Zoo Station

The Financial Times is reporting an amazing story out of India, which at least I have not read anyplace else. Apparently, the police have charged Arjun Singh (he of IIM quotas, private sector reservation etc) with making excessive demands for dowry from his grandson's bride. There you have it, the human resources minister of the country stands accused of harassing a young woman and her family over dowry.

Police in Moradabad, a town in the northern state of Uttar Pradesh, said a case had been registered against Mr Singh, his wife, son and grandson after the father of the bride alleged that his daughter had been the victim of harassment.

Prem Prakash, a senior police officer from Moradabad, told the Times Now television news channel: “It is a case of dowry harassment. There were demands for a Mercedes car and a flat. There was talk of Rs5.5m-Rs 6m ($135,000-$150,000, €90,000 -€109,000, £67,000-£73,000) as dowry during the wedding.”

"We can lick gravity, but sometimes the paperwork is overwhelming."

Marginal Revolution and my buddy, Pablo Halkyard, provide the Africa fact du jour.

The entire market capitalization of the continent is $800 billion, of which $600 billion is from the South African market. As the Economist puts it, China could buy every single public company in Africa with its foreign exchange reserves [and still have more reserves than India does]. Amazing, but keep in mind that Africa is growing at 5% since 2001 (yet another fact that gets distorted by the usual stories), compared to a global average of 4.2%. Expect this anomaly to not last longer than 5 years, by which time I expect investments to start pouring in Africa barring any significant blow-up. The other underlying assumption, of course, is that other African exchanges (Lagos, Accra, Nairobi etc) will begin to become at least half as competitive as the Johannesburg market.

One of my major cribs about the urban development in India has been the utter lack of thought given to architecture, design etc. Everything that I see going up are either cookie-cutter homes in ugly sprawls (like in Hyderabad and Bangalore) or uglier skyscrapers in Bombay and elsewhere. It almost seems like decent architecture in India stopped with the pre-independence art deco movement (Marine Drive being an excellent example). This is really a huge difference between Indian cities and the upcoming Chinese cities. The Chinese have clearly decided to invest heavily in path-breaking buildings and design and are contracting some of the world's best architects to help them along the way. That explains why Pudong has one of the most impressive skylines in the world.

So, I was surprised to come across this building on Indic View. It's called India Towers and is coming up on Marine Drive in Bombay.



Not only is it interesting architecture, but when completed, it will be, at 300 mts, the tallest green building in the world. Of course, I was wondering immediately how they got around FSI regulations and the like, but I am guessing some of the green practices (water recycling, in particular) may actually help? As Indic View points out, this building is clearly aimed at the super-rich, but at least it's a start and they're thinking down the right line. Here's hoping for more thought in urban planning, architecture etc even as India grows at break-neck speed.

Over the years, Marginal Revolution has become one of my absolute favourite blogs to read. In fact, given my crazy schedule, I've had to cut down on reading my RSS feeds diligently and yet, MR remains among my diet of 5-10 blogs I read everyday, no matter what. So, when I heard that Tyler had a new book (Discover Your Inner Economist, it's called) out, I could not wait to pre-order it out on Amazon. From what I can tell, it seems to carry on the noble, mathematics-free, curiosity-driven economics tradition of Steve Levitt, Tim Harford etc. No surprise if you've been a regular reader of MR, I guess.

If you've never read MR and are wondering what the fuss is all about, here is a link to a New York magazine profile/book review of Tyler Cowen.

Among this new crowd of economists, Cowen, a 45-year-old professor at George Mason University just outside D.C., is a cult hero, insofar as he co-runs an influential blog called marginalrevolution.com. You don’t need to be an economist to enjoy it. There are only a handful of posts a day, but the range of ideas is awe-inspiring. Cowen weighs in on everything from “wage compression”—when bosses give raises at a rate below productivity gains—to household pets, arguing that “if you must support the life of either a cat or a dog, choose the undervalued cat.” (Dogs’ friendly disposition increases the odds of their being well-cared for by other people, while the natural diffidence of cats makes them more susceptible to neglect).

