Giving Keys and Giving Meaning.

Aid often gets less attention when surrounded by so much conflict. Honestly, we live in a world where bad news is good news. When talking to a friend we said that perhaps the news should feature one good story in every news showing, a bit like Russell Howard's aptly titled show 'Good News'?  The purpose would be to give us something uplifting; encourage us to work for the safety and security of others in our local community. As these storms rage outside I cannot help but think of the plight of the homeless throughout the United Kingdom.

So, I thought I would offer an example I stumbled across of some good news in the middle of all this violence. Some may of heard of them, but it is new(s) to me.

Giving Keys, a business set up by Caitlin Crosby, employs homeless people to hammer words such as HOPE, COURAGE and LOVE onto old keys. People love them and this success has enabled the homeless people employed to earn a living and to reach their true potential.

Below is a video that explains it all (skip to 2.50 to hear about how it started).

Now, I am a natural pessimist and will, if given enough time, find a flaw in everything. It is not a bad trait if used constructively (that is what I keep telling myself). Similarly, being too optimistic can be dangerous when the plans do not go quite to plan.

So I would point out that Crosby is from a privileged background. With powerful friends setting up a business was easier as once one celebrity was doing it, everyone would.

However, there is nothing wrong with using our uncontrollable background to help those who are less fortunate. At least she took a step out there and approached someone she did not know.

The reason I'm posting this article is to encourage us to all think about those in our own country who are homeless this Christmas. Sometimes we are too centered on the international stage and forget those suffering in our local community. The recession is still being felt and its time we move beyond the cost of goods and think of the worth of goods. Giving presents is about the meaning not the cost.

Do something you mean this festive season, approach someone who is suffering and raise awareness about an issue close to you.

ROSCAs - The Advantages, Disadvantages and Everything in Between.

Following the previous blog about loans and savings this blog will focus on what financial options are available to those in rural areas where finance is in the hands of the villagers. The advantages, disadvantages and everything in between. 

Let's start with ROSCAs or Rotating Saving and Credit Associations.

Individuals meet at pre-defined intervals of perhaps a week or a month and contribute small amounts of money into a 'pot'. Notably, ROSCAs have been used by those with high incomes in the developed world and therefore income is exogenous to ROSCAs. They are simply common  in rural parts of the developing world, 50 to 95% of Adults engage in them in the Congo, Cameroon, Gambia, and villages of Liberia, Ivory Coast, Togo, and Nigeria (Bouman [1995] for references),due to the advantages discussed later. ROSCAs operate by either:

• Each interval giving the total to one individual. You can only receive the contents of the 'pot' once.
• Conducting a lottery, with those members who have already received their payouts being excluded from the lottery.
• Bidding, in which members who want the money most bid an additional sum to that which they have contributed. When the winner is known his or her contribution is then shared out equally. This is a relatively unknown in Africa.

The advantages of ROSCAs: 

• Social capital getting to know contacts or information within the ROSCAs.
• A range of different ROSCAs exist - religious, market, ethnic, office or neighborhood.
• Women tend to utilise them more then men the due to social and financial (normally lower income) reasons. For instance, in Kibera the probability that a woman is involved in a ROSCA is 40% compared to a man at 10.1%. Further, a study in Nairobi by Anderson and Baland (2002) showed that a women's bargaining position in the household is directly related to her contribution to household income.
• ROSCAs offer a personal source of income for women, particularly in Africa. Men in Africa are seen as 'deserving' personal spending money whereas a woman's income is collective. The work of Hoddinott and Haddad (1995) empirically verifies this claim for African households where, relative to women, men spend a greater portion of their income on goods such as alcohol and cigarettes,whereas women are more likely to purchase goods for children and for general household consumption.
• Transparency due to group regulation.
• Efficiency - money is put in the 'pot', the meeting occurs and the money distributed in the chosen way. 
• Can be tailored to the income of the group.
• The savings of many are transformed into a lump sum for one person. This is often used to improve household livelihoods, to invest in a new business or to pay school fees.
• Protect an individuals savings against immediate consumption - identified as particularly beneficial for women (Anderson and Baland, 2002)
• Offers a protection against theft as savings are not left within houses

The disadvantages of ROSCAs: 

• If the ROSCA distributes money by prior agreement or by lottery it is unlikely to be available at the time in a business cycle when it is most useful. These types of ROSCA are often then used in order to save up for household durables such as utensils or roofing sheets. They are an effective savings instrument, but relatively ineffective as a means of capitalising productive investment 
• The amount of money is fixed and may be inadequately matched to a person’s investment plans 
• There is no return on people’s investment in a ROSCA, except a marginal time-value of-money benefit of receiving a lump sum at no interest cost before reimbursement 

Further findings:

• ROSCAs are not a substitute for credit but rather complement it. But, are often the sole saving and credit institutions in many rural areas.
• While, ex ante, all individuals are better off by saving through a ROSCA, the member who receives the pot last is ex post worse off. Particularly if investment is set. For instance:

1. The purchasing power of a pound is slowly decreasing due to inflation. 
2. If ten individuals put ten pounds into a ROSCA then each week an individual at random is given one hundred pounds. 
3. At the beginning of the ROSCA one hundred pounds will have the equivalent purchasing power.
4. However, after ten weeks one hundred pounds may equate to less purchasing power, say ninety eights pounds, then at the beginning of the ROSCA.

Simply if a ROSCA 'pot' was ten pounds and could buy you ten apples at the beginning you may only be able to buy nine apples at the end of the ROSCA due to the price of apples inflating. Yet, orders of ROSCAs change every cycle? Not really... Anderson and Baland (2002) contend that ROSCA orders rarely change and often follow the first pattern which does not explain why the last recipient would stay and by backwards induction why the ROSCA does not break down.

