Wednesday, 8 October 2014

Modi's Clean India campaign - don’t waste the opportunity

Narendra Modi, the Prime Minister (PM) of India, launched a Swacch Bharat Abhiyan (Clean India campaign) on October 2, the birth anniversary of Mahatma Gandhi.

Senior government officials, politicians and Bollywood actors were seen holding brooms in their hands cleaning neighbourhoods and getting photographed. The twitterati was abuzz with excitement. The campaign was filled with images and messages.

Credit: Press Information Bureau (Government of India)

The PM aims to have a Clean India by the time of Gandhi’s 150th birth anniversary in 2019.

The campaign is timely but will it be effective?

India generates more than 150,000 tonnes of waste every day and is projected to be one of the largest waste generators in the world by 2030 (PDF). Open dumping and open burning of waste is rampant in large cities. The health and environmental impacts are well known: improper waste management causes vector borne diseases, such as malaria, as well as pollution of ground water.

At the same time waste management provides livelihoods to hundreds of thousands of people. Estimates suggest that India has more than 1.5 million people whose livelihoods depend directly or indirectly on waste.

Waste management in India - problem or opportunity?


The Government of India launched a $20 billion National Urban Renewal Mission (NURM) in 2008 (PDF). A key component of the NURM was to improve solid waste management. The first round of the NURM funding cycle is over and the results have not been very encouraging. Part of the problem with the approach was the focus to identify formal private concessionaires who would be responsible for waste management. It was assumed that the private sector would be successful where the government has failed. The PM’s campaign is one of the indicators of limited results of the NURM.

So what can be done differently?

Waste, much like its composition, is a complex challenge. The starting point for understanding the complexity of the problem and associated challenges is to recognise the multiplicity of actors, interests, technologies and narratives. The complex interplay between the actors and their interest and how they play out under different narratives (and technologies) is critical for any intervention. A stark example is the uneasy relationship between the large numbers of informal recyclers and the local government responsible for waste management (PDF).

In most cities, although the informal sector provides key services for waste management it is not a part of the “formal” waste management narrative. By not resolving this uneasy relationship, and attempting to privatise waste management, the local governments have shifted the burden on to the formal private sector. At the same time, the informal sector has struggled to find a stable role in formal waste management.

The Clean India campaign’s success depends on recognising the multiple interests which could drive or block its implementation


This recognition is critical because these actors can bring in different skills, capacities and finances which would be vital for the success of the campaign. At the same time, it should be recognised that no single actor is be able to make the campaign successful.

The alliances which would be crucial for the campaign's success include a range of actors with different skills and interests, such as:
  • The informal sector: widespread collection, reuse and repair networks interested in preservation of their livelihoods
  • The formal private sector: companies with access to finance for setting up state-of-the-art infrastructure and interested in maximizing profits.
  •  The city managers: able to convene various interests and actors and interested in a clean city.
The critical element would be to identify this diversity of actors and interests and develop city-based approaches. The Clean India campaign, much like the NURM, might have challenges to deliver what it promises with a one size fit all approach. Also, it must learn from the experiments which have succeeded in involving the informal sector in formal waste management in cities like Pune, Ahmedabad, Bangalore and Delhi.

Mr. Modi’s campaign has tried to portray the individual in a city as a potential driver for a Clean India. However, the efforts of a motivated citizenry would need the support of an infrastructure that facilitates behaviour change. The campaign provides an opportunity to start thinking afresh about waste management. And critical to thinking afresh is to understand the political economy of waste.

Ashish Chaturvedi is a Research Fellow at the Institute of Development Studies. He has over 14 years of professional experience and specialises in climate change mitigation, waste management, sustainable consumption and production, and environmental policy. 
 

Thursday, 2 October 2014

More on the Argentine debt saga

Two recent developments in the ongoing conflict between Argentina and the so-called vulture funds that are preventing the implementation of an agreement to restructure the country’s foreign debt are of wide significance, in that they highlight respectively the shortcomings of current arrangements for debt restructuring and a possible way forward, albeit one not without pitfalls.

On 26 September US District Judge Thomas Griesa issued a ruling enabling Citibank to process a one-off payment on US dollar-denominated bonds issued under Argentine law to creditors that had agreed to the restructuring. This reversed a July decision by the same judge to the effect that no payment could be made without at the same time paying the full face value of the bonds held by the vulture funds. The ground for the decision is the uncertainty as to whether the bonds to be paid are subject to New York or Argentine law.

