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Connectivity is Productivity

This post concludes my report on my trip to Kenya to see M-PESA, the mobile phone--based money transfer service. Here's the full set.

Iqbal Quadir may be the original visionary of mobile phones for the masses in developing countries. In this 100-second clip from his TED talk, he tells how the vision came to him in the early 1990s:

Quadir was seized with the idea of bringing mobile phones to the poor of Bangladesh. In time, he partnered with the Grameen Bank to form GrameenPhone. And the rest is history, in Bangladesh and beyond.

A Development Perspective on the Gulf's Big Spill

This is a joint posting with Julia Barmeier

The oil leak in the Gulf of Mexico is turning out to be the worst environmental disaster in United States history—we now know that as much as 40 million gallons of oil may end up in the Gulf, destroying wildlife and livelihoods, and taking years to clean up.

Spills of this magnitude are not new to the developing world. Take Nigeria, for example. Due to poor regulation and pervasive corruption, we do not know for certain how much oil has leaked into the Niger Delta region. In 2006, it was reported that 500 million gallons of oil—a quantity not that different from the new estimates of the Gulf leak --has been spilt in the Delta over the past 50 years. The Nigerian National Petroleum Corp estimates that some 650,000 gallons of oil were spilled in 300 separate incidents each year; other reports indicate that Shell (which is now looking to drill in the Arctic) spilled nearly 4.5 million gallons of oil into the Niger Delta in the last year alone.

Feed the Future: A New Way for U.S. Development but Reflections of the Past

The Obama administration’s new Feed the Future initiative is big—$3.5 billion over 3 years—and bold. It has been touted as “a new way of doing development” and aims to reach 40 million people, including 25 million children, in ten years in an effort to tackle chronic hunger and achieve global food security.  The objective and approach of the new initiative are laudable.  Indeed, it is hard to find fault within the new initiative; the challenge is what lies just beyond its reach: a U.S.

A Long-Term Fix for Pakistan’s Energy Woes

This is a joint post with Wren Elhai.

It is little wonder the Obama Administration has prioritized Pakistan’s energy sector in its $1.5 billion aid program this year. Pakistan is gripped by a very serious energy crisis. Daily black-outs in major Pakistan cities sometimes exceed 12 hours. Businesses are suffering, jobs have disappeared, and quality of life has plummeted. Frustrated Pakistanis are taking to the streets, and the political turmoil threatens to further destabilize the country and weaken the (already fragile) central government. Pakistani citizens and policymakers have turned to the United States for help. The United States sees an opportunity both to improve its public image, shore up a friendly government, and remove a key bottleneck to economic growth. Ultimately, fixing the Pakistani energy sector would go a long way towards stabilizing a critical state and benefiting U.S. national security interests.

However, the ever-present danger in jumping into a crisis situation with wallet in hand is that the desire to make progress quickly can overshadow the need to fix the longer-term problems that caused this crisis and, if not dealt with, will cause others in the future.

Make New Media of Exchange, But Keep the Old

This post continues my previous report on my trip to Kenya to see M-PESA, the mobile phone--based money transfer service. Here's the full set.

On our second day, last Tuesday, we flew to Kisumu, a town on Lake Victoria, that vast body of water straddling the borders between Kenya, Tanzania, and Uganda. There we met Frederik Eijkman, co-founder of a local company called PEP Intermedius. Like M-PESA itself, PEP began with microfinance, in 2004. But when M-PESA came along in 2007, Frederik and the other founder, Paul Otieno, seized the business opportunity. To launch M-PESA, Safaricom needed to quickly build a national network of M-PESA points analogous to Western Union outlets, where people could swap paper and e-money. Today PEP manages just over 100 M-PESA outlets; it owns eight and supports the rest as franchises. PEP outlets compete side-by-side with other M-PESA points.

I first learned about phone-to-phone e-money in 2006 at a conference in the basement of the International Finance Corporation. The impressions made upon me then naturally centered on the phones. In a photograph from the Philippines, a customer and a merchant stood facing on opposite sides of a display case in a food shop, each holding up a phone in order to do their bit of electronic business. Brian Richardson, creator of the phone-based bank WIZZIT in South Africa, pulled a phone out of his pocket and before our eyes, in seconds, transferred money to his wife back home. So in my mind before I went to Kenya, phone banking was electronic banking. Poor countries were leapfrogging the rich, leaving cash behind.

There is some of that going in Kenya, but in Kisumu, and in a paper by Frederik and the Gates Foundation's Ignacio Mas and Jake Kendall, I saw a far richer story.