When South African Airways was the only carrier a round-trip from Johannesburg to Cape Town used to cost over $ 1 000 for the two-hour flight. Hardly anyone flew and the two main cities in South Africa had very little interaction. Kulula and 1Time have reduced these fares to around $ 100 return. And, suddenly, business is booming and Jo’burgers consider it normal to have a holiday home for weekends in Cape Town.
How have budget carriers managed this miracle? The simple expedient of having a wide range of competition lowers prices. More importantly, though, budget airlines simply keep their planes in the air for longer, turning them as quickly as possible, packing in extra seats, and offering no frills at all. You get exactly what you want and no more.
Where, then, are the development services based on the same principles? Taking exactly the opposite route is Oprah Winfrey and her astonishingly overpriced Learning Academy1 catering to a microscopic number of kids. At $ 7 500 per year this is no cheap solution to educational problems. Overnight Winfrey has created the most expensive school in South Africa. A significant step in the right direction is the Tersia King Learning Academy1 in Tembisa township on the East Rand. They manage to offer independent-school quality learning for between $ 550 and $ 1 250 per year. But that still isn’t cheap enough.
In essence the requirements are good teachers, a pleasant study environment conducive to learning (no guns, no gangs, and kids with enough food in their bellies to concentrate) and a basic education program designed to teach essential skills and self-study techniques.
The X Prize revolutionised commercial space flight by offering a prize to the first team to achieve a private space trip.
Well, here’s a challenge: what would the most efficient and effective education system look like, and who will be the first person to offer it on a large, repeatable scale for $ 100 per year per student?
Anyone wanting to join us in developing this challenge please contact us.
1Whythawk has not rated either organisation and so expresses no opinion on the effectiveness of these organisations
At a recent international biofuels conference1 held in Cape Town a British businessman stood up and declared, “Sub-Saharan Africa has the potential to be the middle-East of biofuels.”
He bases his claim on soil analysis which demonstrates that less than 20% of some of the best agricultural land in the world is currently under plough. And all this land lies in a broad swathe across Angola, Zimbabwe, Malawi, , Nigeria, South Africa, Tanzania and Mozambique. Most of the agricultural land in South Africa is already farmed but the country, with its deep-water ports and good infrastructure, would be a perfect gateway for agricultural manufactures to the rest of the world.
Instead of accepting this information gleefully and rushing off to grant investors concessions to set up biofuel farms, the Minister of Energy from Malawi said, “We don’t understand this technology. Please can you donate funds to help us?” Sounding less like a savvy business environment and more like a basket-case. This statement would be echoed, one way or another, by other African leaders during the event.
The image of Africa as some sort of delinquent and addled idiot-savant is epitomised in an advert from the Kamitei Foundation,2 a development organisation specialising in education in rural Tanzania: “We have riches but we’re too stupid to use them on our own. Please come do it for us.”
The South African government is attempting to go it alone but have adopted completely the other extreme. They refuse international assistance to the point of making investment almost impossible. The same British businessman who was so excited about the potential of Africa was less than excited about South Africa. “I am very impressed with Mozambique and will definitely be investing there,” he said to me. “But South Africa is impossible. Full of businessmen and politicians who talk big and then stand in the way doing nothing but demand hand-outs.”
It is, therefore, with a great degree of optimism that I observe the actions of the new Secretary-General of the United Nations, Ban Ki-Moon, former foreign minister to the Republic of Korea. He has expressed outrage at events in Darfur and a vigorous interest in Africa. South Korea has gone from third-world kleptocracy to first-world Asian Tiger in only a generation. He is unlikely to view the mewling pleas for continual aid from Africa with any sympathy. After all, South Korea has become wildly successful without massive foreign aid, but with lots of investment.
Whatever its failings, the United Nations is still the best hope for international cooperation and Africa is the world’s difficult child that just doesn’t seem able to kick some vile habits.
I hope that Ban is able to bring a little tough-love to bear on this troubled continent.
1 Note that the Cape Argus articles linked on the conference page were written by Gavin Chait of Whythawk Ratings 2 Whythawk has not rated Kamitei and so expresses no opinion on the effectiveness of this organisation
Back in 1997, as a young engineering student, I conducted a cost-benefit analysis on the Freeplay Wind-up Radio, then in early release. It was being pitched as a low-cost way to bring the wonders of telecommunications and information to the poor masses of the developing world; after all, it didn’t need batteries to run and that must make it significantly cheaper.
Clearly, the thinking went, it is this lack of cheap information which is holding up development.
