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Imagine a Different World

For a long time, through colonisation, exploitation and wars, human actions were only based on self-gain. Today it is clear that this way of thinking misled us and left behind an irreversible damage. Many people suffered and died on behalf of others, we acted regardless of the environmental consequences and called ourselves “developed”. Until that moment where the rich western world could no longer hide from reality. Our capitalist approaches were no longer sustainable and the world had to face a radical change.

In 2036, the inequality reached an extreme and the environmental impact of our actions became a disaster. After the economic crisis of 2007, the trust in our economic and social system never fully recovered. Revolutionary movements against the western attitudes arose and political anti-capitalist parties became more and more popular.

protestsThe real change though came from the suppressed and exploited countries. Their unheard voices found strength in the social networks and spread through the world. As Zambia did in 2002 [1](BBC News, 2002), more and more countries rejected aid in order to stay independent. Slowly, many African, Asian and South American countries cut their trade connections with the outside world. This had a huge impact on the global economy, considering that the continents shares in merchandise exports are relatively high [2](Ruta M., Venables A.J., 2012). The main producing countries in Asia (e.g. China and Japan) didn’t join the movement and had to face strong rioting inside their countries.

Surprisingly the isolated countries developed self-sustainable systems and poverty started to diminish. Threatened by the power shift to emerging countries and by civil disturbances in the west, Europe and North America were forced to agree to new policies, based on more equitable rights.

Recently, new laws against exploitation were set up, collaboration between producing countries are encouraged and we are working towards a system where profits are not one-sided anymore. Suggestions arose to restrict the export of mass-produced goodswhich will give local farmers a chance to sell their own products. The quality of life in Africa’s rural areas would increase and stop the endless flow of migration into cities.

Historians now claim that the clash in the year 2036 was inevitable. Countries throughout the last few centuries that had their independence taken from them regained it and therefore revolutionary movements as such have been anticipated. Yet the support in the first world was unexpected, never before had there been such a massive collaboration of people, regardless of their background and social class.

Not only has the economic approach changed, but also the idea of development itself. The Millennium Goals of 2015 are still a scale for development achievements, though only a few have been accomplished (e.g. combat against HIV/AIDS through new medical inventions). For others, such as diminishing extreme poverty, new approaches have been put forward, no more financial imposing, rather alternative investments (e.g. research and knowhow) to boost development. The West has to accept that they have to work together to create a sustainable system. Technological improvements and severe pollution laws readjust our ecological footprint, which makes optimists dream of a new tomorrow.

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The current situation is often compared to a post-war period, only that this time we lost a war against ourselves. A lot has changed from 2036 to the current year of 2044. The new policies and restrictions are supposed to distribute wealth more equally, but people are still adapting themselves. Rethinking our economic system means for many restructuring their whole life, this fundamental change needs time. It’s only now, that those who thought they achieved development realise that it is nothing you can accomplish, that development is a notion of time and not a standard of life.

References:

[1]Unknown Author (2002) Zambia refuses GM ‘poison’, BBC News [Online] Available from:http://news.bbc.co.uk/1/hi/world/africa/2233839.stm

[2]Ruta Michaele & Venables Anthony J. (2012) International Trade in Natural Resources: practice and policy, World Trade Organization – Economic Research and Statistic Division [Online] Available from: https://www.wto.org/english/res_e/reser_e/ersd201207_e.pdf

The Ignorance of Distance

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We all know the heroic dream of saving the world by spreading awareness of a problem and by donating a small amount of money. The ignored part is the effect that our money has on its recipients. Are the donations invested in the right projects and do they reach those in need? As a result of our ignorance, many development projects turn into dilemmas. Failure and success are determined by the characteristics of a project such as its research and elaboration. The frequent problem of aid provided by our society is that most projects are born too far from the actual happening, which makes it hard to consider all the possible influences of the unknown terrain.

The distance between the third world and us makes it often impossible to determine the needs of those we want to help. One example of this misplaced aid is the Jason Sadler’s project ‘1 Million T-shirts’. The second-hand charity sends T-shirts we don’t need anymore to poorer countries in order to help those who can’t afford them. Despite the good intentions to provide children from Kenya and Uganda with clothes, the idea turned into a dilemma. There was no need for shirts in Africa and the transport expenses were higher than the T-shirts themselves. Furthermore, the problem with free second-hand products is that they stop the market activity. Who’s willing to buy products, which they can get for free? From one moment to another, local craftsmen lose their jobs. [1](Wadhams N., 2010)

one-million

Wanting to do something to help is no excuse for not knowing the consequences of what you’re doing” (Wadhams N. 2010)

The charity without research nearly destroyed the structure of their shirt market in order to provide one million Africans with unnecessary shirts.

