Volunteer Expatriate: development

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Interesting Articles on Africa and Other Topics Relevant To Me!

Below are a bunch of articles on Africa that may be of interest:

NYTimes: Winning the Worm War (4/28/10) - This Kristof Op-Ed hits on topics related to my post Polio Eradication and General Development Questions. Can a development project succeed without full buy-in and participation from those it is meant to affect?
NYTimes: More American Expatriates Give Up Citizenship (4/25/10) - Americans are tired of paying taxes to the U.S. when they haven't lived there in 20 years. And the Patriot Act has caused banks to close bank accounts that do not have a verified U.S. mailing address. So people are increasingly handing over their U.S. passports.
NYTimes: Pardon My French (4/21/10) - The French continue to worry about their language becoming extinct...and seem to have forgotten about all the people in Africa that have their own francophone culture (like Rwanda!).
NYTimes: With Flights Grounded, Kenya's Produce Wilts (4/19/10) - The volcano in Iceland caused the Kenyan horticulture industry (the country's top foreign exchange earner) to come to a halt as none of the produce and flowers were able to be flown to Europe.
NYTimes: Africa Reboots (4/17/10) - Bono kind of rambles on about the side of Africa he sees when he is here. Overly optimistic from where I sit but still the same theme as my post Polio Eradication and General Development Question.
NYTimes: Zimbabwe's Accidental Triumph (4/14/10) - Somehow the people of Zimbabwe seem to be overcoming the racial divide that is encouraged by their government. While certainly not in the same ballpark, I am often reminded of the political/racial climate in some parts of the U.S. (including Memphis) when reading about what has happened in Zimbabwe.
WSJ: Bushmeat Presents Latest Food Scare (4/14/10) - Health dangers in the rise of bushmeat (bats, monkeys, rodents, wildebeests,etc.) imported to the United States from Africa. Delicious! I once asked one of the park rangers if you could eat the baboons since they look quite meaty, and after thinking about it for a minute he said: "No I don't think so. Too close to us."
NYTimes: Banks Making Big Profits From Tiny Loans (4/13/10) - Microfinance has revolutionized the lending environment for the world's most impoverished but has also been adopted by organizations that may lack the social benefit goals of traditional microcredit programs. When implemented appropriately, microfinance initiatives can have an amazing effect on peoples' lives since they address many of the challenges involved with accessing capital in the developing world (Issuing a lot of small loans to people who live and work in volatile environments and industries with few/no assets and bad/no credit history in the developing world is very expensive, risky, and not very profitable for traditional financial institutions). Unfortunately, it seems some microfinance entities do not always have the best interests of the borrower in mind.
WSJ: On This Safari, the Exotic Lure Is the American Black Panther (4/13/10) - An exiled leader of the Black Panther Party hosts visitors at his home near Arusha, Tanzania.
NYTimes: Young Superheroes in a Hut (4/10/10) - Kristof Op-Ed (he loves the developing world!) on Africa having initiative and a desire to work hard but lacking honest leadership
NYTimes: Uganda Enlists Former Rebels to End War (4/10/10) - Africa has more than its fair share of roaming militia groups, and Congo is perennially the hub supporting a good bit of the conflict in our neighborhood. Well apparently the Ugandan Army has permission to go hunting for the Lord's Resistance Army across the region.
NYTimes: Postcard from Zimbabwe (4/7/10) - Kristof Op-Ed on the downfall of a once prosperous post-colonial Zimbabwe.
NYTimes: Africa's Drug Problem (4/5/10) - As the U.S. and Europe have cracked down on drug trafficking from South America, West Africa has become a hub for the industry (despite there being few users). Hits home again that the support of the developed can only go so far to fix some of the issues in Africa. It requires the commitment of local people and an honest government too.
WSJ: Airlines Swoop In on Growing African Market (3/23/10) - Airline travel in Africa is extremely expensive since it seems to cater exclusively to C-level business travelers, tourists, and aid workers. Pricing seems to have limited science behind it as most flight are between 20% and 60% full yet you can't fly anywhere for less than $300. For example, any day of the week, no matter the actual demand, Kigali-Naroibi is ~$450, Kigali-Addis Ababa is ~820, and Kigali-Dar es Salaam is $700. You can fly to Cape Town for the World Cup this summer from New York for about the same price I would pay from Kigali.