A wind-up radio retails for $ 90. You can get a cheap Chinese radio and PM 9 battery (which will last about six months) for about $ 8. In other words, you’d need to use that wind-up radio for ten years before it starts paying for itself ... and I’m not sure they last that long. Freeplay has subsequently marketed the radio as a novelty gift item and emergency radio in case of power failures … in rich countries.
Negroponte and the $ 100 laptop
Now we have the $ 100 laptop from Nicholas Negroponte and the Massachusetts Institute of Technology (MIT). I admire and applaud the work that has gone in to producing a useable and versatile machine that can be produced for such a low price. As an engineering exercise it is awesome.
As a development exercise the whole project is on much shakier ground. The first point to consider is that there are already computers available in developing countries that cost significantly less than $ 100. Bridgeport Technical Services, based in Cape Town, has a PII entry-level desktop on offer for $ 45. Sure, not a brilliant computer if you’re used to the latest and greatest, but certainly very affordable and much better than the Intel 286 which was my first PC in 1991. And I managed to get a science degree using that one.
The computers are hand-me-downs but, if charities can distribute second-hand clothes to developing countries, I can’t imagine that anyone would turn up their nose at a used pc. We have bought several for the office and are extremely happy with them.
Negroponte claims: “Desktops are cheaper, but mobility is important, especially with regard to taking the computer home at night. Kids in the developing world need the newest technology, especially really rugged hardware and innovative software.”
He doesn’t explain why this is so other than to add the following: “In one Cambodian village where we have been working, there is no electricity, thus the laptop is, among other things, the brightest light source in the home.”
That has to count as probably the silliest reason in the world to waste all this time and effort producing a $ 100 laptop. There are many technological breakthroughs in the $ 100 laptop that I hope will be introduced into commercial mainstream notebooks – using them as a light-bulb isn’t high on my list.
There is also the question of moral hazard, that niggling thing that economists worry about. If you give your child a mobile-phone and they know you’ll simply replace it without comment if it disappears I can guarantee that they’ll lose it pretty quickly (especially if they see an upgrade they prefer). Negroponte says of his freely distributed laptop: “There are many reasons it is important for a child to own something - like a football, doll, or book - not the least of which being that these belongings will be well-maintained through love and care.”
Negroponte’s naïve faith in humanity extends to the governments he expects will distribute these computers “like textbooks”. These are the same governments who fail to distribute textbooks as well.
It has been remarked in previous posts that education is of critical importance to development but it can, and does, take place effectively without technology. As Hernando de Soto expressed in the seminal “The Mystery of Capital”, plenty of countries got rich without the benefit of any technology at all.
The $ 100 laptop sounds like a bright engineering idea in search of a reason to exist.
Oprah Winfrey has just opened a school for girls in South Africa. The Oprah Winfrey Leadership Academy is based in Meyerton, Gauteng and offers 150 “academically talented girls an opportunity to develop their full intellectual, social, and leadership potential.”
Even given the spurious claim that leadership is something that can be painted on, the academy is an expensive way to achieve its objectives. The most expensive private schools in the country charge around $ 6 900 per year for tuition and produce internationally sought-after graduates. The majority charge only $ 1 150 per year. The Oprah Winfrey Leadership Academy charges $ 7 500 a year – the entire fee paid for by Oprah Winfrey’s Foundation.
This is not to single out Oprah Winfrey. There are many schools operating in this way in South Africa. The CIDA City Campus in Johannesburg offers a "free" business degree to its students. It is difficult to assess how much tuition costs when so much is donated (including their entire $ 14 million building, and all the teaching) but you can sponsor one of their 2 000 learners for $ 1 150 a year. The total cost runs into significantly more than this.
Michael Strong, of FLOW, writes that Walmart has, by the simple expedient of purchasing $ 23 billion of goods a year from China, assisted 460 000 Chinese a year out of poverty through jobs created in factories dedicated to supplying Walmart.
He cites the following: “Ashoka, the highly regarded social entrepreneurship organisation certified as among the "Best in America" charities, highlights among its hundreds of projects a worker's cooperative in Brazil that is growing rapidly: each member contracts individually with Coopa-Roca, but the collective meets weekly. Membership in the cooperative grew from eight members in 1982 to 16 in 2000, and has surged to 70 steady members today.”
Strong concludes by asking, “Is it heroic to raise one person up out of poverty each month, but merely a statistic to raise up a million?”
The rush to set up specialised teaching facilities in developing countries seems more about personal visions and dreams than about the real requirements of development. Leadership is not something that can be taught. It is not a technical skill. It is something that is earned through fire and experience.
Education is not an outcome, it is a process. The most important skill learned through education is an ability to learn. South Africa has adequate private schools and universities.
Walmart did not create all those jobs by providing a requirement for high-level technical skills at one business, but for thousands of suppliers at thousands of different low-level businesses.
