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THE STAR BUSINESSWEEK JULY 7, 2018

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PRIORITISING PRIVACY

Are we prepared for the next pandemic?

When I was a child, my family would often go on hikes across Dartmoor, that glorious hilly wilderness in the southwest of England.

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As the EU enacts stringent data protection rules, Caribbean businesses must re-examine how they communicate with customers

BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT

Countries face higher debt bills due to climate risks Countries that are vulnerable to climate change are paying significantly more to borrow from the financial markets, according to new research, as investors price in the risks.

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The European Union’s sweeping new privacy law is changing the way Caribbean companies communicate with their overseas customers. Caribbean businesses now need a greater level of consent to use an EU customer’s information and must be more transparent about how they use that data. The controversial new General Data Protection Regulation (GDPR) is set to have significant and far-reaching repercussions for the region’s key industries of tourism and banking.

Continued on page 4

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LOOKING BEYOND THE WALL: THE CARIBBEAN AND THE US ON IMMIGRATION

BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT

The STAR Businessweek

BY CHRISTIAN WAYNE – EDITOR AT LARGE

I must begin by thanking the readers who wrote to us with their opinions and perspectives on the issues discussed in last weekend’s special Disaster Preparedness issue of The STAR

TRUMP’S BRAND OF FOREIGN POLICY

Businessweek.

If you didn’t have a chance to get a copy of the 12-page supplement, head over to www.issuu.com/starbusinessweek to catch up on some of our back-issues.

This week we’re shifting gears from resilience-building to a different type of protection— data protection. In particular, today’s lead story considers what the European Union’s new data protection laws (GDPR) mean for Caribbean-based businesses with European clients.

The GDPR is a watershed piece of legislation meant to equip consumers with authority over their personal data—but the law’s reach extends far beyond the borders of Belgium. Read Prioritising Privacy, starting on the cover, for more.

The GDPR partly governs the manner in which customer data is permitted to travel throughout, and outside of, European borders but if you’ve been watching the news, you’d know that data isn’t the only issue facing border zones around the world. STAR Businessweek correspondent Ed Kennedy is taking a look at one of the most salient immigration disputes on the airwaves—the US-Mexican border zone—and how elections around the world are increasingly being defined by border security and immigration concerns rather than the value of open-borders and multi-culturalism. I found the writer’s comparison between the US-Mexico border dispute and the influx of Venezuelan immigrants and asylum-seekers to the Caribbean particularly interesting. Check out Looking Beyond the Wall here on page 2.

The STAR Businessweek Nothing Personal. It’s Just Business.

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to maintain the post-war liberal order.

The democratic tradition of readily giving shelter to refugees in need is being tested like never before. Anti-immigration sentiment was a key element in the Trump election, the Brexit vote, and recent German election. Whether one agrees with this sentiment or not, it’s been a key part of many significant global elections.

The pro-immigration argument is compelling but also relatively straightforward. Advocates say a compassionate society has a duty to welcome others in need and, even if it strains resources, there is always ‘enough food to go around the dinner table’.

The anti-immigration argument is more complex. It typically cites security risks, population growth and jobs, and foreign relations.

“We have people coming into the country or trying to come in, we’re stopping a lot of them, but we’re taking people out of the country. You wouldn’t believe how bad these people are,” said Trump back in May during a speech hammering California for its sanctuary policies

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ast month was one of big contrasts for all nations throughout the New World.

The awarding of the 2026 World Cup to the US, Canada and Mexico was not only celebrated by its host nations, but throughout the Caribbean and the Americas.

The hosting of the World Cup was awarded after a personal assurance by US President Donald Trump that he would not block visas to visitors in 2026.

The US celebrated this victory, and the good will that follows it. Then the most harrowing immigration scandal of recent times broke out in the US, and much of the goodwill generated by the Cup award was undone.

The scandal arose after outcry at US policy that separated suspected illegal adult immigrants from their children when detained on US soil. Criticism was so pronounced and widespread that even First Lady Melania Trump—herself an immigrant and occupying a role usually seen as apolitical—said she “hates to see children separated” and that the US should “govern with heart”.

