Investment, not charity

The Fourth UN Conference for the world's poorest countries recently concluded in the Turkish city of Istanbul. The conference is also referred to by its shortened name - LDC-IV. Over 7000 delegates attended the conference - Heads of States of the world's poorest nations, members of international aid agencies and other stakeholders. The parting theme of the conference - the world's poor nations do not need aid, they need investment.

The poorest nations of the world are not just a vague group of countries, but have been designated as such by the United Nations on a number of parameters. There are 48 nations in the world that are designated as LDC's, or Least Developed Countries, representing 900 million of the world's population, or 12% of the population.

Speaking at the Conference, the UN Secretary General, Ban Ki Moon made these three points:

“Investing in LDCs is an opportunity for all,” said Mr. Ban. “First, it is an opportunity to relieve the world’s most vulnerable people of the burdens of poverty, hunger and needless disease. This is a moral obligation.

 

“Second, investing in LDCs can provide the stimulus that will help to propel and sustain global economic recovery and stability. This is not charity, it is smart investment.

 

“Third, it provides a massive opportunity for South-South cooperation and investment. The world’s rapidly emerging economies need both resources and markets.”

The South- South cooperation that the Hon'ble Secretary General talks about is, in my opinion, going to one of the cornerstones of this century, as the "poor, the backward, the native, the non-WASP, the third world, whatever slang and description that has been used to call them by the rich folks", will emerge out of the shadow of influence of their former colonialists or their trading partner or their aid giver. Global trade is one issue where I have always called for a greater south-south cooperation because I know, and I am sure most people know, that global trade was never equal or fair. It was always skewed to suit the policies of the United States, followed by the European Union, the two biggest markets in the world, and hence, the creators of the axiom that the customer is always right. They have been pretty successful till now enforcing it in earnest, creating barriers, imposing tariffs, and all other tricks of the trade (no pun intended).

I can't recall how many times I have read about the tussle between European Union and the textile exporting nations of the world, with EU imposing some restriction or the other regularly. However, now I feel that globalization is finally happening the way it should be - with a certain degree of equality and fairness, as countries begin to think for themselves, and stop following what the IMF/WB or a western trade representative tells them. The WTO is something that will never be agreed to by all the nations of the world together.

I think I had written somewhere that this is not just a trade problem, but a problem of ideology. The western model is that based on global trade, growth, manufacturing, and basically an equal opportunity for all to make a profit for themselves. Thus fairness and equal opportunity in the system is apparently one of the hallmarks of the western model. Unfortunately, as I grew older and read more, I realized that this fairness and equal opportunity is basically extended by the west to its own members. So the US will heavily subsidise its farmers who will then dump all that grain and corn to other countries at throwaway prices which will make their own farmers uncompetitive. And then they'll charge India of protectionism. Ah fairness.

Coming back to the issue at hand, one of the biggest short-cuts we take in our thinking about the LDC's today is that we assume that most, if not all, of them are on the continent of Africa. That is absolutely not true.

The LDC's need to come together to cut down aid, or rather, change it to investment. But when that happens, what will happen to this huge ecosystem of aid agencies? When money turns into investment, the poor country will not need an aid agency's member (or a missionary), but somebody who will execute the project on the ground and help the country set it up. So what will happen to the many charity balls that take place for the third world, where dinner plates go for many thousands of US dollars? How will the thousands of youth from North America and western Europe get to travel to a poor third world nation and return with a halo on their head and tell about it at parties? Basically, how will thousands of people then be able to donate to their televangelists who will bring the glory of the Lord (and food with it) to the downtrodden in Africa or some other poor nation elsewhere? Wait, the last one is another story.

As I talk of a greater south-south cooperation in trade, there needs to be a greater south-south cooperation even in aid and development. I had talked of this a little yesterday when I said that the economic powers from the third world, especially India and China are investing in such development projects all across Africa, but perhaps for their own reasons. This seems more true for China, which has inked deals worth billions with a number of African nations with significant mineral resources.

I have wondered often why agriculture has never really been an issue linked with African development, at least I have never read any writing calling for greater agriculture in Africa. However, it seems there is a call to make agriculture a priority on the continent. There has been a recent trend in Africa where rich farmers from India and China have been buying vast swathes of land on the continent and using it to grow flora such as flowers, fruits and other products for export mainly to Europe. While this is commerce in its own right, it is still pure business, and growing roses for Europe will definitely employ many local citizens, it just means that the resources of that region, such as fertilizer and water, are going into growing export products, and the owner is not even a citizen of that country! Some have gone as far as to label it the second wave of imperialism.

However, the agriculture that Africa needs is not exactly this, but of a more humble, more life-sustaining kind. According to Claire Ngozo writing in the Allafrica.com article linked above,

The report ("A World Without LDC's", by the Civil Society Forum) argues that many developed countries have heavily subsidised their farmers and dumped food in the South through international supply chains in the form of food aid. "As a result, many LDCs have become net food importers and have been unable to benefit from the recent rise in prices of food commodities," the report said.

Rising food prices have pushed 44 million more people into poverty in the ten months since June 2010, according to The World Bank.

Thus, if we have to talk of investment, it does not necessarily mean investing in giant factories or manufacturing units, and investment certainly should not become just another word for aid. Despite the lack of human development and education in the third world, there is a lot of potential in a lot of ways in these countries, exactly the point that the Conference made. Nepal, for example, hosts the highest mountain peak in the world, something which draws numerous mountaineers, tourists and the like to it every year. Certainly the Sagarmatha is not the only great attraction the country has, and it has all the reasons to have a profitable hospitality and tourism industry that will generate direct employment for thousands and indirect employment for millions. Even agriculture on the African continent. There is an impending food grain crisis upon the world according to many sources, and many regions of Africa can provide for arable land and water sources to increase their agricultural output multi fold, but what that would need is investment in technology, seeds and fertilizers. Now these are not just the domains of a developed country, but a lot of developing nations have made rapid strides in agriculture.

If all of the South got together today and said they would help out each other with agricultural technology, animal husbandry, education and healthcare, and other economic and social sectors, and did it earnestly, we could indeed see a world without LDC's. "Tis a consummation devoutly to be wished."