Afghanistan

Birth kits: An immediate solution to lowering maternal deaths

57 million women give birth each year without the help of a trained professional. Photo: <a href="http://www.flickr.com/photos/7203470@N03/2366525625/">hugrakka(Flicker)</a>
57 million women give birth each year without the help of a trained professional. Photo: hugrakka(Flicker)

Bringing one life into the world shouldn't mean sacrificing another. While the developing world scrambles to secure funding for midwifery services, there's a cheap, short-term solution: birth kits.

The risk of death due to pregnancy or childbirth is 1 in 8,000 in developed countries, as opposed to 1 in 17 in developing countries, according to the organization Unite For Sight. Yearly, approximately 57 million women give birth in their home without the help of a trained professional, increasing the risk of complications.

Midwives are an essential player in lowering maternal deaths. "Midwives can save women's and newborns' lives if they are properly trained and equipped, and if a support network is available," writes the World Health Organization. Worldwide, the WHO estimates, there is a shortage of 350,000 midwives. But training 350,000 new midwives won't happen overnight. In the meantime, birth kits could fill the gap.

Birth kits provide the tools for a safer and sanitary delivery, including soap to wash hands, razors and ties for the umbilical cord, plastic sheets for a clean surface, and an instruction sheet.

The impact of birth kits can be life-saving but their success depends on acceptability within the community where it is introduced. At times, modifications might be needed such as redesigning the instruction sheet to use images instead of words, considering low literacy rates. PATH, an international organization which focuses on global health and well-being, has produced kits used in Bangladesh, Egypt and Nepal. Cutting the umbilical cord on a coin is considered good luck in Nepal. To adhere to traditional customs, PATH created a kit that includes a plastic rupee.

Another common problem: Cutting the umbilical cord with unsanitary, used razor blades. Disposable razor blades or an illustrated instruction sheet encouraging woman and midwives to sterilize reusable blades after every use could reduce this problem. The Janma clean delivery birthing kit by AYZH is making modifications to its current scalpel handle design to discourage reuse.

Though midwives are the ideal choice for safe births, families can't always afford their services. Government and non-profit programs that subsidize midwifery programs aren't economically sustainable in the long run. A model pursued by the Midwifery Association of Pakistan involves changing public perceptions of the midwife's role in health care, advocates for government-set standards for midwifery education, and lobbies for professional rights.

Until midwifery is economically viable and publicly understood, we need an affordable stop-gap solution to save lives. Maternal mortality will continue to rise if birth kits—and, eventually, midwifery services—aren’t accessible to the women who need them now.

How technology is changing the world, and allowing you to change it too

Men in traditional Maasai clothing using their mobile phones. Photo: <a href="http://www.flickr.com/photos/markkelley/1022720488/">Mark Kelley (Flickr)</a>
Men in traditional Maasai clothing using their mobile phones. Photo: Mark Kelley (Flickr)

Envy Jared Cohen. At 29, the man has advised two U.S. presidents, shaped relations between countries, and now leads his own think-tank at Google. But his take on technology suggests you could do this, too.

Cohen, at a recent Mercy Corps-sponsored talk in Portland, OR, wowed the audience with personal anecdotes about how technology is changing international affairs. Cohen has seen firsthand the effects of communications technology and understands the potential it holds for the world’s future.

Cohen, a security expert, spent much of his talk describing the effects of communications progress on modern states and their rule of law. He spoke of technological literacy in Iranian youth that was instrumental in coordinating the June, 2009 Green Revolution. He spoke of an unemployed Colombian activist who used social media to coordinate the anti-FARC demonstration, the largest protest against a terrorist group in history.

"The 21st century," Cohen said, "is a really terrible time to be a control freak." But that applies whether you're trying to control peaceful demonstrators in Cairo or violent drug cartels in Mexico. Government control is proving ever more elusive as groups find out just how empowering technology can be.

Jared Cohen.
Jared Cohen.

He painted a picture of exponentially growing networks that are bringing people together from around the globe. This interconnectedness makes it difficult to control and contain groups that are finding ever more ways to use technology that is itself rapidly progressing. These groups tend to be made up of young people, as the empowering effect of these new forms of communication is most potent for those who understand how to use them.

