Inflammation and stories on trade

nigerian wheat_opt
The recent slowdown in Nigeria’s grain trade holds tremendous implications for food security in the Sahel. Nigeria supplies almost half of the region’s cereal and is the most important market for farmers, herders, and traders from surrounding areas.

The communities most at risk from the rise in food insecurity are located in southeastern and central Niger, northern Nigeria, and northern Benin. Chad is usually highly dependent on the grain supplies from Nigeria, but a very strong 2012 harvest has somewhat insulated the country from the current crisis.

In the hardest-hit areas, staple grains like maize and millet, are selling at prices even higher than those seen during the 2012 regional food crisis. For example, a 100kg bag of maize now sells for $9 more than at the same time last year.  This trend is particularly worrisome as prices are only expected to increase during Ramadan in the month of July.

The increase in food prices are devastating in a region where many of the poorest families will spend up to 80% of their household income on market food. Nigeria’s production is so critical to these markets that despite the fact most Sahelian countries saw an increase in maize and millet, the decrease in Nigerian supply offset three-quarters of the regional gain.

The factors behind the current grain shortage are complex, but three major facets can be distinguished. The first is last year’s widespread flooding. Many of the farmers have not been able to recover their fields and crops from the damage.

The second major factor is the popularity of cash crops. Many farmers are switching from staple crops to cash crops, not generally sold in the regional food markets. In fact, the production of millet, a major staple grain, has decreased by 13% from the five-year average.

In addition to the previous two factors, the rise of Boko Haram has greatly disrupted Nigerian agriculture. The violent extremist group has forced an estimated 65% of farmers in northeastern Nigeria to flee their homes and fields. The violence has also discouraged traders from engaging in traditional trade routes and markets.

Experts say aid to Nigeria must be increased to combat the growing food security crisis. Nigeria receives millions of dollars in aid every year, but the amounts are far less than what is received by its neighbors. Given Nigeria’s key position within the food market of the region, aid priorities should be reassessed to insure the current agricultural slowdown does not worsen to a widespread food crisis.

Lauren Brown

Sources: ISN, World Bank
Photo: Kansas Agricultural Network

pakistan
The U.S. Agency for International Development operates a program in Pakistan focused on increasing the participation of women in international trade. The program recently celebrated its second crop of graduates.

According to the agency, the Women in Trade (WIT) program is part of USAID’s PakistanTrade Project, which represents a commitment to Pakistan to help boost economic growth, education and other areas to help ensure a future of stability and prosperity for the country. WIT is a mentorship and management training program that launched in 2011.

Through WIT women trainees (both graduates and post graduates) have access to three months of management training experience in the private sector with companies that are involved in importing and exporting goods to and from Pakistan. WIT gives the women trainees a monthly stipend for the training.

According to USAID research released in March 2011, women represented just 10 percent of the staff hired by private sector, international trade focused firms in Pakistan. Women’s participation rates in Pakistan’s formal economy are low in general. An estimated fewer than one third of the 31 million women in Pakistan who are of working age are considered economically active. And more than half of the women who are part of the workforce are either unpaid family helpers or low-skilled workers.

Through WIT trainee participants have worked with large international firms, including Target and Li $ Fung (a major apparel supplier). One of WIT’s goals is to help more women explore careers in international trade sourcing, marketing, product design, product development and supply chain management.

WIT launched as a one year program in 2011 with 17 graduates. For the second round of the program WIT placed 57 trainees, 48 of whom completed the full three months of their training by the end of 2012. Thirty-three percent of the WIT trainees in the 2012 cohort have also been fully employed as a result of their participation in the program.

– Liza Casabona

Source: USAID Business Recorder
Photo: Gender Concerns

africaglobalbusinessforum

May 1, 2013 was the kick-off of the two-day Africa Global Business Forum in Dubai.  Africa, a continent on the move, has been showing promising signs of economic growth and development.  The Africa Global Business Forum is just one more step in the right direction for a continent on the move.

The Africa Global Business Forum, as announced by the UAE Prime Minister, is set to become an annual event.  The forum brings together leaders from Africa and the UAE to promote business investment, development, and collaboration between the nations of Africa and Dubai.  More than 3,500 delegates are in attendance.  The Prime Minister of Uganda gave the keynote address and stressed the importance of the forum as a signal of the interest in African business and investment opportunities.  He also discussed the importance of the private and public sectors working together as has been done in Dubai.

Dubai serves as a center of 150 different shipping lines and could be a very key logistics hub for Africa to export goods.  The young population and growing middle class in Africa are indicators of the potential for increased growth within Africa. Consumer spending is set to hit US $1.4 trillion by 2020. The forum will seek to strengthen alliances between Africa and outside investors with the goal of reducing poverty in Africa and increasing economic growth and self-sufficiency.

