Refugees and migrants: Hope nonetheless

The best thing for Europe would be to welcome refugees and migrants, not only for moral reasons but also for selfish ones too.  Just like the United States did with successive waves of refugees in the 20^th century, a more open Europe with more flexible labor markets could turn this refugee and migrant crisis into a rewarding opportunity.

The fuse that led to the current influx of refugees and migrants in Europe was lit in Syria in March 2011 when an anti-regime uprising spiraled into civil war.¹ The situation became worse when the Islamic State in Iraq and Syria (ISIS) came into the picture.² ISIS, a vicious terrorist group that is now realizing that sustaining a caliphate is much harder than declaring one, does not hide its brutality. On many occasions, it had burned men alive or impaled their heads on spikes and posts the videos online. And its fighters boast that they are doing God’s will when they rape and enslave infidel girls and women. So naturally, the fugitives or refugees from ISIS-occupied Syria and Iraq would be frightened to return home.  And the world governments, especially that of Europe must believe they are telling the truth and welcome them into their territories.³

European Union: Live and let live

The citizens of the European Union (EU) are lucky to be living in one of the richest and most peaceful regions on Earth. They also like to think that they set the standard for compassion. Generally speaking, all the countries that make up the EU accept that they have both moral and legal duty to grant safe harbor to people with a well-founded fear of persecution. The problem, however, is that the recent surge of asylum-seekers – about 300,000 migrants (see table 1)⁴ – has tested Europe’s commitment to its ideals. In Germany, the government’s effort create a welcoming atmosphere for refugees has sometimes being thwarted by Neo-Nazi thugs who have torched asylum-seekers’ hostels on many occasions. In Sweden, an anti-immigrant group is now the most popular political party in the country. The story is the same in Hungary, where the prime minister warns that illegal immigrants, which he considers a burden to the country’s public services, threaten his nation’s survival.

Table 1: Migrants and Refugees Detected Entering EU Illegally, Jan. –July, 2015

Nationality of Migrant/Refugee	Number of People
Syria	106,939
Afghanistan	61,826
Eritrea	23,878
Nigeria	10,747
Pakistan	6,641
Kosovo	23,260
Other Sub-Saharan Countries	9,766

Source: Culled from BBC Data, 2015

So far, almost 270,000 asylum seekers have reached Europe by sea this year. This means that more refugees and illegal immigrants entered the continent this year than last year. But that number merely represents one asylum-seeker for every 1,900 Europeans and, unfortunately, many of them will be turned away by their host countries.  It is important to note here that helping refugees and asylum seekers hold more pluses than minuses. And, when it comes to being nice to refugees and asylum seekers, the evidence of history seems to be on the side of some  nations that are even poorer that Western European countries. Lebanon, for instance, has welcomed approximately 1.1 Syrian refugees into their territory. This means that the size of Syrian refugees welcomed by a tiny and poor country like Lebanon is so large that it is almost the size of a quarter of the country’s local population. Turkey has also taken in 1.7 million refugees. Even Tanzania, a poor African nation whose average income is less than one-fiftieth of EU nations, has hosted hundreds of thousands of refugees from Congo and Burundi  for decades without complaining like Europe is currently doing. By contrast, when the European countries like Greece and Italy where Arab and African refugees first arrived asked for help with looking after them, the responses of other EU states has exposed them to a well-founded charge of hypocrisy. As of last week, they grudgingly agreed to take only 32,256 refugees over two years.⁵

What Europe must do now: The economics of generosity

The best thing for Europe would be to welcome the refugees and migrants, not only for moral reasons but also for selfish ones too.  First, Europe’s labor force is ageing, which means that it will soon begin to shrink.  European governments are also drowning in debts, which they plan to dump on future generations. But if those future generations are smaller in number, it will be a challenge for them to manage Europe’s debts.  This is where the refugees and immigrants comes into the picture: they are typically young and eager to work. In other words, these refugees and immigrants (including the asylum seekers) can help Europe ease this problem once they are re-settled. Simply put, the refugees and immigrants can help care for Europe’s elderly as well as help the region shoulder a share of debts they had no role in running up. As an example, Arabs and African refugees and migrants are usually young. So if European governments handles this refugee crisis and all types of migration sensibly, they can borrow some of their vitality. For Europe, this may be a politically hard decision to take, especially given that it will also require a reform of the region’s labor markets.⁶

It is quite understandable why Europe is leery about absorbing these refugees and migrants, given the intensity of global terrorism. To take care of this concern, Europe should be firm when screening the asylum applicants. But the screening process should also be swift and generous.  It will not be an exaggeration to say that these refugees and migrants will not become slackers overnight – certainly not after crossing stormy seas and deserts to get to Europe.⁷ On the contrary, there is documentary evidence that immigrants around the world are more likely to start businesses than the native-born. In the United States alone, large technology companies like eBay, Google and Intel were founded by immigrants. In fact, many of America’s greatest brands – which include General Electric, IBM, AT & T, Budweiser, McDonald, Apple and Colgate – were started by founders who were either immigrants or are the children of immigrants.⁸ Immigrants are also net contributors to the public purse and are less likely to commit serious crimes. Examined against this background, the fear that they will poach jobs or drag down local wages, even though it may have huge resonance with the European public, is also misplaced. Without putting it in so many words, when refugees and migrants are properly settled, they actually tend to raise the wages of the native-born overall because they bring complementary skills, ideas and connections with them. Though their presence may slightly reduce the wages of the unskilled local men, at the end of the day, everyone in the host country will be better off.  What is certain is that these refugees and migrants can become several times more productive, and their wages will rise accordingly if they are allowed to settle in Europe and other advanced countries with predictable laws and efficient companies.

