Does health aid to governments make governments spend more on health?

If you’re not an economist, you might reasonably assume that the answer to this question is yes. The story might go something like this: aid agencies give money to poor country governments to distribute bed nets or give vaccinations, and those additional funds are added to whatever money the country was able to scrape together to spend on health before the donor came along. As a result of the health aid, the total amount of money spent on health increases. There is new evidence, from a study from the Institute for Health Metrics and Evaluation published in the Lancet last week, showing that this story doesn’t describe what’s really going on. Overall, global public health financing shot up by 100 percent over the last decade, but the study’s authors found that on average, for every health aid dollar given, developing country government shifted between $.43 and $1.17 of their own resources away from health. The trend is most pronounced in Africa, which received the largest amount of health aid.

The finding that health aid substitutes for rather than complements existing government health spending has caused a mini- scandal in the press precisely because it runs so counter to people’s optimistic expectations, perpetuated by aid agencies’ fund-raising campaigns, about the level of control that donors can exert over the spending of developing country governments.

Economists, on the other hand, have been beating the dismal drum for a long time on this issue. In 1947, Paul Rosenstein-Rodin, then a deputy director at the World Bank, famously said, “When the World Bank thinks it is financing an electric power station, it is really financing a brothel.” Economists expect that aid will be at least partially fungible (that is, that aid money intended by donors for one sector or project can and will be used by governments interchangeably with funding for other priorities), and this prediction is borne out by empirical studies from the late 1980s on. The authors of a 2007 paper in the Journal of Development Economics observed, “While most economists assume that aid is fungible, most aid donors behave as if it is not.”

You might argue (as Owen Barder does in depth here) that recipient governments are acting rationally in response to erratic donor funding, which ebbs and flows according to donor priorities and how well the global community mobilizes fundraising around a particular issue in any given year. After all, doesn’t the donor community’s insistence on country ownership mean that they want poor country governments to be able to set their own budget priorities?

The problem is that aid agencies have long used the argument that earmarking aid for a specific project or sector is a credible way to force recalcitrant recipient country priorities into line with donor priorities—to coerce bad governments into making good decisions.

If  governments that don't prioritize their people's welfare respond to an influx of aid money by simply shifting their existing resources around to circumvent donor priorities (and we don’t know what is happening to the resources shifted away from health—they could be going to private jets and presidential palaces, or to education, infrastructure, or loan repayments, or really anything at all),  then the aid agency argument for project aid falls apart. The burden of proof correctly lies with the aid agencies to show that aid isn’t freeing up funds for bad governments to use badly.

The Lancet findings are scandalous, relative to the naïve but widespread belief that donors can use earmarked aid to force bad governments to behave.

Another blog criticizes a video by a certain famous economist

Update 4/13/10: see Aid Watch post above From ICTWorks.org post:

Sachs has a new video out about ending global poverty, and I find it very disturbing.....Sachs (and all the white people) sitting in very nice, even posh settings, but black people are filmed from a car in poverty settings. Does that mean we can take time and get face-to-face with whites, but best to stay in the car and drive by black people quickly?

Speaking of animals, what's up with the cameos of wild animals? Are they counted in global poverty numbers? Or does Sachs feel all of Africa is zebras and giraffes?

While his narration is palatable, I am really disappointed in the video work - too many stereotypes he should know better than to promote.

The video is on the blog site.

Needless to say, any opinions expressed here are those of another blog and do not necessarily represent the opinions of Aid Watch,  its bloggers, its sponsors, or any blood relative or social acquaintance of any of the above.

Michael Clemens won’t let up on the Millennium Villages + bonus links

It’s nice to see scholars bringing attention to the critical need for evaluation and informed public dialogue (not just “success stories” or short-term impact evaluation) for the Millennium Villages Project, which we have also covered on this blog. Michael Clemens of the Center for Global Development is currently carrying on a very revealing dialogue with Millennium Villages. In Michael’s first blog post which we blogged, he makes three central points:

1. The hundreds of thousands of people living in the Millennium Villages, present and future, deserve to know whether the project’s combination of interventions is backed up by good science.
2. Randomized evaluation is the best way to do this. While it may be too late to properly evaluate the first wave of villages, there is still time to conduct such a study for the next wave of villages.
3. The MVP evaluation should demonstrate long-term impact before it is scaled up.

In a subsequent post, Michael parses the curious non-answer he receives from the director of monitoring and evaluation for the MVP, Dr. Paul Pronyk. He breaks down—for those of us not intimately involved in the finer details of impact evaluation—the difference between true scientific evaluation and what the MVP says it is doing, namely “matched randomly selected comparison villages.”

