps they are worse off. They have a debt to repay, but still they have no sanitation, no health care, no education.” Unlike many N.G.O.s, however, Pro Mujer largely supports itself. “We don’t fudge on our numbers, we have the best auditing firms, we have received awards and high ratings for our business practices,” Velasco said. “And as soon as we become more efficient we lower the interest rates our clients have to pay. If we weren’t financially viable, we wouldn’t have the right to argue for our way.” By “our way,” Velasco meant the traditional emphasis on social justice—even though, as she put it, “the fashion today is all about making it into a business.”

Last spring, I accompanied some Pro Mujer officials to the rural town of Tizayuca, about a two-hour drive from Mexico City. Twenty Pro Mujer clients—all women—were sitting under the canopy of a large tree outside a simple stucco house. “Presente,” one after another responded as their names were called. They were attending their weekly meeting. The women ranged in age from their twenties to their fifties; many had small children with them, who played nearby or sat solemnly on their mothers’ laps. This day’s session—after the women had made their payments to the treasurer—was devoted to self-esteem. The instructor, a relentlessly energetic woman, was encouraging members of the group to stand and describe how they viewed themselves. One by one, they rose, took a few steps into the center of the circle, and began to speak.

Like all Pro Mujer clients, the women had begun by forming a group and then taking a week of training to learn about the process and develop a business plan. By the week’s end, they had elected their board and chosen a name for themselves—Mujeres del Futuro. They had started by each borrowing two thousand pesos, or about two hundred dollars, in a three-month loan; then they had graduated to three thousand pesos, then four thousand, and now they were borrowing five thousand pesos, in a six-month program. They had advanced to the higher loan level after repaying the smaller loans. Weekly savings were mandatory, as were the installments on repaying the loan. Each woman was engaged in what might be called a microbusiness. Some sold quesadillas or tortillas at a market stand; others sold women’s underwear, Tupperware, or blankets, mainly door to door.

The Pro Mujer officials began asking questions. What do your husbands do? Several were carpenters and construction workers. Should men join the group? That sparked a great deal of laughter and rolling of eyes. “No, but let them have a different group,” a woman suggested. “They would be thinking differently. They wouldn’t be on the same wavelength,” another said. A young, soft-spoken woman said, “There is a little machismo here. It is a great help to go out. Some husbands don’t really agree that we should be here. Even when there is not enough income, it is difficult for husbands to acknowledge that. So there are double challenges. We have to do everything at home so that when we are here they don’t have any problems in our house.” Do their husbands know about their savings? “No!” they responded at once. “If they knew we managed to save,” one said, “they would give us no money for the house.” Not one of them had ever had a bank account, although they were all familiar with moneylenders, who generally charge about twelve to fifteen per cent a month, and in some instances as much as fifty per cent a week.

We drove to another small town, San Francisco Zacacalco, and waited on a narrow, dusty street. After a time, a stocky figure appeared, walking beside a bicycle that had been modified into a three-wheeler. It was a portable oven: balanced over the front wheel was a bright-red propane tank, which was attached by a pipe to a large aluminum can, carried in a makeshift cart between the two rear wheels. Its inventor and owner, Ilze Concepción Rodríguez Chávez, invited us into her workplace, a two-room concrete structure, painted blue, about eight feet high. A huge Rottweiler was on the roof, barking ferociously. “Close your eyes,” Chávez said, grinning with mock dismay as we entered the small room, where cans, pots, and tamale ingredients were strewn over the counters.

A warm, self-possessed woman of fifty-four, Chávez was wearing a navy baseball cap and a blue work shirt over a pink-and-blue plaid apron. She has eight children and twenty-five grandchildren. Eight years ago, she said, she and her husband were extremely poor, and they saw no way to improve their situation. But then a friend who had become a Pro Mujer client invited her to attend a meeting. Chávez said that she was worried about the one-week training program (“I learned how to read and write making tortillas—I don’t know much”), but she decided to join.

With the help of instructors, Chávez developed a business plan. She realized that the hot-tamale vender outside a nearby school came only in the afternoons; she could be there in the mornings. She started with a four-month loan amounting to about two hundred dollars. Each week, she met with the other members of her group—about twenty women—to make her payments, and take part in sessions dedicated to financial decision-making, health topics, domestic violence. With the initial loan, she was able to rent her workroom. With her second loan, of about three hundred and fifty dollars, she bought the bicycle and rebuilt it. She now has a loan of five hundred and fifty dollars, and next time she will ask for six hundred and fifty. She has added empanadas to her repertoire. On a good week, she makes as much as two hundred dollars. Her workroom contained a microwave, a television, and a DVD player. She explained that she had bought these on an installment plan, and that she organizes her week according to her debt obligations—generally, three days to pay the interest on her consumer loans, two days to pay Pro Mujer. Pro Mujer Mexico is a relatively new, small organization; its size, extra services, and the high cost of operating in Mexico result in an annual interest rate (including taxes and other fees) of about eighty-four per cent.

But Chávez didn’t find it exorbitant; the poor are accustomed to expensive credit. Chavez said that she never writes any of these figures down, but she was very precise in detailing the various amounts. She said that she had decided she needed a small car, even if it was old. She paused, and then gestured theatrically toward a beat-up white sedan parked outside. She had already bought it! She added that she now wanted a professional oven, with three levels, which the car could transport. She told us that her husband became jealous when she joined Pro Mujer, and wanted her to quit. But her daughter and son-in-law defended her. “My husband said, ‘How is it possible that there is a group that allows a woman to feel so independent? What is this group doing?’ ” She laughed. “It’s the machismo—they want a woman here,” she said, pointing to her knee.

She smiled even more broadly, looking around the room at her admiring guests. “I wish my husband could be here, to see me being interviewed,” she said.
The broader shift toward the profit model began in the nineties, when Acción International, a network of Latin-American institutions, concluded that commercialization was the only way microfinance could serve large numbers of people, because commercial enterprises could tap the capital markets for the funds they needed to grow. In 1992, Bolivia’s BancoSol, an Acción affiliate, transformed itself from a nonprofit into the first private commercial bank in the world dedicated exclusively to microfinance—and dozens of other institutions have followed.
“Acción created the commercial model, and the commercial model is the one that works,” the organization’s president, Maria Otero, declared. She and Pro Mujer’s Carmen Velasco were schoolgirls together in Bolivia, and their fathers were best friends. Now they are on opposite sides of this small, fractious community. “Pro Mujer is performing well, and it could become a commercial bank,” Otero told me. “But Carmen believes becoming commercial will dirty you with the ‘P’ word of profit. She thinks it will compromise the program.” Otero thinks that nonprofits don’t have much of a future in microfinance.

The debate is about much more than purity of motives. The Yunus faction worries about “mission drift,” saying that, as the drive for profitability increases, only the so-called “less poor” (as opposed to the very poor) will qualify for loans. “On the one side, there are the people saying, essentially, We want to be Citigroup for poor people,” said Jonathan Lewis, the C.E.O. of MicroCredit Enterprises, which provides loan guarantees from wealthy donors to institutions that serve mainly the poorest women. “But, on the other side, we’re saying, We didn’t start this to become a bank. We started this to end poverty. So we’re going to experiment with all the different ways, profitable or not, that we can work with our constituencies—who are our customers, not our shareholders. If your core mission is to provide a channel out of desperate poverty, it creates a different set of questions than if your mission is to create a global market in microfinance futures.”

Hyperbole distorts the debate on both sides. Muhammad Yunus speaks eloquently about eradicating poverty, but some advocates of commercialization argue that microcredit burdens the very poor with debt, and that the less poor are the only appropriate customers. Since relatively few rigorous studies on the impact of microfinance have been completed, ideology tends to dominate. Jonathan Morduch, a professor of public policy and economics at New York University’s Wagner Graduate School of Public Service, who has studied the field for more than a decade, said that there is clear evidence that microfinance can help the very poor, but he added that “credit alone is not a panacea.” He emphasized the success of groups that combine lending with other initiatives, such as education and health care. And although the lives of individuals have improved, loans to the poor have not yet had a demonstrable effect on aggregate poverty levels. “The boldest claim for microfinance—that it can single-handedly eliminate a large share of world poverty—outpaces, by a long distance, the evidence accumulated to date,” Morduch told me.

After the announcement of Yunus’s Nobel Prize, some in the microfinance community worried that exaggerated claims about microfinance would lead eventually—when unrealistic expectations were not met—to the discrediting of the field. Outside critics have argued that microfinance is merely a palliative measure, which does nothing to bring about the large societal reforms necessary to reduce poverty—and even serves to preserve the status quo, by making the lives of the poor more tolerable. “That is a valid critique, to a point,” Morduch said. “But get real. How long are you willing to wait for the revolution? I can’t see any moral foundation for not trying to address the current deprivations of the world’s poorest billions. If microfinance can help provide options in cost-effective ways, we should celebrate it.”

The United Nations designated 2005 the International Year of Microcredit, and this was primarily intended to encourage policymakers to support favorable regulatory environments. But even the title provoked bitter fighting. Shouldn’t it be the Year of Microfinance? Acción and other profit-minded groups demanded that the name be changed. So did a World Bank affiliate, the Consultative Group to Assist the Poor (CGAP), a consortium of government and private development organizations working to expand microfinance. When CGAP was created, in 1995, the “P” stood for “poorest”—something for which Yunus had lobbied hard. In 2003, “poorest” was replaced with “poor.” (“Their explanation was that the poorest can’t handle credit, so we should be looking only at the upper part of the poor,” Yunus said. “That was absolutely against the intention of the creation of CGAP.”) In the end, at the insistence of developing countries—Bangladesh in particular—“microcredit” retained its place in the name, but Secretary-General Kofi Annan used the word “microfinance” in his opening statement.

A few years ago, Pierre Omidyar left Silicon Valley and moved his family to Henderson, Nevada, just outside Las Vegas. A slight, unprepossessing figure with hints of gray in his wavy black hair, he tends to think aloud, following desultory paths, looking for theoretical solutions to problems. If anything, his approach has become more abstract over the years. As a young software engineer, he solved problems as they arose, but now he likes to reflect on the nature of the eBay phenomenon and how it supports his philosophy. He often cites Adam Smith’s doctrine that unrestrained market forces and self-interest drive the most efficient—and socially beneficial—use of resources. Omidyar sees Smith’s principles at work in eBay; he believes that eBay’s commercial success was linked to a profound social good. “I did an early investors’ road show in the fall of 1997, and I went to New York and talked to some Wall Street folks, and I said, O.K., this is strangers from all over the country, sometimes internationally, and they’re doing business together over the Internet. And people were shaking their heads. ‘That’ll never work! It’s impossible! You can’t trust anybody—you’re going to get ripped off!’ ” Now, he says, eBay has taught “more than two hundred million people that they can trust a complete stranger.” Omidyar told me that he believes the trust that was inculcated on eBay has carried over to other online sites and, perhaps, to real-life interactions as well. “People have learned that, in general, people are basically good. And we’ve demonstrated that.”

Omidyar believes that eBay had another powerful social impact. “I remember in early focus groups, when I started meeting some of our customers, there was a housewife who had sort of accidentally begun to sell things on eBay. She went to flea markets, bought things for a quarter, put them online, and sold them for twenty-five dollars, and she said, ‘Wow!’ She said, ‘Now I finally feel like I’m contributing to the household.’ So that’s an incredibly empowering thing, when an individual discovers his or her own ability to generate economic value.” He added, “There are three-quarters of a million people or more who make their living selling on eBay.”
His frustration with the traditional philanthropic world eventually resulted in what one of his colleagues described as an “Aha!” moment. EBay would be his template for the future. In 2004, he founded Omidyar Network, which makes for-profit investments as well as philanthropic donations, and as he began to search for vehicles with eBay-like properties he decided that microfinance was an amazing fit. Both eBay and microfinance allow people to discover that they can be entrepreneurs. Both are based on trust. Both can be viewed as demonstrations of free-market principles. Both can be seen as businesses whose profitability is linked to their social impact. Omidyar stopped talking about microfinance as a way to end world poverty, and instead described its mission in a way congruent with the eBay experience.

Indeed, when Omidyar was invited to participate, with Yunus, on a panel on poverty alleviation at the Clinton Global Initiative conference in September, 2005, he and his colleagues at Omidyar Network debated for some time about whether he should accept. Would it send the wrong message? Ultimately, he did go, but one of his first statements was “For us, it’s not just about alleviating poverty; it’s about economic self-empowerment.” Omidyar told me that in the two years or so since he became involved in microfinance he had not visited a microfinance institution or met a borrower. Just the opposite of Yunus’s entry into microfinance: Yunus left theory behind to listen to the poor, and Omidyar seems to rely largely on theory. Omidyar sees himself as an agent of global change—in this case, the commercialization of the microfinance sector. Hence his insistence that his hundred-million-dollar gift to Tufts be invested in ways that will promote that commercialization.

“Pierre takes his role in the world quite seriously,” Lawrence Bacow, the president of Tufts, told me in his office recently. He pointed to the hundred-million-dollar eBay stock-transfer certificate, framed and hanging on the wall in his office. “He changed the world once, with eBay. And he wants to change the world again.”

In 2005, Citigroup, the largest banking network in the world, launched a microfinance business division. At the time, Robert Annibale, who is now the division’s global director, said that two and a half billion people had never used a bank: “Forty per cent of the world is beyond the world we know.”

Stanley Fischer, a former World Bank official who was then the president of Citigroup International and now heads the Bank of Israel, told Citigroup senior management that the microfinance division would try to earn a reasonable rate of return. But he also said that “although there were very high rates of return being earned in this industry—we’d heard that companies were making forty and fifty per cent—a company like Citigroup could not, from a public-relations viewpoint, go out there and maximize return on capital, nor would we want to.” (Clearly, engaging in microfinance might help Citigroup with regulators, too—but not if it looked as if it were profiteering from the poor.) Fischer argued that many of these microfinance clients would develop economically and become a whole new client base for Citigroup.
Annibale insists that the challenge of reaching the “un-banked” is so vast that there is room for every approach: profitable, sustainable, and subsidized. But he is a commercial banker, and he talks not about reducing poverty but about “financial inclusion.” By this he means retail banking for the poor, which includes not only loans and savings accounts but also insurance and remittances. “Hopefully, one day, ‘microfinance’ will kind of go away, and we’ll talk about who’s providing financial services to whom,” Annibale said. “Is it people living on three dollars a day that the banks should serve, and those on two dollars a day that the nonprofit microfinance institutions should serve? I don’t really have a clear view, but I do think that what we’re really talking about is just expanding access to financial services.” (Technology should speed that advance. In India, Citi has begun to install A.T.M.s in microfinance institutions, and clients will be able to open Citi savings accounts, with no minimum balance; the machines, which can identify clients by their fingerprints, will speak to them in any of six dialects.) For his part, Annibale said, “I want to treat somebody as a client, not like a beneficiary of a donation. Because when we have someone that we psychologically think of now as a client we say, ‘How are we going to satisfy them?’ If you’re just going to give money, it’s very different.”
In the past several years, Citigroup and its subsidiary Banamex raised seventy million dollars in the capital markets for the Acción affiliate Compartamos, the largest microfinance institution in Latin America, with more than five hundred thousand clients. This June, Compartamos became a fully regulated bank. “The only way to have massive impact is to do it profitably,” Compartamos’s co-C.E.O. Carlos Labarthe declared. “As an N.G.O., getting donations, we were not able to grow. But when you are able to go to the market, then the sky’s the limit.” Labarthe said that Compartamos now has access to two hundred million dollars in the market. In five years, he predicted, eighty to ninety per cent of all microfinance institutions will be for-profit institutions.