Polio Eradication and General Development Questions

I recently posted about the work my brother does for the CDC (Shout Out to the Big Brother) and the Gates Foundation announcing a new initiative on agri-business financing (Food Security and Agri-Business Financing Program from Gates Foundation) and there happens to have been an article last week in the Wall Street Journal related to both of those posts (WSJ: Gates Rethinks His War on Polio). The article brings up an interesting discussion about the best approach to improving the health of both the developing world and the global population and other questions about the role and effectiveness of international aid in the developing world.

As I had mentioned before one of the three Gates Foundation focus areas is Global Health and the foundation has put up quite a bit of money to eradicate polio. This is known as a "vertical" approach where a single disease with dramatic symptoms is honed in on with the hopes of dramatically reducing its frequency worldwide and subsequently improving global health (like smallpox was eradicated worldwide in 1979). Vertical approaches tend to get quite a bit more publicity since they are tangible and generally well-known diseases like HIV/AIDS, cancer, malaria, etc. On the other hand, "horizontal" approaches are focused on general improvements in the broader healthcare systems of the world and may include water, hygiene, sanitation, access to medicine and medical care, etc. In the developed world, much of the healthcare infrastructure like clean water sources, hospitals, and availability of medicines is already in place so horizontal policies tend to receive less attention (ignoring the recent major healthcare overhaul in the U.S.). In the developing world, the existing healthcare systems can be quite shoddy (at best) and there is much more interest in projects that address more basic needs like digging wells to improve the water supply or building clinics to increase availability.

While eradicating polio worldwide is certainly something the international community should continue to pursue (especially when we are so close), it does make you wonder if those resources (~$8.2B over the last two decades) could have been better utilized by addressing the most basic of healthcare needs of the developing world (currently, polio is essentially just a disease of the developing world) like ensuring a clean water supply or improving systems to provide vaccines and medicines. When Lee returned from his first trip to South Africa during his residency, I remember him telling me that much of his time was spent diagnosing and treating diseases that he had rarely (or never) spent much time with in the U.S. because they were essentially non-existent at home. While I don't remember exactly what he was treating and imagine some of it was TB and HIV/AIDS related, I would also guess many of the issues were related to broader healthcare issues in South Africa like malnutrition, unsafe drinking water, and lack of preventative medicine. Of course the effects of vertical and horizontal approaches do cross over (like in the case of malaria-preventing bed nets), but it does make you wonder what is the best way to affect change in the livelihoods of those in the developing world.

Broadly speaking, international aid organizations and non-governmental organizations ("NGOs") have thousands of projects around the developed and developing world with the general goal of improving peoples' lives. It could be anything from digging wells to financing education to teaching them to produce better products that generate more income (like me!). Programs might include operating a soup kitchen or training people in new skills or providing temporary financial assistance or housing. Every project is established with good intentions (one would assume) and strives to further its goals in often challenging environments. At the same time, aid organizations are put (or put themselves) in the awkward position where in order for a project to succeed, the ideals, work ethic, goals, etc. of the organization often must be embraced by (or imposed on) the people that the project is trying to effect.

This brings up some questions about the best way to provide assistance to those in need and the role of aid organizations in the developing world:

Which projects have the greatest impact on the livelihoods of the people?
Do the people impacted by these projects really want the projects in the first place?
What social, political, logistical, and financial challenges exist locally that could impact the project's success?
In the developing world, is it outsiders' place to alter societal social norms for the assumed betterment of society?
Should the developed world force its perception of success on those who may be both poor and happy?

While there are no answers to these questions, there is a constant debate about what type of aid is the most effective as there are a variety of theories on how to get the most bang for your development buck. I am far from an expert on this whole discussion but am very happy that I have had the opportunity to better understand it by living in East Africa.