This lack of information is not only visible in questions of “what to provide” but also in the way “how to provide the aid”. The Humanitarian Daily Ration (HDR) project of the US government in 2001 ignored the circumstances of those they wanted to help. The project destined to support Afghanistan’s war against the terrorists soon turned into a problem. cluster1111

The HDR packages given to children in Afghanistan were easily confused with the BLC-97/B bomblets also dropped by American planes. Both were nearly the same size and colour which made it impossible for children, who had no knowledge of English, to differentiate them. The choice between a 2000-calorie meal and inevitable death was a matter of luck. [2](Stupart R., 2012) [3](CNN.com, 2001) Aid dilemmas can’t be excused by good intentions. It’s necessary to consider every possible implication because each unnoticed aspect could have horrifying outcomes, such as in this case the illiteracy level and simultaneous projects.

Another consequence of distance is the lack of responsibility that people have towards their projects. After Haiti’s earthquake in 2010, the Haitian hip-hop artist Wyclef Jean raised $16 million to help his homeland. But his charity ‘Yéle Haiti’ misused the donations for personal purposes and soon went out of business, leaving behind debts and broken promises. The announced and dismissed programs included the construction of temporary homes ($93 000), a medical center ($146 000) and the revitalisation of a public site ($230 000). In addition, he even broke more urgent promises such as food and shelter for displaced Haitians and orphans. “If I had depended on Yéle, these kids would all be dead by now,” said the leader of the orphanage Diaoly Estimé. The amount originally destined to the nutrition of orphans ($3000 monthly) was spontaneously invested in the unnecessary construction of a second orphanage. Abandoned, the starving children had to find help somewhere else. [4](Sontag D., 2012) [5](Morris M., 2013)

The true development dilemma is the blindness given by the ‘heroic’ idea of people helping strangers. Westerners ignore the distance and everything coming along with it, which can have fatal consequences. Surely this isn’t the case for all western aid projects, some have a lot of experience and manage to transform this into something good. Research and communication are important parts of development that can reduce the mental distance but as long as projects aren’t well elaborated, they are doomed to fail at some extend.

References:

[1]Wadhams Nick (2010) Bad Charity? (All I Got Was This Lousy T-Shirt!) Time [Online] Available from: http://content.time.com/time/world/article/0,8599,1987628,00.html

[2]Stupart R. (2012) 7 Worst International Aid Ideas 7 Matador Network [Online] Available from :http://matadornetwork.com/change/7-worst-international-aid-ideas/

[3]Unknown author (2001) U.S. changes color of food aid, CNN.com/U.S. [Online] Available from : http://edition.cnn.com/2001/US/11/01/ret.afghan.fooddrops/

[4]Sontag D. (2012) In Haiti, Little Can Be Found of a Hip-Hop Artist’s Charity, International New York Times [Online] Available from :http://www.nytimes.com/2012/10/12/world/americas/quake-hit-haiti-gains-little-as-wyclef-jean-charity-spends-much.html?pagewanted=1&_r=1&

[5]Morris M. (2013) 10 Attempts At Charity That Stupidly Made Things Worse, listverse.com [Online] Available from : http://listverse.com/2013/11/19/10-attempts-at-charity-that-stupidly-made-things-worse/

The problem with microfinance – is it a bad concept or a bad realization?

We’ve seen that development aid often brings more damage than help, some people blame the present governments, some the economy and as in every questioned sector, revolutionaries try to re-invent the system and to find new solutions. So did Muhammad Yunus, founder of the Grameen Bank in Bangladesh, who introduced a new concept to re-structure banking in favour of the poor.

The new aid instrument, called microfinance became very popular in the global North. [1] (Klas G., 2012) It’s trying to involve the uninvolved countries in the global economic system, to make them part of the market which determines our wealth and social structure. The idea of microfinance is to lend poor people a small amount of money at a relatively low interest rate in order to give them a chance to build their own independent business and to overcome poverty. [2] (Yunus M., 2012) [3] (Grameen Bank) [8] (Ledgerwood J., 1998)

working man

Through the last years many scandals related to microfinance had been shocking us, bad consequences of a good system which no one had seen coming. Indebtedness reached an extreme [1]:

“Tanda Srinivas was lounging in the yard of his two-room house in the southern Indian village of Mondrai shortly after noon on Oct. 28 when his wife, Shobha, burst out of the door covered in flames and screaming for help. The 30-year-old mother of two boys had poured 2 litters of kerosene on herself and lit a match. The couple had argued bitterly the day before over how they would repay multiple loans, including those from micro lenders who had lent small sums to dozens of villagers […] When Srinivas, 35, tried to snuff out the flames with a blanket, his polyester clothes caught fire. Within three days, both parents were dead, leaving their sons orphans.” (Bloomberg newsletter 28.12.2010)

This is only one of the horror stories that shocked the world in 2010 and questioned the concept of microfinance, whose results were suicides, increase of poverty and desperate families incapable to manage their debts.