What is most pleasurable about Marginal Revolution, though, is the heavy dose of cultural opinion and advice dispensed by Cowen. He is a world-class polymath who whips through graphic novels and 816-page bricks like Africa: A Biography of the Continent, listens to everything from Bach to Brazilian techno, searches out exotic cuisines all over the world, and still finds time to travel to remotest Mexico to update his collection of amate painting. For him, deep immersion in culture defines the good life, and his readers get the vicarious benefits.

Tyler also periodically puts out lists of his favourite things, which are a testament to his catholic tastes and amazing curiosity. Here is one of those lists. For me, one of the best finds in recent times thanks to Tyler has been the Brazilian electronica outfit, Suba. Their album, Sao Paulo Confessions, is some of the most amazing electronic music I've heard in recent times.

This is one of the funniest Che Guevera cartoons I've comes across in recent times. Courtesy of the brilliant Matt Diffee at the New Yorker.



In the meanwhile, even the Village Voice thinks the movie is brilliant. You know what that means.

I came across this gem on Marginal Revolution today. Next week, a doctoral candidate will submit his doctoral thesis in astrophysics at the Imperial College, London. The thesis is titled "Radial Velocities in the Zodiacal Dust Cloud" and is being defended by a 60-year old 'student' who had given up his doctoral work to pursue an alternative career. The question, obviously, is who?

Now, a lot of people have asked me over the years how a quizzer's mind works. I have maintained that a good quizzer is someone who has a solid base of knowledge and the ability to think laterally and imaginatively. A lot of people assume just the base of knowledge will do, and I disagree. This question posed above requires a combination of the two skills.

Clearly, one makes the assumption this person is famous (why else would it matter). He obviously left his doctoral work for the career which made him very famous, since the astrophysics profession isn't really known to create stars (pun unintended). Given these two assumptions, you then have to scan your base of knowledge to find out which celebrity was also a well-regarded amateur astronomer and chances are you have your answer right there.

Okay, I am done with the digression. The 60-year old doctoral candidate defending his thesis next week is Brian May, the legendary guitarist of the late, great Queen. Besides "Bohemian Rhapsody" and "We will Rock You," May also happens to be the author of "Bang: The Complete History of the Universe."

Dr Brian May. Ha!

I had made a post in May saying that Indian mobile numbers had dropped somewhat, mostly likely because of the customer verification drive. It seems like that dip was only temporary and the industry has rebounded with some pretty stunning numbers. According to the Economic Times, India added 7.34 million subscribers in June, which is the global record by a long margin and probably unlikely to be bested by any other country, unless the Indian telecoms firms themselves add more subscribers in the coming months (China has reached saturation levels). To put this in context, that is the equivalent of the entire population of Switzerland going mobile in one month.

The irony is that I still have to explain to some people (typically latte liberals in India and elsewhere) that well-regulated competition is a bloody good deal for the consumer.

The SME sector in India has been a pet obsession of mine for years, and in fact is a key focus are of the BOP Learning Lab I have set up at the Indian School of Business. SME's are fundamentally the engines of a country's economy and well over 80% of the average country's job creation happens in the SME sector. Therefore, promotion of the sector is a key ingredient to sustainable economic growth. At the BOP Lab, we have identified a series of transactions costs that hold back the sector in India. To me, the key transaction cost is vis-a-vis access to finance, both debt and equity, but specifically equity. So, it took me by surprise to read this story in the Economic Times (therefore, need to take it with a pinch of salt). According to the story, U.S. banks are being encouraged to lend to Indian SME's.

