Should Multilateral aid have results?

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Multilateral resource allocation: best practice approaches (Article – ODI Project Briefings 51, November 2010)

When DFID changes track on development, it is important to notice as DFID is one of the thought leaders among donor agencies. If ODI writes about it, it is important to notice, because ODI is one of the voices DFID is likely to follow. This is why the ODI project briefing “Multilateral resource allocation: best practice approaches for Multilateral resource allocation” is important. This is why the central thesis of the report, that multilateral results are difficult to quantify and we could settle for now for a transparent, quantifiable , auditable system, makes me uncomfortable. It seems an effort to plead for status quo. It outlines a superficially quantified and auditable system, but under the hood the data are subjective and debatable. More importantly, it sidelines the more important issue of results and effectiveness, because “objective measurement is difficult”.

Will this “best practice approach” lock the donors in a transparent system, taking away the pressure to move to better results? Will process and tools drive the donors for the foreseeable future instead of outcomes and results?

Governments have judged their private sector partners on their results and cost efficiency for years in a transparent way. Why would this be impossible for Multilateral Organisations (MO)? Choosing to fund organisations of which it is difficult to measure the results and effectiveness seems not a best practice. Perhaps we could measure the results by assessing the difference without funding? Is there another way? I think so.

The central problem with the thinking expressed in the briefing is the partnership approach, where an organisation is funded because of its institutional setup and not for its results. The funding becomes an entitlement that is not questioned. In a partnership approach, the UN-organisation has a role within the wider UN-system. This “ UN-system” however is a misconception: the UN-ecosystem is not a coherent system. To the contrary, each individual Multilateral Organisation was created by all member states because a certain distinct value, e.g. child care, or health standards, had to be addressed in its own sector, separately from the others. Those values stand on their own, and serve the global public needs only in this sector. In a sectoral approach or results based approach , the UN-organisation has a role within a certain sector (e.g. global public goods in health). You should assess the role of the organisation within this sector, and compare it to the alternatives in the sector. In a sectoral approach you are not expected to compare the performance across multilateral organisations, as there should be only one organisation in the sector fulfilling this role. You should not compare allocations among MOs, because they are in different sectors.

This choice between a partnership approach and a results based approach has important budgetary implications: in a results based approach there will be a funding balance sought among the different actors in the same sector, according to their contribution to the results. In the partnership approach the different UN-agencies will be funded from the UN-budget, and essentially compete with each other for funding. Within a partnership approach it is difficult to measure up which organisation is the most efficient; in a sectoral approach it is clear to most actors what global public good is needed and provided by the multilateral organisation.

For instance in the health sector, WHO is responsible for the global public goods such as the standard health procedures, but will also compete for operations with national governments, NGOs, the World Bank, and other UN-organisations such as UNICEF. Should we fund WHO for its “efficiency of procedures compared to the FAO” or should we fund them for the work they do in the sector?

Most Multilateral agencies have a creative approach to fundraising. While they pay lip-service to the UN-principles on funding, their fundraising is businesslike, and takes the reality of development funding into account. They try to cover all the markets:

  • Core funding is the bedrock of the organisation. This money mostly comes from multilateral budgets. Core budgets are supervised by the boards, and fund the administration, core responsibilities and whatever the board finds fit to approve.
  • Thematic funding gives flexibility within a sector. This money comes mostly from thematic funds from donors.
  • Project money can come from a myriad of donor budgets: multilateral budgets, thematic budgets, geographical budgets. The big money is in this line. A lot of small projects is together a lot of money. As administration is automated, the overhead per project is limited. The proof of this being that all organisations accept nearly all projects offered.

The objective is to maximise funding for the organisation. The board looks mostly into the core budget. Thematic spending is accounted for to the donor group that feeds this fund. Projects are on one by one accounted for. Most boards have no complete picture of what is happening. This gives management a lot of freedom.

The board members meanwhile, have seldom any management experience. The oversight happens mostly by diplomats who first defend the policy positions of their country and not by economists asking for efficient organisational management.

Another “best practice” approach

A results based approach to oversight on the multilateral organisations would start from a sector approach and define the role of the organisation within the sector.

Where the organisation really provides a global public good, the oversight should happen fully by the board. The funding allocation is very much like the funding for a government department in the home country: efficiency is a necessity, bud political priority and needs decide on the level of funding. Professionalisation of the board is necessary.

Where the organisation has a competitive edge for operations, they compete with other actors for funds. The picture is of course more blurred than this: they compete with the program country administration for direct funding through bilateral funds, but on the other hand coöperate with them too. The same happens with NGOs or the civil society.

It is in operations where the big money is. In operations results are measurable and can be compared with the results obtained by the other actors. Operations that can be done directly by other actors should not be single sourced to the multilateral agencies. By abandoning the push to form consortia and cartels in all areas, and stimulate competition instead, value for money would result, just like in all other government spending areas.

Compound indicators for meaningless conclusions

The five lenses approach, although it claims to be auditable, fails to be accountable as it fails to give “best value for money” being the measuring stick for government funding.

