Open loans on MyC4

As “investor”* you can open an account with MyC4. The platform then let’s you choose from a number of open loans, which have been vetted by local partner organizations, the so-called “providers”. The lending itself is competitive - it uses the “Dutch” auction system. You can place a bid (say 20 € at 15%) on an open loan. Once the total loan amount has been funded, new bids need to be better than the existing ones. The worst bid of a loan will be kicked out if another investor makes a better offer, thereby reducing the average interest on the loan. Once the interest passes a predetermined threshold (usually between 10 and 15%) the provider can close the loan, but most loans end up several percentage points below the asked interest. This system is supposed to ensure that investors with varying doing good/making profit expectations can participate in the platform.

Over the years, I dedicated a total of 1000 € from my savings to MyC4. My objective was to make a modest profit, which would render my investment sustainable. Sometimes during the last year I realized that my approach was not working out and I stopped reinvesting. Now almost all my loans are either paid back or defaulted and I can try to draw a conclusion.

The good

As of today, I have invested a total of 2070.12 € through the platform. This is double the amount of money I actually put into it. This is possible, as MyC4 loans are repaid on a monthly schedule, thereby opening the door for rapid reinvestments. From a social perspective, I think this is far better than donating money, as this way I can give again and again and again, all while leaving a maximum of responsibility with the borrower, who after all knows best what he needs the money for.

The bad

While the social aspect of the experiment certainly worked out, the idea of making a profit sure didn’t. 17 of the 97 loans I participated in defaulted (an unacceptable  20% default rate), which resulted in a total loss of ca. 200 €. Worse, even the 73 loans that were fully repaid only barely broke even, because of massive currency deprecation.**

This criticism has to be qualified though. First of all, 73 hard-working entrepreneurs honored their contracts and repaid loans that asked for interest rates far higher than those common in the EU or USA. They deserve applause. Of those who didn’t repay in full (the average defaulted loan resulted in a 50% loss of the invested capital) we don’t know the stories and it may well be that some of them are not personally responsible for what happened.

Also, a part of these losses is due to beginner mistakes made by myself. Especially in the beginning, I did not spread the investments over enough borrowers, providers, countries and industries. I also didn’t calculate currency risk correctly, which resulted in the bad result for the repaid loans.

Most importantly though, a huge part of the losses is due to a Ponzi Scheme run by one of the providers, which gave rise to huge criticism on how MyC4 was run:

The ugly

I don’t want to examine the whole story, but fact is that one of MyC4′s Kenyan providers put up fake loans on the platform, raked in the money of the lenders and subsequently made off with it. MyC4 itself did not participate in this criminal behavior, but  they certainly neglected their duty to check on their business partners and ensure compliance to transparency standarts.

I guess at least half of my losses are due to this racket. As far as I know, there are still court proceedings going on in Kenya relating to this case, but I doubt that I will see any of the money I lost again.

MyC4 has made several changes to its procedures as a consequence, but I doubt that anything safe of a total makeover of the legal framework in the respective countries could fully mitigate the risk of such a thing happening again.

The long and the short of it

Investing in MyC4 has been a mixed experience. While it was certainly more effective than simply buying a goat through a donation to a large NGO in terms of “helping”, the promised profits have not materialized. As I said, I have transfered practically all of my remaining investment as a consequence of this.

But I will return! I am still convinced that micro-lending is a great way to combine supporting entrepreneurs in the developing world and making a small profit. While MyC4 had to fight many problems over the last few years, the changes they have made seem to result in a much more stable platform which reduces (though not eliminates) the risk of defaults and outright theft. Also, countries like Uganda and Ghana will join the ranks of oil-exporting nations this year, which will likely reduce the volatility of their currencies.

My new investment in MyC4 will reflect my experiences. I will adhere religiously to a doctrine of spreading my loans over various countries, providers and industries. I will limit the value of a single investment to a maximum of 20 €. And I will be more rigorous in calculating my asked interest rate to make sure that I ideally realize a profit around 3%.

Are you investing in microloans, either thorugh MyC4, kiva or other organizations? Which experiences have you made?