Similar incidences happened in Bangladesh [4](Roodman D., 2011) and the Grameen Bank was under criticism ever since but are these happenings really the fault of the system or only of its application?

The Grameen Bank, which calls itself “Bank for the poor”, tries to reach the poorest of the poor, who aren’t considered credit-worthy by ordinary banks and offers them the opportunity of small loans for relatively low interest rates of 20-35%. [3][5](Anu M., 2009)[6](Biswas S., 2010) High compared to traditional banks, those interest rates are the only alternative for the poor, considering that the interest rates of local moneylenders (100-200%) are unbearable. [1] 

The Bank targets mostly poor women (97%), trying to empower by giving them financial independence. [3][5][7](Yoolim L. & Ruth D., 2010) But the result was unexpected, women ended up being even more dependent. Being forced to sell everything they have, in the worst cases their bodies, they become slaves of their own debts. This doesn’t only occur for women, distributing micro-credits is like selling dirty water to people who are dying of thirst. [1]

To help their customers, Grameen Bank set up a policy that they’d only offer credits to small groups of people. The idea was to guarantee for each other’s payback and to get strength in times of trouble, but even this concept has failed in many cases. [3][5] The pressure, which leads to tragedies like above, comes often from exactly these groups. If a group can’t repay its loan due to an accident or failed project, the bank isn’t that understanding and supporting anymore. [1]

The Grameen Bank was supposed to be a bank of the people, but is it? On paper, 95% of the bank “belongs” to the people (the rest to the government) [5] but the borrowers have no personal relation with the bank and often don’t even feel supported by the institution. The only side they see is the pressure of the money collectors. [6] The lack of transparency for the often-illiterate clients and the corruption hidden behind the walls of the bank destroys the sacred image of the welfare NGO.

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The financial intermediaries of the Grameen Bank work on a commission-basis and seem to urge people to accept microcredits. Debtors are mentally and physically threatened to payback and slowly pushed into debt-slavery. [1] NGOs have to find a balance between the customers who struggle to repay their debts and the investors who expect a profit from their investments. [7] As a result they often tend to the most powerful, the rich side. It appears that Yunus’ idea of a non-profit based “social business” [2], has been lost during the process.

“If […] you are not helping poor people’s lives, you are not patient. You are not restrained. You don’t have empathy for the people. You are just using them to make money. That’s what blinds you when you are in the profit-making world. We need to see the people, not profit.” (Muhammad Yunus, 2006)

Many of the social ideas behind the initial microfinance have been lost through time. Microfinance isn’t a solution for everyone but the suicides only represent the worst-case scenarios, they shouldn’t be ignored, neither should they darken the idea of aid. Despite its numerous negative aspects, microfinance can reduce a village’s poverty up to 40% and it’s been proven, that each year 5% of the borrowers cross the poverty line. The impact is higher on extreme poverty than on the general poverty but at least it changes something. [9](Khandker S.R., 2005) Some microfinancial institutions try to change the system to the better, by creating personal relations with customers, advising and supporting and by improving flexibility and transparency.

A program with such huge extent can’t be defined as good or bad.  Everyone needs his own time and way to develop. I am convinced that microfinance is a good initiative but needs to improve its application. Allowing us to help without intervening too much, it’s an opportunity for those who are willing, to emerge through their own strength.

References:

[1] Mikrokredite – Ethisch sauber? – Gerhard Klas (20.08.2012) RosaLuxNRW, Youtube [Online] (https://www.youtube.com/watch?v=sgIlGH0qBNw)

[2] A History of Microfinance – Muhammad Yunus (18.01.2012) TEDx Vienna, YouTube [Online] (https://www.youtube.com/watch?v=6UCuWxWiMaQ)

[3] Grameen Communications (1998) Grameen Bank – Bank for the poor [Online] Available from: http://www.grameen.com/index.php?option=com_content&task=view&id=16&Itemid=112

[4] Roodman David (21.11.2011) Microcredit Suicide Story out of Bangladesh, Center for global development [Online] http://www.cgdev.org/blog/microcredit-suicide-story-out-bangladesh

