Hip Product Bloat or Social Entrepreneurship?

Mozilla’s announcement of a joint venture with Chinese chip-maker Spreadtrum to launch a $25 smartphone for the developing world is in a kind of netherworld between Bloat and Boring.

On the one hand, much of the announcement looks like classic “Hip Product Bloat”: designed by people far from the scene, bringing something that’s common in rich countries to places where it’s largely unused, etc.

Yet Mozilla the mobile phone’s appeal to developing country consumer’s is extremely well established now, which holds out the genuine possibility that the $25 smartphone could spread organically, in the kind of demand-led way that eludes usual Hip Product Bloat.

Certainly, there are any number of income enhancing and income smoothing applications you could build into a suitably accessible smartphone. And it’s clear that it’s Mozilla’s own money that’ll be going into this: if it flops, the flop is on them and their partners alone.

Perhaps what concerns me about the announcement, though, is that it falls into the old trap of treating the product as the relevant innovation, ignoring the finance and distribution bottlenecks that are generally spell the death of Hip Products in the developing world. If anything, a $25 Smartphone seems like an ideal candidate for the kind of M-Pesa-based, micropayment financing model M-KOPA Solar has pioneered for solar panels.

$25 is still a substantial chunk of change for people in LDCs. But 10 cents a day for 250 days? That seems very doable.

And if the phone locks up, allowing you only to make a payment or to make emergency calls once you miss a payment, how big a default rate do you think you’d get?

Teddies-for-Tragedies: Because only a monster can resist a picture like that!

It’s Silly Friday, a time to look at those development projects that transcend the ridiculous to reach a kind of clueless, navel-gazing glory.

When it comes to the cloying, manipulative use of Cute Kid pictures to drum up donations, it’s hard to outdo the sheer, brazen chutzpah of Teddies for Tragedies, a charity that does very much what it says on the tin.

The Bloat Backlash (Bloatlash?!) Spreads

You can say this again: hip gadgets for the developing world won’t solve global poverty, as Hugh Whalan argues.

It’s nice to see this anti-bloat rant get some viral traction online. It shows there’s a growing awareness of the problem. I especially liked their takedown of Soccket, the deliriously bloaty gadget pictured above, in effect:

soccer ball that harnesses kinetic energy to generate light. Cool right? This company has received loads of press (including here at Co.Exist), and has raised nearly $600,000 from crowdfunding sites. Even Obama and Bill Clinton love it. It is undoubtedly a nifty piece of technology.

The problem? At a cost of $60 per Soccket, it is the most expensive six-watt light on the market. D.Light, for example, produces a high-quality study light with a two-year warranty and similar functionality that retails for $10. The Soccket is also certainly the most expensive soccer ball the customer, presumably kids with no access to electricity, is ever going to see. (A more in-depth analysis of the concerns with Soccket’s approach can be found here.)

I do think it’s important to go beyond denunciation to a positive agenda, one that goes beyond blasting bloat. Whalan is right to note that “many entrepreneurs (incorrectly) think the biggest challenge is actually making the product.” But if that’s not the biggest challenge, what is?

If it’s achieving efficiencies in marketing and distribution, then let’s talk about that. If it’s ensuring poor people have enough money in their pocket to buy any given product, then let’s talk about that. If it’s Financial Inclusion, then let’s talk about that.

But let nobody think you can  just bitch about hopelessly bloaty products and projects and call it a day.

LivingGoods: Waking Up to the Distribution and Marketing Bottleneck

Anyone who’s worked in Africa has had that moment of realizing that capitalism doesn’t quite work the way they sold it to us in the textbooks there. Tons of markets are monopolistic or oligopolistic, but more are just plain disorganized, with a crazy jumble of providers each operating at an unsustainable scale, failing to compete effectively with each other.

Oddly, what’s true for African SMEs is true for international NGOs in Africa too.

Which is one good reason to get excited by Living Goods – a social enterprise now operating a network of Avon-like distributors for NGO-goods in Kenya and Uganda. As their website explains,

In Africa today, outside of a few major cities, there are no chains or franchise networks. That means thousands of small sellers are utterly lacking in buying power. Moreover, existing distribution is built on layers of re-sellers. A little drug shop 20 kilometers from a trading center typically buys from a small local distributor, who contracts with a regional distributor, who in turn buys from a national wholesaler who purchases from a manufacturer or importer. Each layer in this Byzantine network tacks on profit margins and transaction costs that are ultimately born by the poor clients. As such, market retail prices can reach up to 350% of the manufacturing cost. Living Goods harnesses the buying power of its agent network, removing supply chain inefficiencies to deliver cheaper prices to consumers and bigger margins for our micro-franchisees.