The five lenses measure clusters of related indicators in five different areas and bring them together in one evaluation framework. Eliminating competition and results from the framework means that funding will depend the quantification of often crowd-sourced assessments. Crowd sourcing can be useful, but is dangerous in areas where group think tends to occur, with development among government officials being certainly one of these areas.

The congruence with donor’s objectives is the first lens, and difficult to argue with. All donor funding should happen in line with the donor policy. If a donor funds against his own policy, well.

It seems incredible to find in the second lens, development effectiveness, only excuses for NOT measuring effectiveness. The lens is limited to process indicators like MEFF ( rule one of the logical framework: never make your means an objective) or MOPAN (crowd sourcing amongst donor diplomats). It could be seen as an insult by all the MOs who did work hard to get their indicators right and measure them.

What would be the outcome of the measurements in the third lens “role in the international architecture”? How do you distill an auditable number from these measures? It is remarkable how the role of “global public good provider” (appropriateness of the mandate) is mixed with the competitive role in the marked “alignment of activities with comparative advantage”. You would expect the board (with the donor included, and having a veto over all the decisions) to assure that the activities are aligned with the core mandate (I could expand on this one). These core activities should be well done, but without comparative advantage, because they fulfil a natural monopoly for the global public good. Comparative advantage is only relevant in sectors where there is competition, and not in the area where the organisation has a natural monopoly. Where there is comparative advantage, competition should play, and the funding should probably not be multilateral.

The fourth lens is also rather strange, as the potential for improvement is a reward for past bad management. Normally you would think past behaviour is seen as a proxy for the future. Those who reformed before have little scope for improvement. Moreover, it would also reward the organisations that can easily be instrumentalised by one donor, while the reform dynamic should mostly happen in the oversight bodies.

I am still wondering how scale made it as fifth lens. Indeed, it is more efficient for a donor to write 1 check of 1 billion than to write 1000 checks of a million, but the relationship with results is unclear to me. It is definitely easier to transform a small organisation than a big one. I wonder whether there is any link – all other parameters like professionalism and organisation the same – between size and efficiency. A small organisation with a focused mandate will probably be a lot more efficient than an unfocused sprawling dinosaur. However, a machine like WFP might be more efficient then an amateuristic outfit.

The total absence of the role of the oversight bodies in the document is worrying, and the prominent role given to informal donor gangs is a bad sign for the future of the multilateral system. The 5 lenses, without an assessment of the role in the boards, mean in practice that the donor and board member does not take responsibility for the management imposed on the organisation in the board.

Conclusion

The Multilateral Organisations have gone through important reforms, and some of them are more efficient than ever. Some Multilateral Organisations fulfil a central role in the development of the sector where they provide operations and global public goods. It is a disgrace not to reward them with funding in line with their results.

Sunday Paper

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Some articles to remember:

It seemed like a good idea while we were at it: coordination instead of competition

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A few months ago, Owen Barder wrote a ground-breaking article: Beyond Planning, Markets and Networks for Better Aid. As a development practitioner, being confronted with the latest ideas on best practices from ODI and the daily chores of coördination, there seems to be little movement towards a more market based approach. Does the following story seems familiar?

Programming for success:
A country has retrenched its administration heavily, and when the country gets clogged up with traffic jams, mostly because of the potholes, it finds no engineers left to advise it. Something must be done.
The first step is to bring the construction firms together and ask them to propose the legal standards for road construction.The second step is to ask the same industry to prepare an annual investment plan for road construction, to be proposed to the government. An industry commission is created to prioritize when the government budget is not enough. However, if the traffic jams don’t diminish, budget will rise.
In order to keep the road building effective the following measures will be taken:

  • All companies in the industry should get a piece of the pie. No exceptions made. No strong companies sidelining weaker ones.
  • Companies should have their own technical or geographical niche. As overlap is inefficient it will be eliminated, coördination at all levels will be needed to make sure there are no gaps nor overlaps.
  • In order to be sure everything runs smoothly, all planning decisions are taking in consensus among all companies involved. Work should be coördinated at all levels.

As there could be some questions on accountability, it is agreed that the different regions of the country will be represented in the respective boards of the companies, and the same governments can delegate politicians to sit in the management.

What is illegal in business is a good idea in development

The practices described above have been used in different sectors, the energy sector and arms industry most notably.

However, it is only in the development and humanitarian sector these practices are seen as conventional wisdom. In a business environment this approach would be illegal.
An overview:

  • The government has the obligation to follow up on the expenses made, to assure the products were delivered. This cannot be done without a minimum of technical capacity.
  • An industry writing its own legal standards or its own investment plan is a clear conflict of interest. Sitting on the board and on being part of the management equally.
  • A cartel is created to cut the pie, competition is eliminated
  • Within specific niches, monopolies are created.

Perhaps we should be more active in searching for alternative approaches to the current partnerships in development.

The Sunday paper

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Development policy and evolution: does the donor public request impact or action?

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Owen posted a very good presentation on evolution and development on his blog. Indeed, evolution, like the market, is an efficient way to find solutions to complex problems or to optimize resource allocation.