Each of Cohen’s points seemed to return to a basic theme: technology is eroding the barriers to entry to all sorts of games, markets, and movements. And while technology is getting better, people, especially young people, are getting better at using it. Cohen argues that “those who don’t have information technology today will be the most active users tomorrow.” Ten years ago, 361 million people had access to the Internet. Today, that number has increased to 2.1 billion, with the fastest growth in Africa, the Middle East, and Latin America. “Pakistan, in the year 2000, had 300,000 mobile phones. By 2010, it had over 100 million. That's in a population of 165 million,” Cohen explained. Technological growth will have the biggest empowering effect on those who currently find themselves with the least power.

Cohen’s opinions on this topic have authority because of the life he's led and the movements he's witnessed. He’s travelled the world and met with leaders of insurgencies and counterinsurgencies, democracies and autocracies. His own story is a case in point that technology is empowering those who know how to use it.

Technology, according to Cohen, is driving the changing tide of the times and youth tend to have an inherent advantage in understanding and deftly using these innovations. Cohen rode the wave of technology into the most exclusive circles in Washington. And he says we should all be using technology to find our own wave to ride.

Ben Osborn is a 2011 graduate of Lewis & Clark College in Portland, Oregon. Read his other contributions to Global Envision.

Alternatives to food aid can transform economies for good

Aid can restore dignity by providing choices. Photo: Miguel Samper for Mercy Corps
Aid can restore dignity by providing choices. Photo: Miguel Samper for Mercy Corps

Food aid can fill bellies, but countries hit by famine need choices, not handouts. Two new alternatives can solve longer-term problems by letting victims choose how aid gets used.

First, cash voucher programs give people choice.

UNICEF and two of its non-governmental partners implemented cash voucher fairs in 2010 that provided crucial supplies to 65,000 people displaced by violence in eastern Democratic Republic of the Congo. Each family received 13 coupons totaling $40, which they used to purchase supplies from participating vendors.

Cash vouchers let people decide what they need, as opposed to receiving standard packages with items they might not. Having the power of choice also restores dignity and a sense of worth in a time of struggle. “Furaha!" a mother of two, Kavira Matita, exclaimed to UNICEF during a cash voucher fair, expressing joy in the Kiswahili language. "I am able to choose what is close to my heart. I am very happy to use the coupons for what I know my family needs and not be given things I won’t have much use for.” That's not all: Economically speaking, the vouchers tend to support local business rather than international ones, which can inject much-needed capital back into a struggling community and increase the impact of aid dollars.

Cash-for-work programs are another option. They hire people to participate in their own rebuilding process.

In landlocked Chad, which borders Sudan, World Concern’s cash-for-work program is already putting communities to work. One of the first projects was to dig large ponds for catching water for irrigation and animals. Other projects built low rock walls to reduce erosion on hillsides.

As in cash voucher programs, cash-for-work participants receive vouchers as payment so they can buy what their family needs. However, injecting new money into a weak economy can cause inflation. To prevent this, World Concern sets price ceilings beforehand to ensure economies aren't further destabilized.

In previous posts, Global Envision dug into cash-for-work and cash voucher programs, highlighting responses to the Haiti earthquake -- a Mercy Corps cash-for-work project, and a World Food Program cash voucher system.

Worldwide, 40 countries face food shortages, and aid delivery to these regions in crises is vital. Each country has unique needs, and they should be evaluated accordingly. As a result of the famine in the Horn of Africa, three million people in Somalia need emergency aid and more than 10 million are at risk of severe prolonged hunger or even starvation, according to The New York Times.

As the world looks for ways to deliver this aid, it should consider cash vouchers and cash-for-work programs. Both make recovery after crises and conflicts more sustainable by directly involving those affected in rebuilding their communities.

The Private Scams Behind the Scenes of War

Soldiers, the traditional actors in a war, patrol in remote Afghanistan. Not shown here are those that provide comforts on the U.S. bases nearby. Photo: <a href="http://www.flickr.com/photos/soldiersmediacenter/1634664667/">The U.S. Army (flickr)</a>
Soldiers, the traditional actors in a war, patrol in remote Afghanistan. Not shown here are those that provide comforts on the U.S. bases nearby. Photo: The U.S. Army (flickr)

At the end of a movie, the credits run for cast and crew. At the end of a war, soldiers receive Purple Hearts and well-earned pensions. But when is the production crew of a war recognized?

Lacking in grandiosity, working at a McDonald's inside a U.S. military base isn’t going to win you any medals. And yet, you face the same mortar attacks, the same war zone threats, as soldiers.

In a recent article from The New Yorker, Sarah Stillman reveals the rampant deception involved in recruiting these laborers from the developing world and the slavery-like conditions that prevent them from returning home.

