Global health and international development is changing. I recognize this has been the opening of keynote addresses to countless conference, symposia and workshops in the field. Yet, I repeat it now, because it now stands to be eminently true. To be more specific, financing for global health is changing.
The reason for this change is two-fold. Demand and Supply.
First, there is a great need for change in financing of international development. The current model of financing of international development involves governments of rich countries handing out money to their poorer cousins. This model worked well, until rich countries realized that they are no longer rich. The best case in point is the United States. One-fourth of global development aid comes from the US government. The tiny fly in the ointment is that the US government no longer has any money. The narrowly averted debt crisis brought to everybody’s attention the fact that the US government was living on borrowed means. It has been borrowing money (mostly from China) and giving it out for free to the rest of the world. While admirably generous, it makes for fiscal suicide to be doing this. Some have called this a national Ponzi scheme. I submit that it is actually even worse. While a Ponzi scheme involves payment of borrowed money to creditors, the US government is currently running an operation that pays borrowed money to parties that have no claim to that money. China, in the meanwhile, has quietly learned that you do not put all your eggs in one basket, and is beginning to diversify their foreign exchange holdings. This means that the next time the US government threatens to default, China will have sufficiently reduced their exposure to be able to call the US government’s bluff. When that happens, the US government will have to make a dire choice. Either it fulfills its obligations to its own citizens, or it fulfills its obligations to citizens of other nations. Hardly a tough choice, but a cruel one, nonetheless. The bottomline is that rich country funding to international development will wane, perilously so.
The other reason is Supply. There are a number of innovative financing solutions that have come up to replace the hegemony of government-funded development. One such modality is the concept of Social Impact Bonds (SIBs). SIBs have three players -an implementing partner, the donor and private investors. The implementing partner actually carries out the work of development that the donor wants done. However, the donor does not pay the implementing partner up-front for the work, as the current model dictates. Instead, the donor institutes conditions or goals that must be met before the implementing partner gets paid. What happens if the pre-decided goals are not achieved? The donor simply does not pay the implementing partner. This places a huge risk on an implementing partner, and actually stifles innovation. This is where the third player, the private investors, comes to the rescue. Instead of forcing the hapless implementing partner to bear the risk, the private investors take the risk upon themselves by purchasing Social Impact Bonds. If the implementing partner does achieve the pre-defined goals, the donor pays it its due, and it then honors its bonds. If it fails, the private investors lose their money. This institutes a much-needed market dynamic in international development, an arena that loses much efficiency as a result of its current model. Under the SIB model, if a particular implementing partner routinely fails to meet the goals set by the donor, it will lose investor confidence and will die a natural death. By establishing objective and well-defined goals, it increases transparency and fairness in the award process.
SIBs are, of course, only one among many innovative financing models that have been taking flight recently. They are a good example of how, to twist the phrase around, one man’s poison is another man’s meat. They rely upon the same tools of financial engineering and shifting risks that brought down the global financial establishment; only this time, for doing good. The difference is that here, the parties bearing the risk are well-aware of their situation. Private investors in SIBs are usually of the kind that would like their investment make the world a better place, while earning them a dividend at the same time.
The beneficiaries of international development, either as individuals or as a community, are almost never able to pay for the services that they are provided through implementing partners. Donor funding, though potentially dwindling and uncertain, is required to provide these services. Although it behooves implementing partners to be as efficient as they can, the current model does not enforce ruthless efficiency. SIBs are one mechanism that can.
Tuesday, October 18, 2011
Friday, October 8, 2010
Spare change
Arvind Iyer, one of the most intellectual personalities I have had the fortune to call my friend, sent me this link echoing the question asked at the very end of the video (which you must watch), “How can anyone fail to want to help these people?” For those of you spoiled by executive summaries, I’ll indulge you and give you a gist of what the organization 50pence.org seeks to do. Their contention is that with just 50 pence (75 cents), you can buy a person treatment from six debilitating or fatal diseases for one whole year. What person, except for the sado-psychotic, would not offer their money for a cause as ridiculously important as saving a life? Yet, we all do it routinely. All of us hold on to our purse strings and those 50 pence never really reach the people to whom it means so much more. It’s plain that our miniscule donation could save a life, and yet, we fail to make that donation. What gives?
The answer lies in a thought exercise that I encountered as a graduate student at Harvard. During a lecture on ethics by the exceptional Daniel Wikler, he told us to imagine a scenario. This is what he said, “Imagine there’s a button on the wall. Every time you press it, a life somewhere is saved. Every single time. Will you press it once?” A couple of bewildered looks later – this was the school of Public Health, after all – there was general agreement that the button would be pressed once. “Would you press it twice?” Dr. Wikler countered. “Of course”, we all yelled. “How about 10 times?” “Definitely.” “A hundred times?” “Bring it on!” “Ten thousand times?” After the slightest hesitation, “Why not?” Then, he said, “How about the whole day? No bathroom breaks, no breaks for lunch, no breaks for sleep. Nothing.” We now knew where this was going; and we didn’t like it. I mean, what do you do when nature calls?! He didn’t leave us thinking too long. “How about for the rest of your life, you keep pressing that button?” Of course, the question was a rhetorical one, but its power was not lost on any one of us. Here we were, eager public health professionals, having dedicated our entire existences to saving lives through the world by any means possible. Here we were, and when we were offered something as simple as a button to save lives, we were reluctant to use that facility for the rest of our lives. Gosh, we balked at committing ourselves to it for even a full day.
Essentially, the matter comes down to how we think at the margin. After the ten thousandth button-press, do we think of the ten thousand lives that we have saved? Or do we think of the one life that we could save by pressing it one more time? And then another, and another, until one reach six billion presses. It really does boggle the mind, and honestly, I do not know how I will react if I were to find the fabled button-on-the-wall.
