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A Steppe Back?: Economic Liberalisation And Poverty Reduction In Mongolia

Paper delivered to the School of Politics and Government, Birkbeck College, University of London, London, UK, 2000

“… the neo-liberal claim that transition is most successful in situations where state organs wither away is highly problematic. The state, it seems, is required as a fundamental regulatory formation in transition (Pickles and Smith 1998: 15).”

By David South

This paper will explore the profound weaknesses of economic liberalisation as a tool of poverty reduction in the developing world. I have chosen to explore the experience of the Northeast Asian nation of Mongolia; a country sandwiched between Russia and China which has been held up as an example of how economic liberalisation policies and strong personal freedoms can help a country make the transition from a command-based Communist country to free markets and democracy (UNDP Mongolia: The Guide 1997-1999). I argue that the slate of policies that constitute economic liberalisation (or “shock therapy”) in the 1990s – privatisation, price liberalisation and a free-floating currency – are, by themselves, poor mechanisms for the alleviation of poverty; that in fact they increase poverty rates and leave a legacy of weak institutions that are either unwilling to or incabable of helping the poor. The author will also draw on firsthand evidence gained while working in the United Nations mission in Mongolia for two years.

Economic liberalisation policies have been inhibited from alleviating poverty by the cultural legacy of Mongolia’s economic development, which has de-emphasised private property and a money-based economy and placed a high emphasis on wealth being held in herds of animals and goods exchanged by barter.

Mongolia, with its relative isolation and small population of 2.4 million (Human Development Report Mongolia 2000: 55), has been seen as a self-contained petri dish by economic liberalisers hoping to incubate a robust transition to free markets and democracy that can serve as an example to other post-Communist states.

Mongolia’s journey towards neo-liberal ideas is unique. Unlike many other developing nations, Mongolia’s lively democratic movement that emerged at the end of the 1980s actively sought out these policies, and has enjoyed strong and widespread public support for them (though this has ebbed and flowed with the economic fortunes of the country). The 1996 election was fought and won by the Democratic Coalition based on these policies; the Coalition won 50 of the 76 seats in Mongolia’s parliament, and voter turnout was more than 90 per cent (Far Eastern Economic Review 1997: March 27). Thus, this is not a case of international institutions forcing upon a country policies against its wishes: the door was opened and the economic liberalisers were effectively invited in for a big bowl of fermented mare’s milk.

However, it is also a country in which economic liberalisation has failed to deliver anticipated reductions in poverty for the majority of the population, and a strong case exists that it has made things worse.

As the Human Development Report Mongolia 2000 states:

In recent years however, the predominant vision has been neo-liberal. Backed by some international donors, reformers have argued that the best thing the state can do is to largely withdraw from the economy – by rapidly privatising state enterprises, and dismantling as many regulations and controls as possible, and allowing market forces to determine the production and allocation of goods and services. (Human Development Report Mongolia 2000: 13)

Liberalisation policies in Mongolia: A potted history

With the fall of the Soviet Union at the beginning of the 1990s, Mongolia woke up to find itself without its financial benefactor for most of the 20th century, Russia, and in the grip of a severe economic decline (Rossabi 2000: 9).

But a new “big brother” was at hand. In 1991, economic liberaliser Jeffrey Sachs arrived in Mongolia (Fortune 1998: December 7). The arrival of Sachs and his ideas were to have a profound impact on the lives of Mongolians. He gathered a group of well-educated Mongolian economists to test economic liberalisation theories.

Smith and Swain neatly summerise the source of economic ideas for the transition states:

The roles played by Francis Fukuyama (1992), formerly of the US State Department, and Jeffrey Sachs (1990), as policy adviser … translated this agenda into the all too familiar programme of so-called ‘shock therapy’. Shock therapy has been based on the view that capitalism could be … imposed by fiat and that the unleashing of the power of capital will inevitably allow the institutions, regulations, habits and practices associated with the ‘normal’ functioning of a capitalist market economy to emerge (Smith and Swain 1998)

The economic liberalisation project in Mongolia can be split into two distinct phases. The first more tentative phase under the Communist government extended from 1990 to 1992 and included privatisation of some state firms, the issuing of stock-market vouchers to most of the population and a failed attempt to enter the foreign currency markets (as a result of which 80 per cent of the country’s reserves were lost). This phase coincided with a new constitution, democratic elections and significant improvements in personal freedoms.