I interviewed Labarthe and his partner, Carlos Danel, in their offices at the Compartamos headquarters, in a tall glass building in Mexico City. The “two Carloses,” as they are known, started Compartamos in 1990, operating mainly in the poor southeastern states of Oaxaca and Chiapas. Both came from prosperous Mexican families, and graduated from conservative universities; in the early years, much of their funding came from members of Gente Nueva, a network of nonprofit organizations. Labarthe, a genial, expansive man who was wearing a white shirt, unbuttoned at the chest, and a large silver cross, told me that he attributes much of Compartamos’s success to the partners’ corporate sense of purpose. In 1993, when they had only three hundred clients, they took a close look at the Grameen Bank. “We had then the vision that this can really explode and be huge,” he said.
It was the size of Grameen—not Yunus’s philosophy—that excited them. “Muhammad Yunus always has said that credit is a human right,” Labarthe said, his voice tinged with sarcasm. “Well, I don’t believe that. Opportunity is a human right, education—but credit is for the one that has an opportunity to make something productive with that. This is in a way creating wealth, more than wiping out poverty. Not bringing up the destitute.” I asked what he thought of the Grameen Bank’s program of loans to beggars, which enables them to sell small items door to door. Yunus charges them no interest, cross-subsidizing their loans with interest paid by other borrowers. Labarthe waved a hand dismissively. “There’s no interest and no payment schedule—it’s a local grant.” Compartamos’s target population, on the other hand, is, he said, “what some call the working poor—people who are well nourished, a level of well-being that allows them to engage in economic activity. We believe that that is where microfinance is effective.”

Compartamos’s loan model is simple credit; it does not provide sessions on family planning or domestic violence or women’s empowerment. Even though the company lends predominantly to women, Labarthe emphasized that “it is not a philosophical thing; it is very practical.” He pointed to the Grameen Bank’s “Sixteen Decisions”—a collection of resolutions made by borrowers, which include planning for smaller families and forswearing the dowry system, in which daughters, particularly in very poor families, are viewed as burdens. “They clearly have a cultural agenda,” Labarthe said. At Compartamos, they lent to women at the start not only because they knew women were more reliable borrowers but also because in many villages most of the men had emigrated to the United States, and the women were the heads of household. In the past five years, as they expanded to urban areas, they have been lending to men as well.
More than seventy per cent of Mexico’s population lacks access to banks, and there were no other major providers of microfinance. Compartamos “became a virtual McDonald’s of village banking,” wrote Jonathan Schlefer, in a 2004 case study for the Kennedy School of Government. “A near monopoly offering one product in one market.”

That lack of competition has helped enable Compartamos to charge interest rates that are breathtakingly high, even in the world of microfinance. For most loans, Labarthe explained, Compartamos borrowers pay an annual rate of a hundred and five per cent in interest and taxes. Some rates, when adjusted to reflect their real costs, are higher than a hundred and twenty per cent. (Labarthe predicts these numbers will go down.) Recently, the Mexican central bank issued regulations that forced credit providers to clearly state the actual amount that a borrower will pay in interest, commissions, and fees, and Compartamos is making a better effort to explain hidden costs to clients.

CGAP has stated that some microfinance institutions are more profitable than commercial banks, and Compartamos belongs to that category, in part because of its extraordinarily high rates. Danel and Labarthe expect to double their client base by 2008, to a million. And when Fidel Castro dies they plan to take Compartamos to Cuba. At the time I met with them, they had just returned from Washington, D.C., where they had presented their proposal to an official at the Inter-American Development Bank, which, according to one of their bankers, was “very enthusiastic.” But, given U.S.-Cuba relations, the banker added, it was agreed that the United States would remain in the background of this enterprise.

“Now that we can tap into the markets, many banks, finance companies, and private investors are looking at Compartamos, and they’re seeing this is good business,” Labarthe said. “Before, the poor were always thought of as the problem of the private sector. But now they can be an opportunity.”

Last year, when Lawrence Bacow first explained to the Tufts trustees that Omidyar had insisted that the university create a separate fund for his gift which would invest only in microfinance, some of the trustees said, “We’re going to do what?” They were worried about the extreme “immaturity” of the sector—data on returns are poorly documented, information about different investment vehicles is not easily accessible, currency risk in investments is endemic, and ways of exiting the market (that is, finding a buyer when one wants to sell) are limited, at best. In the end, though, Omidyar’s hundred-million-dollar proposition had proved irresistible.
The Omidyar-Tufts Microfinance Fund’s goal—in line with the rest of the Tufts endowment—was a return of at least nine per cent. But there are not many places to obtain that reward in the microfinance world.

“We’ve discovered that a hundred million dollars might be difficult to place,” Omidyar told me. The problem was with the microfinance institutions themselves, many of which weren’t yet sufficiently evolved or profitable. “The rhetoric is ahead of the reality,” Omidyar said. “When people are saying, ‘We are commercially viable’—well, they’re not really commercially viable.” He now hopes that the fund will serve as a “carrot,” so that institutions hungry for capital will get rigorous in the hope of becoming eligible. The return, if achieved, will draw other investors into the market. Omidyar views the fund as a way of testing his theories about commercializing the sector. “It’s really the demonstration impact I’m looking for, primarily,” he said. Currently, much of the fund is sitting in short-term investments, waiting to be disbursed.

There are good reasons to wait. The stars of the commercial microfinance world—financially and operationally strong institutions like Compartamos—make up only a small percentage of all microfinance institutions. The best performers are the most popular, favored not only by investors but by donors, too. (According to CGAP, eighty per cent of all funding goes to the same twenty institutions.) Omidyar and his colleagues say that the biggest obstacle to commercialization of the sector is philanthropic capital. They say that it distorts the market—not only by filling channels that might otherwise draw commercial investors but also by keeping unsustainable programs alive. “One of the things we need and we will get is a cycle of creative destruction,” said Tryfan Evans, the director of investments at the Omidyar-Tufts fund, who previously worked at U.S.A.I.D. “If you’re inefficient, you will get overtaken by competitors.” Evans said that he is confident about achieving the fund’s goal of nine per cent—and more. (His bonus depends on that.) The fund plans to be fully invested within three years.

“I would love investors and donors to really think about this,” Omidyar said, earnestly. “There is a difference between undemanding capital”—contributed by donors, who expect nothing in return—“and demanding capital,” which requires transparency of financial reporting and an appropriate reward for risk. His goal, he says, is “to shrink the undemanding source of capital and grow the other.” That mission, however, might be complicated by the recent entry of some of his colleagues in the technology community, including Bill Gates, Michael Dell, Sergey Brin, and Larry Page. Omidyar believes that there is a role for philanthropic capital in carefully delineated areas like funding research and building infrastructure. But if these foundations commit large sums to other kinds of enterprises—as the Gates Foundation did in its grant to Pro Mujer, a microfinance organization that Omidyar told me he would not support—then his effort could become more difficult. The “cycle of creative destruction” might be slowed. Regarding his colleagues’ grants, Omidyar said, somewhat stiffly, “I would hope that businesspeople would see the value of a business-oriented approach.”

“The Omidyar fund represents a faith-based belief in the market,” Jonathan Lewis, of MicroCredit Enterprises, said. And, in all the excitement about what the market can offer, hard questions have been obscured. Individual borrower repayment rates are excellent, he added, but there are few statistics available for default rates of microfinance institutions; if an institution defaults, how will investors get their equity out without hurting the institution’s clients? “Someday, people will have to cross a Rubicon, because there will be events like foreclosures,” Lewis said. “Will the president of Tufts and Pierre Omidyar, when they are waiting for a liquidity event, say to thirty-seven thousand women, ‘Sorry, we’re closing down and you’re going to lose your loans—so go back to feeding your kids twice a day’?”
For that matter, will any interest rates paid by very poor women to rich investors be deemed too high? The issue of interest rates arose last March in the state of Andhra Pradesh, known as India’s capital of microfinance, where a number of women borrowers committed suicide. The link between the suicides and the lenders (one was SHARE, a Grameen Foundation partner) has not been definitively established, and the question of whether abuses occurred has become highly controversial. Microfinance has been growing at a furious rate in the past couple of years in Andhra Pradesh, with intense competition between private institutions and a state-sponsored program. The government and its supporters accused microfinance groups in the province of charging exorbitant rates and of bullying clients who were overextended and unable to repay their loans. Microfinance groups claim that the suicides were largely incidental to their activities, and that the deaths were exploited by the government to dampen private competition. The rates among the microfinance groups varied; some were about thirty per cent, but, because of the way they were structured, and because of various hidden costs, they had appeared to be much less. Today, the private microfinance institutions in Andhra Pradesh have lowered their rates—a few are as low as eleven per cent—and have adopted codes of conduct. Opposing sides in the commercialization debate drew different lessons from the episode. For Yunus’s allies, it demonstrates how the emphasis on profit can blind lenders to social values; the other side worries that rates lowered for political rather than economic reasons probably aren’t sustainable. What nearly everyone can agree on, though, is that it is a reminder of the dangers facing this immature and rapidly growing field.

The Omidyar-Tufts fund has invested in a Frankfurt-based banking network called ProCredit Holding, which is managed by a former German radical of the generation of 1968 named C. P. Zeitinger. His goal today, he says, is to found banks for what he calls “ordinary people.” With grants from international financial institutions and from the U.S. government (totalling about fifty million dollars in the past eight years), he has built a network of nineteen banks in Eastern Europe, Latin America, and Africa; he plans to expand the network into Colombia, Honduras, Sierra Leone, Armenia, Kyrgyzstan, and Mexico (where he looks forward to competing with Compartamos). After a few years, the banks are expected to start operating on their own. Of the nineteen existing banks, Zeitinger says, eighteen are profitable. Zeitinger’s forte is high-risk areas where he is freer to impose order. He pointed to the recently opened ProCredit bank in Congo. “Someone wanted to make a ten-thousand-dollar deposit, and he tried to give a fifty-dollar bribe—to make a deposit! It is part of their cultural heritage, you might say. We try to build up a different culture—Protestant ethics.”

Chain-smoking, irascible, erupting every so often in short bursts of indignation, Zeitinger is impatient with questions about microfinance’s serving the poor. “In a way, I don’t want to belong to that world. It is a field occupied by ‘visionaries’ who are actually politicians. ‘Credit is a human right’! Can we please remember that credit means you owe something and you can get overly indebted?”

He went on, “It is an altogether different thing than what we do. We say, These are banks for ordinary people. That means everybody who does not have access to the financial system. I want to stabilize the middle class in these countries as well. I want to be a different type of banker. But I only want to be a banker, not a microfinance banker. Yunus is against banks. He is for social revolution.

“Museum of poverty!” he muttered. “It’s ridiculous! To claim that microfinance is going to solve poverty is a myth. From ancient Greece to today, poverty has been with us and it will occupy us forever.”

Zealous as he is about his commercial approach, Zeitinger thinks that the role of philanthropic capital has been too widely denigrated. For one thing, notwithstanding his banks’ profitability, he is still trying to obtain more grant money, for expanding into new, harder-to-serve rural regions. He also said, “We don’t want to be the only M.F.I.s in the world. There need to be others. But if you look at the level behind us, there aren’t enough scale players. What’s going to make the difference there? Strategic investment of grant money, linked to investors who don’t have fixed demands on returns.”

Zeitinger believes that Omidyar’s resistance to the use of grant money in microfinance is naïve. “He will not learn unless he is engaged, seduced rationally, to change his thinking.”
One of the proposals under consideration by the Gates Foundation is Zeitinger’s request for a major grant to enable him to expand into rural Africa. Omidyar’s fund of a hundred million dollars generated great excitement initially, but it has since been somewhat overshadowed both by the expected size of the Gates Foundation’s commitment—thought to be as much as several hundred million dollars annually—and the breadth of the Gates approach. “It’s not so much a debate between a Compartamos or a Pro Mujer model,” Rajiv Shah, at Gates, said. “You need a range of different business models. Some are going to be very commercial.” Some, he noted, will be commercial eventually but not right away. And others will need some degree of continued support, in order to reach the destitute and specific communities in certain parts of the world. Shah said that Gates is giving grants and loans, and even making investments, to reach its goal of moving hundreds of millions out of poverty. “But the goal is always that—it’s not to get a return. That distinction is important, because Omidyar has taken a different approach.”

The Gates Foundation’s approach is notable for its catholicism—not only within the field of microfinance but in its over-all program, aimed at reducing inequities around the world, which includes global health, education, and agricultural production as well as financial services for the poor. The Gates staff conducted an intensive study of microfinance for about a year before Bill Gates formally made the initiative part of his foundation’s portfolio. What stirred him was a visit last December to BRAC, Bangladesh’s largest microlender and the largest national nonprofit in the world. In its offerings to its clients, BRAC provides not only financial services but also schools, legal training, and help with marketing. Its subsidiaries offer dairy products, textiles, and crafts—all produced by borrowers. BRAC makes the Grameen Bank look spare.

In early May, representatives from eight microfinance institutions around the world were invited to a three-day event at the Gates Foundation’s headquarters, in Seattle; among them were Carmen Velasco, of Pro Mujer; Maria Otero, of Acción; and Ingrid Munro, the founder and executive director of an organization called Jamii Bora, which serves the very poor in the slums of Nairobi. “We wanted to hear from people who have had a lot of firsthand experience, and we wanted to bring people from different geographies together,” Rajiv Shah said, noting that the visitors came from Latin America, Africa, and Asia. “When you do that, you realize there are very different approaches to this, and certainly there are few right answers in terms of one approach versus another when you look broadly across a big part of the globe.” For instance, in the case of Ingrid Munro and Jamii Bora, he said, “Is Citigroup ever going to securitize her loan portfolio? Probably not. Is she going to be wildly profitable, to the point where she’s spitting off the kinds of dividends Compartamos spits off? I doubt it. But she can sustainably provide important services that are helping to move people out of poverty in the heart of a very poor community. So shouldn’t she also have the ability to innovate and reach scale?”

At one point, the group met with Melinda and Bill Gates, and with Warren Buffett, too. It was several weeks before Buffett would announce that he was giving roughly thirty-one billion dollars to the Gates Foundation; the guests assumed that he just happened to be visiting Bill and was curious about microfinance. Buffett asked incisive questions about interest and repayment rates—and dazzled several of those present with the speed with which he ran the numbers in his head.