The move comes at a time when India expects its trade with the US to double to $60 billion by 2009. US, which is India’s largest trading partner, accounted for 16.8% of the country’s exports and 6.3% imports in 2005. The first bank to come to Indian shores with an SME focus is New York-based M&T Bank. Its line of credit has US Exim Bank guarantee and does not require collateral — which most Indian banks insist on from SMEs. The other banks learnt to have partnered the US department of commerce’s trade promotion unit in this regard are AmSouth Bank, North Carolina-based Branch Banking & Trust Co, Atlanta-based Sun Trust Banks Inc and Bank of Oklahoma NA.
[...]
This could be for anything from starting a hospital or a renewable energy project to setting up a golf course. “The cost of borrowing works out to 7-8% as per the Libor rate,” M&T Bank’s administrative vice-president Clement Miller told ET. This is competitive compared to 10-12% rate at which domestic banks finance SMEs, that too with collateral. The credit is classified as external commercial borrowing (ECB) and the borrower requires RBI permission to avail it.

“Around 95% of industrial units in the country are SMEs and 40% of the value addition in the manufacturing sector takes place in the segment. They are the largest job creators in the country. Still, many of them cannot access credit because of the requirement of collateral by many domestic banks. The initiative bridges the gap,” KDB Associates managing partner Sumant Batra told ET quoting a 2002 survey of the ministry of small scale industries.

As I said, since this is the ET, it is better to be prudent and wait until there is confirmation and some real lending that takes place. Nonetheless, a very important and positive move, if true. If any of you has additional information, please let me know.

I am way behind the curve in identifying the problems with the international aid industry, when compared with Bill Easterly. Easterly has been calling the bluff for years now and in this op-ed in the L.A.Times, he actually talks about the specific perception issue that I've been talking of since TED. It's called "What Bono doesn't say about Africa" and needs to be read in full. As always, a few excerpts:

It's a dark and scary picture of a helpless, backward continent that's being offered up to TV watchers and coffee drinkers. But in fact, the real Africa is quite a bit different. And the problem with all this Western stereotyping is that it manages to snatch defeat from the jaws of some current victories, fueling support for patronizing Western policies designed to rescue the allegedly helpless African people while often discouraging those policies that might actually help.

Let's begin with those rampaging Four Horsemen. Do they really explain Africa today? What percentage of the African population would you say dies in war every year? What share of male children, age 10 to 17, are child soldiers? How many Africans are afflicted by famine or died of AIDS last year or are living as refugees?

In each case, the answer is one-half of 1% of the population or less. In some cases it's much less; for example, annual war deaths have averaged 1 out of every 10,800 Africans for the last four decades. That doesn't lessen the tragedy, of course, of those who are such victims, and maybe there are things the West can do to help them. But the typical African is a long way from being a starving, AIDS-stricken refugee at the mercy of child soldiers.
[...]
The real Africa also has seen cellphone and Internet use double every year for the last seven years. Foreign private capital inflows into Africa hit $38 billion in 2006 — more than foreign aid. Africans are saving a higher percentage of their incomes than Americans are (so much for the "poverty trap" of being "too poor to save" endlessly repeated in aid reports). I agree that it's too soon to conclude that Africa is on a stable growth track, but why not celebrate what Africans have already achieved?
[...]
Why do aid organizations and their celebrity backers want to make African successes look like failures? One can only speculate, but it certainly helps aid agencies get more publicity and more money if problems seem greater than they are. As for the stars — well, could Africa be saving celebrity careers more than celebrities are saving Africa? In truth, Africans are and will be escaping poverty the same way everybody else did: through the efforts of resourceful entrepreneurs, democratic reformers and ordinary citizens at home, not through PR extravaganzas of ill-informed outsiders.

Easterly also points to the TED debate...

The real Africa needs increased trade from the West more than it needs more aid handouts. A respected Ugandan journalist, Andrew Mwenda, made this point at a recent African conference despite the fact that the world's most famous celebrity activist — Bono — was attempting to shout him down. Mwenda was suffering from too much reality for Bono's taste: "What man or nation has ever become rich by holding out a begging bowl?" asked Mwenda.

