The new BRICS bank

The BRICS (Brabricszil, Russia, India, China and South Africa) have announced that they will set up a “New Development Bank” (NDB) to fund economic development in their countries. The aim is to start with US$50bn of equal contributions in an infrastructure loan fund, to grow that over time, and to establish a US$100bn contingency reserves arrangement for financial/payments crises. The NDB stems i) partly from a frustration with the lack of reform at the World Bank/IMF in recognition of all the comparative and absolute economic change of the last few decades and ii) partly from a positive desire to develop new streams for the growing networks of economic interaction between and across the South. The stated intention is that other ’emerging’ economies could contribute and benefit from the NDB over time.

The NDB might well be an inherent ‘good’ for these countries and their partners. Anything that potentially supports sound, value adding, infrastructure development in these countries could be very welcome. There are, however, five main issues that will determine its success or otherwise.

1. Politics – how will the institution affect geopolitics? It could be highly divisive, adding to the worrying strains that already exist between North and South? Also, are these five contributors politically stable and aligned enough to be able to pursue their goals efficiently, effectively and honestly or are they going to fall out over the real world application of their aspiration?  Rule of law and a ‘free trade’ approach are vital ingredients to successful, long-term, economic development on this scale. Sadly, some BRICS do not always display these characteristics very well.

2. Economics – the countries vary so much in the scale and scope of their investment processes and they are competitors as well as partners – can they manage the stresses these differences imply?

3. Financial – why is the pooling of this money better than the spending of it individually? Will the infrastructure that is produced be better or worse (economically as well as physically) as a result? How will they handle the letting of contracts? There is a danger of circularity here: India donates funds to the NDB which is spent with Indian companies on Indian projects – why set up an institution in Shanghai to act as a middleman in this? Why not do it yourself? In essence, why would the sum of these parts make for better outcomes than the individual pots? They can do, but how is the NDB going make sure they do?

4. Practical – who is going to do the appraisal and evaluation of investment proposals and outcomes? There is a need for robust monitoring and surveillance of the projects and the funds. Why would this NDB be be better at that than any other parallel format? All the problems of an expensive bureaucracy, with the potential for corruption, could emerge.

5.  Relationships – is the NDB set up in competition or partnership with the IMF/WB and other bodies? Will it lead to separate funding streams that are vying for the same projects? Competition may be good but it can also be divisive and inefficient. Is China going to act as guarantor as, effectively, the USA has done for the Bretton Woods institutions for nearly 70 years? Will existing institutions now decline, disappear or become more of a ‘developed’ world club?

At this point, we can not answer these issues. Good intentions now need to be backed up with practical implementation. We will need to watch closely as the NDB is born, grows and matures.

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Slum Tourism – the Good, the Bad, and the Ugly

The-Kibera-Slums-in-Nairobi-Kenya

Quick! Take a picture!

I once went to visit Kibera slum in Nairobi. Walking through the streets, I passed a group of guys dragging a heavy log through the mud. One of the men turned – he looked a bit drunk – and yelled out “hey, mzungu! You think we’re giraffes? Go to a safari park!” His friends laughed, my guide nervously pulled my arm and told me to move on. I felt extremely uncomfortable. The guy pulling the log was of course right. I was a ‘slum tourist’, paying to see areas of intense poverty.

Slum tourism has come under considerable intelligent criticism, including from Kennedy Odede and Jamal Osman. These critiques are eloquently summed up by the quote above; slum tourism turns people’s lives into safari parks. Critics claim it objectifies poverty, giving rich tourists an interesting experience but nothing back to the community.

I think that picture is too simplistic. In Kibera, I was not struck by the poverty and deprivation – but by the vibrancy, quality of infrastructure, and colour. It was a world away from the sterile, sewage-ridden mess that I’d imagined. I had no idea that there were rich areas of Kibera, with expensive churches and wealthy businessmen. I had no idea that you could buy iphones, get haircuts, and set up an internet connection there. At least personally, I think my slum tourism experience improved my understanding of Kibera. Moreover, I suspect the angry man I met was the exception rather than the rule. One study found that the single most common reaction from slum residents was apathy.

More broadly, I think one of the biggest risks facing places like Kenya (and the UK) is the increasing separation of rich and poor. The rich spend more time in wealthy ghettos, and have no reason to go to the poor areas. Asserting an ethical principle that rich people shouldn’t go to poor areas just reinforces this trend. Obviously a simple slum tourism experience is unlikely to radically change anyone’s worldview, but I think it is important that people make an attempt to move outside their normal comfortable circles.

Like anything, I think slum tourism can be a positive or negative influence, depending on how it is done. So here are some tips for anyone considering it:

  • Pick the organisation carefully. Go with an organisation with links to the local community. You should be taken round by someone from the slum, and at least some of the money should go back to the local community. This should happen directly as well as indirectly. For example, they should encourage you to shop locally, as well as using a percentage of your payment for community projects.
  • Don’t take photos. Many negative accounts of slum tourism focus on the distance that photographs put between the tourist and the subject. As Kennedy Odede says; “They get photos; we lose a piece of our dignity.” If you absolutely have to take photos, then ask permission first, and don’t single out the most stereotypical ‘slum-like’ view for your photograph.
  • Look for the beautiful aspects of slums. Ultimately, I think it’s your attitude that determines the impact of slum tourism. Slums aren’t one-dimensional collections of poverty and deprivation – but if that’s what you look for, that’s what you’ll find.
  • Interact with residents. It’s uncomfortable to interact with people when you’re a tourist, especially for us emotionally stunted English people. However, one of the key criticisms made by slum dwellers in this study was that tourists didn’t really talk with them. If you find it hard to start a conversation with someone on the street without sounding like an idiot (“So…what do you do?”) an easy way to start conversations is to buy small things (like water, sweets, or crisps) from local shops.