Development

This is a guest post by Ashlyn Anderson, research associate for India, Pakistan, and South Asia at the Council on Foreign Relations. India recently hosted a milestone summit attended by delegations from all fifty-four African countries. Confronting similar development challenges, India and the nations of Africa charted plans to deepen ties and unite to address shared global concerns. India is one of many countries keen to participate in Africa’s rise, and the third India-Africa Forum Summit signaled an alignment of interests and the potential for a closer relationship. Following the summit, the group released the Delhi Declaration 2015 along with the India-Africa Framework for Strategic Cooperation that outline their shared vision. The countries cited a common priority of inclusive economic growth, and strategies to address such development challenges as climate change, gender inequality, poverty alleviation, and terrorism. India and Africa share a long history most recently derived from their colonial experiences. India’s Jawaharlal Nehru, Egypt’s Gamal Abdel Nasser, Ghana’s Kwame Nkrumah, and the leaders of Indonesia and Yugoslavia founded the Non-Aligned Movement in 1960 based on the principles laid out at the Bandung Asian-African Conference in 1955. Since the end of the Cold War, in an era of increased globalization, the group has turned toward the issue of inequality in the international economic order. But the heyday of the movement has largely passed, and the convening of the first India-Africa Forum Summit in 2008 demonstrated the desire to take India’s relationship with the African continent forward using a different venue. Along with political ties, India and the African continent share many social links. A 2010 report from the Indian Ministry of Overseas Indian Affairs reported the Indian diaspora in Africa surpassing two million in 2001 with the largest concentrations in South Africa (1,000,000), Mauritius (715,756), and Kenya (102,500). Africans increasingly migrate to India for employment and education. India offered 50,000 additional scholarships at the 2015 summit to encourage Africans to study in India. India-Africa trade currently stands at nearly $72 billion, twice as much as five years ago but still small in comparison to the value of the China-Africa trade, over $200 billion. However, the resurgence of India’s economy and Prime Minister Modi’s diplomatic activism has positioned India as a rising economic power capable of rivaling China’s economic heft in Africa. Source: Bilateral Investment Statistics, United Nations Conference on Trade and Investment, 2012 India’s total foreign direct investment (FDI) in Africa places it among the continent’s top investors. However, Indian investment in Africa has not been without obstacles and a disproportionate amount of India’s Africa FDI stock is in Mauritius, an island strategically located in the Indian Ocean. A sample of Africa’s top investors below shows how emerging investors such as China, India, and Japan, stack up against some of Africa’s traditional investors. As Western countries adjust to slower economic growth and China reacts to its recent downturn and steps up its engagement with other areas such as Latin America, India has an opportunity to play a much larger role than in the past. India does not yet eclipse the presence of countries such as China or the United States in Africa, but the 2015 summit effectively elevates India-Africa ties. Invoking shared history and ideals, India and the nations of Africa will increasingly have the economic capacity and influence to advance a common agenda. At this year’s summit, India announced $10 billion in lines of credit would be extended to African nations over the next five years in addition to another $7.4 billion pledged in 2008. The announcements of $600 million in grant assistance along with a $100 million India-Africa development fund and a $10 million India-Africa health fund demonstrates India’s transition to a more active development donor and partner.

This is a guest post by Allen Grane, research associate for the Council on Foreign Relations Africa Studies program. The government of Kenya is tapping the country’s digital finance prowess to raise critical infrastructure funds. The National Treasury has teamed up with a local mobile money pioneer, Safaricom, to launch the so-called M-Akiba bond. It is the first government security carried exclusively on mobile phones. M-Akiba is a national economic solution that has the potential of filling-in for foreign investment. This is especially important in light of Standard & Poor’s recent lowering of Kenya’s credit rating outlook to negative due to depreciation of the Kenyan Shilling and a growing budget deficit. M-Akiba, like M-Pesa, which was developed in response to Kenya’s retail banking shortcomings, is another African tech-based solution to a regional finance challenge. This initiative is also significant in the aftermath of J.P. Morgan’s recent dropping of Nigeria from its local-currency emerging market bond index. That move could signal a waning of international interest in African bond markets, which have become more important to African government infrastructure financing over the last several years. Despite the continent’s rapid economic growth in the past decade, investors may be worried by the recent fall in commodity prices and China’s cooling economy, both of which are having secondary effects in Africa. In the midst of this potential downturn, African countries must find new ways to create investment. Kenya is seeking to do that with the M-Akiba bond, an original way to raise capital through its citizens while leveraging East Africa’s large, and ever-growing, mobile markets. Mobile platforms such as M-Pesa have been extremely successful in Kenya, where 75 percent of its citizens own cell phones and 60 percent of its population transact payments via M-Pesa. The Kenyan government argues that M-Akiba will not only help them tap into local investors for government bonds, but that it will allow more Kenyans to build personal savings (Akiba is the Swahili word for savings). M-Akiba lowers many of the hurdles to citizen investors purchasing government bonds. They no longer have to go through a financial intermediary (just their mobile phones) and the 3,000 Shillings ($29) entry price makes M-Akiba bonds more accessible than typical government bonds, priced at 50,000 Shillings (approximately $475). Similar to M-Pesa, which has become a leading example for digital payments providers around the world, the M-Akiba concept could become a model for developing economy government finance.