Pressing that button on the wall is akin to donating 50 pence to deliver the life-saving treatments to those who need it most. In essence, every 50p donation is a button-press. If you plan on buying this BMW, you could as well have used the money to help 84,000 people for one year. My education at Harvard could have in fact bought services for 50,500 lives. The money spent on the opening ceremony at the Commonwealth Games in India one week ago would have brought the services to 42.5 million people. The math is staggering. Critics will argue and accuse me of being the cynic who knows the price of everything and the value of nothing. Admittedly, the above analysis is an oversimplification of much more complex economic forces that are at play in such calculations. Nevertheless, I believe it’s something to think about.
In the final scenes of Steven Spielberg’s “Schindler’s List”, Oskar Schindler, who uses his entire fortune to buy the lives of Jews who would have otherwise been executed at Nazi concentration camps, brings this entire conundrum to poignant, dramatic prominence. “Why did I keep this car?” he says, “it could have bought us 25 more lives…and this golden ring, it could have bought us 4 more lives.” That’s a dilemma to which I don’t pretend to have an answer. All I know, is that 50pence.org will continue to do the good work they do, while always being short of funds to save that one extra life. In the meanwhile, we shall enjoy our Lamborghinis.
Note 1: At the rate of 100 button-presses a minute, it would take 115 person-hours to save 6 billion lives; essentially, two life-times. If I find the button, will you find two volunteers?
Note 2: The author,sadly, does not drive a Lamborghini.
The answer lies in a thought exercise that I encountered as a graduate student at Harvard. During a lecture on ethics by the exceptional Daniel Wikler, he told us to imagine a scenario. This is what he said, “Imagine there’s a button on the wall. Every time you press it, a life somewhere is saved. Every single time. Will you press it once?” A couple of bewildered looks later – this was the school of Public Health, after all – there was general agreement that the button would be pressed once. “Would you press it twice?” Dr. Wikler countered. “Of course”, we all yelled. “How about 10 times?” “Definitely.” “A hundred times?” “Bring it on!” “Ten thousand times?” After the slightest hesitation, “Why not?” Then, he said, “How about the whole day? No bathroom breaks, no breaks for lunch, no breaks for sleep. Nothing.” We now knew where this was going; and we didn’t like it. I mean, what do you do when nature calls?! He didn’t leave us thinking too long. “How about for the rest of your life, you keep pressing that button?” Of course, the question was a rhetorical one, but its power was not lost on any one of us. Here we were, eager public health professionals, having dedicated our entire existences to saving lives through the world by any means possible. Here we were, and when we were offered something as simple as a button to save lives, we were reluctant to use that facility for the rest of our lives. Gosh, we balked at committing ourselves to it for even a full day.
Essentially, the matter comes down to how we think at the margin. After the ten thousandth button-press, do we think of the ten thousand lives that we have saved? Or do we think of the one life that we could save by pressing it one more time? And then another, and another, until one reach six billion presses. It really does boggle the mind, and honestly, I do not know how I will react if I were to find the fabled button-on-the-wall.
Pressing that button on the wall is akin to donating 50 pence to deliver the life-saving treatments to those who need it most. In essence, every 50p donation is a button-press. If you plan on buying this BMW, you could as well have used the money to help 84,000 people for one year. My education at Harvard could have in fact bought services for 50,500 lives. The money spent on the opening ceremony at the Commonwealth Games in India one week ago would have brought the services to 42.5 million people. The math is staggering. Critics will argue and accuse me of being the cynic who knows the price of everything and the value of nothing. Admittedly, the above analysis is an oversimplification of much more complex economic forces that are at play in such calculations. Nevertheless, I believe it’s something to think about.
In the final scenes of Steven Spielberg’s “Schindler’s List”, Oskar Schindler, who uses his entire fortune to buy the lives of Jews who would have otherwise been executed at Nazi concentration camps, brings this entire conundrum to poignant, dramatic prominence. “Why did I keep this car?” he says, “it could have bought us 25 more lives…and this golden ring, it could have bought us 4 more lives.” That’s a dilemma to which I don’t pretend to have an answer. All I know, is that 50pence.org will continue to do the good work they do, while always being short of funds to save that one extra life. In the meanwhile, we shall enjoy our Lamborghinis.
Note 1: At the rate of 100 button-presses a minute, it would take 115 person-hours to save 6 billion lives; essentially, two life-times. If I find the button, will you find two volunteers?
Note 2: The author,
Tuesday, October 5, 2010
Take the "Cash" out of Conditional Cash Transfers
It takes a lot to get people to change. Then God said, “Let there be Conditional Cash Transfers”; and He saw that it was good.
Often touted as the magic bullet in the development community, conditional cash transfers, or CCTs as they shall be hence known, hold immense promise. They have increased the rates of institutional deliveries, put thousands of children into school, and helped many more crawl out of poverty. The introduction of CCTs has brought a paradigm change in the arena of behavior modification.
For the uninitiated (Hi, Ma!), a CCT, as the World Bank defines it, is a program that transfers cash, generally to poor households, on the condition that those households make pre-specified investments in the human capital of their children. CCTs have now exploded across the world and although the jury on whether they are an acceptable intervention in any situation where a behavioral modification is required, they have proved their effectiveness and efficiency in a number of settings and cultures. Money, it turns out, does make the world go round.
My question is, can’t we use something else to turn the world round? I’m sure cash in hand is a powerful incentive in modifying behavior, but the cash itself has suspect usefulness from a development perspective. For example, what’s to stop a man from using the money he received for sending his kid to school, to buy himself a week’s supply of liquor? There are conditions on the receipt of the money, not on the use of that money. Wouldn’t it be better to construct a system where the incentive for healthy behavior is itself health-promoting? The two-birds-with-one-stone deal. Vestergaard-Frandsen has an answer.
Vestergaard-Frandsen is an interesting company that runs what they call a “Humanitarian Entrepreneurship” business model. It is essentially a social enterprise that follows a “profit with a purpose” approach. They develop products that cater to the health needs of the developing world, price them competitively and make their profit from the whole exercise. They have a whole array of products ranging from portable water filters to mosquito nets. Recently, they embarked upon an experiment that put their money where their mouths were.
