Posted by: apscott | July 15, 2008

Summer Reading

Some books we need to finish up over the summer:

Daniel Esty’s Green to Gold

Do some research on this guy! His ideas are eerily close to my own and will prove to be a valuable resource for anyone interested in Corporate Economics and Environmental policy.

Bill Easterly’s The White Man’s Burden

Paul Collier’s The Bottom Billion

If you have $60 sitting around this might be the best purchase of the summer. All three of these books provide ridiculously detailed insight into the world of developmental economics and while I don’t always agree with some of these authors’ points every page is worth reading.

P.S. Sorry about the lack of posts in the last few weeks. I’ve been on vacation in the Cape and will be returning next Sunday.

Update: I’ll be opening another blog on Blogspot: The Green Nile, which will parallel this site and soon become its new home. In the meantime continue to enjoy!

Posted by: apscott | June 29, 2008

The Fix

This entry is really an addendum to an article I wrote for GW Discourse, but it is one I feel is necessary to see my views on International Development – specifically that of Africa.

The above article paints an alternative picture to the African Crisis. However, I would like to offer some alternative solutions to this crisis as well. This region will not be fixed by a politician, anthropologist, or businessman. Rather, it will take an approach which combines assets from all three of these fields to make progress in this area. That being said, the following presents a specific area in which these three groups can partake to improve Africa’s world standing.

Green Technology and Africa have striking parallels to the Internet and Asia. Green Technology will be the heir to the internet boom, as Africa will be the heir to the booming markets in Asia. Interestingly enough, both the markets in the Internet and Asia became over-saturated and burst in the late 90’s.

However it seems to me that oversaturation is less of a worry in Green Tech and Africa. I doubt that too many green businesses, fuel efficient cars, or renewable resources will cause any imminent market crash; nor does too much entrepreneurship, honest governance, or social development pose any real threat.

Just as the Internet helped create an amazing market in Asia, I see Green Technology as the key to the African Market. The only difference is that market capacity seems much greater – possibly the greatest we have seen so far.

Governments tend not to get involved in Africa as they do not see any benefit of their time, capital, or manpower being spent there. However Green Technology presents the incentive necessary to get involved. By conducting R&D and investing in Green Technology, governments can develop the tools necessary to better the African situation.

Anthropologists, 501(c)3’s, and NGO’s can profit from this as well. The above article discussed a policy of creating wealth instead of reducing poverty. Green Technology is a perfect implement for this policy. Micro-finance, small business programs, and social development initiatives can teach Green Technology to citizens of developing nations, allowing them build the most sustainable infrastructure possible for productive growth.

Corporations hold a lot of stock in staying ahead of the curve. By investing in Green Technology, they will have already set themselves up for unprecedented innovation. Though it may be hard to believe, Africa holds the same potential. Entrepreneurship in Africa is among some of the best in the world. By investing in Africa, corporations will be able to gain tremendous returns compared to those earned in Asia. By combining innovation in Green Technology with investment in Africa, an immense market capacity will evolve, creating the newest and foremost region of growth and prosperity. Talk about a win-win situation.

Corporate involvement in Africa is the most powerful message I hope to convey. While many people find fixing governmental and social issues as the key to solving this crisis, I see a whole in the market where corporations are concerned. Corporate relations are the only ones capable of generating wealth instead of reducing poverty in this region – a policy which is integral for growth and prosperity in Africa.

Posted by: apscott | June 25, 2008

Greed is Something Even the Blind can See

A coworker and I got into an argument today, during which I was called “blind” to the real issues in Africa.  After she continued to call me blind preventing me finishing my thoughts, I decided to walk away and write down the rest of my thoughts:

The reason for America’s lack of involvement in Africa isn’t race based.  Of course race plays a part.  They’re black and we’re white – but the basis for general disinterest in Africa is a matter of political and economic strategy.

1994 – Clinton chose not to go into Rwanda.  Why? Of all people, Clinton (one of the biggest advocates of Nelson Mandela) is the last person to be racist in such a decision; the unfortunate truth is that he couldn’t authorize any action in a gridlocked congress.  Clinton could make no argument for political or economic advantage to Gingrich or to a Republican Senate. It had little to do with race – rather it was a matter of using our military, economic, and political forces in more productive manner (one where we would see returns, rather than just do a favor for an impoverished nation).