This is a guest post by Aubrey Hruby and Jake Bright. They are the authors of The Next Africa: An Emerging Continent Becomes a Global Powerhouse. The role of technology in sub-Saharan Africa is growing. An emerging information technology (IT) ecosystem is reinforcing regional trends in business, investment, and modernization. There is a growing patchwork of entrepreneurs, startups, and innovation centers coalescing from country to country. Most discussions of the origins of Africa’s tech movement circle back to Kenya, which was home to several major technological innovations between 2007 and 2010. This innovation inspired the country’s Silicon Savannah moniker, and has provided an example for other African countries to follow. In 2007, Kenyan telecom company Safaricom launched its M-Pesa mobile money service to a market lacking retail banking infrastructure yet abundant in mobile phone users. The product converted even the most basic cell phones into roaming bank accounts and money-transfer devices. Within two years M-Pesa was gaining nearly six million customers and transferring billions annually. The mobile money service shaped the African continent’s most recognized example of technological leapfrogging: launching ordinary citizens without bank accounts into the digital economy. Shortly after M-Pesa’s launch, four technologists created the Ushahidi crowdsourcing app in response to Kenya’s 2007 election violence. The software that evolved became a highly effective tool for digitally mapping demographic events anywhere in the world. Ushahidi has since become an international tech company with multiple applications in more than twenty countries. In 2008, Erik Hersman, an Ushahidi co-founder, hatched Nairobi’s iHub innovation center after identifying the need for "[permanent information technology] community spaces…in major cities [for] young entrepreneurs. The nexus point for technologists, investors, [and] tech companies.” Since 2010, 152 tech companies have formed out of iHub. It has 16,000 members and on any day, numerous young Kenyans work in its labs and interact with global technologists. iHub gave rise to Africa’s innovation center movement, inspiring the upsurge in tech hubs across the continent. Another Kenyan milestone was the government’s 2010 completion of The East African Marine System undersea fiber optic cable project, which increased East African broadband and led to establishment of a national Information and Communication Technology (ICT) Authority. Today, Silicon Savannah is but one corner of sub-Saharan Africa’s tech scene. Across the region a Silicon Valley inspired network is developing. Nigeria is a hotbed for startup activity. Facebook recently announced an initiative to beam internet access to Africa from space. Silicon Valley investment is funneling into ventures from Kenya to South Africa. In total, our research highlights the existence of roughly two hundred African innovation hubs, 3,500 new tech related ventures, and $1bn in venture capital to a Pan-African movement of startup entrepreneurs. Our study also reveals growing connections between the United States and sub-Saharan Africa’s IT sector. Tech giants IBM, Microsoft, and Google are expanding business operations in the region and partnering with African innovation centers. Repatriated entrepreneurs from the U.S. contemporary African diaspora are leading many of the continent’s tech incubators and startups. All three of Africa’s most prominent ecommerce startups--Jumia, Konga, and MallforAfrica--were founded by Nigerians who earned their university degrees and initial private sector experience in the U.S. A noteworthy portion of the combined $300 million in venture capital to these entities comes from American investment firms, attracted to the opportunities of digital sales to the world’s fastest growing population expected to consist of 540 million smartphone owners by 2020. Following the lead of countries such as South Africa and Kenya there are growing expectations on African governments to flesh out plans and infrastructure for information and communication technologies. Countries such as Ethiopia, Nigeria, and Ghana are already feeling the pressure, conscious of the success of Silicon Savannah. Most of SSA’s tech applications are emerging as solutions to local challenges, but this is creating unforeseen opportunities for other markets. Business people and investors are using IT in Africa to solve longstanding socio-economic issues formerly relegated to the development sector. Aid-agency grants previously going to NGOs are already being diverted to social-venture African tech organizations. It is still early days for sub-Saharan Africa’s burgeoning IT sector. As it continues to connect with the region’s demographic and economic currents, expect tech to play an increasingly significant role in Africa’s business, politics, and international relations.

The following is a guest post by Caroline Andridge, research associate for global health, economics, and development at the Council on Foreign Relations. Controversial President Robert Mugabe isn’t the only unpredictable force citizens of Zimbabwe face. Over 1.5 million additional people in Zimbabwe (above the 4.8 million undernourished citizens in 2013) will go hungry this year because extreme weather and poor farming methods halved maize production. This is just one sad example of climate change’s growing impact on human health. “Climate-smart” practices, like crop rotation and efficient food storage, can help address such shortages but current efforts are disjointed and inadequately financed. Yet their potential contributions will only increase as climate change’s impact becomes more severe. Climate-smart agriculture is barely on the periphery of the UN climate summit to be held in Paris later this year. It should instead be a central theme. Emissions from agriculture are substantial. Nearly one-third of global greenhouse gas emissions come from land use; over 85 percent of those emissions stem from agricultural production. Yet, only twenty-eight of the 127 national adaptation plans—which will drive the summit conversation—mention climate-smart agriculture by name. These peripheral mentions suggest the potential contributions from climate-smart agriculture will be lost in the Paris discussion. Instead, we are likely to see a familiar litany of proposals that do little to help those suffering from climate change today and require difficult tradeoffs between improving the standard of living for today’s population and ensuring there is a planet for future generations. Climate-smart agriculture sustainably increases productivity and resilience, reduces greenhouse gas emissions, and advances food security and development goals. Many farmers in developing countries have begun experimenting with these practices, but lack resources to scale up projects. The Paris summit is the first UN climate meeting to prioritize bottom-up efforts through national adaptation plans; prioritizing climate-smart agriculture in Paris will draw needed attention to these similarly local initiatives. Although climate-smart practices are implemented locally, international coordination to rally resources and coordinate expertise will bolster success. The UN’s top climate official claims current national plans do not cut emissions enough to achieve international mitigation goals. Paying increased attention to the agricultural sector may go a long way to address this shortcoming and save lives. Climate-smart agriculture has two unique strengths. First, it promotes production systems that mitigate harmful emissions and adapt to the changing environment—both today and for the future. Current plans to address climate change focus on reducing emissions over future decades, but this does little to assist the many people experiencing real effects of climate change now. Unexpected dry conditions shortened Ethiopia’s rainy season and lowered crop production, putting 4.5 million people in need of food aid. More efficient food storage and water-saving techniques may have eased this burden. Climate-smart practices increase land-use efficiency today and also make smarter use of resources to decrease future agricultural emissions. For example, reducing unnecessary fertilizer use (a large emitter) conserves it for more crops and minimizes greenhouse gases. This is particularly important for low-income country economies. Nearly forty percent of the labor force in low- and middle-income countries is employed in agriculture, compared to only 3.5 percent in high-income countries. The group Agriculture for Impact estimates that sub-Saharan Africa will suffer $68 billion in economic loss from land degradation per year. That diminished productivity has health