Instead of describing the details of their experiment for you, I’d rather direct you to this excellent description by their communications and public relations director, Peter Cleary. If you have a little more time, I highly recommend watching this video documenting their work. For the truly lazy, and strapped for time, here’s an executive summary. The good people from VF went out to a district in Kenya, and gave out - for free - a combined package consisting of a bed net, a water filter and condoms. The only catch- they had to receive counseling for an HIV-test. Before you scream “Unethical!”, you should know that the actual test was voluntary; all that people had to do to “earn” the package was undergo counseling about the test. In the span of one week, they succeeded in testing 50,000 people, a massive upsurge in voluntary HIV-surveillance, in a community that was traditionally loathe to get itself tested for HIV. The incentive inducing people to get the HIV-test wasn’t any cash; it was the CarePack, VF’s name for their goody-bag. It worked perfectly.
The philosophy behind this experiment takes the interpretation of integration to a whole new level. Not only does it integrate effective interventions for the three most devastating diseases in the region, HIV, malaria and diarrheal diseases, but it also integrates the private sector, government machinery and most importantly, the community. They brought on Yvonne Chaka Chaka, a South African singer, who is also a local superstar, and incorporated her into their advocacy strategy, which drew people out of their homes and into the testing clinics. This was the kind of community involvement that money cannot buy.
This brings me back to my original argument, that CCTs may be innovative and imaginative, but they don’t go the whole way. There may just be a much more cost-effective and in truth, useful, way to incentivize people. The folks at Vestergaard-Frandsen certainly have a story to prove so.
Often touted as the magic bullet in the development community, conditional cash transfers, or CCTs as they shall be hence known, hold immense promise. They have increased the rates of institutional deliveries, put thousands of children into school, and helped many more crawl out of poverty. The introduction of CCTs has brought a paradigm change in the arena of behavior modification.
For the uninitiated (Hi, Ma!), a CCT, as the World Bank defines it, is a program that transfers cash, generally to poor households, on the condition that those households make pre-specified investments in the human capital of their children. CCTs have now exploded across the world and although the jury on whether they are an acceptable intervention in any situation where a behavioral modification is required, they have proved their effectiveness and efficiency in a number of settings and cultures. Money, it turns out, does make the world go round.
My question is, can’t we use something else to turn the world round? I’m sure cash in hand is a powerful incentive in modifying behavior, but the cash itself has suspect usefulness from a development perspective. For example, what’s to stop a man from using the money he received for sending his kid to school, to buy himself a week’s supply of liquor? There are conditions on the receipt of the money, not on the use of that money. Wouldn’t it be better to construct a system where the incentive for healthy behavior is itself health-promoting? The two-birds-with-one-stone deal. Vestergaard-Frandsen has an answer.
Vestergaard-Frandsen is an interesting company that runs what they call a “Humanitarian Entrepreneurship” business model. It is essentially a social enterprise that follows a “profit with a purpose” approach. They develop products that cater to the health needs of the developing world, price them competitively and make their profit from the whole exercise. They have a whole array of products ranging from portable water filters to mosquito nets. Recently, they embarked upon an experiment that put their money where their mouths were.
Instead of describing the details of their experiment for you, I’d rather direct you to this excellent description by their communications and public relations director, Peter Cleary. If you have a little more time, I highly recommend watching this video documenting their work. For the truly lazy, and strapped for time, here’s an executive summary. The good people from VF went out to a district in Kenya, and gave out - for free - a combined package consisting of a bed net, a water filter and condoms. The only catch- they had to receive counseling for an HIV-test. Before you scream “Unethical!”, you should know that the actual test was voluntary; all that people had to do to “earn” the package was undergo counseling about the test. In the span of one week, they succeeded in testing 50,000 people, a massive upsurge in voluntary HIV-surveillance, in a community that was traditionally loathe to get itself tested for HIV. The incentive inducing people to get the HIV-test wasn’t any cash; it was the CarePack, VF’s name for their goody-bag. It worked perfectly.
The philosophy behind this experiment takes the interpretation of integration to a whole new level. Not only does it integrate effective interventions for the three most devastating diseases in the region, HIV, malaria and diarrheal diseases, but it also integrates the private sector, government machinery and most importantly, the community. They brought on Yvonne Chaka Chaka, a South African singer, who is also a local superstar, and incorporated her into their advocacy strategy, which drew people out of their homes and into the testing clinics. This was the kind of community involvement that money cannot buy.
This brings me back to my original argument, that CCTs may be innovative and imaginative, but they don’t go the whole way. There may just be a much more cost-effective and in truth, useful, way to incentivize people. The folks at Vestergaard-Frandsen certainly have a story to prove so.
Monday, October 4, 2010
Don't forget the men
The UN Secretary-General’s new strategy to achieve the MDGs incorporates a truth that has been well-documented for the longest time now- that subsidies and benefits focused on women and girls have a multiplier effect that positively ripples throughout the family, community and society in which the point beneficiaries reside. Personally, I endorse this vision and more than a value judgment, the above notion has proved itself to be a verifiable fact. One of the strongest examples that come to my mind is the principle that Muhammad Yunus’ Grameen Bank followed in its micro-lending model: target the women, and you will get maximum bang for your buck. There can be no stronger empirical argument than the success that Grameen has had over the decades in alleviating poverty. So, by all means, you must know where my sympathies lie.
However, there is a caveat that’s worth issuing at this point of time: Don’t forget the men. True, programs targeting women beneficiaries yield maximum social benefit. True, the empowerment of women is the greatest social mobilizer that one can imagine at this moment. True, the hand that rocks the cradle rules the world. However, beyond these truths and adages, there lies a more fundamental reality, the reality that all societies in the world, except for the most enlightened, follow patriarchal systems. The wielders of power in most parts are men, and if we leave them out of the development equation, we risk unacceptable failure. The empowerment of women should be our goal; but the keys to that empowerment lie with their male counterparts.
