Examination of Witnesses (Questions 240
- 249)
TUESDAY 9 MARCH 2004
MR ABDIRASHID
DUALE, DR
SAAD SHIRE
AND DR
ROGER BALLARD
Q240 Mr Colman: So the UK is okay.
Is there a framework across Europe which is developing which we
need to take account of? Again, you might wish to send us something
on this, but I see the time.
Dr Ballard: In terms of the submission
that you are suggesting, I think we might well get together and
do it between ourselves[2].
Q241 Tony Worthington: Before turning
to my colleague, John Barrett, we are recently back from the Somaliland
part of Somalia, and what was very, very striking there was the
extent to which the diaspora had helped that area—more than
anywhere else I have seen, I think. To what extent, in terms of
public places (and this is not foreign direct investment and it
might have been wealthy people investing in hotels or whatever)
does the remittance system contribute to development—not
in terms of sending money from person to person, but to what extent
are you conscious, particularly because it is a clan system within
Somalia, that the transfer of money goes to collective purposes
rather than to individual purposes?
Dr Shire: To a large extent—as
you know, the Somali Government collapsed ten years ago—bilateral
aid is non-existent, it is mostly from United Nations' agencies
and international charities that help, so the bulk of investment
comes from the diaspora in the form of remittance. Let me say
that 90% of remittance is person-to-person for consumption and
10% towards investment, maybe in property, sometimes in commerce
or industry and agriculture as well. The consumption itself is
also a form of investment in the sense that it creates a multiplier
effect in the economy and through that generates a lot of employment.
Also it helps a lot of families to educate their children. I support
two families in Hargeisa and between them they have a dozen children.
If I was not supporting them, their children would be in the street
basically.
Q242 Mr Battle: In Dr Roger Ballard's
paper to us[3],
which was very helpful, where you compare Jullundur with Mirpur,
you suggest, in fact, that the money that goes back into Mirpur
is not actually delivering sustainable development. I was not
clear what it was spent on but when you say that it showed no
sign of productively driven growth, it is entirely concentrated
in the remittance driven service sector, when the remittances
go back, what do they go on that is not sustainable development?
What should they be going on, in your view?
Dr Ballard: Current investment
is overwhelmingly confined to housing and all the services associated
with house construction. Such investment patterns should not be
dismissed out of hand. Housing is a very important good. My alarm
arises because in Mirpur, and many other areas like it, there
is minimal investment in agriculture, and in other activities
likely to bring productive benefits in the long run. In my view
this is not so much a result of a lack of entrepreneurial initiative
amongst the returnees, but rather that the local social, structural
and economic order is such that there are no other profitable
areas of investment. I carefully contrast Mirpur with Jullundur,
where there are profitable alternatives. In their absence the
least returnees can do is to invest in a new house. This may bring
a return in terms of social status, but will not generate an income
in the future. In my view policy initiatives are urgently required
to promote other more profitable and sustainable forms of investment.
Q243 John Barrett: Is this distinction
between consumption and investment valid because, as you say,
it may well be that people are sending over remittances to support
a family in whatever way that family deems it needs it, but is
the knock-on effect from that that you then have, as you mentioned
yourself, Dr Ballard, islands of wealth in a sea of poverty? What
can be done to guide this vast quantity of remittances that we
hear about dwarfing aid to make sure that it has the effect of
poverty reduction?
Dr Ballard: This is a crucial
issue. Remittances do indeed reduce poverty in the case of the
people and localities into which they flow, making them a great
deal more affluent than those in neighbouring areas from which
chain migration has not taken off. But when there is no significant
investment in agricultural technology in these islands of affluence,
agriculture and indeed all other kinds of activity can easily
be rendered unprofitable. One very telling comment I heard in
Mirpur was to the effect that "You know, we do not cultivate
grain any more, we just cultivate visas". In such islands
of remittance-driven prosperity, dependency all too easily sets
in, so much so that children grow up with the expectation that
by far the best option for the future is to get a visa which will
enable them to work overseas. Hence the productive dimension of
the local economy stagnates yet further.
Q244 Mr Battle: Mirpurians who come
to my constituency and live in Leeds, youngsters, perhaps second
generation, earn money and send it back to build houses exactly
like you say. It is almost like a parallel with people who, in
the 19th century, moved from Ireland and then built the villas
to return to. Is that what you are saying?
Dr Ballard: Yes, the parallels
are plain to see. But Mirpur differs because the whole area is
so seriously under-resourced in infrastructural terms. So even
if you get an electricity connection for your new house, power
is often unavailable; and even if there was once a road to the
village, it may well be so poorly built that it collapses. So
if someone has built a wonderful new home and hopes to live in
it, just as the Irish did in previous generations, lack of sustainable
development in the local economy militates against making the
most of it. Whilst individual families can build houses, they
cannot construct a local irrigation system, or develop a transport
system, or build a bridge. That is why I am suggesting in my paper
something like "smart aid" as seed corn to get infrastructural
developments off the ground. The object in so doing would not
so much be to "help the deprived" or to "reduce
poverty", but rather to facilitate the greater utilisation
of local entrepreneurial skills, as well as those of returnees.