The same conditions exist today.  Except now it’s a Republican president who simply chooses to ignore Africa’s problems.  Sure, Bush is a racist bigot, but since his presidency foreign aid has never surpassed .1% of GDP.  This includes aid to hundreds of other impoverished nations; not just those 53 in Africa.  That means we don’t care about poor nations; not that we don’t care about black ones.

I acknowledge race as a factor in the aid crisis today, but I feel it is insignificant to the more pressing issue that we are simply not doing enough about across the board.  We give all nations roughly the same meager amount of aid, except for China and India – where we see tons of political and economic potential.  Until a significantly lower amount of aid is given to black countries than to white ones, there is no foundation for calling our pathetic foreign aid policy a problem of race.

In the past decade 6 of the top 10 recipients of Foreign Aid from the US were black nations.

It’s not a matter of race – it’s a matter of Greed.  Open your eyes.

Part of what Corporate Donkey is advocating is for the US to see that Africa holds a plethora of political and economic opportunities.  Once the Government realizes this, you’ll see aid skyrocket in favor of these nations.  It’s all a matter of what decisions will give the US the best returns – disgusting, I know, but that’s the game and every nation plays it.  Never in the history of the world has a nation spent billions, jeopardized troops, expended time, all out of the kindness of their heart.  They want something in return. 

 Sorry for the overly zealous response, but I didn’t appreciate being called blind to the sole issue I care the most about.

African Enterprise can spur this realization onward.  Aside from the abundance of resources available in Africa, entrepreneurship and Green Venture opportunities are growing exponentially.  We must work hard to give the US a reason to care about Africa because unfortunately, showing need isn’t enough.

Posted by: apscott | June 24, 2008

An essay on the Principles of Development

Population Growth of Developed and Developing Countries

The above chart is dismal. Consider the following:
Adjusted for inflation, gas prices from 1990 to 1999 were cut in half. In the past 8 years they have quadrupled.

Food prices are skyrocketing, causing starvation, disease, and hindering any chance the middle class American, much less the developing world has of breaking through this weak economy.

Malthus was on to something a few centuries ago. The world is already starting to outgrow its resources. in 40 years, the world population is due to increase by 50%; resources will at that point be effectively stripped bare.

What happens then? I can only see a clash of civilizations much worse than any ideological clash Huntington foresees. I can imagine nations warring not over ideals, but over simple access to basic necessities.

We look at the instability in Africa right now and think they are crazy for killing each other over food, but when it comes down to it, life at it rawest is a zero sum game. What your neighbor is eating is food you will never feed your family with. What he wears, you cannot wear. In a land too distraught with poverty to concern itself with public goods, it is hard to imagine we might be in the same position half a century from now.

Green Ventures and African Enterprise are crucial to solving this problem. If we do not want to become Africa, we must help Africa untie its knot of impoverishment and sustained destitution. In order to do this though, we must look at green solutions to fix these problems. The answer is not only to reduce poverty in this area; rather it is to grow wealth.

In order to do this, solutions must sustain themselves beyond the utilization of our most precious resources. If we can create an environment of sustainable growth through the use of green technology and independent energy sources, then we can begin to grow the wealth of a place in need.

By growing wealth in such regions of the world, families will feel less need to war over their property, as they will have the security to know they can survive on what they have. Further, more wealth means less need for labor intensive work – in other words, there will be less demand for large family households to run the house – instead, service sector economies can begin to develop, alleviating the strain of the family, and alleviating the population growth strain on the world.

Such actions are beneficial to us all, as the development of Africa will bring the development of the world in order – allowing our clashes to remain a matter of ideological differences rather than one of necessity.

Posted by: apscott | June 16, 2008

No really, Algae

Back in May, I created a post called Fuel, Coconuts, and Algae? What is interesting is how much hype the thought of Algae as a viable biofuel has gotten.

Just earlier this week, the Journal came out with its third blog on Algae biofuel since my post.  This could be the real thing – or at least people are starting to talk about it and that is half the battle.  Once people get used to the idea of biofuels instead of traditional fuels, the choice will become a no brainer.

Oh yeah, and the great thing about algae is that it is mutually exclusive from food prices:

A quote from the latest entry on the subject, “Vegetable oil from single-celled algae has shown some promise as a source of renewable, alternative fuel. Several companies are pursuing growing it in lined pits or plastic tubes. Solazyme uses steel tanks and a microbial fermentation to get algae into the mood to reproduce and create oil.”

