Rachel's World

My Blog for MCC

I haven’t died… I’m just writing blogs for Millennium Challenge Corporation.

Perverse Cycles: Agricultural Development and Unrest in the Middle East

My summer employer is engaged in a rural agricultural development program in southern Morocco. This involved me schlepping to Aoufous this morning - a beautiful oasis in a valley nested amid the vast and desolate desert. Aoufous is rural and, compared to Moroccan cities like Casablanca and Rabat, relatively undeveloped.

Young people in these rural areas - particularly men - are migrating to bigger cities like Rabat and Casablanca to find work. The urban economies here, however, cannot support this migration and these people often find themselves selling tissue on the side of the road for lack of better opportunities. Meanwhile, emigration from rural areas leads to a depletion of the kinds of services that make cities livable - movie theaters, restaurants, etc. As more people leave, Aoufous becomes a less attractive place to live, and so on - a perverse sort of economic cycle perpetuates itself. Moreover, the bigger cities that these people move to lack infrastructure to absorb them, leading to urban slums, crime, and a high percentage of disenfranchised youth. It is these restive segments of the population that are the harbingers of political unrest spreading across the Middle East and North Africa.

Economies like those in Morocco, Egypt, and Tunisia are also highly dependent on imports. In Morocco, agricultural practices are leading to the mass erosion of soil, which results in the permanent loss of farmland. The project I am working on is promoting more sustainable agricultural practices with higher value crops, like olives and dates on farmland that had been traditionally used for wheat. It is also focused on training young people to farm and build farming cooperatives.

The problem is, many young people don’t want to farm - they want to move to cities. This is an international issue, as well; the average age of farmers in the United States is around 60. Countries like Egypt and Morocco also subsidize the price of bread and other basic commodities for the poor, keeping them artificially low. However, these low prices keep investors from moving into the farming sector, ultimately discouraging growth and innovation. Stagnant agricultural sectors result in economies that are more susceptible to negative price shocks. Protests in Egypt actually began when I was living there in in 2007 because of the climbing price of bread. 

All of these issues - social, economic, and agronomic - are thus linked. And as Lester Brown writes for Foreign Policy, the political turmoil that will result from increasingly volatile food prices is becoming increasingly unavoidable. Governments must redefine security by shifting expenditures from military uses to investing in climate change mitigation, water efficiency, soil conservation, and population stabilization or we will be facing a world with increasingly volatile markets and violent uprisings.

The Myth of Arab Civil Society

I am spending a good portion of my summer in Rabat, Morocco. It is astonishingly nice here; peaceful, with sea breezes and fresh orange juice (aseer portuqal) served on street corners.  The livability of this city belies the subtle unrest beneath the surface, a residual electric current unleashed by the aftershocks of the Arab Spring.

As is common throughout the Arab world, I find myself amid a youthful, energetic population that no doubt yearns for a better life. The median age in Morocco is around 27.  In the wake of the uprisings across the Middle East and North Africa that have given way to uneasy and sometimes violent political transitions, I wonder what the next steps are for this region.  Does a Facebook uprising yield a Facebook democracy?  Certainly it has potential, but we must stop short of buying this sort of assumption. While the person-to-person connectivity of the internet is a powerful tool for civil resistance, it has yet to prove itself as a harbinger of civil society.

In a particularly thoughtful piece, Timur Kuran, a professor of economics and political science at Duke University, argues that the Arab world has historically lacked nongovernmental organizations or associations that served as intermediaries between the individual and the state - better known as civil society. Civil society checks the rights of individuals against government abuses, and is thus necessary for the most fledgling sorts of democratic movements we see sprouting in Egypt and Tunisia. It also promotes bargaining and leadership skills to form coalitions and govern.

Arab leaders throughout the region have suppressed new media, intellectual inquiry, banned political parties, and silenced dissent for the past century. However, Kuran argues that the roots of the dearth of civil society go back even further. Until the establishment of colonial regimes in the 19th century, Arab societies were ruled under Shariah law, which according to Kuran, “precludes autonomous and self-governing private organizations,” the kind of which took centuries to to gestate in Europe. 

Shariah lacks the concept of a corporation - a perpetual and self-governing organization that can be used for profit making or to pursue social services. Islam’s alternative to a non-profit is known is a waqf, which is common parlance for “trust.” A waqf is established in accordance with Shariah to deliver specific services forever via trustees bound by fixed instructions. 

