05 January 2012

Bad Eggs Harming Markets in Rwanda

The season of giving passed by in a hurry to give way to a new year.  What did not change as we changed from a 1 to a 2 on the calendar is the desire to give stuff to people.  Whether it is doing a local giving tree, putting clothes in the large yellow bin or giving an extra few bucks to the panhandler on the street, everybody feels just a bit more generous.

Is it possible that our generosity is doing harm?  Well, it is not such an easy question to unpack. If we struggle with saying with saying that generosity and giving are absolutely bad, why is there a willingness to accept it to be absolutely good?  The story told in the video is quite simple.  A church in Atlanta responded to the genocide in Rwanda by sending eggs to communities outside of Kigali.  The motivation was full of good will and should be commended.

However, the influx of eggs meant that prices suddenly dropped due to large supply of freely distributed eggs.  Farmers who sold eggs in the market could no longer compete and sold off their chickens in order to make up for income lost.  The following year, the church group moved on to a new project and the market for eggs bottomed out.  The people on the ground adapted to the new supply source and switched to other farming.

Without the cheap supply, prices rose because eggs have to be imported from other communities.  In the long run, this donation placed a greater burden on the community by raising the overall price of a good and putting some farmers out of business.

This is merely an anecdote and does not necessarily reflect every time a good is given away.  What it does show is that such aid can cause long term damage that makes the lives of some worse than they were before.    Ed Carr makes an excellent argument for why looking at the community level impacts informs how development and aid have been crafted incorrectly.  That point will be expanded in a review of his book. I want to end by saying that it is a mistake to continue applying the same solutions in every context.  It is not a radical statement, but it seems that giving things continues to occur.

There are times when donated items are needed, but there are also times when it is better to give nothing.

HT to Daniela Papi for the video