Economist Glenn Hubbard argues that aid targeting local African business development would help the continent more than infrastructure projects like roads. Photo: Stefan Gara (flickr)

Foreign aid has failed to end poverty in Africa because it often funds the wrong kinds of projects, says economist Glenn Hubbard. As he explains in a recent podcast interview with NPR's PlanetMoney, Africa remains just as poor as it was 50 years ago, despite the $1 trillion in foreign aid that developed countries have spent since WWII.

How to fix this? Hubbard argues that funneling aid money directly to local businesses is the most effective way to promote growth and end poverty, an idea he expands on in his book The Aid Trap. He contends in an interview with Columbia University Press that Western governments could model such an initiative on the Marshall Plan, the foreign aid program that the United States used to rebuild Europe after WWII:

Everyone in aid recognizes the Marshall Plan as the most successful aid program in history. What few realize is how the Marshall Plan actually worked. It made loans to Europe’s private businesses, who repaid them to a national fund, which spent the money on commercial infrastructure like ports and roads.

Hubbard believes that this aid model can also be applied to Africa, since small-to-medium sized business are the engines of any economy. "There is a collective amnesia among prosperous countries about how they themselves rose from poverty: their local business sectors," he writes in an article for CNNMoney. By contrast, large multinationals doing business in Africa rarely impact local poverty levels.

"We can do [this plan] without spending new money," Hubbard says to PlanetMoney, explaining that he just wants to restructure how aid is given. He also believes that "we have a moral imperative to act" to end poverty through aid, in contrast to the prominent economist Dambisa Moyo, who argues that Africa would be better off without any aid at all (see Manasi Sharma's "Is Foreign Aid Helping or Hurting Africa?"). Hubbard tells Columbia University Press that not all aid money should go to business either, since humanitarian aid and microfinance programs are both successful and necessary for the poor.

Hubbard admits to the PlanetMoney team that the idea has some risks, such as the possibility that local elites could siphon off many of the benefits without improving the lives of the poor. However, he says that it's even easier for them to do so under the current system. "The traditional aid has definitely strengthened the elites," he explains.

Despite possible drawbacks, as Hubbard points out to PlanetMoney, it's clear that when one aid plan has already failed, we shouldn't try to duplicate it for another sixty years — we should move on to something new. And as he tells Columbia University Press, "It’s not that business hasn’t worked in poor countries, it’s that business never had a chance in poor countries. Let’s provide that chance."

Add banking to the growing list of things your cell phone can do.

A September special report in the Economist took a look at the expanding use of mobile banking in Africa and explained how it could play a large part in improving personal financial stability in the region. In essence, here's how it works:

You take your cash to a mobile banking agent and tell the agent that you want to send money to a friend or family member. They credit your mobile banking account. Once the funds are available, you transfer money by sending a text message to whomever you want. The recipient then goes to his or her local agent to access the transferred money. People can even pay utilities or pay for cab rides with the service.

There is a strong correlation between the increase in a developing nation's cell phone use and it's rise in GDP, notes the World Bank. Mobile money offers similar effects on the individual level. A study by researchers at the University of Edinburgh found that users of the Kenyan mobile money service M-PESA have seen a 5 to 30 percent increase in their incomes since the service began in 2007.

One reason for this is the increased convenience that M-PESA offers. Like many men in Kenya, Nairobi resident David Omuchilili used to have to take time off from work and pay for travel costs to deliver money to his family, whose village is nearly 200 miles away. With M-PESA, he is now able to avoid the traveling and can be more available for work, as he explains to Business Week.

Mobile money transfers also offers a safer, more reliable way to send cash. Citizens without the means for traveling no longer have to take the risk of giving an envelope full of cash to a middleman — like a bus driver — and telling him where to deliver it. In the aftermath of the 2008 Kenyan election, M-Pesa was used to send money to those trapped by the rampant violence.

One thing is for certain. As mobile banking continues to grow in popularity and scale, users will find opportunities for better financial stability.

Could Africa be the world's next breadbasket?

Elizabeth Chiles Shelburne of The Atlantic seems to think it's a real possibility if African farmers adopted more modern farming technology and used better-quality seeds and fertilizers. And the payoff for agricultural investment would make a huge difference for poor African countries.

Agricultural investment in Africa — and in a few other high-potential places such as Ukraine and Russia — may be the world’s best bet for keeping food plentiful and cheap. This investment could bring other benefits too; the World Bank estimates that agricultural development is twice as effective at reducing poverty as other sources of growth. In Asia, as cereal yields rose, poverty rates plummeted. Investment in Africa’s agriculture — by donors, farmers, and African governments — may allow the continent to feed the world and save itself.

