Crisis in Nicaraguan Microfinance: Between the Scylla of Business for Profit and the Charybdis of Clientelism

From the being a poster child of microfinance development, Nicaragua became one of the nightmares for the industry. The negative influence on the countries' repayment culture of the Non-Payment Movement, ambiguously related to the new Sandinista government, is typically blamed for the crisis. A closer analysis, however, reveals that features of the mainstream microfinance policies in Nicaragua are possibly more to blame for the crisis than the political turmoil, which opportunistically seems to have taken advantage of the underlying problems. Overfunding of regulated MFI-banks and promotion of excessive competition, in particular of these banks with the non-regulated MFIs, led to reckless lending and created over-indebtedness. Gradual professionalization and conventionalization also led to the erosion of social embeddedness –once at the core of the Microfinance revolution- and left MFI weak in the face of political challenges. And the obsession with profitability and 'finance only' implied higher interest rates and left many poorer clients with little or negative impact, lending credibility to the accusation of usury. While the Non-Payment Movement could be understood as a Polanyian countermovement to the problems created by market development, its ultimate political objectives however seem to offer only dubious perspectives for future inclusive economic development.

Political arenas around access to land: a diagnosis of property rights practices in the Nicaraguan Interior

Land property issues remain firmly on the agenda in Nicaragua. Revolutionary land reform, followed by additional land redistribution and overnight liberalisation of land markets, are assumed to have caused severe insecurity of land tenure. Dominant received wisdom is that only significant state intervention through full-scale legal titling cum registration can put an end to the ongoing struggles that cause insecurity as well as injustices against poor agrarian reform beneficiaries. This view, inspired by economic and legal engineering perspectives on land rights, has however successfully been challenged in other development contexts, particularly Africa, where a legal pluralist view turned out to be more adequate to describe the complex social processes that define land rights. This view argues for a need to understand the detailed land right practices where legitimacy (and thus security) of land access and tenure is socially constructed by calling upon state as well as non-state sources of land rights. Policy conclusions do not call upon state intervention to remedy allegedly chaotic and unjust informal land practices, but rather calls for an institutional reorganisation that contributes to a greater synergy between different sources of rights, thereby reducing insecurities and injustices due to prevailing incompatibilities. Inspired by the legal pluralism view, our paper provides an attempt at interpretation of the real world land rights practices in an agricultural frontier region in Nicaragua.

The 1980s Price Bubble on (Post) Impressionism

The Log Periodic Power Law is a model used to define and measure speculative bubbles. This model has proven useful to track bubbles and even predict crashes of liquid asset classes. Using this methodology coupled with properties of cointegration between stocks and art, the 1980s price bubble on Impressionism and Post-Impressionism is analyzed. It is shown formally that there was a bubble in this market between 1986 and 1989. However, when denominating the art index in JPY rather than in USD, no price bubble behaviour was found at all. This observation suggests that Japanese buyers never felt that they were riding a bubble. Despite popular beliefs, no evidence is found that Japanese buyers viewed art as a speculative vehicle instead of a more classic consumption good that was related to their own cultural heritage.Impressionism, art market, hedonic regression, LPPL, bubble

Poverty, institutions and interventions: a framework for an institutional analysis of poverty and local anti-poverty interventions

At a time when technological innovations are making our world increasingly smaller and our production systems are becoming increasingly more efficient, the benefits of economic growth and development as a whole have not been able to reach all of society. Indeed, many poor countries, characterised by their disadvantageous position in the global society and continuously plagued by weak governments, internal strife and natural disasters have missed out on many of the benefits of growth and development. Within countries that do gain advantage from the various developments of globalisation, significant groups continue to be excluded from the benefits of this new-found prosperity. It is quite significant that a generalised conclusion such as this is still a reality at the turn of the century, despite decades of national and international effort to promote development and combat poverty.

Institutional Embeddedness of Local Willingness to Pay for Environmental Services: Evidence From Matiguás, Nicaragua

The concept of Payments for Environmental Services (PES) has gained increasing popularity in the conservation literature as it offers the potential to reconcile opposing social and ecological objectives by paying land owners for the positive environmental externalities they generate on their land. Based on extensive fieldwork in Matiguás, Nicaragua, this paper aims to complement the literature on locally-financed PES schemes in agricultural watersheds. Using both qualitative and quantitative research approaches, it inquires into the under-researched demand-side potential by assessing local willingness to pay (WTP) for water and watershed services in an upstream-downstream setting. Our results show a significant WTP for improved water services and a clear local consciousness about upstream-downstream interdependencies, suggesting potential for a ‘Coasean’ water-related PES scheme. Contrary to expectations, the feasibility of such a locally-financed PES system is however undermined by prevailing local perceptions of agricultural externalities and entitlements, questioning the fairness of such payments. Also low levels of mutual trust seem to undermine the credibility of the PES framework. The viability and acceptance of locally-financed PES mechanisms will thus also depend on the prior social production of cognitive synergies and improved collective action.Payments for Environmental Services; Watershed; Willingness to pay; Fairness; Externalities; Institutions