The subsequent discussion on his blog raised a few issues I would like to expand on, in addition to what I wrote before on evolution in development.

  • The evolutionary pressure is being steered by the public perception. Public perception evolves too. However, I do think this pressure is for the moment rather away from long-term results and towards short-term visible activity. Sorry.
  • Evolution works with selection of the fittest, not by coordinating, clustering and evolving the un-fit. The inclusive narrative for better aid might have to make room for an exclusive selection process. (see also “what don’t make sense in trade don’t make sense in aid”).
  • The path dependency of evolution can easily lead to sub-optimal results.
  • Every evolutionary process creates dinosaurs: creatures fit for the world of yesteryear. Who is your favorite development dinosaur?

This  entry is on public support for development results.

Is the public interested in results? I would not think so: for the donor public the perception of activity is more important than results. Indeed, it is easier to look professional than to be professional. If the donor public doesn’t experience the quality of the services you deliver, it is not economical at all to invest in real expertise and real results when you can invest in faking expertise and fake results. Most NGOs manage to look trustworthy enough to part people from their money. Not all of them are sufficiently accountable.

When disaster struck in Haiti on January the 12th 2010, it took less than 24 hours for donor countries to decide to send their rapid response teams to Haiti for search and rescue. This led to major congestion at the airport, and some spectacular saves by white knights in shining armour that were documented live on television. There were more than 222.000 death and 211 lives were saved by the international and national search and rescue teams. This would be 1 per thousand. There are no data available to me about people saved by their neighbours, as the efforts of Haitians were very much underreported on during this crisis. Would Haiti have been better off it they used the airspace for bringing in shelter, food, water?

In November 2010 a cholera epidemic struck, making more than 1000 victims, while there was clearly no adequate health services or humanitarian workers around. Oh yes, this one struck in West Africa, after the flooding there. The epidemic in Haiti, at the same time, with a few hundred victims got international coverage and full assistance of the international community.

“The public is genuinely moved by the suffering and wants to support poverty reduction” writes Owen in his post. However, as they don’t experience the services for poverty reduction , they are tending to ask for the second best: visible action. In this context, as the situation is still catastrophic, after years of aid, the current “professionals” are clearly not up to the job. Support for hands on volunteers or stars is a normal way out. As is the loathing of the aid establishment. While serious evaluations of the Haiti humanitarian intervention are rather positive (for a once in decades type of event), the public perception is negative. The concern of the public that the money is lining the pockets of agencies and governments, is a valid concern, but also a typical populist issue. In domestic politics this concern is seldom alleviated by information on audits or results. You don’t establish long-term trust with the public on basis of bureaucratic requirements, but on basis of  a long-term open communication strategy, or on basis of a charismatic communicator.

A logical response to the search for public approval is to deliver activity: approve more projects, do more field visits as a minister, or create high level events,  where the stars and politicians from all stripes come together to vow action. This is exactly what is often seen as the problem with Aid. In this context, the plans themselves decided on at the high level events are not relevant, as nobody will wait for the results on the hot topic of today anyway. Activity is also about moving on to the next big thing.

While populism on domestic issues runs sooner or later into the reality of undelivered services, this feedback loop is nonexistent in development, as the taxpayer pays for services for people far away.

If I am right about the political economy of the incentives for a short-term or top down approach, than the development community must start changing some parameters of the equation in order to work towards impact instead of the perception of activity. Change the environment to create evolutionary pressure in the other direction.

However the current reality is not as bleak as we could expect, so some things must be happening that work in favour of the support for a long-term impact geared approach.

The different actors are no blind victims to the incentives before them. Apparently, a lot of them are moral actors. Elected politicians can inform themselves and translate the short-term populist concern in a long-term commitment for results. The same is true about the activist journalists and stars with a long-term commitment, e.g. as UN-agency Ambassadors.

Like piloted by some of the more successful NGOs or agencies, there is a need for a professional outreach to the public. It seems to me that only approaches with this kind of outreach might have a long-term survival chance in the political arena. Even policies that are hugely successful, if they don’t communicate well, might be doomed.
This outreach should put the ad hoc issues and in a wider context. The approach of UNICEF or MSF comes to mind as successful to put a broad results based vision on the agenda. Meanwhile the donor governments seem to be hugely inefficient in explaining their policies to the wider public. The whole Paris agenda seems to be mostly ignored by the public, what seems to be a bad basis for long-term planning.

Brooks’ law in aid plans : is more always merrier? gain goes down the drain.

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Definition

Brooks’ law on software development says : “adding manpower to a late software project makes it later”. Brooks adds to his law that “Nine women can not make a baby in one month”. Is there a similar law for development?

I could propose two options:

  1. If results are elusive, adding an extra partner to an existing  coordination mechanism only detracts attention more from getting results.
  2. Adding untied development money to an acute conflict area makes the conflict more chronic.

While option 2 is tempting, I fear it would be difficult to prove this option in a way it would stand scrutiny; Option 1 is an  open door I want to walk through.