The Trump Administration has since

revised the policy, and children won’t be separated in future (although reuniting those previously separated from parents won’t happen immediately). Though the White House would now wish to put this behind it, the matter has renewed attention on Trump’s immigration policy, and especially as it relates to security and humanity in Latin America.

THE GLOBAL IMMIGRATION DEBATE

It’s commonly said that a week is a long time in politics. So it can be no surprise that the world looks very different in 2018 than it did in 2008 or earlier. Yet compared to just five years ago, the world has been truly up-ended. Russia annexed Crimea in 2014, the revisionist Xi has ascended in China, the UK wants out of Europe, and President Donald Trump is often seen not as the leader of the free world, but as a mix of warmonger and disinterested bystander globally. Events are individual but trends are collective, and two are central to these global events. The return of assertive undemocratic power in the East, and the fatigue among western nations tasked to do the work required

Trump has declared immigration a national security issue, that immigrants take jobs from Americans, and that ‘closing the borders’ sends a message to everyone that America is strong. Security and immigration have a complex relationship, especially in an era of global terrorism.

Yet when it comes to immigrants’ impact on a national economy, the data has long been clear. As opposed to diminishing economic growth, immigrants boost it.

Yes, there are qualifiers here—whether the immigrants are skilled professionals and where they resettle can impact—but overall, a US president intent on growing an economy shouldn’t decry immigration, he should champion it. Were he to do so, he’d find in the Caribbean many leaders ready to partner with him on our key challenge.

In March up to 3,000 Venezuelans a day were seeking to cross the border into Colombia, joining over 250,000 held to have done so since August 2017. Colombia’s recent dispatch of troops to the border mirrors the presence of the United States Border Patrol along the Mexican border. An active force seeking to keep back anyone who would attempt passage for any reason.

Then there’s been the flare-up in Trinidad and Tobago with the UN accusing the nation of forcibly deporting 82 asylumseekers.

For Trump and the US this distinction is vital. The White House can restrict immigrants who seek jobs or a greater lifestyle in the US. Yet asylum-seekers fleeing due to political reasons that give them a “credible fear” for their life, have a much lower bar of entry. So much so that out of 8,757 Venezuelans who applied as Continued on page 5

PANDEMICS

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© The Financial Times Limited [2018]. All Rights Reserved. Not to be redistributed, copied or modified in anyway. Star Publishing Company is solely responsible for providing this translated content and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation

ARE WE PREPARED FOR THE NEXT PANDEMIC? The Gates Foundation estimates that if a global flu pandemic hit now, 33 million people would die

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BY GILLIAN TETT, FT CORRESPONDENT

hen I was a child, my family would often go on hikes across Dartmoor, that glorious hilly wilderness in the south-west of England. One of my favourite pastimes on these trips was spotting the ruins of old villages, tucked under heather; these, I was told, were settlements that had been abandoned in the 14th century when the Black Death swept through Europe, killing between 30 per cent and 60 per cent of the population.

It was a haunting memory; so much so, that when I recently took one of my daughters riding in the same hills, I pointed out the stones, and explained they were a small monument to the horrors of pandemics.

“Could it happen again?” my daughter asked solemnly, looking at the ruins.

I carefully proffered the same reassuring answer that my parents had once given me: unlike the 14th century, we now have powerful medicines and a much more advanced understanding of infection and how to control it. This, in theory, should easily prevent another Black Death. But as I uttered the words, part of my mind was asking: “Really?”

After all, if you talk to the medics or philanthropists involved in the fight to prevent contagious diseases, there is a clear—and rising—note of anxiety.

Take Bill Gates, the tech billionaire.

In recent years, he and his wife Melinda have battled to improve global public health and say they are very optimistic about the stunning possibilities offered by 21st-century science. But there is one area where they are pessimistic: pandemics.

The Gates Foundation recently modelled what might happen if a flu

“During the 1918 Spanish flu pandemic, as many as 100 million people died — up to 5 percent of the world’s population.

