- Annals of Development #4 – We’ll take whatever you’ve got
- Self-Interest vs. Country Ownership
- An Open Letter to USAID Administrator Gayle Smith
- A Development Primer (in 10 Index Cards) by Tom Dichter
- The Road Forward – Video
- Annals of Development #3 – Buy One Get One Free
- Gullible’s Travels
- Questioning the Value of Templates and Frameworks in Capacity Development
- Has USAID has lost its vision?
- Annals of Development #2 – Sustainability – Are we there yet?
By Tom Dichter
Casamance, Senegal, 2011
The Senegalese NGO “Enfance et Paix” (Childhood and Peace) is part of a USAID funded project, called “Support for Increasing the Capacities of the Sedhiou Region Civil Society Organizations to Enhance Good Governance.” The front room of the NGO’s premises has been set up as its new “Resource Center,” a scheme suggested by USAID to earn the NGO income and thus make it more self-supporting. The center, with its four brand new Dell computers, chairs and tables, is one of the “deliverables” for this project aimed at strengthening civil society groups in the Casamance, the southern region of Senegal that has been in a state of low-level civil war with the central government since 1990. The area is desperately poor – the fishing industry is moribund, there is little or no new investment, tourism is limited to gated enclaves like Club Med, and perhaps because the government is punishing the area for its rebelliousness, the few paved roads in the region are allowed to fall into total disrepair, with some sections 60% pot-hole and 40% pavement. The Enfance et Paix NGO is well-funded, however, since it is a subset of a large USAID water supply project called PEPAM.
There are many hundreds, perhaps thousands of civil society groups in Senegal, legally constituted as such and layered into local cells called groupements, then into federations and finally into federations of federations. The expectation of this project is that by learning about organization (administration, management, financial planning, etc.) and other basic roles of an organization (e.g., the roles of a president, vice president, secretary) and being taught something as basic as that “the President is not necessarily the supreme boss,” local people will become “citizens” who will know their rights and be able to approach local elected official and convince them to be more responsive to their needs (which range from infrastructure, to better schools, to economic opportunities.)
The NGO has been around for a decade, and has two main staff along with people hired for the length of the USAID project as “consultants.” It was founded by 14 concerned people – teachers, former staff members of defunct NGOs, etc. In the last 10 years the NGO, with funding from the EU, from Intermonde, as well as USAID, has worked in literacy, natural resource management, and HIV/AIDs.
In my first meeting in their office, I ask what they see as their main challenge. “We need to do dissemination and multiplication [replication]. This can’t be done without money.”
We go to visit a small village, where we sit on the rickety veranda of a school building. The president of the association does all the talking with 7 silent members of his association (all officers) present in the first row. What he says sounds rehearsed. He talks about civil society and governance and, directing his remarks at me, says “What we need is the ability to multiply the learning/training we’ve received.” What does that mean? I ask. “We need to be able to reach all the organizations at the base.” Well, what is keeping you from doing that? “We need money to pay the participants to attend the meetings; money for lodging, for travel, and for food.” What kind of money are you talking about? “Well with each set of groups we would need about 450,000 CFA (ca $900).“ Wasn’t this in the project budget? I ask. The president answers no; USAID, he says, told them they could only have $100,000, so they adjusted their budget accordingly, and came down from their original budget of $180,000. Now he is asking for some of that difference to be made up.
I ask “who will learn, the local people themselves, the associations’ officers?” And then I ask how the resource center will be sustained? I ask the group of seven officers who sit in the first row on the veranda to speak. No one responds. The president again speaks for them.
The name USAID means money to them, and my presence seems to reinforce that. All afternoon, in the three meetings we had, the same script is repeated. “We need more resources, we need to reach more groups, there needs to be more ‘multiplication.’”
(When I later asked back at their offices, what the project expected in the way of organizational strengthening — one of the components of their USAID funding — they replied first that they wanted help in raising money, and for USAID to act as recommenders, as references, and to introduce them to different “partners.”)
A half hour later we arrive at another project village. Here we meet with a women’s group. We sit on the ground in a circle. There are no formalities; the women get to the point quickly – “we need income,” they say. “We need Income Generating Opportunities and we hope you’ll help us to get them. We need a store nearby, the one store in the area, it’s too far to walk.” I point out to them that there probably would be a store nearer if there were enough of a market to make it worthwhile for the store. They say they need a store nearer. And they ask me why USAID cannot help to provide that? The group’s president also complains that many of the local “civil society” groups are run by politicians.
These ladies, sitting on blankets on the ground, seem quite adept at using the language of civil society. They talk about “Solidarité,” “principes de bonne governance,“ “formation” (training), “société civile.” The phrase I hear most often is “without training, there is no development. “ And “we need suivi” – follow up – which seems like it could be a euphemism for more money. Is the message here simply “Don’t drop us, don’t go away, give us more resources”?
[Is what we see here perhaps a kind of monetization? Something intangible – “training” – becomes something that folks can get something from, a bit of cash, in the form of a per diem to attend, free meals, perhaps a temporary job as a “community mobilizer,” a connection, to become part of a network, anything to find a hook on which to rise in this brutal system. ]
I then ask them questions about the “income generating” part of their project, which calls for value-added to local products. “What is it you want to earn income from?” They mention peanuts, shrimp and the resources of the forest. “But who and how will these be transformed into value-added products? What is the idea? What is your plan?” They are silent.
When, back at the project’s new “Computer Resource Center,” which is supposed to be self-supporting, I ask what sum people will be asked to pay for the computer use. They reply that they will have a participatory meeting and the members will decide. The USAID project officer who is with me asks if they did any analysis of the running costs of the center, and what they would need in terms of numbers of clients to keep this going? No, they did not. What if the computers fail after a couple of years? “Well, we will find donors to give us new ones. “
Patrick Fine, the CEO of FHI360, a $650m dollar contractor (one of USAID’s top 25 vendors) posted a piece on Devex.com the other day entitled “Why we shouldn’t be working ourselves out of a job.” His position is a good example of self-interest in the aid industry.
He refers to the view “that if we just do a good job, then prosperous, well-governed communities will quickly take root and eliminate the need for further assistance.” And he goes on to say that “ending poverty is not simply a matter of following the blueprint or reducing institutions and socio cultural norms to a set of discrete tasks, that once completed, will stand like a stone wall against the tides of change. Human history is full of examples of societies that flourished and then regressed or collapsed as a result of natural disaster, external conflict or internal upheaval.”
He adds: “Moreover, in a world where the pace of change requires constant adaptation and lifelong learning, the whole notion of sustainable development as an anchor concept in the development lexicon becomes an oxymoron. Quite literally, in a world of constant change, our work is never done. “
Mr. Fine is of course right that there is no blueprint for development and implies that we cannot impose one. And he is right that development doesn’t have an end point – a time when one says it’s all done. He even admits that our own development in the advanced countries is problematic: “We need to dispense with the fiction that “developed” countries have the answers and our task is simply to export them.”
But a close look at his piece reveals a few contradictory twists that make his more enlightened statements look a bit hollow. First the use of the telltale “we” as in “if we just do a good job, “ and “our work is never done.” What Mr. Fine seems conveniently to forget is the concept of country ownership, the notion – now backed officially by the development agencies and their clients – that developing countries must take responsibility for their development, not just for its conception, but its implementation. If it ever was up to “us” to do the work, it certainly no longer is. Today development is not “our work.” We can help, but the time for “us” in the North as the engine of other countries’ development, is coming to an end and soon at that.
