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Why rethinking how we work on market systems and the private sector is really hard

Duncan Green's picture

Whatever your ideological biases about ‘the private sector’ (often weirdly conflated with transnational corporations in NGO-land), markets really matter to poor people (feeding families, earning a living, that kind of thing).  But ‘making markets work for the poor’ turns out to be really difficult and, just as with attempts to tackle corruption or improve institutions, there is a rethink going on in the aid business. Critics of conventional approaches (of which I am one) argue that systems thinking and complexity both explain why a lot of previous approaches haven’t worked that well, and suggest some new ways to tackle the problem.

To catch up on some new research on all this, I spent a fascinating afternoon at DFID last week. The ‘knowledge hub’ BEAM Exchange (they don’t like to be called a thinktank) presented a discussion paper and technical paper on ‘rethinking systemic change’, along with a warts-and-all case study from Palladium on the difficulty of trying to put this into practice in a large market development programme in Uganda. Some highlights.

The discussion and technical papers reviewed the lessons from the 3 elements of New Economic Thinking: evolutionary economics, new institutional economics and complex adaptive systems. Eric Beinhocker’s influence much in evidence. The papers draw some useful and pretty challenging conclusions:

‘The aim of development must be to enhance the evolutionary process in an economy and create access to this process for all levels of the society, both politically and economically.’

Blockchain for Development: A Handy Bluffers’ Guide

Duncan Green's picture

Top tip: if you’re in a meeting discussing anything to do with finance, at some point look wise and say ‘you do realize, blockchain is likely to change everything.’ Of course, there is always a terrifying chance that someone will ask what you actually mean. Worry not, because IDS has produced a handy bluffer’s guide to help you respond. Blockchain for Development – Hope or Hype?, by Kevin Hernandez, is the latest in IDS’ ‘Rapid Response Briefings’ series, (which itself is a nice example of how research institutions can work better around critical junctures/windows of opportunity). It’s only four pages, but in case even that is too onerous, here are some excerpts (aka a bluffer’s guide to the bluffer’s guide).

‘What is blockchain technology?

At its heart, the blockchain is a ledger. It is a digital ledger of transactions that is distributed, verified and monitored by multiple sources simultaneously. It may be difficult to think of something as basic as the way we keep and maintain records as a technology, but this is because record-keeping is so ingrained in daily life, albeit often invisibly. The ubiquity of ledgers is in part the reason why blockchains are held as having so much disruptive potential. Traditionally, ledgers have enabled and facilitated vital functions, with the help of trusted third parties such as financial institutions and governments. These include: ensuring us of who owns what; validating transactions; or verifying that a given piece of information is true.

Weekly wire: The global forum

Roxanne Bauer's picture

These are some of the views and reports relevant to our readers that caught our attention this week.

Refining advocacy assessment: reflections from practice
ODI
Efforts to assess advocacy – and thinking about how best to do so – are relatively recent compared to other fields. However, in the past decade a number of advocacy evaluation frameworks have emerged. This working paper looks at how these existing frameworks classify people and activities, and define and assess outcomes. It identifies problem areas, discusses implications for practice, and offers suggestions on how they can be addressed. The paper is derived from work over the past five years, revisiting recommendations from existing guidance, many of which the authors have followed and suggested to others. The working paper aims to contribute to further adaption and refinement of conceptual thinking and practical tools to assess advocacy.

Humanitarian Connectivity Charter Annual Report 2016
GSMA
The 2016 Annual Report tells the story of the growthof the Humanitarian Connectivity Charter from its launch in 2015, to the end of 2016, charting how its footprint has expanded to more than 75 countries, becoming a globally recognised industry-wide initiative. This report also details signatory and partner achievements in upholding the HCC principles.

Is the Anti-Politics machine still a good critique of the aid business?

Duncan Green's picture

Just been re-reading a great 6 page summary of James Ferguson’s 1994 classic critique of the aidindustry, The Anti-Politics Machine. Read this and ask yourself, apart from the grating use of the term ‘Third World’, how much has changed?

‘Any question of the form ‘what is to be done?’ demands first of all an answer to the question, ‘By whom?’ The ‘development’ discourse, and a great deal of policy science, tends to answer this question in a utopian way by saying ‘Given an all-powerful and benevolent policy-making apparatus, what should it do to advance the interests of its poor citizens?’

This question is worse than meaningless. In practice, it acts to disguise what are, in fact, highly partial and interested interventions as universal, disinterested and inherently benevolent. If the question ‘What is to be done?’ has any sense, it is as a real-world tactic, not a utopian ethnics.
 