Those Europeans who oppose immigration may argue that the refugees and migrants may bring in new cultures whose effects on the region will be profoundly unsettling. They may equally argue that Europe is neither willing nor able to absorb big inflows of refugees and migrants.  Broadly speaking, Europeans recoil each time they see crowds of unassimilated and jobless immigrants. Also, since the disarming of a gun-wielding Moroccan on a French train last month⁹ and after the massacre at Charlie Hebdo,¹⁰ Europeans have become more scared of Islamist terrorism.

To be fair to the Europeans, their concerns are quite understandable.  And, if the experience of the past few years teaches us anything, it is that monitoring of jihadist groups needs to be stepped up. Nevertheless, Europe still need to figure out a practical and lasting solution to their current refugee and migrant crisis. If I have my vote, the solution is simple: to assimilate them better, European nations should let them work. This formula has been used before in Vancouver, New York and London and it worked well.¹¹ By working together and interacting with the locals at the workplaces, the re-settled refugees and migrants can learn their customs, and vice versa.  The bottom line here is that, just like the United States did with successive waves of refugees in the 20^th century,¹² a more open Europe with more flexible labor markets could turn this refugee and migrant crisis into a rewarding opportunity.

References

¹CNN(2015): Syria Civil War Fast Facts. Retrieved September 9, 2015 from http://www.cnn.com/2013/08/27/world/meast/syria-civil-war-fast-facts/

²Landis J. (2014): The Battle Between ISIS and Syria’s Rebel Militias. The Clarion Project. Retrieved September 9, 2015 from http://www.clarionproject.org/research/battle-between-isis-and-syria%E2%80%99s-rebel-militias

³Migration to Europe - Let Them in and Let Them Earn. (2015, August 29). The Economist. Retrieved September 9, 2015 from http://www.economist.com/news/leaders/21662547-bigger-welcome-mat-would-be-europes-own-interest-let-them-and-let-them-earn.

⁴Why is EU Struggling With Migrants and Asylum? (2015, September 1). BBC News.  Retrieved September 9, 2015 from http://www.bbc.com/news/world-europe-24583286.

⁵Migration to Europe – Let Them in and Let Them Earn, op. cit., p. 13

⁶Ibid

⁷Ibid

⁸Anderson S. (2011): 40 Percent of Fortune 500 Companies Founded by Immigrants or Their Children. Forbes. Retrieved September 14, 2015 from http://www.forbes.com/sites/stuartanderson/2011/06/19/40-percent-of-fortune-500-companies-founded-by-immigrants-or-their-children/

⁹Jamieeson A. (2015): How American Heroes Prevented Terrorist Train Massacre. New York Post. Retrieved September 14, 2015 from http://nypost.com/2015/08/22/americans-hailed-as-heroes-for-thwarting-terrorist-attack/

¹⁰The Charlie Hebdo Massacre in Paris. (2015, January 7). New York Times. Retrieved September 14, 2015 from http://www.nytimes.com/2015/01/08/opinion/the-charlie-hebdo-massacre-in-paris.html.

¹¹Migration to Europe – Let Them in and Let Them Earn, op. cit., p. 14

¹²Ibid

Self-Service revolution.

Self-Service revolution.

It defeats the purpose when businesses heap work on their customers.

 Once upon a time shops used to keep all their goods behind the counter. When customers came to the shop, all they had to do was to tell the sales clerk what they wanted, and then wait while their purchases are bagged up. It is only then that they would hand over their money. All these changed in 1916 when Clarence Saunders, the father of modern retailing, opened his first Piggly Wiggly supermarket in Memphis, Tennessee.¹ Saunders changed the face of retailing when he introduced the idea of self-service, in which customers selected their own groceries from the shelves. They will then take their baskets or carts to a cashier on their way out. Saunders claimed that his idea would slay the demon of high prices by cutting labor costs.²

 
By 1932 the Piggly Wiggly store was the undisputed king of the retail industry, with 2,660 stores across United States. In the 1920s, Saunders did lost control of the company. However, that did not stop him from continuing to innovate and look for ways to perfect the fully automated shop. One of his innovations include the “shopping brain” – a feature that allows customers to choose items displayed under glass as well as keep a tally of their bills.³ As a business, Piggly Wiggly is no longer as popular as it used to be. As a matter of fact, it is now a shadow of its former self. As of three months ago, it has only about 600 stores in United States, and it operates only in 17 states.⁴ But their “self-service” idea, among others, has conquered the world.