So how does Mr. Fine reconcile his belief that “we” cannot export development, with his equally strong belief that our work is never done? What indeed do “we” have to offer? His fairly anodyne answer is “partnerships,” “co-creating solutions,” and “knowledge sharing.” In short, when push comes to shove, Fine (speaking on behalf of FHI360) re-embraces the very idea he wishes us to believe he repudiates – that “we” know something that “they” don’t and so it is our job to share it. Yes, of course, we do it in “partnership,” a nice word, but isn’t this really a thin rhetorical veneer covering over business as usual? For everyone who has spent time in the field knows how these partnerships look and feel. They are first and foremost unequal – the donors and their agents (Northern firms like FHI360) control the money, and so they have the power. Their partners know this and act accordingly, because willy nilly, they want some of that money. Thus whatever solution FHI360 creates, whatever plan FHI360 wants carried out, is agreed as “co-created” by the subservient junior partner. This pattern, almost as old as the 70 year old development industry, smacks of dependency, something Mr. Fine seems keenly aware of since he vigorously denies it;
“We must eschew the notion that the transfer of resources, knowledge and technology across borders, and the partnerships that enable the dissemination of innovation, means creating dependency.”
Well, we can eschew the notion of dependency all we want, but it is in fact alive and well, and lies at the heart of the dilemma of country ownership. For the best thing “we” can do to promote country ownership is to reduce dependency on us, and by so doing bring back local self-confidence and the strong emergence of local capacity. But for us to do that, we need to back off, control less, and indeed do less. Naturally that will mean less money for us. But that is what working ourselves out of job means. And that, sadly, is why Mr. Fine and most of the rest of us don’t want to do it.
It is simply not in Patrick Fine’s or FHI360’s interest to work itself out of a job. Mr. Fine and his top 21 officers each make over $200,000 per year, and his predecessor Al Siemens who was CEO till mid 2014 brought home close to $500,000 (see their publically available Form 990). Interestingly Mr. Fine came to FHI360 from the now defunct NGO AED (Academy for Educational Development) which got in trouble with USAID in 2010 and was forced out of business. In fact its assets, its people (including Fine), its Washington DC address at 1825 Connecticut Ave, and its contracts were bought by FHI 360, which changed the stationery and the name on the door. But if you walk into 1825 Connecticut today most of the AED people are still there, in the same cubbies they were in before, doing what they did before – making sure the contracts keep on coming.
To show how little inclined USAID and its cohort of US partners like FHI360 really are to reduce their share of the business and work themselves out of a job, one needs to get into the weeds of those contracts.
I use as a simple example a relatively small 22 month project I led for FHI360 that looked at the capacities of local civil society organizations in nine developing countries. Let’s begin with the direct costs — the amount of money that would have been sufficient to undertake the project had it been given to one person or small group of persons to run.
|My fee, hired as a lead consultant, with no benefits; a straight payment against days billed over the 22 months||$300,000|
|Ten other consultants for various terms for various tasks and at differing rates||$220,000|
|A sub-contract to a local NGO to do a particular piece of field research||$54,000|
|Travel (hotels, per diem, air tickets covering visits of 2 weeks each to 9 countries involving two to three consultants for each visit||$140,000|
|Five advisory group meetings including travel and fees to the advisory group||$120,000|
|Miscellaneous other events and costs||$50,000|
However, the actual budget of the project, that is, the total cost to the US taxpayer was $2,200,000. The difference between the $884,000 and the $2,200,000 goes to the contractors – FHI360 (the“prime”), and to one US based sub-prime contractor (MSI). (The reason for having two contractors involved is basically because they had been together in a preceding project, and because this was a successor to that effort, the precedent carried over.) But the important thing to note here is that the 150% premium paid to the two contractors is largely in the name of compliance with USAID’s rules and regulations. While their role is nominally administrative and managerial, they are basically being paid to be watchdogs.
The FHI360’s part of the budget called for 119 days of financial pool time along with 24 days of one of the prime’s senior managers, 36 days of his assistant and an additional 20 days of assorted others – total 199 days. What does the US taxpayer get for these costs? What proportion of the money the contractors get goes to any improvement in development effectiveness? Are the functions performed by the prime and sub-prime in reasonable proportion to the costs? And are those costs even really incurred, or are they partially created or inflated? My answers are respectively, none, no, no, and yes.
How the total of $2.2m is arrived at is not an easy question to answer because as an outside consultant, I was not privy to the full budget details. What follows is thus based on what facts I could gather and on some informed guesstimates. Here is my liberal estimate of the actual time spent by the contractor on this effort, expressed in person days.
|The writing of the contracts for the project, and for the consultants, plus amendments and extensions||20 days|
|Financial pool time – several people who issue checks, calculate and vet travel expenses, and ensure compliance with USAID regulations||30 days|
|The processing of travel reimbursements||32.5 days (26 units X 1.25 days)|
|The processing of invoices||25 days|
|Writing quarterly reports to USAID||16 days (8 X 2 days)|
|Senior manager’s time on emails and oversight||12 days|
|Other assistant time (several people)||10 days|
|Project close-out||10 days|
This total is 22% less than the number of days FHI360 budgeted. But let’s give them the benefit of the doubt and accept their figure of 199 days. Using an average salary rate of $400 per day (estimating the senior manager at about $185,000 per annum and the least paid assistant at $45,000, with others in between, and pro-rating these on the basis of 240 paid days per year) these 199 days come to $79,600 in base salary cost.
FHI360, a non-profit, calculates an 18.8% “compensated personal absence rate” on top of salaries for days lost to vacation and sick leave, plus a 28.72% fringe benefit rate. These two factors would add $37,826 to the salary figure for a total of $117,426. On top of this is the Negotiated Indirect Cost Rate Agreement (NICRA) which in this case is 38.44% and this is applied to the actual implementation cost. The NICRA is based on the prime’s presentation of its overhead costs to USAID and it is then “negotiated.” Getting a NICRA is not automatic however. There is a slight catch 22 involved: if you are not known to USAID, you are not usually qualified to apply for this rate. But to be known you have to have had some sort of relationship over time with the agency. Local firms or NGOs in developing countries complain that they do not get the benefit of a NICRA when they do get lucky enough to be part of a USAID funding arrangement – they get money only for direct implementation of the project, and receive little or nothing to cover their rent, office costs, or salaries of their full time personnel. In any case, once established, USAID basically trusts the firm enough to continue allowing them to apply the NICRA rate.
Since in this project there is also a sub-contractor involved (MSI, a for-profit firm) the prime contractor charges an additional 4.01 % to “manage” the sub-recipient award or contract, which involves writing the sub-award agreement and presumably overseeing their compliance. However, since the sub-prime in this case is a venerable firm that has often itself been a prime, and of course has its own NICRA, it understands compliance as well as the prime and does not need the prime to watch over it. In any case, we end up with a figure of 42.45% that needs to be applied to the $884,000 project implementation cost for an additional $375,258. All of this (the $884,000 + the $375,258 + the salary and benefits of $117,426) adds up to $1,376,684. And while I have little doubt that the full details of how the total of $2,200,000 is arrived at would show nothing illegal, it is hard not to conclude that the difference – over $800,000 – between my back of the envelope calculation and the official total contains a substantial amount of fluff – money that is not really productive, is not necessarily needed, but which sustains many employees and the two contractors they work for. In the most fundamental sense this extra money is “profit,” something we don’t begrudge corporations in the business of selling a product, but which is (or should be) questionable in the case of aid for humanitarian assistance and development.
Note that the time that USAID itself spent on this project is not represented in the figures presented here, though this time is also a cost to the U.S. taxpayer. There is the contracting officer who is warranted to vouch for the compliance of the contracting organization. He or she might spend 8 to 10 person days over the life of the project doing routine monitoring and answering queries related to it. The USAID program officer who is presumably interested in the outcome of the work will read the quarterly reports and engage in some back and forth with the contractor – let’s say another 10 to 15 person days in the life of the project. And we need to add in the time of a number of supervisory and other USAID personnel who in the course of the 22 months might be involved in meetings, or other discussions related to the project – another 12 to 15 or so person days. This USAID total of about 30 to 40 person days forms part of the overall agency “operating expense,” which in FY ‘15 was 7.8% of USAID’s total budget of $20.1 billion, or $1.569 billion.