Mirpuri settlers in Leeds and elsewhere have already demonstrated
their entrepreneurial talents, so they ought to be able to do
just as well in their home environment.. But most find they cannot.
The constant complaint of returnees is the absence of profitable
avenues for business investment, from agriculture onwards. During
a recent trip from Mirpur to California it struck me that the
soil and the climate in Mirpur is not very different from that
in the central valley. Why can't Mirpur do as well?
Mr Duale: I think what the Government
can do is work with us, the companies doing the remittances, and
maybe in a technical way this can be expanded to micro finance
or other investment opportunities so that migrants can be encouraged
to send money and they can see the returns that they can gain.
I think we can work together. The other thing I want to point
to is we also work with other international NGOs based in Somaliland
and Somalia who we are sending the money to. If we get together
we can do a lot.
Q245 Mr Battle: Why can the banks
or the transfer organisations not do that stimulation of micro
financing? I will give you a practical example. South Shore Bank
in Chicago is a people's bank; it started off to get people to
save money. It charged them to manage their accounts and then
it said "We will take another percentage off you and we will
add to that percentage and invest it in the neighbourhood you
live in". Why can the banking sector, where the money is,
not join with the people sending the remittances to look to stimulate
the investment? Is that too idealistic?
Dr Ballard: Because you would
need effective local organisation to pull such initiatives off
successfully. One of the difficulties I have witnessed in Mirpur—and
the situation is in no way unique—is that initiatives promoted
by the Pakistani State come from the top down, and tend to be
out of touch with local concerns and practices. In such circumstances
people in rural areas tend to be extremely suspicious of state-supported
initiatives, and with good reason. What I am suggesting is NGO-style
initiatives which aim not so much to help, but to facilitate
local initiatives. Areas such as Mirpur are asset-rich, not just
in terms of migrant remittances, but in terms of highly qualified
overseas-trained potential returnees. An initiative which began
to put these resources together in a positive way could achieve
great things. What is missing is the institutional framework within
which such initiatives could be got off the ground.
Q246 John Barrett: It reminds me
very much of the conversation we had with representatives from
ActionAid who said that the disadvantage of sponsoring a child
in a village is that you then have one relatively wealthy child
in a class whereas what they would rather see is that same resource
going to providing a well for everybody in the village. I think
it does need somebody to get to grips with the volume of remittances
that are heading over there but, to a certain degree, not being
as effective as they could be for the entire community. Maybe
they are effective for individuals but not for the entire community.
Dr Ballard: Quite right. But these
deficiencies also precipitate handicaps at an individual level.
An individual can build an even taller house than his next door
neighbour, and even set up a PIA ticketing agency within it, generating
a profitable business because so many people are going overseas.
But further expansion will not be possible unless the whole the
local economy takes off.
Q247 John Barrett: If you build the
house you need the drains.
Dr Ballard: Unless you are only
making a brief visit from Britain, and your central object is
simply impress your neighbours. I was struck by how often splendid
new mansions emerge from rubbish tips. Hence people are inhibited
from coming back on longer visits precisely because the local
economy itself is not taking off.
Dr Shire: Can I just add that
the point you raise is a valid question as to why we cannot do
the same thing which they have done in Chicago. The reason why
we have not done this is two-fold. Firstly, we do not have the
knowledge stock that the Chicago people had, we have no experience
of setting up in banking. Secondly, we do not have the pool of
money to start with. Perhaps that is where the British Government
can come in, helping us to set up these sorts of institutions.
A large amount of money goes into the country but it does not
stay very long, it is hand-to-hand. If it can be pooled and it
can stay for a while and that money can be lent to the people
who want to set up businesses and commerce and that sort of thing,
that would help the development more than it is helping now. It
is helping development but not as much as it would if there were
more development financial institutions in the country.
Q248 Mr Battle: I am looking for
more imaginative financing and banking, but not only in Somalia,
in Britain as well.
Dr Ballard: One little point here.
Many migrant communities support informal revolving credit associations
where people put in £5 or £20, so much into the pot
every week in a circle of, say, 100 families.
Q249 Mr Battle: A credit union.
Dr Ballard: Precisely, and otherwise
known in Punjabi as a kommittee. Every Indian and Pakistani
community in Britain supports a number of such kommittees.
When a member's turn comes up, he or she receives a lump sum:
perhaps £1,000, and sometimes more, which may well be remitted
back to Mirpur. Such kommittees operate in Mirpur as well.
What we should remember is there are all sorts of informal resources
available within migrant communities, of which the networks that
we have talked about today only a small part. These are a tremendous
potential resource in terms of collective development, but they
often need seed corn to help them on their way.
Tony Worthington: Can I thank you very
much for taking us into a world we do not understand. It is a
precious insight into the way in which the system works. You have
stimulated our thoughts, thank you very much indeed.
2 Ev 168 Back
3
Ev 157 Back
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