If a similar outbreak were to happen today, the death toll could reach 360 million”—Bill & Melinda Gates Foundation

pandemic like the one in 1918 (in which between 50 million and 100 million people died) erupted today. The research suggests that if a comparable airborne respiratory pandemic hit now, about 33 million people would die within six months. And, as Bill Gates observed in a speech last month: “Given the continual emergence of new pathogens, the increasing risk of a bioterror attack, and how connected our world is through air travel, there is a significant probability of a large and lethal modern-day pandemic occurring in our lifetimes.”

Our globalised world and love of travel makes it easy for pathogens to spread. But another significant problem is a dire lack of co-ordinated action. In theory, the US has plenty of cutting-edge science and money to fight disease. However, the Trump administration has shown little interest in tackling this issue; on the contrary, last week

the White House global health security lead, Rear Admiral Timothy Ziemer, abruptly resigned from the National Security Council.

John Bolton, head of the NSC, does not have plans to replace him, even though—in a ghastly irony—Ziemer left on the very same day that Democratic Republic of Congo reported a new outbreak of Ebola.

Some Trump officials argue that the private sector should take the lead. But pharmaceutical companies do not have much incentive to develop speculative drugs unless there are government subsidies. And while it would ideally make sense for international bodies such as the UN to take charge—since pandemics move across national borders at lightning speed—much of the time the UN is depressingly slow-moving, bureaucratic and underfunded.

Is there any other solution? Gates, for his part, is now frantically assembling

philanthropic coalitions to develop a universal flu vaccine. He is also begging the US government to stockpile “antiviral drugs and antibody therapies that can be . . . rapidly manufactured to stop the spread of pandemic diseases or treat people who have been exposed”. Separately, in a welcome flash of proactive innovation, the UN is exploring ways to improve its own cross-border initiatives: last year, for example, it floated a plan to issue so-called pandemic bonds to give it more pre-emptive funding to fight pandemic risk.

Entrepreneurs are responding too.

Take Nathan Wolfe, a well-known epidemiologist who has spent most of his career working with public sector groups to combat disease. Today, though, Wolfe runs a California company, Metabiota, that harnesses big data to model disease, helping to create pandemic insurance for companies and governments.

This might seem like a sideshow, given that what we really need to do is prevent another pandemic, not just protect against financial hits. Yet, after a lifetime of frustration working with the public sector, Wolfe told me that one of the best catalysts for government change might be getting the private sector to model the risk of pandemics; after all, there is nothing like paying for protection to concentrate the mind.

Let us all hope so. But the next time I hear about a new Ebola, Zika, bird flu— or “normal” flu—scare, those images of the Dartmoor ruins will pop into my mind. Yes, the miracle of technology is what separates us from the 14th century, as I cheerfully told my daughter; but technology only works if we use our brains and collaborative spirit. And in that respect, we are not always so different from medieval Europe.

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PRIORITISING PRIVACY Continued from page 1

The GDPR is Europe’s new framework for data protection laws—it replaces the previous 1995 data protection directive. Previous UK law was based upon this directive.

WHAT IS THE GDPR?

The 88-page EU GDPR is a dense and farreaching regulation that came into force in May and aims to strengthen data protection and privacy. Under the new law, companies are required to re-examine how they use and store the information of EU citizens, ensuring that this data is used reasonably and responsibly, even when it’s shared with third parties. Speaking at a recent seminar hosted by the Caribbean Hotel and Tourism Association, Brian Kent, CEO of Flip.to, said: “[The regulators] are not trying to restrict companies from using data but they want to ensure it is being used with the right intentions. Companies have to get very specific consent.”

Businesses need a comprehensive plan to follow the law, which should include a compliance strategy and an action plan for any data breaches. They need to look at their opt-out policies, purchased data and the privacy notices attached to contact lists.

Personal information has a wide definition under the GDPR and includes passport details, telephone numbers, travel patterns, health complaints, photographs and financial records.

The legislation represents a new phase in data protection. As digital communications have increased and evolved all over the globe, there’s been a corresponding push for more effective safeguards to protect our information online. Even huge social media giants such as Facebook are now being forced to rethink their privacy policies, or risk a resulting backlash.