What the MVP has done is something very different from…a rigorous evaluation.  First, village cluster A1 was chosen for treatment, for a range of reasons that may include its potential for responding positively to the project.  Then, long after treatment began, three other clusters that appear similar to A1 were identified — call these “candidate” comparison clusters A2, A3, and A4.  The fact that all three candidates were chosen after treatment in A1 began creates an enormous incentive to pick those candidates, consciously or unconsciously, whose performance will make the intervention in A1 look good.  Then the comparison village was chosen at random from among A2, A3, and A4.

Differences between the treated cluster and the comparison cluster might be due to the MVP. But those differences might also be due to how the original Millennium Village was chosen, and how the three candidate comparison villages were chosen.  This is not a hypothetical concern…

So, either the MVP director of evaluation does not understand evaluation...or he thinks we won't know the difference.

Dr. Pronyk promises the release of the MVP’s midpoint evaluation at some unspecified time later this year, and said they “look forward to an active discussion about the initial findings regarding poverty, hunger, and disease in the Millennium Villages.” We hope the scholarly community and the wider reading public concerned with development issues will give Dr. Pronyk precisely what he’s asking for.

Bonus Links

* Sounds a bit like a parody we wish we’d written….but it’s true. Yesterday’s NYT features this quote from a story on China’s bid to supply California with technology, equipment and engineers to build a high-speed railway, and to help finance its construction:

“We are the most advanced in many fields, and we are willing to share with the United States,” Zheng Jian, the chief planner and director of high-speed rail at China’s railway ministry, said.

* We’d be remiss not to mention this helpful timeline of celebrity aid to Africa featuring an interactive map from Mother Jones (and some additional commentary from Wronging Rights and Texas in Africa.)

The worst-kept secret in aid: aid-receiving governments run the aid agencies

see UPDATE at end of this post

Thomas Friedman had a good NYT column about Karzai yesterday. {{1}} His column cleared up the puzzlement created by a Dallas News editorial and other very similar stories about how Obama’s visit to Afghanistan to get Karzai to clean up corruption was great for “seizing Karzai’s attention.” Now we know why there’s corruption in Afghanistan: Hamid Karzai just FORGOT to deal with it. Could one of our army doctors give him A.D.D. medication?

Friedman is more realistic about a phenomenon that has been long known in donor-government /recipient-government relationships:  the recipient is the one who runs the donor government’s policies towards the recipient government. The same happens in multilateral aid agencies. We saw this all the time at the World Bank, where the corrupt autocrats receiving our loans would let us know what conditions we should put on the loans to them.

Friedman has a pithy rule that donors routinely break:

Never want it more than they do.

Of course, when the donors want something more than the recipient, and the donors know they MUST continue the aid relationship, the recipient is in a strong bargaining position to ignore that something, and no amount of attention-seizing is going to work. As Friedman says:

If we want good governance in Afghanistan more than Karzai, he will sell us that carpet over and over. How many U.S. officials have flown to Kabul — the latest being President Obama himself — to lecture Karzai on the need to root out corruption in his administration? …. he believes he has us over a barrel and, in the end, he can and will do whatever serves his personal power needs because he believes that we believe that he is indispensable for confronting Al Qaeda…

Even in less fraught situations than Afghanistan, the donors have an extremely poor record enforcing conditions on recipients. Not only do they break the Friedman Rule, but the department for Country X in the aid agency MUST disburse its budget for Country X this fiscal year (or else it won’t get any budget next year). The recipient knows this and so can ignore the conditions. (For a more careful and technical development of this argument, see the classic paper on why aid conditions don’t work by Jakob Svensson).

The solution to the problem is as logically simple as it is politically difficult: give aid only to country governments who want IT more than we do.

UPDATE (4/1, 12:14PM): Karzai says to luncheon guests  that America is an obstacle to peace in Afghanistan. Well, THAT would really simplify the problem -- just remove the obstacle! 

[[1]]Just for the record, I usually think that whatever Friedman writes about economics is nonsense while what he writes about Middle Eastern/Central Asian politics is good. This may be because I know something about the former and nothing about the latter.[[1]]

Three Afghan success stories

Today, finally a break from the doom and gloom on Afghanistan! Clare Lockhart, the CEO of the Institute for State Effectiveness, spoke at DRI’s annual conference last month and gave three examples of what has gone right in the international effort to rebuild Afghanistan. These reforms and projects have lasted despite worsening security conditions and will—Lockhart says—form part of the foundation for the next generation of reforms in Kabul.

