Monday, May 31, 2010

Collective wisdom = better aid?

Is that necessarily the case? Owen advocates greater transparency and engagement with citizens of donor countries:
In the long run, public opinion will determine how much aid is given, to whom, and by what means: we cannot and should not try to sidestep the argument by putting the administration of aid beyond the reach of public opinion.
I agree that attempting to "deliver aid despite public opinion" is not the right way to go. This however obviously doesn't imply that we go to the other extreme. A decent balance is necessary and all those responsible for administering aid ought to strive to strike a balance.

What about the so-called 'beneficiaries' then? As a citizen of a recipient country, would I want the kind of development that a foreigner chooses for me? Choices made by a literate media-savvy population that enjoys a high (and secure) standard of living...Can I be sure that needs voiced by my community would match what the public opinion in the donor countries desire? I agree that results, evidence and analysis can help shape the debate. But I also know only too well that these are only a part of the big picture - and that these alone are unlikely to shape public opinion and donor policies.

The size of aid in itself is unlikely to be significant enough to warrant sustained interest among people beyond those linked directly with the aid industry. Sure, public interest would be high if one considers the sum total of policies that affect international development - trade, migration, outsourcing etc - and that's probably the reason political rhetoric on these issues usually lean towards being protective of local interests in most western countries. (And rightly so).
 
From Owen's article, it is clear enough why citizens of donor countries need to be engaged. One also needs to stress as strongly that citizens of recipient countries need to be heard as well. Of course, Owen himself has written previously about how to get feedback from aid beneficiaries.

Hence, to a large extent, the captains of the aid industry (including, say the trade, defence and finance ministries) have to take the responsibility of directing the course of international aid, receiving and integrating feedback from recipient governments and their citizens, their own citizens and their peers in the aid industry. 

Sunday, May 30, 2010

Just like that...

via Project Syndicate, where Jeffrey Sachs signs off with
The rich world says that it lacks the money to do more, but what it lacks is imagination, not resources. The US should divert its wasteful military spending to new health financing. The world should implement a global bank tax. The billionaires should step up their philanthropy. The oil companies should pay more. New donor countries like China can fill the financing gap left by the traditional donor countries.
It really is that simple...just like that! 

Tuesday, May 25, 2010

Some good news

via Microfinance Focus, about profits posted by Ujjivan Financial Services. The MFI has posted a profit this year and there are rewards going out all around. What makes me happy is this bit -

The annual interest rate for 1st cycle business loans is reduced to 23% from 25% and for repeat cycle business loan it is reduced to 22% from 24.5%. For 1st cycle family loans, the interest rate is reduced to 25% from 26.9% and for repeat cycle family loans it has come down to 24% from 26.9%.
The very impressive Managing Director of Ujjivan, Samit Ghosh, says -
“We have transformed from a start-up to a mature social enterprise in the year 2009-10. With maturity comes responsibilities and we hope we have delivered against these objectives to the satisfaction of all our stakeholders.”
and
“As a company committed to our social mission and double bottom line, it is our obligation to not only pass on the benefits of scaling up to our customers but to also share our profitability in servicing the poor”

Thursday, May 20, 2010

Poking a hole

via David Roodman, Lant Pritchett's comments on microfinance and gives us this really sobering thought
Certainly not necessary..., probably not sufficient, probably not actively harmful, probably just not that big a deal one way or another
I have (naively) tried to defend being idealistic about microfinance in a previous post. I strongly believe that often, the dominant tendency in the 'development' world is to find satisfactory fixes to 'their' problems, that are neither high quality, nor are they likely to improve the underlying systems. Lant's story about water supply systems in India further demonstrates this point. He says -
I was living in India and discussing arrangements for household water supply with some development colleagues of mine. After about half an hour of pretty fruitless discussion I said, “let’s step back. tell me your long-run vision of the household water sector in India” They said “Our vision is that India meets the target that every household lives within half a kilometer of an improved water source capable of providing 40 liters of safe per person per day.” I said, “I see the problem. My vision of success is that every Indian can take a hot shower inside their own home.” The difference is that one can imagine meeting the first goal “programmatically” or with a series of “interventions” while the latter clearly requires endogenously functional systems. No one I know wants to have to go to a group meeting to take a hot shower. They want to turn the tap and it works.
When the NGO I used to work for talked about a private shower for households living in rural Orissa (in addition to a private toilet), lots of donors and the general public would openly wonder what the big fuss was about. Of course, the dominant paradigm of development being pushed by the governments then was a public tap for a designated number of families in every community. That made this NGO's ambition even more preposterous.And often, the resistance did not stem from lack of technology or resources - it was the mindset. 

