The Idealist

by Nina Munk

  Meanwhile, Jeffrey Sachs was urging the villages to offer low-interest loans for inputs. Drawing on his budget, Siriri was expected to extend credit to farmers for fertilizer and seeds, with the idea that after the harvest, once they’d sold their crops, they would pay back the cost of the inputs. To Siriri, this was not a realistic plan. “I said to him, ‘Jeff, to be honest, we are not ready for input credits. We need to keep subsidizing. These are peasants, living hand to mouth, and you are telling me to extend to them a one-million-dollar line of credit that must be paid back? That’s a very tall order indeed!’ ”

  According to Siriri’s rough calculations, farmers who borrowed money for inputs would have to more than double their yields and sell their entire surplus just to break even. Even if that hopeful outcome came to pass, Siriri was not confident that he would be repaid. “People in the village are still playing in the Minor Leagues, and he wants to take them to the Olympics,” he said, referring to Sachs.

  In an e-mail to Sachs’s deputy, John McArthur, Siriri outlined his concerns. “We have only $60,000 in our budget for fertilizer, but now we need three times as much,” he told him urgently. “What should we do?” McArthur was sorry, but there just wasn’t enough money to go around. He was working to solicit donations from a large American fertilizer company, but for the time being, he said, Siriri would have to be creative.

  The only solution Siriri could see was to keep a high level of subsidies in place, no matter what New York demanded. “I do not have a better solution,” he said. “If we don’t keep the subsidies, we will unravel everything we have accomplished. If we don’t keep the subsidies, I am sure the farmers will decide not to use any fertilizer.”

  In New York, Sachs too grappled with the problem of how to pay for inputs. His staff was racing to find financial institutions willing to launch an agricultural credit program in the villages. Meanwhile, with time running short, decisive action was needed: the only solution that made sense to him was to forge ahead and quickly put in place an agricultural credit system funded by the project alone. “I don’t want to slow down in some misguided attempt to design a perfect system—that’s how the World Bank does things,” Sachs said. “If that was our approach, nothing would ever happen.”

  As Sachs must have known, there’s a good reason why financial institutions are reluctant to lend money to small-hold African farmers; volumes of literature have been written on the subject, all pointing to the fact that repayment rates are dismal. Since at least the 1950s, the West has struggled to establish financially viable agricultural credit programs in the developing world. Between the 1950s and the 1980s, when the idea was largely abandoned as unworkable, economically speaking, the World Bank alone spent $16 billion on agricultural credit.

  In the best of times, collecting debts from poor people is a challenge; making loans to poor African farmers is especially risky. If drought or disease wipes out a harvest, how does a bank get repaid? As collateral, the typical African farmer has nothing but his small plot of land. Even if all goes well, there’s no knowing what a farmer might earn: from one season to the next, the market price of a crop may soar or collapse, depending on all sorts of global macroeconomic variables. “The inadequacies of rural financial markets reflect real risks and real transaction costs that cannot simply be wished, or legislated, away,” concluded the World Bank’s 2008 Development Report.

  Unable to borrow money from banks or microfinance institutions, desperate farmers depend on local moneylenders, who typically charge between 10 and 30 percent interest a month. One farmer in Ruhiira, Frank Kanyankore, borrowed 60,000 shillings, or $30, from a moneylender, with the agreement that he would pay back 96,000 shillings after six months. It was a large amount of money for him, but his wife was sick, with the result that he had unexpected medical expenses, and had to hire a laborer to help him in the field. When the time came to pay back the moneylender, Kanyankore was broke; at that point, he begged the moneylender to extend his loan for another six months.

  In the end, Kanyankore’s initial 60,000 shilling loan, compounded, ballooned to 153,600 shillings—the equivalent of an annual interest rate of 155 percent. He did his best to pay off the loan; finally he just gave up, and the moneylender, in lieu of cash, took possession of a chunk of Kanyankore’s farm.