On a side note since malaria in the developing world is a hot topic, I recently wrote about the heavy rains during the Rwandan rainy season and the impressive rain water management system that has been built here. This remarkable drainage system, along with the generally high elevation of the country, has dramatically reduced the prevalence of malaria, especially when compared to neighboring countries. There isn't that much standing water in Rwanda and it can get quite cool here (low 50s) so the environment is just not that conducive to supporting a large population of Anopheles mosquitoes that carry malaria. This is why Lucy and I do not take any malaria prophylaxis like malarone, lariam, or doxycycline when in Rwanda (though we did take it on our recent trip to Zanzibar). As of now we are still malaria free!

Food Security and Agri-Business Financing Program from Gates Foundation

As you may remember, the TechnoServe Coffee Initiative is funding exclusively by the Gates Foundation who foots the bill for technical assistance and business training but not for any material items or infrastructure for the farmers and their cooperatives. The Gates Foundation is split into three functional groups covering Global Health, Poverty & Development, and Education & Information so the Coffee Initiative falls under Agricultural Development in the Poverty & Development category. Within Poverty & Development, the foundation also addresses homelessness, financial services for the poor, and water, hygiene, and sanitation. A broader issue covering each of these topics is Food Security, which has become a buzz concept across the developed and developing world, and the Gates Foundation is spending a lot of resources trying to understand it and address it.

On the financing side, we have been hearing whispers that the Gates Foundation is interested in setting up an agri-business financing program to bridge the gap between small-holder farmers and their ability to access capital. The foundation has quite a bit of money to put in the ground so this is potentially another way to do it while addressing a major systemic problem in the developing world. As things stand now financing in Africa would potentially come from two sources:

Large national or international aid organizations (UN, USAID, GTZ (German Development Agency), AFD (French Development Agency), World Bank, etc.) that typically fund entire programs (but don't implement them) or fund large infrastructure projects like roads, buildings, big factories, etc (big checks).
Local commercial banks that issue loans seemingly at random with steep guarantee requirements (50-100% cash infusion into the bank) and charge anywhere from 15-20% interest. These banks also don't make much on say 20 $15,000 four-year loans even if they are charging high interest rates in an often times risk free situation (with the guarantee) so these small loan sizes are not very interesting for them. All in all, small-holder farmers (and their cooperatives) with little or no credit history or bad credit history and no assets requiring small-ish loans for infrastructure investments in volatile commodities in often corrupt systems have a very difficult time accessing credit all.

Neither of these sources are applicable to small-holder farmers and their cooperatives since they cannot be accessed reliably in a timely manner (as I am reminded everyday). A program that addresses these issues is desperately needed to provide consistent financing to farmers and would revolutionize agriculture financing in the developing world.

Well, the Wall Street Journal published an Opinion piece today by Tim Geithner and Bill Gates to announce a financing vehicle funding by the Gates Foundation and a handful of developed countries to address these financing challenges (WSJ: A New Initiative to Feed the World). While the article is very high level and there isn't much else out about it right now, this is potentially very exciting for what I am doing and could make a huge difference in the developing world.

On a related note, the coffee cherry in Rwanda is ripening and the coffee washing stations that were financed are installed and up and running. Volumes collected by TNS-supported washing stations have been astronomically high and the system is working with a few kinks here in there (too much rain right now is ripening the coffee too fast to give it time to dry appropriately). Anyway, the picture below is from one of our coffee washing stations near Kibuye on Lake Kivu in Western Rwanda (that is the promised land CONGO in the distance).

Working in Coffee > Drinking Coffee

Since arriving in August 2009, I have been very lucky to be working on TechnoServe's East African Coffee Initiative as a Volunteer Consultant with the title of Regional Credit Analyst. The projected is funded by a US$47 million grant from the Bill and Melinda Gates Foundation with the goal helping small-holder farmers double their incomes over the lifespan of the project. In phase one of the project (first four years of what is hoped to be 12 years) that means 180,000 farmers in Ethiopia, Kenya, Rwanda, and Tanzania.