I am grateful to David for bringing us this debate. We really do need a reality-check...

Wednesday, May 19, 2010

The Conservative-Lib Dem deal: Parties Agree!

The (even more) confused (international) aid worker: the elusive quest for impact...

On my way, over the last couple of years, I have stepped out of my country and into the 'international development' sector. First, through a year of classrooms, field and desk research in the UK and now in Ghana over the last eight months. In making the move - lots of familiar questions sprang up -
  • Is it going to be more challenging? Any more different from moving to the north-east in India from Kerala? I doubt it. Even moving to Bihar or central India might be a lot more challenging. Although, it has to be said that Ghana has been a particularly easy move. Can't say the same about many other parts of the world...
  • Will the experience be immediately transferable to India? Probably not. Ghana is a small country - smaller than many Indian states. There are of course similarities in regional diversity; the nature and scope of challenges that face the two countries; in how public policy is formulated and implemented. 
  • So is this a great career move? initial steps in building an international profile? Well probably, Yes. Since my experience in India (as an Indian) doesn't count as international development experience (but Ghana will, although Ghana has just about a fraction of the diversity in India) for potential recruiters; though I probably will still be required to prove my skills in managing a 'desk' through a stint somewhere in the 'west'.
Most of the above questions are probably motivated by this - Isn't there enough development work left in India? Why then am I hopping off to another country; to another continent? Having grown up in India, these were pertinent questions I ought to have answers to. It would make sense if I was moving to another developing country with a for-profit concern. It would also make perfect sense if I was moving to a desk-job in one of the industrialised countries. However, if I wanted to work closely with people and experience change at the grassroots, investing many more years in a certain part of my own country might be the best option.

So then, in the end, this is really about me - the rational development professional; and not so much about the people in either India or Ghana. Much of the thinking behind this is about what I think I would learn from the development community at large. Most of the motivation comes from a desire to experience the difference of working outside my natural comfort zone; the inquisitiveness of engaging with a new country, a different context and new systems.

Will all of this make me more effective? Obviously, the first question is - effective in what sense?
    • Is it my ability to make an impact in a foreign land, compared to that back home?
    • Is it how effective I could be in the long-term in development back in my country as a result of this international development experience?
    • Is it about how effective I could be in the long run, not necessarily in my country, but as a professional in the field of international development? 
Lots of questions as usual. Few answers; but worth the thought, and the time...

Saturday, May 15, 2010

Being idealistic about microfinance

David Roodman reflects on his exchange with Lant Pritchett on microfinance. One of the two points of debate was about what Roodman calls the 'Schumpeterian success' of microfinance. In Roodman's words, one of the arguments Pritchett was making was as follows -
microfinance should be seen as an unfortunate work-around for the failures of mainstream financial systems to serve the poor, like private water sellers in New Delhi who sell water to slumdwellers without piped water at far higher prices than the rich pay (for piped water systems subsidised using public funds)
For Roodman's response, see the last paragraph of his post.