  Sachs approached the conundrum of agricultural credit with his usual impatience and blind faith. In late 2008 and early 2009, in three of his villages, he decided to hand out low-interest loans, on the spot, to every single farmer. No one needed to prove his creditworthiness or put up collateral or offer evidence of financial responsibility. “If we did it a little on the fly, it’s because there was a crisis” is how John McArthur would later defend the decision.

  Sachs took for granted a kind of mutual accountability and respect; he’d convinced himself that the villagers were as committed to him as he was to them. “We took this proposition that they would repay us,” added McArthur, when I pressed him to explain why the project was willing to trust people with no credit history. “They committed to us that they would.”

  In short, the Millennium Villages Project failed to recover its investment. Repayment rates in Mali weren’t bad. But of the ten thousand farmers who received loans in Sauri, the Millennium village in western Kenya, around two-thirds defaulted. In Mbola, Tanzania, default rates were even higher, somewhere in the range of 99 percent. Some farmers were too poor to repay their loan. Others, perhaps, didn’t understand the terms of the loan. At the same time, many farmers felt under no particular obligation to pay back the Millennium project. Cleverly, a number of them arbitraged the loans, taking fertilizer on credit, then reselling it elsewhere at market prices. Or else they used the fertilizer themselves, then quietly sold their surplus crops, while assuring the Millennium project’s loan officers that their crops had failed. There were stories of men using Millennium’s money to pay for funerals and school fees. Some farmers spent the money at local bars.

  In its annual reports for 2008 and 2009, the Millennium Villages Project neglected to disclose details of its failed agricultural credit program (just as it neglected to disclose the failure of Dertu’s livestock market). One report did in fact acknowledge that in Mbola “a number of factors,” including “the variability of the rains and a grasshopper infestation,” had led to “lower than expected” repayment rates. Another report mentioned “several challenges,” the particulars of which were glossed over, and noted that in Sauri “the task of introducing a universal access credit system … proved significant.” Precisely what was signified is not spelled out.

  For internal purposes, the Millennium Villages Project commissioned two postmortem reports to discover why so few farmers had upheld their side of the “mutual-accountability bargain.” When I asked in New York for copies of the reports, my request was dismissed: the reports were not “rigorous,” I was informed; they were “impressionistic” and “non quantitative.” Millennium had nothing to gain from handing over the reports to an inquisitive journalist, I inferred; the role of the press was to focus on the project’s worthy achievements and thus mobilize public support for its goals. The bumps and potholes on the road to ending extreme poverty are no one’s idea of good news.

  Chapter 18

  I Have Been Failed by the Markets

  One afternoon, in a classroom at Ruhiira’s Nyakitunda Primary School, a “health facilitator” was lecturing an audience of women on the dangers of diarrhea. He held up flash cards illustrating the “four F’s” of bacterial transmission: Food, Flies, Fingers, and Feces. He passed around a laminated image of dirty cooking utensils covered with flies and strewn on the ground outside a hut. He then contrasted that example of poor hygiene with an image of three or four freshly washed pots resting on a raised wooden rack. Next, he handed out bars of soap and explained the benefits of a simple hand-washing contraption known as a “tippy tap”—a foot lever pulls a string that tips a jug to start the flow of water. He devoted a great deal of time to discus
sing the proper construction of pit latrines: three meters deep, thirty meters away from any water source, tightly fitted with a lid.

  In this modest way—in small, incremental steps—the lives of people in Ruhiira were getting better. David Siriri could see progress; so much good work had been done since his arrival in Ruhiira. In the area of health, the Millennium Villages Project had invested more than $1.2 million since 2006, three times as much as the Ugandan government had spent in the village, and that $1.2 million was very well spent when you considered how much healthier the people were. A medical staff of just ten (none of whom were doctors) when the project started had grown to fifty-three, including two doctors and thirteen midwives. The number of babies born with the help of a trained birth attendant had increased fivefold, chronic malnutrition was down, and the prevalence of malaria had fallen from 17 percent to less than 1 percent.