* While competing platforms like kiva focus on the “giving” aspect of microcredits, the approach of MyC4 focusses on “profit” for both the borrower and the lender.

** The main culprit for this one was the weakness of the East Africa Shilling currencies over the last years. This seems to be normalizing now.

Protest against Abdoulaye Wade in Paris, September, 2011. Photo by Flickr user Gwenael Piaser, CC BY-NC-SA

On February 26, the voters of Senegal will elect their next president. The country has long been the stalwart of democracy and stability in West Africa. But this changed dramatically several years ago when incumbent President Abdoulaye Wade—85 years old and in power since 2000—decided to stand for another term to pave the way for a family dynasty by installing his son, Karim Wade, as his successor.

Many members of the opposition had hoped that Wade would leave office voluntarily. After all, he himself oversaw the introduction of presidential term limits, which were added to the constitution in 2008, and pledged to stay out of this year’s race.

These expectations turned into anger when Wade backtracked on his promise with the words “Ma waxoon waxeet” (“I said it, I can take it back” in Wolof) in 2009. The Senegalese supreme court—whose members are appointed by the president—supported Wade’s interpretation that the amendment could not be enacted retroactively and that he should hence be entitled to stand for two more seven-year terms in office. On January 27 the court officially greenlightedWade’s candidacy, while blocking several other candidates—among them the internationally famous singer Youssou N’Dour—from running. Obviously in anticipation of this ruling, protests were banned in the days around the court hearing. […]

Read the rest on Waging Nonviolence.

SIPRI just published a new report on arms deals and weapons flows in sub-saharan Africa (SSA). The report offers little news for those who are familiar with the weapons market in SSA, but this actually makes it only more important. I don’t want to summarize the whole report here (it has a good two page summary included), but discuss some issues in more detail that I think are crucial to the arms transfers debate in Africa.

A Ugandan soldier trains with his foreign supplied assault rifle. Photo by Flickr user US Army Africa, CC-BY

Transparency of arms transfers

This is a main point of the report and with good reason. The SIPRI is considered the best source on arms transfers and deals which is accessible to the public, but even they can only estimate the amount and types of weapons which flow into SSA each year. The reason for this is simple: neither the delivering countries, nor the recipients have a great interest in making their transfers public.

While the report stresses that some arms transfers are legitimate and actually have the potential to improve the security situation, I think it is safe to say that most arms flows in SSA are ambiguous at best and outright dangerous at worst. The report confirms that it is common for African countries to meddle in each others affairs by delivering arms to the government or rebel groups. Western and Eastern nations frequently use preferential arms deals as a means to gain political favors. And while the total value of the African arms market is little (only 1.5% of the global market), it remains a lucrative business to deliver arms to those places where they are actually used: the 20 or so African states that experienced conflict over the last five years.

The lack of information about arms transfers is also contributing to a lack of knowledge on how exactly fresh arms influence security in volatile regions. This makes targeted political actions close to impossible, if one tries to influence conflicts through providing or limiting arms supply. So from a policy perspective, the most important step would be to have the principle exporters (China, Russia and Ukraine) and ideally the African states sign up to a weapons transfer database. But as even the EU has difficulties providing timely data on arms deals, I have little hope that we will see progress in this quarter soon.

Effectiveness of arms control regimes

Sometimes, the UN security council actually gets its act together and issues an arms embargo against a state or individuals. This is great in theory, but these embargoes (and other arms control regimes) are often beset with so many problems, that one has to ask oneself if they are worth the paper they are written on.

Take the arms embargo against the region of Darfur for example. The SIPRI report details that it had little practical effect, as the government in Khartoum was still allowed to receive arms transfers as long as it guaranteed the sender that these arms would not be used in Darfur. I imagine this looks something like this:

Chinese/Russian/Ukrainian arms dealer: Thanks very much for your order Mr. Bashir. We will be happy to provide you with the AK-74s/MIG bombers/tanks you requested. Just one last formality; We will need some form of guarantee that you won’t be using these weapons in Darfur.

Mr. Bashir: Oh no problem. I’ll give you my word that we will only use these shiny new killing machines when parading around in our baracks and in case Egypt tries to invade us!

