Pacific News Spot: Preparedness for and Resilience after Cyclone Pam

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Picture Caption: Amongst the destruction of Cyclone Pam a man tries to salvage what is left of his house, whilst his son resiliently kicks a ball around.

As most of you know a category 5 cyclone called Cyclone Pam hit Vanuatu with devastating effect on the 13th of March. The cyclone formed east of the Solomon Islands on the 6th of March where it initially established itself as a category 3 cyclone. It intensified into a category 5 as it tracked down to Vanuatu. Cyclone Pam tracked down Vanuatu passing by the islands of Pentecost, Ambrym and Epi. It then passed just east of the Efate, the main island of Vanuatu, and where the capital of Port Vila is located. It then continued tracking down, passing the islands of Erromango and Tanna. Pam’s strength was at its peak as it was passing through Vanuatu with winds up to 270kmph, however some have estimated up to 320kmph. The storm only weakened after it passed through Vanuatu, before heading to New Zealand where minimal damage was done. To my knowledge, the death toll stands at 24. Ariel photos of Vanuatu show sheer devastation with an estimated 90% of buildings destroyed on some islands. Communications on the islands outside of Efate are for the most part “down”, making it very difficult to contact friends and family in the islands. This is exemplified by the fact that Vanuatu’s Prime Minister Baldwin Lonsdale was ironically in Japan for a disaster mitigation conference and had no contact with his family in the days after the crisis. He has since returned to Vanuatu. This lack of communication is true of most families who have relatives scattered amongst the islands. My family is also highly involved on the island of Tanna undertaking a collaborative tourist based business project with a community there. Unfortunately we have not heard from our friends up there since the cyclone. For regular updates on how the people of Tanna, and our more personal connections on the island, respond and recover from Cyclone Pam take a look at Vanuatu Traveller. This article has sparked my interest on the question of to what extent is media being used to warn populations of impending disasters? How do they fit in with other more social systems of warning? It also makes me ask the question of, how will the people of Vanuatu respond to this crisis?

Cyclone Pam

The path of Cyclone Pam

Use of Media to Inform Populations about Disasters like Cyclone Pam

In anecdotal evidence from my family it seems as though that the people of Vanuatu could have been more prepared for the crisis. As Cyclone Pam approached Vanuatu calls were made to the families and villages we know to warn them of the crisis. Warnings to a family in the outer island of Tanna of what was approaching were taken light-heartedly. Only after repetition of the seriousness of the situation was it understood that more thorough preparation was in order. This included boarding up houses and moving their vehicle (used for tourist adventures) into a more protected area. We have not yet heard from this family and their village due to the breakdowns in communication. We have however heard from a family in Port Vila who have stated that do not have any food or water. This is to my family’s frustration as they were advised to stockpile some food and water and to find an ultra-secure place to store it. These efforts were not done. Again the seriousness of the situation was not understood. Perhaps it was because they believed Cyclone Pam would be just like every other Cyclone that has hit the area in the past. In these scenarios they have gotten by just fine. However it does prompt the question of how should the seriousness of impending disasters be expressed in the Pacific in order for people to take appropriate preventative measures?

The most common form of disaster warning comes from broadcast radio, however these warnings can be quite formal, prescriptive, and explained in non-relatable ways such as “category 5”. The mobile phone is increasingly been thought of a technology to provide warnings. In Samoa, Papua New Guinea, and Tonga emergency broadcasters have experimented with sending out SMSs to mobile users to warn them of cyclones. It should be noted however that mobile penetration in the islands is not 100%. In Vanuatu it is estimated at 76% however we could expect a larger percent in urban areas and on the main island, as opposed to rural areas in the outer islands. Furthermore telecommunication infrastructure can be patchy and unreliable. This means there needs to be other non-technical non-media related ways to provide warnings to areas that will be affected by disaster.

