Empowering Remittance Recipients and Financial Consumers in Tonga

Money management takes on increased importance during the Global Financial Crisis. Tonga's Prime Minister this week reported a ten percent drop in remittances so far this year. Given forty percent of Tonga's GDP is comprised of remittances, it was no surprise the recently concluded IMF Article IV mission to Tonga identified the steep decline in remittances as the main risk to Tonga's economic outlook.

Westpac Bank of NZ launched a new remittance card for the Pacific Islands in December 2008. On a typical $200 transaction, Pacific Island financial consumers are typically charged $30 to use Western Union but if the Westpac card is used, total fees are less than $06. A press release from Westpac NZ this week proudly reported the card saved Pacific Island families $50,000 in transaction fees to date. This is a positive early result, particularly because Westpac has not yet engaged in any marketing or advertising of the cards.

Understanding Formal and Informal Financial Channels

If the impact of the financial crisis means less money in the pockets of Tongans, households are under greater pressure to make every pa'anga go further. I think the key challenge for development institutions is to facilitate this without telling Tongans what to do with their income.

In addition to typical household expenditures in Tonga, a significant percentage of funds are spent on donations to the Church, weddings and funerals. Cultural obligations in Tonga do not cease because of the financial crisis, yet the Heads of ANZ and Westpac informed me the level of bad debt on their books was unsustainable. The two largest commercial banks responded by significantly curtailing lending. It is not uncommon for Tongans to perpetually carry two or more loans.

If remittances are declining and borrowing in the formal financial sector is increasingly difficult, where do Tongans access cash? To answer this question, it was helpful to get out of Nuku'alofa and journey into some of the villages (this was possible because I was travelling with a former Tongan MP). This presented an opportunity to speak with community leaders. At least sixty percent of Tongans rely on local village lenders to support what is predominantly consumption-based borrowing. The Reserve Bank of Tonga does not have the resources to adequately monitor these informal lenders, but it is not difficult to imagine the exorbitant rates of interest that are applied to these loans.

• The desperation for cash in a cash-driven society like Tonga is put in stark perspective with the discovery of informal lending operations within institutions! Management at a financial institution and a government agency discovered “rings” of several employees who established high-interest lending operations within their organization.

The Way Forward?

This mission provided an opportunity to collect data from private and public institutions with a stake in Tonga's financial system - as well as data from those operating outside the formal sector. There is a human side to financial mismanagement as almost 70% of domestic violence in Tonga is directly related to money matters. The financial challenges we identified in Tonga are probably not dissimilar from the rest of the Pacific.

Similar research is being undertaken in other countries across the Pacific. With an enhanced understanding of the domestic financial system, the World Bank and IFC will be in a much stronger position to consider possible operational interventions that should make it easier for Tongans to access the formal financial sector and borrow without fear of a lifetime in debt.

I was encouraged that bank managers in Tonga looked favourably at remittance products such as the Westpac card because they believed it was a good way to start developing a pattern of savings, which would in turn mobilize banks to lend to these customers.

Canada's UN Security Council Ambition and the Conservative Government's Cuts to Aid in Africa

I attach an article below that discusses how PM Harper 'dispatched' a Member of Parliament to drum up support for Canada's membership bid to the UN Security Council. The is interesting because the Conservative government's cuts to aid likely mean the very countries we hope will support us now have the last laugh.

The Canadian government is looking for a seat on the UN Security Council; the most undemocratic institution in the world. Even if we do manage to get the two-year fixed term seat, we are only one of a 15 member Council. Ten of these members can raise their voice, but the Permanent Five have veto power and are the members with real clout: to authorize military force or send prosecutors after the Dictator in Sudan. The Security Council is an archaic institution left-over from post WW II planning and in my opinion it needs to be reformed immediately. Each of the five permanent members understands that each passing day these current arrangements remain the credibility of the UN takes a knock. Its amazing that in a time where we are seeing daily the evidence of poor governance in corporations, governments and international institutions, no individual or organization will speak out against the farce that is the UN Security Council...

CIDA cuts to Africa could hamper UN ambitions

BRIAN LAGHI AND JANE TABER
From Monday's Globe and Mail
March 16, 2009 at 4:33 AM EDT

OTTAWA — The Harper government has dispatched a senior MP to Africa to seek support for a Canadian seat on the UN's powerful Security Council, an effort that critics say may be hamstrung by this country's changes to African aid.