Of course, as Brooks himself states, the law is an “outrageous simplification”, and further points to two main factors that explain why his law works all too often (wikipedia) :

  1. It takes some time for the people added to a project to become productive. Brooks calls this the “ramp up” time. Software projects are complex engineering endeavors, and new workers on the project must first become educated about the work that has preceded them; this education requires diverting resources already working on the project, temporarily diminishing their productivity while the new workers are not yet contributing meaningfully. Each new worker also needs to integrate with a team composed of multiple engineers who must educate the new worker in their area of expertise in the code base, day by day. In addition to reducing the contribution of experienced workers (because of the need to train), new workers may even have negative contributions – for example, if they introduce bugs that move the project further from completion.
  2. Communication overheads increase as the number of people increases. The number of different communication channels increases along with the square of the number of people; doubling the number of people results in four times as many different conversations. Everyone working on the same task needs to keep in sync, so as more people are added they spend more time trying to find out what everyone else is doing.

The picture is easy to recognize : the 2 or three main players in a development field know each other so well they don need to meet except for a beer. Indeed: it is a jungle out there, and the fight for funding is harsh: you must know your competitors. The odd outsider claims there is a need for coordination and what used to be a working, informal process must be reported on and formalised.
The Lilliput  partner brings his “important” expertise and money on board, but must be consulted in all important matters. Everybody gets bogged down in coordination meetings.

Lilliput partners at the table

Just look at a typical picture concerning humanitarian assistance in 2009 to a country in Africa, Niger (FTS).The total recorded humanitarian aid was  57.83 million USD:

  1. Central Emergency Response Fund: 20.23 %
  2. USA: 17.07 %
  3. ECHO + other Commission (Europe) 20.76 %
  4. Japan:  6.92 %
  5. Belgium:  5.27 %
  6. France:  3.61 %
  7. Less then 1 %: Germany, Sweden, Switserland, UK
  8. Unearmarked allocation WFP:  3.14 %
  9. Carry over : 19.76 %

There is a good case for involving donors 1 to 3 in a coordination effort from the start. But what is the added value for the humanitarian results to invite one of the group 4 to 6? Sure they might have some specialised insights, but shouldn’t they be invited more punctually? And why invite the donors grouped under 7? Their contributions are close to the margin of error in the calculations of the others.

On the other hand, donors 4 to 6 have a very strong case to want to be involved, as they can free ride on the work done by the strong partners: studies, needs assessments, feedback from the field. Pure gold for the free rider. We might hope the donors grouped under 7 wouldn’t even bother.
Taking into account all coordination costs, it is probably better to keep the contribution of the fringe donors outside than to have them inside.

The picture for data per “appealing organisation” is as interesting:

  1. World Food Programme: 41.93
  2. UNICEF 17.83
  3. MSF: France, Switserland, Luxemburg, etc.  9.50
  4. Save the Children – UK  7.14
  5. Mercy corps  4.97
  6. Food & Agriculture Organization of the UN  4.38
  7. WHO  4.15
  8. Cooperative League of the USA  2.40
  9. Concern Worldwide  1.33
  10. Action contre la faim  1.13
  11. Less then 1 %: Luxemburg red cross, Oxfam UK, Medicins du monde france, French Red Cross, care international, Africare,

In the area of direct food assistance, USD 24.1  million has been contributed, of which USD 22.8 million was going to WFP, some 94 %. It seems coordination on food assistance is just a waste of time. For the overall effectiveness of food aid, the internal management of WFP activities is much more relevant than the effects coordination could have. Why is WFP a reluctant UN-reformer? Perhaps because they want to have results with the group they are supposed to help, hungry people, and not just with any nobody that might show up in the field claiming they distribute food.

I am not saying that the small agencies or small NGOs are irrelevant: far from that: they are the ones innovating, reaching the victims most difficult to reach, challenging the effectiveness and efficiency standards of the juggernauts (and dinosaurs). A coordination effort draws them in the mush that general consensus is, with a risk of conforming to the mainstream. It might even be a prerequisite for coordination to comply with what is generally accepted.  To get a share of the pie distributed at the coordination table, you have to pay the dues.  They could end up selling their soul for being allowed to play with the big boys.

Political economy of institutional coordination

It is not safe to assume that participants in a coordination mechanism share a common development goal. Indeed, sometimes one organisation is interested to push local ownership, while the other one pushes its own valuable and unique expertise. Coordination is more and more seen as an objective to aim for, not just as a means for better delivery

In our example, food assistance to Niger, the goal might be shared.
The different actors have some leeway to take decisions in country, but if push comes to shove, they are executing what their headquarters decide, sometimes in detail, sometimes only the general principles.