Perhaps Bono was grouchy because his celebrity-laden "Red" campaign to promote Western brands to finance begging bowls for Africa has spent $100 million on marketing and generated sales of only $18 million, according to a recent report. But the fact remains that the West shows a lot more interest in begging bowls than in, say, letting African cotton growers compete fairly in Western markets (see the recent collapse of world trade talks).

I met Jennifer Brea, a freelance journalist when I was at TED Global. Now, she has done amazing writing on the conference and its aftermath. Her first piece was titled, "Africans to Bono: 'For God's sake, Please Stop!'" In my opinion, it is a must-read piece, but here are a few excerpts:

Africa has never loomed as large in the popular imagination of the West as it does today, thanks to the Jeffrey Sachs-Bono ambition to Make Poverty History, and of course to Angelina Jolie and Madonna's commitment to adopting African babies. Their message of hope is one that seems to deny Africans a role as agents of their own transformation. We can save Darfur. We can save Africans from disease. We can even save Africans from themselves. Africa can be saved if we just try hard enough.

It is true that from the villages of Darfur to the slums of Soweto, thousands of people on this continent die unnecessary deaths each day, but Africa is home to 900 million. Tragedy is a small part of a much larger and more complex story. Of the 47 countries that make up sub-Saharan Africa, only five-Sudan, Chad, Uganda, the Democratic Republic of the Congo, and Somalia-are home to active conflicts. Last year, Africa saw its highest growth in GDP in two decades. Sixteen African countries have favorable sovereign credit ratings. Botswana's is higher than Japan, yet it still struggles to attract investment.

For the thousands of foreign-educated lawyers, businessmen, and architects from the Diaspora who are leaving cushy corporate jobs to return home with their skills and their dynamism to open businesses, it's about creating wealth, not reducing poverty. Africa is not a victim in need of saving: it's a land of opportunity.
[...]
Aid not only crowds out local entrepreneurship, it makes governments lazy and deprives countries of the incentive to build effective institutions. Public revenue derived from taxes makes governments directly responsible to their citizens. Free money builds white elephants and bloated bureaucracies, it being far easier to create new government jobs than implement policies to fight unemployment, especially when someone else is footing the bill.

The perverse result is that many of Africa's best and brightest become bureaucrats or NGO workers when they should be scientists or entrepreneurs. Which is why some are wondering: why not just take the aid money and invest in local business? "If you make Africans rich, they'll be less poor," said Idriss Mohammed, a financier who wants to raise a private equity fund for Sub-Saharan Africa. "Forget making poverty history. I want to make Africans rich."
[...]
Here's a radical idea: if we really want to help, why not ask Africans, not their governments, how they perceive the challenges before them, the dreams they have for the future, and the resources they think they need to realize them? Instead, we let a well-intentioned Irish rock star, a Jewish-American economist, and their Hollywood cohort become the voice and face of Africa. And in the process, the story of the other Africa, the Africa that is dynamic, creative, and wants to work as a partner and the leader of its own future, is being drowned out by the clarion cry of the anti-poverty glitterati–and our own appetites for gripping, salacious headlines of war, poverty, and grief.

This is just one among the many stories Jen has written post-TED and each one is worth reading. In the meanwhile, she (and several others) pointed to a Nick Kristof op-ed, in which he actually talks about investment opportunities in Africa, written the week after my run-in with him about my TED round-up. Now, I am not vain enough to think that my piece was responsible for the positive story from Kristof, but if there was even the slightest impact, that's good enough for me.

Sometime in the dim and distant past, I had linked to the Overheard in NYC website. A lot of people think that the stuff in there is exaggerated, but anyone who has lived in New York long enough know every damn thing is either true or well within the realm of possibility. I was taking the subway home last night after drinks and a really disheveled hobo entered the train around 86th or 96th. He was about 60 years old, looked like he was about to keel over, but he was wearing a Morgan Stanley investment banking t-shirt. Clearly, this was a hobo that mattered.