The expansion of private-security contractors in Iraq and Afghanistan is well known. But armed security personnel account for only about sixteen per cent of the over-all contracting force. The vast majority—more than sixty per cent of the total in Iraq—aren’t hired guns but hired hands. These workers, primarily from South Asia and Africa, often live in barbed-wire compounds on U.S. bases, eat at meagre chow halls… A large number are employed by fly-by-night subcontractors who are financed by the American taxpayer but who often operate outside the law.

In recent years, federal officials have been spurred into action. The Department of Defense (DoD) initiated an investigation in 2006 following several such grievances. According to the Pentagon-issued directive, FRAGO 06-188 [Trafficking in Persons], (pdf) which went into effect later that same year, “an inspection of contracting activities supporting DoD in Iraq revealed evidence of illegal confiscation of worker (Third Country National) passports by contractors/subcontractors; deceptive hiring practices and excessive recruiting fees, substandard worker living conditions at some sites, circumvention of Iraqi immigration procedures by contractors/subcontractors and lack of mandatory trafficking in persons awareness training.”

Based on a yearlong investigation, Stillman discloses that despite the directive against human trafficking and the Department of Defense's efforts to increase subcontractor accountability, poor workers are still being manipulated, swindled, and robbed.

A typical manpower agency charges applicants between two thousand and four thousand dollars, a small fortune in the countries where subcontractors recruit. To raise the money, workers may pawn heirlooms, sell their wedding rings or land or livestock, and take out high-interest loans... Many learned [upon arrival] that they were to earn as little as two hundred and seventy-five dollars a month as cooks and servers for U.S. soldiers—a fraction of what they’d been promised, and a tiny sliver of what U.S. taxpayers are billed for their labor.

Taking advantage of the least advantaged is despicable enough, but these workers not only lose money and freedom but sometimes their lives. Stillman writes that "for the first time in American history, private-contractor losses are now on a par with those of U.S. troops in both war zones [Iraq and Afghanistan], amounting to fifty-three per cent of reported fatalities in the first six months of 2010." Yes, that is more than half of the total fatalities—and, she notes, the true number is probably higher. The official number is based solely on what the private contracting companies report.

According to the Trafficking in Persons Report 2011, the United States is ranked in Tier 1. This means that the U.S. government has identified human trafficking as a problem and is implementing preventative and remedial laws and programs. After reading Stillman's article, you might question the United States' rating.

Afghanistan's Women Mean Business

This has been reposted from the Mercy Corps blog.

For many years under an oppressive regime, Afghan women were unable to leave their houses — they could only dream of starting businesses. Thousands of women had ideas, but no opportunity and certainly no assets to realize them.

But today, that's changed: women are now a vibrant and vital force in Afghanistan's economy. Mercy Corps pitched in to make that happen through Ariana Financial Services, a microfinance organization we founded in 2002. Ariana provides loans and other financial support to entrepreneurs. It currently has more than 7,500 clients, most of whom are women.

And those women are making a difference not only for themselves and their families, but their communities as well. They're filling markets with their products, creating jobs and training other women to succeed. These women are proof that, when given the chance, they can turn a little funding into a lot of good, as well as a lifetime career.

Freelance photographer Julie Denesha recently put together this video that includes her interview with Ariana's Executive Director, Storai Sadat, about how her organization has helped bring about this remarkable transformation.

Kabul's First Skatepark

In a place ravaged by years of war, there is something new taking place: Afghan youth propelled by a deck on four wheels and armed with an abundance of self confidence and a new pair of skate shoes.

Skateistan is a co-ed skateboard school and the group behind Kabul's first skatepark, says the school's founder, Sharna Nolan. The school engages growing numbers of urban and internally-displaced youth in Afghanistan through skateboarding, and provides them with new opportunities in cross-cultural interaction, education, and personal empowerment, according to their website. The main objective of Skateistan is to build the confidence of Afghan kids and to give them a voice, as Nolan explains in the video below. It's been amazing for Nolan to watch these youth become empowered through skateboarding.

There's nothing like watching an Afghan woman roll down a ramp for the first time and she has achieved something she never thought she would.

SKATEISTAN: TO LIVE AND SKATE KABUL from Diesel New Voices on Vimeo.

War and Development: Do They Mix?