At the coordination table the organisations will do what they are supposed to do:

  • Pushing the mandate: Each NGO has a different political view on how society should work. This view will be different from the view of an international agency, guided by the General Assembly. Even within the UN, you might have a different focus between UNICEF and WFP on how to proceed. The goal is more to “trick” the others to your line of thought, as each partner has little authority to divert from their own mandate.
  • Dividing the loot: Coordination mechanisms are all about deciding what is important, and giving a place to each partner. In countries where there is an Emergency Response Fund or a pooled fund, the importance of getting the money becomes a matter of life and death for the organisation. If your specialised expertise is recognised as crucial to the strategy, it is like single sourcing a project.
  • There is no leadership that can enforce any compliance. You can say what you want, you don’t have to comply, the only pressure is peer pressure. This can be used to occupy a field before you are sure to have the capacity to deliver.

Moreover, the individual participants will have their own private agendas, priorities. Some might want to stay in the country for another year, others just want to leave. Alliances between institutions and friends are struck.

All these elements will be at play and deflect attention away from getting the results for the beneficiaries. In normal circumstances, the moral fibre of the humanitarian or development workers and institutions will limit the damage. With more partners, the risk to have somebody at the table who speaks only out of organisational self interest increases.

Cost of communication

In a typical humanitarian crisis, the UN classifies the aid in 11 sectors. Most organisations are active in more than one sector, so they must go to the different meetings. Agencies with a wide scope complain that up to 30 % of their in country management time is spent in coordination meetings (no hard data, no impact nor efficiency evaluations I know of). Smaller organisations could just stop working.  In an important humanitarian crisis, the number of international actors in a well funded crisis is important:  22 in Niger, more than 100 in the DRC. The number of permutations becomes infinite.
Jean-Michel Severino and Olivier Ray present this equation in a telling graph in their publication “The End of ODA (II): The Birth of Hypercollective Action”:

Conclusion

Should we coordinate?  Of course we must coordinate, but the objective must be more efficient aid, not coordination in itself. I would beg for more attention to levelling the playing field for all actors in the market by opening up all information, instead of trying to coordinate with everybody. Standardising information and have a transparent system for sharing is necessary for accountability purposes anyway, and could fulfil a lot of the needs that people wish to satisfy with coordination.  On the push for coordination at all costs, II would like to quote W.  Easterly in his immortal piece “Tower of Babble”:

“Coordination” and “partnership” are the equivalent in foreign aid of U.N. resolutions for world peace. Every different national donor, U.S. government bureaucracy, or private business has its own agenda, will not voluntarily sacrifice its own interests for some other organization, and there are no binding contracts to enforce any such sacrifices.

It seems Brooks’ law for development, including the caveat (“it is a gross simplification”) stands for development:

If developments results are elusive, adding an extra partner to an existing  coordination mechanism only detracts attention from getting results.

Moreover, the explanations stand in principle. In development there is also a third clause:

  1. It takes some time for the partner added to a coordination to become productive. This is is the “ramp up” time. Development programmes are complex endeavors, and new partners must first become educated about the work that has preceded them; this education requires diverting resources already working on the programme, temporarily diminishing their productivity while the new partners are not yet contributing meaningfully. Each new partner also needs to integrate with a team composed of multiple institutions who must educate the new partner  in their area of expertise in the sector, day by day. In addition to reducing the contribution of experienced partners (because of the need to train), new partners may even have negative contributions – for example, if they want to divert funding to their own organisations, or have a different viewpoint on development that move the programme further from completion.
  2. Communication overheads increase as the number of people increases. The number of different communication channels increases along with the square of the number of people; doubling the number of people results in four times as many different conversations. Everyone working on the same task needs to keep in sync, so as more people are added they spend more time trying to find out what everyone else is doing.
  3. The expected contribution of a partner to the totality – as much in expertise as in financial contributions, can be negligible, increasing the risk that point 1 and 2 outweigh the benefits of the extra partner.

Donor projects: is money a placebo, attention the drug?

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In development, local self reliance is often seen as the main long term objective, while the delivered “hardware”, bridges, roads, schooling, are just seen as stepping stones to the road of self reliance.

I would like to raise the following issue: when working with a local partner in a structured way, the donor attention sometimes has more impact than the money. This means the current indicators to measure development value, based on money spent, might be of little merit.

A classical logical framework approach, or even better, a participatory German ZOPP procedure, helps the local partner to analyse his own problems, and search for solutions. It means that in the startup phase of a project, the partner creates himself a project he fully identifies with and can believe in. Further down the line, external attention helps to keep the partner focused to reach the benchmarks of the project.
In my limited experience, the effect of the external attention to the problem at hand, has an important effect on the success of the programme, where the spending of donor money could sometimes rather distract than focus the minds.
Indeed, a limited project to address one issue in the health system, e.g. introducing a new approach to TB treatment, needs different inputs from the different actors in the health department. The donor money itself for this project is only a very limited contribution, compared to the need for focus of the higher management, the time the staff must spend on training, the cost of maintenance and use of health department buildings, etc. The mobilisation of these inputs does not depend on donor money, but on stakeholder motivation on all levels.
In a developing country the problem is often how to bring everything together and motivate the understaffed and underpaid stakeholders. One way to do it is to give recognition. The old fashioned way: doing site visits, meeting officials, holding joint events, bringing overseas visitors to a rural backwater.
Exactly these elements are, in the post Paris declaration world, classified as “transaction costs”. However, the field visits of the donor might for structural multi-stakeholder change processes be the most efficient input, while the money itself is mostly the grease to keep the machine running.
Of course, when the main problem is debt relief, or the need for a concrete bridge over a river, just paying attention will not solve much, but as social programs are more and more central in development, I just wonder whether anybody has more than anecdotal evidence on this effect, or whether I am just  a development romantic?