Arms dealer: Great! That’s settled then.

The deadliest of all good-will gifts

While a huge motivation for arms transfers is still monetary gain, the SIPRI report also points out to the frequent practice of using preferential arms deals as political gifts. This is common for the main arms exporters (think China’s interest in Sudanese oil) as well as for African states (who frequently support one party of a conflict for ideological/political reasons).

Western powers are not above using arms as a political tool as well. This is showcased by the recent support of the (former) rebels in Libya (though not SSA), as well as by the acceptance of western allies Ethiopia and Kenya arming militias in Somalia in their fight against islamists.

This aspect is probably one of the most worrying issues. The current situation in Syria shows that political patronage (in this case by Russia) can have disastrous effects on the possibility to resolve conflicts. African countries are no strangers to political maneuvering by foreign powers and African elites have repeatedly shown that staying in power through the use of guns is an option they will gladly consider, if it is made available to them.

Conclusion

Especially when it comes to small arms and light weapons (SALW, like AK-74s), decades-old thinking needs to be revised. We finally need a political push – probably on UN level – for a comprehensive treaty on transparency in arms transfers. This would be the first step towards more effective arms control regimes, which could reign in the use of weapons as political gifts.

For this to succeed, western nations would have to push this topic onto the international agenda. It remains to be seen if the recent experiences of the Arab Spring (where western sourced weapons were used to fire on peaceful demonstrators) provide sufficient reason for policy makers to rethink stance on arms exports. Only if the West manages to agree on ethical standarts and tight control of their arms exports, getting others to sign up to such rules will be realistic. For Africa, it would be a good development.

For those of you who want to dive deeper into the details of arms deals in Africa, you can find the main report here and various other reports, detailing the role of South Africa, Ukraine, Israel, Somalia and Zimbabwe here. If you can read German, you can find an interesting article on the German weapons company Heckler&Koch and its shady business here.

Al Shabaab fighters. Photo by Christian Science Monitor.

So the Somali islamist movement al Shabaab has now sworn allegiance to al Qaida. Several officials in the United States, Ethiopia, Kenya and in the Transitional Federal Government (TFG) in Somalia will have silently thanked their deity at this news, as it makes it much easier to justify the ongoing invasion of Somalia and the frequent targeted assassinations against radicals on Somali soil.

But this view is short sighted. It disregards the direct responsibility of U.S. anti-terrorism strategy for the ever-increasing radicalisation of fighters in Somalia. In a way Somalia and al Shabaab is the best example how the mantra of a militarized anti-terrorism campaign has been successful at nothing, except at creating its own enemies.

It may be hard to remember (it happened over five years ago), but al Shabaab was once part of the Islamic Courts Union (ICU) – it’s youth movement to be precise. While the ICU was certainly no progressive, freedom-loving organisation, it was the first institution to return something resembling order and a functioning (albeit archaic) legal framework to large parts of Somalia, after years of often chaotic inter-tribal and militia fighting.

This of course ended abruptly when Ethiopia decided to invade Somalia in 2006. The Ethiopian government was suspicious of the islamist rhetoric of the ICU and was supported in this stance by the U.S. government, who saw every “islamic” movement as a potential safe haven for al Qaida terrorists (no matter that at this point no evidence suggested a link between the two groups).

The ICU proved to be unable to resist the technologically advanced Ethiopian army. After suffering a series of defeats, the ICU officially switched sides and today its former leader, Sheik Sharif Ahmed, is the President of the TFG.

But the grievances that gave rise to the ICU did not go away when the Ethiopian army invaded. So the most hard-core part of the ICU – al Shabaab – decided to keep fighting, but with a change of tactics. Suicide bombings against Ethiopian and TFG troops became frequent. I spoke to many people on my recent visit to Ethiopia who said that in these times you could here the cries of mourning of family members every day, when they received the news of the death of their son, brother or husband via SMS (!) from the army.

