Comments

Thanks for the links to this recent research. The notion that lack of access to capital is all that prevents hard-working poor households from achieving prosperity appeals to many people from both sides of the political spectrum. The precise definition of "microfinance" is also hard to pin down. It can encompass everything from rural lending arms of commercial banks to small scale savings groups or community revolving funds. The objectives of commercial lenders are completely different to that of a savings group, so it is rather unfair to place them all in the same basket. Unfortunately many donors, including Australia, don't seem to be able to differentiate. In a place like Cambodia the commercial microfinance sector has 40-50 different players, who mainly provide loans to farmers engaged in commercial production. This sector has attracted an alarming increase in private funding in recent years, along with the usual cheap credit from development agencies. Rates of return are high, much higher than in the recession-hit US, for example, and this is reflected in the amount of money available for what are probably sub-prime loans. While Cambodia's economy is growing, repayments will not necessarily be a problem, but if there is a drought or other external shock, the impact will be similar to that of India in recent years, where the reputation of microfinance has taken a hit. Unfortunately these bad lending practices by commercial providers have the ability to give the whole sector a bad name. Microfinance definitely has a place, and is particularly good where it displaces, or provides an alternative to, predatory lending. Savings groups also have great potential as a social protection mechanism, and can improve household and community resilience, and the money stays in the community. But as the literature points out, these are not pathways out of poverty. Poor households in rural areas will always have a need for loans - it's often part of the annual agricultural cycle. Any "livelihoods" or "rural development" program funded by donor money should at least include some means of reducing the cost of loans for these poor farming households.

Terence An interesting piece but your apparent determination to provide a mainstream explanation for the continued existence of microfinance in development policy means that you seriously confuse the reader on many of the key issues. First, Roodman’s contribution was simply to echo what many others had been previously announcing without anyone in the development industry taking any notice, which was that microfinance does not work. My <a href="http://www.zedbooks.co.uk/node/21677" rel="nofollow">own contribution</a> on this issue came out in early 2010 and, among other things, thanks to much publicity on Roodman’s blog (he ill-advisedly tried to smear the book on his blog, but everything I said pretty much turned out to be 100% accurate), it was turned into a modest best-seller and it became the recommended critical book on very many courses involving a discussion of microfinance. Roodman then went on to say that no matter his central negative conclusion, microfinance nevertheless still had much to recommend it and we should not abandon it! This part of his argument is probably what he was paid by Mastercard Foundation and CGAP (his financial sponsors for the project) to make, but it was a simply ludicrous argument, as I show <a href="http://rrp.sagepub.com/content/45/3/415.full.pdf" rel="nofollow">here</a>. Second, you completely ignore the obvious when trying to explain the reason why microfinance is persisted with in spite of the total lack of any evidence it actually works (and the growing amount of evidence that it has been an historic disaster for the poor). The evidence here is overwhelmingly that it is the POLITICS of microfinance that counts. Microfinance answers to so many of the imperatives of the neoliberal policy-making establishment based in the development industry that it simply cannot be phased out no matter what negative impact it makes. Self-help, individual entrepreneurship, market-based lending, market-driven solutions to poverty, need to avoid engaging the state in development, etc, etc, are all core imperatives in the neoliberal policy-making establishment and all are effectively validated by the (failed) microfinance model. Hence, the support for microfinance, right from arch-neoliberal Hernando de Soto onwards. The development industry has even recently taken to repackaging the microfinance concept under the heading ‘financial inclusion’ in order not to have to phase it out as a result of its zero impact factor. Who can resist the argument that the poor need to be ‘included’ in the financial system? With a co-author, I have written about this specific issue <a href="http://wer.worldeconomicsassociation.org/papers/microfinance-and-the-illusion-of-development-from-hubris-to-nemesis-in-thirty-years/" rel="nofollow">here</a>. Third, you try hard to find some goods news with the various studies reported on by one-time advocates of microfinance Dean Karlan and others without entertaining at any time the even more obvious possibility that perhaps they actually over-stated the impact in coming to their mildly critical conclusions. The motive here would be not to risk losing the funding they require for their own personal research and for the many independent bodies they have established that rely on generous development industry funds to operate. Indeed, this is what I and many others think took place, such as I argued <a href="http://governancexborders.com/2013/05/29/the-art-of-pointless-and-misleading-microcredit-impact-evaluations/" rel="nofollow">here</a>. Milford

There is a good, critical review of the 2015 WDR available <a href="http://economics.com.au/?p=10105" rel="nofollow">here</a>.