Every Caribbean business that interacts with EU citizens falls under the legislation’s purview. This will obviously affect the region’s tourism industry the most, impacting hotels, travel agents, dive companies, transportation firms, restaurants,

resorts, spas, and any other business that deals with EU customers. “It affects everyone in travel,” said Kent. “Not just those folks based in the EU. That is a common misconception.”

Another sector that will feel the effects of GDPR is banking. The Caribbean has long catered to wealthy European investors, eager to take advantage of the region’s preferential tax regimes. Financial services providers with an international client base will almost certainly come up against the law’s strict provisions. The Caribbean Association of Banks has been urging all its member institutions that deal with EU clients to be pro-active in ensuring compliance.

WHY DOES IT MATTER?

The GDPR has teeth, and businesses ignore it at their peril. Penalties for breaching the regulation range from a EUR10 million fine (or 2 per cent of the company’s revenue, whichever is higher) at the lower end to a EUR20 million fine (or 4 per cent of revenue) for more serious infractions.

The law came into force at the end of May but many still consider it to be in a grace period. Given the lack of precedent for a law of this scale, these early days are a learning environment for all stakeholders, according to Kent. “No-one really knows exactly how it is going to be implemented. Best practices are still being figured out. It is something that is very far-reaching and very unique from a lot of the other regulations.”

Caribbean businesses who are still not in compliance aren’t alone. A recent GDPR Benchmarking survey from Deloitte found that only 15 per cent of organisations expected to be compliant by the time the law was passed in May, with most expecting to be on the defensive while the legislation finds its feet. In addition, Deloitte highlighted the most pressing GDPR-related concerns among

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the business community. These included customers’ right to erasure, the issue of consent and data portability.

While the financial penalties seem frightening, they are worst case scenarios.

If a Caribbean company is in breach of the law it will first be dealt with by local regulators, acting on behalf of the EU. These domestic bodies have the power to issue reprimands and order certain actions before penalties are imposed.

If they break the law, companies face losing their most valuable asset—their marketing database. Most firms spend years, possibly decades, building up customer information and contact details. This is a prime resource for those in the banking and tourist trades, allowing them to generate repeat business and follow new leads. If just one customer in the database is an EU citizen, and the company is found to be handling their information irresponsibly, the entire database is lost.

Businesses need to get up to date as quickly as possible to avoid this fate. “It only takes one drop of poison to ruin the entire well,” said Kent. “The head in the sand approach, waiting to see what happens, is not something you should roll the dice with.”

OPPORTUNITY, NOT OBSTACLE

As Caribbean businesses scramble to get their data in order, Kent advises them to look at the new regulations as an opportunity rather than an obstacle. “You need to shift your thinking long-term. Think about getting into better and more personal conversations that serve the needs of your customers. You are building a nurturing relationship rather than falling back to the idea of getting a Personal data, a complex category of information, broadly means a piece of information that can be used to identify a person, such as their name, address, IP address, etc.

Every Caribbean business that interacts with EU citizens falls under the legislation’s purview

whole bunch of emails and blasting those folks.”

With the GDPR now law, marketing departments across the region are being forced to rethink their customer strategy and bring a more personal touch to their business. This shift will have positive repercussions for the entire industry going forward as customers feel more appreciated, respected and involved. It also allows businesses to get a better handle on what their customers need, giving them the opportunity to identify trends that are set to shape the market and develop more tailored and effective products. While the road to compliance has been challenging for some, reaching a new standard of data protection and privacy encourages everyone to raise their game.

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LOOKING BEYOND THE WALL: THE CARIBBEAN AND THE U.S ON IMMIGRATION Continued from page 2

“According to State Department Worldwide Refugee Admissions Processing System (WRAPS) data, 53,716 refugees were resettled in FY 2017, a 37 per cent drop compared to the 84,994 resettled in 2016.” – Migration Policy Institute

immigrants between 2006 and 2015, 77% were approved. Trump’s efforts to decrease immigration and close the border will be undone if he continues on his way with Latin America.

REGIONAL RELATIONS

The Caribbean and Latin America have long felt that Washington doesn’t give it enough attention.

