Don’t Help me, Trust me – Your African Coffee Producer

By Tanja Goodwin At a recent speech at DRI, Andrew Rugasira described what happened as Good African Coffee, the business he founded in Uganda’s Rwenzori mountains, began to take off. As farmers began to produce higher quality coffee and see higher prices for their crops:

Something really extraordinary began to happen.  The values that we don’t really hear about in a lot of these development reports began to manifest: entrepreneurship, business exposure, dignity, esteem, the pride in producing a product that they knew was going into a market…


Find Andrew's full speech and other video from DRI's conference here

While the role of beliefs and values as catalysts for economic growth may still be “underrated and underdebated,” development economists have recently begun taking a closer look.  As a new working paper by Chris Coyne and Claudia Williamson explains, higher levels of self-determination, mutual respect and trust allow impersonal market transactions to happen efficiently, and more market transactions improve economic specialization and productivity.

Since every pound of African coffee we buy in the US relies upon dozens of formal and informal contracts between farmers, packagers, exporters and retailers, the “culture of contracting” matters. And contracts rely on interpersonal trust between strangers each pursuing his or her own self-interest.

Trade sets off a positive feedback loop: In Uganda, the more local producers sell their coffee to strangers, the more they will trust new buyers. The more buyers receive good quality the more they will trust, and look for, coffee from Uganda. Trade induces more trade.

But does aid induce more trade? For Coyne and Williamson, aid flows tend to create dependency and weaken the incentives for people to engage in business and trade, economic activities that rely upon contracts. Where aid triggers rent-seeking activities like corruption or fraud, it is also likely to reduce trust among strangers.

Coyne and Williamson find empirical evidence that trade and aid affect values in opposite ways. This implies it’s the business relationships—not the handouts—that help African farmers in the long run. Yet for Rugasira, getting investors and retailers to look beyond Uganda’s image as war-torn playground of Idi Amin or Joseph Kony has been incredibly difficult. He concluded, “If we treat [African people] like entrepreneurs, people with dignity and self-respect…we might find that we have a different set of results.”

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Latest Schedule Update for Thursday’s Conference

Debates in Development: The Search for Answers

When: March 22, 2012 Where: The Great Hall at Cooper Union, New York City 7 East 7th Street, New York, NY View Map This event is free and open to the public, but space is limited

Register online

9:00am-10:00am Coffee and Refreshments

10:00am-10:45am Introductory Remarks from DRI Technology Answers and Development Possibilities Yaw Nyarko, NYU Development Research Institute Finding Answers or Answer-Finding Systems? William Easterly, NYU Development Research Institute

10:45am-12:15pm Session I: Development Goals, Evaluation, and Learning from Projects in Africa Michael Clemens, Center for Global Development Stewart Paperin, Open Society Foundations Bernadette Wanjala, Tilburg University Development Research Institute

12:15pm-1:30pm Lunch Provided Cooper Union Great Hall Lobby

1:30pm-2:30pm  Session II: Keynote Address: Finding Answers in the Global Market Andrew Rugasira, Founder and Chairman, Good African Coffee, Uganda

2:30pm-3:00pm  Coffee Break

3:00pm-4:30pm  Session III: Searching for Answers with Randomized Experiments Abhijit Banerjee, MIT, presentation of the book “Poor Economics” Discussant: Angus Deaton, Princeton University and Woodrow Wilson School

4:30pm  “Poor Economics” Book Signing

Download printable PDF with map and schedule

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