I found Prof Pritchett's views really interesting. There has been a lot of debate on the effectiveness of microfinance - often starting with the acknowledgment that (mostly private) microfinance players have succeeded in expanding access to financial services in a way that formal financial institutions (mostly in the public sector in a country like India) have been unable to, so far. The consequent debate focuses on the impact of microfinance on its clients. One of the dimensions of gauging the success of microfinance has to be its impact on existing formal financial infrastructure. But we mostly refrain from making an idealistic pitch for affordable and inclusive finance through formal banking channels and find (often justifiable) reasons for why microfinance (both savings as well as credit services) are so costly for its clients (although often cheaper than existing informal alternatives), who paradoxically are among the poorest in the developing world.

Pritchett's reference to water supply in New Delhi makes the same point. It is true that the poor neighbourhoods in Delhi who don't have access to piped water are serviced by private tankers and small water purifying and packaging businesses. In the absence of anything better, millions in Delhi use their services too. One can also be almost certain that a randomised trial would show striking impact of such an alternate water supply system. However, only after giving up on the state for provision of essential services such as water can one justify the existence of the private water suppliers.

At the same time, here is Dean Karlan making the point about usage - why assume that usage automatically translates into positive impact? While Karlan uses this argument to make the case for rigorous evaluations, I want to draw a tangent to argue that we ought move beyond hailing the miracle of microfinance on the basis of the stupendous numbers it has stacked up; that we be idealistic in sticking our necks out demanding that poor clients deserve finance on much better terms than what the microfinance industry currently offers them. I know I am being idealistic when I say this and that there are a million steps we need to cover before we can get there...but I have no doubt that this is the goal far out in the horizon that we need to aspire for.

Thursday, May 13, 2010

Winds of change?

From DFID's website today (emphasis, mine)
As a result of the election, you may notice some changes to the DFID website. If you are searching for information about DFID prior to 7 May 2010, you can find it on the archived version of the DFID website. We have archived a number of web pages including press releases, speeches and news items prior to 7 May. We have also temporarily removed the thematic ‘How we fight poverty’ pages, which are now under review.
Watching out for the 'review'!

Wednesday, May 12, 2010

Immersions for 'poverty professionals'

A friend forwarded this piece by Ravi Kanbur. It is a heart-felt tribute to Robert Chambers and a rather candid admission of the dilemmas of being a development professional, or poverty professional, as Kanbur calls us.And Kanbur, being a former World Bank staff, knows exactly all about this...

Rather delightfully, the economist in Kanbur reveals a humble side, one that he accepts is a rarity among his peers. He says -
I still remain a card carrying economist, fully aware of the power and reach of my discipline, and ready to defend it against ignorant or envious attacks by those who cannot understand it or master it. But the epistemological basis of my discipline, and its attendant weaknesses, are clearer to me now than they were when I first became a professional economist. Indeed, perhaps the greatest weakness of economists is that we do not fully understand the weaknesses of our discipline.
But the article is not just about economists. The article about all of us - people who are in the development sector, those making a rather good living out of it. The article also distinguishes between the for-profit entrepreneur-turned-philanthropist and the conventional set of aid workers by pointing out that
...in these cases, at least, the wealth came first and then the desire to reach out to the poor. And we can legitimately ask whether the philanthropy that it generates is a good enough reason to allow wealth to build to such staggering levels. What is striking about the class of poverty professionals (of whom I am one) is that the good living (granted, not at the billionaire or millionaire level, but pretty good nevertheless) is made through the very process of analyzing, writing, recommending on poverty. To me, at least, this is discomforting and disconcerting
Thus, development work being 'not too bad for one's own poverty' is an undeniable truth - at least for international development workers. Although one can argue about relative levels of being well off (especially in comparison to the people we are supposedly working for), I draw inspiration from a bunch of friends who have chosen a modest living, so they could dedicate themselves to development work. Just to cite one among them - a very close friend of mine recently quit his job in a donor agency to work with a grassroots NGO in one of the poorest states in India, choosing not to (for now, at least) propel himself up the conventional career ladder of the 'development set'.