The trip by Deepak Obhrai, parliamentary secretary to the minister of foreign affairs, Lawrence Cannon, is part of an all-out press being made in the face of what some critics say could be a tough campaign, given changes in foreign policy and a shift of aid away from certain African nations, including two that Mr. Obhrai will visit.

"The campaign is on," Mr. Obhrai said last week as he prepared to travel abroad. Mr. Obhrai will head to Zambia, Malawi and Tanzania to lobby well advance of the selection in October, 2010. Canada is up against Germany and Portugal, although Germany is considered almost a shoo-in for one of the spots. Critics say that reaching Canada's goal may be hampered, however, by a decision to transfer aid away from Africa to Latin America. "It's hard to see how the recent decision to cut CIDA programs in a number of African countries really helps the cause," said Bob Rae, the Liberal Party's critic for foreign affairs.

Last month, the minister responsible for the Canadian International Development Agency, Bev Oda, announced changes that would see 80 per cent of Canadian country-to-country aid focused on 20 nations. One of those favoured nations is Tanzania, while Malawi and Zambia are now off the list. A spokesperson for CIDA said those two nations could still qualify for cash from the other 20 per cent of the fund.
Paul Heinbecker, Canada's ambassador to the United Nations from 2000 to 2004, said the change in African aid could be troublesome to the Canadian efforts. "If you lessen your relationship with countries, you diminish the possibility that they're going to vote for you," he said. "You just have that much less connection with them, and there are a lot of African countries."

A spokeswoman for Mr. Cannon would not comment on whether the changes might make it more difficult to get the support of Malawi and Zambia. However, Catherine Loubier said overall aid to Africa has risen under the Conservative government. She also said Canada has made a substantial contribution to UN activities in Afghanistan, Haiti and Sudan. "We are actively promoting Canada's qualifications for the Security Council membership," she said. "We strongly think our track record is good."

There are 15 members on the council, five of whom are permanent, with the other 10 serving two-year terms. Canada has won election to the body roughly every 10 years and there are 192 countries eligible to vote. The council has a number of powers, including the establishment of peacekeeping operations, setting sanctions, and the right to authorize military action. Canada conducted a high-profile effort for the council for the 1999-2000 term, and has begun a similar campaign, although the current one is seen by former diplomats as a more difficult row to hoe.

Several weeks ago, Peter Kent, Canada's minister of state for the Americas, moved to secure votes for the seat while on a trip to Guyana. Mr. Kent was in the country to announce Canadian support for the candidacy of a Guyanese judge, Mohammed Shahabbuddeen, to become a member of the International Criminal Court. In exchange, Guyana is reportedly pledging to give its vote to Canada for the UN seat rather than to Portugal. Such diplomatic horse-trading is typically part of the effort to secure a seat, although Mr. Obhrai said he didn't plan to do any trading with the three nations he plans to visit this week. "We're seeking support from all the three countries," he said. "I don't think there is anything to trade with them. They are not standing for anything."

Mugabe "Denial of Reality"

I have written many times on this blog about the shameful tactics of Zimbabwe's Mad Bob Mugabe. He snubbed the democratic process quite some time ago, and has been ruling with an "iron fist" ever since. Sadly, he has deceived himself into thinking he succeeded in putting one over on the international community. We all saw him steal the election this year, and then reach out in a pathetic attempt to woo the oppostion party Movement for Democratic Change.

Those of us familiar with Mugabe's dictatorial ways, knew better than to actually think this monster was going to give one inch to his chief rival, Morgan Svirangai of the MDC. His appetite for power is voracious. American, UK governments and even SADC members continue to pressure Harare from afar and make it as inconvenient as possible for Mugabe to operate as Head of State. Reading the deplorable, declining health conditions in the country, seeing images of numerous Zimbabweans burn worthless paper money, UN agencies decrying sanitary conditions outside the shanty towns or seeing people on the street picking rotten garbage out of dumpsters - all of this has lead to the most direct, pointed response from the world's top diplomat:

(From the BBC) Bank Ki Moon tried to reach out the government in Harare: Ban deplored the fact that "neither the (Harare) government nor the mediator welcomes a United Nations political role ... This clearly limits our ability to effectively help find immediate remedies to this crisis." "The current cholera epidemic is only the most visible manifestation of a profound multi-sectoral crisis, encompassing food, agriculture, education, health, water, sanitation and HIV/AIDS," he added.