It is argued that warnings are provided to local populations through wider communicative ecologies. This refers to the how information flows throughout the community whether it be through media, AND personal or institutional interaction. It is proven that more contextualised reporting by trusted locals and institutions resonate most with other locals rather than westernised reporting. For instance, it is argued that in Tuvalu western based and media delivered information on climate change does not resonate with locals. Rather a more effective medium for delivering information on climate change has been through sermons provided by religious institutions. It is also not uncommon for taxi drivers to convey such disaster information that they have heard on the radio in more relatable contextualised language to local passengers. In Kiribati policemen drive around the islands to warn local populations about incoming cyclones. In Niue policemen are also involved by consulting with village council institutions who then warn those who they represent. The more face to face based warnings are taken more seriously than westernised reports.

It therefore seems to me that there needs to be a greater interconnection between these formalised warnings and the more interpersonal methods of providing warnings. The seriousness of impending disaster needs to be effectively transferred between the two methods.

Resilience after Cyclone Pam

Resilience is a term often used after a crisis to express the capability of communities to respond and recover to emergencies. Resilience can come in two forms such as reducing the vulnerability of communities to disaster so that the point of recovery is not so low that it cannot be returned from. It also comes in the form of the adaptability and systems of recovery after a disaster has hit. This is most thoroughly defined in the following definition of resilience.

The capacity of a system, community or society potentially exposed to hazards to adapt, by resisting or changing in order to reach and maintain an acceptable level of functioning and structure. This is determined by the degree to which the social system is capable of organising itself to increase the capacity for learning from past disasters for better future protection and to improve risk reduction measures (UNISDR 2005)

Currently it is not known how Vanuatu will respond to the crisis, however we do know that Pacific Island States do have strong social systems that promote co-operation, help, and communalism. This is most prominently expressed in social systems of kinship. Therefore there is hope that communities will come together, rebuild, and prosper once again. The track record of Pacific Island States to recover from cyclones is encouraging. In 1952 and 1953 the people of Tikopia in the Solomon Islands were hit by successive typhoons. The communities came together and agreed to make certain adjustments in their traditional ways of life to meet their daily needs. This included the temporary abandonment of fallow periods, redefinition of agricultural rights, stricter crime and thief repression, and also the adjournment of wedding ceremonies that require the exchange of vast quantities of wealth. These adjustments were agreed upon during public assemblies. As a result the Tikopia people were able to recover from the cyclones.

I believe the people of Vanuatu will resiliently respond in a similar manner, however it must be stated that this is perhaps the strongest cyclone to ever hit the region. The destruction was unprecedented. Therefore the people of Vanuatu need all the international help they can get to resiliently respond to Cyclone Pam. They need help in the short run with supplies of water, food, and medical supplies. But they will also need help in the long run. As Baldwin Lonsdale the prime minister of Vanuatu stated, they are going to need to rebuild the majority of the country. He wants to restore the country that he defines as a “paradise”. Please donate to the following charities (but be careful there are some fraudulent charities seeking to profit from the devastation in Vanuatu).

https://www.oxfam.org.au/my/donate/cyclone-pam-in-vanuatu/?gclid=CKuqsYefuMQCFY8kvQodaIYATg

http://www.unicef.org.au/Donate/One-off-Donation/Cyclone-Pam-Vanuatu-Appeal.aspx?gclid=CKzmg5afuMQCFUYIvAod7G4ATA