So, USAID’s costs aside, my guesstimate is that 60% of the project’s $2.2m cost goes for indirect and administrative costs, which means the actual implementation of the project is 40% of the total. And while it is legitimate to add some degree of administration and oversight time to the overall cost, it does seem excessive for these functions to amount to 150% of the actual implementation cost. The irony here is that much of this excess is incurred presumably in the interests of protecting the taxpayers’ money, ensuring compliance and keeping costs reasonable. In the budget narrative for this project the contractor states:
“FHI360 strives to ensure that the absolute best value is maintained for our funders. Throughout the budgeting process, every effort has been made to present realistic and reasonable pricing, being based on our significant and long-standing experience in implementing programs worldwide. Additionally, FHI360 focuses on identifying all opportunities to streamline programming and ensure cost-effectiveness and cost-efficiency. We are able to do this through a deep knowledge of program management and implementation, utilizing transparent systems that feature robust logistics, financial management, procurement, and compliance processes.“
The compliance processes that the contractor has “deep knowledge of” consist of a compendium of rules and regulations that, like sedimentary layers in an archaeological site, have built up over decades. They are constantly amended and often added to in response to lobbying and political pressures though seemingly less often in response to lessons about what makes sense and what does not. And while of course some of the compliance rules are indeed straightforwardly about accountability, some are a function of custom and ritual, and some of those reflect a subtle underlying culture of mistrust, if not paranoia – the belief that people and organizations will lie, cheat and steal if they are not watched very carefully. “Trust but verify” makes real world common sense, but in many instances, the modes of verification in USAID’s processes are over-wrought if not plain silly as most people with field experience working on their projects will attest.
Besides bureaucratic inertia (not to be underestimated), a growing aversion to risk (but if development is not inherently a risky business, then nothing is) and a finger-wagging culture that presumes people and organizations are trying to get away with something, one has to ask if part of the obstacle to simplification and less silliness, is a concern for the continuance and growth of the aid industry. If USAID were to put more of its money towards country ownership – grants and contracts going to local organizations, and trust them to use the money carefully, there would of course be cases of inefficiency and waste and perhaps even a bit of cheating. But if a project like the one I’ve described above bears a 150% overload in order to ensure compliance, is it not likely that whatever waste came about in a direct grant to a local organization, without the intervention of a US prime to watch over things, might come out to less? But of course if compliance systems were to be simplified, the first consequence would be a loss of American jobs. Thousands of people in the USAID ecosystem sit at desks wearing metaphorical green eyeshades and look for discrepancies between the stack of regulations, and the equally high stack of contracts, agreements and reports. What would happen to all these people if they had less to do?
In the aid industry working ourselves out of a job is simply not on. It’s too lucrative to stay in business.
One of the biggest issues facing USAID is its culture – there is less of a shared sense of a mission than there should be, and even less a shared understanding of development – the “D” in the agency’s name. The December 2014 mission statement of the agency does not use the word “development” and this may well be the first time in its 55 year life that development has not been widely understood as the main purpose of USAID. A significant number of the agency’s staff today focus on humanitarian relief and extreme poverty. When they think of development, many (mistakenly) equate those two goals with it. While noble ends, and an important part of the agency’s work, relief and alleviating extreme poverty don’t add up to development. As a consequence of this fragmented set of values and beliefs, many of the deeper challenges of development today are not being adequately addressed.
Administrator Smith can undertake four initiatives aimed at changing the way people think about their work; changes that would restore a shared understanding of development to the agency that any successor would have a hard time reversing.
From the top – she can work with the Subcommittee on the Department of State and Foreign Operations on the Hill to bring “development” back to the agency’s mission statement, and at the same time deepen the understanding of development by key congressional staff.
While humanitarian relief and battling extreme poverty are important, if the agency is to be relevant in the future, it must re-embrace development more centrally and more robustly – and this means a shift towards fostering institutional change. The obstacles to development in the poorest countries have to do largely with the nature of institutional arrangements in the political economy of the country, arrangements that usually have their roots in history, social structure and culture. It is the evolution of change in this arena that accounts for development in virtually all advanced economies. Re-engaging USAID in such work necessarily means moving away from short-term thinking and short-term projects, less emphasis on quantification of results, much greater (and more respectful) engagement with entities in local and national governments and civil society, more flexibility in funding, and above all an investment in better “homework” to understand where obstacles really lie. This is subtle work, demanding a spirit of experimentation and people who are open to learning. Bureaucratic protocols, rule sets, frameworks, grids, matrices, checklists – all of which the agency has embraced with a vengeance in recent years, tend to get in the way of such an open and iterative approach to development. Tools (such as The Organizational Capacity Assessment Tool) are not an end in themselves and excessive reliance on them can provide a false sense that one truly understands what is going on and what the context is.
From the top, Ms. Smith can remind the agency of its commitment to country ownership, embodied in the Local Solutions mandate, and hark back to former Administrator Brian Atwood’s comments of 1993.
“It is their country, not ours. It is their community, not ours. We can advise, we can assist, and we can choose not to assist, but the decisions about development priorities and policies must be reached by that society at large, not by us. It is they who bear the risk; they must make the commitment. Providers of development assistance–whether a well-meaning private voluntary group inadvertently imposing an inappropriate cultural style, or whether a panel of prestigious international experts prescribing policy changes from a vantage point far removed from the particular political and social environment–fail if we forget that it is their country, not ours.”
The agency’s work is about “them” not “us.” And while there is an officially sanctioned commitment to “country ownership” (exemplified in the various international accords from the Paris Declarations of 2005 on) this is not clearly reflected in the daily business of the agency, where habits of top-down development planning too often prevail. Yet there are some initiatives within the agency, such as “local works” and the Small Grants Program that carry this message of country ownership and can be the seeds of real change in how things are done. These small efforts need to be allowed the freedom to experiment and learn, and the resulting lessons husbanded and spread (in the spirit of what has come to be called a “skunkworks” approach in some industries where innovative units are nurtured and protected by management so they can produce new products). This approach fits perfectly with the “collaborate, learn, adapt” philosophy the agency espouses. It needs leadership to make it blossom.
From the bottom: Ms. Smith can reinforce this message around the agency by holding a series of seminars/ town meetings to reinvigorate both the development mission and the country ownership commitment. Especially important is the beginning of an acceptance of the implications of both of these – development as a subtle, complex, highly contextual, often rocky process sometimes characterized by one step forward two steps back dynamics, and country ownership meaning we as outsiders need to pull back, be more experimental, more humble, less concerned with immediate outcomes, and get out of the office to meet people, get to know what is really going on, and thus develop a deeper understanding of particular contexts.
From the bottom: the Administrator can encourage frankness and even admissions of failure. Too many staff are afraid to contradict their bosses, weighing their words against the prospects of advancement in their careers and succumbing to “groupthink.” Once in awhile key people in a mission will say what they really think — one mission I know of recently said to AID/Washington “we’ve been spending money on things for 40 years here with little to show for it. We want to do things differently.” This takes some courage and it needs to be acknowledged.
- WHAT IS DEVELOPMENT?
Development is a complex economic, social and political change process during which people begin to attain better living standards and wellbeing through expanded opportunities and increased capacity and confidence to take advantage of those opportunities.
Development results in (and is) sustainable economic growth, the major components of which include:
- Improved health & wellbeing – besides basic human needs of food, water, shelter and sanitation being met; in addition healthcare systems lead to longer life expectancy, there is greater personal security linked to the rule of law and property rights, and educational opportunities, beginning with literacy, are broadened.
- Increased and more inclusive political and social freedoms.