A U.S. soldier in Afghanistan gathers a soil sample as part of his work on an army agricultural development project.  Photo: <a href="http://www.flickr.com/photos/soldiersmediacenter/4174406216/">The U.S. Army (Flickr)</a>
A U.S. soldier in Afghanistan gathers a soil sample as part of his work on an army agricultural development project. Photo: The U.S. Army (Flickr)

The U.S. army’s “surge” in Afghanistan marked a new focus on development in addition to an increase in the number of combat troops. Development has not typically been part of the military’s purview. Yet, this new approach has much to recommend, especially in a country with endemic poverty and an anemic economy. Promoting economic growth and providing aid tends to make military missions more successful, asserts foreign policy expert Reuben Brigety. Having realized the utility of pairing military and development endeavors, the U.S. army is undertaking a host of new projects. But, asks the Economist in a recent article, to what avail?

The Economist questions both the sustainability and the suitability of the projects the army is implementing. These projects include improving telecommunications infrastructure, teaching Afghan farmers how to boost yields, installing generators to provide electricity and establishing markets to encourage trade.

Few people dispute that these projects have the potential to lift Afghans out of poverty, but many doubt their long-term viability. The Economist argues that the generators are “clearly unaffordable for the cash-strapped government that must one day take charge of [them].” Karl W. Eikenberry, current U.S. Ambassador to Afghanistan, agrees. He writes,"[p]roposals to buy generators and diesel fuel for Kandahar would be expensive [and] unsustainable," according to the Washington Post.

So why is the army adamant about undertaking this project? According to a U.S military official at the NATO headquarters in Kandahar, "[t]his [project] is not about development — it's about counterinsurgency." Development, in this context, is a tool to win the hearts and the minds of the Afghan people. By providing goods and services the Taliban cannot deliver, the military hopes to marginalize the insurgency’s influence.

The army’s ulterior motive for promoting development, can produce poorly designed development programs, points out the Economist. A 60 million dollar telecommunications project is just one example of the potential pitfalls of putting the army in charge of development.

The army favors this project because it will provide an alternative to current networks which local Taliban strongmen control. The Taliban's control of telecommunications is a problem according to the military, as they often restrict or shut down access at night to prevent U.S. informants from reporting Taliban movements. But it's uncertain if the addition of another network will directly affect the locals’ security, health or economic well-being. This uncertainty is further called into question by the fact that there are already four other operational networks in the region. Still, the army views it as part and parcel of its development campaign, illustrating how easily the army’s strategic interests can derail its mission to promote development.

The military’s track record in Afghanistan suggests that bringing development and combat operations under the same roof will be trickier than anticipated. Though there is still time for the military’s projects to bear fruit, their lack of success thus far should not be taken lightly. The trend of subsuming development projects under military command is growing worldwide, according to expert testimony given to the U.S. Senate. If this strategy is as ineffectual as Afghanistan may suggest, then we should take note and revisit the practice.

U.S. Contractors Breaking Afghan Trust

Topics: Economic Development
Countries: Afghanistan
U.S. soldier helps Afghan construction workers lay brick for a new classroom Photo: <a href="http://www.flickr.com/photos/thenationalguard/4699430793/">the National Guard (flickr)</a>
U.S. soldier helps Afghan construction workers lay brick for a new classroom Photo: the National Guard (flickr)

While U.S. troops and aid workers struggle to convince Afghans that Americans have their best interests at heart, independent contractors are tearing down these efforts left and right, says The New York Times. According to the article, construction companies like Bennett-Fouch are hiring Afghan workers to rebuild local infrastructure, running up multi-million dollar debts, and leaving the country without making good on their contracts.

Jalaluddin Saeed, an Afghan businessman, said in an interview with The Times that he "was owed $1.5 million by Bennett-Fouch for four contracts to provide concrete barriers for American and NATO military bases last year." According to the article, "his life was now in danger and he had had to...move his family to avoid his many angry creditors."

Instead of causing desolation, contracting companies could bring immense positive change to Afghanistan by creating well-paying jobs for small business owners and construction workers. This would lower the 35 percent unemployment rate and help Afghans develop a sense of leadership and participation in the economy.

Contractors could look at a program run by the U.S. government for inspiration. The Afghan First policy seeks to hire and train Afghan workers whenever possible, build domestic production capabilities,pay employees in local currency and incorporate Afghan businesses into reconstruction efforts. The policy promotes local development while creating positive business interactions between Afghans and Americans.

It seems natural that private contracting companies should follow suit, attempting to strengthen these efforts rather than undermine them. Instead, The Times article suggests contractors are destroying the delicate trust that Afghans have placed in the American presence.