The economic liberalisation project encountered serious difficulties from the start, and when all aid and subsidies from the Soviet Union were removed, the economy collapsed, with inflation spiralling to 320 per cent (Human Development Report Mongolia 2000: 13). Pro-economic liberalisation factions in the Communist government lost influence and the reforms stalled from 1992 until 1996, when they were re-started with a vengeance with the election of the Democratic Coalition. The Coalition was assembled from a hitherto fragmented opposition by the Washington-based International Republican Institute and mimicked the policies of the American Republican Party, including distributing a Newt Gingrich-style “Contract with the Mongolian Voter.”

The second phase of reforms, under Democratic Coalition Prime Minister M. Enkhsaikhan, was launched with the removal of price controls on fuel and electricity, increasing prices by 50 per cent (Rossabi 2000: 11). This phase of economic liberalisation also ran into difficulties, but its most successful policy achievements have been the privatisation of public housing, the removal of trade tariffs and the reining in of inflation.

Poverty and economic liberalisation

Prior to the introduction of economic liberalisation, there was no extreme poverty in Mongolia, though it is difficult to gauge relative poverty since this information was not gathered. Rossabi notes, however, an extensive public welfare system was spread throughout the country:

The Mongol economy required substantial subsidies from the Soviet Union. This command economy produced inefficient industries, few consumer goods, and scant increases in the size of the Mongol herds. The one-party system limited dissent and contributed to human rights abuses. On the other hand, the government provided extensive medical, educational, and welfare benefits to the young, women, the elderly, and indeed much of society. A growth in population, a longer life span, and high rate of literacy were byproducts of such state policies. (Rossabi 2000: 6)

All research data has shown an increase in poverty levels for a large portion of the population after 1990. Estimates vary wildly, but the United Nations Development Programme reports that 38.4 per cent of urban dwellers – and 32.6 per cent of rural residents – were poor in 1998 (Human Development Report Mongolia 2000: 23). School attendance is down, regional disparities have become more extreme, with the capital experiencing a boom fuelled by international aid (this totalled US $180 million in 1998 (Mongolia Update 1999: 27) and an expanding service sector. Provincial towns and smaller communities have seen local state-run businesses collapse, communications weaken, and a leaching of the population, either to the countryside to herd animals or to the capital to seek work.

To cite one graphic anecdotal example of the process, a consulant for the Asian Development Bank told a 1998 donor agencies meeting of the irony of going into former factory towns, and telling the well-educated residents to turn to small crafts and itinerant vegetable growing rather than restarting the existing factory.

Mongolia’s transition: theoretical dilemmas

As Pickles and Smith note in their work of political economy Theorising Transition: the Political Economy of Post-Communist Transformations, it is a profound mistake to ignore the distinctive evolution of each of the former Communist states. Mongolia’s attempts at transition to a market economy have been deeply marked by its cultural legacy, in spite of attempts to transcend this. While Ohmae may assert that “This movement up the ladder of development has nothing to do with culture and everything to do with the region’s ability to put the right policies, institutions, and infrastructure in place at the right time (Ohmae 1994: 21),” culture is crucial. It is simplistic to depend on a “stock set of policies to enable the supposed transition to capitalism at the end of the twentieth century to be achieved (Pickles and Smith 1998: 10).”

As Pickles and Smith add about post-Communist Eastern Europe:

Treating post-communist Eastern Europe as a whole fails to recognise the ever-present diversity of some 27 states and 270 million people. Even at the end of the nineteenth century, such political-economic diversity was central to what was unfolding in the region … The diversity of historical experiences was replicated under state socialism, and while we would not argue for some form of historical determination, the state socialist economy in part relied upon these spatial divisions of labour and forms of social organization and institutionalised practices, albeit that large-scale attempts at forced industrialisation were made to eradicate the legacies of ‘peasant societies’ and uneven capitalist development. (Pickles and Smith 1998: 12)

Historically, Mongolia had never experienced capitalism, even in its most basic and embryonic form. Prior to the 1921 revolution which made Mongolia the world’s second Communist country, the vast majority of its citizens were divided between two occupations: nomadic herding, and the herding of souls as Buddhist monks. There was a small trading community, including a tiny community of Jewish traders – a legacy of the long-gone silk route that once plied its way through the Mongol Empire. But modern, urban, industrial capitalism as was present at this time in Europe was nonexistent in Mongolia. Concepts of capitalism, market economics and private property were introduced anew after 1990.