- Broadened and deepened access to information, services (private and public), and goods.
- Expanding personal economic options and opportunities – via improved education and training, improved infrastructure (especially roads and electricity), services, open markets, and generally speaking, good governance.
- Increased leveraging of domestic assets as investment capital.
- Economic evolution/transformation from informal income generation to formal business, from subsistence to commercial agriculture, from low value to higher value production, and increased productivity.
- Decrease in regional disparities within countries and eventually across regions.
- Increasing local human resource and institutional capacity to identify and analyze problems, and to design and execute solutions.
- Increasing transparency and accountability in private-private and public-private relationships.
Poverty reduction in the long term is a function of economic growth. Though the basic relationships between poverty, inequality and economic growth remain hotly debated, the long historical trend shows economic growth reducing poverty. At the same time, history tends to show (including American efforts in the 2nd half of th 20th century) that alleviating the most egregious aspects of poverty (infant mortality due to preventable diseases, inadequate housing, lack of nutritious food etc.) does not always equate with development.
- WHAT IS THE RELATIONSHIP BETWEEN AID AND DEVELOPMENT?
From the 1970s on, with some acceleration in the last twenty years, there has been growing controversy about whether aid promotes growth or not – among those who raise doubts are for example Bauer (1971, 1974), Lappé, Collins & Kinley (1981), Bruckner (1986), Hancock (1989), Galbraith (1994), Maren (1997), Landes (1999), Chang (2002), Dichter (2003), Easterly (2006), Riddell (2007), Moyo (2009), and Deaton (2013).
- WHAT DOES DEVELOPMENT DEPEND ON?
- People’s aptitudes and attitudes (culture)
- Institutions (as mechanisms of social order such as law, property rights, marriage, etc); institutions (as structures such as judicial, financial, legislative, governmental and other systems)
- Political arrangements, both formal and informal
[And it helps to have:]
- Access to ports/waterways
- A temperate climate
- Arable land
- Good water (quantity, quality)
- Absence of major barriers to transport
- Diverse mineral resources
[And it can hurt to have:]
- Tropical or too dry climate
- Susceptibility to extreme weather events
- Lack of arable land & water
- Only one major mineral resource (e.g. oil, thus “dutch disease” or “resource curse”)
- No or restricted access to ports/waterways (being landlocked)
- Presence of major barriers to transport (e.g., extremely mountainous, etc.)
- Bad neighbors
- Being part of some major power’s “sphere of influence.”
- Being much smaller than others in the region is a negative if combined with bad governance
Internal political economic and governance minuses
- Bureaucratic indifference, slowness, cumbersomeness
- Poorly paid, unmotivated civil servants
- Informal rules of the game within institutions (such as tribal or ethnic affiliation) that work to favor one group
- Corruption, and internal arrangements that reinforce it
- Short tenure (rapid rotation) of civil servants
- Isolation – physical, psychological and cognitive (literacy, lack of communication, books, newspapers, radio, other media)
- Instability – civil strife
- lack of ease of registering/doing business formally
- lack of property rights, lack of rule of law, or laws not applied
- lack of institutional capacity (for regulatory functions; for infrastructure maintenance functions; etc.)
- lack of investment in infrastructure, beginning with roads, energy generation and distribution (especially electricity).
Cultural and social structural minuses
- ethnic or religious conflict
- dominance of elites in controlling access to rights, education, property, markets, finance etc.
- cultural/social structural barriers to social mobility, such as caste, etc.
The negative effects of past development aid itself (development “archaeology”)
- Countries with highest proportion of aid to their own budgetary resources are by definition least able to make it on their own, and tend to have developed the highest degree of aid dependency (e.g. Haiti).
- Development aid tied to the political aims of donor countries can result in mixed agendas, fickle changes in emphasis, and instability of aid flows.
- Poor people who have been recipients (”targets”) of generations of aid projects have become either suspicious of (false) promises and/or adept at manipulating donors.
- BASIC LESSONS WE’VE KNOWN BUT RARELY APPLY
- Development takes time
- Context is crucial
- Extensive “homework” is essential to understand context
- There are no magic bullets
- Incentives are key; therefore give-aways don’t work unless they are carefully used as stimulants or pump-primers.
- Dependency is very often an outcome of subsidy
- Circumstances change and design must therefore become more iterative
- Short term projects are usually too short to see the unintended consequences that almost always arise
- The “project” form is often ill-adapted to development, but well-adapted to donors
- Failure has great value if acknowledged and learned from
- DONOR HABITS THAT WORK AGAINST AID EFFECTIVENESS
- Short project time-frames
- Rise of evidence-based planning can lead to “false accountability,” focus only on what can be quantified or measured, and thus reinforces short time frames
- Concern to “brand” donor-sourced funds which acts against possibility of unrestricted or pooled funds
- Concern to standardize and “package” tools, assessments, M&E frameworks, training modules, evaluation frameworks etc.
- Continued habit of beginning next project before learning lessons from last one
- Continued reliance on log-frames and “input measurement”
- Tendency to emphasize quantity over quality
- COMMON NGO (OR FOR-PROFIT FIRM) PITFALLS
- Molding the organization to fit donor agendas rather than focusing on what the organization believes or has experience doing
- The pressure to bring in business from donors means giving short shrift to good homework
- Growth for growth sake accompanied by rationalization that the bigger we are the more impact we’ll have on poverty.
- Uncritical belief in own “success stories” and “how good we are”
- Growing gap between self-image and reality. (e.g. all players claim to be “unique”)
- Failure to see or accept that the goal of development is to work ourselves out of a job.
- SIGNIFICANT GLOBAL TRENDS THAT DEVELOPMENT AID HAS A HARD TIME KEEPING UP WITH
- Aging population (growing percentage of people living longer)
- Youth bulge (growing percentage of under 25s)
- Labor migration
- Increased movement of people across borders (refugees, both political and economic)
- Brain drain
- Automation and globalization leading to long-term decrease in low-skill jobs
- Rise of remittance flows
- Rise of New Donor powers with different approach (e.g., China)
- Rise of the New Philanthropy, including in the South
- Regionalization (South to South alliances, collaborations)
- Significant increase in local human resources and capacity
- Increased awareness of rights or position, via media and social media
- Role of diasporas
8. A FEW POPULAR DEVELOPMENT AID IDEAS WORTH QUESTIONING
- technology and “innovation”
- RCTs, evidence-based planning
- tackling extreme poverty directly
- impact investing & social entrepreneurship
- social capital
- civil society as essential
9. AREAS WHERE DEVELOPMENT AGENCY RHETORIC FALLS FAR SHORT OF ACTION
- Country ownership — continued interest in holding the reins
- Working ourselves out of a job — no interest in becoming smaller, employing fewer people, using less money
- Aid harmonization — little action
- CORE OPERATING PRINCIPLES AID AGENCIES COULD DO MORE THINKING ABOUT
- Doing more rigorous homework
- Cultivating humility
- Facilitating, fostering & teaching rather than doing
- Being integrative
- Thinking strategically, acting iteratively
- Being unafraid of taking risks when appropriate
- Ensuring cross-cutting interventions
- Selecting clients and partners carefully
- Using tough love in relationships with clients
- Focusing on drivers of sustainability
by Tom Dichter
The Heifer International (HI) Project in Malawi seems off to a good start. After almost one year it is meeting its objectives. Staff have come on, vehicles procured, an office set up, dialogues held with the appropriate government officials, and animals delivered.
