Economy

The failure of the UN Millennium Development Villages

After a similar attempt resulted in civil war in Madagascar, the South Korean government bought 1,000 sq km of land in Tanzania for use in agriculture.  Mindful of the politics involved, the South Koreans are setting aside half of that land for local development.

To quote from a recent BBC article:

Lee Ki-Churl, a corporation official, said he expected Tanzanians to benefit from the deal. “Some African countries export fruit and import fruit juice, or export olives and import olive oil, simply because their past colonialists did not teach them how to process food,” he told the AFP news agency. “We plan to set up an education centre for Tanzanian farmers in the food-processing zone in order to transfer agricultural know-how and irrigation expertise to them.”

I think it is both patronising and ignorant to assume that Africans don’t farm the way modern western farms operate because they are uneducated.  This almost seems to imply that Africans are too stupid to help themselves.

I’m not a purist when it comes to the “rationalism” of markets (the theory that every price includes all available information to reflect that price), but I do believe that in relatively unsophisticated African markets there are good reasons why farmers do not farm or invest in productive capacity:  weak rule of law, ineffective property rights, high taxes, bribery and corruption all add up to ensure that the cost exceeds the benefit of investment.

Anthony Mills, a soil scientist at the University of Stellenbosch contacted me regarding the difficulty of conducting development in Africa.  “The Zambian land tenure system is particularly problematic.  By law the land is owned by the President.  In practice it is owned by the chiefs.  The land is consequently probably even further from private ownership than in most developing countries.”

Yet, without any due acknowledgment of the political and legal environment standing in the way of growth and development, international projects duly waste cash on major interventions.  In 2004, the UN launched the Millennium Development Villages project in an effort to demonstrate how the goals for the Millennium Development Goals could be realised.

Promises of the Millennium

Millennium Promise was co-founded by the economist Jeffrey Sachs and the philanthropist Ray Chambers. The project work of the Millennium Villages are overseen by a Scientific Council composed of leading scientific and development authorities at the UN Millennium Project and The Earth Institute at Columbia University, both of which are headed by Sachs.

The project is a miserable example of the patronising and objectionable way in which development in Africa is imposed, as if like manna from a benevolent West.

The project hasn’t “failed” in the way a business would fail.  Jeffrey Sachs hasn’t been forced to live in a homeless shelter, and the villages themselves aren’t derelict.  My concerns have to do with the nature of the promises, and of the results.  My analysis is based using only their published information and claims (on their sites: http://www.unmillenniumproject.org/ and http://www.millenniumvillages.org/).

Their objectives are an overwhelming mish-mash of wants and desires:

“In its first 18 months, the MVP’s five main objectives were to: (i) Provide universal access and free distribution of long-lasting, insecticide treated bed nets to fight malaria; (ii) Achieve significant increases in staple crop yields; (iii) Ensure universal access to functioning health clinics; (iv) Increase primary school enrollments; and (v) Provide community access to improved and year-round water for consumption. In addition, the MVP emphasized cross-cutting interventions focused on addressing gender inequality; on community mobilization, participation and leadership; and on infrastructure for transport, energy, and information and communications technologies (ICT).”

“The Millennium Villages seek to end extreme poverty by working with the poorest of the poor, village by village throughout Africa, in partnership with governments and other committed stakeholders, providing affordable and science-based solutions to help people lift themselves out of extreme poverty.”

Ending extreme poverty is a known quantity.  Numerous countries have done it (from South Korea to Brazil) and what is required mostly boils down to accountable government and rule of law, plus sound economic principles premised on enforceable property rights.

So much for the background.  Let’s look at the viability of these projects themselves.

The region chosen

“Ethiopia, Ghana, Kenya, Malawi, Mali, Nigeria, Rwanda, Senegal, Tanzania and Uganda.”

According to a quick check, the bottom 20% earn roughly $350 to $450 per annum in this region.  I’m being generous here, since the MDP aims to work with the absolute poorest which the UN usually defines as people earning less than $1/day.

“Between 1990 and 2001, the number of people in sub-Saharan Africa living on less than $1 a day rose from 227 million to 313 million, and the poverty rate rose from 45 percent to 46 percent. Sub-Saharan Africa has the highest rate of undernourishment in the world, with one-third of the population below the minimum level of nourishment.”

This implies a total of 62 – 63,000 villages (at their requirement of 5,000 people per village) who fall into the project scope.

The investment

“Each Millennium Village requires a donor investment of $300,000 per year for five years. This includes a cost of $250,000 per village per year (5,000 villagers per village multiplied by $50 per villager) and an additional $50,000 per village per year to cover logistical and operational costs associated with implementation, community training, and monitoring and evaluation. Note that this level of external support is fully consistent with the 2005 G8 commitments for official development assistance to Africa by 2010. The other $60 per villager per year will come from village members, local and national governments and partner organizations, making for total funding of $110 per person per year.”

