Category: Finance

Land and the Mortgage: History, Culture, Belonging

daivirt1 Comment

By Daivi Rodima-Taylor and

The mortgaging of land, a risky practice usually treated as just an economic and legal contract, hasneeded a broader set of perspectives for a fuller, more humanist understanding. Most of the existing scholarly literature on land and mortgages has been written by economists and legal specialists, reflecting the perspectives of their disciplinary traditions. Lacking are assessments from a wider range of disciplines in the social sciences and humanities, drawing upon historical experiences, cultural meanings, and locally informed perspectives.

Our recent edited volume, drawing on historical and observational research in different parts of the world, is meant to help fill that gap. It examines mortgaging as a social and cultural phenomenon to show its origins, variation, and effects on human lives and communities. Here anthropologists, historians, and economists explore archival, printed, and ethnographic evidence about mortgage. The book shows how mortgages affect people on the ground, where local forms of mutuality mix with larger bureaucracies. Tracing origins of land titling, pledging, and the mortgage in over millennia and incorporating findings from authors鈥� original field research, the book explores effects of government, bank, and aid agency attempts and impositions meant to encourage mortgage lending and borrowing.  It shows how these mix in practice, in different languages, currencies, and contexts, with locally rooted understandings, and how all parties have sought, and too often failed, to make adjustments. The outcomes of mortgage in Africa, Europe, Asia, and America challenge economic development orthodoxies, calling for a human-centered exploration of this age-old institution.  It must take account, we insist, of emotions, vulnerabilities, and histories of unexpected outcomes, as shown in different societies, cultures, and environmental and political conditions.

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Exploring the Platform Political Economy of Self-Help in Africa

daivirtLeave a comment

Informal savings group in Tarime district, Tanzania. Photo: Daivi Rodima-Taylor

Self-help groups can be found in many areas of Africa鈥攊ncluding the chama groups of Kenya, isusu of Nigeria, and stokvels of South Africa (Ardener and Burman 1995). Their customary rotating credit arrangement is also popular among African diaspora communities (Hossein 2018; Ardener 2010). A significant rise has occurred in these groups at the wake of the neoliberal restructuring reforms of the 1980s-90s, with a decline in formal sector employment and state-funded producer cooperatives. At present, these mutual support groups are targeted by FinTech platforms as well as conventional banks with various financial products and software apps. My recent research explores of the contentious interplay between the formal and informal finance in these emerging digital interfaces in Africa. It studies the intersection of FinTech with the social economies of African mutual help groups in Kenya and South Africa, situating this dynamic in longer-term colonial legacies and present-day policies of extractive financialization (Rodima-Taylor 2022).

Informal mutual support groups with their saving-credit patterns have long served as an inspiration for the development industry. The initially successful micro-finance model drew on pre-existing reciprocities and mutually negotiated liability in largely informal contexts. However, as the microfinance formula shifted from socially situated lending towards 鈥榝ast-scaling鈥� and universalizing group lending in an expanding range of localities, the industry was faced with repayment crisis (see Haldar and Stiglitz 2016). The recent conceptual shift from microfinance to digital financial inclusion foregrounds mobile payments and fee-based service delivery, with payment industry also experimenting with new sources of value such as customer data (Maurer 2015). Microloans have remained an important part of the digital financial inclusion enterprise, with poorly regulated lending apps fueling over-indebtedness. As informal savings groups and mutual support associations have become central in the livelihoods in many low-income communities, I suggest that more attention is needed to the intersection between the self-help groups and FinTech initiatives in the global South.

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Price Wars: How the Commodities Markets Made Our Chaotic World: Q&A with Rupert Russel

Farwa Sial1 Comment

In Price Wars: How the Commodities Markets Made Our Chaotic World, sociologist and filmmaker Rupert Russell travelled to some of the world鈥檚 most chaotic places: war zones in Ukraine, Iraq, and Somalia, the climate wars in Kenya and Guatemala, and Venezuela鈥檚 economic catastrophe. Told as gonzo investigation into what made the 2010s so tumultuous, Russell links each of these eruptions to swings in commodity prices, and the financial speculators whose bets set their prices.

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The colonial geographies of Kenya鈥檚 fintech boom

Nick BernardsLeave a comment

Digital and mobile finance applications have boomed in Kenya over the last decade. Mobile money, Vodafone鈥檚 M-Pesa system in particular, is ubiquitous. Kenyan banks and smaller start-ups have led the adoption of a wider range of mobile and digital financial applications.