For the rest of us, Kanbur recommends 'immersions' - the program Chambers used to refer to during his Saturday workshops at IDS.
My specific proposal, therefore, is that each poverty professional should engage in an “exposure” to poverty (also known as “immersions”) every 12 to 18 months. I do not mean by this rural sector missions for aid agency officials, nor the running of training workshops by NGO staff. What I mean is well captured by Eyben (2004); these are exercises that “are designed for visitors to stay for a period of several days, living with their hosts as participants, as well as observers, in their daily lives. They are distinct from project monitoring or highly structured ‘red carpet’ trips when officials make brief visits to a village or an urban slum….”
During those workshops at IDS last year, I spent quite some time wondering that 'immersions' might be useful, but are they the most effective way of reaching where we want to reach? Kanbur addresses the prominent criticisms of the approach - the poverty tourism argument, of it being an extractive exercise and the quantum of resources this would require. I feel 'immersions' are partly a result of a few core assumptions about development workers, that have crystallised on the basis of the typical high-flying poverty professional:
  • They are very busy - so they cannot be expected to change their regular life-styles. Instead, all they can do is to schedule slots in their calendars for a week-long 'immersion'
  • They need to have a high standard of living and be paid astronomical amounts - just so that they can be efficient? Efficient, by removing themselves from the realities of where they live, so they can focus on the logframe and the activity report? One can understand development workers not living in slums. But do they have to become the new elite? 
  • Life styles are hard to change - a common paradox I see frequently around me is that of the development professional using CFL bulbs in their homes and offices, while driving around only in SUVs. Top-of-the-line international development workers could live their lives insulated from all the elements that are characteristic of the countries they live in. Sure, to their credit, lots of them choose not to do so. But I have to ask - how many of them here in Accra have ever taken a tro-tro ride?
Immersions are necessary in a world where none of the above can be changed. Have we accepted that the system itself cannot be changed? Just as Kanbur suggests, the marketplace of development workers should perhaps call their bluff by collectively rationalising salaries...won't that be fun!



PS - Check out Ravi Kanbur's website for many more interesting pieces on poverty and development - especially the one on Amartya Sen. And you might want to read this and this - about his resignation from the WB, over disagreements on the World Development Report.

Tuesday, May 11, 2010

Politics of youth

FT comments on the new age of Indian politics, hailing the transition from
Atal Behari Vajpayee, former prime minister and head of the Hindu nationalist Bha­ratiya Janata party government, once pointed out that an Indian politician is born at the age of 50, becomes a teenager at 60 and a young man at 70
to

The 39-year-old Mr (Jyotiraditya) Scindia is an example of a broader change taking place in the upper echelons of the world’s largest democracy: the emergence of a generation of politicians that hopes to steer India’s global integration and rising economic power in coming decades.
As the article itself acknowledges, it is not just the names that matter. A quick look at the surnames - Gandhi, Scindia, Pilot, Prasada, Sangma, Dikshit, Dutt, Abdullah etc reinforce the obvious:
Ms Sangma, from a political family in the north-east, acknowledges the benefits of family ties. She says she has achieved a ministerial job in her 20s while someone without her pedigree could take 30 years just to get a parliamentary nomination
Too bad then, that the emergence of young leaders has mostly served to reinforce the notion that politics is for the elite. I am not sure if US MBAs and work experience in international finance alone are the best building blocks for tomorrow's political leaders. Going young may be in keeping with (and good for) India's global image, but them young leaders are definitely not one among us

“the political trilemma of the world economy”

Dani Rodrik on Project Syndicate 
economic globalization, political democracy, and the nation-state are mutually irreconcilable. We can have at most two at one time. Democracy is compatible with national sovereignty only if we restrict globalization. If we push for globalization while retaining the nation-state, we must jettison democracy. And if we want democracy along with globalization, we must shove the nation-state aside and strive for greater international governance
International governance is a neat concept that is as elusive as it can get in practice. Rodrik points out how EU is learning this the hard way. But where EU is at today is an aspirational target for many other budding coalitions around the world. Will EU's troubles discourage the rest of us? Or will we learn from their mistakes?