The article does provide a dimension into the debate on the Pacific Islands Forum and the inclusion of The Trans-Tasman Big Brothers in it and the reservations by Fiji's Prime Minister to have Fiji re-admitted in the Institution. What the Edward Snowden leaks reveal is the hyprocrisy of the Trans-Tasman nations forcing the other nations to suspend Fiji under the rubric of anti-democratic behavior. The wide spectrum spying on the communications in the Pacific and on Pacific Island Leaders violates the basic tenents of democracy on an industrial scale and have barely received a mention in the main stream media or a denigration from the Pacific Islands Forum. Such bullying from the Trans-Tasman undoubtedly underscores the realpolitik, chicanery and double speak.

Well said, Joanna. Good evaluations (as you note, undertaken within often difficult resourcing constraints) offer critical opportunities for policy and programming improvement. There is a real opportunity here: yet the urgency in many evaluations - particularly of the summative kind - and the slow nature of bureaucratic adjustment don't sit easily together. I'm not sure what the answer is. Perhaps engaging evaluators to help drive the implementation process is one option. Having a really senior DFAT person engage courageously with it could also move things along. It is hard to know whether the fairly standard promise to consider and explore is weak or there is more afoot here. Let's hope it's the latter.

TFF education policy in PNG was introduced in 2012 by the government. Parents paid project fee up to 2014. Why has it been stopped? Putting a compete stop was insanity. Look, K605 million allocated for TFF subsidy was not enough. The Post Courier reported that there are 1.9 million eligible students in the country, that is close to 2 million. In fact, the government is paying K300 school fee per child - and that is for the whole year. Schools are on the verge of closing (and others closed before term one ended). The Catholic school principal conference in February highlighted this problem before in happened. So, who are we to blame? The government can fix this problem: it can either let parents pay project fees or double its TFF subsidy.

Can you explain the sudden decrease in tourism arrivals in 2013?

Abrupt policy education changes, including the ban on vital project fees, are causing real problems for schools, particularly remote area schools. Given the consistently very late disbursement of TFF, schools have no other option than project fees if they are to pay real and essential costs such as: - Mobilising teachers to their school (lack of transport allowances for Morobe teachers caused no end of mayhem earlier this year; on the first day of the teaching year hundreds of teachers were at the Provincial headquarters seeking support for transport and verifying their posting locations) - Paying "volunteer" teachers from the community who keep schools going in the absence of registered teachers - Buying basic school materials - Carrying out basic maintenance and small infrastructure improvements Banning project fees, combined with late or inadequate TFF, are conspiring to make already fragile disadvantaged remote schools face even greater barriers than before. A lack of project fees, as well as other factors related to education policy shifts, have meant that some schools have remained shut for most or all of the entire first term. Thankyou for highlighting the problems associated with banning project fees. Sincerely, Rebecca

Documents released by NSA whistleblower Edward Snowden show that Australia, New Zealand and the other members of the “five eyes” alliance have used signals intelligence capacity to advance their agendas on trade and climate policy. Despite a common interest in monitoring criminal and terrorist activity, Asia-Pacific governments are increasingly aware that the Anglosphere alliance is using mass surveillance systems during international summits, trade negotiations and other multilateral meetings. Documents released by Snowden show that signals intelligence capability was used to monitor delegations during climate negotiations at Copenhagen in 2009 and Cancun in 2010. This information advances the negotiating positions for United States, Canada and Australia (three countries whose climate policies have been significantly driven by mining and extractive industries). An officer from Britain’s GCHQ went disguised as a UK delegate to the 2009 United Nations Convention on Climate Change meeting in Copenhagen, and another was deployed to the UN’s Cancun climate talks in 2010. The NZ Government Communications Security Bureau (GCSB) was also used to monitor candidates for the position of Director General of the World Trade Organisation (WTO), at a time that NZ Trade Minister Tim Groser was (unsuccessfully) bidding for the position. Groser was one of nine candidates in contention for the position at the WTO. The surveillance operation by GCSB appears to have been part of a secret effort to help Groser win the job. Governments always play the “national security” card to justify the expansion of state powers, but more and more the definition of security is being expanded ! Sebastian Gjerding, Anton Geist, Henrik Moltke, and Laura Poitras: “For the NSA, Espionage Was a Means to Strengthen the US Position in Climate Negotiation”. Information (Denmark), 30 January 2014. http://www.information.dk/486360 At Global Climate Conferences, Spying Is Just Part of the Woodwork, The Intercept, 12 April 2014. https://firstlook.org/theintercept/2014/12/03/global-climate-conference-spying-just-part-woodwork/ New Zealand Spied on WTO Director Candidates, The Intercept, 23 March 2015 https://firstlook.org/theintercept/2015/03/22/new-zealand-gcsb-spying-wto-director-general/ Copy of document from NSA whistleblower Edward Snowden http://media.nzherald.co.nz/webcontent/document/pdf/201513/WTO%20document.pdf