Urbanisation, modernisation and industrialisation were wholly communist concepts in Mongolia prior to 1990. The traditional nomadic way of life measures wealth in terms of the size of the herd and places a high value on the ability to roam unencumbered by private property divisions and the ability to trade animals for other goods (though these needs are simple since a nomadic herder can only carry around a limited quantity of possessions).

Economic liberalisation policies have, ironically, only exacerbated this trend, driving more of the economy into barter relations and actually pushing a portion of the population out of urban areas and into subsistance herding in order to survive (Partnership for Progress 1998: 2-3).

Mongolia also offers some anomalies to theories of economic and democratic liberalisation. Lewis contends that democracy gives a nation a distinct economic advantage. “Average wealth, the degree of industrialisation and urbanisation and level of education are perceived to be much higher for countries which are democratic, education being of particular importance in this respect (Lewis: 1997).”

Yet as Fortune magazine noted, “No other Asian country enjoys more political freedom today than Mongolia. And no other Asian country has shown greater commitment to open markets. But Mongolia has received little reward for its efforts (Fortune 1998: December 7).”

The role of the state

Broad, Cavanagh and Bello see a strong argument for clear state direction in underdeveloped economies in the beginning stages, before allowing market mechanisms to dominate:

The South Korean economy’s resumption of growth after a brief period of stagnation at the onset of the 1980s and Eastern Europe’s slowdown after rapid growth in the 1960s confirm a more complex truth than the purveyed by free-market ideologues. Communist economies may propel societies through the first stages of development, but further growth into a more sophisticated economy necessitates a greater role for market mechanisms. (Broad/Bello/Cavanagh 2000: 392)

Strong state direction in economic development has been abandoned in Mongolia (it remains to be seen whether the re-election of the former Communist party in the summer of 2000 will alter this), and it can be argued that the over-dependence on market mechanisms has been premature.

In fact, “the neo-liberal claim that transition is most successful in situations where state organs wither away is highly problematic. The state, it seems, is required as a fundamental regulatory formation in transition (Pickles and Smith 1998: 15).”

The absence of this regulation in Mongolia means that where once economic transactions were transparent, they have now gone underground. The example of cashmere exports (one of the country’s major foreign-currency earners) is particularly interesting. In 1998 the Mongolian government, faced with ever-dwindling tax revenues, introduced a tax on cashmere exports, ostensibly to protect the domestic cashmere-manufacturing industry. Whatever the true intention, the result was catastrophic for government revenues. Recorded exports fell by more than 98 per cent, to US $306,000 in 1998 from US $16 million in 1997 (Far Eastern Economic Review: 1999). The trade went underground and a handful of customs officials could not make a dent in a border as vast as Mongolia’s. It is a graphic example of how weak the central government had become, unable to raise revenues when necessary.

Economic liberalisation also tends to pull economic activity into the capital, as has been witnessed across the transition states. Centrifugal forces leave great swathes of poverty in rural areas and drain marginal urban centres of their skilled workers (Pickles and Smith 1998: 17). Mongolia is no exception to this pattern (Rossabi 2000: 10).

Forces outside the market

After investigating the role economic liberalisers in non-communist developing nations, Robert Bates found that market-oriented economists routinely overlook the role politics and political power plays in wealth distribution:

One reason that market-oriented economists tend to deny the centrality of politics to the development process is that they tend to discount problems of distribution. Those who adhere to the efficiency-and-growth position counter that if development produces a maldistribution of income, those who are losers in the short run could become winners in the longer run … From this viewpoint, governments are not just irrelevant to the development process, the actually impede it. (Bates 1988: 239-240)

There is scant contemporary research into the role of clan or family elites in modern Mongolia, but Rossabi, a Mongolia historian, believes they wield significant influence to this day, and have glided from communism to capitalism with ease (Rossabi 2000: 12). He asks, “Has there been sufficient turnover in the political elite, or does it represent the same consitutency as in the past? Has it expanded sufficiently to make itself more broadly representative of the Mongol population, including the herders and the countryside in general?”

In search of a purpose

Mongolia today is undergoing a basic economic dilemma familiar to Ricardo. It is at once transforming political and economic relations while also exploring what advantages it has to offer to the world markets, that old chestnut of absolute and comparative advantage. To date, its absolute advantage has been to be the source of raw materials, the two key foreign currency earners being copper and cashmere wool (Human Development Report Mongolia 2000: 30).

