Ideas to Action:

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CGD in the News

March 19, 2019

Development finance institutions grapple with their growing role (Devex)

From the article:

Small agencies that work alone, siloed off from the rest of a country’s development work: That’s how development finance institutions might have been described just a decade ago. But DFIs have gained prominence as the role of the private sector has been accepted and because their work can be put in direct service of meeting the Sustainable Development Goals.

As the paradigm shifted from a focus on social service support and grant-based official development assistance to one more driven by private sector development, countries have turned to development finance institutions to provide solutions to help create jobs, spur economic development, and reduce poverty. As a result, the number of institutions has proliferated.

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Taking risks

In the past several years, a number of DFIs moved to invest more in least developed or low-income countries.

Deals in LDCs are difficult and complex. They require taking more financial risk and more effort and creativity, said Colin Buckley, chief operating officer at CDC.

Historically, DFIs have been hesitant to invest in fragile states and risky settings where the investment had less than an 80 percent probability of success, even if it had the capacity for transformative impact, Buckley said.

“One thing DFIs need to be more comfortable doing is rolling the dice for transformative impact,” he said.

DFIs will not, and cannot, solely invest in the poorest, riskiest places. In an effort to remain profitable and balance their portfolios, they will continue to make some investments that are deemed safer, even as they look to invest more in low-income countries.

But some experts believe that DFIs should be taking more risk and doing more to crowd capital into higher risk markets where private finance is especially scarce.  

“Some DFIs — I’d pick on IFC [the International Finance Corp.] for sure here — are mostly not in high-risk markets and not very engaged in high-risk sectors and are mostly doing safe projects,” said Todd Moss, the executive director at the Energy for Growth Hub, a spin-off from the Center for Global Development, where he is also a visiting fellow.

Part of the problem has to do with incentives: At some DFIs, investment teams are rewarded based on the amount of money invested, rather than on where it is invested or what its impact will be. There is also often pressure on the financial side, especially for DFIs that operate like commercial banks and are trying to maintain AA or AAA credit ratings.

“The scale and risk issues mean for these agencies to succeed, they need to create internal incentives for people to take risk and subsidize upfront costs,” Moss said.

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As a result, in some industries, DFIs appear to be preventing a natural progression to more commercial capital over time, keeping them locked in as sectors dependent on concessional financing, he said.

Not all DFIs are investing in that way, the investor noted. He pointed to a recent Overseas Private Investment Corp. deal where OPIC made part of its investment junior debt, a move that would allow the fund to raise more commercial sources of capital, which would need to be senior debt.

“I dont think they’re chasing out private capital very often. The bigger problem is sometimes crowding in other DFIs rather than truly private capital,” Moss said, adding that it could be an issue of immature markets that would change over time.

Some, including Andreasen, said that they don’t see competition as a problem, and instead often see DFIs working together. About one-third of individual investments that the European bilateral DFIs make are done alongside other European DFIs, he said.

“It’s fine to have debate and scrutiny in this respect, but I don’t see a lot of specific evidence,” Andreasen said.

One place DFIs are playing a critical role, and are working together, is in financing local banks in Africa in the wake of restrictive regulations around risk that have led many commercial banks to pull out, he said.

Buckley said DFIs haven’t been very good at coordination with one another or with aid agencies. Often, transformative investments need regulatory or institutional reform — and that is where DFIs should work more closely with aid agencies to address some of those challenges.

“I think people should demand more cooperation as DFIs grow in prominence and capital,” Buckley said.

Transparency and measurement

As more funds are funneled through DFI investment mechanisms, demand is growing for better measurement and improved transparency.

“As public agencies, they should be as transparent as possible — they don’t need to release every detail of every project, but they should release information about activities ... as maximally as possible,” Moss said.

A DFI should release all information unless there is a commercial reason not to, he said. It should be transparent about systems for evaluating development impact during and after it makes investments, and the data should be made available in easily accessible formats.

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February 24, 2019

Providence native faces diplomatic challenge as U.S. ambassador to Zimbabwe (Providence Journal)

From the article:

U.S. Ambassador Brian Nichols, a Moses Brown School graduate and son of a Brown University professor, has an opportunity to help foster democracy in the African nation at a “pivotal and precarious time” in its history, according to one observer.

The air traffic control tower at the airport in Zimbabwe’s capital city has a distinctive design, inspired by African history.

A Rhode Islander willing to look past the tower’s triangular windows and other style details could easily liken it to a New England lighthouse.

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So far, the policy has not produced all of the desired results.