consequences too. The severe burden of malnutrition in developing countries is exacerbated by variable precipitation, rising temperatures, soil salinization, and desertification, all worsened by climate change. This burden will only increase if low diet diversity and poor crop yields are not addressed. Investment in climate-smart agriculture allows local farmers to fill these shortages now. Climate-smart agriculture can help developing countries maintain agricultural productivity and increase production of foods that boost nutrition. Examples include the hugely successful SRI-Rice system, a yield-increasing methodology for rice farming that dramatically reduces necessary inputs like seeds and water, cuts costs to farmers, and increases rice yields by half. Small-scale farmers in over fifty countries have successfully adopted this system. Projects in Namibia, Micronesia, and Zambia that train farming communities in food preservation, micro-gardening, and agroforestry have also shown success in boosting nutrition through climate-smart practices. Second, climate-smart agriculture does not require universal participation for positive results. These practices outwit the challenge of collective action by providing local benefits. Tangible increases in crop production and household income incentivize nations to implement climate-smart practices, regardless of commitments made by other nations. These actions, in turn, will reduce greenhouse gas emissions from land use. There is already some international momentum for climate-smart initiatives. Recent support for these activities—notably from the United States and many low-income countries—suggests an increased focus would be embraced in Paris. In addition, climate-smart agriculture is one of the World Bank’s five steps to mitigate climate change and is promoted by multiple global and regional alliances. These initiatives, however, lack funds. The UN Green Climate Fund has received barely half of the promised contributions from participating countries; the Global Alliance for Climate-Smart Agriculture does not finance projects. In 2014, only 0.01 percent of U.S. official development assistance was directed toward the U.S. Agency for International Development’s (USAID) Global Climate Change Initiative (GCCI); even less was directed toward GCCI programs that may include climate-smart practices. Climate-smart agriculture projects have also been disjointed, leading to inefficient allocation of resources. USAID and similar development organizations support several ongoing projects in developing countries, while some national governments also attempt to initiate climate-smart projects unilaterally. Flexibility is beneficial, but increased resources and unified expertise will allow specialists to share best practices and improve implementation. Improving cohesion in climate-smart agriculture should be a priority in Paris. Countries should begin by raising the issue’s profile and seeking partnerships with the private sector to invest in climate-smart agriculture. As the effects of climate change increasingly create challenges for food security, we can’t afford to ignore this potential game-changer. Simply put, climate-smart agriculture is a rare win for both development and the environment.

CFR’s Civil Society, Markets, and Democracy (CSMD) Program highlights noteworthy events and articles each Friday in “This Week in Markets and Democracy.”    U.S. Acts on Honduran Corruption Honduras faces widening corruption scandals. Troubles started last summer over allegations that public officials skimmed more than $200 million from the federal social  security program. President Juan Orlando Hernandez resisted civil society demands for his resignation, despite evidence linking the stolen funds to his political party. Last week the U.S. Department of Justice (DOJ) indicted former Honduran vice president Jaime Rosenthal, as well as his son and nephew (both former government ministers), accusing all three of  laundering drug trafficking proceeds through U.S. financial institutions. The U.S. Department of Treasury announced sanctions against the family’s significant private sector holdings, including Banco Continental—one of Honduras’ largest banks. This is the first time the Department of Treasury has used the Narcotics Kingpin Act (typically invoked against drug traffickers and their businesses) to sanction a bank outside the U.S. Honduran regulators have forced Banco Continental’s liquidation and seized control of the family’s companies. Authorities have yet to announce their own investigation into the Rosenthals, one of the country’s wealthiest and most politically connected families. This contrasts to developments in Guatemala, where corruption investigations by the attorney general and UN-backed International Commission Against Impunity in Guatemala (CICIG) led to the fall of the president and vice president, among others. Honduras has refused the creation of its own CICIG, acquiescing only to an Organization of American States (OAS) mission to “advise and support” Honduran corruption investigations. This choice may take corruption investigations and prosecutions out of the hands of local authorities altogether, augmenting the role of the U.S. DOJ in enforcing Honduran justice. Election Timeline Four upcoming elections will have significant implications for political transitions and fragile democracies. Argentina—October 25 On Sunday, Argentines will vote for their next president, ending twelve years of Kirchners in the Casa Rosada. Daniel Scioli, governor of the province of Buenos Aires and establishment candidate could win in the first round if he can both garner 40 percent of the votes and beat his nearest rival, Mauricio Macri of the Republican Proposal (PRO) by 10 percentage points (polls show him close). If he falls short, the final two candidates will compete again on November 22; each wooing the third contender, Sergio Massa, a former friend now foe of President Cristina Kirchner. International observers and many Argentines hope for economic change; whoever wins, reform will come slowly. Tanzania, October 25 Unlike the elections unfolding in Rwanda and the Democratic Republic of Congo (DRC), in Tanzania President Jakaya Kikiwete will step down when his constitutionally mandated term ends on October 25. The two leading candidates are John Magufuli of the ruling party, Chama Cha Mapinduzi (CCM), and Edward Lowassa of opposition party Chadema. A clear difference between the two is their legacy on corruption: Magufuli is known for sacking officials guilty of bribery, while Lowassa resigned from his post as prime minister due to corruption accusations (he denies the charges). This week’s elections are tightly contested. Citizens’ concerns include high poverty and unemployment rates (at 65.6 percent and 11.7 percent, respectively), and overwhelming bureaucracy (Tanzania earned one of the lowest rankings in the 2015 World Bank’s Doing Business Report for its complex and costly regulations). Still Tanzania remains a bright spot in sub-Saharan Africa, as the opposition has a solid chance of ending thirty-five years of one-party rule. Turkey—November 1 Prime Minister Recep Tayyip Erdogan called next week’s snap parliamentary elections last August to try and recover his Justice and Development (AKP) Party’s June lost parliamentary majority. In the run-up he has catered to anti-Kurdish and nationalist sentiment,  launching airstrikes against Kurds in Syria and deepening ethnic tensions. Slowing growth, political instability, and rising ISIS-related violence has scared investors – some $6.6. billion fled Turkey’s equity markets since the start of the election cycle in March 2014, and many Western allies and investors hope that the election forces Erdogan to form a coalition, checking his power and reigniting the economy. Myanmar—November 8 In three weeks Myanmar is expected to hold its first free election in over twenty-five years. The country officially adopted a nominally civilian government in 2011, though military vote rigging brought in former commander Thein Sein as president. In next month’s parliamentary election, the opposition National League for Democracy (NLD), led by Nobel Prize-winning Aung San Suu Kyi, hopes to gain enough seats to lead the coalition that will choose the next president. Pushing back, the military-led Union Solidarity and Development Party (USDP) has proposed to postpone the election date, disenfranchised millions of Myanmar nationals living outside the country from early voting, and effectively barred the Rohingya Muslim minority from the polls. With campaigns mired in religious discrimination and fraud allegations, Myanmar’s elections are only a first step toward democracy.                