Acción and Pro Mujer were both already Gates grantees, but Jamii Bora was a newcomer. Munro started it in 1999, and today it is the fastest-growing microfinance institution in Kenya. Munro is from Sweden and her husband from Canada, but they have lived in Kenya for the past twenty-one years. In 1988, they adopted a boy from the streets. “It was a small seven-year-old boy who more or less adopted us,” she said, chuckling. “And then we later found his two brothers and adopted them. With a situation like that, like in all great love stories, in literature and in real life, you are a helpless victim, you know?” Through her sons, she got to know other street children, and their mothers, who were beggars. She was the head of the African Housing Fund, which works with the homeless. “When I retired from the African Housing Fund, the beggars kept coming to my house and banging on the door, and they said, ‘You can’t abandon us now, Mum, you are our mother.’ So they really challenged me, and I said, ‘O.K., if you want me to do something for you, now you have to do something for yourself.’ I challenged them to save a little bit of money. ‘For every shilling you save, I promise, I will find somebody who will give two shillings, and then you can borrow twice as much as you’ve saved.’ ”

“The unique thing is, then, that it started with trust,” she said—sounding like Pierre Omidyar, her doctrinal opposite. “Also, I thought it was just a small club, a group of women I thought were very special. But, really, it grew like a bushfire! After a few months, we had to formalize it. We decided to call it Jamii Bora—jamii bora means ‘good families’ in Swahili. And that’s what we say—you can be very poor but you’re still a good family, and you still have the talent to get out of poverty.”

Munro started with a group of fifty beggars from the slums of Nairobi, and over the past seven years Jamii Bora has expanded to sixty-one branches, serving about a hundred and thirty thousand members; Munro aims to reach at least five hundred thousand by 2009. She says that she has stuck to the original idea, “that you can borrow twice as much as you’ve saved—which means we have a very strong foundation, because we have a lot of savings, and our members take very small risks.” Jamii Bora has received some grants, but it largely pays for itself. About a third of its borrowers are men. And nearly all of its staff members are former borrowers or their relatives.

This is important, Munro said. Some microfinance organizations in Kenya will not open an office in the worst slums. “My staff is not afraid, because they were born in the very same slum, and the thugs and thieves were their classmates in primary school. I don’t agree at all with those who say you can’t reach the very desperate with microfinance. But you have to be involved—really involved, you know? You can’t just sit there in the bank and wait for them to come in.”
Munro emphasized that she continues to work with the poorest of the poor. “Very few in microfinance do that, because it costs just as much to administer a loan of twenty dollars as two hundred dollars, or two thousand—but, of course, the income from a twenty-dollar loan is very small. Our average loan is ninety-five dollars.”

Munro added housing loans, health insurance, and life insurance to her services. About a year after she started Jamii Bora, she realized that when clients defaulted on their loan repayments it was usually because a family member had been hospitalized. No insurance company would offer an affordable policy to her borrowers, so Munro decided to do it herself. “We charge about twelve dollars a year for an adult member, with a maximum number of four kids. After that, it’s an extra few dollars for each kid. There is no upper limit on cost, and we don’t exclude people with H.I.V. and AIDS. And we’re covering our costs and have never used donor money on our health insurance.”

Munro’s latest project is to build a town on a two-hundred-and-ninety-three-acre parcel of land near Nairobi. It will include housing, a town center with shops, a school, a hospital, and a small industrial area, and some two thousand Jamii Bora families will live and work there. About two years ago, local groups seeking to block the project obtained a ruling from an environmental-management authority to the effect that the development would have a negative impact on wildlife; that ruling has since been overturned, but now it has been appealed to the high court. “It’s the classic thing that rich people don’t want to have poor people around,” Munro said. “But you can never finally get out of poverty if you can’t get out of those slums.” She hopes for a decision before the end of the year.

Although most of Jamii Bora’s loans are very small, loans as large as nine or ten thousand dollars are available to exemplary long-term clients. “Among the very poorest of the poor, you have some absolutely outstanding, brilliant people, who would have been top executives anywhere if they’d had the chance to go to school,” Munro says. She likes to cite a woman named Claris Adhiambo, one of Munro’s original group of fifty beggars, whose husband drove her out of their home after she gave birth to her fifth child. Adhiambo saved sixteen dollars and borrowed thirty-two dollars to open a food stall, selling fish. Three years later, she became a wholesaler and opened a restaurant. She bought land and built a small rooming house and small stores. She has repaid eleven loans, and her current loan is for thirty-two hundred dollars. “If you were to see her today, she looks like a member of parliament—you can’t believe she was a beggar!”
Munro said that Melinda Gates would be impressed if she came to Kenya and saw Jamii Bora in action. “Because that is the time you really understand. You know, when people visit the worst kinds of slums—even worse than anyone can imagine—and they walk around and meet people in their little businesses and little homes, almost always, their first comment is ‘Why are they so happy?’ They are smiling, proud, with dignity, showing what they have achieved. And I say, ‘It’s because they have something today which they didn’t have a month ago, and they have a plan and dream of something they’re going to have in a month’s time that they don’t have today.’ ” ♦

the_new_yorker:http://www.newyorker.com/archive/2006/10/30/061030fa_fact1

2008-08-06T18:53:00.000-07:00

Article http://www.countercurrents.org/aziz220708.htm

Presently, there are nearly 500 billionaires worldwide whereas 1.2 billion live on a dollar a day or less. Tens of millions of children are locked out of school because their parents are unable to afford school fees. More than a million children die a year from diarrhea because their families lack access to clean drinking water. More than one billion people worldwide do not get essential health care. On average, developing countries have one doctor for every 6,000 people whereas industrialized countries have one for every 350 people. Under developed countries face a nightmare of almost no healthcare for their teeming masses.

In 2001 the 497 billionaires registered a combined wealth of $1.54 trillion, well above the combined gross national products of all nations of sub-Saharan Africa ($929.3 billion) or those of the oil rich regions of the Middle East and North Africa ($1.34 trillion). The collective wealth of these billionaires is also greater than the combined income of the poorest half of humanity.
Per capita health spending in the world's least developed countries, most of them in sub-Saharan Africa and South Asia, comes to only about $11 a year. That compares with $1900 per person in developed nations, or almost 150 times as much. The richest 10 percent of households own 85 percent of global wealth whereas the 50 percent at the bottom share just 1 per cent. On an average, a person in the top 10 percent has accumulated wealth nearly 3000 times that of a person in the bottom 10 percent. It's not very easy to wrap one's mind around the inhumanity of these numbers.

The disparity becomes even more glaring when comparing per capita assets country-wise. The average wealth in the rich countries is estimated at $1, 81,000 in Japan and $1, 44,000 in the US. Denmark accounts for $70,000, New Zealand $37,000 while average for the UK is $1, 27,000. At the lower end of the ladder is Indonesia $ 1400 and India with $1100.
North America with 6 percent of world population accounts for 30 percent of all household assets, while Pakistan, Bangladesh, India and the African nations, with overwhelmingly large populations, get a bare minimal share of the total global wealth.

Among the 4.4 billion people who live in developing countries, 3/5 has no access to basic sanitation. Almost 1/3 are without safe drinking water, 1/4 lack adequate housing, 1/5 live beyond reach of modern health services, 1/5 of the children do not get as far as grade five in school and 1/5 are undernourished.

The divergence between rich and poor is accentuating as time goes by. The 3 richest in the world own assets that exceed the combined gross national product of all the least developed countries and their 600 million inhabitants. The richest 20 percent of the world's population enjoys a share in global income that is 86 times that of the poorest 20 percent.

More than 1.2 billion people in the world live on less that $1 a day. More than 50 percent of them are children. Nearly 1 billion cannot meet their basic consumption requirements. The assets of the 200 richest people are more than the combined income of 41percent of the world's people. A yearly contribution of 1percent of their wealth or $8 billion could provide total universal access to primary education.

Industrialized countries hold 97 percent of all patents, and global corporations hold 90 percent of all technology and product patents. Over 80 percent of foreign direct investment in developing and transition economies goes to just 20 countries, China receiving the maximum share. Debt relief for the 20 worst affected countries would cost between US $5.5 billion to $7.7 billion, less than the approximate cost of one stealth bomber.

Even starker though are the contrasts between basic and feminine luxuries and minimal resources such as sanitation and education of women. Basic education for all would cost $6 billion a year; $8 billion is spent annually for cosmetics in the United States alone. Installation of water and sanitation for all would cost $9 billion plus some annual costs; $11 billion is spent annually on ice cream in Europe.

Reproductive health services for all women would cost $12 billion a year; $12 billion a year is spent on perfumes in Europe and the United States. Basic health care and nutrition would cost $13 billion; $17 billion a year is spent on pet food in Europe and the United States. By comparison with these small items, $35 billion is spent on business entertainment in Japan; $50 billion on cigarettes and $105 billion on alcoholic drinks in Europe; $400 billion on narcotic drugs around the world and $780 billion on the world's militaries.

Poverty is not foremost among the criteria by which wealthy nations choose to disburse their aid. All aid has a measured degree of self-interest and strategic interest associated with it, rather than selfless altruism. Two thirds of the world's poor get less than one third of the total development aid. Donor nations routinely tie assistance to military spending.

In 1992, countries that spent more than 4 percent of their GDP on their military received $83 per capita in aid, whereas nations that spent less than 2 percent got $32. A large part of this imbalance is brought about by bilateral donors, who offer not just military but economic aid to strategic allies. For instance, Israel and Egypt received more than $3 billion of the $10.4 billion of US bilateral assistance. (The two nations receive an additional $5 billion in military assistance from the U.S. every year)

The US, Russia, China, France and the UK, the five permanent members of the UN Security Council, supply the most weapons to developing countries. Although multilateral institutions are more even-handed, the World Bank gives about half its aid to two thirds of the world's poor. They do not redress the imbalance. As a result, a Brazilian woman living below the poverty line receives $3 in such support a year, whereas her Egyptian counterpart receives $280.
A new study terms inequality at home between men and women leads to poorer health for the children and greater poverty for the family. UNICEF found that where women are excluded from family decisions, children are more likely to be under nourished. There would be 13 million fewer malnourished children in South Asia if women had an equal say in the family. Where men control the household, less money is spent on health care and food for the family, resulting in poorer health for the children.

Trade, another means by which developing countries earn foreign capital, also benefits the more developed and illustrates the ambivalence of wealthy states toward the world's poor. Although poverty wins a measure of sympathy, the cheap work force of poor nations makes them an economic threat. By one estimate, if developed countries lifted all trade barriers to Third World goods, the latter would gain in exports twice what they now receive in aid. Foreign debt, another constraint on the development of the Third World, keeps growing. In 1970 the total debt was $100 billion; today it is almost $3.5 trillion, including service charges.

In essence these are the 'fruits' of economic globalization, a world of the haves and have nots. This staggering disparity of numbers is proof that we live in a world where all natural and human resources are exploited mercilessly, so that a small minority can consume far more than their rightful share of the world's real wealth. Now, as we push the exploitation of the earths social and environmental systems beyond their limits of tolerance, we face the reality that the industrial era faces a burnout, because it is exhausting the human and natural resource base on which our very lives depend.

We must hasten its passage, while assisting in the birth of a new civilization based on life affirming rather than money affirming values. All over the world people are indeed waking up to the truth. We should strive and take steps to reclaim and rebuild our local economy. It should also be our goal to create locally owned enterprises that sustainably harvest and process local resources to produce jobs, goods and services.

Ideally our economy should be local; rooting power in the people and communities who realize their well being depends on the health and vitality of their local ecosystem. We should favor local firms and workers, who pay local taxes, live by local rules, respect and nurture the local ecosystems, compete fairly in local markets, and contribute to community life. A global economy empowers global corporations and financial institutions, local economies empower people. It is our consciousness, our ways of thinking and our sense of membership in a larger community, which should be global.

Perhaps the most important fact of all, albeit forgotten, is that life is about living, not consuming. A life of material sufficiency can be filled with social, cultural, intellectual and spiritual abundance that place no burden on the planet. It is time to assume responsibility for creating a new future of just and sustainable societies free from the myth that competition, greed and mindless consumption are paths to individual and collective fulfillment.

New Public-Private Partnership to Strengthen Laboratory Systems (October 2007)

2008-01-30T19:04:00.000-08:00

New Public-Private Partnership to Strengthen Laboratory Systems (October 2007)

Dr. Yunus Video at the Aloud Series

2008-01-30T18:46:00.000-08:00

Many Are Already at Work on Fulfilling Gates’s Vision

2008-01-30T06:53:00.001-08:00

Many Are Already at Work on Fulfilling Gates’s Vision
By John Markoff
http://dealbook.blogs.nytimes.com/category/davos-2008/

Bill Gates’s bold Davos challenge to the world’s capitalists last week should have come with equally bold footnotes.
“There are billions of people who need the great inventions of the computer age,” he asserted. “Breakthroughs change lives only where people can afford to buy them.”
Conspicuously missing from the appeal, which asserted that human nature is not just driven by greed but also by concern for our fellow beings, was any reference to the work and thinking of the Nobel Peace Prize winner Muhammad Yunus.
The microfinance innovator, who is known as the “banker for the poor,” recently wrote a book, “Creating a World Without Poverty: Social Business and the Future of Capitalism,” that foreshadows Mr. Gates’s newfound social philosophy.
Last week Mr. Gates called on the executives of the largest corporations to add social entrepreneurship to their agenda, a leopard-spot-altering exercise at best. However, in challenging his compatriots, one of the experiments he overlooked was Mr. Yunus’s stunning success at Grameen Phone in Bangladesh, an effort he has pioneered during the past decade in partnership with Telenor, a Norwegian wireless carrier.
Intended as an experiment to extend wireless communications networks to the world’s poorest people, the program has become a remarkable success on multiple levels. Not only did it create a class of “phone ladies” who brought wealth into village communities, it has grown quickly enough and been profitable enough that Mr. Yunus said this week in Davos that Telenor had decided to break its original promise to his organization and refused to turn over control to allow the program to be run on a not-for-profit basis.
The challenge now facing the firm is to replicate its success as a wireless voice provider as a wireless Internet company. This week in Davos, Mr. Yunus said that that transformation was well under way.
The deeper implication of that shift would be an advance from a communications to a computing revolution. As voice networks have paved the way into the farthest reaches of the emerging world, it is likely that they will quickly be followed by the Internet and the World Wide Web. That in turn could become a great leveler, bringing markets, electronic commerce and health care networks to the world’s poorest.
With any luck it will mean that the emerging nations will finally complete the promise of a failed computing experiment played out by a team of French and American computer scientists in Senegal a quarter of a century ago. The original idea was that computing technology would make it possible to skip a stage of economic development, with people in developing nations quickly joining the information society without having to undergo industrialization.
Which brings us back to Mr. Gates’s plea at the World Economic Forum last week. Microsoft’s research lab in India, he said, was focusing on a variety of projects, ranging from low-cost wireless to new computing interfaces that will allow semi-literate and illiterate people to use computers effectively.
These are great ideas, but at Davos this year there were already a proliferation of technology-driven projects in evidence, all targeted at the bottom of the economic pyramid. They indicated that over the next decade the so-called “digital divide” may prove less of a barrier than previously thought.
Because Moore’s Law — the doubling of chip density at regular intervals — drives down price while increasing performance, computing has reached an increasing portion of the world’s population at an accelerating rate. Today over three billion people — half the world’s population — have cell phones. This year at the World Economic Forum, wireless industry executives predicted that two billion more would be added in the next six or seven years.
This underscores the increasingly rapid spread of the Internet, for what is a cell phone but a computer and a radio attached to a wireless data network?
The real challenge may prove to be whether the emerging world will modernize without repeating the mistakes of Mr. Gates’s developed world that have produced climate and pollution crises.