He stressed that the mediation by the Southern African Development Community (SADC) "needs result fast." "The people of Zimbabwe cannot afford to wait any longer. The international community cannot afford to watch as the situation gets worse," Ban noted.

But is it enough??????????????????????

A Muzungu's Take on a Recovering Kenya

Wow - AFRICA, Kenya. It is great to be back after too long an absence!! After total flying time from Sydney, Australia of 22+ hours it was a RELIEF to arrive in Nairobi’s Jomo Kenyata airport. I found a SIM card immediately and must say this is the one thing i notice since my last visit to Kenya and Nairobi - everyone has a mobile phone! M-PESA the amazing financial telecoms technology issued through Safaricom has transformed the lives of many urban and rural Kenyans - domestic remittances now total USD $4.5 million/month. Rural farmers are some of the biggest beneficiaries of this technology.

My first reaction taxi’ing and walking the streets of Nairobi is traffic has actually improved - the Matatus (public passenger buses) are all licensed now. Shockingly they continue to blast Celine Dion music but must drive the speed limits of the city and not carry more than 14 passengers…and they are actually complying!!! Walking the streets I found myself in the usual routine of being approached by a number of con artists, glue sniffing children and stray animals. On my first day a dozen taxi drivers laughed at me when I was swarmed by 8 kids hanging off my arms for half a block. The hotel I stayed in is nice but I do hope the water will eventually stop coming out brown! The hotel was $25/night, so one expects at least 2 stars and clear water??

I met my Kenyan Rafiki (friend) David after 5 years away; he runs a small NGO called the Juhudi Children’ club; they receive money to decorate children’s hospitals around Nairobi with murals art. I didn’t know there was so much artistry to completing a colourful, intricate mural. He and I shared a few Tuskers, the national beer of Kenya. He is doing well and is now a father of three beautiful children. He has invited me to stay with his family, which I happily accepted. We talked about one of the key differences between Westerners and Africans; I am now 29, not married and do not have children. Women are having kids here at 18 and many males are fathers by 22. David is 35 and has three children, he told me that probably wasn’t normal by Kenyan tradition.

Kenyans refer to the Jan/Feb. 2008 post-election tribal violence only as the “Crisis” and sadly poverty has increased since when I was here in 2002. This week the Prime Minister Raila Odinga is in the UK to promote foreign investment and to salute the Kenyan diaspora for their assistance during the Crisis. Despite the sadness over the last few months, the perpetual Kenyan smile, sense of community and ample time provided to strangers is overwhelming…the West still has so much to learn here.

I have spoken with a dozen different tribal affiliations around Kenya in my first 4 days and one thing is clear: the almost unanimous dislike for Kikuyus. Land and title being the central issue. It is difficult for a Muzungu to have a discussion with Kenyans about tribal affiliations. Suffice it to say resentment has been suppressed, but sensitivities remain and it would only take one incident for Kenya to again spiral out of control. I pray the new coalition government starts to reconcile the differences between the dominant tribe and all the rest. I believe the future of Kenya is intricately linked to the ability to find tribal compromise; leading hopefully to peaceful coexistence.

On the coast in Mombassa two issues impact tourism and thus the inordinate number of young Kenyans wondering the beaches aimlessly. One is the Tsunami affected beaches, the gorgeous white Sand on the Indian Ocean Coast was sucked out during the Tsunami in 2004 and has left rock-exposed beaches! Second is the crisis which has scared off many tourists. Coastal Kenyans are going without meals for three days; unable to feed families and some resorting to petty crime. I like to haggle with matatu drivers and street vendors to receive a fair price but find myself adding to the total price as I might be the only tourist they see for the day!

When it gets dark it is very difficult for a male travelling solo to enjoy a quiet drink with some live music. The rate of prostitution has jumped since the last time I was in Kenya, in 2002. Some publications estimate 85% of prostitutes have HIV. Tragically, the majority of these women are so very young.

MUGABE SHAMELESS; MBEKI GUTLESS

There can be no denying how ugly the Zimbabwean election crisis has become. Mad Bob's cling to power has reached desperate proportions. Mr. Mugabe received quite a shock in March 2008 when his cronies and youth thugs failed to scare enough Zimbabweans away from voting for rivals the MDC. When you consider Mugabe government's efforts to subvert the democratic process through all of 2008 it is amazing what the MDC and majority opinion achieved. Today he swore himself in after "winning" an unopposed election. However, unlike previous coronations, Mugabe was more subdued than usual.