Plumpy’nut is frequently used by humanitarian agencies in emergency malnutrition situations. Photo: Thatcher Cook for Mercy Corps

Humanitarian agencies have long been using protein and energy bars filled with nutrients and vitamins when responding to food emergencies. Though these "ready-to-use foods" are seen everywhere on grocery shelves in the West, they're often viewed as lifesavers when food crises strike the developing world.

BBC News recently highlighted the efforts of two British doctors, Steve Collins and Alistair Hallam, who saw the great results these easily accessible foods can have on malnourished populations. The doctors have taken the idea of ready-to-use foods even further with their company, Valid Nutrition, which manufactures foods supplemented with important nutrients found in meat and vegetables — foods most Africans can’t afford. While majority of emergency food packets contain high sugar concentrations and supplements that help in emergency relief areas, Valid Nutrition's products contain nutrients that are important in a person's daily diet and are sold at an affordable price. The company has opened manufacturing factories in various African countries, creating jobs for locals and helping the economy by using local crops.

Instead of only using these foods during emergency relief situations, the doctors want to help treat severe acute malnutrition, where a person's weight for height measurement is 70 percent below the median range due to food shortage and/or illness, according to the World Health Organization.

"The idea is to target people suffering from a less acute, but more widespread form of malnutrition that affects a staggering two billion people worldwide," reports BBC News.

Fortification of food for the developing world is not a new idea. Other companies such as Global Alliance for Improved Nutrition, a Swiss nonprofit, has programs in various developing countries providing food for the poor. In fact, Gain is trying to put more market pressure on firms to “develop new, affordable nutritious foods by convincing business it is missing a vast untapped market.”

A group of men plant crops in Kenya. Photo: World Bank Photo Collection (flickr)

Earlier this week, Agriculture Secretary Tom Vilsack reiterated the United States' commitment to reduce Africa's dependence on food aid and promote agricultural sustainability while in Nairobi, Kenya. Vilsack said the U.S. will focus efforts on providing "affordable credit to farmers, support to women farmers and providing new technology to encourage irrigation."

The United States understands that it has to be more than providing periodic emergency food aid. It has to focus on sustainable solutions to hunger, food security and poverty. This is not something where we come in and say this is the way you need to do it, it is where we come in and say how are you doing it and how can we help you do it better.

His comments come almost a month after G-8 members pledged $20 billion dollars to fight hunger in poor nations.

Many African countries, like Madagascar pictured here, are increasingly leasing land to foreign firms, but critics argue the deals are exploitative. Photo: goukley (flickr)

A million hectares in Uganda. Some 690,000 hectares in Sudan. And 500,000 hectares in Tanzania. These are just a few of the numbers that have appeared on the bargaining table in the past year as foreign firms scramble for land leases in Africa.

The Independent takes a look at the phenomenon known as "land grabbing," or the recent trend of foreign governments and corporations leasing or purchasing large swaths of land in poorer countries to grow food or other crops for export back to their home country. The phenomenon is most prevalent in Africa, but leases have been sought elsewhere, including the Philippines and Pakistan.

[The sudden increase in "land grabbing"] has its roots in the food crisis of 2007/8, when prices of rice, wheat and other cereals skyrocketed across the world, triggering riots from Haiti to Senegal. The price spike also led food-growing countries to slap export tariffs on staple crops to minimize the amounts that left their countries. That tightened the supply still further, meaning food prices were driven up more by a situation of policy-created scarcity than by supply and demand.

This situation also made many rich countries that are reliant on massive food imports question one of the fundamentals of the global economy: the idea that every country should concentrate on its best products and then trade. Suddenly having unimaginable quantities of cash from oil was not enough to guarantee you all the food you needed. The oil sheikhs of the Gulf states found that food imports had doubled in cost over less than five years. In the future it might get even worse. You could no longer rely on regional and global markets, they concluded. The rush to grab land began.

Investors say they will bring needed infrastructure, technology and employment, but in some cases, these investments have been met with resistance. Riots erupted earlier this year in Madagascar, where almost half the children under age five don't get enough to eat. The riots were driven in part by the news that the government had given South Korean firm Daewoo a 99 year lease over 1.3 million hectares of land. On an area amounting to half the island's arable land, Daewoo planned to grow maize and palm oil solely for export to South Korea. The deal fell through when the riots forced the president, Marc Ravalomanana, out of office, BBC News reports.