Banker to the Poor

2008-01-26T12:21:00.001-08:00

Bill Drayton - Social Enterprises

2008-01-26T12:19:00.000-08:00

Grameen - Social Ventures

2008-01-26T12:16:00.000-08:00

Grameen-Danone

2008-01-26T12:13:00.000-08:00

Citizen Bono Brings Africa to Idle Rich

2008-01-26T11:46:00.000-08:00

By DAVID CARR
Published: March 5, 2007
If you are a rock star with a touch of the messiah complex, saving the world one song at a time has its limits. Even John Lennon didn’t make much progress on world peace before he died.

So Bono, the rare rock star with an ability to make a dent in something besides the pop charts, has met with everyone from Pope John Paul II to President Bush in an effort to achieve debt relief and address poverty and AIDS in the undeveloped world. He is also pushing his agenda one T-shirt at a time with a product line called Red that includes clothing, iPods and credit cards.

But even those combined efforts have been slow going. So now Bono is opening up another front with an unlikely weapon: as the guest editor of the July issue of Vanity Fair, he will try to rebrand Africa.

“We need to get better at storytelling,” Bono said, sitting in the 22nd floor of the office of Graydon Carter, the editor of Vanity Fair. “Bill Gates tells me this all the time. We’ve got to get better at telling the success stories of Africa in addition to the horror stories. And this magazine tells great stories.”

Vanity Fair does tell great stories and serious ones, but it sits atop the American magazine industry, in no small part because it takes as its preoccupations the needs and doings of the idle rich. The current Hollywood issue is its biggest ever, 500 pages jammed with glitz, celebrity and so many ads that the magazine could injure someone if it fell off the coffee table. Just outside Mr. Carter’s office, a framed to-do list with hundreds of items details Vanity Fair’s preparations for one of its past Oscar parties, which is a long way from Mogadishu.

“Bono will make a different issue about Africa than we would,” Mr. Carter said. “I think there isn’t one editor in the world who would not pay attention if Bono pulled up and said he wanted to edit a magazine.”

It would be easy to render in a cartoon — storied rock star, fizzy magazine, collaborating to noble ends. But Bono doesn’t look at wealth (fantastic wealth in his case) and charity as a contradiction. At a time when many people think they can consume their way to virtue, he is happy to accommodate.

“We are trying to deal with the Sally Struthers thing,” he said, a stack of story ideas in front of him. “When you see people humiliated by extreme poverty and wasting away with flies buzzing around their eyes, it is easy not to believe that they are same as us.”

Mr. Carter has used his magazine to political, even partisan ends, including the second impending “green” issue and a relentless drumbeat against the current administration. Bono, on the other hand, gives the current president very high marks for making practical efforts to address the AIDS epidemic in Africa.

“Hey, I’d meet with Lucifer if I thought it would do any good,” Bono said. Mr. Carter gives up a sporty laugh at that, pretty sure he is talking about someone else.

Bono has traded out his sunglasses for the editor’s eye shade before. He guest edited The Independent in London and was the first guest editor of the French newspaper Libération. And back in August, Elevation Partners, a private equity group in which he is a partner, bought an interest in Forbes magazine.

Some rich guys buy baseball teams or soccer teams, but Bono’s tastes lean toward the sport of kings — publishing.

“I live in that world, the world of media,” he said. “I don’t want to talk about Forbes right now, but I will say this: One of the things that I have learned of in Africa is the crucial role that commerce will play in taking its people out of extreme poverty. Everyone talks about China being the next big thing, but if you spend any time in the bars or hotels in Africa, you see a lot of Chinese doing deals there. There is tremendous opportunity there.”

There is, of course, the danger that the effort to chic out Africa — “Africa is sexy and people need to know that,” Bono said — will seem like a hobby born of extreme wealth. His eyes narrow and he stands up rather suddenly when it is suggested that there is something a bit cheeky about the whole enterprise.

“Really?” he said. “What is more interesting to me is that we are losing the fight against AIDS in Africa. There are still 5,000 Africans dying every day of a preventable, treatable disease, dying for lack of drugs that are available at any corner drugstore.”

Mr. Carter frankly said that he hopes a co-mingling of brands will help sell a tough subject. “We plan on making this an event with more separate cover treatments than the magazine has ever had.”

“I wanted him to change the title and call it ‘Fair Vanity,’ ” Bono said. “He said he’d do that just as soon as I change the band’s name to 2U.”

Mr. Carter said, “Bono really does see the world through rose-tinted glasses.”

As a writer, it is tough not to wonder what it might be like to get a call: “Bono doesn’t think your story is working.” Bono explained that if he wasn’t singing in a band, he would have been a journalist, but that he may not be the writer’s best friend.

“Strangely, maybe not,” he said. “I want this issue to be a best-selling issue of Vanity Fair, I want to make a hit record. These are the best writers in America, but I am a devotee of the 45,” he said, referring to the predigital single that required economy and precision.

“I want to turn some of these novels into pop songs,” he said. “My colleague here,” he said, indicating Mr. Carter, “will fight for the writers, but I don’t want the reader to be weighed down.”

He’s already learned the first lesson of editing: strike fear in the hearts of writers.

Bono - you do not have to become a monster to defeat a monster

2008-01-26T11:40:00.000-08:00

"America is my country," he declared, to loud applause. And the Irish rocker, wearing a medal that had just been placed around his neck by ex-President George H.W. Bush, who chairs the Constitution Center, indeed had quite a few good things to say about this nation that he's adopted, at least philosophically. He said some of money he's successfully lobbied for here, both from Washington and from big business, is making a difference in fighting AIDS and malaria in Africa and in sending kids to school.

“Your America gave the world the Marshall Plan, the Peace Corps, JFK, MLK, the Special Olympics, Bill and Melinda Gates, Bob Dylan, Bruce Springsteen, the Bard and the Boss," in a long, almost jazz-like riff that also included Philadelphian Will Smith, Mary J, Blige, Allen Ginsberg, Edward R. Murrow and others.

BUT...

But his strongest words of the night were this warning:

Today I read in the Economist an article reporting that over 38 percent of Americans support some type of torture in exceptional circumstances. My country? No. Your country? Tell me no. Today, when I receive this great honor, I ask you, I implore you as an Irishman who has seen some of these things close up, I ask you to remember, you do not have to become a monster to defeat a monster. Your America’s better than that.
He expounded on that theme earlier in the day, when he met with some editorial writers and reporters at the offices of the Daily News and Inquirer. He was asked a question about America's standing in the world, in light of Abu Ghraib:

You lead the world in fighting HIV AIDS,, but these are dangerous times for America. Brand USA has never been in such a vulnerable state," Bono responded. He said something to the effect that the neon was fading "a little bit in the grubby storefont of some corner of the world somebody’s thrown a petrol bomb throough it."

He described a phone call that he said he'd received recently from an American four-star general and commander of European forces, Jim Jones. "Of all the surreal encounters," Bono said. He said Jones told him that U.S. security overseas needs a development component.

Bono said Jones told him:

"'I'm a Marine,' he said, 'and Marines do not mind being fired at for the right reasons, they don't mind being shot at for the right reasons -- they don't like being shot at for the wroing reasons.' We didn't discuss Abu Ghraib but that’s a part of it... ‘ What he did say was the United States had heroic men and women and they had good intentions and they weren't getting across. He said we had billions and billions in high tech equipment floating in the Mediterranean, aircraft carriers off the coast of Lebanon, and he said we’re losing the war because Hamas are building schools.
Bono said that America could improve its standing in the world by spending relatively small amounts on medicine, doctors, and schools. The good news that I picked up from the meeting is that Bono and his allies on the Africa issue are paying super close attention to the 2008 election -- in fact he acknowledged that one reason he wanted to meet with the Daily News and Inquirer is because he knows that Pennsylvania is a battleground state. I'd like to see tonight's message become part of the '08 debate -- in both parties.

The Next Billion and Base of Pyramid BOP

2008-01-26T11:35:00.000-08:00

NextBillion.net is a website and blog about how business drives positive social and environmental change in low-income communities. We serve as a discussion forum, networking space and knowledge base for individuals and organizations interested in the "next billion" – the next billion people to rise from the base of the economic pyramid (BOP), and the next billion in profits for businesses that strive to fill market gaps by integrating the BOP into healthy economies. Our goal is to promote the development and implementation of business strategies that open opportunities and improve quality of life for the world’s 4 billion low-income producers and consumers.

http://www.nextbillion.net/about

LIVING ON PENNIES, Part 3 - LA TIMES

2008-01-23T19:15:00.002-08:00

For sale -- cheap: 'Dead white men's clothing'

In Africa, the West's castoff clothes are de rigueur, not demeaning. Nearly everyone has to buy used.
By Davan Maharaj
Times Staff Writer

July 14, 2004

LAGOS, Nigeria — Tossed off a flatbed truck, a 100-pound bale of used panties and bras, worn socks, DKNY suits and Michael Jordan jerseys lands with a thud amid a jostling swarm of shoppers.

Okech Anorue slits the plastic wrap on the refrigerator-size bundle he bought for $95 and dives in. There's bound to be a gem in there — like the faded leather bomber jacket once worn by Tiffany of Costa Mesa High School. That piece now hangs on the premium rack in his 5-foot-by-5-foot stall with a $25 price tag.

"These clothes make people's dreams come true," says Anorue, chairman of the vendors association at Yaba Market. "Everyone wears them, from insurance women, vendors, poor people to parliamentarians. When they put them on, you can't tell rich from poor."

Much of Africa was once draped in fabrics of flamboyant color and pattern, products of local industry and a reflection of cultural pride. But with half of its people surviving on less than a dollar a day, the continent has become the world's recycling bin. People scramble for 10-cent underpants, 20-cent T-shirts and dollar blue jeans discarded by Westerners.

A young man in the Congolese jungle wears a T-shirt that pleads: "Beam me up, Scotty." In a Lagos nightclub, a Nigerian ingenue models a used red negligee over a hot-pink halter top. A young Liberian fighter with an AK-47 assault rifle wears a tan bathrobe like a trench coat.

In Togo, the castoffs are called "dead white men's clothing." Few people in that West African country believe that a living person would throw away anything this good. Consumers in Uganda, Kenya and Tanzania call the used clothing mitumba, the Swahili word for bale.

"Without mitumba, most Ugandans would be walking naked in the countryside," lamented an editorial in that country's leading newspaper, the Monitor.

Insatiable demand from village shops and sprawling urban markets has turned the West's castoffs into an industry that generates hundreds of millions of dollars annually. Clothing is only the most visible example. Polluting refrigerators and air conditioners, expired medicines and old mattresses also are routinely shipped and resold here. Used vehicles imported from Japan dot African roads. Antiquated secondhand computers power many African governments.

The trade in hand-me-downs offers millions of Africans another means to endure their daily struggle with poverty. Shoppers get cheap clothes, and legions of vendors eke out a living one worn T-shirt at a time.

Mere survival has a long-term cost: The continent is losing the capacity to produce its own clothing. Although labor is cheap, Africans cannot make a shirt that costs as little as a used one. Every textile mill in Zambia has closed. Fewer than 40 of Nigeria's 200 mills remain. The vast majority of textile factories in Uganda, Kenya, Tanzania and Malawi are shuttered as well. Thousands of workers have lost their jobs.

"We are digging our own graves," says Chris Kirubi, a Kenyan industrialist who blamed secondhand clothing for the demise of his textile mill. "When you make your own clothes, you employ farmers to grow cotton, people to work in textile mills and more people to work in clothes factories. When you import secondhand clothes, you become a dumping ground."

The used clothes most often start out in America. Charities such as Goodwill and the Salvation Army sell donated clothes by the pound to wholesale merchants, who grade them. The top grade usually ends up in vintage shops in the United States, Europe or Latin America. The lesser grade merchandise, much of which is faded or stained, is labeled Africa A and Africa B.

Once in Africa, the bales of clothes bounce through a chain of wholesalers until they are thrown off a truck at a market.

Several countries, including Nigeria, have tried to ban imports of used clothing; others are trying to impose taxes on the trade. But even in Nigeria, which earns billions of dollars a year in oil exports, the demand for hand-me-downs is great and the traders creative.

So every morning before daybreak, Yaba Market is a carnival bursting with the sounds of vendors setting up for the day. They haul their goods in wheelbarrows and on homemade carts, but mostly on their backs, dumping them on the hard-packed soil to grab a quick bite to eat from women warming pots of tea and porridge over glowing coals.

The market stretches for miles, spilling out from a sprawling collection of galvanized sheds and rusting steel buildings. Yaba is not even among the five biggest markets on the outskirts of greater Lagos, home to 20 million people.

"Some vendors come here to hustle," Anorue says. "The good vendors know that if you treat your customers right, they will come back."

In one corner, clothing vendors are clumped around the railroad tracks. There are 20,000 of them. When the train rumbles through — sometimes several times a day — vendors scramble to clear their makeshift stalls from the tracks.

Many have specialties. Izuka Aptazi, 23, operates the Athlete's Foot of Yaba. Each day, Aptazi, who flaunts a jersey of Philadelphia 76ers guard Allen Iverson, scours the market for athletic shoes and jerseys bearing the names of international sports stars. Some vendors sell him jerseys from their bales at cost. He earns about $30 a month.

A Shaquille O'Neal jersey that costs him $3 can be sold for as much as $8. In soccer-crazy Nigeria, even poor fans will scrape together a few dollars for the jerseys of French star Thierry Henry, Senegalese striker El Hadji Diouf or former Manchester United superstar David Beckham.

Water Eoji, 26, sells tablecloths and curtains at about $2 a yard. He often knocks on the doors of hotels, offering to outfit their rooms with drapes that once adorned American homes.

At the bottom of the heap are used underwear vendors such as Teresa Williams, whose trade is cited by Africans as evidence of how far they have fallen: How did people get desperate enough, they wonder, to buy other people's discarded drawers?

Under a multicolored umbrella next to the railroad tracks, Williams glumly minds her few piles of panties, priced at 25 cents, and brassieres at 50 cents. She calls out to encourage prospective customers. But Williams sheepishly acknowledges that she would draw the line at wearing anything she sells.

Three young toughs strut past, glancing scornfully at her rumpled piles of garments. When they're a safe distance away, Williams blurts out: "If you check under their pants, I bet they're wearing used underwear." And she explodes in laughter.

Minutes later, four young women from Surulere, a nearby neighborhood known as Nigeria's movie capital, stop by and pick through the pile. They choose half a dozen pink and black panties.

Nigerians call these places "bend-down boutiques," because customers often have to stoop to get to the merchandise. But no one minds stooping if the price is right. And the price is always negotiable.

John Muriamo, a 45-year-old teacher and father of four teenage sons, arrives ready to bargain hard.

He has the equivalent of $20 in his pants pocket. He is wearing one of the two white long-sleeve shirts he owns. Both are threadbare. He is trying to support his family of six on a salary of $325 a year — a little less than a dollar a day. But, like many Africans, he often is paid late, if at all.

With sweat rolling down his face in the tropical sun, Muriamo stops at the booth of Precious Okoyo. He selects a yellow Lakers T-shirt and a checked Gap shirt for his two older sons, and baggy jeans for his two younger boys, who are 14 and 15. Finally, for himself, he picks up a lily-white, long-sleeve Yves Saint Laurent shirt that, with any tie, could command respect from his students.

Okoyo does some mental calculations and tells him that he owes her 4,200 naira, the equivalent of $28.

"I'll give you 1,800 naira," Muriamo offers, his voice cutting through the hum of buying and selling.