It’s the kind of initiative that gives me hope that the failure of aid in Africa need not spell the failure of development, or even the failure of western involvement in Africa’s development. Because the last few years have seen incredible ferment in these kinds of initiatives: business-oriented, aimed at boring-as-hell-problems, focused on livelihoods and rigorously tested.

Whether LivingGoods and the Avon model is the right solution or not, I can’t tell. (Though probably the RCT they’re using can tell.)  But what’s clear is that if the right solution exists, you’ll only ever find it via experimentation. And experimentation is what these guys are all about.

Aid, Oil and a Question of Magnitudes

As Blattman likes to say, our views are inevitably influenced more than we’d like to admit by the one or two countries we know most. In my case that’s Venezuela, which is where I’m from, and a country I’ve long blogged about. The growing protests there this month have seen me return to that beat, temporarily.

Needless to say, you don’t write about a place for 12 years without it powerfully affecting your understanding of development.

A smallish (30 million people) middle income country sitting on top of an ocean of oil, Venezuela’s experience neatly puts international aid flows in perspective.

On average, over the last 10 years, Venezuela has taken in roughly $100 billion in oil revenues each year. A trillion dollars total, give or take. That’s within spitting distance the total overseas development aid from all OECD countries to all middle-income and poor countriesAll of it going to a single, not-especially-poor, not-especially-large country run by a government whose entire basis of legitimacy is its militant determination to make people’s lives better.

If there was some simple mechanism whereby throwing money at a government deeply concerned with poverty would make it go away, surely Venezuela would have eradicated poverty a long, long time ago. And yet our social performance over the last 15 years has been middling, at best. Sure, poverty fell, as did infant mortality and illiteracy, but none of this happened markedly faster in Venezuela than in other countries in the region that didn’t get a massive oil bonanza.

After a decade-long petroboom, Caracas – my hometown – is still ringed by some of the most violent slums anywhere in Latin America. Hunger is still a problem in rural communities. One squandered trillion dollar oil-boom later, a government of undoubted political commitment to the poor has demonstrated just to what extent good intentions are not enough.

Recent trends are threatening even the advances that were made at the height of the oil boom. A disastrous anti-business policy stance, alongside some truly reckless fiscal policies have left the country facing very high inflation and mounting shortages. Here, to give you a sense, is what you have to go through to make a cake in Caracas these days. As mass demonstration rock the country, the oil bonanza of the last 15 years seems increasingly distant.

It takes seeing the Venezuelan case up-close-and-personal to realize the basic good sense of Angus Deaton’s critique: there is no amount of money and no volume of good intentions that can make up for the impact of a bad policy regime.  A sharp look at Venezuela, Nigeria, Indonesia and the other developing petrostates should make this obvious.

Somehow, it doesn’t.

Why rural development comes first

One common criticism this blog has been getting has to do with its rural focus. “Sure,” people argue, “most of the very poorest live in the countryside. But, overwhelmingly the way they get less poor is to move to a city.”

This is true. Urbanization has been a key feature of every fast development experience there’s ever been. So, in terms of grand strategy, why would you waste your time messing with rural producers?

In Taiwan and South Korea, the cities had to compete for rural people to want to move there.

That’s what I thought too until I read Diane Davis’s remarkable Discipline and Development: Middle Class Prosperity in East Asia and Latin America. (You can read the brilliant intro online here.)

Davis’s book is a perfect little counterpoint to Robert Bates’s classic Market and States in Tropical Africa, (which it really helps to have read before you dive into it.)

For Bates, the political economy of the post-colonial African state was pretty simple: they were machines for extracting rents from farmers and transferring them to urban constituents. Through a series of institutional mechanisms handed down from the Colonial past (chief among them, the dreaded Agricultural Marketing Board), African states systematically looted the countryside, underpaying for products, undersupplying services, and spending the proceeds on a series of industrial boondoggles in town. It…wasn’t a very successful development model, in large part because it created powerful incentives for industrialists to specialize not on running profitable industries, but on pressuring the state to extract rents from rural people and hand them over.