He then started reeling off a bunch of jokes that had the entire compartment in splits. I can't remember all of them, but here's a sample that gives you some indication of how good the hobos of New York can actually be.

Q. Why does Michael Jackson prefer 28 year olds?
A. Because there's 20 of them.

Q. Why doesn't Osama Bin Laden have sex with his wife any more?
A. Because every time he takes the pants off, he sees Bush.

The best of the lot, and one that I would have been proud of cracking:

Q. Why did Freddy Krueger kill Martin Luther King?
A. Because he Had a Dream.

Needless to say, the guy probably made about $15 from my compartment alone. And yes, I know these jokes are prolly old, but the effect of an old NYC hobo wearing a Morgan Stanley t-shirt cracking them at 2 am has to be experienced to be believed.

In October last year, I was complaining on the blog about my insane travel schedule and the need to slow it down a bit. Clearly, that's been very, very successful. Here's what the last few days have looked like.

Friday -- Paris
Weekend -- Reykjavik
Monday -- New York
Tuesday -- San Francisco

Thankfully, I have a few days in San Francisco, before returning to New York. However, this is not a lifestyle I would recommend to anyone. The inability to blog with any frequency is the least of your worries. On the upside, besides the miles, you get to see places like Reykjavik which is one of the most fascinating cities I've seen. By a bizarre coincidence former ZS blogger, Vinay Nair, was also in the Reykjavik the same weekend.

My recently inspired blogging is going to take a break for a few days, since I am now in Paris and the weekend in Reykjavik. But, as David Frost would say, there is just enough time though to tell you what a friend of mine remarked when he first saw the Eiffel Tower this morning. He said, "that looks like a giant transmission tower in suburban Bombay." After laughing uproariously for about 5 mins, I had to concede he may had a point. 110 V or 22O V? :)

As promised, here is my response to Nick Kristof's piece in the NYT that picked up from my post on TED.

Hi Nick,
Reuben Abraham from Zoo Station here. First of all, thanks for highlighting my/our side of the debate as well. Secondly, I have a great deal of respect for what you're doing in highlighting the problem in Sudan.

Don't get me wrong: I think you're absolutely right about highlighting the genocide in Darfur, and I'd dare say that without your coverage of the situation there, things might well be quite a bit worse. There's no other word for it besides a genocide. However, is Darfur all there is in a continent of 53 countries?

As someone who works regularly with investment professionals, I can testify to the fact that perception matters and the relentless coverage of the bad news does have a major impact. The trouble, as I see it, is that for most of the world, Africa is a country not a continent and the problems in Sudan somehow get attached to Namibia or Botswana and drives away potential investors.

So, when you see these amazing entrepreneurs struggling to raise capital for a generics pharma expansion (for example), because the providers of capital simply do not believe Africa is investment worthy, it's very frustrating.

Ultimately, the greatest poverty alleviation story in human history is going on currently in India and China as anything between 400-500 million people are being lifted out of absolute poverty. Similarly, a sizable chunk of Africa could potentially follow the same path, which makes inflows of capital absolutely necessary.

Does this mean Darfur is not a serious problem that requires the immediate attention of all the major powers? Absolutely not. However, people like you and Bono, who have a bully pulpit and an influential captive audience should, I believe, also be making a case for real investment (not aid) in Africa which is, IMHO, ultimately the way to ensure real economic development on the continent.

Let's look at Malaria, as a random example. There is a school of thought that believes that economic growth cannot happen without getting rid of problems like Malaria. I disagree. Are there any regions of the world that do not have Malaria and yet stagnate economically? Absolutely. Are there any countries that are high-income and yet are malarial? I can't think of a single one. Can you? The point I am driving here is that economic growth has the potential to solve a lot of seemingly intractable problems, but this will require massive investment, among a whole host of other enablers.

There is an entire generation (what George Ayittey calls the cheetahs, as opposed to the hippos of the earlier generation who are quite happy to keep themselves in power using western aid) of young Africans who are willing to call a spade a spade and do something to radically change the status quo. However, their cause is not helped at all by the consistent bad coverage in the media, which exacerbates the problem of them having no real say in the debate in the first place, thanks to a domination by well-meaning, yet misguided, westerners and the hippo generation.