It is much cheaper to send a child to an existing school or university than it is to build and staff a new one. There is also the terrible attraction that the founders have of meddling in their students’ education and attempting to fill their heads with all the hopes and aspirations they have for that society rather than allowing the child to find their own interests and dreams.
In CIDA's case the dream of the founders was to create a society based on transcendental meditation. Two years ago the students rose up in rebellion against the imposition on their time and the pseudo-religious overtones it was taking on. One of the major sponsors, KPMG, became so concerned about what was happening that they withdrew their sponsorship. That was the year that the first crop of students were due to graduate. None did. The conflict died down but suspicions still linger.
In the case of charitable educational institutions the focus becomes more about the charity rather than the education. Let's admit it, it costs money to get a good education and we should not be embarrassed to admit it. If both CIDA and Oprah’s Leadership Academy were really about the needs of the children rather than about the marketing and idealism of their founders then they would be low-profile low-cost bursary schemes in which the students got to choose their own direction and their own beliefs.
The ability to make free choices about what to learn and where will teach far more than the imposition of a faux-free education filled with pseudo dreams.
If poverty was purely a lack of cash then we should end it this year.
The World Bank, financier of last resort to bankrupt governments, has a great deal of competition. The Global Fund has $ 6.8 billion. The Gates Foundation has $ 31.9 billion. Google has chipped in with $ 90 million in their foundation. Even the US government, so much maligned, has tripled their development aid to $ 9 billion. There are now more than 50 billion-Dollar foundations in the US alone.
Many of these foundations are having trouble giving away the minimum of 5% of their capital that they must to maintain their charitable status.
Yet poverty remains as intractable as ever. Clearly money isn’t the only problem.
Money is not wealth. Neither does it have any intrinsic value. It is simply a physical reflection of the wealth in an economy. Printing more money doesn’t increase the wealth of an economy – there is still the same amount of physical stuff as before – but it does debase the value of the currency. And capitalism is no different from the internal combustion engine.
An engine works by the same rules under a communist government as it does in a free-market democracy. It’s just that in a communist economy the government decides what the efficiency of that engine will be and how well it will work. Then everyone gets the same engine. If you doubt how bad this can be, just ask some East Germans about the Trabant.
In a free-market economy the vehicle comes in a wide variety of styles. If you don’t like the car you can complain to the manufacturer and indulge in consumer action. If you didn’t like the Trabant you had to take issue with a police-run, Soviet-era, state.
Social development has been a lot like a centralised Soviet-run economy. There is only one choice, and you will take what you’re given. Soviet states ran very well; if you didn’t mind poverty, shortages, and corruption.
All of these new charitable foundations, started by entrepreneurs, rely on third-party development organisations started by socialists. They’re speaking different languages.
Development is not as simple as just giving people the things they lack. Oxfam has, since the early 1980s, assisted subsistence and micro-farmers to grow coffee around the world. Their success at raising charitable donations for this inspired other organisations to follow suite. Not surprisingly all this activity resulted in a global coffee slump even as Seattle coffee culture swept the globe. Who does Oxfam blame? Why Starbucks of course. It seems that consumers don't pay enough for coffee.
Yet farming is not simply about growing the same cash crop year-in-year-out on the assumption that it will always have the same value. Commercial farmers study global supply trends and decide what crops and how much of it to farm. As one crop becomes devalued they farm another. They diversify by raising a number of different crops and livestock. Development organisations do not teach this finesse. They expect market conditions to remain identical. But demanding a stable coffee price despite massive supply is the same as expecting Playstation 1 games to remain at the same price as newly introduced Playstation 3 games. In the real world retailers left with PS1 stock dump it in the bargain bin in the hopes of getting rid of it.
Demanding an esoteric idea of "fairness" requires very real unfairness and has resulted in organisations like Oxfam colluding with corrupt dictatorships (like Ethiopia's).
The future of development relies on teaching the poor the mechanisms of a market economy, not simply the appearance of one. And this requires that we modernise social development organisations. The problem with this is the same as trying to convert a communist-era economy into a free-market one without turning it into modern Russia; filled with corruption, oligarchs and dramatic differences between rich and poor. It requires continual scrutiny and feedback.
In this new year of 2007 let us start a conversation about development. In the same way bloggers hold each other to account (most especially over the recent Acer Ferrari fiasco) let us hold development organisations to account.
If they believe that they are doing a good job, let them explain and prove and win our support. Let us not allow them to blame others for their own mistakes. So that the poor are not always with us.
aloft: the whythawk blog 
At a recent 
”, plenty of countries got rich without the benefit of any technology at all.
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