Aid evolution: a system beyond planning, markets and networks

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Local units obeying local incentives and rules1

I remember the bleak look of the supermarkets in Nicaragua in 1992. Only a few products were available, nearly all from the same low quality brands. So where should we buy diapers, baby toys?  I am speaking about the everyday things you need to run a household with two small kids. On the black market of course: the Mercado Oriental, where you ventured only with enough money to buy what you wanted. A market bustling with activity and offering products from all over the world. The government, which controlled a big chunk of the economy, trade, the borders, could not deliver simple products like diapers to the consumers, while the rough and bustling smugglers could.

Central in the concept of evolution is the principle that the result is not planned, but is obtained by local units obeying local rules and incentives, and each optimize their behavior to get for themselves optimal result, within the limits set by the rules. This is the secret of natural evolution, but also the way the Mercado Oriental could sell my kids a Korean bicycle.

The concept of evolution is interesting to apply to development processes, as it would turn the current paradigm on its head: a lot of proclaimed principles  work against the grain of the self interest of the actors, and by striving to commonly defined goals, the actors flock towards one-size fits all fads instead of trying to optimize the results of their own efforts. An evolutionary approach would make donors flock to high result areas, but also reward higher benefits when specializing in a less crowded area.

Beyond planning, markets and networks

Owen Barder wrote a thoughtful paper explaining exactly why it is important to move away from the current planning paradigm. In essence, the planning paradigm tries to ignore the political economy, the different interests at play in the aid environment. While a consensus is created at a higher level, the incentives to get low-level results are scant. Owen argues that instead of imposing a new plan, we should change the evolutionary pressures in order to get results where it matters, unleashing the powers of evolution by harnessing the potential of a market and network approach.

Perverse effects of joint agendas: the lemming effect.

“Admitting that coordination problems are insoluble could point in a more fruitful direction, such as specializing more and then you won’t have to coordinate“

As only a few aid agencies have the wherewithal for good research, the research of the World Bank and DFID is dominating the discourse on development. It is not surprising that the best course of action for a whale like the World bank is probably not the best course of action for a mountain goat like Luxembourg or Switzerland. Under the current paradigm, the Paris Declaration, this is largely ignored. All should invest more in basket funds and budget aid2. If a small donor would strive to get some expert knowledge in only a niche, like in land management in mountain areas, their credibility and added value would probable be way beyond their monetary contribution, while the value of money in a basket fund is never much beyond the nominal value. What is the best course of action for the World bank might not be the best for the recipients, nor the individual contributing donor. As the consensus tries to cover all aspects af development, it pushes the donor countries to spread their support thinly, towards all good causes. This is something where the World bank might strive for, but for a small donor it leads to a ridiculous number of small contributions.

At the same time, the current consensus leads donors to select the same donor darling countries, or the same sexy themes of gender and development. In the current paradigm, where the budget and not prior evaluation is the tool for deciding on an intervention, the donor has no incentives to search for his own niche.

The planning response to the lemming effect, where all donors fund the same interventions, is to create a trust fund, to support “underfunded” causes. A common complaint is indeed that some actors and causes are just not enough taken on board. The disadvantage of this kind of approach is its tendency to spread the money amongst all stakeholders (“more democratic than strategic”). It is just not done to judge the quality of the participating executing agencies. The possibility that nobody funds a project because of quality issues with the evidence base or the partner organisation is never really taken on board.

The social economy of incentives, rules and indicators

The current paradigm : an amount is a result; everybody using the same instruments and partners

A number is simple and authorises everybody to judge whether it is much or not. However, in development the amount invested is seldom related to the results. The drive for higher project amounts is not based on economies of scale, but rather on the capacity of donors to manage transactions. The difference in efficiency between interventions rank from micro-interventions with huge payback (e.g. the Sant’Egidio community succeeding peace negotiations in Mozambique) to huge interventions with catastrophic results (the US intervention in Vietnam?) with combination in between.

The current incentives are very much skewed to a lemming – like approach to development. A mono-culture of approaches and priorities. If an approach is “hot”, everybody wants to be in the picture and rushes to join the stampede. The incentives are important to do so. Indeed, as the electoral cycle of 4 years coincides with the rotation cycle of development staff, success is not in results, but in announcements, commitments and project start ups, in line with the issues the international seminar circuit agrees upon. You shine today, not in 4 years’ time. Everybody moved on by then. The rules on “good” donor behavior will stimulate the donors to walk jointly the same paths. The current rules that donors abide with are more about how do we do what, than what should we get to. Indeed, if the MDGs would be taken seriously as a basis, the interventions would fight child mortality directly, not basket funds based on long term comprehensive plans.