With the new UN strategy, there is the risk of the development fraternity (if you’ll pardon the usage of the term) launching into an all-out offensive, keeping women and girls on the frontier. This would mean programs targeting women in their marketing campaigns, distributing subsidies and benefits only to women and portraying women as the most important piece in the MDG puzzle. I call this a risk, because one chances the alienation of the other party on the chromosomal divide- the men. Men are still the major decision-makers in most households, and a purely woman-centric strategy would not lead us anywhere. We need to target men as forcefully as we target women. The message doesn’t change much. We still put out the headline that women are the central piece of our development strategy, but men are our esteemed guests as well. You may accuse me of mollycoddling the male ego, but the truth is, the inflated male ego is a practical reality.
Done with the rhetoric and theory, I’d like to offer you a real example of how this works. While I worked on the field in Talasari, India, the program that I was a part of was sought to improve maternal and child health. The largest component of our activity was community-level advocacy and behavioral modification. The first couple of months provided frustrations. The adolescent women and pregnant mothers we spoke to nodded their heads in agreement, but we repeatedly saw them relapse into their old, dangerous practices surrounding pregnancy, childbirth and child-rearing. I had my Eureka moment at one such session, educating mothers huddled together in a small little hut that was the home of one of the women. Her husband, who wasn’t feeling too well, hadn’t left to plough his land that day, and stayed home. As I talked to the women, this young man who could hardly be older than me, listened in rapt attention to what I was saying. The most surprising part was when he asked me questions about the information that I was doling out that morning. I went back to our Center with an idea. Why not bring husbands into the equation as well? They were, after all, the decision-makers.
What followed was a year of male participation in our program. The director of the program and I created a system where we would speak to the pregnant woman and her husband, as a couple, and bring them to buy the idea that it wasn’t her that was pregnant, but that it was them who were pregnant. Again, to my surprise, this was an idea readily acceptable to the men, and almost immediately we saw improvements in our compliance rates. It turns out, that all we needed was to convey to the men what their wives needed to be doing, and the changes happened.
I’d like to issue a caveat to my caveat. The ultimate endpoint is to have a situation where women follow healthy practices, without needing the permission or nagging (yeah, right!) of their husbands. The ultimate goal is to have a society where each woman is empowered enough to take her own decisions, and informed enough to make sure that those are the right decisions. However, till we reach that goal, let’s keep the men in the game as well. We aren’t all that bad, you know.
However, there is a caveat that’s worth issuing at this point of time: Don’t forget the men. True, programs targeting women beneficiaries yield maximum social benefit. True, the empowerment of women is the greatest social mobilizer that one can imagine at this moment. True, the hand that rocks the cradle rules the world. However, beyond these truths and adages, there lies a more fundamental reality, the reality that all societies in the world, except for the most enlightened, follow patriarchal systems. The wielders of power in most parts are men, and if we leave them out of the development equation, we risk unacceptable failure. The empowerment of women should be our goal; but the keys to that empowerment lie with their male counterparts.
With the new UN strategy, there is the risk of the development fraternity (if you’ll pardon the usage of the term) launching into an all-out offensive, keeping women and girls on the frontier. This would mean programs targeting women in their marketing campaigns, distributing subsidies and benefits only to women and portraying women as the most important piece in the MDG puzzle. I call this a risk, because one chances the alienation of the other party on the chromosomal divide- the men. Men are still the major decision-makers in most households, and a purely woman-centric strategy would not lead us anywhere. We need to target men as forcefully as we target women. The message doesn’t change much. We still put out the headline that women are the central piece of our development strategy, but men are our esteemed guests as well. You may accuse me of mollycoddling the male ego, but the truth is, the inflated male ego is a practical reality.
Done with the rhetoric and theory, I’d like to offer you a real example of how this works. While I worked on the field in Talasari, India, the program that I was a part of was sought to improve maternal and child health. The largest component of our activity was community-level advocacy and behavioral modification. The first couple of months provided frustrations. The adolescent women and pregnant mothers we spoke to nodded their heads in agreement, but we repeatedly saw them relapse into their old, dangerous practices surrounding pregnancy, childbirth and child-rearing. I had my Eureka moment at one such session, educating mothers huddled together in a small little hut that was the home of one of the women. Her husband, who wasn’t feeling too well, hadn’t left to plough his land that day, and stayed home. As I talked to the women, this young man who could hardly be older than me, listened in rapt attention to what I was saying. The most surprising part was when he asked me questions about the information that I was doling out that morning. I went back to our Center with an idea. Why not bring husbands into the equation as well? They were, after all, the decision-makers.
What followed was a year of male participation in our program. The director of the program and I created a system where we would speak to the pregnant woman and her husband, as a couple, and bring them to buy the idea that it wasn’t her that was pregnant, but that it was them who were pregnant. Again, to my surprise, this was an idea readily acceptable to the men, and almost immediately we saw improvements in our compliance rates. It turns out, that all we needed was to convey to the men what their wives needed to be doing, and the changes happened.
I’d like to issue a caveat to my caveat. The ultimate endpoint is to have a situation where women follow healthy practices, without needing the permission or nagging (yeah, right!) of their husbands. The ultimate goal is to have a society where each woman is empowered enough to take her own decisions, and informed enough to make sure that those are the right decisions. However, till we reach that goal, let’s keep the men in the game as well. We aren’t all that bad, you know.
Friday, October 1, 2010
It wasn't me!
I love the word accountability. I love how it conveys such gravitas, being packed with so many syllables and all, and yet is a rather loosely used term with rather indefinable borders. Case in point- accountability in the world of development.
At a side-event during the UN MDG Summit, one highly passionate gentleman stood up and launched into a diatribe on what he called the hypocrisy of the donor countries. He was livid that donor countries routinely blame partner countries for not being accountable to the commitments that were made, when, in fact, the donor countries themselves don’t live up to their own aid commitments. While the man had a point, I grew more interested in the whole idea of accountability. It got me thinking about what accountability really means.
At the micro-level, it’s pretty simple. When in school, you’re accountable for your grades, and you’re accountable to your parents. If your grade slips, so do your evening privileges. When you grow up and get a job, you’re accountable to your boss. If you don’t get the job done, it’s the door for you. Plain as cheese. Everything about micro-level accountability makes sense to us. However, things start to get a lot more nebulous when you reach accountability at the national level. For example, is Barack Obama responsible for the financial mess that the US is in? Or should the blame be appended to George Bush? Or does the malaise go all the way back to Reagan? Or would the current crisis had happened irrespective of who was pushing papers in the Oval Office? Where does the buck really stop? One thing is certain though; whom these presidents are accountable to- their people, the American people, who get the opportunity to keep their leaders honest, at least come election season. Alas, in global health and development, even this facility is lost.