The new way of fighting proved to be successful and in 2009, Ethiopian troops began to withdraw from Somalia without adequate alternative troops being in place. The result was simple: soon, al Shabaab was in possession of much of the territory of southern Somalia, exactly the area that was ruled by the ICU before the Ethiopian intervention. Of course the laws and regulations enforced by al Shabaab reflected their fundamentalist interpretation of Islam and it is safe to say that many Somalis and also the neighboring states preferred the ICU in hindsight.

Not so the military strategists. They just saw al Shabaab as a new and even greater threat to “security and stability” and reacted in the usual way: targeted assassinations through U.S. drones, warplanes, special forces and even bombardment by U.S. Destroyers instead of negotiation.

This “strategy” culminated in 2011 with a renewed invasion of Somalia – this time Kenya made the start and Ethiopia joined after some deliberation (or persuasion by the U.S.?). History repeats itself as the troops of various African nations with U.S. support manage to use their technological superiority to achieve military victories (though so far this has not translated into territorial dominance yet).

With enough time, money and life spend, this campaign may defeat al Shabaab as we know it today. But it will not make anybody more “secure” – not the average Somali, nor Kenyans, Ethiopians or Westerners. Al Shabaab may cease to exist, but the proclaimed merger between the group and al Qaida points to the inevitable consequence: the most motivated and radical elements of al Shabaab will keep on fighting, one campaign richer in experience and many lost comrades less likely to ever consider a peaceful solution for their grievances.

Photo from Flickr user magnusfranklin, CC-BY-NC

I had an interesting conversation with a press relations guy and former journalist today. He currently works for the German branch of a large INGO, with which I did an internship a while back. I told him of my plans to become a freelance journalist and communications consultant and his immediate reaction was: “You can do either one, but you can’t do both.”

The essence of his argument was that working for two masters (writing articles about NGOs for newspapers and teaching workshops in social media for some of the same NGOs for example) would jeopardize my independence. I would end up being disliked by the aid community, because writing about them implies criticizing their work at some point, and being eyed suspiciously by the media community, because they could not be sure if I deliver honest reports.

This got me thinking. So far I assumed that this would not be a problem, if I handel professional relationships transparently. I know many bloggers and have heard of many journalists who do consulting work. I still trust these people to deliver critical work and I also took it for granted that most consulting clients can take public criticism (if it is fair) with at least a basic level of decency.

My question to you: Am I wrong? Will I risk stepping on many toes by working as a journalist and communications consultant simultaneously?

My current opinion – that critical journalism and consulting work are not always a contradiction – is based on the following arguments:

We are not objective anyway

To loose ones independence one has to have it in the first place. While I know that there is a strong believe in journalisms circles that “objective” coverage is possible, I believe strongly that it is not. What we see, feel and write is always filtered by our experiences. So instead of trying in vain to guard ones mental independence, media professionals should probably be always self-critical about their allegiances and prejudices. Don’t get me wrong: it’s not bad per se to have these, it’s just bad if you assume that you don’t.

Criticism and support are no contradiction

The best people to work with are those that give you an honest feedback of your work – that is at least my opinion. The best way to improve development practice is to criticize it (fairly) and the more people do this (stakeholders, aid professionals, politicians and yes, journalists) the better. If this criticism happens over a beer or in a newspaper is in my view not really important, as long as the critique is well founded and put into context.

It is important that we understand each other

Journalists and aid professionals do not necessarily speak the same language. They have different experiences and hence (see above) see the world differently. While that is not bad in itself, it opens up the possibility of ugly misunderstandings that serve neither the people both parties want to help, nor the reader who wants to understand. Hence we need to foster an understanding, teach each tribe the rituals and traditions of the other. For that you need a certain overlap between the worlds.

It’s the money, stupid

In a perfect world this last argument wouldn’t be one, but as we all know, this world is not perfect. The fact is that living from journalism alone – let alone from reporting on such far-away places like Burkina Faso – is probably not possible. This is deplorable, but for now the stark reality. So how should we react to this? Just stop reporting? Hardly a good solution.

Do you think these arguments hold tight? What’s you opinion on this topic?

Tuareg rebels. Al Jazeera photo.

