Traditional birth attendants and antenatal care in western Kenya

This paper examines the extent to which locally informed intermediaries can be exploited and provided with incentives to change the health-seeking behavior of pregnant women in rural Kenya. Despite Kenya being the largest and most advanced economy of East Africa, maternal and infant health outcomes are typical for those of other sub-Saharan countries, which lag significantly behind the developed world. There is evidence that antenatal care (ANC) is associated with improved maternal health outcomes, yet the majority of women in rural Kenya fail to meet recommendations for ANC timing and use, despite the availability of government subsidized healthcare. I examine whether a local intermediary, whose own incentives might oppose those of the government, can be co-opted to assist the government’s objective of increasing women’s ANC utilization.

I use a randomized controlled trial (RCT) to evaluate a program, which provides financial incentives for TBAs to encourage pregnant women to seek ANC at a formal medical facility. Competition between the TBAs and the formal clinics makes the effect of the program an empirical question, as there is no guarantee that the TBAs will respond to the incentive.

I find that living in a TBA treatment village increases the likelihood of attending the recommended number of visits by 20.7%. Women living in TBA treatment villages are 4.4 percentage points more likely to attend the recommended number of visits than women living in control villages, who attend the recommended number of visits 21.3% of the time. The results of this experiment, the first to study the extent to which TBAs can be motivated to encourage women to attend the prenatal clinic, could have important policy implications. The program’s success suggests that despite having a risk of losing clients, TBAs can be utilized as intermediaries of health facilities. Furthermore, finding that TBAs can induce pregnant women to attend ANC visits indicates that cultural norms, which discourage women going to ANC visits, can be overcome with relatively small financial incentives. By increasing the demand for formal maternal healthcare, TBAs’ encouragement of ANC attendance by women may help achieve improved maternal and child health outcomes.

That’s Georgetown’s Nisha Rai, in an excellent paper on the possibilities of integrating the use of traditional birth attendants with the formal healthcare system in Kenya (and developing countries in general). You can find a summary of the paper at the Bank’s Development Impact blog here.

If you know a policymaker in the health ministry of a developing country, please have them read this paper.

A call for “politically robust” evaluation designs

Heather Lanthorn cites Gary King et al. on the need for ‘politically robust’ experimental designs for public policy evaluation:

scholars need to remember that responsive political behavior by political elites is an integral and essential feature of democratic political systems and should not be treated with disdain or as an inconvenience. instead, the reality of democratic politics needs to be built into evaluation designs from the start — or else researchers risk their plans being doomed to an unpleasant demise. thus, although not always fully recognized, all public policy evaluations are projects in both political science and political science.

The point here is that what pleases journal reviewers is seldom useful for policymakers.

H/T Brett

On Contracts and Motorcycle Taxi Markets in Benin and Togo

In the motorcycle-taxi market in most Sub-Saharan African countries, the relation between vehicle owner and driver is characterised by a principal-agent problem with the following features: the owner cannot observe the final output of the driver and therefore cannot condition a wage on it, and higher effort from the driver depreciates the motorcycle. These two feature simply that it is in the owner’s best interest that the driver exerts as little effort as possible while still leasing the motorcycle from him. The problem with low effort implementation is that the motorcycle will not generate enough revenue. I analyse the contractual arrangements between owners and the drivers in this market using survey data from four cities in Togo and Benin. Evidence suggests that the quest for trust through kinship between owner and driver may explain the prevalence of a contract that induces drivers to exert excessive effort, leading to adverse outcomes like traffic accidents.

That is Moussa Blimpo in a new cool paper in the Journal of African Economies.

One of the questions the paper addresses implicitly is whether trust necessarily leads to better development outcomes (you’ve seen those cross-country regressions with trust as an independent variable…)

……. in the presence of trust, people tend not to sign formal contracts that define residual rights and the actions to be taken in different expected situations. For example, if the owner and the driver are family members, they will be unlikely to draft a contract that caters to litigation, given that it is socially unacceptable to take a legal action against family.