No response.

"Look, Miss Precious, I always buy from you," he pleads. "Am I not your best customer?"

He makes a final appeal: "Everybody has to live."

"Teacher, make it 2,700 naira and we'll remain friends," Okoyo says. "But remember, next time it's my turn."

Muriamo hands over the money, grabs the merchandise and thanks Okoyo with an elaborate handshake. He has a piece of clothing for each of his four children, a new work shirt and about $2 left. His children will be happy, and his family will eat tonight.

Like other Nigerian men, Muriamo used to wear the colorful, flowing Nigerian agbada on special occasions, or when he and his family attended Sunday services at their Pentecostal church. He cannot remember the last time he bought one of the traditional robes. Now, his $20 would buy only a yard or two of locally produced fabric.

"We get better deals because everyone is trying to do some business," Muriamo says of the market.

One reason is international trade policy. While Nigerian fabric has grown scarcer and more expensive, reforms demanded by international lenders have eliminated Africa's high tariffs on imported clothing, driving down prices.

After a decade of wearing used clothes from the West, many Africans find that necessity has become style. Their children no longer want to wear anything else.

"If they want to look like rap stars and sports stars, we can't compete," says J.P. Olarewaju, who heads an association of Lagos textile manufacturers. "The children want to dress in baggy jeans and look like their heroes.

"It would be the happiest day in my life when secondhand clothing is truly banned from this country," says Olarewaju, who is wearing a floral green African suit. He acknowledges that he hasn't been able to keep even his own children from shopping at the bend-down boutiques.

Nigerian wholesalers evade their country's ban by shipping goods to neighboring Benin, where a bribe to a customs officer guarantees passage to Nigeria — and boosts the local economy. Fifteen percent of Benin's revenue comes from so-called re-exports.

Once in Nigeria, the clothes pass through a chain of middlemen to markets buzzing with millions of eager customers. Even when Africa's ferocious noonday sun is beating down on them, buyers and sellers merely pause.

At Yaba Market, shoppers seek out cooler spots; merchants take a break. Vendors rush in with pots on their heads to serve porridge, greens and meat.

In front of a shed emblazoned with a homemade sign that reads, "Hand of God: Dealers in All Kinds of Trousers such as Chinos, jeans and Electronics," young men break out drums and percussion gourds. The music summons vendors and shoppers. Some dance until they become entranced by the frenzied beat. Their sweaty bodies convulse like worshipers at a gospel revival.

"Oh God," the young vendors sing, their faces twisted in what could be ecstasy or pain. "Let good things happen to us."

Life depends — for all the vendors — on a good bale of clothes.

Today, Anorue, who deals exclusively in skirts and suits for professional women, is smiling. His bale produced three DKNY suits, a couple of Ann Taylor outfits and some Italian brands he hasn't seen before.

"My customers are very demanding," he says. "They are going to be very happy."

The next bundle might be different. But the clothes won't be discarded.

"This is like the palm oil business," Anorue says, referring to the lucrative trade that squeezes cooking oil from palm tree parts. "Nothing, not even the husk, is wasted."

LIVING ON PENNIES, Part II - LA Times

2008-01-23T19:15:00.001-08:00

Trading tomorrow to eat today

In shriveled Ethiopia, the search for food is constant. Scraping together one meal often comes at the expense of providing for the next.
By Davan Maharaj
Times Staff Writer

July 12, 2004

Machete in hand, Batire Baramo steps out of her mud hut before dinnertime and begins whacking at the base of a struggling young tree.

A cornfield lies nearby, every stalk stunted and barren. A coffee bush wilts in a patch of earth so dry that each footstep kicks up a puff of gray dust.

Roots and stems from the false banana tree — so named because it never bears fruit — are all there is for dinner today. Batire will pound them into a pulpy mush that offers little real nutrition but at least will quiet the hunger of her husband and seven children. When those parts of the tree are gone, she will boil the bark. When the bark is gone, she will search for something else.

"This place is cursed," Batire says of the family's half-acre plot.

Life on less than a dollar a day, as most Africans live it, is the unending pursuit of sustenance. In the Horn of Africa, it is a search rarely satisfied.

Ethiopia is one of the five poorest countries in the world and the largest per-capita recipient of humanitarian aid. Nearly half the population of 67 million is malnourished. Every year, millions face starvation. For the very young, life often ends in a sad, blue death.

Behind the statistics lies a harsh reality that helps explain why hunger is such an intractable problem in Africa. When life is so consumed with survival, tomorrow is routinely traded away to fill stomachs today.

Foreign aid groups spend so much money feeding the starving that they never have enough left to prevent the next famine. The causes of Africa's hunger — drought, war, disease, corruption, overpopulation — never go away. They fade during the relatively good times, only to return.

Even in the good years, when the rains come to Ethiopia, subsistence farmers barely harvest enough maize, sweet potato and other crops to feed their families. Batire has never had the luxury of allowing her small clumps of false banana trees to fully mature, which would triple her yield. Instead, she shears the trees as soon as her family needs something to eat.

In the cruelest times, people eat sporadically, hoping that a day of searching by whole families can turn up more than morsels.

When everything is gone, the hungry seek handouts from the government or aid groups. But by then, disease often has gripped them. Severe protein deficiency brings on a condition known as kwashiorkor, which condemns its young victims to live their last days marked by telltale blue spots, their faces frozen in mournful expressions.

"If the diseases don't kill us, the drought is coming behind to finish the job," Batire says.

She already has seen half a dozen neighborhood children die this way. And many times, her own children have gone to bed hungry. On those nights, Batire sits trapped in the family's windowless, one-room mud hut — powerless to feed them yet unable to escape their cries for food.

The round hut, or tukul, that Batire and her husband, Ledamo Ataro, built when they were married 20 years ago has a floor of hard-packed dirt flecked with ash. In the fireplace, the false banana porridge simmers in a black pot resting on three clay jars.

Their village in southwestern Ethiopia sprawls amid farmland that in good years produces coffee beans for Starbucks and other high-end labels.

But 2003 was not a good year. It didn't rain in February and March, preventing the family from planting maize, wheat and other crops. The summer rains were sporadic.

Dinner is the only meal of the day. Before eating, the family offers its thanks for whatever food it has. Ledamo — a tall, wiry man who is perhaps 50 — is served first because he needs strength to provide for the family. His wife and children get to eat if anything is left.

Batire, who is about 40, wipes the sweat from her face with the ends of a blue head wrap as she bustles around the family's plot on an endless round of chores. The soles of her feet are cracked and stained with dirt.

The oldest child, 15-year-old Letimo, is a muscular youth. But his siblings' skinny limbs and slightly bloated bellies attest to varying degrees of malnutrition. From oldest to youngest, their limbs gradually become thinner because, in the words of one aid worker, "when you eat from a pot the strongest one eats first."

Each child owns one set of clothes, which means they all sit naked when Batire does the wash. Of the children, Letimo has the only shoes, a pair of red rubber slippers.

The children have never been to school and probably never will go. Ledamo says he can't afford to pay the fees and buy proper school clothes. Besides, he needs the children to search for food and help him grow their crops.

In good years, the Ledamos earn about 30 birr a month (about $4), selling produce in the village market. The family spends about 5 birr each week to buy staples it cannot grow: oil, salt and pepper.

Although they are battling hunger, the Ledamos are among the better-off members of their community. They own an ox, which they use to till their land. They also rent the animal out to the neighbors. The beast is so precious that it shares the family's home, chewing on a bundle of grass on one side of the 15-foot-wide hut. Left outside, the bony animal could become prey for thieves or spotted hyenas.

"We're not poor," Ledamo says proudly. "Many of my neighbors are poorer than me."

Even so, food is so scarce that Ledamo and Batire will soon have to make a crucial decision. They could sell the ox for about $12 to feed themselves and keep their children out of the emergency feeding centers that United Nations aid workers have been setting up in the region. But the money would be enough to feed them for only a few months.

They would be mortgaging the future to fill their stomachs today.

"We have to feed the children [or] these people will have to take them," Batire says, pointing to a convoy of U.N. aid vehicles rolling past her house.

It is a clear sign that the hungry season has arrived.

There have been so many such seasons for Ethiopians that even other Africans have little pity left. Nigeria's Daily Trust newspaper portrayed Ethiopia as an "embarrassment," a land of "no-thinkers" unable to conquer its cycle of drought and hunger.

Aid agencies say that much of Ethiopia's hunger is self-inflicted — the result of armed conflict, a stifling land policy, poor planning and overpopulation. The government spent millions on a lengthy civil war and a border war with Eritrea. A high birthrate compounds the food shortages. By 2015, Ethiopia will have 90 million people — 23 million more than today.

Unlike most Ethiopians, the Ledamos could irrigate their land using Lake Awasa, which lies a few hundred yards from their house. But Ledamo says that if he digs an irrigation ditch, it will only invite hippos to come out of the river reeds and trample or eat his crops.

Elsewhere — in India, China and Latin America — irrigation has enabled food production to soar. But less than 7% of Africa's tillable land is irrigated. In Ethiopia, the figure is 2%, even though its highlands are the source of two-thirds of the water flowing through the Nile downstream in Egypt.

But Ethiopia cannot come up with enough money on its own to pursue large-scale irrigation projects, Prime Minister Meles Zenawi said in an interview. Potential lenders fear that if Ethiopia taps its sources of water, Egypt will suffer.

Ethiopia's subsistence farmers do not own their land. It belongs to the state. Aid agencies say putting it in private hands would give farmers an incentive to improve the land and increase efficiency. But Meles said that would only be another way of sacrificing the future: Many farmers would sell their land, providing them with a little money immediately but separating them from any means of feeding themselves later.

Unlike the Ledamos, many people have given up. There is a saying that Ethiopians no longer care whether it rains here, as long as it does in Iowa and other farm states, the source of their food aid.

"Ethiopians know that emergency aid will come, that it's only a matter of time," says Gazahegn Tadele, who heads the local chapter of Oxfam, a British-based aid group. But it's often a case of too little, too late.

Donors also find it easier sometimes to feed the starving than to build dams and roads that could help prevent the next famine.

"People say, 'Oh no, why is this happening in Ethiopia all over again?' " Meles said. "But the truth is that donors prefer to see their money feeding a famine victim — the faces of starving children — rather than spend it on some less visible project that addresses the root cause of poverty."

Those young victims, some of them carried 20 miles on their parents' backs, populate the feeding stations — collections of canvas tents filled with emaciated bodies and reeking of soiled clothes. The Ledamos are hoping to avoid such places.

Batire and Ledamo wake up one morning wondering again whether there will be anything to eat that day. For two nights, the entire family has gone to bed hungry. Earlier in the week, they had their last meal of false banana with bark mixed in. Their daughter Maskal, 7, is getting thinner by the day.

That morning, Batire and Ledamo decide to sell the ox.

But later in the day, Ledamo makes an incredible find. Turning up the roots of some dried maize plants, he discovers two clumps of large sweet potatoes buried like jewels beneath the soil. Ledamo calls out to his wife, telling her that he thinks he has found dinner.

God has smiled on us, he says.

Batire has a different idea. Instead of eating the potatoes, she will sell them. If she makes 60 cents, she can feed the family for a few days. They could even get enough flour to make injera, a foam-like bread that Ethiopians love.

Batire places the produce in tiny heaps in front of her house and waits for customers. Early in the day, some neighbors give her about 15 cents for a quarter of the sweet potatoes.

After that, the hours drag by.

A woman, carrying a hungry child on her back and tugging a bedraggled little girl alongside, begs for food. Batire thinks for a few seconds, then gives her three potatoes.

"When you're a mother, you know about suffering," she says. "You know how tough it is when your babies are hungry."

Batire has begun to give up hope of selling the produce when some men ride up on a donkey cart and buy the remaining potatoes. Beaming, Batire grabs her small fortune and rushes inside to tell Ledamo and the children. In her hand are 5 birr, about 65 cents.

"Today," she says, "we are blessed."

LIVING ON PENNIES / PART 1 - LA Times

2008-01-23T19:06:00.000-08:00

When the push for survival is a full-time job

What is it like to live on less than a dollar a day? Hundreds of millions in sub-Saharan Africa know. Their work is an endless cycle of bartering, hawking and scrounging to get by until tomorrow.
By Davan Maharaj, Times Staff Writer
July 11, 2004
GOMA, Congo -- Every day is a fight for pennies.

At sunrise, Adolphe Mulinowa is out hauling 10-gallon cans of sand at a construction site. It takes him an hour to earn 5 cents. Then he hustles to a roadside with a few plastic bottles of pink gasoline, which he hawks alongside dozens of other street vendors.

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"Patron! Boss man! Gas! Gas! Gas!" Mulinowa barks as a battered Peugeot shudders past, kicking a spray of loose rocks at his face.

The car does not stop. Mulinowa, a short man in his mid-30s with sad, reddened eyes, squats down again beside his bottles. It is a scene repeated many times in the four hours it takes to sell them. Mulinowa pockets an additional 40 cents. Then, as the sun goes down, he heads to his evening job hawking used shoes and live chickens. A few more pennies.

After a 12-hour day, he returns home to his wife and six children with his earnings: about 70 cents and a bag of cornmeal swinging from his hand.

"We beat the belly pains today," he says in a tired mumble. "Tomorrow, more hard work."

Up and down the teeming streets of Goma, there is no real work as it is known in the West. There is only what everyone here calls se debrouiller — French for getting by, or eking a living out of nothing.

Decades of war and disease, followed by a volcanic eruption that entombed nearly half the city beneath a rough crust of lava, have reduced work to a mishmash of odd jobs and scheming. Civil servants survive on bribes. A lawyer moonlights by making pastries. A single mother of four turns to prostitution in her living room, decorated with pictures of Jesus and Mary.

They are among the poorest people on Earth, surviving on less than a dollar a day.

In the United States, an individual who makes less than $9,310 a year is considered poor. The World Bank sets its poverty line at $730 a year — $2 a day. Half of sub-Saharan Africa's 600 million people live on about 65 cents a day — less than what an American might spend on a cup of coffee.

It is never enough. In Goma, near the heart of Africa, an average family of seven spends about $63 a month, two-thirds of it on food. With every dollar, they make a choice among competing needs — food, rent, clothes, school and medicine.

Sometimes it is a matter of life and death.

Two years ago, Mulinowa's little boy, Dieudonne, or "God's gift," came down with a fever, cold sweats and shakes. Mulinowa knew that it was malaria.

He took the 3-year-old to a muganga — Swahili for traditional healer — who sprinkled him with water, squeezed the pulp from some herbs into his mouth and sent him home. Two days later, the boy was dead. Mulinowa knows that with 20 cents for medicine to fight the fever and chills, he might have saved his son's life. But he didn't have the money.

Neither did the families of three other children in the neighborhood who died about the same time.

"I do not want this to happen to my Annissette," Mulinowa says of his 2-year-old daughter. "That's why we work from dawn to dusk."

In some ways, the Mulinowas are better off than many Congolese. The family's wooden house, resting on an old lava flow, has a tin roof and some wooden furniture. The walls recently were whitewashed with paint from an aid agency. Their neighbors live in mud huts or houses fashioned from rusting galvanized sheets.