He flies to Egypt today for a meeting of the African Union. His counterparts, including many in the SADC, have been vocal in their critique of his government for creating the intimidating environment leading up to this weekend's election; 100+ MDC members dead, the homes of MDC supporters burned to the ground and other disgusting attempts to silence the voice of democracy. I sincerely hope Bob Mugabe is NOT recognized by African counterparts as the "leader" of the Zimbabwean people; a leader must reflect the will of the people, of which Mugabe certainly falls short. I have written previously about the desperate situation in Z. - inflation levels reaching exponential proportions, mass poverty, starvation, rampant crime and sadly, even slum-dwellers now complain about the filthy conditions of the shanty towns. How many more cries for help are required here?

Odinga, the PM of Kenya is calling for an AU military intervention and I am confident more than a few heads of state in Eygpt (host of the AU Summit) will stay clear of Mugabe. It was great to see D. Tutu and the world's most respected freedom fighter, Nelson Mandela, clearly speak their minds on Mugabe and his regime of terror. In some twisted way, Mugabe probably equates his liberation struggles to that of Tutu's and Mandela's: convinced he is a Messiah.

In the 1980s when he tossed out the British a strong case could be made for his crowning as an anti-colonial freedom fighter. A leader of the people. These days, Mugabe is more ridiculous figure than revolutionary. The people's nemesis, + a petty thug. Mr. Mugabe is politically shrewd to continue claims he is part of a global, imperialistic-colonial plot, of which the Zimbabwean Opposition leader must also be complicit...no doubt, those less informed of his destructive and manipulative methods will be fooled by these accusations.

A Disgrace.

South Africa's Thabo Mbeki's silence on Zimbabwe's farcical election is tantamount to his tacit support for the Mugabe regime. While Mbeki squeaks like a mouse; his anti-apartheid colleagues have roared like Lions voicing their public condemnation of Mugabe and his cronies in Cabinet. Further commentary from African Heads of State is welcomed. Mr. Mbeki has always maintained quiet diplomacy is the solution; working behind the scenes to bridge differences between ZANU and MDC. This is lazy and empty rhetoric from the outgoing South African politician.

Mr. Mbeki's lack of resolve on Zimbabwe demonstrates to the international community that his efforts to bring peace and stability to Zimbabwe have failed. How many opportunities will the UN and the AU allow before they pull the plug on Mbeki's role as mediator? His leadership on the crisis thus far has failed to achieve meaningful results for the people of Z. Granted, he is trying to cozy up to a cunning, desperate politician like Mugabe; an individual who lost his grip on reality some time ago. Does Mbeki's lack of courage reflect an aging politician that doesn't want to rock the boat?? He often looks tired and defeated; Mugabe has played him like a puppet in a war of attrition.

Zimbabweans should rightly be worried if Leaders at this week's AU Summit leave the fate of their country in Mbeki's hands. Clearly, he is not capable of making the tough demands required.

Voiceless in Sudan

I received a letter from Mr. Sarosh Syed of the Save Darfur Coalition recently. I post below a section of that letter, a 'report from the field' in Sudan. Mr. Ernst I saw that you’ve written about Darfur in your blog, and I thought you might be interested in some reports we have been receiving regarding the escalation of violence in Sudan:

At this moment (Thursday May 15th 2008) Salah Gosh Security forces and Special Forces ( The Capital Troops) with huge amounts of vehicles and troops are surrounding the largest market in Omdurman that is known to have large stores owned by Darfuris : Market of Libya ( Soug Libya ). They are detaining any Darfuri there: Store owners, customers, street sellers, passers-by. Women are detained, at least two killed inside their homes separately in Ombudah, another one killed in the street in Omdurman when she tried to protect her brother from Security forces. She was shot at point blank on the face. All women are from Zaghawa tribe.



Paramilitary and security forces went from house to house in darfuri predominant neighborhoods (Umbada, Fitaihab, Libiya Market in Omdurman), arrest male darfurians (mainly from Zaghawa tribe), beaten and kicked in front of their families and children, some are beaten by the end of assault rifles, then thrown on the back of security trucks and taken away (not known where).