What this means is that sub-optimal contracting and economic outcomes in developing countries may not be due to a general notion of lack of trust, but rather the lack of a specific kind of trust, let’s call it civic trust. This is the kind of trust that is infused with a healthy dose of skepticism and accompanied by explicit contracting under the shadow of credible enforcement by a third party, the state.

The Anatomy of Tax Evasion in Africa

Africa Confidential has a great piece analyzing leaked documents from PwC, the professional services firm, showing the various arrangements that enable multinational companies to evade taxes in Africa. You can read the whole piece here (gated).

  • One of the measures PwC advised multinationals to take was to create a wholly-owned Luxembourg-based subsidiary which would hold the rights to intellectual property used by the rest of the group. The rest of the group would then pay licensing fees to the Luxembourg-based subsidiary which, by agreement with the authorities, would be granted tax relief of up to 80%……
  • A second tax avoidance mechanism simply involved the companies becoming incorporated in Luxembourg. In 2010, Luxembourg concluded an agreement with several companies of the Socfin (Société financière) agribusiness group, which was founded during the reign of Belgian King Leopold II by the late Belgian businessman Adrien Hallet. The companies chose Luxembourg as their base and made an agreement under which their dividends were subject to a modest 15% withholding tax, a lower figure than those in force where their farms are located (20% in Congo-K and Indonesia, 18% in Côte d’Ivoire).
transfer-pricing

The art of hiding profits

Altogether, Socfin subsidiaries in Africa [in Sierra Leone, Nigeria, Liberia, Cote d’Ivoire, and Cameroon] and Indonesia produced 123,660t. of rubber and 380,770t. of palm oil in 2012. The combined turnover of its main African subsidiaries reached €271 mn. in 2013. The list also includes the 100%-owned Plantations Socfinaf Ghana Ltd. (PSG) and Socfin-Brabanta (Congo-Kinshasa). Socfin also holds 88% of Agripalma in São Tomé e Príncipe and 5% of Red Lands Roses (Kenya).

  • A third mechanism involves cross-border lending within a group of companies. Companies registered in Luxembourg are exempt from tax on income from interest.

According to the Thabo Mbeki High Level Panel report between 1980 and 2009 between 1.2tr and 1.4tr left Africa in illicit flows. These figures are most likely an understatement. Multinationals, like the ones highlighted by Africa Confidential, accounted for 60% of these flows.

Alex Cobhan, of the Tax Justice Network, has a neat summary of the various components of illicit financial flows (IFFs) and how to measure them. He also proposes measures that could help limit IFFs, including: (i) eliminating anonymous ownership of companies, trusts, and foundations; (ii) ensuring that all bilateral trade and investment flows occur between jurisdictions which exchange tax information on an automatic basis; and (iii) making all multinational corporations publish data about their economic activity and taxation on a country-by-country basis.

Alex Cobham blogs here.

More on debt, macroeconomic stability, and natural resources in Africa (Uganda Edition)

See earlier posts on this subject here and here. Below is a quote from FP on Uganda’s growing petroleum sector (see also the Global Witness report on Uganda’s secret oil contracts here):

Source: Global Witness

Uganda’s Projected Oil Production Curve. Source: Global Witness

The bulk of Ugandan government borrowing against future oil revenues has focused on grand infrastructure schemes built and funded by the Chinese. In 2014 alone, the government signed deals with China to build two hydropower dams worth $2.2 billion, a standard gauge railway that could cost up to $8 billion, and a $600 million fertilizer plant. Additional projects include a $2 billion oil field being developed by the state-owned China National Offshore Oil Corporation and a $350 million roadbetween Uganda’s capital, Kampala, and Entebbe International Airport. The possibility has even been raised that a Chinese bank may bail out Ugandan parliamentarians in danger of going to jail for failure to honor their debts.

And how efficiently is Uganda spending the [expensive] borrowed money?

Costs for the Ugandan section of the East African Standard Gauge Railway are especially out of control. The project had an initial price tag of $4.5 billion for the Ugandan side of the railway, compared to $3.8 billion for the Kenyan side. Estimated costs in Uganda subsequently shot up, first to $8 billion and then to a staggering $11 billion

So what will happen when China decides to deal with its public debt situation and the effects propagate to its many public companies involved in mega-projects in Africa?