This is a guest post by Luis Ferreira Alvarez, an analyst with Stratas Advisors’ Global Biofuels Assessment and Global Alternative Fuels divisions covering Latin America.  As Brazil’s Petrobras corruption investigation continues to roil its economy and politics, the ethanol sector is emerging as a clear beneficiary. New government policies are boosting ethanol sales, chipping away at gasoline’s market share. Brazil’s ethanol comes from sugarcane. Each year producers look to market prices and expectations to decide where to direct their crops. When sugar prices fall, ethanol production increases (and vice versa). Producers must also bet on what type of ethanol will bring higher returns: anhydrous or hydrous. Anhydrous ethanol production is more costly, but demand is guaranteed by Brazil’s laws requiring it be blended into gasoline at the pumps. Hydrous ethanol is a neat fuel that’s cheaper to produce, but competes directly with gasoline. It also has a lower energy content, translating into fewer miles per gallon and meaning that prices must stay below 70 percent of gasoline prices to make it competitive.  The vast majority of Brazilian cars are flex fuel, capable of running on blended gasoline or hydrous ethanol. In 2014, Brazil produced 7 billion gallons of ethanol, making it the world’s second largest producer after the United States. Nearly all went to transportation, with anhydrous and hydrous ethanol accounting for nearly 50 percent of all vehicle fuel consumption (Figure 1). Figure 1: Gasoline and Ethanol Market Shares in 2015F  Stratas Advisors, "Global Biofuels Outlook," 2015. The last several years have not been easy for ethanol producers. The federal government reduced credit lines provided through the Brazilian Development Bank. Droughts hit harvests in the Center-South region, where some 90 percent of sugarcane is grown. Debt burdened companies, as many had taken out loans during former President Lula da Silva’s quest to make Brazil the “green Saudi Arabia.” And falling global sugar prices hurt an industry still recovering from the 2008 financial crisis. Government policies also undermined the ethanol sector. In its bid to control inflation, the government capped gas prices and removed the infrastructure tax (CIDE) on gasoline, making hydrous ethanol uncompetitive at the pump. Consumers quickly switched fuels, leading to a 10 percent decline in 2012 (Figure 2). As a result, many producers invested in anhydrous ethanol or switched back to sugar. Some forty other ethanol plants folded. Figure 2: Gasoline C and Hydrous Ethanol Prices in Brazil Stratas Advisors, ANP, August 2015. In the wake of the Petrobras scandal, the government implemented three major policy shifts to improve its finances and those of the state oil company. First, it increased the required ethanol share in gasoline from 25 percent to 27 percent. Second, Petrobras raised gasoline prices in late 2014. Finally, the government re-introduced the CIDE tax on gasoline in early 2015. Figure 3: Market Share of Pure Gasoline and Total Ethanol in Brazil Stratas Advisors, ANP, September 2015. Note: 2015 data is for January to July. These policy shifts, combined with rain in Brazil’s sugar-producing Center-South region, revitalized the ethanol sector. Producers shifted nearly 60 percent of their sugar harvest to ethanol, and sales rose 28 percent between July 2014 and July 2015 (Figure 3). Although challenges remain—producers are heavily indebted, global sugar prices are low, and gasoline price controls are still in place—ethanol may be among Brazil’s few stable sectors in the coming months.

The BBC reports that troops from the African Union’s (AU) African Standby Force (ASF) have started military exercises in South Africa on October 20. This exercise is meant to establish whether the ASF will be fully operational by the intended December 2015 deadline. The AU’s aspiration is that the ASF will free the continent of the need for non-African outside forces for conflict resolution. On October 12, it was announced that the ASF’s logistics base will be in Yaounde, Cameroon. Established by the AU, the ASF will be multinational, and the goal is that it will be 25,000 strong. The current plan is that the force will consist of five brigades, one from each of the major regional groupings: the Economic Community of West African States Monitoring Group, the Southern African Development Community, the Economic Community of Central African States, the East African Standby Force, and the North Africa Regional Capability. The current training exercises involve 5,000 military and police. The exercise will continue until November 5. As is so often the case with multilateral initiatives in sub-Saharan Africa, the issue is money. In May, the AU said that it will need one billion dollars to make the force operational. The AU will be approaching international donors. Africans have long seen a standby force as an essential ingredient in “African solutions to African problems.” So, too, have international friends of Africa. The training exercise now underway in South Africa is a major step forward. The estimated cost of one billion dollars is probably realistic. At first glance, the number induces sticker shock. But, an effective standby force could significantly reduce the international community’s burden of providing – and funding – various peacekeeping missions. Unlike many international organizations, the AU does not recognize the sovereignty of its member states as unlimited. It has criteria for intervention, and has been increasingly willing to do so as it has developed. Grounds for uninvited AU intervention include war crimes, crimes against humanity, and genocide.