Nevertheless, land grabbing is poised to continue at a rapid pace, according to The Independent:

The government of President Ravalomanana became the first in the world to be toppled because of what the United Nations' Food and Agriculture Organization recently described as "land grabbing." The Daewoo deal is only one of more than 100 land deals which have, over the past 12 months, seen massive tracts of cultivable farmland across the globe bought up by wealthy countries and international corporations. The phenomenon is accelerating at an alarming rate, with an area half the size of Europe's farmland targeted in just the past six months.

Critics question the truthfulness of the investors' promises. The head of the UN Food and Agriculture Organization, Jacques Diouf, warned that land grabbing is simply neo-colonialism, and Africa will again be exploited for its resources while seeing little direct revenue.

The Independent offers an analogy from international development policy consultant Mark Weston for understanding the current nature of the leases and what makes them magnets for controversy:

Imagine if China, following a brief negotiation with a British government desperate for foreign cash after the collapse of the economy, bought up the whole of Wales, replaced most of its inhabitants with Chinese workers, turned the entire country into an enormous rice field, and sent all the rice produced there for the next 99 years back to China.

Imagine that neither the evicted Welsh nor the rest of the British public knew what they were getting in return for this, having to content themselves with vague promises that the new landlords would upgrade a few ports and roads and create jobs for local people.

Land grabbing is just one aspect of the current discussion about agricultural development in Africa. When U.S. Secretary of State Hillary Clinton visited Kenya earlier this month she voiced interest in Africa's agricultural potential: "More and more, the world will look to Africa to be its breadbasket, and I hope that when the world looks ... it is Africans and African farmers who will profit from becoming the world's breadbasket."

A new mobile technology is helping battle HIV in Biwindi, Uganda where most people walked days through the tough terrain to get medical care. Photo: youngrobv (Rob & Ale)

Could you imagine having to walk a full day to get medical care, and then wait weeks to learn your test results? Well, that was the reality for people in Biwindi, Uganda until just a few months ago, the BBC reported earlier this month. Now, new technology is bringing medical testing to people living in the middle of Uganda's forests.

This new technology is called the PointCare NOW machine. It's a portable blood-testing device that analyzes what's wrong with you within 10 minutes. It's also the first portable machine that can diagnose HIV within minutes. Developed by PointCare, a U.S.-based company specializing in diagnostic equipment for developing countries, the machine easily fits in the trunk of most vehicles.

PointCare's founders Petra Krauledat and Peter Hansen came up with the idea for a portable, durable HIV-testing device on a trip to southern Africa a few years ago. Krauledat and Hansen say the battery-powered machine has a 180,000-day lifetime.

PointCare is piloting the technology in rural Uganda, where the need for fast and comprehensive medical care is obvious. One in 20 Ugandans is infected with HIV, according to Avert, an international AIDS charity. One in 12,500 people in Uganda is a doctor. And 70 percent of the population lives in rural areas.

Dr. Williams, a physician from England that opened a small hospital in Uganda, sings the praises of the PointCare NOW machine. He tells the BBC:

"I started a testing centre in the hospital, then the mobile testing services, and then, once we had access to drugs, developed a treatment program. Now our death rates from HIV are very low. We're able to diagnose it early, manage it early and keep people living with HIV fit and well. Over a reasonably short period of time, we've been able to change HIV from being a death sentence into something that people can live with and lead productive lives."

A young girl walking on the outskirts of Kibera, the largest slum in Africa. Photo: subcomandanta (flickr)

More than $50 billion of foreign aid is given to African countries every year to address poverty on the continent. Although this may seem generous, and to some a solid strategy to treat Africa’s ailments, Dambisa Moyo — a Zambian economist with a background that includes Harvard, Oxford and Goldman Sachs — says just the opposite.

In her new book, Dead Aid: Why Aid is Not Working and How There is Another Way for Africa, Moyo claims that foreign aid has been "an unmitigated political, economic and humanitarian disaster.”

In a recent op-ed piece in the Wall Street Journal, Moyo writes that although she isn’t completely against humanitarian aid, she doesn’t believe "charity-based aid" can provide long-term sustainable development for Africa. Her biggest issue is with “government-to-government aid,” and funds from large monetary institutions like the World Bank. Moyo says the $60 trillion of this aid that's been given in the past 60 years is not working, evident from the fact that the number of Africans who live on less than $1 day has doubled in the last 20 years. And most foreign government aid, she argues, has been pocketed by corrupt politicians.

