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Amanpour

Humanitarian Aid in Pakistan

Aired March 18, 2010 - 15:04   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[15:04:00]

CHRISTIANE AMANPOUR, CNN ANCHOR: Tonight, a different kind of humanitarian aid. Could it help fight one of the root causes of terrorism?

Good evening, everyone. I'm Christiane Amanpour, and welcome to our program.

It is one of the great challenges of our time, how to end poverty and break its link to extremism. This question is playing out in Pakistan, which is at war with extremists right now, as Pakistani and U.S. forces target suspected terrorists there.

And next week, Pakistan holds talks in the United States on security and aid. Now, a small U.S.-based group, Acumen, says that it may have an answer, a new kind of aid that better target poverty and builds on the work of microfinance pioneer and Nobel Prize-winning economist Muhammad Yunus.

(BEGIN VIDEO CLIP)

MUHAMMAD YUNUS, NOBEL PRIZE-WINNER: Money going to the family through women brought so much more benefit to the family than the same amount of money going to the family through men, because women immediately takes care of the children if she makes money. She takes care of the household. She improves the household, if she has the money.

(END VIDEO CLIP)

AMANPOUR: So does this type of tightly targeted aid work? We will ask our guests who are joining me now.

Mosharraf Zaidi, a Pakistani journalist and former adviser to Britain's Department for International Development, Jacqueline Novogratz, founder and CEO of the Acumen Fund, and Roshaneh Zafar, president of the Kashf Foundation, which receives money from Acumen and is now the second- largest private micro-lender in Pakistan.

Thank you, all of you, for joining us. Let me ask you, Jacqueline, first. We're talking about a form of aid, a form of humanitarian aid. How is what you do different?

JACQUELINE NOVOGRATZ, ACUMEN FUND: Well, first of all, where micro- finance focuses on small loans to individual, low-income women, think of Acumen Fund more like a venture capital fund. We make million-dollar investments in companies that are bringing basic services like water, health care, housing to the poor. Imagine a factory with 7,000 employees making 20 million bed nets a year.

AMANPOUR: But $1 million investment sounds like a huge amount. What sort of size operation are you investing in?

NOVOGRATZ: Well, in companies that are bringing services like bed nets or housing or clean water to low-income people that may start off fairly small, but over time grow to include many different plans.

AMANPOUR: And how did your years on Wall Street shape this effort?

NOVOGRATZ: Well, back on Wall Street, really focused on the power of finance to actually bring a kind of discipline to creating companies that looked at low-income people as agents of change rather than as passive recipients of charity.

Then having started my own microfinance organization in Rwanda in the mid-'80s, saw the power of using finance in a softer way, but one that had real high levels of accountability.

Now, Acumen Fund recognizing that the markets alone will not solve all of the problems, how do we create a different kind of approach, which we call patient capital, to invest, but recognize that you need a longer time to make these companies work.

AMANPOUR: Let me turn to Roshaneh, joining us from Washington. Now, you work on the ground in Pakistan, and you founded a microfinance organization. Tell us about that.

ROSHANEH ZAFAR, KASHF FOUNDATION: Well, actually, I would like to corroborate what Jacquelyn said.

[15:08:00]

This is about impact investing, actually picking up the entrepreneurs who can then build up revenues and build up their incomes in order to then invest in their families.

So there is a direct correlation. The moment you provide capital to women, the first thing they do after investing in their business is to use that money for their families. When we started out in 1995, we were essentially the first microfinance program targeting women, and our purpose was really to demonstrate the business case of investing in women.

We have seen that for every dollar that a woman earns in her income, she will invest 70 percent of that back into her family. So you see a direct correlation between the welfare of the family and women's economic empowerment.

AMANPOUR: And so how--

ZAFAR: But it doesn't--

AMANPOUR: Sorry. I don't mean to interrupt you. But how did Acumen help you? Because it sort of scaled up. Acumen is not microfinance. It's something else. So what did it do to your organization?