You are on your own, folks

 The self-service revolution is still very popular on to this day. In many states, the CVS, a large American pharmacy chain, has replaced cashiers with self-service pay-points. Also a British grocery chain by name Waitrose, offers their customers what can be considered a modern-day version of Saunders’ shopping brain. In that regard their customers were given the choice to scan and tally their purchases. Another institutions that has almost perfected the self-service model are the banks. Most banks are cutting down their branches while, at the same time, making it ever easier for customers to do transactions online as well as via the ATM. Companies like Unilever and other consumer goods giants are seeking to convert some of their emerging market customers into freelance sales folk – a model pioneered in United States by such firms as Avon and Tupperware. Such customers who became their freelance sales people peddle Unilever’s products to friends and neighbors.⁵

 The travel  industry has also joined the elf-service club. And the industry is very ruthless when it comes to engineering its own employees out of its business. For instance, by using the apps in their smartphones, customers can now book their own trip. They no longer need the airline employees to print their boarding passes as they can do this in their houses before setting out. When the customers get to the airport, they are allowed to scan their boarding passes and passports at a machine. And in some airlines, customers can weigh and tag their own luggage. They can even haul it to the conveyor by themselves. In many hotels, a customer may not see any check-in staff or porters. A good example is the Omena Hotels – a Scandinavian hotel empire. This hotel sends PIN codes to its customers to enable them open their doors. Soon all the customer needs to do to get into their room at this hotel will be to simply wave the Apple Watch on their wrists.⁶

It is not an exaggeration to say that the variety of businesses touched by the self-service revolution is growing every year. Take Threadless,⁷ a group of clothes designers. This company invites customers to submit their own patterns, after which they are given the chance to vote on which ones should be produced. Threadless is just one of them: some technology companies now turn their smart customers into unpaid troubleshooters. They do this by encouraging these customers to participate in user forums where their insights can be used to solve other customers’ technical problems. Some newspapers, particularly the Huffington Post, encourage its readers to write as unpaid columnists. How about multinational companies like GE? The story is the same: GE is currently working towards creating a new business model. Under this model, GE will no longer need to keep a stock of spare parts for its jet engines. Instead, their customers will have the option of downloading digital designs of the parts on their computers. They can then make such parts on their own by means of a 3D printers.⁸

 There is no doubt that all these are wonderful for businesses. But does their customers feel the same way?  According to the available published evidence, these days many people are constantly being asked to do “unseen” jobs by everybody from Amazon to the Internal Revenue Service. No wonder many people constantly feel stressed and overworked. And because people these days spend so much time pressing buttons and speaking to machines rather than interacting with other people, they also feel so alienated sometimes.⁹

The above picture may look too gloomy, but they are not always the case. This is because the self-service revolution is not only about the companies. As a matter of fact, it is sometimes driven by customers’ preferences. For instance, there are lots of customers who finds it quicker to choose their own groceries than to wait for someone to do it for them. A lot of customers don’t like queuing at the check-in counter at the airport. Such customers usually prefer to print their boarding passes at home. Besides, customers can always fight back if they get frustrated about a company’s self-service model. For instance, many companies were forced to revert to having people answer the phone when customers complained about automated telephone services. Also many people now choose to have their shopping delivered to them, instead of driving to out-of-town, self-service supermarket.¹⁰

 The vital questions

The self-service revolution did raise two key concerns. First, self-service industries may claim that they have eliminated personal touch from their mass-market offerings. But they had continued to chase the wealthy and the well-heeled customers with extravagant, premium offerings. In other words, they had divided consumers into two classes: the poor consumers belong to the “cattle class” while the wealthy consumers are the “business class.” This classification makes it easy for these companies to “herd” the cattle class into the back of the cabin and to offer them little service; while the business class are pampered with superior service. A good example is Virgin Atlantic, a British airline. Their customers that fly Upper Class were provided with private cars to take them to and fro airports – a privilege which economy class customers do not get. Their Upper Class customers also have flunkeys waiting in the lounge to cut their hairs and polish their shoes. One thing is for certain: this type of preferential treatment might intensify resentment of the haves by the  have-nots. Not only that, it also make it hard for the have-nots to get entry-level jobs.¹¹

 Second, businesses need to understand the importance of meeting with their customers. If they never meet their customers, the result may be disastrous: they will lose touch with them.  From a business standpoint, self-service is great for saving costs. But this saving comes at a high cost for the business. This is because the effect of self-service over time is to train customers to shop on price. This means that the customers can easily switch as soon as a slightly cheaper rival comes along. And one final point: British’s mainstream supermarkets are now suffering from an inversion of German discounters.¹² Firms will be making themselves vulnerable to the same fate if they stop trying to differentiate themselves with good service.

 

 

References

 

¹Clarence Saunders. (2014). NNDB,  Retrieved August 25, 2015 from http://www.nndb.com/people/054/000166553/.

²Schumpeter: The Piggly Wiggly Way. (2015, May 9). The Economist. Retrieved August 25, 2015 from http://www.economist.com/news/business/21650554-businesses-should-think-carefully-about-continuing-heap-work-their-customers-piggly.

³Mitchell, Tucker. 2013. "A Pig’s Tale: How the Grocery Store Was Invented ." SCNow, January 16: Retrieved August 25, 2015 from http://www.scnow.com/opinion/columns/article_5137c928-56c3-11e2-a5c2-001a4bcf6878.html.

⁴Schumpeter: The Piggly Wiggly Way, op. cit., p. 64

⁵Ibid

⁶Ibid

⁷Threadless(2015). Shop Threadless. Retrieved August 25, 2015 from https://www.threadless.com/

 

⁸Schumpeter: The Piggly Wiggly Way, op. cit., p. 64

⁹Lambert C.(2015): Shadow Work – The Unpaid, Unseen Jobs that Fills Your Day. Berkeley, CA: Counterpoint.