TechnoServe was founded in 1968 and has had who knows how many projects around the world stressing business development that leads to economic development. The Coffee Initiative was the very first Agri-Business project funded by the Gates foundation and has to be one of the largest ever implemented by TechnoServe, if not the largest (from what I have gathered, before the Gates Foundation showed up in the last decade, grant sizes from various funding organizations like USAID, Ford Foundation, The World Bank, etc. were either for small projects researching specific topics and employing 5 people or huge $100M+ programs that took on huge issues with broad topics like HIV/AIDS prevention or community development). On a related note, we meet people everyday who are here working on all kinds of different projects that are funded in a variety of ways whether it be a Clinton Foundation and Partners in Health funded program building hospitals and training doctors or any of the dozens of programs funded by USAID and the UN. There are also a number of people who have visited East Africa on vacation and thought some of the crafts could be imported to the U.S. and sold at a premium so small-scale programs are set up that provide jobs to a handful of people and ultimately funnel the profits back to the employees for training, healthcare, school fees, etc. (The cooperative where the Christmas presents our families receieved were made was started by a woman from Chattanooga and now has a storefront in Washington, D.C. to distribute the laptop cases, oven mitts, aprons, purses, etc.) While these programs are much smaller in scale than the Coffee Initiative, they are essentially using the same model as TechnoServe that relies on teaching business skills to spur economic growth (This story about Ugandan Bead Makers in the New York Times is quite normal across East Africa).

So back to what I am doing...The Coffee Initiative at its core provides comprehensive technical assistance programs throughout the coffee production cycle to various stakeholders. These programs include agronomy training (pruning, fertilizer usage, soil testing, etc.), coffee quality testing and training (aka "cupping"), general business education (cooperative management, equipment manufacturers, etc.), and market linkage to coffee buyers and roasters. We have constant interaction with these stakeholders including national coffee boards, coffee processing machine manufacturers, coffee exporters, and international roasters. While this brief description doesn't begin to do each portion of the program justice, it should give you the idea that this is not a fly-by-night operation. There are over 60 people on the ground in Rwanda and probably nearly 300 across the four countries and the U.S. Of the project's headcount, there are no more than 25 Westerners on staff. There is a great Business Week article here that tells more about the Coffee Initiative that is a little too generous on Peet's role in the whole program (I guess there have to be buyers!), but the video is excellent and filmed with people I work with in the Starbucks cupping lab upstairs from our office. Also see the video below put together by TechnoServe on Athanasie Musabyimana who is a Rwanda coffee farmer involved with the program:

Having no experience in coffee prior to my joining (I've still never tried drinking coffee since the smell is not appealing to me but I hope to be able to at least make a mean cup of coffee upon my return), I am not the typical Western employee, but they needed someone with my background to help arrange capital equipment (eco-friendly coffee washing stations) and working capital financing to meet the needs of the coffee farmers and their cooperatives. The TechnoServe model doesn't typically give anything material to the farmers. It is more about building broader business skills that can be translated into improving the farmers' livelihoods. Thus the Gates Foundation grant is to provide just the technical assistance and does not finance the washing station operations, the purchase of trucks for hauling coffee cherry from the fields to the washing stations, or the construction of the washing stations themselves.

What exactly are these washing stations you may be wondering. First off, it might be helpful to understand the coffee production process. Coffee is hand picked off the tree as coffee cherry and goes through a wet process that strips the bean of the fruit and produces coffee parchment. This parchment then goes through a dry process to remove skin and any remaining residue. This ultimately produces green coffee that is sold to the likes of Starbucks. They then roast it and sell it to you as a brown bean or grind it for you. There is this great comic that kind of explains some more about coffee, but it really is an unbelievably complicated process that requires a significant amount of manual labor and is very time sensitive.