ZAFAR: Acumen has been working on innovation. I think one of their core brand, you know, leverages is innovation. So initially they helped us establish a new product, which was a home improvement loan. And, again, that has a direct link to women's economic empowerment, because the house is where they do most of their productive enterprise work, as well.

So if you invest in the home, you're actually not only empowering women's ability to earn more, but you're also giving them a quality of life change within their own environment.

(CROSSTALK)

ZAFAR: That's one. And the -- sorry, go -- and the other thing we did was that we wanted to set up a for-profit model. We felt that a not- for-profit approach for empowering women was not economically mainstreamed. So Acumen has actually invested in the bank that we've set up, which now allows us to do deposits for women.

AMANPOUR: I'll come to you in a second, Jacquelyn, but let me just turn to Mosharraf Zaidi there, joining us from Islamabad, Pakistan, where you are a journalist. You used to be an adviser to the British Department for International Development.

Now, the United States has pledged about $1.5 billion in new aid to Pakistan per year. There are important talks coming up this week between the Pakistan government and the U.S. government. And, you know, there's also been a bit of a backlash against this aid.

What needs to be done to make this work? What's lacking in the relationship in this regard, Mosharraf?

MOSHARRAF ZAIDI, JOURNALIST: Well, I think that the fact that the U.S. is putting up as much money as it is and despite the kind of public furor that was generated when this aid was approved is going ahead with plans to -- not only to give them money, but to really think about how this money is being given.

So despite what I think have been several failures by the Obama administration in terms of understanding and engaging with Pakistan, I think one of the things that has to be recognized is the fact that the administration is willing to listen to new ideas about how to spend aid.

AMANPOUR: OK.

ZAIDI: One of the first things that Holbrooke did when he took over - - one of the first things that Holbrooke did when he took over as the envoy for this region is that he questioned the traditional way of spending U.S. aid in this country, which is generally through contractors and not through governments.

AMANPOUR: Right.

ZAIDI: So in the new model, Holbrooke and his team want to spend money through the government, and the money they can't spend through government because of the inherent risks involved, they want to spend through nonprofits.

AMANPOUR: OK. Let me just ask an obvious question. People will say, what do you mean, a backlash in Pakistan over this amount of aid, $1.5 billion a year? Why a backlash?

ZAIDI: Well, the backlash has to do with the politics of Pakistan's relationship with the United States.

[15:12:00]

While most Pakistanis overwhelmingly reject the Taliban and Al Qaida extremists as not being a part of their society or their faith, they're also not too keen on handing over large swaths of territory as an arena for battle between what they see as a war between the United States and people who are fighting for the end of foreign occupation in Afghanistan.

That's how the sort of mainstream view -- that's the mainstream view in Pakistan. And that's why the resistance to this aid, because it's seen as blood money for the losses of Pakistani lives, particularly through things like drone strikes, which have been targeting Al Qaida militants.

AMANPOUR: All right. Let me -- let me put this to Jacquelyn. Are you getting part of this aid? And how does this political complication affect your investments?

NOVOGRATZ: We have not gotten any of this aid thus far.

AMANPOUR: Are you getting any?

NOVOGRATZ: No, although we have made an application, provided that the aid is structured in a very different way, that it is not short-term, but it is focused on long-term investment in extraordinary entrepreneurs, like Roshaneh, like Julat Afgham (ph), who's a Pakistani-American, who came back to look at building housing.

People like Roshaneh and Julat (ph) could do anything they wanted to do in the world, and they're building Pakistan for the future. We need to see more aid invest in leaders like them in partnership, because I think -- and what Mosharraf is talking about -- I think that that is about a different kind of investment that breeds trust.

And what's needed in both countries is to build real models that can work, success stories, the trust that comes with that, and longer term, a pathway that government can actually help bring to scale.

AMANPOUR: And as we're looking at some of the home-building that is a direct result of your investment, I want to just turn to Roshaneh. So what are you hoping for with this new infusion of aid?

ZAFAR: I think one of the things that Mosharraf said I would like to resonate that, as well. There is a change in discourse. We are seeing that the mechanisms of disbursing the money are certainly changing, and that's a good thing, because traditional aid has worked through contractors, and we know how that money doesn't really get to the end purpose that it's supposed to, so I think that's a good thing.