¹⁰Schumpeter: The Piggly Wiggly Way, op. cit., p. 64

¹¹Ibid

¹²Ibid

 

 

 

 

 

 

This is Lagos.

The trouble for Lagos is that it is a city that feeds on endless population growth. It is crowded, nosy and, sometimes, violent. On the other hand, it can be a model for the rest of Nigeria’s cities.

Only a few Nigerians doubt that Lagos needs a lot of improvement. As Nigeria’s commercial center, Lagos has a lousy reputation. Just consider this:  mention the name “Lagos” to any Nigerian and they will immediately conjure images of motionless traffic, crime and corruption. In Lagos, it is not a new thing to see men urinate on don’t urinate signs. Neither do Lagos people look surprised when they see a loiter by no loitering sign or if they see people hawk by don’t hawk signs. Even at the poshest part of Lagos, such as the Victoria Garden City,¹ commuters are sometimes caught in shoot-outs between robbers and policemen.²

On the positive side, Lagos is, to a very large extent, better now than it was two decades ago. When Bola Tinubu, the former governor of Lagos was in charge, Lagos was literally a slum. Tinubu became the governor in 1999 when civilian rule was restored in Nigeria.³ During that time, the traffic in Lagos was chaotic. Not only that, the city’s infrastructure was rapidly disintegrating. Armed robbery was rampant and people were being murdered almost every week. That period was a bad one for Lagos because dead bodies were being picked on the street on average 10 times a week. There were mountainous refuse all over Lagos.⁴ Basically, it was total chaos in Lagos.

Some kind of normal

It is not an exaggeration to say that Lagos was rundown in the late 1990s simply because it was badly run. As rural migrants flock to the city in search of jobs, the high population growth that resulted outstripped the infrastructure.⁵ There is really nobody, including the Lagos State government, who can say how many people live in Lagos. Even though estimates range from 10 million to 21 million,⁶ the bottom line is that the city’s congested roads and bridges can accommodate just a fraction of them.

Lagos was neglected by the central government during the military rule. It is worth bearing in mind that Nigeria’s capital was moved from Lagos to Abuja in 1991.⁷ Abuja, the current capital, was built in the middle of  the country to symbolize unity. As  the Nigeria’s capital moved to Abuja, public spending followed the politicians there to pay for the new city’s marble-floored palaces and wide boulevards. Lagos still found itself even more neglected after the restoration of democracy in 1999. The main reason this time was not because of the Nigerian politicians’  love affair with Abuja. It was because the then ruling party politicians, the People’s Democratic Party(PDP) politicians, were mad at Lagos’ citizens for voting for the opposition parties. It is important to note here that these opposition parties were the forerunners of the current All Progressives Congress(APC) that earlier this year defeated the incumbent PDP – a party that had almost ran Nigeria to its grave since 1999.⁸

Mr. Tinubu and his successor as governor, Babatunde Fashiola, tried their best for Lagos. Both of them experienced big and similar political challenges when they were the state’s governor: their effort to reform Lagos and improve the lives of the residents were often frustrated by the PDP-led government. For instance, despite their appeals to the PDP-led federal government, it failed to upgrade the main roads in the city that were under federal control. The federal government did not put into consideration the fact that one of the roads in question led to West Africa’s biggest port. The then federal government also delayed approval for an important train line requested by Lagos State government, even though the latter was willing to pay for its construction.⁹

The good thing about these frustrations from the PDP-led federal government at the time was that it made Lagos State government to be more creative. For example, it stopped relying on Abuja for funds. Instead, it started generating its revenue internally. To create room for transparency, it created passable systems to monitor its own spending. Even though Lagos residents are not known for their eager compliance with their tax obligations, the state government devised a strategy that squeezed taxes out of them anyway. As a matter of fact, almost from nothing a few years ago, Lagos’ internally generated revenue  has risen to 23 billion naira(about $115 million) per month.¹⁰ Given the population of Lagos, this amount constitute only a few tax dollars per person. However, the state government has used it as a leverage to borrow enough money to finance laudable projects. Such projects include, among others, the much-needed bridge linking the upmarket areas of Lekki and Ikoyi.¹¹ Moreover, the states newly found independence with respect to federal revenue means that it had to rely more on local tax collection. This has forced it to improve it services so as to attract businesses. And, to a very large extent, it has done well in that regard. In terms of goods and services, the state produces as much as $90 billion a year. This value makes it economy larger than that of most African countries, particularly the economies of Ghana and Kenya.

 It is important to state here that much of Nigeria’s industry once thrived in the northern part of the country. But today, most of the Nigeria’s industries can now be found in the suburban manufacturing estate of Agbara in Lagos State. Cranes hang over many areas of the city of Lagos. In addition, land is being reclaimed from the sea to satisfy the appetites of the city’s developers who were obsessed with acquiring large amount of property.¹²

Studies have found that local elections in Lagos favor candidates who show competence and pragmatism. This is a sharp contrast to what is obtained in Nigeria’s national elections, which are often a squabble over petrodollars. This explains why the opposition party, the APC, won the state’s election: its success in managing Lagos is the source of its sweeping victory in the state election held earlier this year. This equally explains why more Nigerians voted for its candidate, President Buhari, in the national election.¹³ The city now has a chance to do better still, especially now that the APC holds power in Abuja as well as Lagos.