Its large herds of animals (some 34 million) are under-utilised as foreign-currency earners, and for the most part provide food for domestic consumption. One of the main reasons for this has been the rudimentary livestock techniques that exclude these vast meat and dairy resources from foreign markets (while the herds are raised without any use of chemicals, there is no quality control – a service once provided by the state before 1990). The distortions to the economy caused by these policies are highlighted in the Gross Domestic Product (GDP). In 1985, agriculture accounted for 14.3 per cent of GDP, and industry was 31.8 per cent. By 1998, agriculture (now mostly nomadic herding) accounted for 32.8 per cent of GDP and industry shrank to 24.1 per cent (Human Development Report Mongolia 2000: 56). The economy had contracted and was more focused on meeting basic domestic food needs.

Mongolia has a number of strengths it can draw on, however, with its impressive steps at building democracy and personal freedom chief among them. Lewis categorises former communist states into two groups, with group two taking an undemocratic route. Mongolia would rank in group one, since these countries have: “relatively rapidly established a reasonably viable constitutional order and multiparty system, having held free elections, seen unequivocal changes of government and generally established civil liberties (Lewis: 1997).”

The economic model used by the Democratic Coalition was the United States; Mongolia’s new leaders, dismissed other Asian nations – with their stoic, thrifty populations taking direction from the state – as poor examples for Mongolia. Like the US, Mongolia’s nomadic heritage values freedom and individual effort over the state, assert government advisers such as Tserenpuntsag Batbold, an economic adviser to the Mongolian prime minister’s office.

Batbold is sanguine about finding a purpose for the country’s economy: “I’m always thinking about this, but I can’t give you an answer. This is exactly why we have to create a nondistortive economic environment, one which will show us the true comparative advantages of this nation (Asian Wall Street Journal 1997: May 27).”

Yet the process has been a difficult one. At a June 1998 international investors’ conference in Ulaanbaatar, the World Bank variously called Mongolia the “gateway to Russia”, the “gateway to China”, and the “gateway to Central Asia” (UB Post: 1998), giving the impression that both the global institutions and the Mongolian government would try anything in a desperate search for a purpose for the country’s economy. In fact, efforts in the 1990s to attract foreign direct investment (FDI) have not been fruitful. In 1999, FDI stood at US $70 million; it was US $200 million for all of the 1990s (Human Development Report Mongolia 2000). The belief that foreign private companies would pay for the country’s infrastructure improvements has run up against a wall: most foreign companies find it hard to see the benefits in investing in a country that only has a market of 2.4 million people and very high start-up costs.

By 1998, even Sachs was striking a pessimistic note. He told Fortune magazine he disagreed with the pace of reforms and insisted infrastructure improvements – more roads, improved livestock breeding, investment in information technology – were the only things that would improve the country’s economy (Fortune 1998: December 7).

Conclusion

Political power in Mongolia has switched from the hegemonic control of the Communist Party (and its overlords in Moscow) to be dispersed amongst a plethora of actors, including international aid organizations. Economic liberalisation has destroyed the state’s ability to guarantee a minimum standard of living. However, it has also expanded the number of small businesses in the country, and the GNP generated from the private sector has grown from 10 per cent of the total in 1990 to 64 per cent in 1999 (Human Development Report Mongolia 2000: 31). In spite of this, poverty rates remain stubbornly high, undermining assertions that free markets alone will generate wealth for the disadvantaged.

Unfortunately, Mongolia has significantly misdiagnosed the origins of prosperity in its current role model, the United States. Economic liberalisation policies cling to simplistic notions of the evolution of capitalist markets in the US, ignoring the complex relationship between state-funded or regulated infrastructure development and economic growth. Post-communist countries have been ill-advised on what policies will actually reduce poverty rates. These societies do not fit into conventional ideas of underdevelopment; on the whole their populations are highly literate and skilled. While products produced by these countries may not be able to compete head-on with more technologically sophisticated equivalents in Western markets, there is little evidence that wholesale destruction of these industries will spurn economic growth and reduce poverty.

Pax Chaotica: A Re-evaluation of Post-WWII Economic and Political Order

In The Interests Of The Exploited?: The Role Of Development Pressure Groups In The UK

The Sweet Smell Of Failure: The World Bank And The Persistence Of Poverty

ORCID iD: https://orcid.org/0000-0001-5311-1052.