Where the money should be used, I think there are -- if I had a magic wand, the first would be gender equity. That is an issue that has spanned (ph) Pakistan which we really need to address. And it also has a link with security. If we are leaving 50 percent of our women behind, of our population behind, we are definitely not going to progress.

AMANPOUR: Right.

ZAFAR: So gender equity and women's empowerment is very essential. And then, of course, education. And I think that is something we really, really need to rebound--

AMANPOUR: OK.

ZAFAR: -- whether it's the curriculum, the training, teaching training, and the school system itself. And I think that's the second area.

AMANPOUR: As you mentioned those issues, I want to play something that President Paul Kagame said to me on this program earlier this week, and it's in the tradition of what Dambisa Moyo, who's author of "Dead Aid," has said, that aid is debilitating in the long run. Listen to what President Kagame told me.

(BEGIN VIDEO CLIP)

PAUL KAGAME, PRESIDENT OF RWANDA: If you look at in the last five decades or so, Africa, my own country has received a lot of aid. But many cases you don't see anything for it, what it has left behind. So therefore, it raises the questions, is there another way of building on aid so that you stop needing aid in the future?

(END VIDEO CLIP)

AMANPOUR: I hope you heard that, Mosharraf Zaidi, sitting in Islamabad. He's basically saying, what can aid do for us? And don't we need to stand on our own two feet? Do you agree with him? Does that apply to Pakistan?

ZAIDI: Well, I think it's very important to begin -- for this country, in particular, to begin asking questions about the nature of its dependence on foreign flows, not just aid, but also the economic paradigm in this country, which seems to be either dependent totally on the charity of richer nations or on the charity of investors through foreign direct investments.

[15:16:00]

The thing that's often forgotten about Pakistan because of the specific kind of attention Pakistan receives and has been receiving recently is that this is a country of 180 million people. Its GDP makes it -- you know, by purchasing power parity -- it makes it 27th largest economy in the world. Even in real terms, it's $165 billion a year. That's the size of the GDP.

Remittances from Pakistani cab drivers and doctors and engineers and Wall Street bankers alone account for over $8.5 billion. So the idea that $1.5 billion in aid is going to be transformational, even if it was used perfectly, I think has to be -- has to be taken with a grain of salt.

AMANPOUR: OK.

ZAIDI: Of course, then the more specific question about how this money is used.

AMANPOUR: We're going to hold that thought, because we're going to come back after a break with more from our panel, and we'll explore some of these issues, as well as the link between terrorism and poverty and guns versus aid when we return.

(COMMERCIAL BREAK)

[15:18:30]

(BEGIN VIDEO CLIP)

YUNUS: -- not address the root cause of terrorism, to end terrorism for all time to come. I believe that putting resources into improving the lives of the poor is a better strategy than spending it on guns.

(APPLAUSE)

(END VIDEO CLIP)

AMANPOUR: That was Muhammad Yunus in his Nobel Prize address in 2006 talking about guns versus aid. Joining us again, journalist Mosharraf Zaidi, the Acumen founder, Jacquelyn Novogratz, and Kashf Foundation President Roshaneh Zafar.

Mosharraf, let me just ask you directly to play off what Muhammad Yunus said. Is it correct to assume that putting in resources, improving lives will have a direct impact on extremism?

ZAIDI: No, not necessarily, because, I mean, the evidence from a substantial body of work exists both that goes -- that's pre-9/11, as well as post-9/11, and that looks specifically not only at other instances, like Latin America, but also in the instance of South Asia and specifically Pakistan, where the link between terrorism and poverty or terrorism and literacy is tenuous at best.

Now, that's not to say that poverty shouldn't be solved, but poverty should be solved because it should be unacceptable to us as human beings.

[15:20:00]

The problem of extremism -- I mean, if we take the example of the 9/11 hijackers and terrorists, almost all of them were from wealthy families--

AMANPOUR: Right.