[5] Anu Muhammad (29.08.2009) Grameen and Microcredit: A tale of corporate success, Economic & Political Weekly [Online] p.35-42 special article, Available from: http://www.academia.edu/206069/Grameen_and_Microcredit_A_Tale_of_Corporate_Success

[6] Biswas Soutik (16.12.2010) India’s micro-finance suicide epidemic, BBC News [Online] Available from: http://www.bbc.co.uk/news/world-south-asia-11997571

[7] Yoolim Lee and Ruth David (28.12.2010) Suicides in India revealing how men made a mess of microcredit, Bloomberg News [Online] Available from: http://www.bloomberg.com/news/2010-12-28/suicides-among-borrowers-in-india-show-how-men-made-a-mess-of-microcredit.html

[8] Ledgerwood Joanna (1998) Microfinance Handbook: An Institutional and Financial Perspective [Online] World Bank Publications – Business & Economics, Available from: http://books.google.co.uk/books?hl=en&lr=&id=ciFt3kcRYGIC&oi=fnd&pg=PP1&dq=microfinance&ots=vWShciuzUj&sig=PPRmXoTxuGRhnQ5baK9uh1820fY#v=onepage&q=microfinance&f=false

[9] Khandker S.R. (2005) Microfinance and Poverty: Evidence Using Panel Data from Bangladesh – The World Bank Economic Review, Vol.19 No.02 [Online] Available from: http://www-ds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/05/23/000445729_20130523153641/Rendered/PDF/774910JRN020050ofinance0and0Poverty.pdf

Development in Words

Asking around what development means, most answers are the same: fight against poverty, equality, food and water for those in need, education, economic growth, human rights or a life ‘free from fear and need’ for everyone. In the international context, development is often confused with assistance and aid, but is this really what development means? Who defines the tiny word that means so much to so many? Development can’t be seen as one specific moment in history, every society was and still is developing. In the 19th century it was the Industrial Revolution, nowadays, inventions such as the Internet determine our progress. It is hard to define development’s  purpose since everyone’s interpretation is different. The general meaning is clear but the word is used in so many different ways and contexts, so that its ideas and results don’t always match. The protection of the environment form pollution, for instance, doesn’t reflect the same ideas than “the pursuit of economic growth that [is] considered a condition for general happiness” (Rist 2007, p.487). In one way the goals are the same and meanwhile they are contradictory. Still, the meaning of words is important for our understanding, our behaviour and our actions. Words create communication, we share ideas, we create communities and through all this we finally have the chance to act and to change something (Chambers 1997).

int devOften development is seen as sacred, having its origins in the idea of the ‘good’ but this often doesn’t prevent its abuse. Some people say that big development can’t be ‘truly good’, that there’s always an aspect which people ignore, one side that includes negative consequences [1].

We need to question our approach towards development, self-critically we have to reflect on our actions. Despite our best intentions, failures are part of the process and we need to learn from them [2]. Mostly in the context of international aid, imprudent interventions can have dramatic impacts on people’s lives.

To come back to the definition, whose version finally counts? Concerning the underdeveloped countries, who decides whether our attempt to help is good or bad? And most of all, who decides what the world needs and what development is about? Development is made by people, people who get inspired by different ideas, ideas of someone they admire, someone with a voice, with influence. This influence is mostly related to power and money, shortly, most of the famous development speakers come from the Eastern United States (World Bank, IMF, UNDP) and Europe [2]. But even if those ideas are very profound and well researched, they only reflect one vision of development, which surely is a long way from the real needs of the underdeveloped countries. One aspect of development is to give a voice to those people who are affected directly, who have to say something and it should be our role to listen to them [2][3].

It is impossible to concentrate the different and partly opposed meanings of Development as a whole in one simple definition. Perhaps we could describe it as a ‘wish for positive change’, might it be in the economic sector through economic growth or the social sector through the purchase of “well-being” (Chambers 1997, p.1743). Development is part of us; it describes our change through time. It’s a word, with which we try to describe the effectiveness of our actions and objectives but in terms of aid, we forget that at the end everyone has to develop and emerge for himself. No one can give development to you; you have to work for it in order for it to be yours.

References:

[1] Rist, Gilbert (2007) ‘Development as a buzzword’, Development in Practice, 17: 4, 485–491

[2] Chambers, Robert (1997) ‘Responsible Well-being: A Personal Agenda for Development’, World Development, Vol. 25: 11, 1743-1754

[3] Mwenda, Andrew – Aid for Africa ? No thanks. (2007) TEDGlobal [Online] (http://www.ted.com/talks/andrew_mwenda_takes_a_new_look_at_africa)