Essentially, there are three stakeholders in the world of global development. There are the donors, who hold the money; the partner (or recipient countries, as the politically incorrect would call them), who need the money, and the delivery agencies, who spend the money. Several times a year, these three groups come together and declare their need to fulfill the commitments that have been made in the past. There is acceptance on the part of the donor countries that more aid needs to be given; there is acceptance by the partner countries that they need to allocate more resources to health and that they aren’t doing enough; and there is acceptance by the delivery organizations that the aid needs to be more effectively and efficiently used. What’s important, though, is to understand how these groups or actors interpret their responsibilities once they take their flights back home.
Each donor country has the best of intentions at heart. I’m sure that when the commitments are made, each intends to honor that commitment. However, fiscal realities are fiscal realities. In the event of financial hard times, of the kind that we are seeing at the moment, there is no mechanism in place to ensure that the donor governments stay true to their commitments. The only entity a donor government is really accountable to is its own electorate. As far as I remember, no election has ever been lost because the government did not honor their international commitments. In fact, the overwhelming incentive is for the government to renege on their international commitments, and instead divert those resources toward their own people which would, no doubt, yield greater electoral success. It’s no surprise then, that international donor commitments have not been fulfilled. If anything, I’m surprised that the donors have actually put as much money out there as they have.
This is all the more surprising when you consider the negative reinforcement that they have been subjected to by the other parties at the negotiating table. The partner countries have hardly lived up to their own commitments. The Abuja Declaration which committed African nations to allocate 15% of their national budgets to health has been implemented by fewer countries than one would like to admit. This is only one of a series of failed promises that partner countries have made to the international community. Yet, in the true sense of the term, partner countries are hardly accountable to their people on their commitments to the international community. Of course, the fulfillment of these commitments would make for, in theory, a more favorable result for the incumbent government in elections; but how many developing countries actually function as vibrant democracies? Too often, governments in developing countries are elected to power not based on their ability to govern effectively, but by the strength of their clan or religious affiliations. No partner government fears being toppled because they didn’t honor international commitments.
Finally, we arrive at the plate of the delivery organizations. These are the entities that spend the money that the donor organizations put into the basket. It includes the policy think-tanks and the implementation bodies. The billions of dollars that makes the world of international development go round passes through their hands. They determine the agendas, design the policies and implement the programs. In effect, they are the ones responsible for ensuring that the aid money is used most effectively and takes the world towards the MDGs. With the dismal performance on a number of the MDGs, it’s evident that we, the “middle” organizations haven’t been doing our job very well. In a corporate setting, heads would have been rolling all over the place; and yet, we haven’t been held accountable to our role in this entire machinery of world-changing significance. In his speech to the UN General Assembly, President Obama said that the international community cannot continue doing things the old way; and, yet, I fear that is how it’s going to be.
It’s going to be that way because our collective accountability is to the weakest stakeholder of all. Our collective accountability is to the 7 year old girl who has no access to education or any form of empowerment. Our accountability is to the pregnant woman who contracted HIV from an abusive male partner. Our accountability is to the poor man who has too much malaria and hunger to worry about global commitments. Our prime stakeholders cannot speak for themselves. They are not in a position to hold us accountable, and perhaps that’s the reason why we, as an international community, take our commitments less seriously than we ought to. Our commitments must be real, they must be enforceable, and our accountability must be tangible and incentive-driven. Much can be suggested about how this can be done. Rather than expounding on those in this post, I’d rather lead you to look at it from another perspective, the perspective that tells us that we are accountable to future generations. The people of the world to come will look back at us and judge us by our performance, and for us to know how we will be judged, we have some wise words from Mahatma Gandhi, “The greatness of a society can be measured by how it treats its weakest and most vulnerable.”
At a side-event during the UN MDG Summit, one highly passionate gentleman stood up and launched into a diatribe on what he called the hypocrisy of the donor countries. He was livid that donor countries routinely blame partner countries for not being accountable to the commitments that were made, when, in fact, the donor countries themselves don’t live up to their own aid commitments. While the man had a point, I grew more interested in the whole idea of accountability. It got me thinking about what accountability really means.
At the micro-level, it’s pretty simple. When in school, you’re accountable for your grades, and you’re accountable to your parents. If your grade slips, so do your evening privileges. When you grow up and get a job, you’re accountable to your boss. If you don’t get the job done, it’s the door for you. Plain as cheese. Everything about micro-level accountability makes sense to us. However, things start to get a lot more nebulous when you reach accountability at the national level. For example, is Barack Obama responsible for the financial mess that the US is in? Or should the blame be appended to George Bush? Or does the malaise go all the way back to Reagan? Or would the current crisis had happened irrespective of who was pushing papers in the Oval Office? Where does the buck really stop? One thing is certain though; whom these presidents are accountable to- their people, the American people, who get the opportunity to keep their leaders honest, at least come election season. Alas, in global health and development, even this facility is lost.
Essentially, there are three stakeholders in the world of global development. There are the donors, who hold the money; the partner (or recipient countries, as the politically incorrect would call them), who need the money, and the delivery agencies, who spend the money. Several times a year, these three groups come together and declare their need to fulfill the commitments that have been made in the past. There is acceptance on the part of the donor countries that more aid needs to be given; there is acceptance by the partner countries that they need to allocate more resources to health and that they aren’t doing enough; and there is acceptance by the delivery organizations that the aid needs to be more effectively and efficiently used. What’s important, though, is to understand how these groups or actors interpret their responsibilities once they take their flights back home.