© David South Consulting 2017

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China Sets Sights on Dominating Global Smartphone Market

By David South, Development Challenges, South-South Solutions

New UNOSSC banner Dev Cha 2013

SOUTH-SOUTH CASE STUDY 

The rise of smartphones – mobile phones capable of Internet access and able to run ‘apps’ or applications – is the latest wave of the global connectivity revolution. Mobile phones rapidly made their way around the world to become almost ubiquitous – the most successful take-up of a piece of communications technology in history – and now smartphones are set to do the same. The number of mobile phone subscriptions in the world surpassed 6 billion in 2012 (out of a population of 7 billion) and, according to the International Telecommunications Union (ITU), the number of mobile phones will exceed the world’s population by 2014.

Over the last five years, with the increasing popularity of smartphones, the focus of the mobile industry has shifted from voice and messaging to apps and data services.

Smartphones are complex pieces of technology and any country that can develop the capability to make them and innovate is set to make a lot of money.

The high export value potential of designing and making “computer equipment, office equipment, telecommunication equipment, electric circuit equipment, and valves and transistors” was flagged up as a priority for developing nations back in 2005 at a UN meeting looking for “New and Dynamic Sectors of World Trade” (UNCTAD).

At present, smartphones have a long way to go to surpass old-style mobile phones: by the end of 2016, according to Portio Research (portioresearch.com), the number of non-smartphones in the Asia-Pacific region alone will still be bigger than the entire worldwide number of all smartphones. Even so, it’s predicted that by 2016, there will be 555 million active smartphones in China alone, as well as half a billion smartphones in Europe by the end of 2014. By 2013, North America’s smartphones will make up 50 per cent of all mobile phones. All in all, a lucrative market.

The main factor holding back the rise of smartphones is price. Smartphones tend to cost more than a basic mobile phone. But as China gets more heavily involved in the smartphone marketplace with its own smartphone and mobile phone brands, low income consumers will find themselves with a wider choice of affordable and powerful smartphones, each one a mini-computer.

Out of the 10 largest global manufacturers of smartphones, four are Chinese: Lenovo, Yulong, Huawei and ZTE (Gartner).

Huawei (http://www.huawei.com/en/), the world’s biggest smartphone seller (according to research firm Canalys) (canalys.com), has started to move some of its design team to London in the United Kingdom, to better tailor its products for foreign markets. It has revenues each year of US $35 billion.

China’s mobile phone market is vast, accounting for a third of all smartphones sold in the world. Getting a foothold in this marketplace places a company in a very strong position to build the expertise and capital to push into the wider global marketplace. And that is what Chinese brands are starting to do. So far, Chinese exports of branded smartphones make up a fifth of those sold around the world (Canalys).

The big global competitors to date have been South Korea’s Samsung (samsung.com) and the American Apple brand (apple.com). Other large competitors are Canada’s troubled Blackberry and Finland’s Nokia.

To compete with them, popular and successful Chinese brands include Xiaomi (xiaomi.cn), which sells more mobile phones in China than does the American Apple brand, and ZTE (http://wwwen.zte.com.cn/en/).

For years, many of the top global brands have had their phones and the components manufactured in China. This meant Chinese manufacturers were assembling the phones but not benefiting from the high value that can be extracted from being the owner of the brand name and the originator of the innovation and holder of the copyrights and trademarks.

But now China’s Lenovo brand (http://www.lenovo.com/uk/en/), for example, has successfully pulled past U.S. electronics maker Hewlett-Packard (www.hp.com) to become the largest seller of personal computers in the world. It is also selling more mobile phones and tablet computers than personal computers.

Lenovo Chief Executive Yang Yuanqing espouses a two-part strategy to defend market share at home in China while going hard at overseas markets. Lenovo started with so-called emerging markets in Russia, India and Indonesia.

“We have very aggressive plans to explore overseas markets,” Lenovo’s mobile phone division head Liu Jun told China Daily. “We hope the overseas market will contribute more than half of Lenovo’s total smartphone revenue in the long run.”

Xiaomi founder Lei Jun is considered part of a new generation of dynamic Chinese technology leaders. His casual clothing and charismatic public presentations have had some equate him to the late Apple founder Steve Jobs. But Jun is not happy with selling smartphones and instead sees the company’s future in software and that the phones are just a tool to access the software. Xiaomi hopes to make even more money from selling games, running online marketplaces and offering social media.