Emerging Voices features contributions from scholars and practitioners highlighting new research, thinking, and approaches to development challenges. This post is from Nadia Naviwala (@NadiaNavi), an Islamabad-based researcher and writer. Here she details a recent New York Times story on U.S. development assistance in Pakistan, and explains why investigating aid efforts there requires a different approach. The New York Times published a story last month about the second largest United States Agency for International Development (USAID) mission in the world: Pakistan. The Times argued that despite over a decade of work and billions of dollars, “aid has had minimal impact on the ground,” thanks to overreliance on “American contractors with little development experience,” and corrupt Pakistani subcontractors that don’t do the work or return equipment. As a former country representative for the United States Institute of Peace (USIP), a USAID desk officer, and a Congressional staff member who helped to lead the creation of the Commission on Wartime Contracting, I have been involved in U.S. assistance efforts in Pakistan since 2009. My research and experience with Pakistani civil society made me an early and vocal critic of foreign-led development efforts in Pakistan. Yet the Times story’s criticisms are not supported by the evidence. A Lawyer in Peshawar Sues USAID The Times story centered on a USAID contract in Pakistan’s Federally Administered Tribal Areas (FATA) terminated in 2010 for waste, fraud, and abuse. As the Times told it, three lawyers in Peshawar accuse USAID of failing to recover U.S. taxpayer money from a court settlement that awarded the agency damages. It continues: “A recent lawsuit against the agency highlighted the challenges and image problem it faces in a country where American aid is often viewed with suspicion… “Documents and correspondence filed by the lawyers lay bare the money and equipment that went to waste in a project in Pakistan’s insurgency-hit tribal areas…. “U.S.A.I.D. suspended Academy for Educational Development from United States government contracts…Academy for Educational Development was also awarded at least $300,000 after a drawn-out arbitration process with its Pakistani subcontractors — money that should have been returned to U.S.A.I.D. The Pakistani lawyers who filed the suit said that the aid agency had made no attempt to recover the money. “For many Pakistanis, the case is another puzzling instance of wastefulness. ‘This is U.S. taxpayer money,’ Sanaullah Khan, one of the lawyers, said. ‘Why is U.S.A.I.D. walking away from an ongoing legal process?’” The unasked question is, why did a Pakistani lawyer in Peshawar dedicate his time (unpaid) to chase American taxpayer money? After contacting Sanaullah Khan, one of the lawyers involved in the suit, it became clear that the Times is conflating two sets of cases. The first relates to local court battles over contracting corruption, for work USAID supported in Pakistan before 2010. The more recent lawsuit is over unpaid legal fees that have nothing to do with the development agency’s impact there. In 2010, USAID discovered corruption tied to the Academy for Educational Development (AED), a U.S. contractor working in FATA, thanks to a whistleblower who wrote a letter to President Obama. Khan, AED’s Director of Legal Affairs at the time, says he was left behind to fight off subcontractors after USAID cut ties and AED dissolved. Engineering subcontractors then sued AED for around $9 million, though a Peshawar court in 2013 decided these claims were illegitimate. They awarded damages in the other direction—subcontractors were to pay AED a total of $300,000, while AED owed them only $60,000. As to why USAID is not getting involved in the legal process to claim this $300,000 (which is still tied up in appeals), the U.S. Embassy in Islamabad explains: “AED’s subcontractors are not and were never in a contractual relationship with USAID. Because USAID’s contract was with AED and not with AED’s subcontractors, there is and was no legal way for USAID to recover funds.” In addition, the U.S. Department of Justice (DOJ) reached a settlement with AED in 2011. According to the terms, AED paid USAID $5.3 million dollars, plus another $350,000, plus the company’s remaining cash assets—possibly totaling over $15 million. It released both parties from future claims. Khan is now suing the dissolved AED in a Peshawar court for $750,000 in unpaid legal fees (the second case). Khan named USAID’s Pakistan mission director in the claim and asked the court to freeze USAID’s bank accounts in the country until he is repaid. His case faces a challenge by the 2011 DOJ settlement that specifically states the U.S. government is not liable for AED’s lawyers’ fees. In the Court of Public Opinion Khan likely hoped the Times publicity would help advance his cause. Less clear is why the Times extrapolates these cases to make their own about USAID’s minimal impact in Pakistan when the details undermine their argument. The fraud the Times describes happened over five years ago—before the implementation of the $7.5 billion, five-year aid program (known as the Kerry-Lugar-Berman Act) that the story calls into question. Further, the Obama administration acted swiftly and severely against AED’s corruption, effectively “killing” the company. They touted AED’s investigation and suspension as a success story in USAID accountability. The Times’ editors likely realized the overreach and within days of publication changed the title from, “In Pakistan, U.S. Aid Agency Produces Dubious Results,” to “In Pakistan, U.S. Aid Agency Faces Skepticism.” (They also added a lengthy editor’s note about their interactions with USAID in reporting the story.) Surprisingly Khan is not among the skeptics of U.S. development programs. He supports the work AED and USAID did in FATA. “Only the engineering team was involved in corruption. The rest of the program was good and useful. I’d say ninety percent of all other components—in agriculture, health, education, training, development, there are many—worked tremendously well.” Contracting with Governments The Times’ criticism—and its focus on U.S. contractor relationships as a source of the problem—detracts from more useful scrutiny of USAID’s work in Pakistan over the past five years. In 2009, around the time of the AED scandal and the new multi-billion dollar aid package, USAID reorganized the way it implements projects in Pakistan. The agency terminated contracts with U.S.-based companies (at the behest of the late Ambassador Richard Holbrooke, then U.S. envoy to Afghanistan and Pakistan) and started shifting funding to local partners, primarily the Pakistani government. The Pakistan package has since been one of the largest experiments in contracting with a foreign government—referred to as government-to-government or “G2G” assistance—in the world. According to the U.S. Government Accountability Office (GAO), between 2010 and 2014, the value of G2G contracts in Afghanistan and Pakistan exceeded the total value of contracts with all other foreign governments (see: Figure 1). U.S. Government Accountability Office (GAO), "USAID Has Taken Steps to Safeguard Government-to-Government Funding but Could Further Strengthen Accountability," 2015. The approach is not without flaws. G2G would be more aptly named B2B, or bureaucracy-to-bureaucracy. The slow pace has been a huge frustration to both Pakistani and U.S. officials and prompted the gradual reintroduction of U.S. contractors in complex arrangements with government institutions— a relationship worth investigating. The Times makes an important point that whether U.S. money is lost to graft and waste matters, but fails to substantiate it. A more valuable question is whether U.S.-funded projects in Pakistan, including schools, clinics, roads, and power and water infrastructure, are operating and can be sustained once handed over to local governments. And whether the hundreds of millions the U.S. invested in training, capacity-building, policy, and advocacy programs are helping to meet that goal.