Words cannot describe. They cannot depict the unimaginable fear civilians must experience day in and day out nor could words capture my disgust with the outside world's response to the daily reports of rape, pillage and plunder carried out against African tribes living in the Darfur region. The mindset and mandate of the Janjaweed militia is to "spread the seed" at all costs in gruesome, calculated acts of genetic extermination. Any Warrior's Honor or moral code of combat is entirely lost on these pirates.



Almost half a decade has passed since the first reports of violence and ethnic tension surfaced. Sadly the voices from Darfur remain ignored - like the cacophony of whispers we couldn't hear in 1994. The world cried out "Never Again" at the United Nations after the full extent of horrors were revealed in Rwanda, but matching definitive language with sincere, actionable follow-up has never been a strong point of the international community.

The chorus of apologies on behalf of hypocritical, feeble governments has become so cliche. At this stage in the Darfur genocide, perhaps intercession is all we have at our disposal. But even this seems inconsequential...

Will the day ever come when citizens of the international community respond with something other than "Shame on us"???????????

Soon we find out who is the REAL revolutionary...

So go the lyrics sung by Bob Marley almost 30 years ago at the coronation of the new Zimbabwean President, Robert Mugabe. The rest of the melody entitled Zimbabwe Marley eloquently sings about the tossing out of the British as colonial power...No more internal power struggle, brother you're right, you're right, we'll have to fight for our rights, divide and rule could only tear us apart, in every man's chest there beats a heart and I don't want my people to be tricked by mercenaries...Africans liberate Zimbabwe.

Sadly Mugabe spent the better part of his 28 year rule spitting on the very ideals expressed by one of the greatest musicians of the 20th Century. Nobody will soon forget his government's crackdown on all basic freedoms desired by the citizens of Zimbabwe, how he allowed inflation levels to reach over 100,000 percent to become the world's most bankrupt economy and Mugabe's incessant election rigging. Many of us remember the world's outrage when video evidence clearly showed he was involved in the brutal beating of his main political rival in early 2007; Movement for Democratic Change leader Morgan Tsvangirai. Indeed, Mugabe's very actions and his disdain for the democractic process one could almost be forgiven for forgetting that at one point, Mr. Mugabe was a victim of Britain's suppression of democratic rights in the former Rhodesia.

I actually bumped into Mugabe in South Africa back in 2002, and I watched as he addressed a major environmental summit in Joburg. I couldn't get over how often he referenced the evil British Empire, to the delight of most of the crowd. Back then, Mugabe was forcing white farmers off Zimbabwean lands, and this caused global outrage. Given the colonial meddling that occured before Mugabe's fight for the Presidency, I was not opposed to this controversial move as long as forced removal's were gradual and those taking over farm lands be trained in Agricultural production. Of course, this did not happen and Mugabe used the land to reward his cronies, many who had little if any farming experience. No surprise, Zimbabwe became a major recipient of the World Food Programme and food shortages continue to this day.

Election Uncertainty

The march 2008 Presidential election has come and gone. Overwhelming reports indicate Mugabe lost and this is one reason why election results have yet to be released. Nobody forgets what happened in Kenya's most recent election and how delay and fears of vote-rigging sparked massive violence and uneccessary slaughter across the country. Even if he has miraculously won the election legitimately surely Mugabe is guilty of negligence for generating mass uncertainty and panic on the streets of Harare and throughout the country. But his Presidency has clearly been defined by such uncertainties and it would not be a stretch to suggest it charges him up, amplifying the desperation of a man bent on clinging to power at all cost.

Mugabe defends his violent actions by suggesting he is a constant target of a nefarious British plot to overthrow him. Of course this proposed plot would be hard for anyone to prove otherwise, and it plays to Mugabe's key strength as a quasi-revolutionary, a one-time African freedom fighter. Other African leaders have bought into this line and are afraid to 'rock the boat.' As Archbishop Desmond Tutu commented recently "African leadership has not done themselves proud on this one..."

From Past to Present

If he were alive today Bob Marley would agree with the Archbishop's sentiments, and though he would be extremely disappointed in the hypocrisy demonstrated in almost every action of Mr. Mugabe and his followers, Marley held a disdain for the political process because he saw how it corrupted men who once stood for something.

Robert Mugabe needs to face himself in the mirror: WHO rules by divide and conquer tactics, tricks the people with mercenaries, causes internal power struggles and tears a nation apart?