Our Friends Affected by Cyclone Pam

Thinking of our friends in Tanna, Vanuatu

Futures: Virtual currencies in developing countries

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Introducing yet another series of articles that will occur on a regular basis called “Futures”. These articles will analyse new financial technologies that aim to either improve the financial services of the poor or increase their financial inclusion. In this article I will analyse whether virtual currencies can improve the financial services of the poor in developing countries. Due to its dominance in the market we will specifically analyse the virtual currency of Bitcoin. Before we can even analyse their effect we need to ask, what on earth are virtual currencies such as Bitcoin? In short, they have four main characteristics. First of all, Bitcoin is a form of money and therefore aims to fulfil three primary functions. It aims to facilitate the exchange of good and services, to measure the value of these goods and services, and to have the durability and security in order to store value. Second, the “virtual” component means that it is owned, stored, traded on virtual interfaces and networks. Thirdly, all transactions between individuals are peer to peer, eliminating third party handlers such as banks and other financial institutions. This means the transaction costs of transmitting bitcoins is zero. No one is “taking a cut”. These peer to peer transactions are encrypted and therefore very private and essentially untraceable. Fourthly, and perhaps most importantly, virtual currencies such as Bitcoin are not controlled or regulated by national governments or international governance agencies. Therefore the supply of bitcoins in the network is not dependent on how much money Reserve Banks print, or affected by the setting of interest rates. Rather, the creation of bitcoins is determined by a mathematical algorithm. The rate of bitcoins created is tightly controlled by this algorithm and will gradually slow down over time. New bitcoins will cease to be created by 2025. The supply of Bitcoins is relatively fixed unlike national currencies.

These characteristics of Bitcoin have raised questions, for myself and other bloggers on the web, especially in terms of their ability to be utilised in developing countries, and/or their future potential in the developing world. These questions include; can Bitcoin really fulfil the criteria of a sound currency? This is perhaps the most fundamental question as it must establish itself as a sound currency to even be used, whether it be in developing countries or not. What is the potential for Bitcoin to facilitate remittance type transactions? Will the digital divide prevent developing countries from using Bitcoin now or in the future? Is a currency that competes with national currencies desirable?

Bitcoin has yet to prove itself to be a sound currency for a variety of reasons. Firstly the use of Bitcoin to exchange goods and services is nowhere near universal. It is estimated that Bitcoin is accepted by 30,000 businesses, most of these are online businesses. This sounds like a lot, however on the global scale this number is fairly minimal. We can know this intuitively as when we shop online we often don’t see the acceptance of bitcoin. We also cannot go down to the local shop and transfer bitcoins to the shop owner through a devise or through physical forms of bitcoins. Secondly, their limited use prevents the general user knowing how much a bitcoin really is worth. Thirdly, bitcoin has not proven itself to be a sufficient store of value. It has seen great volatility in worth. This volatility has primarily been created by technology enthusiasts speculating on increases and decreases in value. This volatility  can be seen in the graph below.

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However, there is a strong case for Bitcoin’s future as reliable currency. This is because the amount of bitcoins created is set by mathematical algorithms. The supply of bitcoins cannot unexpectedly rise due to a government deciding to print money or change interest rates. In theory this should make the price of Bitcoin fairly stable in the long run. There is also forms of physical bitcoins coming onto the market which enables it to become a more tangible store of value.  These physical forms of Bitcoin can be seen in the header picture. On the coins, there is a number hiding under a covering which can peeled off. This code then can be entered into the bitcoin network, essentially transferring the value of your physical bitcoins to a virtual bitcoin wallet. On the notes there is a Quick Response Code (QR) that can be scanned with a mobile or other devise for it to be transferred to your online wallet. After the transfer is made between physical and virtual forms of the currency, the physical form becomes useless and not re-useable, but at least a physical form of Bitcoin allows for physical trade to occur. There are obvious issues in making a physical bitcoin work, but solutions to these kinks seem to be in a state of development.  These kinks need to be worked out because the establishment of a physical Bitcoin is necessary to create a sound reliable virtual currency, especially for developing countries. For instance, users in developing countries may initially need a physical form to reassure themselves of the durability and security of a virtual currency. Overall, Bitcoin can’t claim to be a sound currency right now, but there is potential for it to be in the future if handled correctly.