Each donor country has the best of intentions at heart. I’m sure that when the commitments are made, each intends to honor that commitment. However, fiscal realities are fiscal realities. In the event of financial hard times, of the kind that we are seeing at the moment, there is no mechanism in place to ensure that the donor governments stay true to their commitments. The only entity a donor government is really accountable to is its own electorate. As far as I remember, no election has ever been lost because the government did not honor their international commitments. In fact, the overwhelming incentive is for the government to renege on their international commitments, and instead divert those resources toward their own people which would, no doubt, yield greater electoral success. It’s no surprise then, that international donor commitments have not been fulfilled. If anything, I’m surprised that the donors have actually put as much money out there as they have.
This is all the more surprising when you consider the negative reinforcement that they have been subjected to by the other parties at the negotiating table. The partner countries have hardly lived up to their own commitments. The Abuja Declaration which committed African nations to allocate 15% of their national budgets to health has been implemented by fewer countries than one would like to admit. This is only one of a series of failed promises that partner countries have made to the international community. Yet, in the true sense of the term, partner countries are hardly accountable to their people on their commitments to the international community. Of course, the fulfillment of these commitments would make for, in theory, a more favorable result for the incumbent government in elections; but how many developing countries actually function as vibrant democracies? Too often, governments in developing countries are elected to power not based on their ability to govern effectively, but by the strength of their clan or religious affiliations. No partner government fears being toppled because they didn’t honor international commitments.
Finally, we arrive at the plate of the delivery organizations. These are the entities that spend the money that the donor organizations put into the basket. It includes the policy think-tanks and the implementation bodies. The billions of dollars that makes the world of international development go round passes through their hands. They determine the agendas, design the policies and implement the programs. In effect, they are the ones responsible for ensuring that the aid money is used most effectively and takes the world towards the MDGs. With the dismal performance on a number of the MDGs, it’s evident that we, the “middle” organizations haven’t been doing our job very well. In a corporate setting, heads would have been rolling all over the place; and yet, we haven’t been held accountable to our role in this entire machinery of world-changing significance. In his speech to the UN General Assembly, President Obama said that the international community cannot continue doing things the old way; and, yet, I fear that is how it’s going to be.
It’s going to be that way because our collective accountability is to the weakest stakeholder of all. Our collective accountability is to the 7 year old girl who has no access to education or any form of empowerment. Our accountability is to the pregnant woman who contracted HIV from an abusive male partner. Our accountability is to the poor man who has too much malaria and hunger to worry about global commitments. Our prime stakeholders cannot speak for themselves. They are not in a position to hold us accountable, and perhaps that’s the reason why we, as an international community, take our commitments less seriously than we ought to. Our commitments must be real, they must be enforceable, and our accountability must be tangible and incentive-driven. Much can be suggested about how this can be done. Rather than expounding on those in this post, I’d rather lead you to look at it from another perspective, the perspective that tells us that we are accountable to future generations. The people of the world to come will look back at us and judge us by our performance, and for us to know how we will be judged, we have some wise words from Mahatma Gandhi, “The greatness of a society can be measured by how it treats its weakest and most vulnerable.”
Tuesday, September 28, 2010
Not Charity, but Solidarity
I was at a party last week that capped a hectic, but thoroughly fascinating week at the UN MDG Summit. The party was actually a happy-hours MDG gig organized by a forum cheekily called BYOC, or Bring Your Own Cause. After a week of hobnobbing with the who’s who of global health and development (I met Margaret Chan, Director-General of WHO thrice!), this party was a refreshing off-off-UN Plaza affair. Nobody talked about advocacy, nobody uttered ‘leveraged partnerships’ and most importantly, nobody said anything about ‘new money’. It was all very laidback with most people younger than me, bringing with them the youthful enthusiasm that somehow gets diluted the closer one gets to UN Plaza.
Sometime during the evening, I got drawn into conversation with a hulk of a human being. He was German, of course, and standing at well over 6 feet, he literally towered over me. I recall him telling me that he was studying International Affairs, and our conversation drifted to social systems as he was keen to know about the caste system of which India is the unfortunate heir. He then proffered that the class system in Germany wasn’t very much different than the caste system, and it was difficult, if not impossible to rise above the class that you were born into. Of course, I would argue that in India, one gets bogged down by the double whammy of the caste AND class system, but I was intrigued to know that social mobility was a deep concern even in a society as advanced in Western values of individualism and freedom as Germany. My German friend then made an interesting argument, which I thought held its fair share of water. He said that social mobility was difficult because the folks at the top of the pyramid were afraid of relinquishing their top-dog position to those from lower levels. Continuing with the argument, he said that those at the top are all too happy to share their resources with the ones below, as long as their positions are not challenged. When they fear for their own supremacy, their generosity dries up, and they become protectionist and would do all within their power to hold on to the reins of power. Legitimate logic, I thought. He then extrapolated this pattern to international aid. He predicts that with the rise of the Asian powers of India and China, traditional donor countries like the US and Europe would be wary of helping these countries in their ascent and international aid flows would see a precipitous decline. I have to say, I could find no fallacy in his argument, and it sounded pretty convincing at the time.
However, my doubts about continued international aid were soon put to rest by President Obama’s address to the UN General Assembly. They were further allayed as I read through the US Global Development Policy, the first of its kind issued by a US President. It was quite a relief to see that the most powerful man in the world does not view international power politics as a zero-sum game. The Obama administration realizes that there is place for all nations in the evolving global geopolitical landscape, and doesn’t necessarily view the world as a hierarchy, but rather as a comity of nations whose collective prosperity would always surpass the wealth that any one nation could generate for its citizens, acting independently. You may claim that I’m naïve to believe the politically correct posturing of an astute politician, and I realize the validity of that claim. For all we know, perhaps the developed countries may take on a stance of protectionism to hold on to their positions at the top of the ladder in the years to come. That, however, would be their own undoing. The unprecedented prosperity that the developed nations have seen over the last century or so is the result of them allowing each market to feed off the prosperity of the other, thus leading to a hyper-functional system where the whole is more than the sum of its parts. If Adam Smith taught us anything, it’s that an economically formidable partner is more of an asset than a threat. In his speech to the General Assembly, President Obama pointedly asserted that the aid that was being given to the South isn’t really an act of charity, but rather, an act of self-interest. That one line tells me, more than anything, that Obama gets Adam Smith, and is a far cry from the socialist that he is so often accused of being, and that I wish he was. At least, he seems to be the good kind of free-market advocate.