The current approach, is geared to joint photo-opportunities at coordinating events and funding complex “innovative financial products” such as pooled thrust funds, Cerfs and Errfs, with overall unclear oversight structures.This approach seems to contain risks for an elected official, as all politics are eventually local.

Like buying a government bond as an investment, following the crowd isn’t exactly a bad investment: the results will be dependable, but average. However, development needs bold initiatives, where high returns and failure are the two sides of the same coin, with evaluation as a way to flip it

From identity to added value

In development, like in business, an added investment should never be decided on the average return of the investment, but on the marginal return. What will be the real added value of a small donor topping up a World Bank effort and contribute 0.3 % to a trust fund for basket funding?  Wat is the benefit for a skilled plumber to start an Internet company, because the internet is where the money is? Would taking out a loan to invest in the internet startup be really the best the plumber can do?

What if a donor stopped caring about the effectiveness of the system as a whole, but looked at the results of his own money instead? Deciding on real evidence based results for the beneficiaries.

The main question should not be “what do the others do? ” but “where can I make a difference”. The Easterly post “Do what you are actually good at, or what you should be good at?“makes an eloquent case on New Zealand. But other examples abound: an analysis of the Netherlands development cooperation “less pretention, more ambition” advocates concentrating on what the Netherlands are actually good at, like water management, instead of just supporting the World Bank ideology of the day.

A focus on measuring and expected impact and evaluating results on a case by case basis should be central, in order to determine exactly how high the added value of the marginal investment is. The evidence base of effectiveness should replace the current set of proxy indicators for donor effectiveness, as they are contained in the Paris declaration or the Accra agenda for action.

For a donor politician, this seems an easy sell towards his voters: Our contribution to develpment will be linked to our national identity, like the Dutch building dykes, the New Zealanders training pacific students and helping sheep farming. We are our own man. And where we cannot help, yes, we just abstain or support whoever can do best.

notes

1 The greatest Show on earth, Richard Dawkins, 2009, p 218

2 Let alone the Paris declaration is mostly based on in house World Bank research that has been found inconclusive in subsequent World Bank research reviews.

Civil society, or perhaps mercenaries. What are NGOs?

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A Grimm fairy tale

While reading the Haiti Earthquake Flash Appeal 2010, I was surprised, after all these years of talk about local ownership, to find only a few local civil society organisations mentioned in the whole document. What is wrong here? Have the poor become less empowered over the years?

In the seventies and eighties, the rural areas of Central America were stirring. There were farmers’ unions creating savings and credit unions and mutual health insurance was starting up. The organisations of the poor professionalized, and linked up on national level. With economical self reliance came more political cloud.  This was hailed as the coming of a social democratic movement, comparable to how the poor were uplifted in Europe long time ago.

In the nineties however, these membership based service organisations were in decline. The treasurer ran off with the money, or some insolvent members took the whole system down. Meanwhile, (is correlation causation?) the Credit-NGOs took off on a large scale. NGOs, led by a professional board, and hiring experts for the field work, created credit systems all over the place with donor money, not limited by the savings they could gather. As the risk in taking credit is rather limited (it is another guy his money anyway) and the risk in depositing savings in a community managed structure is high, the creditworhty poor moved to the better option, leaving the cooperatives with heaps of bad credit and angry savers.
The same happened with farmers unions. Being part of a union for legal support spreads the risk amongst the members, but using a legal support NGO is without any risk for the individual poor. The outcome is simple: bye bye empowerment. The rural client-patron relationship between landlord and sharecropper moves towards a triangle, where the landlord and the legal NGO become the patron of the sharecropper. Is he better off now? yes, without any doubt. Did the poor become more self reliant and  powerful to negotiate his rights with the landlord and the other powers surrounding him? Doubtful.
While self organizing poor can be a threat for the powers that be, NGOs seldom are, although the NGOs might speak out forcefully.
A black and white picture, and the reality has a lot of shades of gray. However, if there is even some truth in it, NGOs can be counterproductive if self reliance is the goal of aid, as they make the self-organisation of the powerless more difficult. This leads to less accountable governance, a prerequisite for a more equitable society.

Legitimacy comes in different stripes

For the sake of this article, I would narrow down the definition of NGO to the typical organisation that receives donor aid: an organisation governed by a board that is self contained and not directly responding to the beneficiaries of the services the NGO offers.
Most civil society organisation are accountable to the (paying) membership. The chamber of commerce, the church, the union, even Greenpeace lives and dies with its active membership. It are also the members who receive the benefits provided by the organisation, such as an entry to heaven, business related information and lobbying or defense of the employee. NGOs are contractually accountable only to the donor providing the funding. I would like to define civil society, for this article, as such a membership based organisation. Although the press and the academia definitively are civil society, they are not captured by this definition.
In essence, if the organisation would die without donor funding (funding by a foreign power), it is not civil society, but it is still classified as an NGO.
A third important group active in development  is the private sector as such, and we might wondeer whether the typical NGO is not rather part of the private sector.
From the governance structure you know who will call the tune: “if you ask them to paint your bathroom, they will” claimed somebody about a competing NGO in South Africa. NGOs will be more popular with donors as they can focus on delivering on their project documents: no internal democracy, no unruly membership, no delays discussing project arrangements with the membership, just flawless execution, at a transparent price.
NGOs have no democratic legitimacy as they represent only themselves, however, their legitimacy can be very strong on other aspects. They can have strong financial systems and deliver the required results. Some NGOs, like e.g. Transparency International1 and many other local and international NGOs have a very strong moral legitimacy.
Community Based Organisations can be Civil Society or NGOs, depending on the governance structure. However, when local groups are serviced by national organisations, it is only when this larger organisation can qualify as civil society (with the local CBOs as members) there will be a counter-power holding  the national government accountable. If the servicing organisation is just a NGO, there is no democratic legitimacy, and no counter-power. Supporting efficient NGOs can cause the civil society to wither and will consequently strengthen the powers that be.