In a town of debrouillards, Mulinowa has learned to exploit tiny advantages. He has figured out that, because Goma has dozens of gasoline vendors, his chances are better two miles away at the Rwanda-Congo border. There, drivers have to slow down and are more likely to notice him.

His family also improves its odds by spreading out during the day, hoping that at least one member will earn enough to buy food.

If Mulinowa doesn't sell enough gas, shoes or chickens, then perhaps his son, 18-year-old Ivan, will have better luck making deliveries with his homemade wooden scooter, called a chukudu. For a few cents per trip, Ivan ferries goods through a bazaar of vendors hawking their wares, grilling lake fish on smoky coals and blasting the guitar rhythms of soukous stars such as Kanda Bongo Man. Sometimes the merchants also give him small bags of flour or vegetables.

If Mulinowa and his son fail, then daughter Bernadette, 15, might be able to bring in some money selling used clothes, canned sardines or other goods for neighborhood merchants.

The fallback is Mulinowa's wife, Faith, who struggles to feed her family of eight when a 50-pound sack of manioc flour costs $24; a sack of beans, $17; and a dozen salted fish, $7. Occasionally she receives produce from relatives in outlying villages that she can sell for extra money.

"When you work hard, good things happen to you," Faith Mulinowa says. "That's why we make it."

*

Goma, on the eastern edge of Congo, is controlled by rebels fighting the central government hundreds of miles away in Kinshasa, the capital. One aid group estimates that at least 3.3 million people have died in the country's violence and chaos since 1998.

But even a society living on the edge needs civil servants. Men with government seals, such as Pancrace Rwiyereka, a grandfatherly former schoolteacher who runs Goma's Division of Work, engage in their own version of se debrouiller.

They don't bring home an actual salary, but the majority still show up for work every day. A government job gives them the opportunity to demand money from businesses and members of the public. Their official jobs are a charade.

"Bribes are the answer," said a mid-level government employee in the finance department. "Why do you think we would never give up our jobs or strike to get our salaries?"

Authorities require entrepreneurs importing goods to obtain stamps from at least six agencies: the main customs office, an immigration office, a health agency, a separate health office that certifies goods for consumption, the governor's tax revenue office and a provincial office that collects money from truckers for nonexistent road rehabilitation.

Bureaucrats typically sell the stamps to the businesses at a reduced rate and then pocket the money. If a supervising officer discovers that the appropriate taxes haven't been paid, he too is paid off.

Bribes in Goma range from about $5 for a birth certificate to about $100 for an import license. But workers have to share the take with colleagues and superiors. So on many days they go home with less than $1. The system ensures that a single bribe will feed several families for a day.

Civil servants say they are merely finding a way to get paid for their services. That's the way it is here: Ordinary people always have had to scramble to survive. The only ones who have ever gotten rich are the leaders and those with connections.

In the 19th century, King Leopold of Belgium treated the Congo colony as his personal possession. And the late dictator Mobutu Sese Seko, who took power in 1965 — five years after Congo won independence from Belgium — plundered an estimated $8 billion from the treasury during his three-decade rule. In a famous speech, he openly acknowledged the role of corruption.

"Everything is for sale, everything is bought in our country," he said. "And in this trade, holding any slice of public power constitutes a veritable exchange instrument, convertible into illicit acquisition of money or other goods."

Or, in the words of a government accountant: "Everyone has to look out for themselves. If you fail, you die."

So each workday, 61-year-old Rwiyereka dons a brown jacket over a secondhand Izod shirt, grabs his briefcase and heads for a sparse office at the Division of Work. The beige walls have been stained by tropical rains that pound through the leaky tin ceiling.

Rwiyereka has jammed his desk next to a window so he can catch a narrow shaft of sunlight. Several months ago, looters stripped the electrical cables from the building.

From the window, he sees lush jungle and fertile, black land that once made this area the breadbasket of Central Africa. The hills are rich in fine hardwoods and minerals, including coltan, which is used to make computer chips in Asia and cellular phones in Finland.

Despite this natural wealth, some Goma residents believe that the gods have cast them into hell. When it rains, lava still cooling after the eruption of Mt. Nyiragongo in January 2002 emits clouds of steam that envelope the city. The pungent smell of sulfur sometimes wafts in through Rwiyereka's window. Often, the bowels of the volcano rumble, forcing methane gas to bubble up in nearby Lake Kivu.

At his desk, Rwiyereka points to two stacks of letters from workers. He says that those who want him to investigate grievances have to bring in their own paper so his unpaid secretary can pound out an official response on his manual typewriter.

Rwiyereka chuckles when a visitor asks whether he and the 27 staffers in his office take bribes.

"I try to tell them that is not allowed," he says. "But they have mouths to feed. They and I know that having a job that doesn't pay is better than having no job at all."

*

There was a time when people thought that there was a way out. In a country where the vast majority of the people are illiterate, a college education would put one among the elite.

But Diane Kavuo has learned the hard way that even with a diploma, she needs se debrouiller.

Her father, who owned a small trucking business, poured most of the family's earnings into educating the brightest of his 11 children. It seemed like a ticket out of endless need.

Kavuo, like many people in Goma, speaks five languages — English and French, and three African languages: Swahili, Lingala and Kinande. She also has a law degree. But the chaos of Congo's civil war shattered her plan, and today the 28-year-old lawyer helps the family by selling fritters in the market.

Months go by without Kavuo earning a penny in fees from her legal cases, most of which involve unpaid loans of perhaps $100. Sometimes, lawyers groups pay her way to attend human rights conferences across Africa, where she highlights the plight of child soldiers and of women who have been raped by militiamen.

Kavuo spends her per diem money on handbags, lotions and cosmetics, which she brings back to Goma and gives to hawkers to sell. She uses her profit to buy sugar, flour and baking powder for the fritters.

A $50 investment returns $65. Almost half the fritters are given away to street children. But in Goma, the $15 profit can sustain a large family for several days.

Kavuo says she dreams of a day when Congo is a stable and prosperous country.

"Light is going to come," she says. "It's been dark too long."

Until then, another Goma resident, 37-year-old Mama Rose, also will have to struggle to feed her four young children.

Four years ago, militiamen robbed and killed her husband. Like Adolphe Mulinowa, he did odd jobs. But he had been his family's sole breadwinner.

For several months, Mama Rose worked menial jobs and tried hawking goods on the street. But she found herself relying mainly on neighborhood men who befriended her and brought her small baskets of food.

For that, they expected — and received — some intimacy.

Many women in Goma rely on such relationships to feed their families. But Mama Rose had another idea. Why pretend that she was befriending the men for their company? Why not admit to herself that it had become a job and start charging money?

"Every truth is not good to say," says Mama Rose, her radiant smile exposing her capped gold tooth. "But let us face it. In Goma, everything has a price. And I don't want to sell myself short."

In some months, Mama Rose earns less than $25, mainly in her small living room decked out with pictures of Jesus and Mary. Stuffed toys lie on her single wood-framed bed.

In a good month, when she works the better-off U.N. soldiers who are monitoring the conflict in Congo, she can earn up to $75.

Mama Rose has persuaded other prostitutes to organize. They recently confronted the regional governor, who had declared that 80% of Goma's sex workers were infected with HIV or had AIDS.

Mama Rose acknowledges that AIDS is a big problem, but denies that the infection rate is that high. Yet many of her friends have died of the disease, leaving their young children to fend for themselves and starting a new generation on the cycle of poverty.

"We're not bad people," she says, dusting some breadcrumbs from images of the Virgin Mary printed on her dress. "This is how we have to live. This is how we put some food in our stomachs."

Teenage Affluenza

2008-01-13T18:21:00.000-08:00

2008-01-13T18:12:00.001-08:00

Living on Pennies

2008-01-13T18:10:00.000-08:00

Foreign Policy Goes Glam

2008-01-13T17:24:00.000-08:00

WHO WOULD you rather sit next to at your next Council on Foreign Relations roundtable: Henry Kissinger or Angelina Jolie? This is a question that citizens of the white-collared foreign-policy establishment thought they’d never be asked. The massive attention paid to Paris Hilton’s prison ordeal, Lindsay Lohan’s shame spiral and anything Britney Spears has done, said or exposed has distracted pop-culture mavens from celebrities that were making nobler headlines.
Increasingly, celebrities are taking an active interest in world politics. When media maven Tina Brown attends a Council on Foreign Relations session, you know something fundamental has changed in the relationship between the world of celebrity and world politics. What’s even stranger is that these efforts to glamorize foreign policy are actually affecting what governments do and say. The power of soft news has given star entertainers additional leverage to advance their causes. Their ability to raise issues to the top of the global agenda is growing. This does not mean that celebrities can solve the problems that bedevil the world. And not all celebrity activists are equal in their effectiveness. Nevertheless, politically-engaged stars cannot be dismissed as merely an amusing curiosity in foreign policy.
Consider the most notable example of a celebrity attempting to move the global agenda: Angelina Jolie. Her image has come a long way since her marriage to Billy Bob Thornton. In February of this year she published an op-ed in The Washington Post about the crisis in Darfur, referencing her work as a goodwill ambassador for the United Nations High Commissioner for Refugees. During the summer, her press junket to promote A Mighty Heart included interviews with Foreign Policy’s website and a glowing profile in Newsweek, modestly titled “Angelina Jolie Wants to Save the World.” In that story, former Secretary of State Colin Powell describes Jolie as “absolutely serious, absolutely informed. . . .She studies the issues.” Esquire’s July 2007 cover featured a sultry picture of Jolie—but the attached story suggested something even more provocative: “In post-9/11 America, Angelina Jolie is the best woman in the world because she is the most famous woman in the world—because she is not like you or me.”
What in the name of Walter Scott’s Personality Parade is going on? Why has international relations gone glam? Have stars like Jolie, Madonna, Bono, Sean Penn, Steven Spielberg, George Clooney and Sheryl Crow carved out a new way to become foreign-policy heavyweights? Policy cognoscenti might laugh off this question as absurd, but the career arc of Al Gore should give them pause. As a conventional politician, Gore made little headway in addressing the problem of global warming beyond negotiating a treaty that the United States never ratified. As a post–White House celebrity, Gore starred in An Inconvenient Truth, won an Oscar and a Nobel Peace Prize, promoted this past summer’s Live Earth concert and reframed the American debate about global warming. Gore has been far more successful as a celebrity activist than he ever was as vice president. This is the kind of parable that could lead aspiring policy wonks to wonder if the best way to command policy influence is to attend Julliard instead of the Fletcher School.
Joking aside, celebrity involvement in politics and policy is hardly new: Shirley Temple and Jane Fonda became known as much for their politics as their films. The template for Live Earth was the 1985 Live Aid concert, which in turn echoed the 1974 all-star concert for Bangladesh. Actors ranging from Ronald Reagan to Fred Thompson have taken the more traditional star route to power: running for political office.
Not everything old is new again, however. There is something different about the recent batch of celebrity activists. Current entertainers have greater incentives to adopt global causes than their precursors. Furthermore, they are more likely to be successful in pushing their policy agenda to the front of the queue. These facts have less to do with the celebrities themselves than with how citizens in the developed world consume information. Whether the rise of the celebrity activist will lead to policy improvements, however, is a more debatable proposition. Promoting a policy agenda is one thing; implementing it is another thing entirely. Regardless of what Vanity Fair or Vogue might want you to believe, celebrities really are just like everyone else. Some are competent in their activism, and some are…something else.

The Supply of Celebrity Activism
ONE REASON for the newfound global agendas of celebrities is simply that today’s stars have more autonomy than previous generations, and many of them recognize the benefits of being a popular saint. Stars may have always cared about politics, but they have not always been able to act on these impulses. Entertainers likely feared speaking out in the past, but the entertainment industry is not as authoritarian as it once was. The studio systems of yesteryear exerted much greater control over their movie stars. Mostly, the studios used this leverage to hush up scandals before the press found out about them. In the decades since, celebrities have acquired more leverage in Hollywood. In some cases—see Winfrey, Oprah—they have become moguls themselves. This gives them the autonomy to adopt pet causes, policy initiatives and make their own publicity missteps. It also affords them the opportunity to manage their own “brand”, as it were. Just as Nike or Pepsi recognize the benefits of developing a positive brand image, so do George Clooney and Sheryl Crow.
This leads to another, somewhat more selfish reason for celebrities to embrace policy activism: It distinguishes them from their tawdrier brethren. We now live in a world where the path to fame can be as fast as a 15-second YouTube clip. Paris Hilton became one of the world’s most well-known faces on the strength of a famous name and a poorly lit home video. In such a world, marquee celebrities need to take steps to differentiate themselves from the lesser stars of stage and screen—or distance themselves from past scandals.1 So when Angelina Jolie attends the Davos Economic Forum or sponsors a Millennium Village in Cambodia, she’s not only trying to do good, she’s trying to create a brand image that lets Americans forget about her role in breaking up Brad Pitt and Jennifer Aniston.
The final reason more celebrities are interested in making the world a better place is that it is simply easier for anyone to become a policy activist today. An effective policy entrepreneur requires a few simple commodities: expertise, money and the ability to command the media’s attention. Celebrities already have the latter two; the Internet has enabled them to catch up on information-gathering. Several celebrities even have “philanthropic advisors” to facilitate their activism. This does not mean that celebrities will become authentic experts on a country or issue. They can, however, acquire enough knowledge to pen an op-ed or sound competent on a talk show. And when they look sexy doing it, all bets are off.

The Power of Soft News
EVEN AS star activists aspire to appear on hard-news outlets, they dominate soft-news programs—a different but no less influential media format. Celebrity activism matters more now because Americans get their information about the world in different ways from a generation ago. Way back in the twentieth century, the available news outlets were well-defined: the major television networks, the weekly news magazines, The New York Times and the local newspaper. By relying on the same “general interest intermediaries”, the best and the brightest editorial gatekeepers forced most Americans to consume the same information. Clearly, the gates have been crashed. Cable television, talk radio and weblogs have radically diversified the sources of news available to ordinary Americans. The market for news and entertainment has shifted from an oligopoly to a more competitive environment.
This shift in the information ecosystem profoundly affects how public opinion on foreign policy is formed. Matthew Baum has argued in Soft News Goes to War that a large share of Americans get their information about world politics from “soft-news” outlets like Entertainment Tonight, Access Hollywood, SportsCenter, The View, People, US Weekly, Vanity Fair, Vogue, The Daily Show, The Tonight Show, or Gawker, TMZ and PerezHilton. Although viewers might not watch these shows or read these magazines to learn about the world, any reporting of current events aired on these programs reaches an audience unattainable to The New York Times or Nightline.
In the current media environment, a symbiotic relationship between celebrities and cause célèbres has developed. Celebrities have a comparative advantage over policy wonks because they have access to a wider array of media outlets, which translates into a wider audience of citizens. Superstars can go on The Today Show or The Late Show to plug their latest movie and their latest global cause. Because of their celebrity cachet, even hard-news programs will cover them—stories about celebrities can goose Nielsen ratings. With a few exceptions, like Barack Obama or John McCain, most politicians cannot make the reverse leap to soft-news outlets. Non-celebrity policy activists are virtually guaranteed to be shut out of these programs.
The growth of soft news gives celebrity activists enormous leverage. The famous and the fabulous are the bread and butter of entertainment programs. Covering celebrity do-gooders provides content that balances out, say, tabloid coverage of Nicole Richie’s personal and legal troubles. ESPN can cover both Michael Vick’s travails and Dikembe Mutombo’s efforts to improve health care in sub-Saharan Africa. MTV will cover Amy Winehouse’s on-stage meltdowns, but they will also follow Angelina Jolie in her trips to Africa. They covered Live Earth for both the music and the message.
The power of soft news is not limited to television. Vanity Fair let Bono guest-edit a special issue about Africa, knowing that cover photos of Madonna and George Clooney would attract readers and buzz. Without intending to, those perusing the pages might form opinions about sending aid to sub-Saharan Africa in the process. Similarly, celebrity blogs can garner higher amounts of traffic. We may only speculate why Internet users flock to Pamela Anderson’s website—but we know that while they are there, they can learn about Anderson’s stance against animal testing.
Indeed, celebrities actually have an advantage over other policy activists and experts because hard-news outlets have an incentive to cover them too. Celebrities mean greater attention, and hard-news outlets are not above stunts designed to attract readers or ratings. Consider this question: If The Washington Post is deciding between running an op-ed by Angelina Jolie and an op-ed by a lesser-known expert on Sudan, which author do you think they are most likely to choose?