Historically in East Africa, the "wet process" has been completed at home in a basin of some kind or in huge washing stations (or "factory" in Kenya) on coffee plantations. The typically washing station looks like a huge water slide with a roof over it and requires a substantial amount of water and labor (i.e. not very efficient or cost effective except at very high volumes). As you might imagine, the quality of home-processed coffee is not very good and the large washing stations have a number of issues related to coffee volumes, operations costs, and water sources, among other things. This is where the TechnoServe Coffee Initiative comes in to help farmers and cooperatives adopt a different business model that focuses on maximizing yields from coffee trees and the utilization rate of much smaller, eco-friendly washing stations and minimizing wasteful spending and corruption. The one pictured below can process 500kg of coffee cherry per hour and at least 125,000kg in a season. That would result in about 20 tons of "fully-washed" green coffee.

So it has been my responsibility to identify potential funding sources, meet with them, and push the financial institutions along their funding process. Since my arrival, I have developed a bank-friendly pitch book on the project, met with dozens of financial institutions across the region, created business plans for cooperatives in all four countires, and am now in the midst of pursuing the most interested parties and negotiating terms. All of this while figuring out exactly how coffee goes from a little red berry when it comes off the tree to being sold to a roaster (i.e. Starbucks) as a green bean to getting to your table as a brownish thing you grind and brew in water (as the Italians said over Christmas with a smirk "Americano").

The financing needs vary by country since each country has a slightly different coffee model with different regulatory requirements, sales and export systems, and capacity constraints. Coffee is highly regulated in all of these countries because it is often the leading provider of foreign exchange for the governments and has been a critical part of the local economy for decades. The funny thing about this is that many Africans don't drink coffee at all, preferring tea, and some of the most rural farmers don't understand why they grow it at all since they have absolutely no use for it. Our goal is to find sustainable funding sources that engage local lenders and when possible can be applied across our four countries (Ethiopia, Kenya, Rwanda, Tanzania).

On a side note, I am pleased to write that just last week, we finalized the financing for 14 new washing stations in Rwanda, totaling around $185,000. Some of the machines were financed by a local coffee service provider (local or international business that does dry milling, bagging, marketing, and exporting of the coffee...and all of this varies by country but that is the gist of it) and some machines were financed by the largest bank in Rwanda in terms of rural branches, Banque Populaire du Rwanda. To give you a sense of the capacity building that had to be done with BPR (though all of the banks have the exact same issues), we first met with them shortly after my arrival in early September 2009 and it took a full six months to explain our model, line up guarantee providers, explain the model again, put paperwork in place, explain model again, and find all of the people who need to sign with their appropriate rubber stamps (In Africa, you aren't anything without a rubber stamp). In the banks 35 year history, it had never granted a U.S. Dollar loan, even though the Dollar is essentially the only trade currency in the region, and this loan was the first. I can't begin to describe all of the hoops we had to jump through to do this, and I was literally camped out a BPR headquarters for the two weeks prior to the money being disbursed. Even at BPR, they joked that I was a part-time employee and they wanted to get me a badge, of course with a stamp. The best way to describe the mindset of the banks here the first question from any commercial bank during any meeting (it has to be repeated over and over again) has been "What type of guarantee are you providing?" The only use of a guarantee I was familiar with in the U.S. was when people graduated from college, moved to New York, and couldn't afford their apartment, someones parents would be put on the lease as a guarantor. In Africa, a guarantee is typically a cash infusion into the bank ranging from 50-100% of the loan. For example, if you wanted a $100,000 loan to buy a new piece of heavy equipment, the banks would require you (or someone else willing to do this) to deposit $100,000 into the bank so that the bank could then loan you $100,000. All of this while the bank is charging 15-20% interest (on someone else's money!). The banks' aversion to business lending and unwillingness to assess risk appropriately is impossible to believe until you hear it repeated over and over again. So these are the conditions we are working under, and I am certain it would be impossible for me as individual to walk into a bank, apply for a $5,000 loan to start a business, and receive money within six months, if at all.