One thing is for certain: Lagos’ experience could teach Nigerian politicians a thing or two. The first lesson is that fostering a broad tax base is very important to the survival of a state. It does not make any sense to just rely on oil, which provides more than 67 percent of Nigeria government’s revenues.¹⁴ Besides, a better tax collection will greatly improve the country’s budget by making it less vulnerable to wild swings in the global oil prices. And because people who pay tax tend to demand better services in return, it might also lead to more accountable governance. The second lessons is that better infrastructure boosts economic growth. So, if a country or a state don’t have the money to pay for it upfront, it can adopt Lagos’ model: get private investors to do the job and allow them to collect tolls until they recover their investment capital and make some profit.

References

¹Victoria Garden City (n.d.): Images of Victoria Garden City. Retrieved August 15, 2015 from https://www.google.com/search?q=victoria+garden+city+lagos&biw=1366&bih=667&tbm=isch&tbo=u&source=univ&sa=X&sqi=2&ved=0CB8QsARqFQoTCPLluOSsqscCFcw4Pgodm0UIFg&dpr=1

²Nigeria: Learning From Lagos. (2015, July 4). The Economist. Retrieved August 15, 2015 from http://www.economist.com/news/middle-east-and-africa/21656701-nigerias-commercial-capital-crowded-noisy-violentand-model-rest.

³Ibid p. 40

⁴Ibid                                  

        

⁵Walt, V. (2014, June 12). Lagos, Nigeria: Africa’s Big Apple. Fortune. Retrieved August 15, 2015 from http://fortune.com/2014/06/12/lagos-nigeria-big-apple/

⁶Campbell, J. (2012, July 10). This Is Africa's New Biggest City: Lagos, Nigeria, Population 21 Million. The Atlantic. Retrieved August 15, 2015 from http://www.theatlantic.com/international/archive/2012/07/this-is-africas-new-biggest-city-lagos-nigeria-population-21-million/259611/.

⁷Ogunlesi, T. (2014, May 4). Abuja, Nigeria’s Capital City, Grows and Flourishes. Financial Times. Retrieved August 15, 2015 from http://www.ft.com/intl/cms/s/0/68c28016-bb16-11e3-948c-00144feabdc0.html#axzz3irWnZDx7.

⁸Nigeria: Learning From Lagos, op. cit., p. 41

⁹Ibid

¹⁰Akinsanmiâ, G. (2015, April 16).  Lagos Govt Puts IGR at N23bn Monthly, Drags 686 Tax Defaulters to Court. ThisDay Live. Retrieved August 15, 2015 from http://www.thisdaylive.com/articles/lagos-govt-puts-igr-at-n23bn-monthly-drags-686-tax-defaulters-to-court/206948/

¹¹Alao, D. (2015). Nigeria Infrastructure Advisory Facility. Lagos: Nigeria Infrastructure Advisory Facility. Retrieved August 16, 2015 from http://niafng.org/wp-content/uploads/2015/02/Lekki-Ikoyi-link-Project.pdf

¹²Nigeria: Learning From Lagos, op. cit., p. 41

¹³Ibid

What’s the Matter With Ghana?

The jewel of Africa has lost its shine!

“The discovery of oil off Ghana’s coast has raised questions about whether Ghana can escape the ‘resource curse’”, wrote BBC, a British newspaper in a classic 2010 article, “where discoveries of valuable commodities fuel conflict and corruption instead of funding development.”¹ Five years later, that simple assessment has turned into a self-fulfilling prophesy.

Sometimes one can spot an economic crisis from afar: abandoned building projects, relentless power cuts, high unemployment rate, you name it. Ghana has plenty of these issues. Its problems, however, grew more dramatic last June. In that month, a torrential rain flooded Accra, its capital. The rainstorm caused an explosion at a gas station in that city and claimed up to 200 lives.²

From stuff to fluff

It should be noted here that Ghana could ill afford this kind of disaster at this time. The West African country was an economic success stories just a few years ago.³ Not anymore. One big mistake the current government made – a mistake that made things to go wrong in the country – was to ratchet up spending on salaries and fuel subsidies. Unfortunately for the country, when commodity prices began to fall, the country started to implode under the weight of its economic problems.⁴ The country was forced by these problems to reach out to IMF for a bailout. Luckily for them, the organization agreed to lend the country almost $1 billion last February.⁵

In 2011, Ghana’s public debt was about 43 percent of the country’s GDP. By the end of this year, it could reach 70 percent of its GDP. When oil began flowing in the country in 2011, its annual growth topped 15 percent. But, given its current economic problems, it may dip to 3.5 percent. It will not be an exaggeration to say that Ghana will breach its budget-deficit target of 6.5 percent of GDP by the end of this year. And the cedi is currently on a free fall, with no sign of ending.⁶

So far this year Ghana’s currency, the cedi, has fallen over 25 percent of its value. One of the reasons for this is that investors have continued to shun its bonds. Broadly speaking, since 1992, the cedi has lost over 99 percent of its value against the dollar. And for the quarter of Ghanaians who live in poverty, inflation, which is now at 16.9 percent, has continued to make life a misery. The traders at Ghana’s marketplaces don’t see a quick end to the country’s current problems.⁷ In their views, business has completely dried up. To get the country back on track, President John Mahama will need to reign spending on those things that gobble up the government tax receipts, particularly on salaries and fuel subsidies. This will, however, be a difficult decision for him given that he seeks re-election in 2016: Ghana’s leaders have a history of splurging in election years.