My guess is that seeing developing countries actually developing, the rich nations will drool at the prospect of growing markets for their products thanks to increasing purchasing power, and that will spur them to push the process along even more quickly. So, Holger, rest assured that international aid will not dry up. If anything, it will further increase, continuing the trend that recent years have seen. Your job and mine are secure as long as a market remains to be created; and that shall remain a prospect till kingdom come.
Sometime during the evening, I got drawn into conversation with a hulk of a human being. He was German, of course, and standing at well over 6 feet, he literally towered over me. I recall him telling me that he was studying International Affairs, and our conversation drifted to social systems as he was keen to know about the caste system of which India is the unfortunate heir. He then proffered that the class system in Germany wasn’t very much different than the caste system, and it was difficult, if not impossible to rise above the class that you were born into. Of course, I would argue that in India, one gets bogged down by the double whammy of the caste AND class system, but I was intrigued to know that social mobility was a deep concern even in a society as advanced in Western values of individualism and freedom as Germany. My German friend then made an interesting argument, which I thought held its fair share of water. He said that social mobility was difficult because the folks at the top of the pyramid were afraid of relinquishing their top-dog position to those from lower levels. Continuing with the argument, he said that those at the top are all too happy to share their resources with the ones below, as long as their positions are not challenged. When they fear for their own supremacy, their generosity dries up, and they become protectionist and would do all within their power to hold on to the reins of power. Legitimate logic, I thought. He then extrapolated this pattern to international aid. He predicts that with the rise of the Asian powers of India and China, traditional donor countries like the US and Europe would be wary of helping these countries in their ascent and international aid flows would see a precipitous decline. I have to say, I could find no fallacy in his argument, and it sounded pretty convincing at the time.
However, my doubts about continued international aid were soon put to rest by President Obama’s address to the UN General Assembly. They were further allayed as I read through the US Global Development Policy, the first of its kind issued by a US President. It was quite a relief to see that the most powerful man in the world does not view international power politics as a zero-sum game. The Obama administration realizes that there is place for all nations in the evolving global geopolitical landscape, and doesn’t necessarily view the world as a hierarchy, but rather as a comity of nations whose collective prosperity would always surpass the wealth that any one nation could generate for its citizens, acting independently. You may claim that I’m naïve to believe the politically correct posturing of an astute politician, and I realize the validity of that claim. For all we know, perhaps the developed countries may take on a stance of protectionism to hold on to their positions at the top of the ladder in the years to come. That, however, would be their own undoing. The unprecedented prosperity that the developed nations have seen over the last century or so is the result of them allowing each market to feed off the prosperity of the other, thus leading to a hyper-functional system where the whole is more than the sum of its parts. If Adam Smith taught us anything, it’s that an economically formidable partner is more of an asset than a threat. In his speech to the General Assembly, President Obama pointedly asserted that the aid that was being given to the South isn’t really an act of charity, but rather, an act of self-interest. That one line tells me, more than anything, that Obama gets Adam Smith, and is a far cry from the socialist that he is so often accused of being, and that I wish he was. At least, he seems to be the good kind of free-market advocate.
My guess is that seeing developing countries actually developing, the rich nations will drool at the prospect of growing markets for their products thanks to increasing purchasing power, and that will spur them to push the process along even more quickly. So, Holger, rest assured that international aid will not dry up. If anything, it will further increase, continuing the trend that recent years have seen. Your job and mine are secure as long as a market remains to be created; and that shall remain a prospect till kingdom come.
Monday, September 27, 2010
Like Money in the Bank
One of the more interesting, and even, in my eyes, ridiculous events at the MDG Summit last week was a session that was deceptively titled “Innovative Financing for Development”. Always keen to hear about where the fabled “new money” for development would come from, I made it a point to attend this event, in the hope that I could tap into the most radical thinking in terms of generating funds for development. I got to hear radical thoughts, for sure, but of a slightly different nature.
What was touted as a session Innovative Financing turned out to be deliberations (which I felt were self-aggrandizing) on a proposed Currency Transaction Tax. That was it. No talk about the International Finance Facility for Immunization, no talk about optimization of the funds available through the Global Health Initiative. Nothing. Innovative Financing to these folks was levying a Currency Transaction Tax (CTT) on all international currency transactions.
To be fair, I have to acknowledge the promise in the idea. International currency flows at mind-boggling volumes from one location to another. In 2010, this volume has swollen to USD 4 trillion a day. Yes, that’s 4 trillion A DAY. The estimate is that a taxation of barely 0.005% on this amount would yield a sum of USD 33 billion a year, which would then be channeled into development efforts throughout the world. I have to hand it to the fairness of the idea of a tax on currency flows that until today have largely been unaccountable to international regulation. The argument continues to state that a proportion as small as 0.005% will have no noticeable effect on the volume of these transactions, which does seem reasonable. Finally, of course, the world of development could do with 33 billion dollars of spare cash.
Now, for the critique. What I found most disturbing at the discussions were the attitudes the panelists and indeed the members of the audience had towards the whole idea. There was such a strong sense of self-righteousness and entitlement that one would have imagined the money that the CTT would yield was something that they themselves had worked hard for. I watched in astonishment as each panelist proceeded to rail against the banking system and the entire financial establishment. They brandished their pitchforks and torches to ferret out the immoral and “criminally obscene” profits that the financial world was making. It’s time “they did their bit” to help an ailing world.
Now, I’m certainly not a Wall Street sympathizer, but there were several things wrong in the approach of the panelists and the audience that day. First, they must realize that they are demanding a pound of flesh from none other than the richest people on the planet outside of Hollywood. These guys got rich not by being conscientious, or socially aware, but rather with their eye on the bottomline. It would be foolhardy to believe that moralistic patronizing would carry water with an organization as far down the road to perdition as Goldman-Sachs. A different approach is required.