Keep your eyes peeled, because this topic is about is explode in popularity and hype.

Posted by: apscott | June 16, 2008

General Update

Over the past two weeks I have been doing a lot of thinking; thus apologies for the lack of content in the meantime.

As I am considering a Masters degree after I graduate next May, I have really put forth an effort to simplify my life into only the thing that truly matter to me.  In doing so, I have found that my passion and sole interests lie in African Development and Green Innovation.  I see the two as invariably linked and since have decided to focus this sight on making the link between these grand endeavors even stronger.

In the next week, I will be developing a paper on green technology will hold the key to African Development.

This site was originally designed to focus on Moral Capitalism – an ideal I feel will carry me through my years as a businessman.  But what the site has allowed me to do is to really find out that cause I am passionate about – the thing I wake up and scour the news for headlines, argue with everyone about, and go to sleep wondering how I can actually make a difference.

Moral Capitalism will still be a large part of my focus – however it will be applied directly toward my policy on African Enterprise and Green Ventures.  Enjoy!

Posted by: apscott | May 27, 2008

Underwater Gas to Save Africa?

It seems Rwanda might have hit the Jackpot. Relatively speaking of course…

In a recent post “An Unlikely Hero,” I discussed the immense opportunity Rwandan women have presented themselves through the micro-finance of entrepreneurial endeavors. The initiative set forth by these women showed the upside of a risk-reward situation. Now, an even greater opportunity may lie ahead, and thus an ever greater risk-reward.

In the Wall Street Journal blog today, Keith Johnson writes about a topic bridging both concepts of Green Business and African Enterprise.  Johnson notes a vast source of methane found deep down in Lake Kivu.  While this deposit of methane poses an imminently fatal threat to the 2 million lakeside dwellers, it also provides access to an opportunity for affordable electricity in an area void of such access.

‘Hoping to avert a catastrophe on the shores of a lake where 2 million people live and to solve its energy woes at the same time, the Rwandan government is embarking on a risky project to extract the methane and use it to generate electricity. Methane-power generation plants exist elsewhere, but the effort here is the first attempt to extract the gas from underwater and burn it to fuel an electricity plant. “It’s the first of its kind in the world,” said Albert Butare, Rwanda’s minister of state for infrastructure. “In the beginning, it was a myth. But now the technology is promising.”’

The World Bank estimated the pilot projects could produce electricity for about 6 or 7 cents per kilowatt hour. That would be competitive even in the U.S.—and a quarter the price of electricity produced by diesel generators, which Rwanda has relied on for its power production.

the principles of Moral Capitalism are exemplified in this article in a crossroad between Green Business and African Enterprise. As Johnson stated, “often, developing countries have to choose between the environment and electricity—with one predictable loser.” It seems a win-win situation has arisen in Rwanda.  The environment and development have found a rare intersection with Moral Capitalism in which both will come out successful at Lake Kivu. It seems the risk-reward situation is actually a no risk situation, as the only potential loss will be in any inaction to take advantage of this opportunity.

Investors like Vinod Khosla should be all over this opportunity as they will be able to leave their mark in an inevitably needed industry throughout this increasingly prosperous area.

Posted by: apscott | May 22, 2008

Thoughts on African Aid

The following is an article I wrote, to be published in the newest issue of GW Discourse. The topic is one I consider of utmost importance, African Aid, and serves as a draft proposal for change in our current policy toward Aid in Africa:

Catastrophe, a Charitable Cause

 

“Foreign aid undermines democracy”

         Andrew Mwenda

 

I. A Progressive Regression     

            If you gave money to a charity, you’d want to see where that money goes, right?  Surely you wouldn’t want that money to end up in the wrong people’s hands.  But what if the money you were giving was supporting an unstable, corrupt, likely violent environment?  Would you be upset? Or would you keep giving?

 

            This situation parallels one the United States faces today. President Bush has tripled direct humanitarian aid in Africa since he took the Presidency.  He has plans to double the current number by 2010 – a 500% increase in under ten years.  Noble, indeed, but this action exemplifies the kind of irresponsible economic policies that are un-developing the African continent.

 

            It might be hard to see how a 500% increase in humanitarian aid could be a bad thing.  Certainly supporters of such aid are elated with such an increase.  Perhaps the phrase “ignorance is bliss” is well suited here. 