The Chinese-made smartphone brand Coolpad (http://coolpadamericas.com/) – made by Yulong Computer Telecommunication Scientific Co. – is the third best-selling in the Chinese marketplace, surpassing Huawei and Apple and has global annual revenue of US $1.8 billion, according to Forbes magazine. Sino Market Research found 10.2 per cent of China’s smartphone users own a Coolpad, behind Korean brand Samsung and China’s Lenovo.

Coolpad has succeeded by investing heavily in research and development (R&D) and innovation to make the phones cheap but also powerful.

Innovations include technology that lets users have more than one phone number for the same phone by being able to connect to two different network technologies. The phones also include security and privacy protections that make them popular with businesspeople and government officials.

The Coolpad brand has also been frenetic in launching different models of the phones to appeal to its customers. In 2012, it launched 48 different models, selling for between US $50 and US $500.

Coolpad was launched in 2012 in the US as part of the company’s global expansion plans.

China has placed innovation at the core of its economic development policies. China increased its R&D spending in 2009 to US $25.7 billion, a 25.6 per cent rise over 2008, according to Du Zhanyuan, vice minister of the Ministry of Science and Technology. In 2011, China surpassed South Korea and Europe in total patents filed and was in a neck-and-neck race with Japan and the United States.

China now boasts twice as many Internet users as the United States, and is the main global maker of computers and consumer electronics, from toys to games consoles to digital everything.

China is also on course to become the world’s largest market for Internet commerce and computing.

The drive to change and transform China’s global economic role was promoted in 2011’s Beijing International Design Week (http://www.bjdw.org/en/), with its theme of transforming “Made in China to Designed in China.”

Resources

1) iHub Nairobi: iHub – Nairobi’s Innovation Hub for the technology community is an open space for the technologists, investors, tech companies and hackers in the area. This space is a tech community facility with a focus on young entrepreneurs, web and mobile phone programmers, designers and researchers. Website: http://www.ihub.co.ke/

2) Venture Capital for Africa: Venture Capital for Africa (www.vc4africa.biz) is the continent’s leading founder’s network, the largest and fastest growing community of  entrepreneurs and investors building promising companies in Africa. Website: https://vc4africa.biz/

Red Dot: The red dot logo stands for belonging to the best in design and business. The red dot is an internationally recognized quality label for excellent design that is aimed at all those who would like to improve their business activities with the help of design. Website: http://www.red-dot.de

C3: C3 offers product design and product engineering services in Shanghai, China. Their strong point is managing innovative design processes from scratch (market research) until production: a one shop service: Website: chinacreativecompany.com

North Korea Tech: North Korea Tech is dedicated to covering and collecting information regarding the state of information technology and related industry in North Korea. You can expect to find articles related to Internet connectivity in the country (yes, it does exist), North Korea’s use of technology, and the country’s centrally-controlled and heavily-censored mass media. Website: http://www.northkoreatech.org/

Published: September 2013

ISSN 2227-3905

ORCID iD: https://orcid.org/0000-0001-5311-1052.

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Study Finds Simple Toys Key To Boosting Educational Development | January 2007

African youth need to play more according to a new landmark study published in the UK’s leading medical journal, The Lancet. The study tackles the high rates of illiteracy and educational under-achievement in Africa and finds that malnourishment and lack of stimulation are leaving millions unable to benefit from schooling. It found projects that encouraged learning through play led to children boosting their IQs and getting better reading skills. And it comes up with a very simple and low-cost solution – but excellent opportunity for entrepreneurs – toys and play.

“These are not high tech interventions,” said team leader for the study, Professor Sally McGregor of the Institute of Child Health of University College London. “Research over decades in Jamaica (and other countries) has shown that women with only primary school-level education and a few home made toys can be trained to make a significant difference in the education, intelligence and mental health of disadvantaged children. The Millennium Goal of universal primary education for all cannot be met unless these children’s poor development is tackled.”

The paper – Strategies to Avoid the Loss of Developmental Potential among Over 200 Million Children in the Developing World – is published in three parts in the journal.

Twenty projects around the world were evaluated for the benefits they produce for children under five who use toys. McGregor, who has set up several projects in Kenya, Tanzania and Uganda designing and constructing toys using whatever materials are available, was appalled by the widespread neglect of play throughout these countries. With play, the study found children read better, have better mental health and better self-esteem. In Africa it is ‘desperate, really desperate’ she says.

