Interesting facts of development

Emerging markets, regional growth areas, food crises, poverty, microlending. These were development concerns a decade ago. They are still development concerns today.

Asia was hot in the late 1980s--including the Philippines, which the CEO of the global trade publishing house I was working for at the time described, as they moved a whole group's editorial base from Hong Kong to Manila, as "an exciting place; it reminds me of Hong Kong 20 years ago." Unfortunately, Manila was supplanted barely five years after, before even the 2000s, by Shenzhen and, very soon after, by the rest of China.

Now, China has ceased to be emerging to the world, only to the people in its rural areas who have yet to get to the veritable dream factories that are Shanghai, Beijing, Guangzhou, and practically every other Chinese city.

The late 1990s were coming-out years for Africa, energized by a very supportive Pax Europeana. But in Africa's wake came the wars, the droughts, the violence, the displacement of peoples. Bono had to stage world concerts to raise funds for the continent while George Clooney and Don Cheadle used their star value to call attention to the painful tragedy of Darfur.

One hopes, more than anything else, that the affluent and influential in every country will use their ginormous resources on projects that will truly teach the poor how to rise above their situation.

Unfortunately, most of the time, the rich and powerful prefer to wear shades that allow them to disregard the poverty around them even as they rally for more abstract, more personal, or more vengeful concerns.

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Editorial Page column, The Evening Paper
Issue of 28 September 1995

At the opening of the Philippine summit yesterday, President Ramos cautioned summit participants about the possibility that they could miss the Philippine bus. However, our bus isn't the only one poised to depart. In this part of the world, even Burma is dusting off its rickety old wagon for the long trip to economic development.

There are, of course, trillions of dollars flying electronically through the capital markets of the world, but short-term deposits and no-commitment investors can spell doom rather than boom, as Mexico has sadly learned in past months.

The kind of investors we need are those who, like James Rogers Jr. said of the country he has chosen to sink his dollars into: "There is a chance it could explode ... But that wouldn't cause me to sell." Unfortunately, Rogers--who teaches finance at Columbia University, is a business commentator on the CNBC cable network, and was a former partner of Hungarian billionaire investor George Soros--wasn't talking about the Philippines. Rogers was talking about Africa, the latest, much ballyhooed emerging market.

At a forum for American investment bankers at the New York Stock Exchange, Rogers downgraded Latin America ("sure to devalue"), Asia ("not as hot as it was"), and Russia and Eastern Europe ("too much in turmoil"). Africa is "it. I'm the biggest fan of Africa in the room," said Rogers. "Whether you're a hairdresser or an investment banker, things are so exciting."

Rogers said he has investments throughout the continent--Ghana, Zambia, Zimbabwe, Botswana--though South Africa is particularly hot. Of course, there are problem spots: Nigeria, Zaire, Rwanda, Burundi, Angola. But the secret in making market choices, said Rogers, is the people: "You don't invest in a country unless the people have changed."

A lesson there for us, surely?

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Despite Rogers' spirited promotion of Africa, one cannot just dismiss Asia. Not the capital cities, this time, but the former-backwaters-turned-aspiring-growth-areas. There's EAGA down south, and another one up north.

The latest to make a pitch for growth is a six-nation stretch through which one of the longest rivers in the world runs. The Mekong six--China, Thailand, Laos, Burma, Vietnam, and Cambodia--have called attention to the vast investment potential of this relic of Vietnam-war memories.

The area through which the river runs is perhaps one of the most remote and untouched territories in Asia. Only its Vietnam portion, the Mekong Delta, shows any sign of development because the Vietcong needed the area to help fund their war bill. Only one bridge, the Thai-Lao Friendship Bridge, spans the 4,350-kilometer waterway.

Now, with the help of the Asian Development Bank, the Mekong six want to finalize a framework of cooperation that will provide a road network all along the Mekong River basin. Eventually, a package of tourism and hydroelectric projects may be offered to investors.

Growth areas are mushrooming throughout Asia, bringing countries and governments together in a common pursuit. But the effort can be altogether dangerous, leading to mistakes that impact most, and worst, on the very people targeted as beneficiaries of development. At every step of such undertakings, there must be one running thread, one enduring guideline: sustainable growth.

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A real wheat crisis may well have begun, with the scramble for supplies spurring panic buying, especially by African countries where bread is the staple. Even as wheat stocks reached their lowest levels in 20 years, prices shot through the roof at the Chicago futures pit, the world's largest wheat market.

Egypt, the world's second biggest wheat importer, snapped up American wheat and is eyeing Australian wheat ready for harvest in December. Algeria and Jordan need wheat by November; drought-hit Morocco, by December.

With production of other cereals similarly projected at levels well below what is required, the time may have come for all countries to encourage paradigm shifts in the production and consumption of food.

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On another subject I had touched on a few times in the past--small loans for women--here are the latest so far.

In Cambodia, the sponsoring organization--the US Agency for International Development--will be funneling the funds through the Catholic Relief Services, which in turn will work with three district-based nongovernmental organizations to provide loans to rural women through 78 village banks. Cambodian women will be charged rates of 4-5 percent per month against loan-shark rates of 20-30 percent.

In China, one remote district bank in the northwest, a branch of the state-owned Agricultural Bank of China, has been pioneering in the concept and attesting to the high rate of repayment. "Shanxi is the first ... province to give cheap loans to rural women who live in poor counties to help them become better off," said Yan Dianshan, vice chairman of the Women's Federation of Shanxi.

Launched as early as 1989, the program is a little different from the Grameen Bank and Women's World Banking (WWB) models. "We usually do not give money directly to poor women," said Yan. "We give them chicks, rabbits, piglets, and other materials to make it easy for them to repay. Or we lend money to better-off women responsible for poverty-relief work for poorer women." The loans, in cash or kind, carry a 2.4-percent interest and are repaid in three years.

The nonprofit WWB has found low-income women the best credit risk in the world. "Their repayment rate is 95-98 percent, better than that of large clients of commercial banks," said WWB's president, Nancy Barry, who was in Beijing for last month's women's conference.

So dedicated is Barry to the concept of micro-lending that she has been trying to negotiate through the obscure Chinese structure, attempting to find a route by which to expand WWB into China.

-- NBT