Especially in the post-Cold War era, when relationships have shifted from ones of security challenges to those of economic growth.

True, greater understanding from both sides would be beneficial, as Washington may be local but its size demands diplomatic pursuits that are truly global.

Yet, even with this understanding, Trump’s era has brought relations to a new low. Alongside his bruising campaign and inflammatory rhetoric that reminds many in the Caribbean family of the combustible days of the

Cold War, his ‘no-show’ at regional summits and (alleged) scandalous description of some regional nations as “shithole” countries have raised the ire of many locals.

Leaders may find it unpalatable to work with such a figure but ultimately there can be common ground found here. If Trump’s White House is motivated by border security at home to help address the crisis in Venezuela, that can be seen as a win-win that meets the present US foreign policy goals and sets out the path for Venezuelans to one day return home again.

STRONG PARTNERSHIPS, STRONG BORDERS If Latin American leadership is unable to win Trump’s attention to the region at present, it may find its greatest success in engaging with its future leaders right now. Those who say ‘wait him out’ and that there’s no way Trump

will win in 2020 forget that the same was said about his win in 2016.

Trump is theoretically a one-man band but in practice his role as US chief diplomat is pursued with many other figures. Florida senator Marco Rubio—the son of Cuban emigrants to America—is considered a key architect in the Trump Administration’s Cuba and Venezuela policy and a potential future presidential candidate. One who joins fellow Republican, the son of a Cuban emigrant, and potential presidential candidate Ted Cruz, in a Congress more active than ever in the formulation of US policy domestically and globally, given the unprecedented behaviour of the White House.

It is in Latin America’s interest to do so, and in the United States’ interest to do so. Both sides can rely on their self-interest right to drive momentum. Recognising, too, that the failure to build a strong working relationship here will only strain both in the future.

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DEVELOPMENT

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THE TECH PHILANTHROPY MOVE FROM PRODUCT DONATION TO DIGITAL TRANSFORMATION

BY CATHERINE CHENEY, DEVEX

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EDWOOD CITY, Calif. — At many technology companies, corporate social responsibility programmes are shifting their work with development NGOs from product donation to “digital transformation” in order to bring the sector up to speed on tech.

Tech companies have long offered donations or discounts to non-profits that might not otherwise be able to afford their products or services—this enabled them to ensure their products and services see greater use around the world, while having an impact as part of their CSR efforts. But NGOs did not always see much benefit from these donations, particularly when they were not sure how to use the products to achieve better outcomes.

Tech start-ups that see these old CSR models as outdated are coming up with new models to partner with non-profits, and many established tech companies are following their lead by overhauling their own philanthropic efforts. Increasingly, CSR programmes are focusing on what they call digital transformation, by helping non-profits integrate digital technology and data-driven

decision-making across the organisation.

“I’m definitely seeing a trend where I think we’re all realizing that the ‘here’s your software, go knock yourself out’ thing is old philanthropy,” said Neal Myrick, director of social impact at data visualization company Tableau and head of the Tableau Foundation.

He said this is happening because “these companies realize that we have to build data literacy in order to get adoption, and you have to get adoption to get outcomes”.

Additionally, Myrick said, tech employees want to use their skills for good, so companies are looking for ways to connect them with the non-profits who need their help.

One example of this trend is Tech for Social Impact, a new team at Microsoft Philanthropies. It is part of a gradual shift the company has made from donating products, to training organisations how to use the tools, to ensuring they actually integrate these products into their day-to-day work. These closer partnerships also enable Microsoft to better understand the non-profit sector’s needs, so the company can work with NGOs on building the tools that organisations are lacking.

“While our donation and philanthropic

programmes have been necessary, and we’re going to continue to do them, we believe they’ve been insufficient,” Justin Spelhaug, general manager of Tech for Social Impact, told Devex. “When we take a look at the level of digital transformation among NGOs, the sector is behind the curve, and that is because of some very real barriers.”

Those barriers have to do with capacity, whether it be digital skills, time to devote to learning and using these tools, or the level of funding required, Spelhaug said.