Hajji Layeq is just one of many Afghan shareholders that Bennett-Fouch left disheartened. “People are thinking the Americans are failing in everything,” Layeq told The Times.

Certainly in this regard, it seems they might be right.

A Glimpse into Afghanistan's Past

In the 50s and 60s Afghanistan had modern, clean health facilities.  Today only 13% of children are born in hospitals. Photo: <a href="http://www.flickr.com/photos/vizpix/4701889">Daveeza (Flickr)</a>
In the 50s and 60s Afghanistan had modern, clean health facilities. Today only 13% of children are born in hospitals. Photo: Daveeza (Flickr)

Recall an Afghanistan you probably forgot existed (or maybe you never knew). It's modern, stylish, and humming with productive economic activity. Women work alongside men dressed in form-fitting pencil skirts and kitten heels.

Foreign Policy's photo essay on Afghanistan in the 50s and 60s provides a glimpse into this bygone era. The photos highlight how much has changed since a war with the Soviets, a decade of Taliban rule, and the U.S. invasion.

There are shots of cinemas, homes lit with electricity, and well-stocked hospitals — things that few Afghans enjoy today.

This visual reminder of a long-lost Afghanistan says more than words ever could about how much conflict and oppression has cost the Afghan people.

Will Mineral Deposits Bring Afghanistan Wealth or Warfare?

Topics: Economic Development
Countries: Afghanistan
These girls might be sitting on buried treasure. Photo: Cassandra Nelson/Mercy Corps
These girls might be sitting on buried treasure. Photo: Cassandra Nelson/Mercy Corps

Afghanistan may be home to $1 trillion in untapped mineral deposits, reports The New York Times. This is incredible news for a country that has been troubled by war for the past three decades. Although data on the deposits was actually drawn up by Soviets back in the 1980s, the Times report released earlier this week has everyone buzzing.

The central debate focuses on what this discovery will mean for Afghanistan. Will the deposits provide a much-needed economic revival, or make the country even more vulnerable to corruption and conflict?

Some people are hopeful, trusting the deposits to improve the country's economy and provide jobs. Thomas Gouttierre, director of the Center for Afghanistan Studies at the University of Nebraska at Omaha, describes the potential to The Christian Science Monitor:

This puts Afghanistan in a position where it can now work on its reconstruction and development with new resources ... that if exploited appropriately could incorporate many Afghans into the workforce in their country.... It helps [those trying to reconstruct the country] to have alternative economies.

Currently, Afghanistan’s economy relies primarily on illegal opium production -- a trade that fuels oppression and terrorism, points out The Huffington Post. The mineral deposits will potentially provide Afghans with a better economic base.

On the other hand, some worry that Afghanistan will fall prey to the “Natural Resource Curse,” NPR’s Planet Money explains:

Poor countries that are rich in natural resources tend to have more violent conflicts than countries with fewer resources. Their governments are more likely to be corrupt and authoritarian. And the people often don't get any richer when the government sells the country's resources on the global market.

CNN notes that natural resources have sparked fierce civil wars in places like Angola and the Democratic Republic of the Congo. Afghans are certainly familiar enough with war. Only time will tell whether the minerals spell more conflict, or will instead cut these people a much-deserved break.

Poor Vision Put in Focus for the Developing World

Glasses are one key to improving the economic productivity of poor people in developing countries. Photo: <a href="http://www.flickr.com/photos/deepchi/3515292325/">deepchi1 (flickr)</a>
Glasses are one key to improving the economic productivity of poor people in developing countries. Photo: deepchi1 (flickr)

Poor vision may not seem like an economic problem at first glance. But according to the World Health Organization, workers with poor and uncorrected vision cost the global economy hundreds of billions of dollars in lost productivity each year.

Many of these workers struggle to put food on the table, much less purchase an expensive pair of glasses, so their vision problems go untreated. This situation may change thanks to an innovative new series of affordable glasses designs that the New York Times recently highlighted. Their genius lies in two factors: their low cost and how easy it is to adjust them. Production is cheaper when a single model can be made to fit almost anyone, which also cuts out the need for expensive doctors to write vision prescriptions.

How can glasses be one-size-fits-all? One type highlighted by The Times has lenses whose refraction can be adjusted by injecting a clear liquid into them, while another has overlapping lenses that can be adjusted by the user. These models are already improving the lives of wearers in countries like Rwanda, Afghanistan, Ghana, and Tanzania and cost $19 and $4, respectively.