The sudden reversal confirms the doubts about Judge Griesa’ s erratic behaviour and the fears that he has lost a grip on the case that I referred to in a previous blog. More seriously, though, it also confirms the inappropriateness of handling complex multi-jurisdictional commitments and negotiations as if they were domestic cases to be tried in national courts. That this approach could have dangerous systemic consequences is by now well recognised; even the vulture funds themselves acknowledged that it would be reckless to continue preventing any payments, and supported the reversal.(1)

The way forward is therefore to set up a new, multilateral mechanism for debt restructuring. And this is precisely what the second recent development is about. As is by now fairly well known, on 9 September the United Nations General Assembly (UNGA) adopted Resolution A/68/L.57/Rev.1 entitled “Towards the establishment of a multilateral legal framework for sovereign debt restructuring processes”. The Resolution contains a decision to ”elaborate and adopt through a process of intergovernmental negotiations, as a matter of priority during its sixty-ninth session, a multilateral legal framework for sovereign debt restructuring processes with a view, inter alia, to increasing the efficiency, stability and predictability of the international financial system and achieving sustained, inclusive and equitable economic growth and sustainable development, in accordance with national circumstances and priorities.”

This is clearly progress; however, the follow up to the Resolution is by no means straightforward. The text calls for a prior process “to define the modalities for the intergovernmental negotiations and the adoption of the text of the multilateral legal framework”; this will be difficult, given the fact that the main creditor countries either voted against the resolution (11 of them, including the US, the UK, Germany and Japan) or abstained (41 countries, including most of the EU). The end result could be a significant dilution of the original aim of adopting an international convention on debt restructuring.

The UNGA Resolution is without a doubt a major first step; but the road ahead is still long and hard.

Note:
(1) Alexandra Stevenson, “Judge Grants Temporary Stay in Argentina Default Case”, The New York Times, 26 September 2014.

By Carlos Fortin, Research Associate, Institute of Development Studies

Thursday, 28 August 2014

Does fortifying food improve nutrition for the poorest people?

Globally, deficiencies in micronutrients are staggering in scale. According  to some estimates, between 40 and 60 percent of all children in developing countries suffer negative health consequences from not receiving enough iron, and a similar percentage don’t get enough Vitamin A.

One response to this problem has been more widely adopted than any other: food fortification, the process of adding micronutrients to basic foods such as wheat flour, salt or vegetable oil. According to the Food Fortification Initiative, 81 countries have passed legislation requiring at least one cereal food to be fortified.

While the rationale behind this approach is clear: fortification costs relatively little and has the potential to rapidly reach large numbers of people, case studies by IDS and partners have highlighted that fortification programmes need to do more to have an impact on the social groups that suffer the most from undernutrition – especially the rural poor. These programmes need to examine whether they are successfully covering the products and markets that reach the poorest people.

Why mandatory fortification as a nutrition strategy?

There is a clear logic underlying using legislation to make fortification mandatory: markets, if left on their own, don’t provide enough nutrient-dense foods. This is because consumers are often unwilling to pay for these foods compared to cheaper, unfortified alternatives, and there are numerous products that falsely claim to contain added nutrients or provide health benefits.

Mandatory fortification gets around these challenges by levelling the playing field, requiring all food producers to add micronutrients to their products. At the same time, they avoid the complexities of changing consumer behaviour by providing nutrients in products that people already eat.

The difficulty of regulating value chains at the ‘bottom of the pyramid’

  1. To be successful, a fortification programme needs to accomplish two things: Cover the products that poor people eat 
  2. Motivate ALL businesses making the product (and similar alternative products) to comply with the rules
Our research in Nigeria and Tanzania highlights why these conditions are difficult to achieve.

Even under the best of circumstances, motivating businesses to comply with fortification requires a well-functioning regulatory system. Experience from Nigeria shows how difficult it is to achieve this: even with support from government and donors, and commitments from large companies, only about 30 percent of products covered by the programme contained enough micronutrients.

Meanwhile, the value chains that reach poor people at the ‘bottom of the pyramid’ are difficult for policymakers to regulate. For example, in Tanzania, there are tens of thousands of small businesses processing maize flour, many of which do not appear in government records. A USAID-funded programme (pdf) has strived to motivate these small businesses to fortify since 2011. Yet, as of early 2014, none of them had started fortification – most were unable to meet the requirements for registration with the government.

Such experiences suggest that programmes need to provide support for small enterprises over longer periods, while also improving the ability of regulating institutions to cover these markets.

Fortification programmes need strategies to work with informal businesses

Food fortification programmes and partnerships should develop strategies to ensure they reach the poor, and recognise that success with larger companies doesn’t necessarily lead to better nutrition for the poorest people. If they are to improve nutrition for the poorest, programmes need strategies for working with small and informal businesses. They also need to grow and protect households’ ability to access these foods through social protection.