“Ambassador Nichols has arrived in Zimbabwe at a really pivotal and precarious time, which is exciting for a diplomat,” says a prominent Zimbabwe observer, Todd Moss, a senior fellow at the Center For Global Development. “But it also makes it difficult.”

“It’s going to be a challenge,” Moss says.

The election itself, while a marked improvement from the Mugabe era, fell short of international standards, according to observers sponsored by the U.S.

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February 20, 2019

Growth Alone Won’t Help the Poor (Foreign Policy)

From the article:

The global economy, in terms of GDP per capita, grew by 32 percent between 1990 and 2010. This growth has helped lift more than a billion people worldwide out of poverty, nearly cutting in half the 1990 global poverty rate.

However, using the same yardstick for measuring poverty across the developing world—and defining poverty as earning $1.25 or less per person per day (adjusted for price differences across the world)—the number of Nigerians in poverty between 1992 and 2010 increased to 70 percent of the population, an increase of 22 percent from the rate in 1992. Clearly, global growth was not good for Nigeria’s most vulnerable citizens. The poor were not lifted by the rising tide; instead, they were left to sink.

As of 2010, 7 out of 10 Nigerians were considered poor. And according to a study from the Center for Global Development, most of the poor are from the north of the country, with more than two-thirds at risk of spending their lifetime in poverty. This is despite a rise in the country’s GDP per capita by about 19 percent and a decline in the level of inequality.

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The challenge for the next government, therefore, is to generate more growth while at the same time dealing with inequality and reducing poverty. The challenge for the next government, therefore, is to generate more growth while at the same time dealing with inequality and reducing poverty.

Whoever wins the election should take two steps: First, since Nigeria is an oil-rich country, it should attempt to implement a proposal developed by Todd Moss and his colleagues at the Center for Global Development—using oil revenues to make direct cash transfers to the poor, counting such transfers as income, and subjecting them to taxation, a policy that would enhance accountability and reduce official corruption. Although the current government is running a cash transfer program of 5,000 naira (approximately $14) per month per household, this won’t bring relief  because fewer than 1 per cent of poor people are benefiting and the amount isn’t enough to boost the welfare of the poor in an economy currently experiencing inflation. Without an increase and an expansion of the number of beneficiaries it won’t do much to reduce poverty.

 

January 17, 2019

Zimbabwe’s president channels Mugabe in violent crackdown on protests (Talk Media News)

From the article:

Click here to listen!

Todd Moss is a senior fellow at the Center for Global Development and says the man running Zimbabwe in Mnangagwa’s place, Vice President Constantino Chiwenga, has resorted to some familiar tactics to maintain order.

“He is a long-time enforcer, he’s the head of the military and all the brutal tactics that we’re seeing — shooting civilians in the streets, raiding peoples’ homes in the middle of the night — that’s all organized by Vice President and former general Chiwanga.” 

Moss isn’t hopeful Zimbabwe’s government can or will fix the mess they’ve created.

“It’s like a mafia situation, where there’s a small group that uses their control of the security to enrich themselves and as they see the economy getting worse, they’re like rats on the ship — everyone is grabbing what they can now in a desperate bid to hold onto what they have.”

But instead of writing off Zimbabwe’s problems as endemic, Moss says the U.S. and other countries should harness the leverage they still have over the new president.

“They must make absolutely clear to Mnangagwa that he is responsible for the actions of his military and that all the things he craves from the world – legitimacy, he wants investment and he’s desperate for debt relief from the U.S. and other creditors – all of that is absolutely on the line if he does not rein in the terror we’re seeing unfold today.”

January 17, 2019

Zimbabwe Crackdown Saps Hopes of Reform (Foreign Policy)

From the article:

Authorities in Zimbabwe have killed at least eight people and shut down the internet following protests on fuel price hikes in the past week around the country, in the most severe bout of state-mediated violence since President Emmerson Mnangagwa came to power in 2017.

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“He’s the enforcer,” said Todd Moss, an expert on the region and former State Department official now at the Center for Global Development.

“Under the Mugabe dictatorship, the police were always at the forefront, and the use of the military was there, but behind closed doors.”

To make it hard for organizers to coordinate the protests and to prevent images and video of the crackdown from seeping out and prompting international criticism, the Zimbabwean government moved to shut down internet access on Jan. 14.

January 15, 2019

BBC Newsday: Todd Moss on fuel shortages in Zimbabwe (BBC)

Click here to listen!

Todd Moss, Senior Fellow on from minutes 37:30-41:00

December 14, 2018

New US-Africa policy takes aim at growing Chinese, Russian influence (Talk Media News)

From the interview with Todd Moss:
 
Optics aside, countering Russian and Chinese won’t be cheap, and Bolton instead pressed for reducing foreign aid to countries able to pay their own bills or that vote against the U.S. at the United Nations.
 