Other topics of note at the forum are looking at boosting Africa’s trade through the role of free trade areas and private equity.  Already major telecom companies are looking to invest in Africa and the prospects for future growth and development are exciting.

– Amanda Kloeppel
Source: CPI Financial

Dutch Foreign Aid Controversy

The current economic crisis is causing many Western countries to change the way they allocate funds in their budget, mainly regarding development aid. Increased contention has generated attention over the foreign aid topic. And now, the Dutch government is re-thinking their foreign aid plan: they want to shift from direct aid to more focus on trade. A 1 billion euro cut by the Dutch Ministry of International Trade and Development Cooperation (MITDC) generated this uncertainty and controversy over whether entrepreneurs and businesses can wholly be trusted to tackle global poverty. Thus, Dutch foreign aid is on the hinges of drastic change.

There are a few leading opposing arguments: the minister of MITDC Ploumen suggested that despite the cuts, trade can ease up on the damage effects. In another argument, author Linda Polman suggested that international aid can “prolong war, promote corrupt governments and contribute to a culture of dependency.” Ploumen stressed “international [development] cooperation,” now that most countries have moved up the poverty ladder and have become middle-income countries. On the other hand, Linda Polman views this new phenomenon of “international cooperation” as mainly serving Dutch interests. Polman is calling for a revision of European agricultural and economic policy.

A professor at the Radboud University, Henk van Houtum, expressed his thoughts in a Dutch newspaper regarding helping less developed countries; he said that alleviating structural inequalities from the world trade system provides greater help to more people than an aid program would. Bernedine Bos, from Corporate Social Responsibility (MVO), Netherlands, asserted that with those inevitable inequalities aside, investment in less developed countries should not stop. He asserts that causing political change at the structural level is a tough challenge, adding that entrepreneurial endeavors can undoubtedly cause a more effective “bottom-up” change with social responsibility.

Leen Abdallah
Source: Xinhuanet News
Photo: Google

World Poverty Declines RapidlyOxford University’s poverty and human development initiative published a world poverty report.  As world poverty declines, the report notes that “never in history have the living conditions and prospects of so many people changed so dramatically and so fast.”  In fact, if some countries continue to improve at current rates, it is possible to eradicate acute poverty within 20 years.

The academic study measured new deprivations, such as nutrition, education, and health. By examining more than income deprivation, the study is able to convey the bigger picture.  The new methodology is entitled to the Multidimensional Poverty Index (MPI).  Past studies identify income as the only indicator of poverty.  This is a misrepresentation because multiple aspects constitute poverty.

The MPI measures poor health, lack of education, inadequate living standards, lack of income, disempowerment, poor quality of work, and threats from violence.  These factors provide a holistic look as world poverty declines.

Dr. Sabina Alkire and Dr. Maria Emma Santos developed the new system.   They named the system “multidimensional” because it is what people facing poverty describe.  “As poor people worldwide have said, poverty is more than money,” Alkire said.

This increased information and understanding better inform international donors and governments.  “Maybe we have been overlooking the power of the people themselves, women who are empowering each other, civil society pulling itself up,” Alkire said.  The new data could incentivize donors to provide assistance.  International and national aid contribute to declining rates.  Improvements to infrastructure, education, and healthcare help decrease poverty rates.  Trade has improved the economies of Ethiopia, Rwanda, and Sierra Leone.

Rwanda, Nepal, and Bangladesh experienced the greatest decrease in poverty rates.  It is possible that “deprivation could disappear within the lifetime of present generations.”  Close behind in the ranks of poverty reduction were Ghana, Tanzania, Cambodia, and Bolivia.

The study is supported by the United Nations’ recent development report.  The UN report stated that poverty reduction was “exceeding all expectations.”

Check out the MPI interactive world map for more details.

– Whitney M. Wyszynski

Source: The Guardian

Does WTO's Aid for Trade Reduce Poverty?
Aid for Trade is a holistic approach to incorporating developing economies into global trade networks by assisting them in increasing exports and market access. Aid for Trade was initiated at the WTO Ministerial Conference in 2005, and the program has since increased its scope to include building production capacity (financial services, businesses, and industry), trade-related infrastructure (communications, energy, transportation), and trade policy and regulations.

When the Aid for Trade initiative began, it was unclear whether it would receive funding or be successful. Now that it has been implemented for over a decade, it is time to reexamine the links between trade, development, and poverty reduction that Aid for Trade aims to strengthen.

The principle behind Aid for Trade is that increased trade should benefit inhabitants of developing countries, whether or not they are directly involved in the program. One Aid for Trade program teaches Ugandan farmers how to grow and process dried fruit to be sold into the European cereal market. The farmers involved should benefit from increased income, market access, and productivity, and Uganda should benefit from increased exports.

Most evaluations of the effectiveness of Aid for Trade programs take place within 18 months of a given program’s initiation. This is not enough time to measure whether the program has truly been successful at reducing poverty in a sustainable way. Additionally, evaluations often do not take into account a program’s impact on those not involved; how did the fruit-growing education program impact farmers who did not receive additional training and support?