The problem is that taking a shortcut, bypassing international NGOs and supporting immediately the local NGOs, will not solve the legitimacy question.

The goal of development aid: self reliance

If the goal of development aid is to support the self reliance and self development of the poor, it is important to use NGOs for their skills, expertise and moral legitimacy for strengthening the civil society, and not just for the services they deliver. Even if this civil society is less than perfect in delivering themselves. Supporting NGOs in roles that compete with the role civil society normally plays should be shunned. NGOs are important, but only to a degree. Strengthening the NGO-sector is not a valid development goal, while strengthening a democratic civil society is.
Of course, the central problem is, that accountability to the beneficiaries is mostly an aftertought, and beneficiaries might not like the donor priorities.

notes

1 Amnesty International and the Red Cross movement are rather civil society organisations, as they are very much membership based.

See also on the goal of development and civil society: Global Dashboard: Aid: what is it good for?

From heart of darkness; develop or civilize? to city of light

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The objectives of development aid are not well defined. This is one of the reasons why it is so easy to claim that aid does not work. More narrowly defined sub objectives, like diminishing child mortality, or getting more children in schools (whatever they do there) are more specific, and success is more common and even measurable. Most often development is seen as poverty reduction, in the broad sense. however, poverty reduction does not give the full picture: development is wider. Values like respect and empowerment have only limited poverty reduction value, and they should be accepted as part of “development” in their own right. On their own, they are also better measurable than mixed up with all the other aspects.

In Conrad’s’ “heart of darkness”, Marlow, the captain,  before leaving for Africa, visits “the city of light” where he gets his contract as a captain on the Congo boat. The main discourse in that city amongst the chattering classes is not about getting rich but about ‘weaning those ignorant millions from their horrid ways’.  As recent as the invasion of Irak, the civilizing mission was highlighted, more than the economical or even military aspects of the enterprise.
Marlow goes on:
I ventured to hint that the Company was run for profit.
‘You forget, dear Charlie, that the labourer is worthy of his hire,’ she said, brightly. It’s queer how out of touch with truth women are. They live in a world of their own, and there has never been anything like it, and never can be. It is too beautiful altogether, and if they were to set it up it would go to pieces before the first sunset. Some confounded fact we men have been living contentedly with ever since the day of creation would start up and knock the whole thing over.
The insensitive choice of words is not the issue here, I just want to highlight that even King Leopold’s exploitation of Congo was marketed and even bought as a noble task, aimed in the first place to transfer values.  Aren’t we development workers like Marlow’s auntie? We are still mixing up the noble development tasks and the mundane, and then claim everything is one and the same thing.  Going holistic.
Apart from the material aspects of development, there is a whole body of values that are considered as part and parcel of development. Gender equality, human rights, accountable government, the convention of the rights of the child, refer to values that are ingrained in development thinking. Most of these internationally recognized values are important on their own. When they are “taken on board” as a prerequisite for economic growth and whatnot, they end up diluted and compromised. Political correctness has linked these values to the overall development goal, mostly defined in shorthand as poverty reduction, or, economic growth. The noble values get mainstreamed instead of spearheaded.

Meanwhile, there seems to be little evidence that these individual rights and the values behind them really lead to faster economical growth, and we don’t need  a link between these separate goals. The results are bad economics, and very much compromised values.

I would like to argue for a more vertical approach, where you know that if you work on Child Protection or accountable government, you will not be accountable for economic growth, or when you work on small business development, you are not evaluated for gender equality. When you want to improve the life of women, it is often better to improve it than start an overall watch on everything everywhere, called mainstreaming. Indeed the different values and goals are  linked in some way, and a good problem analysis will show all the interdependencies, and help to choose those that must be tackled to get our results. Where values clash, it is worth to have a fight over it, and make choices instead of just smothering everything in a meaningless consensus.
It is possible that if  budgets are allocated for the separate values instead of for development as a general enterprise, countries would choose to fund only support for economic growth, or only child rights. I am not sure whether this would really be a problem, as some kind of market would be created, where a donor will have to find for a “fit” for its priorities with the recipient countries, with less demand for the more exotic choices, or for the same choice everybody else makes.

By Sam Gardner