  The project had invested nearly $600,000 in education, a sum that, combined with growing government resources, represented a sharp increase in funding. True, Ruhiira’s primary school had almost no textbooks; classes were severely overcrowded (typically fifty students per teacher); an estimated 40 percent of Ruhiira’s students could barely read and write; and a good number of teachers, moonlighting to make ends meet, rarely showed up at school. Nevertheless, Siriri was pleased that new classrooms had been built and that enrollment was up, thanks in part to the school-feeding program he’d put in place. To help Ruhiira’s best students continue their education, the Millennium project was underwriting the cost of secondary school for sixteen students.

  Investments in infrastructure had been rewarded too: looking out from his house, perched on a hilltop, Siriri observed with satisfaction the many new roads crisscrossing the steep slopes below.

  When it came to increasing people’s incomes, however, Siriri saw nothing but failure. Pineapple couldn’t be exported after all, because the cost of transport was far too high. There was no market for ginger, apparently. And despite some early interest from buyers in Japan, no one wanted banana flour. “I have been failed by the markets,” he said soberly.

  On one level, the cardamom crops had exceeded Siriri’s expectations: the spice thrived in Ruhiira’s moist valleys. However, as soon as Siriri tried to sell it, he hit a roadblock. “We proved it could be grown,” he said, “but when I took it to the buyers they asked me, ‘Is it organic?’ and I had to tell them ‘No! Of course it is not organic!’ In Ruhiira we have run-off fertilizer that comes down from fields in the hills above—so no, I am sorry to say it is not organic.”

  As for starting a poultry enterprise in Ruhiira, Tyson Foods’ feasibility study had exposed “several obstacles” and “hurdles”: poor roads; insufficient water; high-priced chicken feed; a dependence on child labor; a lack of export markets; and low local prices for eggs. There was also a risk of bio-insecurity; in fact, concluded Tyson, Ruhiira was a “breeding ground for disease outbreaks.” If Siriri could address these obstacles, Tyson Foods would gladly reconsider the matter. “We never heard from them again,” Siriri told me.

  Ruhiira’s “Entrepreneurship Development and Business Skills Training Program” had been a disappointment. A handful of the entrepreneurs had managed to make something of their training—one man started a successful venture selling veterinary drugs, for example—but most of them never even got started. “In big towns, business is easy,” Siriri remarked. “But in the village it is hard to get peasants to think like businesspeople.”

  After eight months in business, Emmy Byamukama’s Twimukye Poultry Farm went under. The cost of chicken feed had been higher than he’d projected. Building a chicken coop was more complicated and more expensive than he’d anticipated. His chickens took a long time to begin producing eggs; and when they did start laying, there weren’t enough eggs to turn a profit.

  To start his business, Byamukama had applied for a loan from Ruhiira’s Savings & Credit Co-operative, the small village credit union supported by the Millennium Villages Project. When the loan failed to be approved, he borrowed 800,000 shillings from a moneylender at interest of 20 percent a month. Then his business failed. To pay off the loan, he sold the chickens and the chicken coop, at a steep discount. Then he sold five of his eight goats. After all that, he still owed the moneylender 600,000 shillings—a debt that was consuming his wife’s entire schoolteacher’s salary. Now Byamukama was back to subsistence farming.

  Siriri blamed himself for every failure in Ruhiira. The optimism with which he had initially approached his job had been replaced, not by cynicism exactly, but by frustration and a sense of inadequacy. It occurred to him that, in a way, the donkey fiasco could be viewed as a symbol of his own work. Within months of the animals’ arrival in Ruhiira, four of the eight donkeys that were supposed to transport water from the valleys up to the hills had dropped dead of exhaustion; thereafter the entire donkey scheme was written off as a misguided experiment.

  As for the PVC pipes, a deal had finally been brokered with JM Eagle to transport ten containers of water pipes to Ruhiira. JM Eagle agreed to pay the cost of shipping the containers to Mombasa, on Kenya’s coast. From there the Millennium Villages Project would pay $60,000 to have the containers trucked to Ruhiira—an arduous one-thousand-mile journey all the way across Kenya, past Nairobi and Kisumu, to the eastern border of Uganda, down and around Lake Victoria, through Kampala, and finally, turning southwest toward Rwanda, up the narrow dirt roads to the hills of Ruhiira. But the pipes did not reach the port of Mombasa, because in the Indian Ocean the cargo ship transporting the containers was seized by a gang of Somali pirates. Siriri was reasonably confident that the pipes would one day make their way to Ruhiira; still, he couldn’t help but view this latest setback as an ominous sign.