Purely radiative irrotational dust spacetimes

We consider irrotational dust spacetimes in the full non-linear regime which are "purely radiative" in the sense that the gravitational field satisfies the covariant transverse conditions div(H) = div(E) = 0. Within this family we show that the Bianchi class A spatially homogeneous dust models are uniquely characterised by the condition that $H$ is diagonal in the shear-eigenframe.Comment: 6 pages, ERE 2006 conference, minor correction

Organic farming and fair trade in developing country as a new agribusiness paradigm: Evidence from Mali

Organic farming and fair trade certified chains have emerged in West-Africa since the 1990s in answer to new alternative markets in developed countries. These chains, involving actors from North and South, are seen as an opportunity to sustainably valorise the small peasants agriculture in Africa and include the smallholders in global markets. Certification and labelling systems accompany these chains in developed countries. The aim of this article is to analyze the challenges for smallholders of this new North- South trade regime established by certificates and labels. This article uses the theory of Global Value Chains as theoretical framework. The empirical framework consists of four cases (organic sesame; organic- fair sesame; fair cotton and organicfair cotton) in Mali and in Belgium and France. It focuses on data that are gathered during our inquiry based on a questionnaire with the chains stakeholders in the south and in the north. The chains upstream inquiry was conducted in Mali with individuals producers, producers organizations, exporters; and the downstream inquiry was conducted in Belgium and France with European importers, distributors and certifications bodies. The results show that the new North- South regime established by organic and fair certificates and labels has a potential impact on the negotiation power and value distribution between chain participants. Lack of adequate local institutions in Southern countries, and increasing complexity of the “cahiers de charges” imposed by the North however may cause exclusion of many smallholders in these new North-South trade networks.organic farming, Fair Trade, smallholders, North-South trade, Certificates, Labels, Global markets, Value chains, certification scheme, local institution, Agribusiness, International Relations/Trade,

Assessing the extent and use of risk analysis methodologies in Africa using PVS derived data

African countries that wish to export are increasingly faced with import risk assessments from importing countries concerned about the sources of their imported goods. Other risk analysis methodologies and approaches are also employed, which focus on animal and human health within countries and communities. Based on an analysis of evaluations conducted by the World Organisation for Animal Health (OIE), using the Performance of Veterinary Services Tool, the authors attempt to define current practice in Africa and degrees of compliance with the World Trade Organization Agreement on the Application of Sanitary and Phytosanitary Measures ('SPS Agreement') and OIE standards. To assist in this task, the authors also make use of a review of selected risk assessment reports. Results point to a lack of technical capacity and capability to conduct risk assessments in compliance with OIE standards (except in the case of three countries), ranging from an outright absence of any form of (documented) risk assessment and consecutive risk management decisions (level of advancement 1) to shortcomings in one or several aspects of the risk assessment process. This is confirmed by a number of case studies, half of which have been produced by international consultants. The major recommendations of this paper are i) to strengthen the human resources pool for conducting risk assessments and ii) to establish dedicated risk assessment units, with clear terms of reference, job descriptions and policies, procedures and protocols. (Résumé d'auteur

The Potential and Limitations of Markets and Payments for Ecosystem Services in Agricultural Landscape Restoration Critical Reflections Inspired by an Assessment of the RISEMP Program in Matiguás-Río Blanco, Nicaragua

During the last two decades the concept of Payments for Ecosystem Services (PES) has gained ever-increasing attention among a wide public of scholars as well as conservation and development practitioners. The main premises of this innovative conservation approach are appealing: private landowners, which in normal circumstances -i.e. in absence of any direct incentives- are poorly or not motivated to protect nature on their land, will do so if they receive direct payments from environmental service (ES) buyers, which at least cover part of the landowners’ opportunity costs of developing the land. In this paper, however, we warn for an overenthusiastic adoption of the PES approach. Based on an extensive literature review and a field study of the Nicaraguan component of the ‘Regional Integrated Silvopastoral Approaches to Ecosystem Management Project’ (RISEMP), one of the main GEF-World Bank funded pioneering pilot projects of PES in Latin America, we argue that the concept still has to deal with several theoretical and practical lacunae. We argue that the concept of PES rests on loose foundations, mainly because of (i) a simplistic view on ES as discrete, quantifiable and marketable entities; (ii) an abstraction of the required landscape approach to conservation and the corresponding collective action precondition; (iii) a simplistic and arbitrary one-sided approach to the externality problem with important implications on the desirability of different policy instruments; (iv) a simplistic perception of socio-institutional reality and negligence of institutional effects on human behaviour and environmental morale; (v) the problematic character of transaction costs and a misleading justification of the approach based on the efficiency criterion; and (vi) a potential continuation of regressive financing of global commons with important fairness and sustainability implications. As such, we argue that the concept of PES could distract the attention for environmental problems away from the more complex underlying causes, which generally require broader locally embedded political action for their solution and not merely market creation. We think more debate about the desirability and conceptual clarity of the PES conservation tool is necessary.