To reiterate, let’s not declare mission accomplished in the war against the resource in Africa just yet.

The Long-Run Economic Impact of the Tse Tse Fly in Sub-Saharan Africa

The Tse Tse is estimated to have had substantial effects on precolonial Africa: a one standard deviation increase in the TSI [Tse Tse suitability index] is associated with a 23 percentage point decrease in the likelihood an African ethnic group had large domesticated animals, a nine percentage point decrease in intensive cultivation and a six percentage point reduction in plow use. A one standard deviation increase in the TSI is correlated with a 53 percent reduction in historical population density….

The TSI has a negative correlation with current economic outcomes as measured by satellite light density or the observed cattle distribution in Africa. The modern analysis is performed at the district level and is robust to including country fixed effects. The evidence suggests that the relationship between the TSI and satellite lights is driven by the Tse Tse’s effect on shaping historical institutions, particularly political centralization.

You can find the entire paper here.

HT Tyler Cowen.

Working With the Grain in Development

I finally got to reading Brian Levy’s Working With the Grain. It is easily the most underestimated development book of 2014, and should be read alongside William Easterly’s Tyranny of Experts (which it both complements and pushes back against). Like Easterly, Levy worked at the Bank and has insightful case studies and anecdotes from South Korea, to Ethiopia, to Bangladesh, among other countries. The book’s main thrust is that approaches to interventionist development policy ought to internalize the fact that:

… Successful reforms need to be aligned with a country’s political and institutional realities. For any specific reform, an incentive compatible approach begins by asking, who might be the critical mass of actors who both have standing and a stake in the proposed arrangements – and so are in a position to support and protect them in the face of opposition? [p. 142-3]

From a policy perspective, Levy tackles the relationship between governance, regime types, and development head on. How do you deal with the Biyas, Kagames or Zenawis of this world if you deeply care about [both] the material aspects of human welfare – roads, hospitals, schools, electricity, etc., [and] political freedoms and inclusive institutions?

Screen Shot 2014-12-17 at 12.32.06 PM

Levy’s answer is that development experts should work with the grain, focusing on incrementally solidifying past gains in specific agencies and issue areas, instead of engaging in epic battles against ill-defined and equally poorly understood “bad institutions” and evils like “corruption.” He aptly points out that you do not need the full set of the “good governance” bundle in order to continue chugging along on the path to economic prosperity.

In other words, we don’t have to put everything else on pause until we get the institutions right (or topple the bad guys). It is not an all or nothing game. His argument is persuasive (“good governance” has failed as a prescriptive remedy for underdevelopment), albeit at the cost of casting the immense toll of living under autocratic regimes as somewhat ineluctable on the road to economic prosperity. But at least he dares to challenge conventional approaches to governance reform that have at best failed, and at worst distracted governing elites from initiatives that could have worked to improve human welfare in developing countries.

As I read the book I wondered what Levy might think of the current state of development research. We are lucky to live in an age of increasing appreciation for evidence-based policy development, implementation, and evaluation. However, the resulting aura of “objectivity” in development research often leaves little room for politics, and its inefficiencies and contextual nuances. Sometimes the quest for generalizability makes us get too much into the weeds and forget that what is good for journal reviewers seldom passes the politicians’ (or other influential actors’) incentive compatibility test, rendering our findings useless from their perspective.

It is obvious, but worth reiterating, that the outcomes we can quantify, and therefore study, do not always overlap with the most pressing issues in development or policies that are politically feasible.

Perhaps this is a call for greater investment in public policy schools (not two-day capacity building workshops) in the developing world that will train experts to bridge the gap between academic development research and actual policy formulation and implementation (talking to policymakers makes your realize that this gap is wider than you think). Linking research findings to actual policy may sound easy, but you only need to see a “policy recommendations” section of a report written by those of us in the academy to know that it is not.