Samantha Dickinson is an Internet governance consultant and writer. You can follow her on Twitter at @sgdickinson and via her blog, Lingua Synaptica. The eagerly anticipated draft outcome document for the UN General Assembly’s December High Level Meeting on the review of the World Summit on the Information Society (WSIS) appeared fashionably late last week. At the two major summits in 2003 and 2005, which together were known as “WSIS”, UN Member States agreed to a number of activities aimed at bringing the benefits of information and communications technologies (ICTs) to everyone in the world, and in particular to those in the developing world. This latest document, called the “zero draft”, will form the basis of negotiations in New York next week when Member States continue to debate the next steps in achieving the WSIS goals. The draft arrived a little too fashionably late as states, with the input of other stakeholders (the private sector, civil society, the technical community and academia), race to find common ground before December’s meeting. There are significant divergences of opinion on WSIS issues—security, Internet governance, human rights, and policies that improve Internet access are just a few—and they have largely existed in the same form since the original WSIS discussions of a decade ago. Moreover, Member States have only in the last few weeks diverted their attention to the WSIS process given that much of their time was consumed with the much larger Sustainable Development Goals (SDG) process. Many Member States didn’t feel able to form full positions on WSIS until they knew what the SDGs would finally be. The convergence of all these factors means that the development of an outcome document for the December High Level Meeting has been, and will continue to be, challenging. The two co-facilitators of the preparatory process have tried their hardest in the zero draft to set forth language that States may perhaps be able to accept. However, there is very little likelihood of reaching any agreement on significant changes to the current WSIS priorities or agreement on any new ones. This, of course, won’t stop participants in the preparatory process from making their case. Developing countries will push for a larger role for multilateral institutions to manage the Internet and many in the West will push back. Russia will advocate for a recognition of the concept of “national Internet segments” and civil society groups will parry, arguing that it risks fragmenting the Internet and undermining access to ICTs. As December gets closer, negotiators are likely to focus on the following sticking points: Enhanced cooperation in Internet governance. In 2005, Member States agreed that “enhanced cooperation” was necessary “to enable governments … to carry out their roles and responsibilities in international public policy issues pertaining to the Internet.” It’s a vaguely worded compromise, the meaning of which is still debated today. Does enhanced cooperation mean a government-only platform to address Internet policy issues? Would the platform be open to non-government representatives to participate in or to observe? Or does it mean better cooperation between all stakeholders engaged in Internet governance processes? Whether to hold another summit or high level event aimed at developing specific and concrete outcomes. Many participants wanted more specific and significant outcomes and updates to the direction of WSIS for the December meeting, but it’s clear that’s not going to be possible. Hence, there is debate about holding another summit, possibly in 2020, which would be a far more costly exercise than this current process for everyone involved. But for many, the costs would be justifiable if the next summit can achieve the significant changes that are not likely to be agreed in December. Cybersecurity and human rights. These are separate issues in the zero draft, but are closely related to each other, particularly in the wake of Edward Snowden’s disclosures, where a number of States are invoking human rights to argue against other governments accessing information about their citizens’ communications. Funding mechanisms for achieving the WSIS goals. As always, it comes down to debates about who should pay for it all. In the end, the final outcome document is more likely to note the existence of diverse views instead of reconciling them. As the process moves forward, the views and actions that don’t have strong support will begin to disappear from the draft, leaving only what states can agree on. That middle ground is likely to be based on the existing WSIS framework agreed between 2003 and 2005, with some additional amendments based on other related texts agreed since that time. Unless there’s a major change to the way Member States are approaching this review of WSIS, don’t expect agreement on concrete solutions to any of the topics above any time soon.

CFR’s Civil Society, Markets, and Democracy (CSMD) Program highlights noteworthy events and articles each Friday in "This Week in Markets and Democracy.” Africa’s Governance and Economic Struggles New IMF data and the 2015 Ibrahim Index of African Governance (IIAG), both released this week, show stalling or declining economic growth and governance progress across the continent. Despite better health, education, and human development statistics, IIAG found backsliding in accountability and rights, with thirty-one out of fifty-four countries deteriorating. Africa’s business environment—measured as competitiveness, bureaucracy and red tape, and investment climate—scored the lowest and fell the most of any category since 2011. The IMF echoed these gloomy metrics, projecting sub-Saharan growth to slow to 3.8 percent in 2015, hit by an overreliance on commodities. Both sets of data make clear the interdependence of governance and economic growth. The lowest-scoring countries on IIAG’s business indicators—including Eritrea, Somalia, South Sudan, Sudan, and Equatorial Guinea—also ranked among the worst on rights and participation. And Côte d’Ivoire, ranked as IIAG’s “most improved” based on its aggregate governance score is among the few sub-Saharan countries expected to post high growth through 2017. Post-Disaster Aid: When it Works, When it Doesn’t Nearing the six-month anniversary of Nepal’s devastating earthquake that killed more than 8,500 people, comparisons to other natural disaster relief efforts highlight the potential pitfalls of aid delivered in a governance vacuum. Thailand’s post-tsunami recovery fared well relative to others—the country’s centralized (albeit authoritarian-leaning) leadership owned the response, mostly relying on technical rather than financial assistance. In contrast, Haiti remains a cautionary tale—despite some $9 billion in relief aid 150,000 Haitians still live in “temporary” camps and the government remains fragile, as witnessed in the recent chaotic and violent parliamentary contest. Nepal appears to be heading on a similar route with the government yet to draw up a plan for spending $4.1 billion in international donations, even as three million survivors lack shelter, food, and basic medical care in one of the world’s poorest countries. With the new constitution in dispute, a political crisis brewing with India, and a worsening fuel shortage all costing the economy an estimated $1 billion, reconstruction will likely be delayed further. What We’re Reading on the TPP Agreement… This week twelve countries, representing 40 percent of the world’s GDP, signed onto the Trans-Pacific Partnership (TPP). Now experts are chiming in on the many potential effects for participants: Kimberly Ann Elliott from the Center for Global Development summarizes the TPP’s impact for developing countries: cutting agricultural subsidies and expanding access to capital controls may help poorer members, but concerns over rules of origin and intellectual property rights linger. Siddhartha Mahanta finds the changes to the heavily-criticized investor-state dispute settlement process important, saying they may “strike a blow to corporate impunity”—especially cases brought by tobacco companies against smoking bans. As the TPP deal closed, the World Bank announced that extreme poverty will drop below ten percent globally in 2015. John Cassidy argues that trade helped lift 1.3 billion people out of poverty, even as it increased inequality within countries. Fellow CFR expert Ted Alden says that a TPP deal reasserts U.S. leadership in global trade negotiations and strengthens its influence over future rules.    

