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Lokichoggio in the modern economy?

4 Apr

Loki from the airLoki mapBreugel field Denver city

So we are just back from a week in Lokichoggio, Northern Kenya – one of Kenya’s semi-arid areas. It’s part of Turkana County, which on most measures is one of the poorest areas in Kenya, and is basically a border town between Kenya and South Sudan – with its own airstrip, and an interesting collection of planes that didn’t quite make it.

There is lots to blog about (watch this space) but here is my first and abiding impression. We are running a seminar for some of the local community leaders on the Saturday. We put up the two pictures – the Breugel image of Europe in the 1500s and the modern US city at night, and ask everybody to tell us the differences. They are pretty sharp – Europe 500 years ago has no tall buildings, no roads, lots of manual work, people working outside, and a lack of market access. They see the modern economy as about railways, urbanisation, cities, power and electricity, good roads, working inside, lots of cars and transport links – nowhere is remote.

Then comes the interesting bit: is Lokichoggio part of the “old”economy or part of the modern economy? People are not sure – and after some discussion vote for it to be “in the middle”

“Stuck in the middle” is a good summary of many areas like Lokichoggio. The modern economy is going on all around them, but they are not quite part of it. The roads are crap – the A1, apparently about to be improved, is the main arterial road from Nairobi to South Sudan, but at present is full of potholes and liable to flooding. Power is a bit hit and miss – there was much rejoicing when we arrived that the dispute about payment for the new substation had been resolved, so power was back on again (it had been off for several weeks). Minimal education means a lack of training in basic skills like welding and plumbing. Meanwhile, wifi access was really rather good……

Of course, diagnosis is easier than cure – but Tony Blair’s old cry of “education, education, education” has got to be part of the answer.

SMEs role in development – CAFOD has useful stuff to say

27 Feb

Screen Shot 2014-02-27 at 16.15.35

Good report from CAFOD on this subject – see http://goo.gl/Xb9Gpd . At least, the exec summary looks good and in line with World Bank “Doing Business” indicators. And check out the Business Fights Poverty website where they have been running an online discussion on the role of small-scale, local development.

Sen on Poverty – the tolerance of the intolerable

23 Jan

Amartya Sen

 

Amartya Sen was lecturing last night at the LSE on this topic – sold out, as you might expect (2,000 enquiries in the first hour, apparently). But you could also watch a live webcast which worked well – check the LSE video site – http://goo.gl/Kqs6w7 – for the replay

He looked at possible reasons for why we tolerate poverty – ignorance, a belief it is impossible to remove it, and self-centredness (“no obligation”) and found all of them lacking. Of most interest to me were his illustrations from India, and the contrasts between India and China.

I had three key takeaways. First, on ignorance: Sen described how the Indian media ignored extreme poverty because they were “controlled” by the middle classes, in the sense that they pandered to the interests and obsessions of the middle class to ensure their advertising income. Hence little reporting of extreme poverty in India. So my thoughts turned to William Wilberforce, the crusader against the slave trade. I realised, perhaps for the first time, that part of his greatness was to rub the noses of the society of his day into what slavery really meant so that the elite that made the laws could not simply ignore it. I suppose the modern equivalent is “Benefit Street” and forcing politicians to live rough for a bit.

Second, the need for “balanced growth” – not in the sense necessarily of balance between sectors, but in the sense of balance between public and private provision. You need to grow healthcare and education as much as business if your economy is to thrive. A malnourished workforce is not that productive.

Third – think quantitatively about poverty and policy. In the Q&A session, Sen dealt with an argument that “India’s greatest problem was employment subsidies” – and simply showed that this was unlikely given their small cost, and that the much greater cost of utility subsidies to the middle classes were much larger. Avoid dogma and stick to facts and reason was a good message to put across.

 

 

 

Whizzo! – tax relief is coming for social impact investing

6 Dec

Desparate dan

 

I am indebted to the Financial Times, today’s edition, bottom of p5 , for alerting me to George Osborne’s plans for tax breaks for “social capital” – see p 87 of the Autumn Statement, which you can download here – http://goo.gl/vGQ3WU

This seems to mean equity or loan investments will qualify for relief at the investor’s marginal tax rate, as already happens for Venture Capital Trusts (see, for example, this from Citywire  – http://goo.gl/JcynaC). As we are promised a “road plan” for this in January, we should know more then. Here is the relevant paragraph in the AS:

2.51 Social investment tax relief – The government will introduce a new tax relief for equity and certain debt investments in social enterprises with effect from April 2014. Organisations which are charities, community interest companies or community benefit societies will be eligible. Following consultation, investment in social impact bonds issued by companies limited by shares will also be eligible. The government will publish a roadmap for social investment in January 2014. (Finance Bill 2014) .