Mali

The regional repercussions of the fall of Gadhafi are beginning to come clear as Tuareg militants attacked a total of six towns since Jan. 17. The Azawad National Liberation Movement (MNLA) — the group responsible for the attacks — has been formed only recently and is believed to have many former Gadhafi mercenaries in its ranks. The group has recently claimed to have shot down a MIG bomber, probably with ground-air missiles pilfered from ammunition depots in Libya.

The official objective of the MNLA is the autonomy of the Malian part of Azawad, an area that many Tuareg see as their traditional homeland. But the Sahel Blog points out that the Malian government tried to prevent an escalation by offering concessions to the Tuareg community before the attacks even started. It is also interesting that the MNLA seems to have no interest in liberating those parts of Azawad which are situated in Algeria. The conclusion might be that the string of recent attacks did not happen with the intention to capture territory, but to demonstrate the military strength of the group and to bolster its position on the negotiating table.

Nigeria

Over the last year the terrorist group Boko Haram has made its way from a little known splinter group to an international security threat. Its attacks have become increasingly more sophisticated and cover a much wider area than its original area of operation. The latest hotspot seems to be Kano, which saw a huge attack on Jan. 20 and a number of smaller incidents since then. […]

Read the rest (covering developments in Somalia, Sengeal and the Sudans) over at WarIsBoring.com.

Ouagadougou. Photo by Rita Willaert on Flickr, CC BY-NC

In my previous post I explained what I exactly plan to do in Burkina, once I’m there. That leaves the little question of why I chose Burkina Faso in the first place. I will be honest: the main reason for choosing Burkina over, say, Ghana, was that my girlfriend got a job in Ouagadougou (the capital of Burkina). That alone made my decision quite easy, but it is certainly not the only argument for choosing Burkina as your base for starting out as a freelancer.

First the more rational arguments: Burkina is not a highly contested market for freelance journalists. Senegal, Ghana and Côte d’Ivoire (the obvious choices in the region) have lots of resident journalists – both international and local types – that have staked their claim and are well established. But try find a well researched and written story on Burkina on any of the major news sites and you are likely to have to go back several months in the archives. This is not due to a lack of stories though. I will probably write a post lining out potential stories later, but suffice to say that Burkina has enough stories to keep a journalist busy for a lifetime.

Burkina Faso is also a quite stable and secure country, which makes arriving there without a huge support network easier than for example in Côte d’ivoire. I am also looking forward to living in Burkina because everybody I talked to so far went to great lengths telling me how wonderful and friendly the Burkinabé are. Also, my Bradt travel guide tells me that the food in Ouaga is really good.

On the consulting site of things, it is important for me to know that there is a fair number of NGOs and governmental aid organisations working in Burkina, who could be potential customers. Germany has a strong presence in the country (in comparison to its size) and this is obviously a target group which I hope to have a good connection to. But there is also Oxfam, Plan and others.

Now to the more idealistic reasons. Burkina is – I alluded to it earlier – totally neglected by the international media even by (West) African standarts. If even the BBC published only three stories about Burkina in the last six months, something is clearly going wrong. I’m not saying that I can change the lacking awareness of African affairs in western societies on my own, but I can certainly do my part.

I furthermore think that the reverse is also true: people and those with a story to tell from Burkina are probably putting little energy into communicating these stories to a non-French speaking audience*. While the reason for this is clear and understandable, it is nonetheless sad. Communication is a two sided thing. Both sides have to show an interest and have to be willing to be willing to accept the other side on its terms. If this doesn’t happen, both sides loose.

Let me know if I have forgotten any great reasons for going to Burkina. Or have you made different experiences and think that I should reevaluate my decision?

*I have to stress that this is pure speculation.

Picture by Flickr user laughingsquid under CC by-nc-nd

In March, I will move to Burkina Faso, to work as a freelance journalist and communications consultant. I will go into more detail on why Burkina in another post and will focus here on what am I going to do exactly and how do I plan to make it work. The point of documenting this here is of course to get my plans ripped apart by you, so that I can make better ones!

What?

I want to do two things: bring interesting stories about development, politics and conflict in Africa to a global audience to make them care and to help others do the same with their own stories. Oh, and I want to be able to pay my bills by doing that.