Despite their potential, low-cost eyeglasses still face problems. As The New York Times explains, the glasses could cost only $1-2 per pair if produced in great enough volumes, but supply chains don't yet exist to distribute such quantities of glasses to those who need them.

The field of low-cost eyeglass production and distribution is in its infancy, but keep your eyes open for great things to come.

Microfinance Leaders on the Global Economic Crisis, Women, and For-Profit Lending

A Mercy Corps small business loan helped Najeeba expand her successful baby cradle business in Kabul, Afghanistan. Photo: Cassandra Nelson/Mercy Corps
A Mercy Corps small business loan helped Najeeba expand her successful baby cradle business in Kabul, Afghanistan. Photo: Cassandra Nelson/Mercy Corps

Over the past decade, Mercy Corps’ microfinance services have lent more than $1.5 billion, reaching more than one million people. Twelve Microfinance Institutions (MFIs) founded and supported by Mercy Corps operate all over the world, with 270,000 active clients — 65 percent of them are women. To better serve those excluded from formal financial services, Mercy Corps is working with these MFIs to develop and offer savings, remittances, and micro-insurance services as well.

I recently sat down with Zhanna Zhakupova and Jim Anderson who were in town for a microfinance conference hosted by Mercy Corps, to find out more about Mercy Corps microfinance programs and how the global economic crisis is impacting microfinance loans. Zhanna is the Executive Director of the Asian Credit Fund (ACF), headquartered in Almaty, Kazakhstan. Jim is Mercy Corps’ Financial Services Manager and works from UlaanBaatar, the capital city of Mongolia. Together, they have experience working in countries as diverse as Uzbekistan, Vietnam, Japan, Bosnia, Poland and Afghanistan.

Haley Dillan: Jim, tell me a little bit about Mercy Corps’ use of Microfinance.

Jim Anderson: Microfinance is an integral part of what we’re [Mercy Corps] doing as an agency. Mercy Corps works with a group of well-established MFIs to complement other programming. All these MFIs provide loans to individuals and small businesses, and in Mongolia and Indonesia our MFI affiliates also offer deposits. Many support agriculture and offer consumer loans for purposes like tuition payments and health care costs. A micro-loan can range from $65 to a Guatemalan woman raising chickens or piglets, to $7,000 for a Kazakh businessperson.

Microfinance is a great tool because, when managed correctly, it is sustainable. Projects can be established and continue on a sustainable basis: they don’t require ongoing injections of donor money. As the NGO, you create the legacy, and then it often continues independantly.

Haley: Why are the majority of loans extended to women?

Jim: Typically, women are the more common borrowers. From a broad source of statistics, women are more reliable borrowers. They invest their business profits to support the family — educating, feeding, housing, and providing health care for their children. As of this June, Kompanion in Kyrgyzstan had over 91,000 clients, of whom 98 percent were women. What’s the percentage for Asian Credit Fund, Zhanna?

Zhanna Zhakupova: About 93 percent of ACF loans are to women.

Jim: Yes, and the XacBank in Mongolia has over 63,000 clients, and women comprise about 55 percent of that. However, in certain countries, it’s not always clear that just because the borrower is a woman, she’s the one in charge of the money. In Afghanistan, for example, a female borrower may just give the loan money to her husband, and it’s hard to track that.

Zhanna: Also, men are less interested in small loans. When they think about business, they think about “big.” And after the global economic crisis, group lending has grown significantly, and women dominate group lending. Men are more reluctant to join groups.

Haley: What other impacts has the global economic crisis had on microfinance? Have you changed your lending criteria? Has it affected the ability for applicants to repay their loans?

Zhanna: As I mentioned, our portfolio has shifted towards group lending since 2008. So, yes, the global economic crisis definitely caused a shift in our lending. In Kazakhstan, the crisis has been quite severe. The GDP growth was averaging about 8 percent annually since 2000, from oil and mineral resources. A pretty strong middle class had emerged, especially in the two largest cities Almaty and Astana. The economic crisis really affected this middle class; the crisis led to a sharp decline in real estate and that hit a lot of people. It seemed like everyone had loans that were secured by real estate… and when the real estate bubble burst, MFI loans were under water.

The banks stopped lending, because real estate was the key piece of collateral for most people, and it has continued to fall in value. No one had sufficient assets to meet tougher bank requirements, and so couldn’t qualify for loans after the global economic crisis. Lenders accumulated loan repayments, but refused to relend that money, sitting on it instead of pumping it back into the economy. No liquidity — no lending — no economic development — falling living standards.