The three year $1 million “Malawi Smallholder Dairy Development Project” is funded equally by USAID and HI’s own individual and corporate donors in the U.S. The goal is to supply 90 farmers (of whom 70% are to be women) in Mchinji district in western Malawi, with pregnant Holstein heifers imported from South Africa at a cost of about $2,500 each, along with about a dozen bulls to be used for insemination of the offspring of these heifers. Once having been selected, based on character testimonials from local community members, the recipient farmers go though training. Since none of them had kept animals of this type before, they are taught everything from milking, to how to mix feed supplements (Holsteins are great milk producers, but not surprisingly, they are also big eaters), to the rudiments of cattle diseases, to the reproductive cycle of the breed. The recipient must also agree to be a member of a community group set up to support the project. Then the farmer signs a contract with HI which states that as long as he or she manages the animal properly it may remain in their possession. The recipient must put up a shelter, designed by HI, with a partial concrete floor and concrete feeding bins (the concrete is supplied by HI) and then receives the heifer.
The heifer will not graze freely but will stay in the shelter under a “zero grazing” regime which means the recipient must bring the feed to the cow, and stock feed for the dry season. After calving the calf stays with the cow for 6 to 7 months and is then “passed on” to another member who in turn will pass on its offspring to someone else. After the first calf has been passed on, any further offspring from the mother cow belongs to the original recipient.
In addition the recipient receives an imported aluminum milk can (at a cost to HI of $130). The project also pays for the construction of the first bulk milk chilling plant in the area, and that is also on schedule, with local labor being supplied by the community.
During the three year life of the project HI Field Officers are on call all the time in the event of disease and carry a kit with injections and medicines whenever they are called to visit a sick cow. Of the 8 cows I saw during my visit, 5 had had some illness and all were attended to immediately and recovered. All told the project has lost only 2 animals out of the 90 procured.
But as good as things look at first glance, there are a number of vulnerabilities projects of this type share. The first stems from the project’s high “giveaway quotient.” The relatively expensive imported animals, the plans and the concrete for the shelters, the imported aluminum milk can, and the materials for the bulk milk chilling plant are given free by the project, with hardly any contribution demanded from the recipient except labor and found construction materials (poles and thatch) for the shelter. Though there are mechanisms in place that HI believes ensure the commitment of the recipients of the animals to maintain them and keep the cycle going — the initial awareness building meetings, the forming of the community support group, the candidate selection based on character testimonials by elders and others in the community, the setting up and training of Community Animal Health Workers, the “contract” the recipient must sign — it would be surprising if all 90 recipients treated their animals with equal care and commitment. People are different and some will be more responsible than others. In fact after the first year, the field officers can say which caretakers are doing things well, particularly hygiene and feeding (and thus reaching high milk production) and which are doing less well. (In my experience with this type of project the poorer the recipient, the less well they are able to meet the animals’ feeding needs).
But none of this matters much while the project is still going on. The field officers are in close touch with the heifer recipients, can be reached quickly by mobile phone, and respond to all crises. It is clearly in the project’s interest to ensure that the animals survive and are robust. And the returns to the families once milk selling begins are immediate and can be dramatic (e.g., two months after beginning milk sales one family put a new roof on their hut, bought a bike, and began eating meat two times per week).
This careful hand holding ensures also that HI’s reports to its donors contain success stories. At the same time, while the hand holding can easily be seen as a way to reinforce behavior and ensure that the goals are replicated after the project is over, it can also be seen as reinforcing dependency. It is just as easy for a recipient of an animal to feel that the project is instilling proper caretaking behavior, as it is to feel that the project is doing the caretaking on his or her behalf.
Threats to sustainability lurk everywhere in a project with a high giveaway quotient – indeed the threats can be viral and so need to be pounced on quickly.
I visited a woman who has charge of one cow and in a nearby shelter, one bull. On visiting the shelter for the bull, it becomes apparent that he is not terribly successful vying for food in the feed bin with two cows, who seem able to push him out of the way with ease. I ask about the two cows. One has been there 12 days, the other 2 days. It is normal, I am told, that when a cow begins to be in heat, she is brought to the bull for a day or two who then services her. That seems to be the case for cow #2. But what about the cow that has been here for close to 2 weeks? I ask. The answer seems to suggest that the owner did not bother to do the vigilance needed to tell when his cow is in heat and so to avoid any chance of missing the crucial window, he simply said to himself, well, I’ll just install the cow there until it is in heat and then it will be serviced. But as the field officer with me notes, the owner of that cow is putting the animal at risk of disease, and more important a reduction in the health of the bull due to insufficient food, and less room for all three to move around in quarters meant at best for two animals.
Still, so far this project has been working as intended. 97 % of the donated cows survive, first offspring are being passed on, a majority of the recipients of the offspring seem to be managing them fairly well, milk production goes up, and many families make more money than they had before. Some begin to eat more meat, improve the roof on their house, buy some clothes for their children, pay for school fees, and so on. In terms of cost benefit, let’s say the original 90 families, through the pass-on program, multiply to become some several hundred beneficiary families, perhaps a total of 1500 people. By that calculus, the $225,000 worth of animals, the perhaps $50,000 worth of cement and other inputs including the milk cans, plus the salaries for the field officers, the training and vehicle costs, the total project cost of $1 million works out to about $650 per person, which seems like a good social return on the investment. But is it?
After three years HI moves on to another area to undertake a similar project. In Mchinji the field officers have gone. The bulk milk chilling plant, the cows and the community support group are left. In its reports to donors, HI calls the Mchinji effort a success – there are pictures of happy farmers and healthy looking cows in its annual report. The pass it on, pay it forward notion, like the buy one get one free notion in a supermarket, is obviously highly appealing. It gives the impression of something for nothing, a self perpetuating cycle of good. Invest in one cow and some bulls, teach folks how to care for them, set up an income stream for the animals’ owners and the system runs on its own. All HI and its donors had to do was prime the pump.
Very rarely do organizations like HI and their donors like USAID go back 5 or 8 years later to see what has happened. During the 3 year life of the project, there was regular follow up, but judging by my half century of experience, later on things will begin inevitably to deteriorate. The community support group ceases to function, some cows die, the trained Community Animal Health Workers turn out to be inadequate in the absence of veterinary services and the right medicines, some owners sell their cows for needed cash, the gift cows are less well cared for as the 3rd and 4th generation is passed on, the bulk milk plant begins to deteriorate, the market price for milk goes up and then goes down, competition for feed increases, and so on. In short, the real world of risk, externalities, lack of incentives, variable motivation, begins to show itself.
Most important, those who have benefitted remain relatively poor. They are still in the same villages, living pretty much the same way. They are less hungry, have a few more possessions, and their children are better fed and clothed. But having begun as subsistence farmers, most remain so. This is not “feed the future” (the name of USAID’s major new program in agriculture) – this is feed the past.
If we want to talk about poverty elimination, and not just alleviation, then we are in the wrong place. We need to go to the capital city, Lilongwe, 70 miles away and see how the institutions in this very poor country function, its government, its ministry of agriculture and extension services, its university and its schools, its private firms, its laws and land registration regime, its financial services, its courts, its doctors and nurses and hospitals and clinics. We need to take a careful look at its ethnic structure, its social groups and how they are constituted, its internal rivalries, its history and its culture(s). The geography and demographics of Malawi need also to be taken into account. This is a landlocked country, with high population growth putting pressure on the land, which is where most people make their living. A country of subsistence farming, 80% rural, with one half of exports in one crop – tobacco. Deforestation is taking place rapidly. Fish resources in its major lake are endangered. By doing all of this we can begin to see perhaps which arrangements under the surface are the ones that move things along and which keep things from moving along. Perhaps we can begin to understand why the infrastructure is so poor with highly unreliable power and poor communications systems, why there is a high degree of corruption and incidence of HIV-AIDs, why there are water shortages, why economic growth is so far stymied, and why the country is highly dependent on foreign aid. In the light of all this, the HI project is a temporary fix, a band aid. It does little or nothing to deal with corruption, to promote democracy, to move the country to competitiveness. In such a case there are no easy answers, but if there are any at all they lie elsewhere than in Mchinji.