 

            In the example of giving to a charity, the action is noble, but this action doesn’t always produce noble results.  The same goes for foreign aid.  Giving money to a poor and undeveloped country is a righteous and seemingly moral action to take.  Yet, a closer look at where this money goes will blur the lines between development and debauchery. 

 

            Africa has made great strides in development since the beginning of the 20th century.  Decades ago imperialism and the Cold War left vague and uncertain political boundaries throughout Africa, crumbling any foundation on which to build a stable nation.   Now, there are 53 autonomous nations in Africa.  Though it is perceived to be a continent wrought with civil war, only six nations are currently involved in such conflict.  Economically, South Africa, Botswana, Ghana, Kenya, Cameroon and Egypt have shown considerable economic success in past years.  Africa is also situated atop some of the most abundant natural resources in the world. Some countries, like Angola, Sudan, and Equatorial Guinea have begun to extract these resources and jumpstarted their economy, witnessing jumps over 10% in their GDP.

 

II. The Downside to Charity

            When aid is dumped into Africa, it is apportioned by economic need.  The poorest countries often get the most money.  Seems logical, no? 

 

            Look at it this way.  Unfortunately the poorest countries are often destitute because the government in power is corrupt and adverse to development.  Supporting such nations through foreign aid only sustains the corrupt environment that is in control. Thomas P.M. Barnett, a military strategist, addresses this issue in his book Blueprint for Action:

 …bad governments force their citizens to rely on their own, typically meager savings to self-finance entrepreneurship, which is just about the slowest way to grow your economy. Since many of these same economies receive significant amounts of foreign developmental aid… there is the additional destructive effect often associated with such charity: it tends to infantilize the local social, political, and economic institutions necessary for broadband development.[1]

 

            Foreign aid is often given with a “budget for construction, but not for maintenance.” When aid is poured into a country based on its economic situation, the money is often given to the wrong people, feeding a habit of instability and corruption. Rather than inadvertently supporting governments clearly incapable of using aid to better their nation, theorists like Ugandan journalist Andrew Mwenda argue for a more careful and perhaps more responsible appropriation of developmental aid. 

 

III. Less is More          

            At the recent G8 Summit in Berlin, it was decided that the solution to Africa’s problems should be a massive increase in aid.  Yet foreign aid already accounts for some 10-15% of many African states’ GDP.  As Mwenda notes, this is an “unprecedented transfer of financial resources from rich countries to poor countries.”

           

            Often what we hear about Africa carries strong undertones of despair, poverty, struggle and conflict, justifying any amount of developmental aid in the area.  It is hard to argue for reformation of African aid when all signals lead us to believe Africa ishopeless. The question of what to do with Africa has presented the solution of simply putting more money into the system to feed the hungry, help the poor, and spread peace through areas of conflict.  But in doing so, we have in a sense stripped Africa of its self initiative.

 

            Clearly, there are fundamental problems in Africa hindering its development.  On the same note, however, the area is filled with potential. As Andrew Mwenda notes in a conference on aid in Africa:

           

            We need to reframe the challenge that is facing Africa, from a challenge of despair, despair which is called poverty reduction, to a challenge of hope.  The challenge facing all those interested in Africa is not a challenge of reducing poverty; it should be a challenge of creating wealth.[2] 

 

             Rather than basing aid on the reducing the poverty of each nation, aid should be given to generate wealth.  In simpler terms, money should not be spent to stifle further loss of money; it should be spent in places where it can productively grow.

 

            Foreign aid today has distorted the incentives for national development.  Governments have little push to democratize or become legitimate when they can live off of such charitable contributions.  Right now it makes more sense for an African nation to go to the IMF for help than to go through the trouble in developing its economy.  In doing so, however, each benefactor of foreign aid loses its ability to listen to its citizens – to understand what its own people need for development.  Instead all ears are pointed toward the donor, and pretty soon institutions like the IMF are dictating policy – telling African nation X what its own people need for development.

 

            Herein lays the problem with the system.  Foreign aid should be used to reward nations who have shown capacity for positive change rather than to sustain nations who contest it. The answer to Africa’s problem is not moreaid; rather it is a reframing of the issue at hand, so as to promote the generation of wealth and to incite productive and positive change throughout.


[1] Barnett, Thomas P. M. Blueprint for Action. New York: The Berkley Publishing Group, 2005.

[2] TED Conference. http://www.ted.com/speakers/view/id/132.