Bates’s book is the stuff of a thousand undergrad syllabi, I think most people in the development game have at some point come across the argument. What I find dismaying is that Davis’s book, which is at least as good (for my money, way better), is…not as often read. What she shows is that some of East Asia’s fastest developers of the Tiger years turned the political economy of African states on its head.

Davis shows how in Taiwan and South Korea – which, in the 1950s, were just as poor as Uganda or Nigeria – land reform produced a class of prosperous, independent, middle-class rural producers. The producers – mostly rice farmers in South Korea, a mix of rice and sugar-cane farmers in Taiwan – were politically powerful. Powerful enough to resist any thought industrialists might have had to finance industrial expansion on their backs.

If anything, it was just the opposite: rural people put the heat on the government to squeeze the industrialists for surpluses. In this narrative, Taiwanese and South Korean industrialists’ export orientation was forced on them by a political dynamic where they were relatively weak, and under strong pressure to perform.

Continue reading Why rural development comes first

How Prevalent is fake seed in Uganda?

Say you’re a farmer in Uganda. You don’t have a lot of land, you don’t have a lot of money, you don’t have a lot of hope. You go into town and stop to talk to your local agro-dealer. He says if you buy his high-yield seed and fertilizer you can triple your harvest for about $100.

Do you believe him? Should you believe him?

If Fake Seed turns out to be as prevalent as initial tests suggest, the problem is a development catastrophe for Uganda.

In a better world, this should be a no-brainer. Of course you should believe him! There are tons of cases of farmers doubling and tripling their yields just by switching to hybrid seed + fertilizer. This isn’t voodoo, it isn’t even GMO: it’s a long established, tried-and-tested technology at the heart of the 1960s and 70s’ Green Revolution. You’d have to be dumb to pass up on hybrid seed.

And yet, if you’re a Ugandan farmer, you may well not believe your ag dealer. And not because you’re dumb; because you’re smart.

You’ve heard the stories. Stories of farmers who gambled on seed that didn’t grow. Stories of unscrupulous dealers making off with their very hard-earned savings in return for junk. You know the seed you saved from last season won’t get you a great harvest, but one thing you’re sure of: it will grow.

The stakes couldn’t be higher. If the seed you buy doesn’t grow, you’ll starve. Even the money you’d need to buy emergency food will be gone since, of course, you’ll have spent it on the seed.

The question, then, is how good a reason do Ugandan farmers have to worry about this? Sadly, there are plenty of anecdotes about fake seed in Uganda, but – at present – a shortage of hard data.

An important study is now underway by Svensson, Yanagizawa-Drott, and Bold should help pin down the scale of the problem. This same team previously studied the market for antimalarials in Uganda, 37% of which turned out to be fake. Their preliminary results on seed, not yet published, show perhaps 3 in 10 commercial seed bags sold in Uganda fail to germinate. 

I asked James Joughin about this number, which strikes me as astronomic, and he said it’s not immediately evident how much of this bum seed is outright counterfeit – just normal grain painted to look like it’s been industrially treated as seed – and how much of it is “real” seed that fails to germinate for some other reason.

“Who can tell?” Joughin said, “maybe the ag dealer left a bag of real seed outside, and it got wet, and that’s how it was ruined.” Or maybe a mistake was made at the seed treatment plant, where quality standards vary enormously. The fact that the National Seed Certification Service is a bit of a cess-pool, with seed companies working to dismal quality standards able to bribe their way to certification, certainly doesn’t help.

Whether the culprit is lax quality control, limp regulation, improper handling in the supply chain or outright criminality, the result is the same: the final buyer can’t be certain this very expensive input is going to work.

One thing is for sure: if Fake Seed turns out to be as prevalent as initial tests suggest, the problem is a development catastrophe for Uganda. Adopting Improved Seed and Fertilizer remains the most promising, quickest road out of acute poverty for vulnerable rural populations, with stories of harvests tripling entirely common. (On demonstration plots run by trained agronomists, the yield bump can be up to 10-fold.) Anything that slows the spread of hybrid seed or heightens farmers’ perceptions of its risk is an outright disaster.

And so back we go to Uganda’s broken Seed Certification system. Development topics really don’t get more boring than that, but the Ugandan Seed situation is a perfect little parable for how indispensable a minimally competent state able to enforce its own laws really is for development. If the state can’t (or won’t) prosecute people who cheat farmers with bum seed, that’s just not a category of problem an NGO can address.