(with apologies to Bolivia)
While what follows will seem far-fetched, and contains more than a few anachronisms, imagine the following back-to-the-future fiction.
It is 1867 in the U.S. A civil war has recently ended; the southern states are devastated; former slaves, illiterate, are at a loss for livelihoods; agriculture has been ruined, disease is rife. In both the North and the South corruption is rampant. Labor migration is increasing. Most people still live on the land, in primitive conditions – there are few sources of clean water, and farming is at a subsistence level.
In contrast, Bolivia, in prosperous South America has been one of the most developed countries in the world for some time, and continues to lead in technology and other arenas. Pablo Boledison has just invented the first practical electric light bulb, and Juan Graham Bobell is working on something called the Boliphone. Bolivia’s bilateral aid agency BOLIVAID, recently bolstered by a presidential directive to help more poor nations develop, announces a major aid initiative for the impoverished United States called BOPFUS (Bolivia President’s Program for the US). Staff at BOLIVAID begin to devise literacy programs for former slaves, training in income-generating activities, and a health program aimed at rural clinics, including setting up training for para-pharmacists and midwives. A gravity based high altitude sea access program will be a top priority (Bolivia has years of expertise in gravity based sea-going trade) and a massive animal husbandry improvement program is called for in partnership with Llama International, a Bolivian NGO, which plans to introduce high yield llamas to the American plains.
One of the largest and oldest Bolivian INGOs – “BOCare” sets up headquarters in Washington D.C., and ravished Atlanta, Georgia. Bolivian experts begin arriving to design the assistance projects. Ojotas (leather sandals) and monteras (hats) are distributed to all the American officials the Bolivians meet, with the hats picturing the Bolivian flag, the logos of BOCare and BOLIVAID and emblazoned with the phrase “From the BOLIVIAN People.”
An early assessment of these aid programs was conducted by a team of consultants and here is a sampling of what they found.
“A significant number of the American local organizations we talked to told us that the “BOCare” and BOLIVAID procedures for working with them as implementing partners do not make much sense in their eyes. For example, one said to us:
“Can you believe it? We have to fill out a form that asks whether any of our male staff become short of breath at 14,000 feet above sea level, and then if not, why not? But what can you do, we follow their rules because otherwise no help.”
Many of the local American staff of the Bolivian organizations complained that while they had become fluent in Spanish and Aymara, the Bolivians had not made much of an effort to understand American ways and do not speak English very well, especially the English spoken in Mississippi and South Carolina.
One of the people we met said:
“We suggested translators, and they hired them. But then we noticed that the Bolivian project officers don’t get out to the field very often – they are busy in their project offices reporting to La Paz. And most of them leave after just a couple of years. What bothers us is that while they are here, they enjoy privileges our people don’t, like coca leaves delivered weekly to all their people from the Bolivian embassy in Washington.”
We also heard often that many of the local people who were supposed to benefit from the BOLIVAID projects began to resent the efforts, feeling that they were being patronized. We were told by one of our interviewees of a recent comment he heard from a farmer in Virginia:
“What do these foreign folks know? And who do they think they are, trying to teach us something when we hear that they have some problems of their own at home? Why, the other day in the newspaper there was an ad: ‘Make sure your child chews coca every day – make her grow up strong – From the Bolivian people.’ Do I need Bolivians to tell me what my child should chew? What’s wrong with tobacco?“
By Tom Dichter
We live in a meta age. We talk about meta humor (jokes about jokes), meta cognition (knowing about knowing) and meta data. In the capacity development field we appear to have arrived at the meta-framework stage – there are so many frameworks for organizational capacity, organizational capacity assessment, and capacity development indicators that we are beginning to produce frameworks that frame the frameworks.
There are at present at least fifteen capacity assessment frameworks (e.g., MSI’s ISF, MSH/USAID’s OCA, the World Bank’s CDRF, McKinsey & Co.’s OCAT ) as well as a number of past and ongoing attempts to create frameworks for the monitoring and evaluation of capacity development (CD) interventions.
If we in the development industry were better at reflection (not to mention meta reflection) we might wonder whether we have gone too far – beyond usefulness into a zone where the framework has become an end in itself; a zone where we have the false comfort of believing we have corralled many unruly elements into a neatly configured set that we can control.
For the gap between what we have been learning over the years about capacity and capacity development and how we do our work in this arena remains as wide as ever. Indeed our own imperatives as donors or practitioners of capacity development require us to willfully ignore the implications of what we increasingly know to be the case – capacity and in turn capacity development is (just as Development itself) is an unruly process, and some of its most important aspects – those that may count the most for organizational effectiveness – may not even be knowable.
The literature on organizational capacity has been converging for some time now on a view that amounts to a modified black box. In this view much of organizational capacity is about soft factors, somewhat hidden, hard to grasp; a view in which CD is a non-linear process, inherently unpredictable, hard to assess; a view that CD is so intertwined with context and the enabling environment in which organizations exist that sorting out attribution in CD evaluation is not possible. And to the extent that the literature tries to see a bit into the black box it moves way beyond the “1.0” level of organizational capacity, with its idealized view of what an organization “should” be like, where tools and technically rational systems are the core of the work (administrative control systems, governance structures, human resource policies, strategic planning, board composition), and converges around what we might call Capacity “2.0” – the capacity to adapt, to question and reflect, to change by trial and error, and on to Capacity “3.0,” the even softer level we call organizational “culture.” And all of this is added on to what CD thinkers have been saying for years – capacity development takes time, and moreover may not require others to do it – many organizations can and do develop their own capacities.
Because of the growing implicit acceptance of this modified black box, those who address the practical question of how we as practitioners can be of help, recommend muddling through – quite the opposite of basing our actions on templates or frameworks:
“This often implies that incremental “muddling through” is the best alternative; testing, trying and adapting approaches along the road, and accepting that the risk of failure is high….That implies sometimes doing less, sometimes doing more for CD. First of all, it demands a more managerial, strategic and dynamic look at CD and change, requiring that country and development partners change the mental mode in which they traditionally dialogue about and deal with capacity issues as if it was mainly a technical issue.”
This way of thinking about CD is reflected in works like Merilee Grindle’s “Analytics of Next Steps”; Andrews, Pritchett and Woolcock’s “Problem driven iterative adaptation,” Owen Barder’s call for wholesale experimentation; Donald Schon’s work on reflective practice, Chris Argyris’ discussion of single and double loop learning, David Ellerman’s work on horizontal learning, and so on. And of course if we go back a century to John Dewey, we are reminded that not much is new, for in his work we see the notion of learning by doing, of the oscillation between adaptation, reflection, action, failure, and trying again.
Hopefully these convergences mean that the real world — complex, messy and unpredictable — is making a comeback. Indeed, it is largely because we are so uncomfortable with (and more important, organizationally unprepared for) messiness that we keep hoping for templates and frameworks to ease our unhappy sense of disorder. But that temptation ought to be avoided. And to be sure that we do not get too hopeful about the prospects of being rescued by frameworks and templates, there is the growing literature on complexity to remind us to live with the mess, indeed to embrace it. Here, for example are Snowden and Kurtz, who question three assumptions, ones that seem to underlie our old habits in capacity development:
“The assumption of order: that there are underlying relationships between cause and effect in human interactions and markets, which are capable of discovery and empirical verification. In consequence, it is possible to produce prescriptive and predictive models and design interventions that allow us to achieve goals. This implies “best practice”…. It also implies that there must be a right or ideal way of doing things.”
The assumption of rational choice: that faced with a choice between one or more alternatives, human actors will make a “rational” decision based only on minimizing pain or maximizing pleasure.
The assumption of intentional capability: that the acquisition of capability indicates an intention to use that capability, and that actions from competitors, populations, nation states, communities, or whatever collective identity is under consideration are the result of intentional behavior. In effect, we assume that every “blink” we see is a “wink,” and act accordingly. We accept that we do things by accident, but assume that others do things deliberately.”