From the economic standpoint, Ghana ignored its structural problems when the economy was rising. Now these problems have metastasized to a crisis level. Most of Ghana’s foreign earnings come from cocoa and gold, at least before its discovery of oil in commercial quantity. Yet, the government has not done much to improve the sector, abandoning it when prices fall or crops fail. Given that its successive governments failed to save during the boom years, it is not surprising that the country is addicted to IMF loans. As a matter of fact, Ghana has turned to IMF for help no fewer than 16 times since 1966.⁸ The country’s infrastructural shortages which are costing lives as well as dollars was thus exposed by a crippling power crisis and seasonal floods.

Corruption is also a growing concern in the country. The country recently drafted an oil bill for managing the oil sector. However, its Parliament had continued to criticize the bill for handing too much power to the country’s oil minister. Their concern may be reasonable, given that a similar issue is also a major problem in corruption-prone Nigeria. Meanwhile, Ghana’s oil production has continued to increase. But so also is the country’s scope for mismanaging the oil revenue.

References

¹Ghana Oil Begins Pumping for First Time. (2010, December 15). BBC, Retrieved July 28, 2015 from http://www.bbc.com/news/world-africa-11996983.

²Ghana: The Mighty Fallen. (2015, June 20). The Economist.  Retrieved July 29, 2015 from http://www.economist.com/news/middle-east-and-africa/21654648-africas-former-jewel-struggles-regain-its-gleam-mighty-fallen.

³Minter, A. (2015, April 10). Ghana's Success Story Goes Dark. Bloomberg View. Retrieved July 30, 2015 from http://www.bloombergview.com/articles/2015-04-08/ghana-s-success-story-goes-dark.

⁴Ghana: The Mighty Fallen, op. cit., p.50

⁵Ibid, p. 50

⁶Ibid

⁷Ibid

⁸Ibid

World Health Organization(WHO): Memories of the Ebola crisis, one year later

The Ebola crisis exposed the failings of WHO.

If the experience of the past year teaches us anything, it is that the World Health Organization(WHO), which used to be the north star of disease control and eradication, has become just one star in a constellation. The Ebola crisis, which has now killed over 8,000 people,¹ has exposed the failings of WHO - the world’s ailing health authority. The agency faces criticisms from different quarters because it did very little to stop Ebola from raging out of control in West Africa in 2014.

It is worth bearing in mind that WHO’s mission is to lead the world on health. But the agency has continued to disappoint the world when it comes to managing sudden disease outbreaks or epidemics such as HIV and Ebola. As a matter of fact, UNAIDS was set up two decades ago because of WHO’s inability to tackle the AIDs epidemic. Many experts argues that history repeated itself last year with the Ebola outbreak in West Africa, in which WHO’s response was not only slow but also disorganized and lacking in leadership. Thus the Ebola crisis brought to the limelight the deeper problems being faced by the agency. Most of these problems have a lot to do with funding, structure and staff.²

From a functional point of view, WHO  was founded in 1948 to help people attain and enjoy the highest standard of health possible.³ Hence WHO’s role as they relate to ensuring the highest possible level of health covered everything from helping individuals and countries in managing epidemics, communicable diseases, obesity, and antibiotic resistance, among others. To be able to achieve this feat, WHO  obviously needs adequate funding and, fortunately, its 194 member countries pay dues to support the agency. However, because these dues are calculated according to the member countries’ wealth and population (and the sums has not risen since the 1990s), they are not adequate to cover the cost of WHO’s activities and  programs each year.

So to generate more funds, WHO  solicits contributions from rich countries, nongovernmental organizations and private interests(such as pharmaceutical firms), philanthropic organizations (such as the Gates Foundation), and other multilateral bodies. Nearly 50 percent of WHO’s budget in the 1990s was made up of donations from these agencies and countries. But today, their donations constitute as much as 80 percent of WHO’s budget. The implication of this is evident: WHO is exposed to the ups and downs of the world economy which makes it hard for it to plan ahead. For instance, voluntary contributions to WHO  was hit hard by the financial  crisis of the last decade. For the  2010 -2011 fiscal year, WHO’s  budget was nearly $5 billion. This went down to less than $4 billion in the 2014-2015 fiscal years. Compare this value to U.S.’s Centers for Disease Control budget: in 2014 alone, the agency spent nearly $7 billion.⁴

This squeeze on WHO’s finances has forced it to slash its budget for responding to disease outbreaks by half, while spending more resources on chronic diseases and primary health care. And, because chronic diseases and poor healthcare kill more people each year, WHO’s strategy seemed reasonable. However, in the long run, a rapid response to a disease outbreak like Ebola by WHO  would have been cheaper than scrambling to catch up.

Because WHO relies so much on voluntary donations, it faces the challenge of deciding how to spend a big chunk of its budget as well as how to shift funds fast. This is because most of the donations it receives are for specific purposes. Rotary International had given money to the agency to fight polio;⁵ while the Bill & Melinda Gates Foundation bankrolls malaria eradication.⁶ With fair justification, both are worthy causes. But because WHO’s role in each case has been to follow, and not to lead, its director-general has very little control over the budget. Hence, she was highly  limited in how she can address global health challenges.