In the rural areas, lending was completely frozen. When I recently visited rural areas served by ACF, every village asked us to open a branch. Small loans were in big demand but no one was lending. Now, Asian Credit Fund has about $1 million dollars in group loans, with the average loan size at around $500 per person.

Haley: What's the difference between non-profit and for-profit microlending? Does Mercy Corps work with for-profit lenders?

Jim: Actually, microlending is for-profit in most areas of the world, particularly Latin America and Central Asia. Non-profit lenders are more often located in places like India and Bangladesh. So most of Mercy Corps' microfinance work is with for-profit MFIs, many of which source funding from for-profit socially responsible investors (SRIs).

If these SRI lenders were to calculate the true risk of the loans they’re extending to MFIs, the interest rate would be so unmanageably high — possibly 60 or 70 percent in places like Tajikistan or Afghanistan. But the individuals who invest with SRIs are willing to forgo a certain amount of return because they want to encourage social improvements by lending to developing countries. As a result, SRIs can lend to MFIs at affordable interest rates.

In order to help MFIs attract capital to expand and serve more clients, Mercy Corps utilizes various sources of investment, including equity and debt, typically with SRIs.

Haley: Is there an idea or sentiment that you are taking away from the conference?

Jim: At the conference participants included a diverse group of organizations, culturally, geographically and in terms of business models, yet we all face similar challenges and issues, and it’s great that we have an opportunity to come together and talk about that.

Zhanna: Yes, everyone was talking about development, and long-term goals.

A New Threat to Afghanistan

Afghanistan is facing a dangerous new threat, but it does not involve suicide bombers or roadside explosives.

As the Washington Post reports, government corruption is threatening to topple Afghanistan’s fledgling democracy in the wake of a presidential election plagued by delayed vote tallies and reports of voter intimidation. The Wall Street Journal explains that corruption in Afghanistan is so pervasive that the United States and its allies are reconsidering their strategy in dealing with President Hamid Karzai. Allegations of misconduct are so prevalent that the U.S. has begun to view Karzai not as an ally, but as a liability in their effort to reconstruct the war-torn nation.

USAID recently released a report that said roughly two-thirds of Afghans had been victimized by a corrupt government official — the highest level ever recorded. In a country where the average person makes $700 a year, it takes a $400 bribe to be connected to the electrical grid.

If it's allowed to continue unchecked, the report says, corruption will make it impossible for Afghanistan to develop an economy capable of attracting foreign investment and aid.

Despite the obstacles to eliminating corruption, one organization has begun to make headway. The Christian Science Monitor reports how a multinational relief effort called the Aga Khan Development Network has begun to train Afghan villagers in basic accounting techniques. The villagers — who are now able to audit their community’s financial records — are better able to prevent embezzlement and theft. While the organization's efforts have so far met with success, they're only one soldier in the fight against a serious problem.

Another try at reducing the Afghan poppy trade

Afghan farmers holding up poppy pods in a field of poppy flowers. Photo: Mercy Corps
Afghan farmers holding up poppy pods in a field of poppy flowers. Photo: Mercy Corps

The United States is dropping the stick and picking up the carrot in combating the Afghan poppy trade. The new anti-drug policy ends the effort to eradicate poppy fields and will now focus on giving farmers financial and technical aid to help them replant their poppy fields with wheat and other food crops, according to the Wall Street Journal.

Past efforts to reduce the number of poppies, the basis for opium and heroin production, used a mix of incentives, but consisted primarily of eradication programs, like the cutting and burning of poppy plants. Richard Holbrooke, the senior American official for Afghanistan policy, tells the Wall Street Journal. "All we did was alienate poppy farmers," he said. "We were driving people into the hands of the Taliban."

While eradication campaigns may have made life tough for farmers, they did not materially impact the drug trade. Over the past decade, Afghanistan's share of global poppy production has grown from about a tenth to over 90 percent of the world total, according to an article in the Wall Street Journal.

Holbrooke bluntly informed the New York Times that "[t]he Western policies against the opium crop, the poppy crop, have been a failure". The new policy of crop substitution, while laudable, faces many of the same challenges that derailed the earlier plans.