We still have a lot to learn about what combination of approaches works. Our policy briefing on fortification in Tanzania recommends that policy actors and donors should pursue the following actions:
  • Invest in robust regulatory systems that cover both large and small food businesses and are effective at the local level.
  • Create incentives for small enterprises to complete business registration – even if they are not currently fortifying. This will make them easier to identify, support and monitor.
  • Fund research on how poor households source food, and strengthen national surveillance systems. Nutrition stakeholders need much more accurate data on which groups are reached by which fortified products.
  • Government and donors should fund other programmes that do reach the poorest households, including social safety nets, food distribution and support for the poorest farming households.


About the Authors

Ewan Robinson is Research Officer at Institute of Development Studies, currently helping to run the 'Strengthening Agri-food Value Chains for Nutrition research project' , assessing policy options for enhancing food markets and increasing access to healthy food.

Martha Nyagaya is Food Security and Nutrition Advisor at Irish Aid.

Thursday, 21 August 2014

Will Ghana’s $498 Power Compact deal with the US be enough to bring about much needed transformation to its energy sector?

On 5th August 2014,  U.S. Secretary of State, John Kerry, and the President of Ghana, John Dramani Mahama, signed the second Millennium Challenge Corporation Compact (MCC), the Ghana Power Compact, worth $498 million.

As expressed in speeches by Mr. Kerry, President Mahama and the CEO of the MCC prior to the signing ceremony, this second compact is geared towards transforming Ghana’s power sector, that is:
  • investments in projects focused on distribution to make Ghana’s energy sector financially viable and capable of attracting private investment;
  • funding of initiatives supporting greater energy efficiency and cleaner renewable energy to enhance reliable electricity;
  • reform of critical policies and regulations.
Undertaking these measures within the compact should eventually bring about growth in the Ghanaian economy as they noted.

The signing of this second compact is timely for several reasons, but significant among them are the following.

Timely relief for Ghana’s energy-starved industry and consumers? 


First and foremost, Ghana’s power sub-sector has been hit by supply shortfall since 2012, culminating into one of the longest load shedding of electricity (or what is popularly called in Ghanaian parlance ‘dumsor, dumsor’) for the 72% of the population with access (PDF) as well industries.

This situation has affected adversely all end-users to varying degrees as well as the economy. In particular, a number of industries have suffered financially due to the prohibitive costs associated with the purchase and running of diesel/petrol generators in their day-to-day activities.

The signing of this second compact will signal a certain level of hope for all end-users of electricity in the country because of the possible improvement that will be witnessed on power supply reliability.

Opportunity to accelerate Ghana’s transition to a green economy


Secondly, Ghana has initiated measures that will ensure that her economic growth and development are along a low carbon path (PDF) to help tackle climate change mitigation and adaptation.

Credit: afh_hq - Flickr
(CC BY-NC-SA 2.0)
Although Ghana only contributes a minuscule percent (0.5 percent) to the total global Greenhouse Gas (GHG) (PDF) emissions, the impact of climate change on all the sectors in the economy and the very poor people is substantial.

Not only will the transformation of the power sector, especially the enhancement of renewable energy supply, help in the mitigation of GHG emissions, the spillover effect of abundant energy supply will also boost the activities of all sectors to result in the envisioned low carbon growth.

Thirdly and related to the second reason is Ghana’s pursuit of the transition to a Green Economy (PDF), which will serve as a vehicle for achieving sustainable development and poverty eradication.

With support from United Nations Environment Programme (UNEP), the country has already undertaken a Green Economy Scoping Study (PDF), which shows that sectors including agriculture (cocoa and fisheries), forestry and logging, energy (electricity), and industry (waste) present great opportunities for the transition to an inclusive green growth. While a full green economy assessment of these sectors is currently underway, the nation has already started mainstreaming green economy indicators into the next 3-year Medium-Term Development Policy Framework (2014-2017) – Ghana Shared Growth and Development Agenda (GSGDA) II after the expiration of the GSGDA I (2010-2013) (PDF).

Will the “carrot and stick” conditionalities approach work?


There is no doubt that this second compact agreement with the U.S.A is vital for the inclusive green growth agenda of Ghana. 

However, as many people including politicians observed immediately after the signing ceremony, many conditions have to be adhered to before the nation can access this fund. Some politicians have even doubted the country’s ability to access the fund as a result of these "carrot and stick" conditionalities. One, however, argues that they are important not only to get the leadership and institutions to act decisively and help usher in much needed reform in Ghana’s currently inefficiency-riddled power sector. As my colleague Ana Pueyo has observed, a number of constraints have prevented sufficient investments in electricity infrastructure in African countries, including weak regulatory framework, ineffective reforms, etc., and certain measures are needed to offset them.