The Obama administration and Secretary Kerry have been deeply invested in supporting free, fair, and credible elections in Africa. President Obama and UK Prime Minister David Cameron were directly involved in Nigeria’s national elections in March, as was Secretary Kerry, who also attended the inauguration of President Muhammadu Buhari in May. This month, national elections will take place in Guinea, Tanzania, Cote d’Ivoire, and the Central African Republic. Elections are also expected soon in Burkina Faso. Marking these upcoming events, Secretary Kerry published an op-ed in AllAfrica.com on October 6, titled Decisive Moment for Democracy. The op-ed praises Africa’s progress toward democracy and recalls the elections in Nigeria, where for the first time in that country’s history the opposition came to power through the ballot box. It affirms the genuine hunger for democracy in Africa and elsewhere. The op-ed also reiterates U.S. policy. But, in this pre-electoral period, it is useful to reiterate them. First, Secretary Kerry calls for the respect for term limits, as President Barack Obama did earlier this year during his Africa trip. Term limits are currently challenged by incumbent presidents in, among others, the Democratic Republic of the Congo and Rwanda. Second, while free, fair, and credible elections do not guarantee a successful democracy, they are important milestones of progress. And, third, elections, important though they are, “cannot be the only moment for citizens to shape their future.” The op-ed asserts that citizens must be part of an ongoing process of engagement between the people and their government. The Secretary’s last point is salutary. Too often observers of Africa see election events as the very definition of democracy rather than as part of an on-going process of governance.

Just over a week ago at the United Nations (UN), one hundred ninety-three countries adopted a new sustainable development agenda to tackle some of the world’s most pressing challenges, including inequality, climate change, poor health, and poverty. The agreement comes a few months after the Third International Financing for Development Conference in Addis Ababa, Ethiopia and following a year-long negotiation over the new development framework. The seventeen sustainable development goals (SDGs) adopted at the UN include 169 targets, to be achieved by the year 2030. The Global Goals are a landmark achievement in the international movement to advance women’s rights through development. The new framework makes it clear that addressing gender inequality is critical to global progress. Gender equality is integrated throughout the seventeen SDGs, and one of the goals is specifically focused on this issue (Goal Five). Notably, the goal on gender equality was the first to which governments and civil society agreed during the initial stages of drafting the now-finalized agenda. At the United Nations, Secretary-General Ban Ki-moon highlighted the importance of Goal Five, emphasizing that “[w]e cannot achieve our 2030 Agenda for Sustainable Development without full and equal rights for half of the world’s population, in law and in practice.” The SDG framework is important because it elevates the global ambition to advance the status of women and girls through development. Unlike the Millennium Development Goal framework that preceded it, the new sustainable development agenda addresses several critical issues—such as child marriage and violence against women—that previously were overlooked. The SDGs also include a commitment to women’s economic participation, calling for equality in property ownership, inheritance, financial services, and natural resources, which the World Bank and others have linked to poverty reduction and economic growth. Other targets under Goal Five include ending discrimination against women and girls; eliminating female genital mutilation; recognizing unpaid care and domestic work; promoting equal participation in leadership and decision-making; supporting access to sexual and reproductive health services; and improving women’s access to technology. Though the new sustainable development agenda has been heralded across sectors, significant challenges remain that are likely to impede its realization. The United Nations has estimated that the SDGs will cost approximately $172.5 trillion over the next fifteen years, or between $3.3 trillion and $4.5 trillion a year. The dearth of financial commitments at the Addis conference and the subsequent SDG summit leaves a serious funding vacuum that could hamper the achievement of the Global Goals. Nowhere is this threat more real than with respect to targets related to gender equality, which historically have been gravely underfunded. Another challenge for the new sustainable development agenda will be ensuring accountability. With 304 proposed indicators to evaluate success against each goal, measuring progress could be a significant hurdle, particularly for national governments and regional statistical bodies. The launch of the Global Partnership for Sustainable Development Data, which aims to fill data gaps and improve measurement of the SDGs, is one promising approach to this problem. Led by governments such as the United States, Colombia, Kenya, and the Philippines, international organizations like the World Bank and UN Global Pulse, private sector companies including Facebook, and several foundations, the Partnership seeks to improve effective use of data in development, which should help to ensure nations are held accountable for their commitments. The Global Goals offer a critical opportunity to advance gender equality by providing a more ambitious development roadmap than ever before. This opportunity will only be realized, however, if governments, international organizations, the private sector, and civil society come together to enhance financing and ensure accountability for the agenda the world has now taken on.

Helani Galpaya is CEO of LIRNEasia, a pro-poor, pro-market think tank working on ICT and infrastructure regulatory and policy issues in the Asia Pacific. You can follow her @helanigalpaya. Bringing Internet access to the developing world is a big challenge. While significant strides have been made over the past few years, four billion people still lack Internet access. The concept of zero rating (ZR) has emerged as a potential, if controversial, solution to the challenge. Here’s how ZR works and what the fuss is about. Like users in North America and Europe, most people in Asia and Africa consume mobile Internet on a capped and metered basis. There’s a set volume of data they subscribe to and anything above the data cap is paid for separately, often at a premium. Carriers have begun to allow mobile Internet subscribers to consume content that doesn’t count towards their data cap. That’s ZR. Telecom operators offer different flavors. Users subscribing to a basic data package are offered unlimited consumption of certain ZR content, or they are offered ZR content for a price much lower than other content. In all cases, users pay standard data rates when they access anything other than the ZR content, making ZR content more affordable. Facebook, Whatsapp, and music apps are commonly found in ZR bundles. In the case of Facebook, a text-only version may be zero-rated, but viewing videos or clicking on links outside of Facebook incurs charges. For the user it’s an opportunity to consume their favorite content for free or for a much lower price. For telcos and content providers, it’s an opportunity to entice users to experience the Internet, specific content, or app in the short term, with the hope of converting them to “full paying” subscribers in the long term. Many offering ZR content claim altruistic motives. Facebook’s Internet.org platform (recently renamed Free Basics), for example, gives a package of content (usually video-free Facebook, and depending on the country and operator, a bundle of apps that may include one or more maternal health, weather, and ecommerce apps). Like most of Asia, less than 20 percent of Indians are online. Many might say that an initiative seeking to make the Internet affordable to all can only be a good thing. Yet Internet.org faced enormous criticism earlier this year in India where many argued that the service violates the Indian government’s proposed net neutrality rules. Flipkart.com, the Indian equivalent