African primary school enrolments and literacy rates are among the lowest in the world, with over 42 million school children in sub-Saharan Africa not enrolled in school, and many children not able to afford to go or stay in primary school. Today a little more than half of African adults are literate and some 60 per cent of children go to school, according to UNESCO. The agency has forecasted the need for an additional 1.6 million teachers in Sub-Saharan African classrooms by 2015 – an increase of 68 percent.

The materials used to construct the toys do not need to be expensive or sophisticated. Toys can be constructed from banana trees, mud, corn on the cob, old plastic bottles, or cloth and straw dolls. It is key that the toys are safe for children under five and that anyone building such toys for sale must follow existing manuals.

McGregor continues: ‘One mother in a village was doing marvellous things with tiny scraps of material to make a doll. She received no recognition in the village for the work she was doing yet it was so important. It doesn’t take much – dolls or simple wooden blocks – they are so versatile. You see schools with nothing – it is unforgivable. The problem is how poor these people are – food just takes priority over toys – it is that stark.”

Locally produced toys are key to resolving this crisis for several reasons. Cost is the most important, with those most adversely affected also the least able to pay for toys and who are already living a precarious existence where basic survival takes precedence over play. Another factor is Africa being home to the countries who import the least number of toys: Somalia, Liberia, Togo, Rwanda and Chad. But the situation for African toymakers is often desperate as well, with many craft workers living at the economic margins. Several initiatives have emerged in the last couple of years to address this problem and ensure African toys are local and toymakers earn a living.

Initiatives like the African Toyshop based in Johannesburg, South Africa – a fair trade business – work to ensure African toymakers can make a living and get their wares to as wide a market as possible. The toymakers featured all use natural resources or recycled materials. Most work at the village level and produce toys that are culturally relevant to Africa. The organization COFTA – Cooperation For Fair Trade in Africa – is a network of Fair Trade producer Organizations in Africa involved and working with disadvantaged grassroots producers to eliminate poverty through fair trade. It is an excellent resource for grassroots organizations wanting to work with African toymakers.

Resources:

The UK charity TALC – Teaching-aids At Low Cost – is planning to make available toy making manuals on a CD. Tel: (0) 1727 853869

This website also has excellent resources for budding toy and play area makers in Africa. http://iafrica.com/diy/projects/forkids/

Online exhibition of African toys: African Craft.com

Book: Africa on the Move: Toys from West Africa Stefan Eisenhofer, Karin Guggeis, Jacques Froidevaux Stuttgart, Germany: Arnoldsche, 2004. 216 pp., 195 color, 28 b/w illustrations. $75.00, cloth.

By David South, Development Challenges, South-South Solutions

Published: January 2007

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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Nollywood: Booming Nigerian Film Industry

By David South, Development Challenges, South-South Solutions

SOUTH-SOUTH CASE STUDY 

The digital revolution in filmmaking over the last decade has given birth to an African success story: Nollywood – Nigeria’s answer to Hollywood, uses low-cost digital filmmaking and editing to tell local stories — in the process making money and creating thousands of jobs.

This do-it-yourself (DIY), straight-to-DVD and video market has in just 13 years ballooned into a US $250 million-a-year industry employing thousands of people. In terms of the number of films produced each year, Nollywood is now in third place behind India’s Bollywood and America’s Hollywood. Despite rampant pirating of DVDs and poor copyright controls, directors, producers, actors, stars, vendors and technicians are all making a living in this fast-growing industry.

The power of creative industries to create jobs and wealth has been a focus of UNESCO, through its Global Alliance for Cultural Diversity. UNESCO has been in the forefront in helping African countries re-shape their policies to take cultural industries into consideration. The promotion of cultural industries also has been incorporated into the New Partnership for Africa’s Development (NEPAD).

What is particularly attractive about Nollywood to the poor in the South is its rough-and-ready approach to filmmaking: combining low-cost digital cameras and film editing software on personal computers, with small budgets and fast turn-around times. Films are made on location using local people. These factors make getting into filmmaking accessible and within reach of more people.

Nollywood grew out of frustration, necessity and crisis: in the late 1980s and early 1990s, Nigerian cities became crime hotbeds. People were terrified to go out on the streets, and this led to the closing down of many movie theatres. Desperate for entertainment at home – and unsatisfied with foreign imports from India and the West – Nigerians turned to telling their own stories to stave off the boredom of staying in.