Switching from poppies to other crops isn't a simple task. One of the reasons that poppy production is so profitable is that drug traffickers pick up the poppies at the farms. If they grow a food crop, farmers must build storage buildings and get the crops to often distant markets. While bearing these higher costs, they must also contend with prices both lower and less predictable than poppy prices. Even if they can subsist on the less profitable food crops, they have to deal with threats of violence from the Taliban, which opposes any switch to non-poppy crops.

What's more, the Afghan political elite has a vested interest in the poppy crop. The United States intelligence community estimates that only $70 million out of $3 billion dollars of drug receipts go to the Taliban, according to the Senate Foreign Relations Committee. In a Committee report, officials related that many of the recipients are U.S. allies and members of the government.

"These warlords later traded on their stature as U.S. allies to take senior positions in the new Afghan government, laying the groundwork for the corrupt nexus between drugs and authority that pervades the power structure today."

Most business owners wouldn't invest in a high-risk product with low returns. So it's understandable that Afghani farmers aren't making the switch from poppies to wheat in droves. There are likely to be some parts of the country with sufficient security and strong enough markets for the program to succeed, as Ganesh Sitaraman, a lawyer for the Counterinsurgency Training Center Afghanistan, notes in a New York Times op-ed.

The U.S. is to be applauded for switching from a destructive, ineffective policy to a constructive, potentially effective policy. This new policy will only be part of a larger effort, that will have to include greater security for farmers, to reduce the scale of the Afghan poppy crop.

O Magazine: Three things you can do to empower women

Zahria, a 35-year-old mother of five, took out a loan from Afghanistan’s Mercy Corps-supported Ariana Financial Services to begin an almond-selling business. Photo: Miguel Samper/Mercy Corps
Zahria, a 35-year-old mother of five, took out a loan from Afghanistan’s Mercy Corps-supported Ariana Financial Services to begin an almond-selling business. Photo: Miguel Samper/Mercy Corps

Our work to lend to the so-called "unbankable" is noted in September's O Magazine in a bit about Half the Sky. (The "O," of course, stands for Oprah.)

Mercy Corps-sponsored microfinance institutions reach more than 244,000 clients. Many of those are women in Afghanistan, where we founded Ariana Financial Services, a woman-led agency that has lent more than $11 million to 45,000 clients to date — nearly 75 percent of them women.

Mercy Corps is among several other organizations — including Hellen Keller International and American Assistance for Cambodia — mentioned in Half the Sky and noted in the O Magazine list for "Three Things You Can Do To Empower Women."

The article, unfortunately, isn't available online. But you can find it in the September issue of O, which is already at your local grocery-store or bookstore newsstand.

This piece was originally posted on One Table.


Stories We're Watching

As Growth Slows, India Awakens to Need for Foreign Investment

International Herald Tribune - Wed, 02/08/2012 - 08:26
India’s central bank and economic analysts predict that growth will fall sharply to 7 percent this fiscal year and remain sluggish.

Social responsibility and a new world order

Washington Post - Innovations - Tue, 02/07/2012 - 07:56
Just before the New Year, the London-based Center for Economics and Business Research announced that Brazil had overtaken the United Kingdom as the world’s sixth largest economy. Furthermore, it predicted that by 2020, India and Russia will also have overtaken all the European economic powers.

Aid for trade policy rears its ugly head

The Guardian's Poverty Matters - Mon, 02/06/2012 - 01:41
The UK government's dismay at not being granted the contract for Typhoon fighter jets in India is an indication that its controversial aid for trade policy is still very much alive.

Liberia's battle to put the lights back on

The Guardian's Poverty Matters - Sun, 02/05/2012 - 23:00
Ellen Johnson Sirleaf has set ambitious targets to restore the country's electricity supply. But will it meet them by 2015?

As Africa's consumers rise, so does inequality

Yale Global Online - Fri, 02/03/2012 - 10:17
Kenya struggles to spread the wealth from rapid growth.

Recent comments

Countries

An initiative of Mercy Corps
“You must be the change
you wish to see in the world”
Mahatma Gandhi
Learn more about Mercy Corps >

Efficiency

Over the last five years, more than 89% of Mercy Corps' resources have been allocated directly to programs

Excellence

America's premier charity evaluator gives Mercy Corps four stars in organizational efficiency. Click here to learn more.

High Value

Every dollar you donate to Mercy Corps helps us secure $11.16 in donated food and other critical supplies.

Mercy Corps — Dept. W — 45 SW Ankeny — Portland, OR 97204
All original content Copyright © 2009 Mercy Corps. Quoted and linked content is property of the creator(s). Mercy Corps will not sell, rent or trade your personal information.