A new study on European trade assistance aid, commissioned by NGOs Traidcraft and the Catholic Agency for Overseas Development, suggests that there may be “hidden losers” to Aid for Trade initiatives. For example, South African fruit growers increased exports to Europe after trade sanctions were lifted. They earned higher wages and improved their standard of living. However, the demand for cheaper fruit also caused some growers to lower wages and to replace full-time employees with temporary, often migrant workers, who did not enjoy the benefits.

The study also found that the majority of trade assistance goes to middle-income countries rather than to the least developed countries (LCDs) that Aid for Trade is directed towards. Little evidence exists to prove Aid for Trade’s effectiveness in reducing extreme poverty; this is likely a result of short-term program evaluations that take place before real impact can be measured, as well as lack of donor interest in, and therefore funding for, impact evaluations.

Overall, there are many obstacles to determining whether or not Aid for Trade has been successful thus far. More thorough, accurate, and long-term evaluations of poverty rates are necessary in order to determine the tangible successes or failures of Aid for Trade.

– Kat Henrichs

Sources: OECD, International Center for Trade and Sustainable Development, The Guardian
Photo: European Commission

Mobius Motors: The African HummerThe shortest distance between two points of interest is a straight line. But not in Africa. With 80% of the population living in rural areas, commuting from town to town can get a bit tricky with potholes, dirt roads, or sometimes no roads at all. When Joel Jackson moved to Africa from England in 2009, he never pictured himself running an automotive company a couple of years later, especially one out of Nairobi.

 The horrid conditions of Kenya’s roads made Jackson realize how important improving their modes of transportation were to the country’s economy. “Transportation is as fundamental to developing countries as healthcare, education, markets and all the other things that drive prosperity,” he commented. While paved roads are slowly appearing around the continent, Jackson sees Mobius Motors, his company that builds “African cars for African roads,” as having the potential to change the way African businesses and trade functions.

Every aspect of the Mobius Two, the company’s prototype, was created with the average African entrepreneur in mind. With a steel frame, the car has no windows, eliminating the need for air conditioning. All parts of the car have been made in a fashion familiar to local mechanics so that repairs and parts are cheap and easy to come by. Due to its light frame and .4 gallon gas engine, the all-terrain vehicle can securely carry up to 8 passengers or 1,500 pounds. This makes it perfect for the transport of goods across long, rugged distances.

One thing Jackson makes sure people keep in mind about Mobius is that it is not a charity. He plans on making a profit once production begins, with an average price tag of about $6,000 per vehicle. However, the goal of his company is not to focus just on monetary value but to team up with innovators from around the world to recognize the change these vehicles can bring to the global market and change the way Africa moves.

It is obvious that Mobius’ clients will not be the average African villager. For those entrepreneurs looking to expand the reach of their businesses, the Mobius Two holds the key. While they may be the ones fronting the cost of the vehicle, the entire process will most definitely include and improve the lives of thousands across Kenya, and hopefully the rest of Africa, in the foreseeable future.

– Deena Dulgerian

Source: Global Post

Can Aid For Trade Reduce Poverty?In 2005, the World Trade Organization (WTO) launched its Aid for Trade initiative, which works to reduce poverty in developing countries through trade. In most developing countries, supply-side and trade-related infrastructure problems hinder the ability to participate in international trade. The Aid for Trade initiative works to educate governments on the potential for trade to work towards development.

The World Trade Organization has managed to raise $200 billion worth of funding for the initiative that will go towards resource mobilization, the mainstreaming of trade into development plans and programs, regional trade integration, private-sector development, and the monitoring and evaluation of Aid for Trade. Emphasis is placed on gathering support and resources to counter constraints that deter trade in developing countries. Aid for Trade works on the assumption that “a rising tide floats all boats,” meaning that as national wealth increases, the poor will profit as well.

Some NGOs, however, question the viability of this method in reducing poverty. A study was commissioned by Traidcraft and the Catholic Agency for Overseas Development to look into the real impacts of these projects on the poor. Saana Consulting reported that most of the funding had gone to middle-income rather than low-income countries. They had also found that the program had little impact on the poor, calling the assumption that it will have an effect “a leap of faith.”

Donors have admitted that impacts are indeed difficult to track. Adaeze Igboemeka, head of Aid for Trade at the UK Department for International Development, concedes that there is indeed a lack of information, as the programs impacts on poverty are seemingly indirect.“The assumption,” Igboemeka said, “is – and there is a lot of evidence to support it – that if a country is able to trade more, it will grow, and that will create jobs and increase incomes and lead to poverty reduction.”

The consensus seems to be that, generally, trade is good. However, for now, there is not enough information and time to accurately project its impact on poverty reduction.

– Rafael Panlilio

Sources: The GuardianWTO