Many articles on the web have claimed that Bitcoin has great potential to facilitate international remittances between developed and developing countries. Currently, sending remittances via a financial intermediary such as Western Union or Money Gram is very expensive. Even mobile money services which are also deemed to be the future of sending international remittances come at a cost. Peer to Peer transfers of Bitcoin on the other hand have no transaction cost. This means that a migrant based in a developed country is able to send remittances back home to a family member or friend in their home country without any charge. None of the amount remitted is taken by a financial intermediary. They therefore are able to remit a greater amount of money back home due to the zero cost of the transfer. This is crucial as many people in developing countries rely upon remittances from family members in developed countries. Furthermore, regulations are tightening up around formal remittance channels and is basically driving small remittance agencies out of business. Analysis of this can be found in previous articles on this website here and here. The transfer of remittances via Bitcoin is not subject to these stricter regulations as it is a currency that is not (and cannot) be regulated by governments. As a result, Bitcoin could fill the gap of these lost remittance channels in the future.

Aren’t we getting a little ahead of ourselves though? There is a digital divide between the developed and developing world that prevents developing countries from utilising Bitcoin as a financial service. The broadband infrastructure in developing countries is fairly minimal, especially in Africa. Education on the use of computers as well as financial literacy in these countries can also be quite low. As this article has probably shown, Bitcoin is not a straight forward concept to understand for anyone! Is it really realistic to start making claims that Bitcoin can be used by the common user in any of these countries? I think not. However the development industry is increasingly allocating more and more funds into technological and financial education in the third world. Just think of the work carried out by the Bill and Melinda Gates Foundation. Companies such as Digicel are also targeting rural areas for infrastructure investment. No other telecommunication company has sufficiently invested in rural areas in the past. Digicel sees a market to be captured unlike these other companies and is setting up towers and broadband networks in these areas. Even though the requirements for the use of Bitcoin in the developing world are not yet present, they are developing slowly. There is a future for virtual currencies in developing countries, however it is a distant future.

The last question to be addressed is whether an unregulated virtual currency like Bitcoin has benefits or disadvantages for users in the developing world. Anything that is unregulated has the potential to be used for immoral purposes. For instance, Bitcoin has been used for online black market purchases of drugs, child pornography, and even for assassin rings. Bitcoin enables these despicable transactions to occur because their encrypted Peer to Peer transactions are untraceable. The Bitcoin black market topic has potential for an article by itself, however this article will focus on the potential positives of an unregulated virtual currency in developing countries. In a report by Roskilde University it is claimed that virtual currencies such as Bitcoin provide a more stable and reliable form of currency than some national currencies. It claims that some currencies such as the Argentine Peso has been so volatile that citizens have started to look for other ways of storing value. This has included buying the USA dollar (which the Argentine government has since made illegal), and the purchasing of bitcoins. This report by Roskilde University is unique in that it offers narratives from Argentine Bitcoin users on why they have started to use it. These stories reveal that these users do not want to be adversely affected by Argentine monetary policy. They want to be liberated from the effects of Argentina’s inept monetary governance. This is one case study, but we can see its transferability to other countries that have struggled or are struggling with monetary policy. These include Zimbabwe and various post-soviet countries in the 1990s, whose currencies underwent hyperinflation. Most of these recent cases of hyperinflation have occurred in countries that can be considered as “developing”. In these periods of hyperinflation would you want to lug around wads of worthless cash like in the picture below? Or would you want bitcoins that cannot be manipulated by government monetary policy? The answer is obvious, however a more fundamental question then arises. Is bypassing a government that is responsible for protecting the rights of its citizens a beneficial future?

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So is there potential for Bitcoin in developing countries? And will it be beneficial for its users? The answer is a tentative yes. It will provide a cheaper source of transmitting remittances. It will also give users another method of storing and transferring wealth that is not affected by national monetary policy. However, its use in developing countries is still a very distant future. Further financial and technological education is needed in these countries, as well as the construction of network infrastructures especially in rural areas. There are also potential negatives such as the use of Bitcoin in shady online black market trading and the undermining of governments that need to be more thoroughly considered. These potential negatives will be more thoroughly addressed in a part two of this article coming soon. But there is promise that Bitcoin can improve the quality of financial services for those living in developing countries in the distant future.