  David Siriri is a patient man—long-suffering, he likes to say. His own life was well on course. He now had four children, and on the little plot of land he’d bought all those years ago in a suburb of Kampala, he and his wife were slowly building a house. Every other weekend, when he could afford the time, he traveled by bus to Kampala to visit his family and work on the house. Already the basic structure was in place—three bedrooms, a concrete floor, a tin roof, and windows. Just as soon as he’d saved enough money, he’d install indoor plumbing and replace the outdoor pit latrine with a proper bathroom. Instead of the charcoal fire in the yard, he’d build a real kitchen with a real stove.

  But what about Ruhiira? Where would the village be in a few years, once the project had run its course and Siriri had moved on? On the one hand, he could see clear signs of economic activity in Ruhiira. Like Ahmed Mohamed in Dertu, Siriri noticed the growing number of corrugated tin roofs in the village. And as he remarked proudly, many more people owned bicycles, and new shops had opened in the village’s commercial center. On the other hand, how much of that economic activity was the result of a real, lasting increase in income? “If you ask me if incomes here have increased, I’m not sure what I would tell you,” he said. “I am not sure.”

  Long ago the Millennium Villages Project had set as its goal sustainability—a goal it defined as the maintenance of “economic progress without a loss of momentum, a drop in living standards, or a decline in social services.” Would Ruhiira reach that goal? “I am not sure,” Siriri repeated. “I am just not sure.”

  Part Seven

  I didn’t plan on this—I didn’t plan on everybody descending to flakiness.… I mean, God forbid someone should actually do something! There’s no accountability at all! There’s no will to solve problems, that’s for sure. The system is so dysfunctional I sometimes feel like I’m shouting in the wind.

  —Jeffrey Sachs

  Chapter 19

  Misinformation and Politics

  It was Ramadan, and Dertu was quiet. A dog limped along the town’s deserted main street. Half-naked children slept on mats. In the shade beneath a shop’s corrugated tin awning, two women were sifting grain. Ahmed was away again, in Garissa or maybe in Nairobi. He was rarely in Dertu these
days. More and more of his time was devoted to handling administrative duties, to writing progress reports and grant proposals, and to meeting with various government officials and NGOs. Mainly, he was preoccupied with the urgent business of raising money.

  With the Millennium Villages Project approaching its fifth year, Dertu’s budget had been cut drastically. All the villages faced budget cuts: phase one of the project was winding down, and Jeffrey Sachs was having a hard time convincing donors or venture capital funds to underwrite phase two. In the West, unemployment was way up, people were losing their homes, and poor Africans were no longer a priority (if they ever had been). No one seriously believed the G8 would follow through on its promise of doubling foreign aid to Africa.

  One after another, rich countries were reneging on their pledges to the poor, and Sachs was raging. “The problem is,” he said, “one hundred and ten percent of the air is being sucked out of the room by the financial crisis.” One after another, he named the culprits: “Japan pledged two hundred million for agriculture—nothing was ever seen of that. Sarkozy pledged a billion euros—not one penny has been seen from that. I was at a dinner when Berlusconi pledged a billion euros—he said, ‘Sarkozy’s done it, now Italy will do the same.’ Naturally there were snickers in the room, and nothing came from that. The United States of course has done nothing.”

  He went on: “It’s a farce. It’s all a farce. And it’s a little weird for me, I have to tell you, because I didn’t plan on this—I didn’t plan on everybody descending to flakiness.… I mean, God forbid someone should actually do something! There’s no accountability at all! There’s no will to solve problems, that’s for sure. The system is so dysfunctional I sometimes feel like I’m shouting in the wind.”