They conclude that
“…in decision-making at both policy-making and operational levels, we are increasingly coming to deal with situations where these assumptions are not true, but the tools and techniques which are commonly available assume that they are.”
Therein lies the gap we need to mind. Frameworks and templates are ill-suited to realms such as capacity development where assumptions like the three above (and probably others) are simply not true.
What to do? Less may be More.
The good news is that there may be less for us to do (as practitioners of CD, promoters of CD, donors of CD), and thus less for us to worry about, and less money that we need to spend. The bad news is that this might mean we don’t need everyone who now works in this field to continue to do so. But then again the other good news is that we really now can begin working ourselves out of a job. [That is what we set out to do 50 or more years ago, isn’t it? ]
If we can reflect on why we feel the need for frameworks, and acknowledge the roots of our discomfort and the ways in which our own organizational imperatives drive the need for frameworks, we may become freer to recognize that we have been tearing our hair out unnecessarily; not so much that there has been ‘much ado about nothing,’ but that there has been more ‘ado’ than is warranted.
If we stand back from the task of defining, codifying, and “delivering” capacity development to others, we can begin to see ways to support CD that acknowledge the messy real world and indeed embrace it. Hence new roles and a new script, perhaps as follows:
- “We don’t need to tell you what capacities count for you, you tell us.
- “We don’t need to tell you how to acquire capacities you feel you need, you tell us.
- “We don’t need to devise indicators for your improvements in capacity, you devise them and then tell us.
- “And if you are not ready to do all this, fine, then come back when you are and we’ll begin talking about what we can do together.”
For example, we (as donors) can introduce you to others who seem to face the same dilemmas; we can fund knowledge exchanges such as study tours, cross visits, organizational “twinning;” we can fund research on enabling environment matters you say are critical to your evolution; we could rent you space (or give you space) where you and 2 or 3 others could share the space and exchange problems and solutions; we can play the role of curmudgeon, disturber, sounding board, stimulate you to meet your own objectives according to your timeframe; we can support your experiments in x or y; or we can play “tough love” with you and offer you some money for your endowment, but only if you raise as much or more on your own first.
 Jerry VanSant, “Frameworks for Assessing the Institutional Capacity of NGOs,”
Duke Center for International Development, Duke University, Revised December 2008.
 See for example Maria Carrasco, “Monitoring and Evaluation of Organizational Capacity Building Interventions for Civil Society Organizations,” Draft – Limited Internal Distribution, USAID, July 2012.
 See Wendy Stickel, “Part III: Suggested Guidelines for Evaluating Capacity Development under IPR; M&E Approaches to Capacity Development,” in Working Paper on …August 6, 2012. See also Charles Lusthaus, Marie-Helene Adrien, Gary Anderson, and Fred Carden, “Enhancing Organizational Performance, a ToolBox for Self-Assessment,” International Development Research Centre, Ottawa, 1999. Or UNDP “General Guidelines for Capacity Assessment and Development in a Systems and Strategic Management Context,” January 1998.
 Merilee S. Grindle, “Divergent Cultures? When Public Organizations Perform Well in Developing Countries,” World Development, Vol 25, No 4., 1997. This study focused on 29 organizations in 6 countries, and determined that “organizational culture” was the key variable in accounting for good performance.
 “Echoes from the Field, Proven Capacity-Building Principles for Nonprofits,” A collaboration between The Environmental Support Center and Innovation Network, Inc. funded by the David and Lucile Packard Foundation, no date.
 LenCD Perspectives Note prepared in 2011 for the Busan High-level Forum. See also ECDPM, 2006, and Baser & Morgan, 2008,
 See Merilee Grindle, “Governance Reform: The New Analytics of Next Steps,” in Governance: An International Journal of Policy, Administration, and Institutions, Vol 24, No. 3, July 2011 (pp 415-418).
 Matt Andrews, Lant Pritchett, Michael Woolcock “Escaping Capability Traps through Problem Driven Iterative Adaptation (PDIA),” CID Working Paper No. 239, June 2012.
 Owen Barder, “Complexity, Adaptation and Results,” Sept 7, 2012 in the Blog – Global Development: Views from the Center.
 “The new dynamics of strategy: Sense-making in a complex and complicated world,”
by C. F. Kurtz, D. J. Snowden, IBM Systems Journal, Vol 42, No. 3, 2003.
by Tom Dichter
About a year ago the U.S. government’s foreign aid agency (USAID) completed a new mission statement based on polling some 1500 of its staff members.
“We partner to end extreme poverty and to promote resilient, democratic societies while advancing our security and prosperity.”
I’ve been working in international development for fifty years and I’ve rarely seen as mindless a statement coming from any entity devoted to promoting development (Recall that USAID stands for the “United States Agency for International Development”).
Let’s start with the surprise – the word “development” does not appear in the mission statement of an agency supposedly devoted to it. Years ago, development was understood as the means to poverty reduction, and the hope was to reduce poverty, period, not just “extreme” poverty. But now USAID has obviously retreated to something that is relatively easy and measurable – ending extreme poverty rather than all poverty. One could argue that in this new goal USAID is simply being realistic – ending all poverty is of course not something we can expect any time soon. But my experience with this agency and with the development aid industry in general tells me that realism is not what we are seeing here. Instead it is a rather cynical reasoning that has something to do with keeping the agency in business and avoiding risk. Ending extreme poverty means stopping starvation, preventing infant deaths, providing clean water, raising the nutrition level of children, etc. In short dealing with the poorest of the poor. These things are relatively easy to do. They translate into providing food, inoculating children, bringing nutrition advice to mothers, promoting breast feeding, digging wells, and so on and they lend themselves to short term interventions and to measurement (caloric intake, infant mortality rates, etc.), and carry hardly any risk. All of this means USAID’s constituents in the public and in Congress can feel the money is well spent, and we can all feel virtuous.
But ending extreme poverty has little to do with long term economic development, and research has shown that while such efforts do reduce extreme poverty (defined as living on less than $1.25 per day) they do not move people much further than that (is getting to $1.50 or $1.75 per day really success?) Simply, they do not significantly change the conditions which explain how people came to be extremely poor in the first place.
Virtually all the intelligent discussion of foreign aid to developing nations has for years converged around a view that reducing poverty in a sustainable way depends on changes in the institutions of a society – institutions that embody and enforce the rule of law, ensure property rights, policies that bolster stability and broaden opportunities for economic participation. And these changes depend in their turn on changing the arrangements – both formal and informal – in the political economy, social structure, and culture of a society. But fostering, indeed even barely influencing, such changes is problematic. Fraught with complexity, always at risk of unintended consequences, and of one-step-forward-two-step-back oscillation, such work is a tough sell to a constituency that wants quick wins and measurable results.
Two generations ago the U.S. seems to have begun to understand that development was what our foreign aid should be involved with. Take a look at the U.S. government’s mission statement at the very beginning of our modern foreign aid apparatus – President Truman’s “Point Four Program” which was codified in the 1950 “Act for International Development.”
“It is declared to be the policy of the United States to aid the efforts of economically underdeveloped areas to develop their resources and improve their working and living conditions by encouraging the exchange of technical knowledge and skills and the flow of investment capital.”
While it was far from perfect, somewhat naïve and missed much, it headed in the right direction. It focused on capacity and capital; on skills, knowledge and investment – a formula that, while incomplete, still makes some sense (see China’s success in moving hundreds of millions of people out of extreme poverty). These are some of the key elements in the creation of enterprise and jobs, and through that economic growth.