Vital measures for ensuring the success of power sector development in Ghana


This second compact agreement is therefore a watershed in the power sector development of Ghana, but can only be realised if measures such as the following are given attention.

  • Strong leadership and good governance are very imperative. Particularly, the leadership of the country should be bold enough to take tough decisions that are right for this compact and not for politically expedient reasons. 
  • The leadership needs to pay attention to available scientific evidence to inform the policy decisions that will be taken. In this regard, research activities, findings and recommendations of various scientific studies such as the Green Growth Diagnostics for Africa Project that relate to the overarching goals of this compact are indispensable in shaping some of the policy options to adopt.
  • Greater stakeholder (private sector, civil society, academia, sector players) consultation is needed in order to build consensus around the measures to be adopted.

About the author

Simon Bawakyillenuo is a research at the Institute of Statistical, Social and Economic Research (ISSER) at the University of Ghana, Legon. His key research interests are renewable energy, environment, climate change and rural development.

Thursday, 14 August 2014

The Argentine debt affair: a threat to the international financial system

The decision by a New York District Court judge that blocked Argentina’s payments on its restructured debt to over 92% of its creditors because of opposition from the speculative hedge funds (the ‘vulture funds’) holding the rest of the debt is no doubt bad news for the Argentine government and the Argentine people. But it is also bad news for the international financial system as a whole and for international economic governance generally.

The point has by now been made by a number of weighty observers, ranging from Economics Nobel Prize laureate Joseph Stiglitz(1) to a Deputy Director of the IMF(2), to the United Nations Conference on Trade and Development(3) and the French government, which took the unusual step of filing an amicus curiae brief before the US Supreme Court urging it to reverse the decision.(4)

The French brief sets out neatly the adverse consequences of the decision for the global financial economy: it jeopardises the ability of sovereign debtors to achieve orderly and negotiated restructurings of their external debt; and it threatens sovereign lending, particularly development aid in the form of loans to developing countries.

None of this, of course, has made any difference to the outcome of the case so far; the US Appeals Court confirmed the sentence of the District Court and the Supreme Court refused to hear the case. And this is perhaps the most serious worry coming out of this episode: that complex and delicate international financial negotiations with an impact on the lives of millions of people be decided by domestic courts that have neither the required expertise to understand the technical questions involved nor the sensitivity to international development and social justice issues to put the legal arguments in perspective.

In these respects, the Argentine case is an extreme example. The judge in the suit, Thomas P. Griesa, lacks by all accounts the basic background in economics and finance to make sense of the issues. A New York Times report on one of the latest hearings states that ‘this week’s hearing made clear that he had not completely understood the bond transactions that he had been ruling on for years.’

The problem, however, goes beyond mere incompetence. It has to do with a mindset whereby sovereign debt is no different from ordinary individual debt. Judge Griesa kept on referring in his rulings to Argentina’s ‘obligations’ as if they should override any other considerations, in the way in which individual contractual obligations do. This runs contrary to well-established understandings in the sovereign bonds market; as Stiglitz puts it, ‘all investors in sovereign bonds know that there is a risk of default — that's why the bonds can pay a far higher interest rate than U.S. bonds.’ In fact in the Argentine case the bonds were purchased by the vulture funds in the secondary market at heavily discounted prices after Argentina had declared default in 2001.

To equate this situation with ‘obligations’ in a private loan contract is to miss the very essence of sovereign debt arrangements.

The way out of this conundrum lies in the setting up of an international system for the orderly restructuring of sovereign debt that takes the issue out of domestic courts and into specialist international jurisdiction. A proposal to this effect was already made by the IMF in 2003 and related work on Principles on Responsible Sovereign Lending and Borrowing is underway in UNCTAD. What is needed now is enough political will to implement.

Notes:
(1) Joseph Stiglitz, 'A Global System Is Needed for Debt Restructuring', The New York Times, Room for Debate, 1 August 2014.
(2) 'IMF Launches Discussion of Sovereign Debt Restructuring', IMF Survey Magazine, 23 May 2013.
(3) UNCTAD, Argentina's 'vulture fund' crisis threatens profound consequences for international financial system, 25 June 2014.
(4) Available at http://www.shearman.com/~/media/Files/Services/Argentine-Sovereign-Debt/2014/Arg48-Brief-for-Republic-of-France-as-Amicus-Curiae-in-Support-032514pdf.pdf.

By Carlos Fortin, Research Associate, Institute of Development Studies