In a blog post earlier this month, Microsoft highlighted the way Operation Smile, a non-profit that provides surgeries to people with cleft lip, cleft palate, and other facial deformities, uses its technology to drive greater impact. It uses cloud technologies from Microsoft Philanthropies, including the web-based collaborative platform SharePoint, to manage missions logistics, the cloud computing service Azure to store patient data in compliance with local privacy laws, and the business analytics service Power BI to evaluate surgeries.

Rather than just promoting the way Operation Smile uses its products, Microsoft teamed up with the non-profit to produce a report on how to empower employees to implement and use their tools, as part of a larger effort to drive this transformation across the non-profit sector.

This roadmap includes tips such as prioritizing access to technology, enabling collaboration around these tools, and advancing data security.

Spelhaug advised non-profits to make a commitment internally to being data driven before starting the conversation with companies such as Microsoft. Then, “start by picking one strategic programme that’s critical for you and create a simple

dashboard to get things started,” he said.

Still, 99 per cent of non-profit organisations have less than 50 people, and little to no information technology budget, Spelhaug added.

Or, as Megan Christenson, senior director of the civic accelerator at the Points of Light, which invests in start-ups with social missions, put it: “Sometimes lean and scrappy translated to lean and crappy.”

Christenson was speaking on a session about tech for good—and specifically the role that tech companies can play in a new wave of digital transformation in the non-profit sector—at the Social Innovation Summit in Silicon Valley on June 5.

Joining her was Corey Marshall, director of Splunk4Good, the corporate social impact programme for the data analytics service provider Splunk, and Erik Arnold, who recently joined Microsoft’s Tech for Social Impact Team from PATH, a global health innovation organisation where he was chief information officer.

Arnold said that one of the major challenges non-profits face is that donors increasingly demand outcome measurement, but organisations cannot deliver that data without investing in technology, and they often don’t have the funding to do so.

“We’re looking at: What is the role of the non-profit; what is the role of the donor; what is the role of corporations like us—to make it easier to find opportunities to gather and drive deep insights from information?” he said.

Arnold called the lack of grant funding for technology the largest barrier to the adoption of digital transformation across the non-profit sector, and said that while these CSR efforts can help to bridge the gap, progress will also require action from donors.

The Saint Lucia Government Gazette Company Registration Name: S&O Ventures Ltd.

Name: Epic Events Ltd.

Description: Property purchase

Description: Entertainment and

Directors: Olivet Facey;

event management

St. Claire Casteven Scotland Date Incorporated: 06-Jun-18 Chamber: Colin J.K. Foster Chambers, Saint Lucia

Directors: Siobhan Lloyd; Sheldon Michel Date Incorporated: 19-Jun-18 Chamber: PKF Corporate Services Ltd., Saint Lucia

Name: Felly Belly South Inc. Description: Juice bar Directors: Roward Derrick; Davidson Alwyn Harris; Chrisie Harris; Kim Noel

Name: Carib Invest Capital Ltd. Description: General business activities Directors: Christo Pancheff

Date Incorporated: 18-Jun-18

Date Incorporated: 19-Jun-18

Chamber: McNamara & Co.,

Chamber: Floissac, Fleming & Associates,

Saint Lucia

Saint Lucia

CLIMATE CHANGE

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COUNTRIES FACE HIGHER DEBT BILLS DUE TO CLIMATE RISKS Nations most vulnerable to climate change face extra $168bn costs

By Kate Allen, FT Correspondent

C

ountries that are vulnerable to climate change are paying significantly more to borrow from the financial markets, according to new research, as investors price in the risks.

The most vulnerable developing countries have already paid more than US$40bn in additional interest payments on their governments’ debt because of their exposure to climate change risks. That is set to cost them a further $168bn in the next decade, the study by academics from Imperial College Business School and SOAS University of London found.

The most affected countries include Ghana, Tanzania, Kenya, Bangladesh and Vietnam.

The UN-commissioned research is the first systematic attempt to quantify the relationship between climate change and the cost of capital for sovereign nations.