This financing in Rwanda is a big achievement for the Coffee Initiative since historically the washing stations and the working capital have been financed through a patchwork system using social conscious lenders, development organizations from various countries, and even TechnoServe itself (see above...this is not what we are supposed to do). This is the first time the Coffee Initiative has navigated the difficult financing environment and accessed capital expenditure financing from a local commercial bank in truly sustainable way. The first full-time finance person, Michelle (my boss), was hired shortly before I arrived and this success demonstrates the need for more resources to address the financing challenges for the program as a whole.

All of that being said, you might be wondering what how does all this help the farmer. With the end goal of doubling farmers' incomes, the Coffee Initiative focuses on increasing the amount of coffee produced and almost more importantly on improving the quality of the coffee that is produced. Most coffee in the U.S. comes from large plantations in Latin America that is produced in bulk very cheaply with little focus on quality. As the world's demand for "luxury items" has sky-rocketed over the last few decades from yachts to shoes to bottled water, the everyday cup of Folgers out of the blue tin doesn't get it done anymore. With the rise of Starbucks and other boutique coffee outlets, Americans and much of the rest of the developed world are happy to spend $7.00 for a caramel macchiato with an extra shot of espresso and dollop of whipped cream twice a day. What the Coffee Initiative is trying to do is make sure the farmers get a larger share of that $7.00. This is different than products that are "organic," "free trade," " or "pesticide free" (though the coffee may be some or all of those things and I have another post about that coming). It is about helping farmers produce more high-quality coffee that roasters like Starbucks will pay a premium price for because the consumer wants to know that they are buying truly some of the best coffee in the world from the Virunga Mountains in northwestern Rwanda or the region around Jimma in southwestern Ethiopia. In the end everyone wins since the farmers increase their income, the roasters get the social-responsible marketing cachet with increased sales, and the consumer gets the coffee they want (or to go with a regular theme of mine, they think they NEED).

For those of you who don't drink coffee or buy luxury items (like me!) and have little context for how big this market is, please see the following links from some major international roasters, boutique coffee shops, and other sources that demonstrate what must be huge consumer demand for coffee (keep in mind that buyers might pay anywhere from $0.50 to $10.00 per kilogram of green coffee, with our cooperatives getting $2.50+ for specialty-grade coffee, that is then sold roasted in 12-ounce bags (roughly a third of a kilogram) for $8.00+):

Stumptown Coffee Roasters Vunga Blend - Vunga is a TNS-supported cooperative and Stumptown paid almost 50% more than any other buyer last year and included farmer payment stipulations in the purchase price. They are selling this coffee for $16.50 per 12-ounce bag.
Peet's Uzuri African Blend - Peet's homepage is pretty much dedicated to this blend
Bourbon Coffee - This is a purely Rwandan brand owned (we think) by some high-level government officials with three outlets in Kigali that attempt to be the first Western-style coffee shops in Rwanda with wireless internet and speedier service (i.e. less than two hours). Bourbon has just opened a store in Washington, D.C. (near Dupont Circle) with plans to open on Boston and DC as well. In the U.S., I assume these shops will feel like any other coffee shop that everyone is familiar with by now, but in Rwanda the clientele is largely expats, tourists, and upper class Rwandans and the concept is revolutionary. Lucy's family received examples of all of their blends (100% Rwandan coffee) for Christmas this year and the reviews were quite positive so if you are in DC please stop by and let us know how it is (even though this coffee receives no direct assistance from TechnoServe).
New York Is Finally Taking Its Coffee Seriously
Peet's Commitment to Quality Coffee Creates Sustainable Change for East African Farmers
Crop to Cup - another small roaster that has specific feature that lets the consumer trace where the coffee was produced
Peet's Community - The TechnoServe Coffee Initiative is critical to the ultra high end blends and roasters since without us it is much more difficult for them to source the best coffee out of East Africa.

Here are a few other links on the project:

So this is a long post that has been in the making for a while with a couple more in draft form but please send any questions or comments along so I can better address specific topics. I am committed to being a better blogger!

More Interesting Africa and Coffee Articles

Interesting Articles on Africa and Other Topics Relevant To Me!

Polio Eradication and General Development Questions

Food Security and Agri-Business Financing Program from Gates Foundation

Working in Coffee > Drinking Coffee

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