Last in the ROSCA queue means less apples for you! Fair?

In conclusion, the rationale proposed by Besley, Coate, and Loury (1993) concerning the financial detriment the last member to receive the pot suffers is not debatable. However, ROSCA must benefit the members in many other ways, apart from financially, to explain the high usage in developing states. These benefits are listed in the advantages section and include social capital, self-sufficiency for women who argue that they 'should not rely on their husbands' and the ability to tailor the individual investment per pre-defined interval to the level of income of the members.

I'll cover other financial options available to those in rural areas in the next blog.

Resources used in article:

Allen, H. (2002) - CARE International’s Village Savings & Loan Programmes in Africa: Micro Finance for the Rural Poor that Works

Anderson, S. and Baland, J. (2002) - The Economics of ROSCAs and Intra Household Resource Allocation.

Besley, T. Coate, S. and Loury, G. (1993) - Rotating Savings and Credit Associations, Credit Markets and Efficiency
Varadharajan, S. (2004) - Explaining Participation in Rotating Savings and Credit Associations (RoSCAs): Evidence from Indonesia 

Agriculture, Science and the AASW6

It's the 6th Africa Agriculture Science Week (AASW6) by the Forum for Agricultural Research in Africa (FARA) hosted by the Government of Ghana this week and I've noticed two things:

1. Aid just seems to be one long list of acronyms making reading a report, post or blog difficult for outsiders. So within this blog I'm going to be committed to expanding every acronym I use and I want you the people to police me. 
2. More importantly I'm struggling to keep up to date with the reports, posts and twitter feeds. There are a lot of useful, insightful and grounded responses to aid being made today and that makes AASW6 a big deal. Shame its not on the BBC news.

Here are some of the posts:

Kips Isaac ‏@Kipsizoo 17m

"Smallholder farmers hold the key to African development" - Dr Kanayo Nwanze at the #AASW6

IITA ‏@IITA_CGIAR 11m

AASW6 keynote by IFAD Pres: African governments need to invest more on agricultural research. #AASW6

IFAD ‏@IFADnews 2h

#Africa can feed Africa. Africa should feed Africa and Africa one day will feed Africa, says #ifad Prez @knwanze #aasw6

AAS CGIAR ‏@AAS_CGIAR 1h

We're partnering with org's at local, national & global levels to achieve impacts at scale in #Africa: http://bit.ly/WY7Fdi  #AASW6

Fairtrade Intl ‏@FAIRTRADE 1h

Great convo on smallscale farmers at #AASW6. And while at it, check out our take on powering up smallholders http://ow.ly/n57pg

Addressing my first point IITA stands for the International Institute of Tropical Agriculture and AAS is the African Academy of Sciences. They are a mouthful but at least we are all on the same wavelength now. Also, Fairtrade International's take on smallholders and the report is well worth a read if you have some time.

Focusing on the second point, evidently there is a lot of traffic surrounding this forum and it's pretty difficult to pick out the key message. To summarize, Africa feels that Africa can feed itself, should feed itself and must feed itself to secure its future. AASW6 believes that science can make this a reality.

So as I watch delegates take their seats on the live feed I cannot help but notice that this is a united Africa saying what they need to resolve the issue of hunger that decimates the continent. It is not us prescribing a resolution to the issues Africa faces and often our ways of providing food aid which breeds dependency, assembling schools that never fill and sending monetary aid that ends in corruption, doesn't work miracles (I appreciate this form of aid is necessary at times but I want to look at the long-term solutions). Rather, Dr. Kanayo Nwanze, president of the International Fund for Agricultural Development (IFAD), has declared that Africa holds unprecedented opportunities to resolve their own issues through science and create an industry which engages the youth. Our western magic is not working, the miracle of genetics and breeding will.

A smallholder supporting himself and Africa (Taken from IFAD blog) 

There is hope. Firstly, the work and strategies discussed in the AASW6 are entering onto a world stage. Secondly, Fairtrade International infers that the value of the smallholder is 'starting to be recognized as a potential powerhouse to fix a broken system'. Finally, Africa is not a hopeless case, is a rising star and must be recognized as a new frontier for sustainable economic growth.

Thoughts?

Aid Be Aware! Why?

I'm new to blogging so setting the scene seems an appropriate start...

It's a hot summers day in England where laptops overheat, ice cream is sold out and going for a jog feels like you're halfway through the Marathon des Sables.

Not bad... let's add some intrigue...

Suddenly an unknown voice shouts from the rooftops, "Aid Be Aware!"

Okay, stop there.. woahh. Seems blogging just isn't for me as this becomes some form of dreadful comic/playscript in which an aid worker, an academic and Batman (I feel a joke coming on.. walk into a bar etc..) just merged and created the strangest catchphrase.

Actually it's the title of this blog.

What's with the strange catchphrase/ supposed title of the blog? Well those three words 'Aid Be Aware' and some related thoughts have been brewing inside my head, the rooftop, for days (My means a second year politics student who has just started an internship in aid.. ahhh makes sense).

So, the title outlines a need for a global understanding of the aid sector and the potential issues it presently faces. We need to be aware of whether national aid to national governments, organisations or actors is actually working? Or rather is localized, targeted and long-term aid the way forward?

An unexpected thought :
Batman considering the benefits of national or localized aid?

For example, if you type in 'aid' in google images the page is awash with direct, short-term food aid or figures. Should aid breed dependency? You can probably guess where I stand on the issue and I was attempting to remain neutral so I'll stop writing before I smother you with my views!

To conclude, that's the 'why' of this blog. Good evening and over to you!

Time for you to be a superhero.. for me! What's your general understanding and thoughts on aid? Do you see national or localized aid as more effective?