ZAIDI: -- and if not wealthy families, middle-class families. They were educated young men. They weren't illiterate sort of, you know, starving children off the streets of Karachi--

AMANPOUR: Mosharraf, you know, I've heard that a lot, but let me just go to Roshaneh, because you disagree.

ZAFAR: I absolutely disagree with that. I think we have -- we have evidence to the contrary. We worked with 1 million poor families across Pakistan, and we've seen what happens, the change that happens.

The household, if they're earning, let's say, $45 more a month, they are able to immediately put their children into school, so we're beginning to see a transformation. What that extra marginal value brings to the family is a better life. It transforms the future generations.

And I don't agree that that is not happening. In fact, putting in microfinance, which is the most sustainable way of providing aid to low- income households, we are beginning to see a silent revolution taking place, both in terms of children going to school, their ability to actually transcend their social backgrounds and become professionals.

So I personally think that addressing poverty, which is Pakistan's biggest problem today, is going to combat in some ways the issue of security that we face.

NOVOGRATZ: And if I can just add, I think it links both what Mosharraf and Roshaneh were saying, because I travel all over Pakistan meeting with low-income people, looking at where we invest, and I was recently in Babapour (ph), which is really known as one of the centers for extremism madrassas. And most farming families have one child in a madrassa.

NRSP, which is another incredible microfinance institution, has set up a program to provide low-cost loans to the poorest farmers. And it was a day, 120 degrees. I was out there with all of these farmers. And one stood up named Hamed (ph), who had one acre, which he was trying to support his entire family. And he not only could explain all of the economics of what it would take to double his yield, but he said, "I finally have disposable income for the first time in my life." And I said, "What will you use it for?" And he said, "Well, of course, madam, to educate my children. I want to send them to private schools."

The first thing he does is move from the madrassa to a private school. That's where you start to see the link.

AMANPOUR: So let me get back to you on that--

ZAFAR: And if I may--

AMANPOUR: Hold on a second, Roshaneh. I'll come to you. But let me get back to Mosharraf on that, because I know what you're saying. And everybody uses the 9/11 group as an example of how it was educated people who did that. On the other hand, people say that, you know, they were the committed extremists and terrorists. The real target of all of this aid and the eradication of poverty are those who are on the brink, those who still can be swayed.

So in -- given that, when you talk about development, do you think that it's the role of the host government or NGOs, like Roshaneh's or Acumen, to do this job?

ZAIDI: Well, let me -- let me sort of -- just to clarify. I've known Roshaneh's work and Roshaneh for several years, and I mean, it's a real privilege and an honor not just to share this program with Roshaneh, but also with Jacquelyn, whose work I'm also aware of and whose work is excellent.

I mean, Roshaneh in particular is actually -- is a role model for young Pakistanis and is someone to emulate. But I think that keeping things in perspective is really important. So whereas the impact of Kashf is unquestionable on the 300,000 women that it has reached and the million women that it wants to reach over the next few years as they transition from being a nonprofit to being a for-profit bank, I think it's important to remember what the scale of the challenge is.

And one of the arguments for leveraging these kinds of organizations - - and there are very few of them, I have to say -- an organization like Kashf or the kind of work that Acumen does, the argument for leveraging this is that, well, they do such a great job right now with the limited amount of funds.

[15:24:00]

And if we were to begin to tap large amounts of money like the Kerry- Lugar bill money, then that would automatically have a much greater impact. Actually, that's fundamentally problematic, because scalability doesn't really work in aid.

One of the reasons why Kashf is so successful and one of the reasons why Jacquelyn's work is acknowledged the world over, over the last 10 years, is because small is beautiful, because small allows them to take risks, to be creative, to use the word Roshaneh used, to be innovative.

AMANPOUR: All right.

ZAIDI: Those kinds of innovations, the innovations that make them -- that make them successful aren't possible when you scale these things up into the kind of size--

AMANPOUR: That's what I want to -- that's what I want to address.

ZAIDI: -- that's involved with the Kerry-Lugar money.

AMANPOUR: Because precisely what you're saying has always been the criticism and the skepticism about microfinance. So, Roshaneh, how do you scale up to make a real difference?