The film credited with sparking off the industry is 1992’s Living in Bondage – a huge financial hit credited with raising the level of professionalism and production values in Nigerian cinema.

Now, between 500 and 1,000 feature-length movies are made each year, selling well across the continent of Africa. Average productions take 10 days and cost around US $15,000 (www.thisisnollywood.com). Nollywood stars are famous throughout Africa – and Nigeria culturally dominates West Africa just as the US does the world. It is estimated there are 300 producers and that 30 titles go to shops and market stalls every week. On average, a film sells 50,000 copies: a hit will sell several hundred thousand. With each DVD costing around US $2, it is affordable to most Nigerians and very profitable for the producers.

“These are stories about Africa, not someone else’s,” well-known actor Joke Silva told the Christian Science Monitor.

Focused on Africa, the films’ themes revolve around AIDS, corruption, women’s rights, the occult, crooked cops and prostitution. They do so well because they speak directly to the lives of slum-dwellers and rural villagers.

“We are telling our own stories in our way, our Nigerian way, African way,” said director Bond Emeruwa. “I cannot tell the white man’s story. I don’t know what his story is all about. He tells his story in his movies. I want him to see my stories too.”

The big brands – Sony, Panasonic, JVC and Canon – all produce cameras capable of high-definition digital filmmaking and these have become the staple tools of this filmmaking revolution.

More and more, the films are capitalising on the large African diaspora around the world, on top of Africa’s large internal market. And this is offering a step-up into the global marketplace for Nigerian directors and producers.

The Nollywood phenomemon has been documented in the documentary This is Nollywood, directed by Franco Sacchi, a teacher from the Center of Digital Imaging Arts at Boston University.

The prospects for the industry are only looking up: the Nigeria in the Movies project has been launched to help grow the industry, establish standards, improve distribution and broaden its international appeal and awareness. It also offers filmmaking grants for neophyte filmmakers.

Of course, filmmaking can be a tricky business: authorities in largely Muslim northern Nigeria have imposed 32 restrictions on the local film industry — nicknamed “Kannywood” after the city of Kano. A six-month ban lost the industry US $29 million and put thousands out of work: a sign of the economic importance of this DIY filmmaking business. The message is clear: filmmakers need to be sensitive to the cultural norms of the communities in which they work.

Kannywood, started in 1992, has 268 production companies and 40 editing studios, employing over 14,000 people.

Adim Williams is one Nigerian director who is getting an international audience. He spends about US $40,000 on films that take two weeks to shoot. He has already secured an American release of a comedy, Joshua. Another director, Tunde Kelani, is regularly featured at international film festivals, where Nollywood screenings are more common.

And some, like young director Jeta Amata, believe Nollywood’s cheap, fast-production, DIY approach has a lot to teach Hollywood, with its expensive filmmaking and ponderous production cycles.

Resources

  • This is Nollywood: A documentary about Nigeria’s booming movie industry.
    Website: http://www.thisisnollywood.com
    There is also an inspiring trailer to the film here.
    Website: http://www.thisisnollywood.com
  • The global charity Camfed (dedicated to eradicating poverty in Africa through the education of girls and empowerment of women) has projects to teach women filmmaking skills.
    Website: http://uk.camfed.org
  • Festival Panafricain du Cinema et de la Television de Ouagadoogou 2009: Africa’s biggest film festival.
    Website: http://www.fespaco.bf/
  • Naijarules: Billing itself as the “largest online community of lovers and critics of Nollywood”, an excellent way to connect with all the players in the business.
    Website: http://www.naijarules.com/vb/index.php
  • Nollywood Foundation: Based in the US, aims to bring Nigerian films and culture to an international audience and to promote new films and new media.
    Website:http://www.nollywoodfoundation.org/home.php

Published: March 2008

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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One of the many stories we covered on Africa’s fast-growing cities from 2007. It was witnessing first-hand Africa’s innovators and their adaptive use of mobile and information technologies that inspired us to give birth to Southern Innovator’s first issue.

Cited in Innovation Africa: Emerging Hubs of Excellence edited by Olugbenga Adesida, Geci Karuri-Sebina, Joao Resende-Santos (Emerald Group Publishing, 2016).

Cited in Innovation Africa: Emerging Hubs of Excellence edited by Olugbenga Adesida, Geci Karuri-Sebina, Joao Resende-Santos (Emerald Group Publishing, 2016)