December 2

James Militzer / Kyle Poplin / Scott Anderson

Weekly Roundup: India’s Demonetization Gets Ugly, Health Care’s Last Mile Gets Shorter and Coke Comes to Gaza

The Dark Side of Demonetization

It’s been called a “brilliant strategy” and an “unmitigated – and politically motivated – disaster.” Wherever you fall on the opinion spectrum, it’s hard to disagree with former U.S. Treasury Secretary Larry Summers’ view that it’s “by far the most sweeping change in currency policy that has occurred anywhere in the world in decades.” We’re talking, of course, of India Prime Minister Modi’s surprise move to ban 1,000 and 500-rupee notes early last month, ostensibly to crack down on black money.

The notes account for 86 percent of India’s money in circulation by value, in a country where some 98 percent of all transactions by volume are conducted in cash – so the impact has been, shall we say, significant. Exactly how significant is becoming painfully clear. The ban immediately made countless Indians’ cash holdings illegal tender, sparking a nationwide panic as people scrambled to preserve their savings. Crowds swarmed to banks and ATMs to convert their money to legal currency, taking advantage of a grace period allowing them to exchange limited amounts of cash each day. But with long lines and cash shortages running rampant, dozens of people have reportedly been trampled to death and suffered heart attacks, and the upheaval has even driven some to commit suicide. Many are likely to opt to simply lose their savings rather than dealing with the hassle – especially considering that anyone trying to convert more than 250,000 rupees (about $3,650) must explain why they have so much cash (or pay a penalty).

Meanwhile, much of the country’s informal, cash-based economy has come to a standstill – a circumstance that, like the invalidation of cash savings, takes a particularly hard toll on the poor. And to make matters worse, multiple analysts have pointed out that most of India’s black money is not held as hoarded cash in the first place – the vast majority has likely been converted into foreign currency, gold, bitcoin or some other store of value.

On the plus side, the move has clearly been a boost for financial inclusion: Bank deposits have skyrocketed to record highs as Indians raced to unload their cash savings. And millions have signed up for mobile money platforms and other digital services, giving a boost to India’s push to become a cashless economy (which Modi is now emphasizing as the primary rationale for the move). Yet the prime minister’s response to the very real turmoil he’s caused has been surprisingly tone deaf. He has portrayed complaints about demonetization as driven by defenders of the corrupt status quo, and trumpeted the results of his self-serving mobile survey, in which a whopping 93 percent purportedly support the new policy (critics snarked that this was slightly less than the 99.96 percent vote that Saddam Hussein once claimed).

Only time will tell if demonetization will be worth the cost, which seems likely to include a substantial economic slowdown. In the meantime, India remains the most interesting place in the world for financial inclusion – it’s just a bit less clear if “interesting” is such a good thing.


From $6,000 to international recognition

It takes a lot to stand out in the world of TED Talks, where the best and brightest – or, certainly, the best ideas – are regularly featured. But Dr. Raj Panjabi manages to do it.

On Thursday, Panjabi won the 2017 TED Prize, worth $1 million, for founding Last Mile Health to train community members to provide health care in isolated parts of Liberia.

His effort started ever-so-humbly when he asked guests at his 2007 wedding to donate money toward his dream of relieving Liberia’s acute shortage of medical professionals. He netted $6,000. Today, Last Mile Health has 300 community health workers serving 50,000 patients – and another $1 million to pursue his dream. He’ll use the money, he told NPR, “To develop a project that we’ll launch at the 2017 TED conference in April. We want to expand our reach and make our impact even greater.”

Few among us have the intellectual gifts of Panjabi – he’s a Harvard Medical School instructor, a doctor at Brigham and Women’s Hospital, and a TIME 100 Most Influential People honoree  – but dreamers all over the world, those who go to sleep wondering how they might bring their world-shaking idea to fruition, can take solace in the fact that even Panjabi’s idea started small.


LeapFrog’s Dual Health Investments in Kenya

Equity fund LeapFrog Investments is making good on a promise to diversify its portfolio of financial inclusion products toward more health-related enterprises with a $22 million stake in Kenya’s GoodLife Pharmacy. LeapFrog called its majority stake in the company “the largest direct investment in the East African retail pharmacy sector to date.”

GoodLife is more than a place to pick up drugs, it also serves as a diagnostic center that provides treatment and can connect patients with clinicians via telemedicine. In 2014 LeapFrog invested $18.7 million in leading Kenyan health insurer Resolution Insurance. The two investments are designed to bridge the health gap for low-income consumers.

“Low health insurance penetration coupled with an increase in utilisation of services has an enormous impact on the ability of consumers to access and afford quality health care. By moving into health, we are taking a unique approach and addressing the challenge from both sides – investing in both health insurance companies and health service providers,” said Dr. Felix Olale, a partner with LeapFrog, in a press release.


Have you hugged a horseshoe crab today?

Under the category of delightful diversions we offer the story, “100 Objects That Shaped Public Health” published by the Johns Hopkins Bloomberg School of Public Health.

The wonderfully illustrated story reinforces the idea that the simplest things – like a fly swatters and soap – can save lives, and many modern conveniences – like K-Cups and desk chairs – are ultimately unhealthy. (We’ll tell you that horseshoe crabs made the list, but won’t spoil the fun by telling you why.)

If you’ve got a little time and even a passing interest in public health, check it out.


Tired of Tradeoffs? Omidyar Report Says it’s Time to Move On

“The impact investing field, in our view, must move beyond the unproductive debate over tradeoffs and instead focus on a more relevant question: Under what conditions should an investor accept a risk-adjusted below-market return in exchange for an opportunity to achieve social impact?”

That’s one of the upshots of a new report from philanthropic investor Omidyar Network, which advocates a wide spectrum of investing – from pure commercial plays and profits, all the way to charitable giving. In other words, instead of fretting over tradeoffs of social impact versus profits, the report says a continuum mindset is a better way to think about impact investing.


A mutual fund-ish solution for health care

Africa Property News carried an interesting perspective this week on how to inject a bit of capital into health care in Africa. It’s called a Real Estate Investment Trust.

REITs, as they’re known, are “an investment vehicle for real estate that is comparable to a mutual fund, allowing both small and large investors to acquire ownership in real estate ventures, own and in some cases operate commercial properties,” according to Investopedia. REITS – which can be publicly or privately traded – have existed in the U.S. for more than 50 years, but are relatively new in Africa. The attraction for investors is that they include guaranteed dividend payments.

The story in Africa Property News points out that some REITs in developed countries own and operate hospitals, senior housing and medical office buildings. “The argument for health care REITS continues to grow,” said Ortneil Kutama, the publication’s media director. “There is a gap for hospital services in Africa and property investors can benefit from this.”


A Coke and a (Hard-won) Smile

Coca-Cola opened a bottling plant in Gaza this week, and supply logistics professionals might be talking about it for years to come. The challenges are paramount: nearly undrinkable water, the Israeli blockade, and infrastructure that can barely be described as such. But the soft-drink maker, working with Palestinian partner National Beverage Co., labored for four years to launch the $20 million plant, which will employ about 120 people.

It shows the lengths to which a company will go to tap a market and how many of them create their own weather.

“Multinationals have to have a foreign policy,” National Beverage Co. CEO Zahi Khouri told Quartz.


Photo credit: Narendra Modi, via Flickr.



Health Care, Investing
financial inclusion, impact investing