Judith Tendler and learning from ‘good government’

Suvojit Chattopadhyay's picture

On 24th July 2016, Judith Tendler, former Professor at the Department of Urban studies and Planning at the Massachusetts Institute of Technology (MIT), Boston, passed away. She was 77. A Ph.D holder from Columbia University, Judith Tendler spent several years at the United States Agency for International Development (USAID) before a long career as a Professor in MIT. A significant share of Prof. Tendler’s work focused on the Americas, but she also studied South Asia and parts of Africa over her long career.

Prof Tendler’s book: ‘Good Government in the Tropics’ (1997) is one of the most influential books in the field of international development — an essential reading for students of governance and public policy studies. In the book, Prof Tendler and her research associates studied four cases of successful government in Ceara, a relatively poor state in north-eastern Brazil. In each of the cases, the government at different levels played an effective role, facilitating and brokering relationships, and submitting itself to mechanisms which could be used to hold themselves accountable. Those were rare, but rich, examples of ‘good government’.

These cases highlighting the achievements of ‘good governments’ challenged the dominant pessimistic thinking about governance in the so-called ‘third world’. Prof Tendler argued that much of the advice from international development agencies to developing countries was based on an analysis of poor performance of the public sector and governments. This resulted in a tendency to ‘import’ good practices from the successful developed countries, as well as a resistance to looking deeply into poor countries to identify variations in performance. In many ways Prof Tendler consistently challenged the pre-suppositions that development agencies and policy advisors nurtured and which, as a result, shaped the advice they dispensed into narrow straitjackets often unfit for the context in which they were to be applied.

How do you make aid programmes truly adaptive? New lessons from Bangladesh and Cambodia

Duncan Green's picture
Lisa DenneyDaniel HarrisLeni Wild

Following on from yesterday’s post on adaptive aid, a guest piece from Lisa Denney (far left), Daniel Harris (middle) and Leni Wild (near left), all of ODI.

A swelling chorus of the development community has been advocating for more flexible and adaptive programming that can respond to the twists and turns of political reform processes. They argue that in order to achieve better aid outcomes, we need to do development differently. As part of this agenda, ODI and The Asia Foundation, with the assistance of the Australian Department of Foreign Affairs and Trade, tracked and analysed three programmes in Bangladesh, Cambodia, and Mongolia. These programmes explicitly sought to work politically in practice, using a relatively small amount of money, a relatively short timeframe, and a focus on tangible changes. We followed attempts to achieve environmental compliance and increase exports in the leather sector in Bangladesh, and to improve solid waste management in Cambodia and Mongolia; issues identified for their potential to make important contributions (economic, health, environmental, etc.) to the wellbeing of citizens. Two of our case studies were released this month, telling the story of how the reforms unfolded and shifted strategy to better leverage the incentives of influential stakeholders, as well as the mechanics of how the Foundation supported adaptive ways of working.
 

How adaptation worked in practice

In each case, the programme teams (led by staff in the Foundation’s local office, and supported by a variety of contracted partners and a wider uncontracted reform network reaching both inside and outside of government) made significant changes to strategy during the implementation phase that helped to address difficult, multidimensional problems. In Cambodia, the team faced a complex and often opaque challenge in which waste collection is characterized by a single company with a long-term confidential contract that is difficult to monitor, a fee structure that does not encourage improved household waste collection, garbage collectors whose conditions do not incentivize performance, and communities that are difficult to access and do not always understand the importance of sanitary waste disposal. With a small Foundation team and limited funding, the approach relied on working with individuals selected as much for personal connections, disposition, and political know-how in working politically and flexibly, as for technical knowledge. The team began by cultivating relations between City Hall and the single contractor providing solid waste management services, then moved to work with the sole provider to improve their delivery, and finally, resolved to end the single contractor model in favour of competition.

Parts of the aid system just don’t work – the dismal cycle of humanitarian response

Duncan Green's picture

Every now and then an email stops me in my tracks, reminding me that Oxfam is stuffed full of bright, motivated, altruistic people. Here’s one I got a few weeks ago from Debbie Hillier, one of our Humanitarian Policy Advisers, in response to my request for thoughts on the state of the aid business. Her views are fleshed out in ‘A Preventable Crisis’, a new report published this week:
 

"Hi Duncan,

Here is a current example of how the aid system doesn’t work.

El Niño events and other droughts are forecast months in advance.  There is of course some uncertainty in the forecasts, but nonetheless, there is often a high probability of a natural hazard.  And with major droughts/El Niño/La Niña, these can affect many millions of people.

So there are situations of high probability and high impact – like the current El Niño.  And these are situations where we know what the solutions are. There are far fewer complicating political factors than in conflict – we know what to do.

If this was the private sector, there would be a significant response at this point. However the aid system does not work like this.