Todd Moss is a senior fellow at the Center for Global Development.
 
“Africa is a long-term strategic play for the United States and we should behave like we’re here for the long haul rather than negotiating over small things over short time horizons.”
 
Listen to the interview here.
 
December 9, 2018

Todd Moss: When it Comes to Energy, Big is Beautiful (Nonprofit Chronicles)

From the article:
 
Who could object to efforts to bring clean, renewable energy to people without electricity? Donors and investors love social enterprises (D.Light, Greenlight Planet, BrightLife) and nonprofits (SolarAid, GivePower) that bring solar panels, lights or phone chargers to poor households in Africa and south Asia. Why, even President Obama, on a visit to Tanzania, played with a Soccket, a soccer ball that generates just enough energy to power a light bulb or charge a phone.
 
Trouble arises, though, when these well-intentioned, small-scale initiatives draw attention away from utility-scale energy projects that can power businesses and drive economic growth–the kinds of big projects that lifted the US, Europe, Japan, China and much of the rest of the world out of poverty. Or, worse, when an absolutist devotion to renewable energy stands in the way of big, centralized projects–specifically, the natural gas, coal and nuclear power projects that, even today, provide more than 80 percent of the electricity used in the US.
 
This is Todd Moss’s concern. Moss, 48, is a senior fellow at the Center for Global Development, a former state department official and a PhD economist who recently launched the Energy for Growth Hub. The Energy for Growth Hub is a network of scholars and advocates who want to bring some common sense to the conversation about how get energy to everyone in Africa and Asia. They are focused not just on the 1.3bn people whose homes are without a light switch but the 3bn or so who live in places where a lack of reliable, abundant electricity remains a barrier to progress.
 
Read the full article here.
 
December 5, 2018

Minimizing Energy & Packaging Waste This Holiday Season (The Environmental Magazine)

By Allie Garnham

From the article:

Dear EarthTalk: How can I minimize energy and packaging waste this holiday season?

— Marianne, via e-mail

If you’re dreaming of a green holiday season this year, you’ll have to take care to shop and decorate with the planet in mind. Celebrating the holidays plays a substantial role in the creation of waste during this period as a result of packaging from gifts and surplus food being thrown away and making its way to the landfill. But whether you’re looking forward to a lavish holiday with your friends and family this year or a more minimalist celebration, you can still be green and enjoy the festivities.

One way to reduce your environmental footprint is to shop locally. While online shopping may seem greener, it involves excess packaging (think shipping boxes and padding) and pollution (from miles flown/driven by UPS and FedEX to get purchases to your door).  By patronizing nearby businesses instead, you’ll be supporting the local economy and reducing pollution. If you do shop online, try to consolidate your purchases into one big order to minimize the number of special trips shippers must make to your house.

Another way to green your holiday celebrations is to switch over from those flashing lights and inflatable snowmen to more subtle displays of holiday spirit. The Center for Global Development reports that Americans consume 6.63 billion kilowatts of electricity annually on holiday lighting and decorations. Instead of being part of the problem, unplug and light some candles. All-natural soy varieties—Real Soy’s ginger or cinnamon-scented candles are popular around the holidays—are friendlier to the environment than traditional petroleum-based paraffin candles.

Read the full article here.

 

November 25, 2018

Tech Savvy: Christmas lights: Highlights and lowlights in the season of giving (Brainerd Dispatch)

By Gabriel Lagarde 

From the article:

Christmas lights have something of a unique charm—in some ways serving as luminous symbols of good cheer during the winter solstice, shining brightly and happily during the darkest times of the year.

Americans have a special affinity for these vines of light, garlanded around homes and fashioned into jaw-dropping installations—in fact, it's been reported ad nauseum that the U.S. channels more volts into Christmas bulbs than many developing nations use electricity in a given year.

That's about 6.63 billion kilowatt hours per the Center for Global Development in 2015.

It's enough to put the holiday season power consumption of states like Illinois, Texas and New York on an even playing field with the total year-long power consumption of nations like Austria, Indonesia and Vietnam respectively.

That's supersized holiday cheer for a culture that's never been shy about it's fondness for things that tip the scales, one way or another. But, while people's love for lights is unlikely to dim in the foreseeable future, there may be a lot of motivation to dial down power consumption associated with these multi-colored bulbs—whether it's concerns for the environment, or possibly fire safety, but primarily for the sake of wallets and checkbooks.

Read the full article here

 

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