Hi Jan Kees van Donge With respect, it is very unfortunate that you refer to being a "foreigner", hence the weight of potential mistakes. I don't think such imputation is necessary. Please read my comment. It does not mention, either direct or indirectly, your citizenry or imply anything of that sort. (I do not think that of you or any other fellow academic for that matter. Please don't make such assumption. It will do no good but only subvert what should otherwise be an objective discussion). The three arguments you've pointed out are indeed critical and your article should be commended for taking a rare stand or pointing out the other side of the 'coin.' My comment below does not dispute any of these. I only noted that the facts which now "appear to be in dispute" (as argued by Sonja) need to be re-looked. It seems you have done that now. I will leave it to those that raise the issue of facts to respond. Indeed, while a 'detached' and objective intelligentsia is needed in such perilous time, we are also reminded that those who appear to be one must also act responsibly. Regards, Bal

Hi Seini, Thanks for your comments and the references – I look forward to reading the latter soon. You are right to say that there has been some research shining a light on institutional and individual decay. In the full article, I discuss focus groups in Solomon Islands that provide glimpses of this (although the researchers don’t label these findings as an example of the decay definition per se). But aside from research in reports and academic papers, I have yet to see a policy document that seriously discusses corruption as decay (or something like it) and then uses this definition to frame responses to corruption. Let me know if you’ve come across policy documents that do this. Also, I argue that institutional/individual decay is a form of corruption. Your example (“whole sectors can ‘decay’ to the point where corruption is rife”) is different because it suggests that the institutional decay causes corruption. I agree with you that the decay definition should not be considered the only (or even the best) definition of corruption. It is just another way to understand local perceptions. In the paper I show that, as a whole, Papua New Guineans hold a wide variety of perceptions about what corruption is, which includes the public office definition. So we shouldn’t throw out this definition and anticorruption programs that emanate from it; rather I think anti-corruption agencies need to acknowledge the shortcomings of this definition and think more critically about alternative definitions. In terms of what this means for addressing corruption: I agree with you that it may be counter productive to exhort people to punish the corrupt when they can not do so, or are benefitting from corrupt transactions where the state is weak– as I outline in <a href="http://onlinelibrary.wiley.com/doi/10.1002/pad.1636/abstract" rel="nofollow">this article</a>. But, even more importantly, there needs to be more focus on powerful non-state actors. Currently corruption involving the private sector, not for profits (including the church) and citizens is largely ignored by the anti-corruption industry. The global financial crisis is a cautionary example about what can go wrong when we think of corruption as only/mostly involving the state. While that crisis showed that a web of private firms can perpetuate massive fraud, there was little real response from the anti-corruption industry. If corruption is only seen to involve the state, such private sector corruption can be overlooked, or downplayed. I think it is crucial to start the conversation about corruption in terms of how it is defined. It’s equally important that our analysis and conversation about what drives corruption doesn’t just end there. To this end, a colleague, Caryn Peiffer, and I are working on further analysis of the PNG data, and are analysing what factors drive citizen reporting. We hope to have a paper out later in the year. Look forward to getting your feedback on that. Cheers, Grant

Great article Joel. You mention strengthening procurement networks to get drugs to the people who need them – we also need to keep supporting the development of new and better medicines, vaccines and diagnostics for diseases that predominantly affect developing countries. With no profitable market to entice private companies to invest in the R&D required to develop these technologies, government and philanthropic funding is needed to fill the gap. The Australian Government recently committed $30m over three years to three Product Development Partnerships (organisations that focus exclusively on developing new health technologies for diseases that predominantly affect developing countries). Investments like these need to continue. While it isn’t feasible to make sure we have a cure, vaccine and diagnostic test ready for every emerging infectious disease that has the potential to cause an epidemic (especially those that haven’t been discovered yet!), we do need to invest in product development for existing diseases that affect people on our doorstep. The fact is that today’s main test for TB was developed in 1882 and is <a href="http://www.msfaccess.org/sites/default/files/MSF_assets/TB/Docs/TTB_report_RunningOutOfBreath_21stCentury_ENG_2005.pdf" rel="nofollow">at best 60% effective</a> – and that means that we need to do much better. As the latest <a href="http://www.lowyinstitute.org/files/investment-inclusiveness-implementation-health-governance.pdf" rel="nofollow">G20 Monitor</a> report highlighted, one of the key lessons learned by the global health community from the Ebola epidemic was the need to secure the development of medicines and vaccines that predominantly benefit the poor.