of Amazon, news providers NDTV and Times of India, online travel agent Cleartrip and others pulled out of the platform to avoid controversy. Well-meaning net neutrality advocates fear that people who start using the Internet through a Facebook-provided service will stay inside Facebook without experiencing the rest of the Internet. This is indeed a concern, but it is not tied to ZR. People have been observed limiting their online usage to Facebook in Asia and Africa as far back as 2011. There is no evidence yet that this increased after ZR is offered. Net neutrality advocates also fear that throttling content outside the walled garden will create a two-tiered Internet, a faster tier for the zero-rated content and a slower tier for all other content. Users in Asia already get lower-than-advertised broadband speeds, so this would indeed be a problem. Regulators can get around this by monitoring speeds and making data public, allowing subscribers to vote with their feet. They can also require Internet providers be transparent about how they manage their traffic. Asian markets are highly competitive, with most retail markets having six or more mobile broadband operators in addition to one or two fixed broadband solutions. Regulators will also need to monitor the market to ensure competition, particularly to avoid exclusive contracts between a telco and one content provider that prevents another provider with similar content from being zero-rated.  Instead of banning ZR, regulators in Asia can use regulatory nudges to adjust the market. There is little systematic evidence so far that ZR harms competition in highly competitive retail markets. That doesn’t mean there won’t be. On the other hand, a nationally representative sample survey in Myanmar shows that when telcos offer content for free and users are aware of the fact, adoption is high. 49 percent of users whose telecom operator offered Facebook via a ZR plan started using it, (compared to a national average of 20 percent for any social media app including Facebook), 8 percent used a ZR version of Wikipedia (compared to a 5 percent national average), and 20 percent downloaded music and ring tones. Survey respondents came from households that were rich as well as poor. ZR appears to drive people to consume online content. In the end, the best defense against the possible downsides of ZR is high levels of competition at all parts of the broadband value chain—content, application, devices, international connectivity—not just in retail mobile connectivity. Given the low capacity of many regulatory institutions in Asia, it probably makes sense for regulators to focus on creating a competitive environment and let the ZR battle play out, while being ready to act if actual harm occurs. If regulators insist on acting to enforce net neutrality policies, they could take other actions, such as making ZR offerings time-limited or mandating the first click outside of the walled garden also be zero-rated. Banning ZR products outright could leave millions of the poorest disconnected with no actual benefit. What’s the point of net neutrality if nobody is online?

This is a guest post by Mohamed Jallow, an Africa watcher, following politics and economic currents across the continent. He works at RTI International in Research Triangle Park, North Carolina. I received a frantic phone call recently from a family member living in New York City. She was inquiring whether I knew anyone who could help, or any way for, a young seventeen-year-old migrant (her younger brother), stranded in Ecuador to come to the United States. I was lost for words. Do African migrants go to Ecuador? How in the world did he end up there? This is the reality facing parents in many West African countries. Throngs of young men are heading North, for a chance to make it to Europe, or anywhere else with better economic prospects. Many are fleeing conflicts and political repression, while many more are fleeing poverty and unemployment. The journey to the North, however, is fraught with danger. Thousands have died just this year in the Mediterranean, and the death toll is set to beat the record from last year. All this is if they make it through the Sahara desert alive----teeming with bandits, and now Islamic militants. As for the young man who is stranded in Ecuador (I will call him Bangalie), his odyssey started a few months ago when he left the Gambia for the Bahamas, purportedly enroute to the United States without the proper documentation. His family was lured into shelling out about $5,000 of life savings to what I will consider a swindler who promised to help him and five others get into the United States. The journey began in Dakar, Senegal, to Spain and then on to Bahamas where the person leading them disappeared because they could not come up with more money. From the Bahamas, they headed to Quito, Ecuador with hopes of travelling from there to the US through Central America. News of young people moving to the US and seeking asylum had reached them, and they were prepared to try their chances, but the uproar over migrant children in the U.S. has thwarted their plans. As of this posting, he is still in Ecuador, still waiting for a chance to make it to the United States. This is what is known in the Gambia as “the back way.” That is going to Babylon (Europe, America, or anywhere else out of the continent) through illegal and often dangerous means, risking everything, not least their lives. The Gambia, a tiny sliver of a country in West Africa is one of the most affected by outward migration. Whole towns are being emptied of their young men on their way to Europe or America. In some communities, there are very few young men left to work in the farms. Babylon seems to be the major pre-occupation. Conversely, for a good number of the population, migrant remittances from those who manage to make it are a mainstay of economic survival. For others, it is a rite of passage for young men to go out into the world to seek their fortunes. My father and his cohorts were among the first wave of migrants in the 1960s and 1970s that left the Gambia for in Sierra Leone during the diamond boom in that country. The difference this time is that the migrants are younger, and are headed north, much farther north-----to Europe. If the Atlantic was narrower, they most certainly will cross it to the United States. As it turns out, even the vast Atlantic, as in the case of Bangalie, cannot stop those who are willing to give up everything for a better future. For the parents, there is anguish, and then there are mixed feeling. While many will certainly benefit from the remittances of those who make it, they have no clue of what awaits these young men, or the horrors of a journey fraught with uncertainty. As a result, they become willing participants, often draining their life savings, and entrusting their children to people smugglers, and criminals. Even the US embassy in the Gambia has recently gotten involved in the effort to deter young men from leaving through the backway. The embassy sponsored a concert last year with performances in local languages “to sensitize the public” about the dangers facing their children. As far back as I can remember, the constant ebbs and flows of migrants, flowing with the economic currents to a place a little better than their countries, have shaped this part of the world. In the past, these young men would have gone to the larger urban centers or neighboring countries for work. However, the global economic downturn, and the lack of opportunities in these neighboring countries has shifted the tide northwards. So what is being done to stop the flow of migrants like the young man in Ecuador? Nothing much, at least, nothing with significant impact to change minds. West African governments have raised alarms, but they cannot offer anything meaningful for these young men to start a life in their own countries. Regionally, there is no mechanism in place to address this issue as a collective, just as European governments are struggling to come up with a cohesive plan. Meanwhile, these young people continue to leave, and are willing to do anything, to pay any price for a chance to make it to their Babylon. Many will make it, and many more will perish in the Mediterranean, or languish for years in detention centers in Italy and France, or prisons in Libya, and Algeria. In this case, faraway Ecuador.