The above forms of fund “earmarking” was common in the 1990s. That was the period when donors lost confidence in the WHO’s decision-making practice. On the positive side, the agency had made some improvements in its decision-making process: it now basis its budget on more realistic goals – a part of the reform process the agency initiated in 2010. In line with this, WHO claims that they will begin to  rejects funds from donors if it does not match their priorities.⁷ But  some doubt that the agency will have enough courage to say “no” to such donors.

On their own terms

Without putting it in so many words, another of WHO’s biggest problems has a lot to do with its administration. This is because the agency’s constitution made its six regional offices to be largely autonomous. This means that it is a host country’s local ministers of health who chose the agency’s directors, and not the director-general. This further means that these directors are beholden to the local ministers of health, and not to WHO’s director general. So naturally, the local politicians often treat some of WHO’s offices as tools for patronage. Thus WHO’s director-general is basically ham-stringed: s/he has very little control over the agency’s work in host countries (including in case of emergencies), its budget and human resources.⁸

WHO’s response to Ebola was hampered by these institutional weaknesses. Broadly speaking, because Africa’s health needs are greatest, the continent needs the strongest WHO  regional office.  Unfortunately, Africa has the weakest: WHO’s office in Africa is particularly politicized and staffed with often incompetent people. And any move by the director-general to put competent people at the agency’s regional offices often generate hostile responses from the politicians of the affected countries. For instance, when Dr. Margaret Chan(WHO’s  director-general) replaced top officials of the agency in Sierra Leone, Liberia and Guinea in 2014 – the countries hardest hit by the virus – that change created lots  tension between the local staff and the headquarters.⁹

It is worth bearing in mind that, by providing solid evidence for WHO’s policies, its technical side is meant to arm the agency against unreasonable demands from politicians and donors. WHO, however, is no longer a world leader in health research as it once was. Broadly speaking, since WHO’s recommendations these days do not always match the best available evidence, it is considered an unexceptional organization. As a matter of fact, the University of Washington used the money donated by the Gates Foundation to establish  the Institute for Health Metrics and Evaluation in 2007 after WHO’s statistics were found wanting.¹⁰

Fixing a broken system

First, WHO needs to practice what it preach: its founding mission, which is, to ensure the highest possible level of health, is not only vague but is also unattainable given its resources. It will need to change it to something more practical. The agency’s operational strategy of spending most of its cash on communicable diseases, improving its own management and promoting universal health coverage need to be enhanced as well. By dealing with these key issues, the agency allocate its scarce resources and budget effectively so as appropriately cover items such as promoting good health through the life-course – one of WHO’s program that cut across all areas of its work, including the health of women before, during and after pregnancy; the health of newborns, adolescents and older people, and so on.¹¹

Second, WHO need to fix its daft organizational structure. The flow of authority within the agency should be improved in a way that would make its regional offices, which are where it spends 20 percent of its budget, accountable to Dr. Margaret Chan(its global boss), and not to local governments. The implication of this is clear: with this new arrangement, Dr. Margaret Chan will have enough power to direct WHO’s operations as well as staff it with seasoned employees, not it current incompetent political place-men.

Third, the agency must increase its parlous finances. It is true: the member countries’ dues is inadequate to cover the organization’s running costs. As a result, it had had to accept voluntary contributions from charities, drug firms and rich countries. The fact remained that, in order to implement long-term plans as well as effectively deal with  unpredictable outbreaks of obscure diseases like Ebola, WHO needs a constant supply of funds. The solution is for the agency to find more ways to raise  money. With competent employees, this task  may not be too difficult to undertake.

The bottom line

The unhappy truth is  that WHO’s failure to lead the response  to the Ebola crisis reflects the broader struggle by the agency in recent years to live up to its mandate to lead the world on health. From an entirely practical standpoint, WHO’s management should rethink what the agency is for and how it is financed and run. They should stop doing the jobs of governments and, instead, focus on the things they cannot manage alone, such as combating global epidemics, helping poor countries set up health systems and disseminating the best medical research and policies. Dr Chan, as the boss of  WHO, should stop allowing politicians from using the agency’s regional offices as a parking-place for the relations of their allies and friends. The WHO’s boss should be empowered and emboldened so that she can direct her agency effectively. This means that she should be given more power to hire and fire employees when  necessary. More important, though, is this: if the world wants WHO to be capable of dealing with emergencies like Ebola, it should stop leaving the agency to scrabble for handouts. Instead, it should pay for it by increasing dues.

References

¹Firger J.(2015): Ebola Death Toll Rises in West Africa While Americans’ Interest Wanes. CBS News. Retrieved May 19, 2015 from http://www.cbsnews.com/news/ebola-death-toll-rises-in-west-africa-while-us-interest-wanes/

²World Health Organization: Too Big To Ail. (2014, December 13). The Economist. Retrieved May 19, 2015 from http://www.economist.com/news/international/21636038-ebola-has-laid-bare-failings-worlds-health-authority-too-big-ail

³World Health Organization(n.d.): About WHO. Retrieved May 19, 2015 from http://www.who.int/about/mission/en/

⁴World Health Organization: Too Big To Ail, op. cit., p. 61

⁶Doughton S., Heim K.(2008): Gates Foundation Among Donors to Worldwide Malaria Eradication Plan. The Seattle Times. Retrieved June 11, 2015 from http://www.seattletimes.com/business/gates-foundation-among-donors-to-worldwide-malaria-eradication-plan/

⁷World Health Organization: Too Big To Ail, op. cit., p. 61

⁸Ibid

⁹Ibid

¹⁰Ibid

¹¹World Health Organization(2015): Promoting Health Through the Life-Course. Retrieved June 16, 2015 from http://www.who.int/life-course/en/

Facebook: A digital glutton?

