Isobel Coleman

Democracy in Development

Coleman maps the intersections between political reform, economic growth, and U.S. policy in the developing world.

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Missing Pieces: IMF Projections, Mobile Money, and More

by Isobel Coleman
September 26, 2011

Finance ministers and central bank governors of Brazil, Russia, India, China, and South Africa attend the BRICs news conference during the annual International Monetary Fund-World Bank meetings in Washington, September 22, 2011 (Yuri Gripas/Courtesy Reuters).

In this week’s Missing Pieces, Charles Landow highlights the latest economic projections from the IMF as well as interesting stories from Africa and the Middle East. We look forward to your thoughts as always. Enjoy!

  • The IMF’s New Projections: The IMF last week released its latest World Economic Outlook. The title is grim: “Slowing Growth, Rising Risks.” With troubles in the United States and Europe, natural disaster in Japan, and unrest in the oil-rich Middle East, “the global economy is in a dangerous new phase.” Unsurprisingly, the good news is reserved for certain emerging markets. China is projected to maintain blistering growth, with India trailing somewhat but still robust. (India does face far higher, though declining, inflation.) In Latin America the picture is split between booming South American economies, such as Argentina, Brazil, Chile, and Peru, and their northerly neighbors harder hit by the struggling United States. Growth in both Brazil and Mexico is projected to drop but remain respectable. In sub-Saharan Africa, low-income countries, largely detached from the global economy and therefore spared from the recent crisis, are expected to grow strongly. Africa’s middle-income countries (including South Africa) have felt the global slowdown more, but the IMF still projects solid average growth. The continent’s major oil exporters, such as Nigeria and Angola, are expected to continue robust expansion. Finally, in the Middle East, the outlook is unclear given political events and global uncertainty. Oil exporters are projected to grow strongly for the most part, with Qatar leading the way and Iran lagging behind. Oil importers, by contrast, are projected to achieve only slow growth. This group includes Egypt, which faces growth prospects of under 2 percent and inflation of more than 11 percent–a difficult environment in which to manage surging post-revolution expectations.
  • Mobile Money in Niger: Cash transfers (often conditional on certain behavior, such as sending children to school) have become a widespread way to help the poor. Evaluations have shown that they can reduce poverty and boost access to health care and education, as this comprehensive study from the UK Department for International Development explains. A paper last week from the Center for Global Development evaluates whether transferring the money via mobile phone, as opposed to distributing physical cash, can improve efficiency and effectiveness. The authors conducted a randomized trial of a five-month unconditional cash transfer program in Niger last year. Some of the recipients got funds via Zap, a mobile service (they also received new phones and Zap accounts); others got cash. The results show that mobile payments were easier for recipients to access, and they would be cheaper for implementers to carry out if not for the cost of the new phones. The study also suggests that the privacy and convenience of mobile payments may have positive effects, such as giving women more control over the money. This, however, needs further study. Either way, the paper illustrates the promise of mobile technology in an important category of development intervention. Isobel Coleman covered other interesting developments in mobile banking in a blog post last spring.
  • Corruption in Kuwait: So far, Kuwait has avoided the Arab world’s upheavals. But anger is now brewing thanks to a burgeoning corruption scandal. According to Lebanon’s Daily Star, the story broke last month when a Kuwaiti newspaper reported that about $92 million had been deposited into the bank accounts of two members of parliament. Several more parliamentarians have since come under investigation. Last Wednesday, the Kuwait Times reports, some 7,000 Kuwaitis demonstrated in the streets, calling for the prime minister and cabinet to resign and forĀ  parliament to be dissolved. The crowd was backed by 20 opposition members of parliament (which has only 50 members overall). A New York Times piece explains that the protests stem from long-simmering resentment over corruption involving Kuwait’s vast oil wealth. The country has long ranked favorably compared to most of its neighbors in the Freedom House Freedom in the World survey, but far less so in Transparency International’s Corruption Perceptions Index. It remains to be seen whether discontent over corruption will produce political change in another Arab capital. Yesterday, no doubt with that in mind, Kuwait’s cabinet approved an anti-corruption bill.
  • Music and Democracy in Senegal: Adam Nossiter of the New York Times reported last week on two Senegalese rappers who are shaking up the country’s political scene. Fou Malade and Thiat have become leading voices in the movement to deny President Abdoulaye Wade a third term next year–and to force political leaders to tackle poverty, electricity cuts, and other festering frustrations. The rappers’ group, Y’En A Marre (French for “Fed Up”), is aligned with no party, Nossiter reports. But it “has become a potent force at the heart of resistance to Mr. Wade’s efforts to stay in office.” (The BBC had an audio report, with samples of music, in August.) Senegal’s tradition of relative democracy in a region of conflict and coups is in danger as Wade tries to secure a third term, in apparent violation of the constitution. This June he proposed constitutional changes that seemed designed to pave the way for him to stay, and possibly for an eventual transfer of power to his son. Protesters stormed the streets of Dakar, forcing Wade to drop the proposal. Now he awaits a ruling from Senegal’s Constitutional Council on his eligibility to run again. An opposition coalition on Friday gave him until the end of October to drop his candidacy, promising demonstrations every day if he refuses. Whatever happens, it seems clear that Wade is wearing out his welcome after 11 years in office.

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