Continue reading How Prevalent is fake seed in Uganda?

GMOs are a Red Herring

You’ll pardon a bit of a rant today, but I’m just going to come out and say it: I hate the GMO debate.

Not GMOs, mind you, the debate.

The GMO debate is boring. And not in a good way.

It’s not just because reasonable people temporarily take leave of their senses when they discuss it. (Though that’s part of it.)

It’s not just the creepy quasi-religious fervour on both sides. (Though that’s definitely part of it.)

It’s the way the GMOs constrict a debate that really ought to be much broader.

Take drought resistance. An almighty rumble has been brewing on drought resistant GMO maize (more properly “water efficient”) as a strategy to adapt to climate change. All the tired old tropes of the GMO controversy get trotted out. What’s weird, though, is that the whole thing happens as though there were no alternatives. As though GMO Maize was the one true way to skin a cat.

This is preposterous. African farmers have been dealing with drought for years, hell, for millennia. It’s been literally thousands of years since they domesticated sorghum and millet, crops uniquely suited to drought-prone agroecologies.

While you’re shouting yourself hoarse over some exotic lab-based technique, they’re out there doing what they’ve always done: planting crops that will grow even with stunningly little rainfall.

The GMO debate is blind to sorghum and millet, just like it’s blind to cowpea, pigeonpea, and all the other drought resistant crops farmers in South Asia have been planting forever to deal with drought. And since nobody (with some few, genuinely heroic exceptions) gives a crap about these orphaned crops, nobody gets really worked up about the boring old strategies that could hugely increase their usefulness as food security crops.

Take a particular bugbear of mine: the sorghum value chain. In East Africa, most sorghum is eaten as porridge. Sorghum porridge is – how to put this kindly? – really gross. It’s not very nutritious either. To increase the bioavailability of the nutrients naturally found in sorghum, you have to ferment it.And indeed some places in Africa have a tradition of making Kisra, which is a really yummy, injera-like sorghum-based sourdough bread.

It’s just that this is what that process looks like:

From beginning to end, it takes a week, and generally is too much work for people to take on except on special occasions. There is no industry anywhere in Africa producing Kisra, because there’s no basic research to understand the biochemistry of sorghum fermentation.

So we have a delicious, culturally-prized, nutritionally-rich product of a naturally drought resistant crop that smallholders are familiar and comfortable with…and it just sits there, while we’re off chasing the latest shiny transgenic controversy. I hate that.

The knowledge intensity bar to improving and formalizing kisra-making is way, way lower than the knowledge-intensity bar to genetically modifying maize. And yet is anyone seriously working on industrializing the kisra-making process? Come, now, we’re trying to have a serious debate here.

There’s plenty more disinterest where that came from: Basic agronomic research into pigeonpea improvement? Yawwwwwn. Developing the sorghum value chain? Zzzzzzzz. Investing in new millet hybrids that are even better adapted to drought? Be serious now!

You get crap click-through rates on stories like those. (Believe me, I know.)

Continue reading GMOs are a Red Herring

Time to Sprinkle Some Pixie Dust on those Cookstoves

At their worst, improved cookstoves can look very much like classic development bloat: a high-minded idea cooked up by comfortably well-off researchers in rich countries to address to what they think should be the priorities of the global poor, even though that bears little relation to what the global poor really want.

For sure, studies of improved cookstove take-up can make for some depressing reading.

Everybody talks about the culture clash between the aid worker and the aid recipient, but who worries about the culture clash between the aid worker and the his brother-in-law who works in Marketing back home?

Here’s more or less how it seems to go: earnest young development workers trudges out to god-forsaken African hellhole. Earnest young development worker hands out stoves. Earnest young development worker gives a meticulously research-based talk on how good they are for your health. Earnest young development worker trudges back. Six month later, evaluation team trudges out to same village. Evaluation team finds stove gathering dust in a corner of the hut.

Plenty of reasons have been put forward for why this happens: from ignorance to sheer cultural stubbornness/resistance to change to time-inconsistent preferences to the fact that it takes too damn long to boil water for tea with the things. But one really really obvious explanation seems MIA from the discussions: development interventions are just horribly tin-eared about marketing.

In some ways, this is puzzling.

Continue reading Time to Sprinkle Some Pixie Dust on those Cookstoves