It compared the debt costs of developing countries identified as most vulnerable to climate change by a widely-recognised index compiled by Notre-Dame University in the US with

Turkana County, in Kenya’s arid north, was gripped by drought last year © AFP

those of less-affected developing nations and the G8 countries.

After taking into consideration other variables such as economic growth and fiscal data, the academics found that the countries most exposed to climate change can expect an “increasingly precarious [financial] situation”, according to Charles Donovan, director of the Centre for Climate Finance and Investment at

Imperial College Business School, who is one of the authors of the study.

Mr Donovan said it was a “cruel irony” that countries which most needed additional investment to protect themselves from climate change were the ones most likely to bear higher debt costs.

The research also found that, although credit rating agencies do not explicitly identify climate risk as a factor in their

work, it is implicitly reflected by their ratings. For example, a propensity towards drought will influence agricultural exports and thus foreign earnings.

“The specific types of climate risk that a country faces constitute a source of economic vulnerability, which feeds through into its financial indicators considered by rating agencies,” Mr Donovan said.

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DEEPER LINKS NEEDED

LATIN AMERICA AND THE CARIBBEAN SHOULD TAP INTO BIG DATA TO REDUCE THE COST OF MEASURING POVERTY

BY LUIS TEJERINA AND JUAN MIGUEL VILLA, IDB

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ccording to the US government, the 2020 census could cost as much as $15.6 billion, or $49 per inhabitant. While in developing countries, according to a study of 77 countries carried out

by Development Initiatives, the average cost of conducting a household survey ranges from $1 million to $1.6 million, These initiatives to calculate a country’s population or to measure poverty levels are important for guiding public policy decisionmaking. But gathering data is often done haphazardly and is expensive, especially for developing countries.

Traditional methods used by statistical institutes to collect information are therefore being challenged by the (relatively) low cost of using what is known as “big data”.

These data are generated continually in different forms, ranging from spatial information produced by hundreds of satellites orbiting the planet to geographic information and information from calls by people using cell phones.

An emblematic example is the nocturnal satellite image of the Korean peninsula: North Korea is totally dark, while its neighbour, South Korea, is completely illuminated. Without access to public data extracted from surveys and social accounting, it could be inferred which of the two countries has a higher level of economic development and therefore higher levels of well-being.

Access to this type of information brings into question the very future of statistical information.

According to World Bank, data suggest that in 2016 there were 102 cell phone lines per 100 inhabitants on the planet. Joshua Blumenstock, Gabriel Cadamuro, and Roberto On used this cell phone data in a study to map poverty in Rwanda. For their part, Jessica Steele and her co-authors combined household survey data with phone call records to produce similar maps in Bangladesh. Both studies produced similar results, and with better resolution than traditional maps.

In fact, big data can do much more than map poverty. It can go as far as measuring a

Satellite photography of the Korean Peninsula at night. North Korea is visibly less ‘electrified’ than its South Korean neighbour

wide range of health, education and migration indicators.

Satellite data on lighting provide a unique opportunity to measure poverty, given that the data are in the public domain and cover the entire planet. This coverage is better at low latitudes, where global poverty is concentrated.

Maxim Pinkovskiy and Xavier Sala-i-Martin used data on lighting to validate measurements of well-being based on conventional household survey methods and national accounts. Their analysis details that data on lighting represent a good approximation for the measurement of poverty.

Neal Jean and his co-authors went further and combined information from satellite data on night-time lighting and daytime characteristics with information from household surveys. Using a machine learning algorithm, they succeeded in developing a neural network to predict household living conditions with 75 per cent precision in African countries where a large portion of income depends on subsistence production.

Measuring poverty is transitioning toward the use of big data. It costs less and has great informative value.

Governments of developing countries have

not yet officially adopted these steps to measure the well-being of their populations.

But the United Nations has decided to tap into the advantages of using big data by creating a Global Pulse laboratory whose mandate is to explore big data to monitor compliance with its Sustainable Development Goals, at a fraction of the cost of traditional methods.

Hopefully, little by little, this approach will go beyond a novelty and become a reality for measuring and monitoring poverty indicators at the local level while providing government authorities with timely information.

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