The “Facebook effect” provides the prove that destroying the old to make way for the new is the essence of market economies.

 What is the most popular mass media of the 21^st century? Ask most young people this question and they are likely to say it is Facebook. They are unlikely to mention or pick familiar news media such as CNN, New York Times or Fox News. And, to some extent, they are correct: Facebook, though a mere social networking platform, has become a form of digital glutton that is ingesting everything, including personal data, news, communication, and public opinion, among others. It has even become a mobilization tool used by social movement activists: In 2011, nearly 9 out of 10 Egyptians and Tunisians who participated actively in the Arab Spring used Facebook to organize protests or spread awareness that led to the fall of some autocratic governments in the Middle East.¹

Yet for Facebook, the opportunities for expansion are boundless. Last month, it entered a lucrative partnership with nine news firms, including the National Geographic, New York Times, and the Guardian to develop Instant Articles – a   type of news service.² With this new partnership, Facebook will host the articles from these news media rather than just providing web links that send readers off to the news firms’ websites. This ensures that Facebook users can read stories from the affected publishers without leaving the social network. This arrangement obviously gives publishers new monetization opportunities: they will be able to sell advertising that normally appears next to their stories. Facebook allows them to either keep all the revenues or, alternatively, the publishers can authorize it to sell ad space and then give them a 30 percent cut.³

To those that have shall be given

This new partnership is obviously a strategic success for Facebook and it definitely highlights its growing clout in the news business. Many newspapers and magazines now get a significant number of their readers from Facebook. In addition, a newspaper or magazine can dramatically increase its website traffic if it has a Facebook page. For instance, the New York Times, which has Facebook page, gets as much as 15 percent of its traffic from Facebook.⁴ And some news sites like Buzzfeed gets as much as 37 percent of their traffic from social networking sites like Facebook and Twitter.⁵ The Facebook’s instant articles news service is obviously a success story for the affected news sites, most of whom have already cultivated legions of Facebook fans. Through the partnership, Facebook can keep users from straying as well as serve up more ads, while news firms can reach new audiences.

Just like in every partnership, this alliance is not without its problems. As the “Goliath” of the social networking industry, Facebook has more than 1.3 billion users, a value that is worth about 9 percent of all online advertising globally. Hence this new partnership may give Facebook more power because its users may begin to think that they can get everything they need in one stop. If this happens, the websites of the affected newspapers will become undermined as readers’ destination. In the past, firms like Zynga have been bruised after they hitched their business to Facebook.⁶

This challenge of giving social networking sites like Facebook too much power has prompted some news firms to take more analytical approach to their online business arrangements. Many of the news firms now try to figure out where their readers come from and they often hire teams of data crunchers and traffic analysis firms like ChartBeat to do the job for them. This approach, however, carries some risks too: these news firms seldom pay enough attention to the time people spend engaging on their websites; instead they spend too much time focusing on the number of visitors driven through social media.⁷

It is worth bearing in mind that there is a high possibility that more firms will soon follow in Facebook’s wake. As a matter of fact, many social networking sites now compete to host premium contents from news firms like CNN, BBC News, ABC News and Yahoo News. A good example is the Snapchat, a messaging service. Since the beginning of this year it started offering articles from a select group of news firms to its users – a strategy that can attract more visitors to its website. The bottom line here is that, eventually, competition will force most social networking sites, including Facebook, to pay publishers to host contents.⁸ When this happens, news firms will become less vulnerable to the whims of the algorithms being used by any social networking site. But, until then, news firms and publishers continue to live with the challenges posed by social networks that are almost the modern day newspapers.

For the news firms, the message is clear: Since they can curate content, engage users and sell their attention to advertisers, social networking sites like Facebook can cool readers’ enthusiasm for the traditional news media.

References

¹Huang C. (2011): Facebook and Twitter Key to Arab Spring Uprisings: Report. The National. Retrieved June 2, 2015 fromhttp://www.thenational.ae/news/uae-news/facebook-and-twitter-key-to-arab-spring-uprisings-report

²Johnson C. (2015): What Facebook’s News Service Means for Mainstream News Outlets. Deserete News National. Retrieved June 2, 2015 from http://national.deseretnews.com/article/4466/what-facebooks-news-service-means-for-mainstream-news-outlets.html

³News Companies and Facebook (2015, May 16). The Economist. Retrieved June 2, 2015 from http://www.economist.com/news/business/21651264-facebook-and-several-news-firms-have-entered-uneasy-partnership-friends-benefits

 

 

⁴Ibid

 

⁵Lafrance A. (2012): Coming in the Side Door: The Value of Homepages is Shifting From Traffic Driver to Brand. NiemanLab. Retrieved June 2, 2015 from http://www.niemanlab.org/2012/08/coming-in-the-side-door-the-value-of-homepages-is-shifting-from-traffic-driver-to-brand/

 

⁶News Companies and Facebook, op. cit., p.58

 

⁷Ibid

 

⁸Ibid