ZAFAR: I think I'd like to argue the other way. If you look at Bangladesh, which is the Mecca of microfinance, scale has happened. And scale happened not just in one case. It was replicated across five institutions.

Today, 86 percent of the people who need financial services in Bangladesh are actually serviced. And the Bangladeshi economy today is doing better than Pakistan's. So, I mean, maybe it's a normative argument in some way, but it does verify when we look at the bottom line in the case of Bangladesh.

(CROSSTALK)

NOVOGRATZ: If I could just add to what Roshaneh is saying, because I see you shaking your head -- and when I started Acumen Fund, I wondered as well what kind of scale would we see. I'm seeing a scale on two levels, actually. One is -- and we're seeing this particularly in India, and I think that it's beginning to happen in Pakistan, as well -- where there was no water industry at all, and we found one company willing to take the kind of risk that Mosharraf is talking about.

Now that it has 400,000 people giving access to a million to safe water for the first time, the government of Andhra Pradesh has come to partner and take it to scale with it. So I really believe that increasingly private innovation can lead to public change, but the innovation will come from those private innovators themselves.

And in Pakistan, we're seeing a similar trajectory on housing. It's really easy for politicians to say, "We're going to build a million houses." When I first went in 2002, I heard that a lot. Haven't seen very many of those built through government. Yet now that we're seeing Syban (ph) and AMC-built (ph) houses, we're in conversation with government about potential of partnerships.

I think that's where we're going to start to see real scale. And then there's the scale of the human imagination. Then there's the scale of frameworks that start with trust and credibility, that both the United States and the Pakistan government has as an opportunity to show that they're there, that they care, and they can make things happen.

AMANPOUR: And on that note, I just want to ask you for a 30-second final thought, Mosharraf, on what needs to be done to build back trust on this issue between the U.S. and Pakistan.

ZAIDI: Well, I think that the most important thing is for U.S. policymakers and philanthropists to understand that countries aren't built by NGOs or by philanthropy. They're built by governments.

And the greatest example is the United States itself. The public education system has been the backbone of American supremacy and sovereignty for the last 150 years.

AMANPOUR: OK.

ZAIDI: I think any country worth emulating is a country that builds itself up through the states (ph).

AMANPOUR: OK. And in 15 seconds, Roshaneh, do you believe that NGOs can fill that space when the government's not doing it?

ZAFAR: I agree that the government can't abdicate its role. So that -- putting that aside, I still think that civil society institutions have a major role to play in demonstrating change.

AMANPOUR: OK.

ZAFAR: And the government can pick that up and scale it up.

AMANPOUR: All right. This has been a great discussion.

[15:28:00]

I wish we had more time. Thank you all for joining us, Mosharraf Zaidi, Roshaneh, and Jacquelyn Novogratz, thank you very much for being here.

And when we return, we will have our "Post-Script." We want to tell you something remarkable that happened after our interview this week with the Chinese artist and social activist Ai Weiwei. That's up next.

(COMMERCIAL BREAK)

[15:30:00]

AMANPOUR: And now our "Post-Script." This week, one of China's most prominent artists and activists, Ai Weiwei, came here to our studios and told us about dissent, censorship, and his art. Afterwards, his Twitter followers joined in one our hash tag debates using the hash tag "AmanWei."

It was an emotional and a lively discussion with the artist and his followers about the impact of social media. One user tweeted in Chinese and said, "I feel that China and America are living on two different planets. Americans feel that freedom is as natural as air, but China doesn't have this air. Ai Weiwei has lived on both planets. He is bilingual."

Another Twitter user from China said, "Twitter in all its forms has already proven that it can be a thorn in dictators' sides, but dictators have also become smarter. To look at it another way, it can also be used to transmit misleading information to Twitterers."

And our hash tag debate is still raging, so log on now to amanpour.com/twitter and use it -- use the hash tag AmanWei to join in.

And you can see our Ai Weiwei interview again tomorrow. And we'll also look tomorrow at the struggle for women's equality in America. Until then, check out our podcast on amanpour.com/podcast. And for all of us here, goodbye now from New York.

END