Do Celebrity Do-Gooders Do Any Good?
THERE IS no doubt that celebrities have the ability to raise the profile of issues near and dear to their hearts. Highlighting a problem is not the same thing as solving it, however—and the celebrity track record at affecting policy outcomes could best be characterized as mixed. Star activism has been reasonably successful at forcing powerful states to pledge action to assist the least-developed countries. It has been less successful at getting states to honor these pledges and not successful at all in affecting other global policy problems.
There have been some significant achievements, though. In the 1990s, Princess Diana embraced a ban on the use of land mines. Her death became a rallying point that led to Great Britain’s ratification of the 1997 Ottawa Convention to ban the devices.2 The Jubilee 2000 campaign, which Bono championed, should also count as a success.3 According to the Center for Global Development, the movement to assist highly indebted poor countries resulted in “the most successful industrial-country movement aimed at combating world poverty for many years, perhaps in all recorded history.” Celebrity activism also helped fuel the pledge at the 2005 Gleneagles G-8 summit to double aid to developing countries. Bob Geldof, who organized Live Aid a generation ago, arranged the Live 8 concerts to coincide with the summit. Bono, George Clooney, Claudia Schiffer and Nelson Mandela all appeared on stage.
To be clear, celebrities were not the only reason that the Ottawa Convention was signed or the G-7 launched the Highly Indebted Poor Countries initiative. In each of these cases, celebrities were buttressing organized, grassroots campaigns to change the status quo. At a minimum, however, star activists raised the media profile, spurring politicians to act sooner than they otherwise might have.
But there have been failures, too. While Bono provided an invaluable assist in promoting debt relief, he has not been as successful in his (Product) Red campaign. The idea was for consumers to do good through consumption—by buying iconic products colored red, a portion of the price would go to the UN Global Fund to Fight AIDS, Tuberculosis and Malaria. The campaign was launched in January 2006 to great fanfare at Davos. According to Advertising Age, however, it has been a bust: After an estimated $100 million in marketing expenditures, the campaign netted only $18 million. (Product) Red has challenged the validity of these numbers, but the story invited media critiques of the campaign’s strategy, denting its momentum and cachet.
Celebrity campaigns are also not always considered a greater good. Development expert William Easterly has argued that the celebrity focus on Africa’s problems has been misguided. By focusing exclusively on the diseases of sub-Saharan Africa, celebrities have unwittingly tarnished an entire continent: “[Africans are] not helpless wards waiting for actors and rock stars to rescue them.” Many African officials and activists share this sentiment, even heckling Bono at a development conference.
Though celebrities have a mixed record in promoting development aid to Africa, the record on other issues is even worse. The Live Earth concerts generated mixed reviews because of their disorganization. Promoters had to cancel the Istanbul venue because of a lack of local sponsorship, and the other concerts were less than sellouts. More significantly, some celebrity activists questioned whether the extravaganza even had a clear purpose. Bob Geldof told an interviewer, “Live Earth doesn’t have a final goal. . . .So it’s just an enormous pop concert or the umpteenth time that, say, Madonna or Coldplay get up on stage.” Roger Daltrey of The Who concurred: “The last thing the planet needs is a rock concert.”
Steven Spielberg came up for criticism in a Wall Street Journal article co-authored by actress Mia Farrow. The article warned that Spielberg, as an “artistic advisor” to the 2008 Summer Olympics in China, would become “the Leni Riefenstahl of the Beijing Games” if he did not speak out. The chastised producer later sent a letter to Chinese Premier Hu Jintao because he felt compelled to “add my voice to those who ask that China change its policy towards Sudan.” Regardless of the reasons, Beijing has begun to pressure Sudan’s government into cooperating with the United Nations on Darfur.
Richard Gere has devoted decades to the cause of Tibetan independence to little avail. Yet with one onstage kiss of Bollywood star Shilpa Shetty, he did manage to get himself burned in effigy across India—the reverse celebrity problem. On the whole, celebrities have made little headway in bringing peace to the world’s trouble spots.
Even if celebrities are judicious and focused in promoting their causes, there are diminishing marginal returns to activism. A celebrity who repeatedly harps on a particular cause risks generating compassion fatigue with the general public. As Bono recently told CNN, “Look, I’m Bono and I’m sick of Bono. And I fully understand. . . .I look forward to a time when I’m not such a pest and a self-righteous rock-star. Who needs one?” Clearly, there is a fine line to walk between sustained focus and righteous indignation.

Hindered Hollywood
IT IS TRUE that star activism can influence the global policy agenda. But as we’ve seen, when it comes to concrete achievements, celebrities have a spotty track record. They face a number of constraints on their ability to affect policy. Most obviously, celebrities might not be the most grounded community of individuals. While some celebrities have mastered the activist game, others seem out of their depth. Hip-hop singer and Live Earth performer Akon admitted to reporters that he didn’t know what it meant to be “green” until the day of the concert. Sean Penn’s recent fact-finding trip to visit Venezuelan president Hugo Chávez served little purpose beyond a story in The New York Times that gently mocked both men. Then there’s Peter Gabriel’s idea for “The Elders”, a group which includes Nobel Laureates Jimmy Carter, Nelson Mandela and Desmond Tutu that tries to “use their unique collective skills to catalyze peaceful resolutions to long-standing conflicts”—something that seems more at home in a Matrix sequel than in the here and now. For every Bono or Angelina Jolie, there are other celebrities who are less well-versed in their cause du jour. The problem for the savvy stars is that when other entertainers act foolishly, it becomes easier to summarily dismiss all celebrity activism.
Another problem is that some celebrity causes are more controversial than others—and controversy can still threaten a star’s bankability. Tom Cruise’s sofa pitch for Scientology (and against psychiatry) likely played a role in Paramount’s 2006 decision to sever its business relationship with him. When the Dixie Chicks blasted George W. Bush on stage at a 2004 London concert, radio stations pulled their chart-topping single from playlists, affecting the record’s sales.
None of these episodes ended a career, but they did sting. These cautionary tales reveal a clear constraint on celebrity activism: Most stars will be reluctant to risk their professional careers to take a controversial political stance. When Michael Jordan was asked to endorse a Democratic senatorial candidate during his playing career, he demurred with a famous reply: “Republicans buy sneakers too.” There are certainly those who present exceptions to this rule, such as Robert Redford, Michael Moore and Susan Sarandon—but they are not the rule.
A deeper problem celebrities face is that the implicit theory of politics that guides their activism does not necessarily apply to all facets of international relations. The goal of most social activism is to bring greater attention to a problem. The assumption is that once people become aware of the problem, there will be a groundswell of support for direct action. This is not how politics necessarily works, particularly in the global realm. Any solution to a problem like global warming, for example, involves significant costs. As people become more aware of the policy problem, it is far from guaranteed that a consensus will emerge about the best way to solve it. It is therefore not surprising that celebs have had their greatest successes in touting humanitarian causes and almost no effect on ending militarized conflicts.
THIS INCREASE in influence comes with a warning, however: With great power comes the great potential for blowback. A September CBS/New York Times poll revealed that 49 percent of Americans think celebrities should stay out of politics. Since 2003, the polling data suggests increasing public hostility towards celebrity activism.
Both elites and ordinary citizens have their reasons to resent star power. Celebrity activism rubs many policymakers and pundits the wrong way. To some, star power upsets their sense of fair play. Christopher Caldwell complained recently, “Philanthropy is a route through which celebrity can be laundered into political power.” He makes an interesting point. Why should the leads of Mr. & Mrs. Smith be listened to on weightier affairs of state? Who appointed Bono the global secretary of development? Does Pamela Anderson merit attention for her causes ahead of learned policy experts? To other aspirants of the foreign-policy community, the offense is more personal. Power is a zero-sum commodity, and if celebrities are rising in influence, that means others are falling. This will not sit well with those who feel pushed aside, especially if they have toiled for years in graduate school and low-paying policy jobs.
Among “ordinary” citizens, celebrities are all too aware that the ingredients for a fall from grace are interwoven with the sources of star power. At its core, star activism hints that the famous are somehow better than you or me. Some Americans view celebrities who pontificate on politics and policy as taking advantage of a bully pulpit that they did not earn. There’s a fine line between principled activism and righteous indignation, and the celebrity who crosses that line risks incurring the wrath of the common man or woman. Americans are addicted to celebrities because we like to see them on top—but we also enjoy their fall.

Daniel W. Drezner is an associate professor of international politics at the Fletcher School at Tufts University and the author of All Politics Is Global (Princeton University Press, 2007).
1 For a very amusing skit that satirizes this point, see www.youtube.com/watch?v=e-ia__1d_rM.
2 See Richard Price, “Reversing the Gun Sights: Transnational Civil Society Targets Land Mines”, International Organization Vol. 52, No. 3 (Summer 1998).
3 See Joshua Busby, “Bono Made Jesse Helms Cry: Jubilee 2000, Debt Relief, and Moral Action in International Politics”, International Studies Quarterly, No. 51 (June 2007).

Green Revolutionary

2008-01-13T17:22:00.000-08:00

January/February 2008

Four decades ago, Norman E. Borlaug developed a wheat variety that fed the world. Now he's battling a pathogen whose spread could cause starvation.
By John Pollock

In 1798, the English economist Thomas Malthus argued that population increases geometrically, outstripping the arithmetic growth of the food supply. He promised "famine ... the last, the most dreadful resource of nature." It took another 125 years for world population to double, but only 50 more for it to redouble. By the 1940s, Mexico, China, India, Russia, and Europe were hungry. Franklin D. Roosevelt's farsighted vice president-elect, former secretary of agriculture Henry A. Wallace, believed the solution lay with technology. He was right: the Malthusian tragedy never happened, chiefly because Norman E. Borlaug transformed the breeding of wheat, which feeds more people than any other crop.
From 1939 to 1942, Mexico's harvest was halved by stem rust, a fungus whose airborne spores infect stems and leaves, shriveling grains. Anxieties about wartime food shortages led the American philanthropic organization the Rockefeller Foundation to create the country's first foreign agricultural program: the Coöperative Wheat Research and Production Program, which was based in Mexico and which Borlaug joined, as its plant pathologist, in 1944. The program was prescient: rust hit the North American breadbasket in 1954, wiping out 75 percent of the durum wheat crop used for pasta.
"There was panic in the U.S. and Canadian departments of agriculture," Borlaug tells me. "We had to accelerate the program to develop rust-resistant wheat varieties." Borlaug struggled with a lack of machinery, equipment, and trained scientists. Yet by 1948, he tells Leon Hesser in The Man Who Fed the World, a recent biography, "research results, the bits and pieces of the wheat production puzzle, began to emerge, and the fog of gloom and despair began to lift."
Before Borlaug, plant breeders sought new traits in plants by creating perhaps a few dozen "crosses" of varieties each year. For Borlaug, this would have meant "at least 10 years developing resistant varieties," he recalls, "and there would be another epidemic in that time. I wanted to speed things up." Collecting wheat varieties from around the world, he began a massive cross-breeding program. Such work is "mind-warpingly tedious," he tells Hesser. "There's only one chance in thousands of ever finding what you want, and actually no guarantee of success at all."
To improve those odds, Borlaug tried something unusual: doing two successive plantings of his experimental crosses each year, effectively doubling his rate of research. He was almost stymied by what he calls "the dogma of plant breeding everywhere at the time: plant in the same season and place as local farmers." But soon he was planting in summer in low-quality, rain-fed soils at high altitude near Mexico City, and then taking any promising varieties hundreds of miles north to sow a winter crop in the warmer, drier, lower-lying Yaqui Valley. This "shuttle breeding" helped Borlaug achieve rust resistance in under five years. It also produced exceptionally adaptable varieties, suited for use across climates.
Having achieved rust resistance and plant adaptability, Borlaug now addressed the problem of structure. When Mexican wheat was heavily fertilized, it grew too tall, collapsing when irrigated or rained on--thus limiting yields. After 20,000 fruitless crosses, Borlaug heard about a Japanese dwarf variety that might confer its strength and stockiness. He started thousands more crosses, until "by 1964, we got the really beautiful short wheat varieties." The yields were spectacular, and the variety was quickly adopted around world. In 1968, his approach, which stimulated advances in other staple foods, was dubbed the "Green Revolution" by William Gaud, administrator of the U.S. Agency for International Development. Two years later, Borlaug won the Nobel Peace Prize.
Paradoxically, 1968 also saw the genesis of an environmentalist dogma that was pessimistic about humanity's capacity to feed itself. In that year--when the global population growth rate peaked, at 2 percent per year--Paul Ehrlich published The Population Bomb, intoning, "The battle to feed all of humanity is over. ... Hundreds of millions of people will starve to death in spite of any crash programs." The madding crowd of "stinking hot" Delhi was odious to Ehrlich: "My wife and daughter and I ... entered a crowded slum area. ... People, people, people, people. ... [We] were, frankly, frightened." It was a "fantasy," he said, that India would ever feed itself. Yet Borlaug's program delivered such stunning results that India issued a 1968 stamp commemorating the "wheat revolution," and by 1974 it was self-sufficient in all cereals.
Nonetheless, a neo-Malthusian fear of overpopulation became endemic to environmentalist thinking. Science philosopher and Arts and Letters Daily founder Denis Dutton says, "Well-fed Greens flaunt their concern for the planet but are indifferent, even hostile, to the world's poor with whom they share it. Some Greens I knew acted for all the world as though they relished the idea of a coming worldwide famine, much as fundamentalists ghoulishly looked forward to Armageddon." Dutton, who served in the Peace Corps, personally saw the Green Revolution benefit India. "For the catastrophist, India becoming a food exporter was disturbing," he says. "This wasn't supposed to happen. They blame Borlaug for spoiling the fun."
Not all Borlaug's critics were catastrophists: some opposed the intensity of his agriculture, especially its use of inorganic fertilizer. Borlaug acknowledges the need for care, but he says the "natural" alternative, cow manure, "would require us to increase the world's cattle population from around 1.5 billion to some 10 billion." As he dryly observed in a 2003 TV interview, "Producing food for 6.2 billion people ... is not simple." He added, "[Organic approaches] can only feed four billion--I don't see two billion volunteers to disappear."
Raised on a farm, Borlaug thinks many of his detractors would benefit from a week or two in the fields. He cites Ghanaian farmers who use no-till agriculture (that is, plant waste is left to improve the humus and reduce erosion) and control weeds with herbicides. Their lives are improved by the reduction in weeding. "Less backache, you see," he once said. "You know, it's amazing how often campaigners in rich countries think poor people don't get backache."
A New ScourgeMany thought the work that earned Borlaug his Nobel brought an end to stem rust, but it is back, in the form of a variant called Ug99, which emerged in Uganda and spread to Kenya and Ethiopia. "If it continues unchecked," says Borlaug, "the consequences will be ruinous."
Africa, in fact, presents an especially worrying challenge, for the simple reason that it did not benefit much from the Green Revolution. Borlaug's Nobel largely honored gains in Asia: there, calorie availability per person rose, wheat and rice prices fell, and increased incomes stimulated industrial output. Similar benefits were enjoyed almost everywhere except sub-Saharan Africa, where more than 200 million people--a third of the population--still go hungry. In the last four decades, Africa's average per capita food production has actually decreased.
Ug99 will be fought, at least initially, with the plant-breeding techniques Borlaug so artfully employed. However, he believes Africa's best hopes rest with biotechnology, even though regulatory problems prevent its immediate use against Ug99. Also needed, he believes, are publicity, political will, funding, and renewed coöperation among international agricultural researchers. The work he is inspiring is nothing less than a new African Green Revolution.
The reasons for failure in Africa are complex. "Irrigation is first," explains Michael Lipton of the University of Sussex's Poverty Research Unit. "In sub-Saharan Africa, 4 percent of cropland is irrigated. In South and East Asia it's nearer 40 percent."
Then there's soil. "Africa's soils ... [are] equivalent--and were once adjacent--to the Cerrado's acid soils," Borlaug says. The Cerrado, an area that extends across central Brazil, historically had some of the least productive soil in the world. But improved crop varieties of the sort that Borlaug created--along with liming, fertilizer, and low- or no-till methods--have led to the single largest increase in arable-land usage in the last 50 years.
Politics, both regional and global, were and are another hindrance. "If the Green Revolution in India was proposed to the World Bank today, it would be turned down," says Rob Paarlberg, an agricultural-policy expert at Wellesley College. By the 1980s, he says, "public investment in roads, research, irrigation, fertilizers, and seeds was politically unacceptable to the Washington consensus on the right--and on the left, among environmentalists opposed to chemical fertilizers, road building, and irrigation projects." Thus, real per capita levels of official development assistance for the agricultural sector in the poorest countries fell by nearly 50 percent between 1982 and 1995.
Finally, Borlaug says, "Africa needs roads. Roads bring know-how and fertilizer to farmers and ideas and business for commerce." Africa, Borlaug argues, also needs concerted international help. Meanwhile, Ug99 has reached Yemen: from there, Borlaug warns, "it can reach Iraq, Iran, India, and Pakistan"--even the breadbaskets of Europe and America. A scramble is on to find resistant varieties, ensure that their yields will encourage farmers to adopt them, and produce sufficient tonnages of seed.
Last year, ABC, CBS, and NBC cameras were absent when Borlaug was presented with the Congressional Gold Medal. And alas, Borlaug's friend and biographer Leon Hesser has now produced a prosaic work that, while good on his hero's early years, fades as Borlaug appears on the international stage. Borlaug deserves better, but when journalist Gregg Easterbrook sought a publisher for a popular biography, "they said he was boring," the self-described "environmental optimist" says. "If he'd killed someone instead of saving hundreds of millions of lives, then they'd have been interested."
Copyright Technology Review 2007.