For promoters of fintech as a tool for development, Kenya is a paradigm case. from Tavneet Suri and William Jack 鈥� suggesting that the advent of M-Pesa had directly moved 194 000 households, equivalent to 2 percent of the country, out of extreme poverty 鈥� have been triumphantly cited across a wide range of and policy documents. The rapid adoption of mobile and digital finance, according to advocates, has allowed Kenya to 鈥樷�� the developmental constraints of its existing financial system. In the words of : 鈥榥ew technologies solve problems arising from weak institutional infrastructure and the cost structure of conventional banking鈥�.

There are good reasons to question this rosy narrative, as recent critics have demonstrated compellingly. Among others, raise a number of important methodological and other objections to Suri and Jack鈥檚 claims, and shows how narratives of 鈥榠nclusion鈥� mask the perpetuation of gendered patterns of exclusion and inequality. Wider applications of fintech in Kenya have come in for critique as well. highlight emerging patterns of digitally-enabled over-indebtedness. trace the emergence of monopolistic corporate power enacted through the extension of digital platforms (including for finance) in Kenyan agriculture. show the emergence of new forms of racialized dispossession and exploitation through efforts to extend fintech applications to refugees in Kenya.

On a more basic level, 鈥榣eapfrogging鈥� narratives have to contend with the fact that the geography of Kenyan fintech looks a lot like that of the financial system more generally. The fintech boom is predominantly an urban phenomenon, and especially concentrated in Mombasa and in and around Nairobi. Data from the 2019 national 鈥樷�� survey shows that 6.6 percent of respondents currently or had previously used of mobile lending services, and 6.4 percent reported the same of digital lending apps. The corresponding figures among urban residents were 17.2 and 11.4 percent. The proportion of residents in Nairobi Metropolitan Area and Mombasa using mobile money services (25 percent) and digital lending apps (18.2 percent) is more than double the respective use rates of mobile (12.3 percent) and digital borrowing (7.1 percent) among urban residents elsewhere.

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International support for聽the聽least developed countries: moving聽out of the mainstream

Dan1 Comment

Next January the next United Nations Programme of Action for least developed countries (LDCs) will launch in Doha. It will set the framework for the next 10 years of international support for the world鈥檚 46 officially poorest and most structurally disadvantaged countries, home to around a billion people.  

LDCs are low-income countries confronting severe structural impediments to sustainable development. Membership of the category is based on : income per capita, human assets and economic and environmental vulnerability.  

 for LDCs currently falls under three categories: trade, aid and a range of ad hoc measures broadly aimed at help with taking part in the international system, such as lower contributions to the UN budget and support for travel to international meetings like the annual UN General Assembly.  

Support is largely based on the premise that LDCs are artificially or temporarily excluded from global commerce. Preferential market access, temporary development assistance and help with participating in multilateral processes are intended to tackle this defect, in turn helping the LDCs 鈥榗atch up鈥�.  

Dating to 1971, the category is the only one recognised in UN and multilateral legal texts. There is no official 鈥榙eveloping country鈥� or 鈥榤iddle income鈥� category with associated support measures. Low income countries are not specifically targeted, and the small and vulnerable states are only recognised as a working group at the World Trade Organisation. They are not acknowledged in the legal texts. 

Although donors don鈥檛 meet aid pledges and support doesn鈥檛 go far enough, official targets are possible because the LDC group is officially recognised in the UN system and has legal bearing. An example of such a target is the commitment by developed countries to deliver 0.15-0.20% of gross national income (GNI) in development assistance to LDCs. The European Union offers duty-free, quota-free market access to LDC exports under its Everything But Arms (EBA) trade scheme for LDCs. 

The theory behind support for LDCs is implicitly based on the mainstream economics view that LDCs lag behind because they aren鈥檛 exposed enough to correct market prices and conditions. The removal of so-called distortions like overseas tariff and non-tariff barriers, alongside temporary development assistance and help taking part in the global system, is supposed to free up these economies to play a fuller role in the international economy. Economic growth will drive development and reduce poverty. 

The evidence shows that for most LDCs this theory never worked. Until the pandemic the economies of some LDCs were performing well. Up to 12 could leave the category in coming years. A few, like Bangladesh, Cambodia and Myanmar, were able to take advantage of lower tariffs for their garment exports. These three countries account for 87% of imports to the EU under EBA.  

But half were supposed to meet the criteria by 2020, according to international targets. 12 graduations falls well short. The six that have left since the formation of the category in 1971 have not all done so because of better international market access or special support measures. Commodity exports, tourism or improved health and education are mostly responsible.  