 

Moral Capitalism looks at African Enterprise as an opportunity to reward entrepreneurs for developing their nations. It is also concerned with ensuring sustainable and responsible forms of aid which promote this entrepreneurship – promoting the Prosperity of Wealth, rather than Reduction of Poverty.

Posted by: apscott | May 19, 2008

Venturing into the Wild Green Yonder

Wall Street always looks greener on the other side. That is, if there was a fence between today and tomorrow.

Venture Capitalism, a profession/hobby I hope to embark upon one day, has come to save the future. Investors like Vinod Khosla, David Blood, and even Al Gore have started placing bids on entrepreneurship in the environment.

Green Capital Investment has become the fastest and most powerful strain of the business world. As oil and food prices skyrocket, opportunities for innovation within environmental enterprise are seemingly endless. Cars, alternative fuels, batteries, emissions, among other industries have shown unlimited space for growth.

The day to day structure of an investor’s life is about to change. Investment in the environment is the next great find in the marketplace, and avoiding it would be like avoiding the tech boom in the 90’s (though smarter capital management can prevent the bubble burst…). The double entendre that is “going green” (good for the wallet and the earth…) has manifested itself in modern financial practice.

Moral Capitalism supports corporate investment – where it is profitable and justifiable for reasons other than the dollar’s benefit. Green Investment will make people rich, but most importantly it will sustain the future of our lives, and our children’s’ lives.

In a more urgent realization, green investment may be the one industry that holds promise for our economy. Housing, Retail, Commercial, and Bank investment have shown failures in stabilizing our economy. Green investment, as a matter of necessity shows only grave promise.

Guess what: GREEN INVESTMENT IS THE NEXT BIG THING. No doubt. If you don’t believe it, read these links and think again.

http://blogs.wsj.com/environmentalcapital/2008/03/27/blood-and-gore-veeps-firm-to-spend-big-on-vc/

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/05/10/BUD010IHPC.DTL

http://www.socialfunds.com/news/article.cgi/article1568.html

http://www.redherring.com/Home/24026

Posted by: apscott | May 17, 2008

An Unlikely Hero

Who’s the most underrated entrepreneur out there?

Rwandan women.

14 years ago, 800,00 died in less than 3 months.

If there is any doubt that women are equal in every way to men, check out this article in the Washington Post today. As Anthony Faiola conveys:

“As both female and male survivors sought to rebuild coffee plantations with financial and technical assistance from international organizations, Maraba’s women, most trying their hands at the business of farming for the first time, were by far the faster students. They showed more willingness than men, officials here said, to embrace new techniques aimed at improving quality and profit. Now, Maraba’s female farmers are outdoing their male counterparts in both, numbering about half of all farmers in the village’s coffee cooperative but producing 90 percent of its finest quality beans for export.”

In African Enterprise, I discuss the importance of entrepreneurship in the development of Africa’s most impoverished areas. This is a clear cut case of what I am talking about. These female entrepreneurs have single handedly rebuilt a failing economy with a simple industry like coffee exports.

The focus of this blog is the necessity for entrepreneurship in Africa, but I wanted to point out some important byproducts of this occurrence which stretch into the realms of Human Capital. Possibly more important than the economic development is the social revolution that is taking place:

“Rwanda’s economy has risen up from the genocide and prospered greatly on the backs of our women. Bringing women out of the home and fields has been essential to our rebuilding. In that process, Rwanda has changed forever. . . . We are becoming a nation that understands that there are huge financial benefits to equality.

Back to my point – entrepreneurship is the backbone of the organic development of this area. The fuel behind this entrepreneurship comes in the form of micro-loans and micro-financing:

“The 29-year-old wife of a disabled army officer and mother of two took out a $50 microloan in 2005 with a plan to support her family. Her pitch: Few people in her neighborhood owned cellphones — so she would buy one and charge a few cents per call. She paid back the loan within a year. Last year, she took out a $400 loan to open a graining mill for cassava flour. Her businesses are earning the family a relatively princely sum of $650 a month.”

Whether the economic development of the region is fueling a social revolution or vice versa, the important key here is the absolute value placed on smart investment in entrepreneurship to cure this financial pandemic. In terms of development, African Enterprise see the problem as a lack of growing wealth as opposed to reducing poverty. Entrepreneurship is the business of expanding wealth and therefore holds the key to African development.

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