Missing Pieces: Banking for the Poor, Reform in China, and More

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1 Isobel Coleman Democracy in Development Coleman maps the intersections between political reform, economic growth, and U.S. policy in the developing world. Subscribe to the Blog Feed Receive Blog Posts by Missing Pieces: Banking for the Poor, Reform in China, and More by Isobel Coleman March 5, /6

2 In this edition of Missing Pieces, Charles Landow highlights topics from financial services for the poor to Venezuela s presidential race. I hope you enjoy the selection. Banking for the Poor: Quality matters as much as quantity in expanding financial services to the poor, suggests a paper from the National Bureau of Economic Research. Pascaline Dupas and co-authors first offered a random sample of rural Kenyans a savings account with no opening fees and simplified procedures. More than 60 percent opened an account, but only 28 percent made at least two deposits in the following year. Surveys suggested that many feared embezzlement, unreliable services, and transaction fees. Working with another group of Kenyans, the researchers offered vouchers that made it easier to receive loans. Six months later, only 3 percent had started to apply. According to surveys, recipients feared losing their collateral if they could not repay their loan. Clearly, financial services must be appealing and trustworthy not simply available if low-income people are to use them. China s Reform Agenda: China s current growth model is unsustainable, said World Bank president Robert Zoellick last week in introducing a massive report by the Bank and a Chinese government research organization. The report argues that China can continue its robust growth in an environmentally and socially sustainable way but only with major policy shifts. These center on six pillars, ranging from structural reforms of state-owned firms and the financial sector to the expansion of social safety nets. Such steps will meet resistance, the report notes, saying that much will depend on the wisdom, strength, and determination of the Chinese leadership in pressing ahead with reforms. The Wall Street Journal offers summary and analysis. CFR s Evan Feigenbaum also gives his take, emphasizing the question of whether Chinese leaders will recognize the need for a new political economy and be able to surmount opposition. East Africa s Growth: The World Bank is upbeat about East Africa s prospects for prosperity. A new update 2/6

3 on Tanzania notes that the country has grown by nearly 7 percent per year since 2000, though population growth has reduced the per-capita impact. The Bank projects continued strong growth this year and next, though it warns Tanzania to prioritize educational reform and private sector development. A Bank blog post evaluates the whole region, noting that Kenya, Rwanda, Tanzania, and Uganda could all reach middleincome status in the next ten years. Kenya is closest, but its recent growth has been slowest. An Economist piece, meanwhile, highlights business-friendly reforms in Rwanda. But as these sources note, issues ranging from shaky education to woeful infrastructure continue to hold East Africa back. Afghanistan s Natural Resources: According to a ForeignAffairs.com article, recent surveys in Afghanistan have revealed substantial coal, oil, gas, copper, iron, gold, and more. The total value is estimated at up to $3 trillion. But how can a violent and corrupt country attract the investment needed to develop this bounty? According to the ForeignAffairs.com piece, Kabul must build a resource-based economy with the support of local Afghans, which means ensuring that both investors and Afghan elites spread the wealth beyond the capital. Kazakhstan, which enforces strict production and investment quotas and mandates that investors fund social projects in collaboration with local governors, can point the way. Chavez s Challenges: Though Venezuela s presidential election is not scheduled until October, its early stages are proving eventful. First, Henrique Capriles Radonski, a 39-year-old governor, emerged as the opposition candidate by winning an unprecedented primary on Feb. 12. Voter turnout was massive, according to the Wall Street Journal, suggesting strong dissatisfaction with Chavez. Reuters, though, notes that he remains popular among low-income and rural Venezuelans. Chavez then scrambled the race last week by revealing a recurrence of cancer. He underwent surgery in Cuba and apparently emerged well, tweeting that he was flying like a condor. But should his health falter, a CNN piece argues, his party could well face defeat, portending major changes for Venezuela. Post a Comment Name * (will not be published) * Website * Required Comment * Post Search This Blog About This Blog On Democracy in Development, Coleman maps the connections between political reform, economic growth, and U.S. policy in the developing world. Focusing on the Middle East and South Asia, she offers insights on both breaking events and enduring debates, and highlights innovative solutions to challenges in such areas as democratization, poverty and growth, health, education, and women's empowerment. About the Author 3/6

4 Isobel Coleman Senior Fellow for U.S. Foreign Policy, Director of the Civil Society, Markets, and Democracy Initiative Follow via RSS Follow via Twitter Civil Society, Markets, and Democracy Initiative Paradise Beneath Her Feet In Paradise Beneath Her Feet, Isobel Coleman shows how Muslim women and men are fighting back with progressive interpretations of Islam to support women's rights in a growing movement of Islamic feminism. Recent Posts March 5th, 2012 Missing Pieces: Banking for the Poor, Reform in China, and More In this edition of Missing Pieces, Charles Landow highlights topics from financial services for the poor to Venezuela s presidential race. March 2nd, 2012 Guest Post: Putin and Russia s Electoral Hoops International election observation can be an effective way to expose electoral manipulation and encourage democratic reform. But observers reports can March 1st, 2012 Investing in Female Entrepreneurs: The Impact of Goldman Sachs 10,000 Women Four years ago this month, Goldman Sachs invited me to attend the launch of 10,000 Women, a $100 million philanthropic February 28th, 2012 Saving Face: Film and Society in Pakistan In a feel-good moment for Pakistan, a native daughter won an Academy Award on Sunday a first for the Categories Combating Extremism (8) Democratization (59) Economic Development (47) Education (2) Guest Posts (6) 4/6

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