Development Experts and Their Biases

It is perhaps uncontroversial to suggest that World Bank staff have a different worldview from others. World Bank staff are highly educated and relatively wealthier than a large proportion of the world. However, it is interesting to note that while the goal of development is to end poverty, development professionals are not always good at predicting how poverty shapes mindsets. For example, although 42 percent of Bank staff predicted that most poor people in Nairobi, Kenya, would agree with the statement that “vaccines are risky because they can cause sterilization,” only 11 percent of the poor people sampled in Nairobi actually agreed with that statement. Overall, immunization coverage rates in Kenya are over 80 percent. There were also no significant differences in the responses of Bank staff in country offices and those in headquarters or in responses of staff working directly on poverty relative to staff working on other issues. This finding suggests the presence of a shared mental model, not tempered by direct exposure to poverty [emphasis added].

That is an excerpt from the World Development Report 2015, the section on the biases of development professionals.

One hopes that the problem highlighted by the last line is not crowded out of President Kim’s agenda at the Bank by the ongoing cost-cutting. And in case you were wondering, I don’t think flying coach and no breakfast will cut it since airports and the Mamba Points of this world are beyond the reach of most poor people. Speaking from experience, the development “expert” bubble is real, and enduring. We definitely need to do more to burst the bubble.

If field country offices are mere extensions of DC, then many development projects will continue to be variants of the proverbial solar cookers decried by Jim Ferguson in the Anti-Politics Machine. And everyone will continue to run around in circles.

A New TV Show About Aid and Development

Just saw this over at Africa is a Country:

Finally, a new TV show exists to highlight some of the absurdities of the international aid sector. The slyly named The Samaritans is a comedy about the perils – and pleasures – of the “NGO world”. Created by a Kenya-based production company, it chronicles the work of Aid for Aid – an NGO that, in the words of its creator, “does nothing”.

H/T D. Waweru

Who is the African child on the cover of William Easterly’s new book?

ImageUPDATE: A reader, C. Mwangi, just brought to my attention this quote from William Easterly’s 2009 review of Dambisa Moyo’s Dead Aid.

Moyo is onto something important but, as she says, seldom discussed openly. One of development’s dark secrets is its still-influential origins in the “poor people are children” view, a view with a deeply rooted and very long history. The “development” metaphor was itself is a biological one: poor people “develop” from childhood (poverty) into adulthood (prosperity). Some of the signs of this mindset are subtle but unmistakable. Just think of who was pictured in the last glossy “aid to Africa” brochure you saw? I am willing to bet it was African children. As David Rieff said in his classic book A Bed for the Night, “There are two groups of people who like to be photographed with children: dictators and aid officials.” And of course, you don’t let children manage their own affairs; the adults must do it for them.

The rest of the review, originally meant for publication in the LRB, is available here.

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They say don’t judge a book by its cover, but if it wasn’t for Bill Easterly’s reputation for sound thinking on matters to do with Development, I would not have pre-ordered his upcoming book The Tyranny of Experts.

Seriously, as a new year resolution can we all promise never to fall into the temptation to include anonymous African children (invariably looking poor and shabby with flies on their faces or carrying guns, among other things) on the cover of books on poverty and development?

PLEASE? It is no longer good form (and never has been), especially coming from people who ought to know better. Were the boy’s parents or guardians consulted? Do they even know that their kid is on the cover of Easterly’s book?

The book title suggests that Easterly cares about the forgotten rights of the poor, yet the use of the cover image violates an important right of the poor: the right against unfair objectification. There is research out there suggesting that African states face an FDI inflow penalty simply because they are African. Images like these on the cover of books do not help the cause to reverse this reality.

To be fair (as a commenter pointed out to me on twitter) it is the publishers who decide these things to drive sales. But authors still have a right (and in my view, a duty) to ensure that this sort of stuff doesn’t happen.

I feel bad calling out Easterly on this because he is one of the more nuanced and very sane development economists/practitioners out there (and there are certainly far much worse instances of this phenomenon out there); but the habit of using a whole region and its peoples as shorthand for poverty, underdevelopment and dysfunction has to stop. And it starts with each and every one of us.