Trade, foreign investments and microfinance opportunities can provide a better future for Africans, Moyo said in an interview with the New York Times.

As expected, Dambisa Moyo’s claims have come under fire. In an interview with Newsweek, ONE Campaign co-founder Jamie Drummond says “Dead Aid” is “a poor polemic, with nothing new of substance, filled with anecdotal micro examples which ignore mountains of evidence." Madeleine Bunting from the Guardian calls Moyo’s claims “poorly argued” with “frequent pre-emptory glib conclusions.”

I wanted to get another perspective on Dambisa Moyo's assertions regarding the effects of foreign aid on Africa. So I asked Laura Miller — Program Officer for Central Africa at Mercy Corps — to respond to some of Moyo's claims based on her experience in the international-aid business, including stints in the Central African Republic and the Democratic Republic of the Congo.

Photo: hdptcar (flickr)

It’s not easy to find something good to say about the global economic downturn, but a former World Bank economist claims that there is a possible bright spot.

According to Dambisa Moyo, donations and outside aid money for Africa have done little to extricate the continent from poverty. Instead, she suggests, the slowdown in aid as a result of the global financial crisis will give African countries an opportunity to create new and innovative ways to boost economic development. Moyo would instead like to see African countries increase trade with Asia, have more foreign investments, establish more microfinance projects, and raise money through capital markets.

Moyo’s ideas are quite a departure from the prevailing sentiment regarding aid to African countries. U.N. Secretary General Ban Ki-moon and World Bank President Robert Zoellick, among others, have made impassioned pleas in the past few months, urging wealthy nations not to renege on their aid promises. According to an interview with Reuters, Moyo is not moved by these arguments:

[The aid] actually tends to pool at the top so it's not like the average African is going to suffer. They don't see the aid anyway. Essentially it's going to really affect the bureaucratic processes at the top and would really impact on corruption."

The information from the soil map could help this Tanzanian woman farm with better fertilzers and increase her harvest. Photo: vredeseilanden (flickr)

We have elevation maps, weather maps, and population maps. So why not soil maps? It may be the key to the food security of an entire continent.

Africa has the most depleted soils on earth. A major problem is a lack of information on how to care and maintain land. What type of fertilizer should be used? How much? With which soil type? When should I rotate my crops? How long should I rest my land? Without the answers to these and other questions, the soil is degrading over time, losing nutrients with every harvest, with every harvest getting smaller and smaller. A soil map can answer these questions and, hopefully, help to reverse the trend.

The International Center for Tropical Agriculture (CIAT) is mapping the soil of all 42 countries of sub-Sahara Africa as the first step to building a global map online. The soil map will be created using soil samples and satellite imagery, which will allow for detailed and precise prescriptions for small farmers and their lands. Outreach workers and farmers associations will be trained on how to use the map and translate the information to farmers on their land.

It’s a four-year, $18-million program paid for by the Bill and Melinda Gates Foundation and Alliance for a Green Revolution in Africa (AGRA).

This program has the power to revolutionize agriculture in Africa. Nteranya Sanginga, director of CIAT's Tropical Soil Biology and Fertility Institute has said that "[w]ith accurate soil maps, we find farmers can increase their yields by around 60 percent, and sometimes double." Sounds like a plan for success worth mapping.

Archbishop Desmond Tutu sees hope for Africa with Obama's Presidency. Photo: Joshua Wanyama (flickr)

Since the beginning of the presidential election, President Obama has always had tremendous support from African nations because of his Kenyan roots. An interview done by the Atlantic Online with Nobel Peace Prize laureate and humanitarian Archbishop Desmond Tutu may help understand why Africans have rallied support for a candidate who may have similar heritage, but has never lived in their continent.

During your speech just now, you spoke elatedly about the upcoming Obama era. What special significance does his presidency have for Africans?

"We have a new spring in our walk. In Africa, we keep having to find things that say, “Yes, we can!” And his victory has said, “Yes, we can!”, even in Africa. We believe that he can make more accountable the leaders, especially in Africa. Because he can be rough with them in a way that Bush, or any other Caucasian, could not have been. They won’t be able to say, “Oh, no, this is neocolonialism,” when they’re referring to someone who is part Kenyan. So I hope he uses that particular clout.

The other side of it is that one hopes so very much that he will be able to make Africa be taken a little more seriously. And perhaps he will even increase aid to Africa, remembering his African roots. But it is so important that he couples that with saying, “We have zero tolerance for unaccountable government.”

Tutu also says that in Obama's dignity, patience and inclusiveness, he sees "the African in him." Read the full interview here.

