Posts Tagged ‘microfinance’

Beaten by Geography

A couple of issues recently have gotten me thinking about the limits of what we can achieve in development, especially when combined with conservation.

Being an organisation that has such dual aims we work in some pretty remote villages, a long way removed from infrastructure such as tarmac roads, electricity supplies or banks and markets. To complement our work, and also to build financial literacy, we have been looking at introducing a microfinance scheme into the villages. We talked to a local expert, and he emphasised that it is best if a substantial proportion of loans go to local enterprise development (IGAs = Income Generating Activities, in the jargon). I was curious as to what enterprises in remote villages such as those in which we work could benefit from a small injection of capital. His response, which included things like vegetable gardens and coconut collecting, did not fill me with much optimism. These are livelihood strategies which might help a little bit, but are not going to lift people out of poverty. Moreover, so far from a main road and markets, they are never going to get a good price, and will always be confounded by the costs of taking their produce to market. Lack of capital is not likely to be the principle barrier to enterprise development.

A friend of mine has worked in an even more remote National Park. There she was involved in a small project trying to link the tourists lodges more into the local economy; mostly basic food stuffs but also some local crafts. The problem? A remote NP such as this is very expensive to visit so they do not get many visitors, = not many opportunities for the local communities. Some aspects of the project they ended up winding down because they just didn’t make business sense, and/or were wholly dependent on my friend to market the products (i.e. not very sustainable).

These kind of stories will be familiar to any development economist. In their respective books Jeffrey Sachs and Paul Collier both talk about the severe challenges that the geography of the area of your birth can impose on your chances of participating in economic development. Generally speaking the solution is the creation of more waged jobs in urban areas so that food prices increase to a point where farmers can make a decent living. (All presuming that food prices are not subject to the myriad political controls that is the reality all over the world.)

Organisations aimed principally at poverty alleviation can choose where they work (although many do appear to ignore the basic criteria of economic geography), but conservationists much more frequently find themselves working in remote places; that’s usually where the best biodiversity is to be found. In our desire to help those communities, we need to remember these important lessons. Even the best resourced projects cannot overcome basic facts of geography.

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