To accomplish this goal, I will set myself up in Burkina Faso (in Ouagadougou to be exact). While Burkina has been a very stable country over the last years, it remains to be one of the poorest in the world. It is also situated in the heart of a region (West Africa) that has every complex problem on offer that one could think of: from environmental degradation over internal conflict to questionable governments.

At the same time, it is also a very energetic environment that some people see likely to have an Arab Spring style wave of democratic protest ahead of it. Also, like everywhere where there a great challenges, there is a lot of interesting and creative local problem-solving going on.

There are two ways which I can take to help bringing these stories to the rest of the world: I can write them down and disseminate them myself, or can help others do so effectively. I see these ways not as competing with one another, but as complementary, which brings me to the next point:

How?

First some ramblings about my journalism plans: I have little formal education in the field of journalism, but I think I outweigh this by having a solid education in and first hand experience (for my age, anyway) with the topics I intend to concentrate on: development, security and politics in Africa. I know that it is hard to make a living from journalism under the best of circumstances and that mine are probably not the best, so I don’t expect it to be a money machine. To make my work as a freelance journalist sustainable nonetheless, I intend to do the following*:

• Build up contacts with editors/fellow journalists while I am still in Germany
• Bring my French up to an acceptable standart before I arrive in the country (very few people in Burkina speak English)
• Go beyond the big brand papers for pitching my stories – I want to try especially pitching stories to development-focused publications, as this is where much of my credentials are
• Use this blog and social media to distribute interesting stories on a daily basis, so that my name is out there

Much of my work will probably be in text with the occasional photo (as this is what I will be able to sell), but I want to make sure that I utilise video and voice as well, as I see these as incredibly effective for creating engaging stories that listeners/viewers will care about. Also, I think that multi-media content will become only more important, so spending time on increasing my media production skills is a valuable investment for me.

I will complement this part of my freelance existence with working as a communications consultant for local and international NGOs (and maybe companies). These often do incredibly important work in very complex environments and often face challenges when trying to communicate with their donors. Many of these organisations are increasingly warming up to the idea that external (and internal) communications management is an important part of being successful at what they do. Consulting for these clients could take the form of producing content, supporting them in managing their communications, or designing homepages, social media profiles and so on.

Again, I don’t expect this to bring in much money at the beginning. But I hope that I will be able to break even relatively fast, so that I won’t be a drain on the pockets of others. My main reason for this hope are not my income expectations though, but the very limited budget I intent to adhere to

Please let me know what you think of these plans. Are they realistic/crap? Do you have any valuable tips from your own experience at going freelance?

* I am indebted especially to Jina Moore and  Graham Holiday for sharing their infinitely greater experience in the trade of journalism with me.

• Incredibly intelligent ramblings about how I start out as a freelance journalist in Burkina Faso
• Interesting bits and pieces about political stuff from across Africa
• More information about myself and how to contact me
• Photos, videos and much more color

In the meantime, find me on Twitter (@peterdoerrie) and speak to me!

This is a comment from me that was recently published in the Global Development Voices section of the guardian online. Find it here, together with other excellent commentary and an interesting discussion.

To end violence against women, it may be best to talk less about it and more about other forms of violence. That, at least, is the argument a new report by the Nordic Africa Institute makes about the case of sexual violence against women in eastern Congo, and I would agree.

Violence against women does not exist isolated from other forms of violence in a society. It is part of what Johan Galtung would describe as structural violence, and it can only be fully understood – and hence adequately addressed – if all forms of violence in a society are tackled.

In some cases, like for example in the eastern Congo, sexual violence has become almost an exclusive perspective on ongoing conflicts. While the intent behind this is laudable, it is likely that it actually hurts the interests of women, as any action taken will only be able to mitigate violence against them, not eradicate.

So to end violence against women, it is essential that policymakers, advocacy groups, NGOs and the media start to address the hard questions. It is easy (and right) to condemn the soldier in eastern Congo who rapes a woman, but it is much harder to find a satisfying answer to what made him do it. Only by answering this question will we be able to really abolish violence against women and violence in general.