African roads don't always facilitate the fast flow of goods. Photo: Humanitarian and Development Partnership Team in the Central African Republic (flickr)

Did you know that it costs more to ship a ton of wheat from Kenya to neighboring Uganda than it does to ship it across the Atlantic?

According to the Economist, the way in which trade is conducted in Africa is pretty much the same as it was during Colonial times. Bribes, roadblocks, military checkpoints, malarial fevers, broken-down roads and transportation parts and extra-long waiting times are just a few of the continent's trade problems.

Leading the way in constructing "transcontinental logistics networks" is Bolloré Africa Logistics, led by Vincent Bolloré, says the magazine. Bolloré says there's more to gain than just increasing profits.

[Bolloré] believes better logistics are vital to reduce poverty in Africa. A new warehouse for perishable goods, or a new garage for repairing overland lorries, he reckons, create more lasting benefits to Africans than most aid projects do.

First, food and fuel prices skyrocketed, causing serious problems for families in the developing world. Now, the worldwide credit crisis has delivered yet another serious blow to the economic outlook for low and middle-income countries.

At the start of the International Monetary Fund/World Bank annual meeting, World Bank President Robert Zoellick warned that the triple threat is potentially a “tipping point” that would “push poor people to the brink of survival.” World finance and development ministers urged wealthier governments not to ignore aid commitments in the midst of their own economic woes. The World Bank has developed a list of 28 of the countries most vulnerable to the triple threat of increased food and fuel prices and the financial crisis.

Not suprisingly, 13 out the 28 countries on this list are in Africa. But sub-Saharan Africa may avoid the worst of the global financial meltdown. A recent article in the Economist points out that the region has a number of things working in its favor. These include a highly regulated banking sector that is relatively unlinked to the Western financial system and natural resources that are drawing investment from countries like China, India and the United States.

Back in January, two IMF staffers noted that investor confidence in Africa was on the rise. Still, it's hard to argue that Africa can continue to make as much progress without outside help, like the promised $350 million more in agricultural loans from the 185-country-owned World Bank. “The stark reality," Zoellick says, "is that developing countries must prepare for a drop in trade, capital flows, remittances, and domestic investment, as well as a slowdown in growth."

Photo: Swiss.frog's photostream (flickr)

Working Villages International (WVI) is an NGO with a unique take on how to eliminate poverty in Africa. Their new initiative, Village Reliance, aims to combat poverty directly, rather than dealing only with its effects. They want to give people the skills and tools to take control of their own lives and bring themselves out of poverty.

The goal of this program is to build a village that will be environmentally and economically self-sustainable for people living in the Ruzizi Valley of the Democratic Republic of Congo.

They are building from scratch a model village which will have full employment, private ownership of small farms and businesses, zero carbon footprint and total 100 percent recycling. This project is a practical demonstration that it’s possible to profoundly increase living standards in rural Africa without hampering local culture and ingenuity.

In the future, WVI hopes to spread these villages across the DRC and the entire continent.

We buy cheap bootleg DVDs and fake Coach purses from random street vendors with little hesitation. But what about buying your daily medication from them, too?

This is a common practice in the developing world. In Zimbabwe, for example, street vendors offer the poverty-stricken populace medicine for a price five to eight times less than a legitimate pharmacy.

The trouble with these cheap meds is that they're often not the real thing. One study cited by the World Health Organization says the counterfeit medication industry could reach $75 billion by 2010. Although the industry's reach is worldwide, it's more prevalent in developing countries. The WHO says "many countries in Africa and parts of Asia and Latin America have areas where more that 30% of the medicines on sale can be counterfeit."

Though buying counterfeit medications can save a lot of money, it is also very risky. In 1995, 89 Haitian children died from taking counterfeit cough syrup that contained the active ingredient in antifreeze instead of the real medication. Governments in the developing world often lack the resources to track and prosecute these illegal manufacturers and sellers. The Internet is only making the fight harder.

Major pharmaceutical companies are protecting their products from counterfeiters using different methods. Today, companies like GlaxoSmithKline use holographic labels or stickers to make their product more distinguishable from fakes. Recently, counterfeit drugmakers have, however, been able to convincingly duplicate many of these stickers and packaging. For example, one study revealed that about half of Southeast Asia's supply of the anti-malarial drug Artesunate was counterfeit despite holographic packaging.

The easiest and fastest way to decrease the market for these fake drugs is for consumers to increase their own awareness. Many news organizations have begun to help. In this video, Al-Jazeera reports on counterfeit drugs in Mauritania.