Remittances: A Complement to International Aid

By Rohit Sudarshan

The future of traditional foreign assistance is in a precarious situation. Over the past five years, Organization for Economic Co-operation and Development (OECD) countries that contribute the largest share of international aid—namely Australia, France, and the U.S.—have seen a downward trend in official development assistance (ODA) as a percentage of gross national income (GNI). Additionally, the United Kingdom’s development agency, DFID, is currently handling a surge of fraud investigations regarding their foreign aid. Countries that are global leaders must promote other financial means for international development. Few options are as important and efficient as remittances.

Remittances are payments made by immigrants to families and friends in their country of origin and represent an effective method for those in developing countries to continue to improve their standard of living. While ODA requires the coordination of government agencies as well as policymakers from many countries, remittances do not face that same constraint. The difficulty in ensuring accountability has meant that governments have misused and absorbed aid money. For these reasons, remittances can be an appealing alternative; they can move expediently and directly to a recipient that needs it.

Continue reading

Committing to a Responsible Data Revolution

By Neha Rauf

evaluating_satellite_data_28759690275029_28229

Data scientists evaluate satellite data at the Center for Satellite-based Crisis Information. Photo courtesy of DLR German Aerospace Center, licensed under the Creative Commons Attribution 2.0 Generic license.

The Push for a Data Revolution

In order to accomplish the 2030 Sustainable Development Goals (SDGs), the international community is rallying for a data revolution. The emphasis has been on increased access, interoperability, and actionable use of data, omitting necessary considerations of responsible use. Moving forward, the push for a data revolution which spans international development organizations and the private sector needs to be reined in by common ethics standards.

Continue reading

Reducing Transaction Costs in Development Impact Bonds

By Waka Itagaki

Development Impact Bonds (DIBs) are a results-based financing mechanism that leverages private capital for international development. Since the first DIBs were created in 2014, one of the mechanism’s key challenges has been high transaction costs: Each DIB project is unique, and this customization increases legal fees and requires financial intermediary and technical services. This article highlights two ways to reduce these costs: sharing data and knowledge about DIBs among stakeholders, and limiting the focus of DIBs. The reduction of transaction costs will promote greater use of DIBs for international development.

Introduction and Background

DIBs catalyze private investment that generates social impact as well as financial return, so called “impact investment,” by engaging private investors, service providers, host-country governments, donors, and intermediaries. Once all stakeholders agree on a common goal and an evaluation method, private investors provide upfront funding for a development project and work with service providers. If and only if the pre-agreed development outcomes are achieved, host-country governments or donors repay the investors. An intermediary organization coordinates among the stakeholders and contributes to the creation of a deal that meets all stakeholders’ interests.

Continue reading

Free Labor Movement in the East African Community

By Miguel E. Eusse Bencardino

In 2010 the East African Community (EAC) created a common market protocol under which products and services can move freely between borders to enhance regional economic integration and global competitiveness. Last November the East African Business Council (EABC) led a successful initiative to extend the agreement to include the free movement of workers across borders. This allows cooks, accountants, engineers, and other service workers to work temporarily in Tanzania, Burundi, Rwanda, Uganda, and Kenya. The agreement integrates the service sector into East African economies, providing a needed source of sustainable development and employment for the region.

The initiative began with public-private dialogues supported by international development agencies, including The German Agency for International Cooperation (GIZ), the African Capacity Building Foundation, and the International Trade Center. The discussions identified the issue of labor mobility as an obstacle in the region’s plan for integration and development. Ugandan engineers hoping to work in Tanzania, for example, were not able to provide their services because of government restrictions and high taxation. Such stories prompted the EAC’s Council of Ministers to endorse the initiative to create a legal framework for free labor movement.

5339816173_36427a3682_z

The East African Community flag (EAC)

International commercial blocs around the world have similar free labor agreements; the Pacific Alliance between the governments of Mexico, Colombia, Peru and Chile is one example. The Lima Declaration of 2011 states that “the movement of business people and the facilitation of migration transit, including the cooperation with immigration and consular police” is a priority. Continue reading

Future of Technology in Africa: Private-sector led ICT Integration

By Motoki Aoki

On June 3, German software giant Systems Applications Products (SAP) announced “Digital Africa,” a partnership with the German Ministry for Economic Cooperation and Development (BMZ) that seeks to support the development of Africa’s digital potential. This program—one of SAP’s $500 million investment initiatives—will train 20,000 children in 11 African countries, underscoring growing recognition of the role of Information, Communications Technology (ICT) in driving broader development in Africa. The new partnership comes in recognition of the significant opportunity ICT driven initiatives present in Africa, both in terms of development impact and profit potential.  Here’s a review of that opportunity, and the trends that are driving it.

Access to mobile ICT technology has the potential to transform African economies.

Access to mobile ICT technology has the potential to transform African economies.

Diversified economy for Africa‘s high demographic dividend

Surprisingly, by 2035, the number of Africans joining the working age population (ages 15-64) will exceed that from the rest of the world combined. With the right conditions for sustainable job creation, Africa will enjoy a rapid-growing demographic dividend. Indeed, many Africans are migrating from rural to urban areas to search for better opportunities. This massive urban migration can be transformed into a positive, but in the short term it will stretch already limited public resources. Continue reading