Should aid fight corruption? New book questions logic behind this week’s anti-corruption summit

Duncan Green's picture

Over at the Center for Global Development, Charles Kenny wants comments on the draft of his book on Aid and Corruption (deadline end of May). Let’s hope this becomes standard practice – it worked brilliantly for me on How Change Happens – more varied voices can chip in good new ideas, spot mistakes or contradictions, and it all helps get a buzz going ahead of publication.

But let me take it one step further. As a contribution to the corruption summit, hosted by David Cameron on 12 May 2016, I thought I would summarize/review the book. Charles gave the green light, provided I stress the ‘preliminary, drafty, subject-to-revisiony nature of the text’. Done.

The summit is about a lot more than aid – for example the rich countries putting their houses in order on tax havens. Which is just as well, because the book poses some real challenges to the whole ‘anti-corruption’ narrative on aid. What’s more, it is erudite, engagingly written and upbeat – as you’d expect given Charles’ optimistic previous takes like Getting Better. He’s got a great eye for telling research and ‘man bites dog’ surprise findings. Example: ‘Taking a cross section of countries and comparing current income (2010) to corruption perceptions in 2002 and income in 2002, results suggests more corrupt countries in 2002 have higher incomes in 2010.’

His core argument is pretty striking – when it comes to aid and corruption, corruption does indeed matter, but the cure is often worse than the disease: ‘an important and justified focus on corruption as a barrier to development progress has led to policy and institutional change in donor agencies that is damaging the potential for aid to deliver development.’ Ouch.

Weekly wire: The global forum

Roxanne Bauer's picture

World of NewsThese are some of the views and reports relevant to our readers that caught our attention this week.

What If We Just Gave Poor People a Basic Income for Life? That’s What We’re About to Test.
Slate
Over the past decade, interest has grown in an ostensibly unorthodox approach for helping people who don’t have much money: just give them more of it, no strings attached. In the old days of policymaking by aphorism—give a man a fish, feed him for a day!—simply handing money to the poor was considered an obviously bad idea. How naïve—you can’t just give people money. They’ll stop trying! They’ll just get drunk! The underlying assumption was that the poor weren’t good at making decisions for themselves: Experts had to make the decisions for them. As it turns out, that assumption was wrong. Across many contexts and continents, experimental tests show that the poor don’t stop trying when they are given money, and they don’t get drunk. Instead, they make productive use of the funds, feeding their families, sending their children to school, and investing in businesses and their own futures.

Media as a Form of Aid in Humanitarian Crises
Center for International Media Assistance
As the humanitarian crises following the Arab spring enter their sixth year, the media coverage of war, displacement, and migration in the Middle East and North Africa tragically have become all too familiar. For mainstream media, the millions of people whose lives have been upended are mostly data points, illustrations of the misery and upheaval that have swept across Syria, Yemen, Gaza, Iraq, and many places between. Yet for those who are caught in the crises, and plagued not only by insecurity and uncertainty but a lack of information, relatively little is available to help them make informed decisions for their own survival.  CIMA’s report, Media as a Form of Aid in Humanitarian Crises, examines how humanitarian crises around the world have led to a major change in the priorities and approaches in media development efforts. 
 

Payment by results in aid: hype or hope?

Duncan Green's picture

Is payment by results just the most recent over-hyped solution for development, or is it an effective incentive for accelerating change?

Madeleine has a 17 month-old daughter who was born at the village's primary health facilityWhen reading up on payment by results (PbR) recently I was struck by the contrast between how quickly it has spread through the aid world and how little evidence there is that it actually works.

In a way, this is unavoidable with a new idea – you make the case for it based on theory, then you implement, then you test and improve or abandon. In this case the theory, ably argued by Center for Global Development (CGD) and others, was that PbR aligns incentives in developing country governments with development outcomes, and encourages innovation, since it does not specify how to, for example, reduce maternal mortality, merely rewards governments when they achieve it.

Those arguments have certainly persuaded a bunch of donors. The UK government (pdf) says that this “new form of financing that makes payments contingent on the independent verification of results ... is a cross government reform priority”. The UK’s department for international development (DfID) called its 2014 PbR strategy Sharpening Incentives to Perform (pdf) and promised to make it “a major part of the way DfID works in future”. David Cameron, the British prime minister, waxes lyrical on the topic.

But I seem to be coming up against a long list of potential problems with PbR. Let’s start with Paul Clist and Stefan Dercon: 12 Principles for PbR in International Development (pdf), who set out a series of situations in which PbR is either unsuitable or likely to backfire. For example if results cannot be unambiguously measured, lawyers are going to have a field day when a donor tries to refuse payment by arguing they haven’t been achieved. They also make the point that PbR makes no sense if the recipient government already wants to achieve a certain goal – then you should just give them the money up front and let them get on with it.

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