This is a fudge.  Firstly, sure, the global community may have promised a grand total of $50billion in support, but that usually has strings attached, and includes a wide range of other bilateral investment.  So the full amount isn’t available.  Secondly, most African governments don’t spend their own money on internal development.  Thirdly, the villages have no money (since that is the reason they were chosen).  One way or another, all of that $110 will have to be donated.

That means we are investing $550k annually for each village over a five-year period (i.e. $2.75 million).  To reach all villages in the scope requires an investment of around $172 billion.

The return on investment

So much for the background.  One of the things I’m often asked on African tourism development projects is, “Does this town/area have good tourism potential for development?”  My answer is always this:  “Are there men and women by the side of the road selling curios?  If not, then no.”

People in Africa are not poor because they are ignorant of their own needs, or of how to earn a living.  Neither are they really victims of circumstances beyond their control.  Given the right environment, Africans are as capable of supporting themselves as is anyone else. When the Zimbabwe currency was worth less than spit, inflation was several trillion % and nothing was available for sale. A few months after the Zimbabwe government abandoned the Zimbabwe dollar in exchange for the US dollar everything is available, investment is happening and production is shooting up. Zimbabwe may even be entirely self-sufficient for food again by the end of next year. And that is without any major international intervention.

So, as far as the MDP villages are concerned, my first question is this:  “Are other villages visiting the MDP villages, becoming inspired, and copying this model?”

The answer is: No.  No-one is copying the villages.  No private investor has turned up and offered to do something similar.  Scratch that, George Soros turned up and made a spot donation of $50 million in 2006 to fund 33 villages.  But that is hardly investment.

There are a whole host of reasons that I can spot:

  1. The investment changes nothing about the legal and economic situation in the country at hand; governments are still corrupt, infrastructure is still non-existent.  Even if the MDV were to produce a major food surplus, who would they sell it to and how would they get it to market?
  2. The project makes a great deal of the village-based ownership structure.  This is a collectivist / communist system.  If no-one owns it, then there is little incentive for individuals to work harder, since everyone will get the same outcome.  Like most projects of this nature, the output will continue as long as the expensively-paid consultants are around, then it will return to its base level.  The only reason the Kibbutz system has lasted 100 years is the donations of both the Israeli government and of outside donors.  As soon as the Israeli government cut funding, then the Kibbutzim started to close.  Now only those most hardy (or the very few who have major industries earning revenue) are still functioning.  But at least the Kibbutzim were self-created.  The MDPs rely for their energy on do-gooder outsiders.
  3. Who owns the investment?  If something intangible like a “village” owns the products of individual labour and investment, then what does a person with ambition do?  Can he/she sell their stake in the village and use the money to go to university, or buy a house?  Who decides on what the profits (should there be any) be spent on?

Even in the best-case scenario, all that you achieve is that a group of famished and unhealthy people are less famished and less unhealthy.  For an investment of $2.75 million.  Is it really sufficient to take people from earning $1/day to say $2/day?

What else could you achieve with that money?

You could build a nice, labour-intensive factory for $2.75 million.  Imagine the impact of 62,000 new factories on the central African economy?  And imagine all the things that would be required for such a thing to happen … roads, rule of law, healthcare, education.  All of which would be affordable if millions of people were earning proper salaries.

This isn’t happening.  There are no investors in Africa beyond a few resources and the inevitable mobile telephony.  Africa is 2% of the world economy.  To put the MDP investment in perspective ($110 per person), foreign direct investment in Africa is worth only $19 per person per year.

Whitey Basson of Shoprite, a major African retailer, put it best last week:  “It takes 15 inches of paper to cross a border in Africa.”  Africa’s countries are regularly ranked as the most appalling and corrupt places in which to do business.

The MDP villages do not change that situation.  The agricultural techniques behind the project may be sound, but the economics are a failure.

And, if the economics are a failure, then what is the point of the project?

1 reply »

  1. Another sad failure reflecting the inability of Western Aid agencies or governments to ever learn anything from their mistakes. The record of agricultural “development” over the past sixty years has been one disastrous intervention after another, all premised on the notion that what Africans really need is a western agricultural model. There’s a more insidious explanation than a collective inability of organizational learning, of course–it’s the intentional creation of a dependency of an entire subcontinent on western agribusiness with the aid agencies as the principal enablers. Back to the distinction between corporatism and capitalsim. These projects do nothing for capitalism, but they sure push a corporatist agenda (as I define it anyway). I’m agnostic these days–in general it’s a race to the bottom betweeen stupidity and mendacity.