As Kuran notes, “A corporation can adjust to changing conditions and participate in politics. A waqf can do neither.” It was not until the 19th century that the concept of the corporation was imported from Europe. The relatively shallow development of these entities has led to increased corruption, as “Arab states are more likely than those in advanced democracies to rely on personal relationships with employees or representatives.” This factor is noted in the corruption statistics of Transparency International, which show that in Arab countries relationships with government agencies are much more likely to be viewed as personal business deals.

This also results in a less powerful business sector. Kuran notes that “The Middle East  reached the industrial era with an atomistic private sector unequipped to compete with the giant enterprises that have come to dominate the global economy.”

One cannot, of course, overlook the tremendous successes in structural and economic transformation that have took place in the Arab world over the last 150 years. Entities at odds with Shariah - such as banks and corporations - are now commonplace. The region is not starting from scratch, essentially, in the development of its civil society. Moreover, a stronger civil society alone will not promote democracy. Corporations, as we know, can promote illiberal agendas. But Kuran argues that “without a strong civil society, dictators will never yield power, except in the face of foreign intervention” (or sometimes NOT - take a look at Libya!).

I can’t help but think about how this all affects people my age and younger. How might they organize themselves during these periods of political transition? I can’t think of a parallel to the scouts, sports leagues, and political parties that I grew up with. But these people I come across in Morocco are educated, have big ideas, and leave me hopeful. I just hope that institutions can catch up to meet their aspirations. 

Haitian Savings Groups in Boston

On a warm April morning, a colleague from the Fletcher School and I ventured to Dorchester to go to church. This, of course, was not your average churchgoing Sunday. We had been researching how Haitian immigrants save in Boston, and churches in Dorchester - among other enclaves - are the heart of the Haitian diaspora community in greater Boston.

We arrived at the Haitian Pentecostal church a bit late, and were promptly ushered to the front row.  After singing hymns in Creole, the pastor introduced us as researchers from Tufts University, adding that we were “brought from God” and could potentially help this community. Hoping to live up to these expectations, we somewhat awkwardly introduced ourselves and our project, with the pastor translating into Creole.  

“All over the world, people use savings groups to help one another be motivated to save and lend to one another,” my colleague proffered. She added that we would like to learn about these groups and how they are helpful.

We were curious about this practice of using rotating savings and credit associations (ROSCAs) among this community, known in Creole as a sol or sou sou. A ROSCA is a small group with members who all contribute a fixed amount at agreed-upon intervals, typically set by all members. The amount collected at each interval is paid to one member of the group in turn, until every member has received the “pot”.  

Many people participate in ROSCAs - a form of “informal” finance - because they do not have access to formal financial services, like banks. Yet we were surprised to learn that the Haitian diaspora in Boston are incredibly financially savvy. All of the people we spoke to had bank accounts and savings accounts. Yet by participating in sols, they received something extra - discipline from the pressure to pay in. Sols provide something that banks do not. As a result, these participants deposit more money into sols than they do into their savings accounts.

People use the payouts from sols for different uses. One female noted that she uses the payout for “school fees, savings, funds for vacations, and discipline.” For some sols, she invests as much as $1,000 a month. Another woman noted that sol participants “help each other.” For instance, “We might have a project, like every Christmas we plan to spend money [but we] are not willing to put in bank account. Some may have emergencies. [There] different categories.” More often than not, the money they generate is a lifeline to relatives back in Haiti. All of the people we interviewed are supporting family members in Haiti and regularly send funds from sol payouts to them via Western Union.

Sols are also widely used in Haiti, and many participants start at a young age. One woman did her first sou sou in Haiti when she was around 15, using allowance money from her mother and stepfather. 

Sols work well for Haitians in Boston because, unlike banks, they are adaptive to the needs of their members. Sols enable different-sized contributions from different members, allowing for tremendous diversity in the amount of money people invest. One 51-year-old woman has participated in sols in Boston for over 10 years, investing anywhere from $20 to $1,000 per hand. Sols are also flexible, allowing members to persuade the others to let them receive their payout on the date they need the money.

As banks try to expand financial services to low-income and immigrant clients, they could no doubt learn something from these innovative ROSCAs. Group pressure provides discipline, and Haitians immigrants value flexibility in financial services that can adapt to their needs. Moreover, immigrants can and do value saving to meet their financial needs, and will find innovative ways to do so if banks cannot.