If you would like to get in touch with some of the leaders of that crowd, I'd be happy to make the introductions. Thanks, and apologies for the long comment.

Nick Kristof picked up on my post on TED Africa and wrote a short note about it in the New York Times (it's behind the wall, so don't bother). I reproduce it here in full.

July 1, 2007, 11:01 pm
Overdoing the African Negatives?

By Nicholas D. Kristof

The blog Zoo Station has an interesting post about aid and Africa, noting that at the recent TED conference a Ugandan journalist had attacked Bono and the foreign aid lobby. Bono was apparently rather taken aback, but it is indeed a point of view that you hear periodically from Africans. In Rwanda, President Kagame voiced a similar disquiet about aid to us, and Bill Easterly has taken it to great lengths in his book. I think the debate is useful but that more aid is still beneficial, and that health interventions in particular have a good record. To me, Paul Collier’s new book, “The Bottom Billion,” gets the balance exactly right.

Zoo Station also takes a swipe in passing at me, but I have a bit of sympathy for his point that the focus is so relentlessly on Africa’s problems that it becomes difficult to attract investment capital in the places that are succeeding. I don’t think the problem is to stop covering the problem places — in that case the death toll in Darfur now would be 1.5 million instead of a few hundred thousand — but it is a real problem that the image of Africa is saturated with negatives.

I have a response written up, but I will post it later tonight when I return from meetings.

The witticisms of Warren Buffet are legendary. Here's one I read recently, when Buffet was asked what advice he had to give managers. As is his wont, Buffet immediately broke out into a story.

This is the tale of a stranger in a small town. To get acquainted with folks, he went to the village square and saw an old-timer with kind of a mean-looking German Shepherd. He looked at the dog a little tentatively and asked, "Does your dog bite?" The old-timer said, "Nope." So, the stranger reached down to pet him and the dog lunged at him and practically took off his arm, and the stranger as he was repairing his shredded coat turned to the old-timer and said, "I thought you said your dog doesn't bite." The guy says, "Ain't my dog!"

Moral for managers: ASK THE RIGHT QUESTION

Long-time readers of ZS know I have an enormous amount of respect for George Soros. So, I was thrilled when I was invited to a dinner with him in New Delhi last December. We had a wide-ranging chat about everything India, from human rights to the small/medium enterprise sector. However, the piece de resistance came a few weeks later when I was invited to join the board of the Soros Economic Development Fund (SEDF), a $140 million fund (in assets), dedicated to catalytic investments in emerging markets.

I formally joined the board in late-January and it's been an exciting ride since, with my SEDF colleagues Fawzia and Neal. We conducted a very useful SME workshop at the Indian School of Business, mostly to discuss financing issues bedeviling the SME sector. Based on the output of our various discussions in India, we are in the process of scouting some extremely exciting opportunities in India, the details of which I cannot reveal just yet, but will do so in the coming months. We are also exploring similar initiatives on the African continent, for which my TED adventure proved extremely useful.

Finally, I am in New York currently to attend the SEDF board meeting and structure the India initiative. I know I am missing a lot of people this time around, mostly because I am using my New York stay to slow down a bit. However, if any of you are in New York and would like to meet, email me and let's see if we can work something out. I will also be in Paris and Reykjavik this coming week and in the Bay Area the week after (week of the 9th), so if any of you would like to meet, give me a shout.

On June 25th this year, Zoo Station completed four years of existence, and I didn't even notice. I know the posting on ZS in the last year has been terribly erratic owing chiefly to my extraordinarily busy schedule and I don't know if things will improve much going forwards given that my schedule is only going to get busier from now on. Nonetheless, there aren't that many blogs that have remained in existence for four years and I feel good about that. Thanks much to all my readers who have been patient all these years :)