My second issue is political. The talk that morning portrayed bankers as monsters capable of no good whatsoever. In talking of the bankers as “the bad guys”, you are immediately making enemies of them, and they are a poor choice of foes. If money makes the world go round, the folks in the banking sector have it spinning like a crazy top. These are powerful people, with powerful friends. If you try to push a tax through without having them on board, you will fail. You will lose a confrontation; so don’t even attempt it. There is another way.
When President Obama was still Candidate Obama, most people on Wall Street knew he would lean further on the left. They knew he’d tax them, and that they’d earn less if he was elected; and yet, Wall Street voted for him, with both hands. Incongruent, you think? Not so, say I. Contrary to how we typically portray them, bankers are not ogres, with greenbacks for irises. They are human beings, and feel the entire range of human emotions, greed being only one of them. They know when a need exists, and they know when they are being called upon to contribute to the health of society as a whole. This is the asset we have, that each one of them is human, and hence, vulnerable to the humanistic agenda we preach. However, we can sell this agenda to them only as long as we have them on our side. The minute we push them away, we lose their sympathy, and more importantly, we lose their money. If we treat them as partners and equals, they would come to the table of discussion and the CTT may yet be passed. All we need to do is convince them. In order to do this, we need to prove to them the legitimacy of our cause. Alas, it is at this point that my third and biggest concern lies.
My final concern is the moral prerogative we have, as the development community, to ask Wall Street to make sacrifices and do its bit. Most of the events around the Summit happened in the most deluxe hotels, and served the finest food and alcohol. Maybe this is just me, and it’s unfortunate if it is, but we do not present the image of being a community with a scarcity of resources. If we need any sort of moral legitimacy in asking the financial world to contribute its share, we need to show some austerity in our own gatherings. I would find it extremely hard to say to somebody in Morgan Stanley that I’d like some of his money – for free – so that I can throw a party for my friends at the Helmsley Hotel. Yet, this is exactly what we seem to be doing. A banker making his way from Wall Street to 3 UN Plaza will hardly be able to see any distinction in the excesses.
What was touted as a session Innovative Financing turned out to be deliberations (which I felt were self-aggrandizing) on a proposed Currency Transaction Tax. That was it. No talk about the International Finance Facility for Immunization, no talk about optimization of the funds available through the Global Health Initiative. Nothing. Innovative Financing to these folks was levying a Currency Transaction Tax (CTT) on all international currency transactions.
To be fair, I have to acknowledge the promise in the idea. International currency flows at mind-boggling volumes from one location to another. In 2010, this volume has swollen to USD 4 trillion a day. Yes, that’s 4 trillion A DAY. The estimate is that a taxation of barely 0.005% on this amount would yield a sum of USD 33 billion a year, which would then be channeled into development efforts throughout the world. I have to hand it to the fairness of the idea of a tax on currency flows that until today have largely been unaccountable to international regulation. The argument continues to state that a proportion as small as 0.005% will have no noticeable effect on the volume of these transactions, which does seem reasonable. Finally, of course, the world of development could do with 33 billion dollars of spare cash.
Now, for the critique. What I found most disturbing at the discussions were the attitudes the panelists and indeed the members of the audience had towards the whole idea. There was such a strong sense of self-righteousness and entitlement that one would have imagined the money that the CTT would yield was something that they themselves had worked hard for. I watched in astonishment as each panelist proceeded to rail against the banking system and the entire financial establishment. They brandished their pitchforks and torches to ferret out the immoral and “criminally obscene” profits that the financial world was making. It’s time “they did their bit” to help an ailing world.
Now, I’m certainly not a Wall Street sympathizer, but there were several things wrong in the approach of the panelists and the audience that day. First, they must realize that they are demanding a pound of flesh from none other than the richest people on the planet outside of Hollywood. These guys got rich not by being conscientious, or socially aware, but rather with their eye on the bottomline. It would be foolhardy to believe that moralistic patronizing would carry water with an organization as far down the road to perdition as Goldman-Sachs. A different approach is required.
My second issue is political. The talk that morning portrayed bankers as monsters capable of no good whatsoever. In talking of the bankers as “the bad guys”, you are immediately making enemies of them, and they are a poor choice of foes. If money makes the world go round, the folks in the banking sector have it spinning like a crazy top. These are powerful people, with powerful friends. If you try to push a tax through without having them on board, you will fail. You will lose a confrontation; so don’t even attempt it. There is another way.
When President Obama was still Candidate Obama, most people on Wall Street knew he would lean further on the left. They knew he’d tax them, and that they’d earn less if he was elected; and yet, Wall Street voted for him, with both hands. Incongruent, you think? Not so, say I. Contrary to how we typically portray them, bankers are not ogres, with greenbacks for irises. They are human beings, and feel the entire range of human emotions, greed being only one of them. They know when a need exists, and they know when they are being called upon to contribute to the health of society as a whole. This is the asset we have, that each one of them is human, and hence, vulnerable to the humanistic agenda we preach. However, we can sell this agenda to them only as long as we have them on our side. The minute we push them away, we lose their sympathy, and more importantly, we lose their money. If we treat them as partners and equals, they would come to the table of discussion and the CTT may yet be passed. All we need to do is convince them. In order to do this, we need to prove to them the legitimacy of our cause. Alas, it is at this point that my third and biggest concern lies.
My final concern is the moral prerogative we have, as the development community, to ask Wall Street to make sacrifices and do its bit. Most of the events around the Summit happened in the most deluxe hotels, and served the finest food and alcohol. Maybe this is just me, and it’s unfortunate if it is, but we do not present the image of being a community with a scarcity of resources. If we need any sort of moral legitimacy in asking the financial world to contribute its share, we need to show some austerity in our own gatherings. I would find it extremely hard to say to somebody in Morgan Stanley that I’d like some of his money – for free – so that I can throw a party for my friends at the Helmsley Hotel. Yet, this is exactly what we seem to be doing. A banker making his way from Wall Street to 3 UN Plaza will hardly be able to see any distinction in the excesses.
Subscribe to:
Posts (Atom)