National parks in East Africa: Veblen goods?

At a lunch today I got the chance to listen to a short talk from the head of the Kenya Wildlife Service (KWS). Dr. Julius Kipng'etich joined KWS in 2005 and has transformed the parastatal into a serious business outfit. In a bid to ensure world class parks, Kip has greatly improved management while giving conservation a strong scientific approach. As recognition of his achievements, Kip was the winner of the acclaimed CEO of the Year Award, COYA 2009.

Kip made a couple of interesting points in his speech that I’d like to reiterate here. He noted that, historically, wildlife parks tended to price too low. This did not allow them to become self-sustainable nor earn the revenue needed to build high quality infrastructure and invest in ecological conservation. In recent years this has changed. In Rwanda they started by charging some $50 to see the mountain gorillas. They then upped the price to $100 and were surprised to see demand increase. Incrementally they increased the price to $150, then $200… today it costs $500 to spend one hour in close proximity to these rare mountain gorillas. And demand is higher than ever. You sometimes have to book weeks, if not months in advance.

Similarly, Kip increased entry prices across the board for Kenya’s various wildlife parks. Today it costs a foreigner some $60 per day just to enter some of Kenya’s better parks, a 300% increase from a couple of years back. Prices for locals have increased as well. And KWS revenues are at their highest ever since independence. When prices were much lower, he noted, the local middle class rarely went.

Which raises an interesting research angle: are national parks that are home to rare animals Veblen goods? And, if so, why? Is it a status effect? A signal of quality?

I would ask my friends well-versed in economics to weigh-in here. Wikipedia defines a Veblen good as one for which “peoples' preference for buying them increases as a direct function of their price” but makes no prediction for “what will happen to actual quantity of goods demanded”. So maybe this isn’t a Veblen good. I don’t think it’s Giffen either is it?

Farewell Sitaram Rao

Every so often a person comes along that epitomizes all that is good about humankind. Sitaram Rao was just such a man, and we are worse for his loss.

Sitaram was a tireless champion for solutions to the challenges associated with poverty. He strove, always with full sincerity and all his might for the betterment of others, never seeking even an iota of glory or recognition. Indeed, he would be embarrassed when an organization offered just a bouquet of flowers as a note of thanks. That Sitaram was seen variously as a father figure, a mentor, a guide, a friend and a thought partner by legions of microfinance practitioners across India (and possibly beyond) is the truest testament to his contribution. We once estimated that he spent on average 25 days per month on the road, visiting the ‘field’, always teaching, but also, always learning.

He was the humblest of men. He could very easily have made millions. But he chose other paths; paths where he felt he could have greatest impact. As another said: “Sitaram Rao was the rock upon which today’s vibrant Indian microfinance industry was built. Through the years, you would not find him in the media spotlight; rather he was the common thread behind the scenes.”

He was a father figure to Unitus in India. Without him the organization would certainly not be where it is today. From the time I met him on my second day on the job, he was also a guide to me personally. The first person I would invariably call to discuss a new idea or get opinions on an organization would be Sitaram Rao. His opinion was respected by one and all.

Rest in peace, good sir. You’ve more than done your share. We will do our best to carry on all your great work.

You can read more at: http://www.microfinancefocus.com/news/?p=167.

Tributes by current and former Unitus employees can be read at: http://unitus.com/news-and-information/latest-updates/features/unitus-mourns-the-loss-of-sitaram-rao/unitus-mourns-loss-of-sitaram-rau.

The enigma that is Nairobi

It started well before I even set foot in this country. Indeed, as soon as I told people that I’ll be in Nairobi for the summer, the hushed warnings began. “Be careful,” I was repeatedly warned. “Don’t go out at night.” “It’s as bad as Johannesburg.” The guide books and travel websites agreed. Per the Lonely Planet: “Nairobi is Kenya’s biggest and baddest city… Most visitors dive in and out in the shortest time possible.”

A schoolmate from the year above, who had spent the previous summer in Nairobi, also didn’t do much to assuage my anxiety levels. He recounted (with what seemed, strangely enough, to be a glint of excitement in his voice) about being beaten and mugged by a group of boys on the streets.

Over the six weeks or so I’ve been here, various events / observances have added yet further credence to “Nairobbery’s” negative reputation.

• A colleague asked how long I was in town for. “Two and half months,” I said. “Hmm…,” he replied, “that gives you a 50% chance of leaving without getting mugged.”
• Another colleague and I left a client site one night at 8.30pm. Late, but certainly not late late. There was one taxi waiting outside, a legit one. My colleague wondered aloud whether it might be safer to walk across to a nearby hotel and to take a car from there. I thought he was joking. He wasn’t.
• From time to time another work colleague picks me up from home in the mornings en route to the client site. He usually picks me up around 8.00am, when it is bright outside and the streets are full of traffic. Still, he will only unlock the car once I reach the door. And as soon as I’m inside, all doors are immediately locked.
• On the radio, every morning, the DJs discuss the deteriorating security situation in the city.
• My roommate and I often go out at night. He’s a largely happy-go-lucky guy, who enjoys life. But when it comes a time to heading home, he suddenly turns an uncharacteristic shade of caution. “We need to take only large, well-lit roads,” he comments. He also drives fast and avoids slowing down too much at intersections. Nairobi has a terrible reputation for car-jacking. “If some guy does point a gun at your window,” he advises, “just get out of the car and give him the keys. No trouble.” And when we get home: "Ah, good thing we got home safe."
• The other day we were picking-up a friend from her place at around 8.30pm. I thought we’d just wait outside her building for her to come out. My roommate didn’t think it would be safe to sit stationary. So we drove up and down the road until we saw her. She lives just around the corner from the Prime Minister.
• Every apartment block is, of course, protected by round the clock security guards. Private security firms have blossomed in the city. To provide added comfort to citizens, some security companies even position roving security vans around the suburbs. The guards do nothing but sit around in the vans all day, waiting to be called to an apartment block lest any funny business happen there.
• Last, but not least, speaking of ‘funny business’, the other day I got home around 11.00pm and a police van was parked outside the gate. Blue and red lights flashed ominously and serious-looking uniformed men were engaged in busy chatter. I went in and the security guards had nervous looks on their faces. “What happened?” I asked. “Nothing sir, just some funny business.”

That’s probably enough data points to the get the picture.

But then there’s the flip side. Despite these various security concerns, Nairobi is a thriving metropolis. The city is full of multi-cuisine and high-end restaurants, bars, pubs and clubs, shopping malls and supermarkets. It is also home to a large expatriate population, driven in no small part by the fact that many multilateral development organizations, as well as international NGOs, are headquartered here. It is also the de facto commercial capital of East Africa. Nightspots rarely get busy before midnight. We left a nightclub at 3.30am the other day; it was still packed and going strong.

This is the enigma of Nairobi: one of the world’s most dangerous cities, but also one of Africa’s most active and alive. People, it seems, are cognizant of dangers, but are not going to let these get in the way of living and enjoying their lives. And, to be honest, things really are not so bad. Sure I’ve only been here a few weeks, but it seems that, like anywhere else in the world, as long as you make smart choices you can pretty much avoid most unpleasant low probability events (even if the probability of these events is somewhat higher here than in other parts). As the Lonely Planet concludes: “it’s easy enough to sidestep the worst of the city’s dangers and, as Kenyan cities go, this one has plenty going for it.”