The remaining LDCs aren鈥檛 catching up.聽The gap is widening.聽The pandemic聽聽group.聽Gross domestic product (GDP)聽shrank 1.3% on average聽in 2020, with the economies of 37 contracting during the year聽and extreme poverty in the group rising by a staggering 84聽million. But even before聽Covid, average real聽GDP per capita聽for the group聽had long diverged聽from聽other developing countries聽and the聽rest of the聽world.聽聽

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The聽frailties聽of聽diaspora bonds聽

Aleksandr V. GevorkyanLeave a comment

The interest in聽diaspora bonds聽is sustained by the theoretical potential聽聽in聽poor economies by raising funds from聽expatriate communities, often labor migrants, living abroad.聽At the start of the COVID-19 pandemic in 2020,聽as聽developing nations聽faced聽sudden reversals聽in聽capital flows, diaspora bonds聽聽to聽counter聽the international capital markets鈥櫬爒olatility.聽A year later, the聽聽by the international institutional investors may prompt聽renewed calls for tapping into diaspora. But聽is the alternative scheme so easily deployable?聽

Diaspora bonds are sovereign debt securities issued by countries appealing to the altruistic motives of their cultural and national diasporas across the world. Historically, there have been several attempts to leverage the diaspora premium, with Israel and India running the most effective . 

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The聽Geopolitics of聽Financialisation聽and Development: Interview with Ilias Alami

Ilias ALAMI3 Comments

This聽interview聽was originally聽published in German in the special issue on聽financialisation聽and development policies of the journal聽Peripherie, September 2021, No. 162/163. Frauke Banse and Anil Shah聽(both based at Kassel University)聽spoke with political聽economist聽Ilias Alami聽(Maastricht聽University)聽about聽some of his recent work聽on the relationship between geopolitics, financial flows for development and emerging forms of聽鈥榮tate capitalism,鈥櫬燼s well as related new imperialist formations. The聽interview was conducted via email in May 2021.聽聽

The interview covers a聽series聽of聽International Political Economy聽topics.聽Ilias聽first locates the emergence of the聽Wall Street Consensus in the long and turbulent histories of the relation between finance and development聽as well as in聽secular聽capitalist transformations. He then聽outlines聽some of the conceptual tools he鈥檚 developed聽in his work聽in order to make sense of the聽contemporary聽interconnections聽of money and finance聽and the reproduction of聽imperialism and race/coloniality.聽Next,聽he situates these interconnections within broader scholarly debates about聽financialisation聽and聽highlights聽the similarities and differences between ongoing sovereign debt crises in the global South and the so-called 1980s 鈥楾hird World debt crisis.鈥� Finally,聽Ilias聽discusses the聽recent聽emergence of new forms of聽鈥榮tate capitalism鈥櫬燼nd their聽complex relation聽to the extension聽and deepening聽of market-based finance.聽

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Internal and external constraints: economic development without currency crisis

basiloberholzerLeave a comment

Simply speaking, development macroeconomics can be summarized as the challenge of improving productivity and production capacity in poor countries. This involves the conditions that need to be fulfilled for a development process to start as well as the policy framework and instruments that support it. Heterodox approaches consider the state鈥檚 role in steering productivity growth as essential (Cardim de Carvalho, 1997). Markets may be able to exploit price signals and adjust resource allocation correspondingly. However, they guarantee neither sufficient profitability of key sectors nor the demand for the goods produced. Both the profit rate and effective demand are conditions for investment to take place (Oberholzer, 2020). It is thus up to the government to make public investment in priority sectors and to apply instruments such as taxes and subsidies in ways that simultaneously allow for economies of scale, higher productivity large-scale employment and demand. This is what is generally referred to as industrial policy (see for example Chang, 2006; Oqubay, 2018).

But this is not everything. Policymakers have to pursue such a development strategy in face of an (often permanent) shortage of foreign currency. While domestic currency can be generated via the domestic banking system including public development banks, the availability of foreign currency is limited unless a country is able to increase exports or restrict imports. Since larger export capacity and a higher degree of import substitution are long-term goals, the current account is determined by domestic and foreign economic growth. This insight has come to be known as the balance-of-payments-constrained model or Thirlwall鈥檚 law, respectively (Thirlwall, 1979, 2013): it is reasonable to assume that demand for a country鈥檚 exports grows in income in the rest of the world while imports increase with domestic economic growth because a part of increasing incomes is reliably spent on imported goods. Therefore, stability in the balance of payments requires that imports do not grow faster than foreign exchange earnings via exports allow. A limit to the growth of imports implies a limit to the country鈥檚 economic growth, hence the balance-of-payments-constrained growth rate.

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