Of course in the 1950 statement there was no mention of our security or prosperity; we did not then talk about combining aid to underdeveloped areas with the advancement of American security and prosperity. And we did not for a simple reason – they don’t fit well together. If the current USAID mission statement’s use of the word “partner” suggests we want to help others develop in tandem with them; on their terms (at least partly); then our prosperity, our security may not be what gets advanced. Almost by definition what should advance is their prosperity and their security. And if the Truman era mission statement was a bit naïve and harbored a too-unquestioned belief in ‘technical knowledge and skills’ at least it did not get caught in a blatant effort to have one’s cake and eat it too, which is what the current USAID mission statement tries to do.
Finally, where are those “resilient and democratic societies” that we want ‘to promote?’ I can name a few democracies, but few are “resilient,” and when I look at the 100 or so nations and territories receiving some sort of official U.S. aid, at best there are ten percent that come even close to being both resilient and democratic and on both counts there are reasons to be doubtful (Mexico, Panama, Indonesia, India, Georgia, Belarus, Botswana, Montenegro?). As for the other 90% (e.g., Haiti, South Africa, Rwanda, Kenya, Nigeria, the DRC, Morocco, Egypt, Jordan, Malawi, Philippines, Ethiopia, South Sudan, Guinea, Myanmar….the list is long…) well, let’s just say it’s a stretch to put any of them into either of the two categories. And anyway, if a country is a resilient democracy, it is then by all accounts well on the path to prosperity and does not really need much of our development aid.
So what then is the purpose of this participatory, time-consuming, and basically un-reflective effort to encase U.S. foreign aid in a new Vision and Mission? Do we chalk it up to mere political posturing – a hope that no one will pay much attention other than to its good intentions? Or is this an anodyne attempt to seem like we are doing something meaningful, and if so who is the audience? Congress? The concerned public? And if they read it carefully are they likely to believe it? Or is it just a way to kid ourselves?
Five months into its operation the food processing plant on the outskirts of Dakar, Senegal is running into daunting problems. This international donor-funded project ($400,000 for three years) is intended to support the “Professionalization of Women’s Groups in the Production, Transformation and Commercialization of Fruits, Vegetables, Fish Products and Local Cereals.” The project is to be run by a regional West African NGO and is set up for three production lines: cereals, fruit juices and syrups, and peanut butter. Some 60 women are the intended beneficiaries of the project. They are poor, I am told (I evaluate projects like this in many countries), but there are no baseline data about them, because, as Mr. Maalouf, the project coordinator, says, “we don’t have the resources to do that study.”
The women work in shifts on the designated production lines. I ask to see their time sheets, but the person in charge of these is not able to locate the most recent ones. I explain that I want to see these in order to get a sense of the absentee rate, the consistency of the labor force. Mr. Maalouf tells me this could be calculated but they had not yet done so.
I asked also to see some figures on production for the last two months (the last figures I saw were in their quarterly report for the first three months). They tell me they have not yet done the figures for the last two months. I suggest that knowing the exact production figures each month would be useful feedback for management. They agree, but point out that production was even lower in the last two months than in the two months before. In fact, as it turns out, the only month with high production was the first one, when the project was officially launched. At that time, Mr. Maalouf says, they had bought a large amount of inputs in order to show high production to the dignitaries and media who attended the opening ceremony. Attendees included two government ministers, regional presidents of other West African country branches of the large NGO that received the donor grant, and others. This event was followed by a day of filming done by TV 5, a French TV station. (I learn later in a meeting with Mrs. A, who has led the NGO since its inception, that she has family connections to both the current government and the previous one.). In any event, the first month’s cereal production was 38,185 kg, in contrast to the second month figure of 249 kg, and 355 kg for the third, a drop of almost 100%. If the last two months were even less, as they seem to be telling me, the cereal line has almost immediately become non-operational.
Why this stark drop almost immediately after start-up? Both the personnel at the site and Mrs. A, with whom I meet later at her office, explain it as a “chronic” problem of not having the resources to buy the raw materials or to pay the workers.
How could this be? I ask. Mrs. A. says that they made a “mistake” by not including these costs in the budget they proposed for the project. I recall that in the process of selecting the grantees, the donor staff in Dakar told me that they had recommended funding the project under a number of conditions. These included: “That the NGO make a concerted effort to use a private sector approach (i.e., to borrow the needed funds from an outside lender or to rent the equipment) in order to acquire their production equipment;” in addition the donor had requested “proof “ of market demand, as well as “a copy of the business plan for the project.” The NGO did not comply with these conditions, but the grant was made nonetheless.
What does appear to have been included in the original budget are the purchase of all the machinery for the project, but not its maintenance, the rent for the building (which the project had previously renovated using a grant from the President of Senegal), the salaries of the key personnel of the NGO and the production unit, and utilities. Mrs. A. complains quite forcefully to me that the donor is gaining considerable “visibility” by funding this project and therefore ought to provide more “resources” to cover these mistakes, which she readily admits were the NGO’s fault, and also for overhead. She notes that she had to spend $1000 of her own money to send personnel to a seminar the donor held to train grantees on how to report their results, because there was no money for this in the budget either. I asked her whether these matters, and her other concerns, had been discussed with the donor staff in Dakar. She said no, they had not.
At the plant itself, the equipment, sourced locally, and thus relatively cheap compared to imported machines, appears to be rudimentary in design, and in the case of cereal grinding, not of high enough quality to eliminate all foreign matter from the cereal (dirt, bits of wood, paper etc.). This means that they have to sort the raw grain by hand before it can go through the machines. When we move over to the machinery they use to make juices and syrups, Mr. Maalouf mentions that the machine does not function except for lighter juices and so they are making the syrups by hand. They say they have talked to the supplier about this, but he reportedly told them the machine was never intended for syrup production and he cannot adapt it to do so.
The plant’s electricity supply, as is the case in Senegal in general, is regularly cut off, and so the project had to spend about $4,000 for a generator. But now, four months into its use the generator is regularly breaking-down (it was not operational at the time of my visit), and the supplier has, according to Mr. Maalouf, been reluctant to do much about this.
We look at the peanut butter line. This machine too does not appear to be used much. I’m told they have a problem with the cost of the 5 kilogram and 15 kilogram plastic buckets in which they sell the product. When the cost of these containers is added to the cost of buying the peanuts, they say there is no margin for profit. They do not know what to do about this.
They are also unsatisfied with the installation of the propane gas supply which right now is reaching the machines through rubber hoses laid on the floor. They have mentioned this to the donor, hoping to get additional money to install the lines properly.
With 8 full time staff at the plant and the other problems I am told about, there is little likelihood of reaching financial self-sufficiency, not to mention the “professionalization of the 60 women” which their proposal set as a key objective. The women who are involved are the relatively small number of paid workers and some of the proposed sales force, and the project goal is to increase their income from 1500 CFA per day to 2500. There does not appear to have been an analysis of what volume of sales it would take to cover this increase, or the amortization of the machinery, or its maintenance, or the downtime caused by breakdowns or electricity shortages, nor of marketing and printing costs, packaging, and so forth. Nor does there seem to be any effort made to move forward on the expansion of the project to other areas as originally intended. Finally it is unclear how the products are to be sold, when and if they do reach an adequate production level. At least some of the planned for 60 immediate beneficiaries are so far paid a daily wage for their work and when there is production, they would also receive the finished product to sell in the informal marketplace, though in future the project intends to develop specific branded points of sale.
I ask if they had done a market analysis to determine the demand for what they intend to produce. They tell me they have looked at the market and there is a strong demand for their products because it is natural and “people like it.”
Towards the end of the visit I come back to the issue of how they can get working capital so they can begin to stock inputs and establish a more stable pay schedule. I ask if they have considered going to a bank. Virtually everyone laughs. That would not be possible, they say. What about micro and small business funds, or microfinance? They haven’t tried this avenue. What then do they propose to do? They answer that they hope their donor might add some funding, but in the meantime they are actively approaching other donors to make up the difference.