Saturday, May 8, 2010

The confused aid worker

In the Indian development sector, where I started in 2005, there were typical notions of what constitutes the lifestyle of someone in development. The 'sector' was synonymous with
  • low salaries - The first two years, I was working for $300 a month, and had the fourth or fifth highest compensation package in an NGO that employed about 700 staff and worked with about 50,000 families
  • non-urban base - If you lived in a big city, you are not legit. One's commitment can be proven only when he/she is based in a remote rural area and didn't have easy access to internet. 
  • use of local transport - Most work-related travel was on motor-bikes, buses and trains; usually no 4-wheelers unless donors were visiting and no flying unless a conference paid for it.
  • extensive field travel - desk-based jobs don't make the cut; research-heavy jobs don't make it either. The 'sector-worker' is out in the field with implementation teams, in community meetings or in cities, networking with the government, NGO partners and/or donors
  • the look - kurtas and facial hair
During the time I was in the sector, my work exposed me to a diverse cross-section of development organisations and gave me the opportunity to make connections between what I saw in the field and the general discourse on development at the national level. With my interests and skills, I was probably fortunate this happened, because I realised quite early on that front-line project management was not really my thing. Although it hurt my ego tremendously at that time, there were people around me who inspired me to seek out other ways in which I could make myself useful.

Later in 2007, I moved to Chennai to work with a research centre. I started making about $2000 a month, had AC in my office and traveled extensively, but that mostly meant flying to other cities. In the eyes of many of my friends in the 'sector', I had 'sold-out'. First, I was now into research and policy work - not really part of the real grind anymore; second, my lifestyle rivaled that of my contemporaries holding corporate jobs. Unforgivable!

Again, the debate was not about what was more important - research or practice. The debate was about
  • whether as a researcher, I was any longer a part of the 'sector' fraternity. 
  • whether young trained professionals like me were taking the right decision by abandoning grassroots implementation NGOs which have significant human resource constraints.
  • whether one valued small, but visible direct impact more than perceived big impact, often in the abstract and usually on paper.
But then, like I said earlier, my work is more likely to be in the balance of these questions - neither fully in nor out.

Friday, May 7, 2010

The whole wardrobe...

1millionshirts was quite the sensation and sparked off a torrent of love, hate, taunts, cynicism, sympathy, encouragement and of course, ADVICE. Via Good Intentions are not Enough, here is the entire wardrobe!

Meanwhile, here is another t-shirt that's making the waves these days.

Thursday, May 6, 2010

The hesitant aid worker

When I started my first job in 2005, I told my family and friends I was working in the development sector. There were many who didn't see why a promising (according to them) young graduate should choose not to enter the corporate sector (becoming a government bureaucrat was a close second in the pecking order) and attempt to improve his standard of living. I said 'standard of living' because of the purely monetary judgments involved and I am not even sure it refers to what we understand by 'quality of life'. We would have long intense debates about whether it was possible at all to contribute to an increase in general social welfare, to alleviate the pressing development problems in the country. Those who felt this was a path worth treading on would engage in thinking through questions such as what development meant, for whom, and how we could be effective in our chosen fields. Even though a very small minority, they have been a big source of support and inspiration.

This post though is not about them. It is about the others - who could be family, friends, neighbours, teachers in school and college - pretty much everyone. But it is not very difficult to see why this is the dominant paradigm. The story goes somewhat like this -

Having grown up in Trivandrum, a city with about a million people, we were always reminded that India had massive metros such as Delhi (19 mn) and Mumbai (21 mn), not to speak of the rest of the world and its glittering New Yorks and Londons (Mohuda or Delwara didn't quite sound as exciting). It of course went without saying that along with these names, we also heard about the high costs of living in those cities, the cost of owning assets (like a house, land or automobile) that were increasing by the day - and since we were supposed to aspire to live in a 'big city', we had to be earning enough to keep pace. Earning enough often was directly associated with how we did in school, college (mostly professional colleges now), university (or b-school). And our families would spare no effort in ensuring that we got the best they could afford (or borrow for).  In return, we are supposed to do our best and get the best grades possible; clear professional entry-level selection tests and whiz through placement seasons.