The guests for that show were: Julius Coles, President, Africare; Sam Daley-Harris, President ... all » and Founder, RESULTS Educational Fund; Rima Sa

2007-12-26T10:15:00.000-08:00

Host Patricia Gras talks with Sam Daley-Harris, founder and president of RESULTS, an international citizens’ lobby dedicated to creating the political

2007-12-26T10:11:00.001-08:00

Ingrid Munro presents Jamii Bora, the Kenyan microfinance institution she founded, at the Global Microcredit Summit 2006 held in Halifax,

2007-12-26T10:09:00.001-08:00

Ingrid Munro and Jamii Boro

2007-12-26T10:07:00.000-08:00

Jamii Bora and Ingrid Munro

2007-12-26T10:05:00.000-08:00

Bill Gates @ Harvard Part 4 of 4

2007-12-26T10:03:00.001-08:00

Bill Gates @ Harvard Part 3 of 4

2007-12-26T10:02:00.000-08:00

Bill Gates @ Harvard Part 2 of 4

2007-12-26T10:01:00.000-08:00

Bill Gates @ Harvard Part 1 of 4

2007-12-26T10:00:00.000-08:00

2007-12-04T22:47:00.001-08:00

Skoll Foundation Headlines

2007-12-04T20:39:00.000-08:00

2007-12-04T20:22:00.000-08:00

World Tuberculosis Day

2007-11-30T22:23:00.000-08:00

TB Tuberculosis

2007-11-30T22:15:00.000-08:00

Bonsai Story

2007-08-15T18:35:00.000-07:00

A human being is born into this world fully equipped not only to take care of him or herself, but also to contribute to enlarging the well being of the world as a whole. Some get the chance to explore their potential to some degree, but many others never get any opportunity, during their lifetime, to unwrap the wonderful gift they were born with. They die unexplored and the world remains deprived of their creativity, and their contribution.

Grameen has given me an unshakeable faith in the creativity of human beings. This has led me to believe that human beings are not born to suffer the misery of hunger and poverty.

To me poor people are like bonsai trees. When you plant the best seed of the tallest tree in a flower-pot, you get a replica of the tallest tree, only inches tall. There is nothing wrong with the seed you planted, only the soil-base that is too inadequate. Poor people are bonsai people. There is nothing wrong in their seeds. Simply, society never gave them the base to grow on. All it needs to get the poor people out of poverty for us to create an enabling environment for them. Once the poor can unleash their energy and creativity, poverty will disappear very quickly.

Let us join hands to give every human being a fair chance to unleash their energy and creativity.

Speech by HRH Aga Khan

2007-08-13T21:31:00.000-07:00

This situation of conflict and instability poses a grave risk for the future relationship between the industrialized world and the developing world. The polarizing and paralyzing Cold War, which impacted millions of people in the developing world, has gone. The new issue that demands the attention of the international community is the need to create stable states with self-sustainable economies and stable, inclusive forms of governance.

Much of the world's attention is periodically focused on the phenomenon of so-called failed states. But of the global threats that face us today, apart from nuclear war or HIV/AIDS, the most preoccupying is not failed states. It is the failure of democracy. The global picture at the beginning of the 21st century is a story of failed democracies in the Muslim world, in Latin America, in Eastern Europe and in sub-Saharan Africa.

A startling fact today is that nearly forty percent of UN member nations are failed democracies. The greatest risk to the West itself, and to its values, is therefore the accumulation of failed democracies. That in turn will cause deep under-currents of stress, if not conflict, among societies. It is essential, in the West's own interest, to admit to itself that democracy is as fragile as any other form of human governance.

It is essential that the question be asked, in every national situation and within each society, "if democracy is failing, why is this the case?" Every effort needs to be made to help correct the situation, rather than referring dismissively to failed states. To my knowledge, democracy can fail anywhere, at any time, in any society—as it has in several well-known and well-documented situations in Europe, as recently as the last 50 years. For it is self-evident, in Europe and across the globe, that the existence of political parties and elections do not alone produce stable governments or competent leadership.

Three concepts seem to me to be essential in creating, stabilizing and strengthening democracy around the world, including among the people of Africa and Asia with whom I have worked in the past. These concepts are meritocracy, pluralism and civil society. In particular, I will ask, what role can Canada play, drawing upon her national genius, in creating or enhancing these great underpinnings of democracy in the developing world?

A recent UN audit of democracy covering 18 Latin American countries reemphasizes the virtues of democracy in advancing human development; but it also warns that stagnant per capita incomes and growing inequality, in access to civil rights as well as income, are producing doubt, impatience and civil unrest. Thus, the report underlines a key concept that you will all know instinctively, and which my experience working in the developing world has illustrated, decade after decade: the primary, daily concern of peoples everywhere is their quality of life, which is intimately connected to their value systems. When it turns toward solutions, the report recognizes a crucial fact: "An important relationship exists between citizenship and organizations of civil society, which are major actors in the strengthening of democracy, in the oversight of government stewardship and in the development of pluralism."...

Our long presence on the ground gives us an insight that confirms the UN's detailed assessment in Latin America, which is that a democracy cannot function reasonably without two preconditions.

The first is a healthy, civil society. It is an essential bulwark that provides citizens with multiple channels through which to exercise effectively both their rights and duties of citizenship. Even at a very basic level, only a strong civil society can assure isolated rural populations, and the marginalized urban poor of a reasonable prospect of humane treatment, personal security, equity, the absence of discrimination, and access to opportunity.

The second precondition is pluralism. Pluralism means peoples of diverse backgrounds and interests, coming together in organizations of varying types and goals, for different kinds and forms of creative expression, which are valuable and deserving of support by government and society as a whole.

The rejection of pluralism is pervasive across the globe and plays a significant role in breeding destructive conflicts. Examples are scattered across the world's map: in Asia, in the Middle East, in Africa, in Europe, in the Americas. No continent has been spared from the tragedies of death, of misery and of the persecution of minorities. Are such high-risk situations predictable? If the answer is, "Yes", then what can be done about them, to pre-empt the risk that the rejection of pluralism will become the spark that sets human conflict aflame? Is the onus not on leadership, in all parts of the world, to build a knowledge base about such situations and consider strategies for preventing them? For, I deeply believe that our collective conscience must accept that pluralism is no less important than human rights for ensuring peace, successful democracy and a better quality of life.

I am optimistic that much constructive work can be done, and I would cite one example—only one from the perspective of forty years of experience of agencies of the Aga Khan Development Network—in which the careful, patient development of institutions of civil society helped to created the capacity to manage and legitimize pluralism.

In Northern Pakistan, once one of the poorest areas on earth, our Network has been working for over twenty years, with CIDA as our lead partner. Isolated and bypassed rural communities of different ethnic and religious backgrounds—Shia, Sunni and non-Muslim—struggled to eke out a meager living, farming small holdings in the harsh environment of this mountain desert ecosystem. Relations among the communities were often hostile. The challenge for the Network was to create sustainable, inclusive processes of development in which diverse communities could participate together and seek joint solutions to common problems.

To summarize two decades of work in Northern Pakistan: over 3,900 village based organizations, comprising a mix of broad-based representations and interest-specific groups in such fields as women's initiatives, water usage, and savings and credit were established. The quality of life of 1.3 million people living in a rural environment, representative of the majority of the population of Asia and Africa, has been dramatically improved. Per capita income has increased by 300%, savings have soared, and there have been marked improvements in male and female education, primary health, housing, sanitation and cultural awareness. Former antagonists have debated and worked together to create new programs and social structures in Northern Pakistan, and more recently in Tajikistan. Consensus around hope in the future has replaced conflict born of despair and memories of the past.

Ensuring World Bank Microfinance Funds Reach the Very Poor

2007-08-13T21:08:00.000-07:00

Summary

Globally, one in five people must survive on less than $1 per day. Yet, according to the UN Development Program we have the resources to end poverty. One of the very best ways to achieve the Millennium Development Goal of cutting absolute poverty in half by 2015 is to reach the Microcredit Summit Campaign's new goal: ensuring 100 million of the world's poorest families rise above the $1 a day threshold. Meeting this goal would lift half a billion people out of extreme poverty and build a safer and more equitable world. Thanks to congressional leadership supported by the work of RESULTS and allies, landmark microenterprise legislation was signed into law in June 2003. The law will help ensure that at least half of U.S. microenterprise funds targeted to benefit the very poor actually reach them. If we are to halve severe poverty by 2015, other key financial and development institutions, especially the World Bank, must do more to reach the very poor.

Strategy

We will ask our Representatives to participate in the meeting with new World Bank Robert Zoellick and insist that he agrees to progress toward these four action items: 1) expanding resources for microfinance, 2) committing half of all microfinance resources to families living on less than $1 a day, 3) requiring the use of cost-effective poverty measurement tools to ensure compliance, and 4) reporting annually on results.

Why Microfinance

Microenterprise works. A long-term World Bank study found that microcredit was responsible for 40 percent of the moderate poverty reduction in Bangladesh. For individual borrowers, microloans can mean a powerful transformation from hopelessness to a bright future. M. Motuke lived in a wrecked car in the Democratic Republic of Congo with her four children. If she could find something to eat, she would feed two of her children; the next time she found something to eat, her other two children would eat. She got her first loan of $100 and bought production materials to make chikwangue (manioc paste). Today, Motuke and her family no longer live in a broken down car; they rent a house with two bedrooms and a living room. Her four children go to school on a regular basis; they eat regularly and dress well. She currently is saving to buy some land in a suburb farther outside of the city and hopes to build a house.

Expanding Access for the Poor Public Law 108-484, requires that half of all U.S. international microenterprise funding benefit people living on less than $1 per day and that new tools be developed and used to ensure this happens. It has already begun to fundamentally change the microenterprise work of our foreign aid agency, the U.S. Agency for International Development (USAID).

The mission of the World Bank is to reduce global poverty and it exerts much sway on other countries and institutions through the policies it supports. In order to achieve the MDGs, it is critical that its resources and policies directly benefit very poor people and reduce rather than exacerbate poverty.

A letter to new World Bank President Robert Zoellick was signed by 72 members of the House of Representatives and delivered on Friday, July 13 th, 2007. The letter asked Mr. Zoellick to meet with members of Congress and take several critical steps to help further the world's progress toward the Millennium Development Goal of halving severe poverty by 2015.

The key requests are:

Increase funding for microfinance
Commit at least 50 percent of funds to families living on less than $1 a day
Require the use of cost-effective poverty measurement tools to ensure compliance
Report annually on results

By writing the following letter you can help reach millions more very poor people with credit and other financial services.

Take Action

Write a letter to your Representative or Senator.

Introduce yourself and explain that you are a constituent.

Share your concern that over a billion people are forced to survive on less than $1 per day.
Explain that the U.S. must lead in a concerted global effort to ensure that the goal of cutting severe poverty in half by 2015 is reached. Tell him/her that Microcredit, often starting at $50 or less, has transformed the lives of tens of millions of very poor families around the world.
Ask your Representative to participate in the meeting with new World Bank President Robert Zoellick and push for acceptance on the four bullet points above requesting that the Bank expand resources for microenterprise and take specific steps to ensure that at least half of those resources reach very poor people. Mention that the meeting is being organized by Reps. Rush Holt (D-NJ) and John Carter (R-TX).

Ask for a reply.

Note: letters must be faxed or e-mailed, as regular mail delivery to Congress is delayed by several months. Rep. __________; U.S. House of Representatives, Washington, DC 20515 .

Ensuring World Bank Microfinance Funds Reach the Very Poor

2007-08-13T21:04:00.000-07:00

Given that the World Bank's mission is to alleviate poverty, the Bank should provide increased funds for microfinance and make sure that at least half of those funds go to families living below $1 a day. If the World Bank doesn't do it, who else will? It's the right thing to do.

Muhammad Yunus, 2006 Nobel Peace Prize Laureate