Like millions of other families, my family was reasonably well off and could easily afford a comfortable standard of living in the city we lived in. We had everything we needed and almost everything we wanted. What I grew up with determines what I now think is necessary to lead a comfortable life. What we clearly did not have, was the security that even if I didn't do something to earn a monthly paycheck, I could maintain my standard of living. And all our parents knew only too well that their carefully accumulated retirement savings would not suffice if we too had to be supported beyond a certain age. Therefore, acing through schools and colleges was not enough. By the age of about 24, we also had to earn enough and start saving for (the future) family. Yes, that's right. This means that my family completely took care of all my costs until I was 22. I never felt bad asking for what we agreed was reasonable and I am sure my parents never hesitated from refusing what they thought was unreasonable. And I am expected to do the same for my children. So the development sector is really not for someone like me to hob-nob with. I wasn't born with a silver spoon in my mouth - and it made everyone curious that I wanted to join an NGO and be based in a rural area after a second degree in rural management the age of 22, at a time when I should have been chasing the big bucks.

None of the above is a secret from the rest of the extended family and the community around us. So they too felt like it is their moral obligation to make sure we didn't stray off the path to 'settling down' ASAP in our lives ('settling down' = high income + marriage + own/rented house in big city). Also, our targets were supposed to be aspirational. I was automatically expected to aspire to something more than what my parents had achieved. This could just be impossible in say, intellect...But if everything is translated into money, sky is the limit! And yes, in a nation of over a billion people, everything was scarce. Sure, all conceptions of scarcity are relative, but throughout our lives, we are expected to compete with our peers. His/her grades, salary, house (even spouse) could not be better than mine. Everyone around everyone was busy pointing out to each other how someone else was doing better on some count. So we could be working in the development sector, or for all that it matters, in the finance industry or be selling soap - it didn't matter as long as all the above expectations were fulfilled.

I dont believe that anyone is being unreasonable here. Lots of us continue to go through this and it is just the sign of societies struggling to reach a life of dignity and achievement, a lot of which, at this stage is measured by social status and material standards of living, and no one really has the time to worry about whether our successes are at the cost of others. So my being in 'development' is the result of a calculated decision - calculations that often dont add up. There are wild swings between passion and trained pragmatism - between romance and frustration. As a trained professional though, I feel we are less likely to become self-sacrificing martyrs. We are also less likely to become self-serving bigots. But what about 'the people' whose lives are affected by development workers like me?

Tighter controls over raters

Business Standard (BS) reports a new Securities and Exchange Board of India (SEBI) circular issuing guidelines for  credit rating agencies (CRA). Rating agencies would have to make mandatory disclosures at least every six months. Importantly, the raters will be bound to disclose the fees they charge as well as their shareholding pattern. Also, raters have to disclose the default rates on their previous ratings.

SEBI has also asked raters to maintain and make available for scrutiny by regulators for at least five years, details of the process by which ratings were finalised. It also specifies the terms for carrying out 'default studies'.

One of these guidelines that's going to be relatively difficult to enforce is ensuring a clear separation of the actual rating staff and the business development staff and steps necessary to avoid any conflict of interest.
A CRA shall ensure:
  • 3.2.1  that   its   analysts   do   not   participate   in   any   kind   of   marketing   and business development including negotiations of fees with the issuer whose securities are being rated,

  • 3.2.2  that   the   employees’   involved   in   the   credit   rating   process   and   their dependants do not have ownership of the shares of the issuer.
  • 3.2.3  prompt review of the credit ratings of the securities as and when any of its employees joins the respective issuer.
The full circular is here

From the BS report, it sounds like the rating agencies are happy to comply with the new rules.