1) Hawala dealers implement Afghan currency exchange. In 2001, there were three currencies in circulation in Afghanistan, all produced illegally by warlords, with frequently fluctuating values that only the hawala dealers—the country’s informal currency exchangers—could decipher. To move to one unified currency, international donors recommended that Afghanistan switch to the dollar for two years in an expensive and lengthy process that would require the assistance of 15,000 UN bureaucrats. Instead, the Afghans decided to tap into the extensive networks of the local hawala dealers. Once enlisted, they were able to reach every village and change the currency in just 4 months. Clare commented:

To me that’s a lesson of instead of us looking at what’s not there and what do we need to bring in from the outside, how do we turn it around and learn how to …look at what is there. What are the assets that exist on the ground, what are the networks, what are the traditional and existing ways that people manage their daily lives? And how can those be harnessed to the urgent and important tasks of the day?

2) Aid underwrites risk so Afghan telecom can take off. Telecoms were reluctant to enter the risky, post-US invasion Afghan market. Donors had suggested that the Afghan government would actually have to pay the telecoms to provide service. Instead, the government and the international community came up with an innovative way to cover the risk and spur investment. OPIC- a US agency that promotes development in emerging markets- stepped in to write a risk guarantee for $20 million for the firms willing to compete for government licenses. The $20 million was never used, and after $1 billion investment in the sector, there are now more than 11 million phones in Afghanistan.

3) Village-level grant program taps village know-how. Afghanistan’s National Solidarity Program has provided grants to thousands of Afghan villages. The village councils choose how to spend the money, but must post their accounts publicly. Funds for the program are pooled into a locked trust fund that can only be replenished by donors once they’ve seen project audit reports. The program is growing as villages combine grants to take on larger projects, like an irrigation system or a regional maternal hospital, and although the NSP has developed some opposition from politicians who would prefer to be able to skim money off the top of these grants, it has also attracted wide support.

To hear Clare Lockhart tell these stories, listen to this 8-minute clip. If you have the time, it’s also well worth listening to her full presentation with slide show on the DRI website, here. [audio:http://aidwatchers.com/wp/wp-content/uploads/2010/03/Lockhart-Afghan-Success.mp3|titles=Lockhart-Afghan-Success]

We wouldn’t be Aid Watch if we didn’t note that Lockhart is also an outspoken critic of failures in the aid system. Her talk contains many tragic examples of aid failures in Afghanistan, which we’ll post another day on the blog.

My pro-government rant

When I give talks celebrating individual creativity as a driver for development, there is always one or more questioners afterwards who asks nervously, “don’t you see ANY role for government?” The answer is: OF COURSE. Government provides public goods. You could argue that one good that has such large external benefits that it’s at least partly a public good is Education. Public education is a major contributor to American economic development.

These thoughts are prompted by cheering along West Virginia University’s epic victory over U. Kentucky last night in the NCAA basketball tournament. A government sponsored and funded university, West Virginia U played an important role in my family. It educated  both my grandparents and my parents (and, wandering off message, they each MET and married there, so I owe WVU thanks for existing at all). WVU allowed a poor fatherless boy a chance to get a Ph.D. in biology and realize the American dream (my father).

So here’s a chance to praise the Government for its role in development, and yes, development’s not ONLY about private individual dynamism.

The “smart power” military-industrial complex takes off

What do Lockheed Martin Corp, Northrop Grumman Corp, and L-3 Communications Inc. have in common? Yes, all are top 10 Pentagon contractors. But they are also increasingly winning lucrative government contracts to implement “smart power” or “nation-building” programs—like educating peacekeeping troops in human-rights law, sending anthropologists to Afghanistan to understand local culture, mentoring Liberian prosecutors to combat corruption and crime, and rebuilding airports and government ministries.

Hillary Clinton and others in the administration have helped pave the way for this shift by calling for a “smart power” approach in which the 3Ds—defense, diplomacy and development—are mutually reinforcing (which we respectfully acknowledged by giving the 3Ds idea our Grand Prize for Worst in Aid).

From yesterday’s Wall Street Journal (subscription required):

Defense firms are eager to oblige. "The definition of global security is changing," says Lockheed's Chairman and Chief Executive Robert Stevens. He wants the maker of the Air Force's most advanced fighters to become a central player in the U.S. campaign to use economic and political means to align countries with American strategic interests

Last year, Lockheed had two of its highest profile programs, the F-22 Raptor fighter and a fleet of presidential helicopters, ended by the Obama administration. Now, Lockheed is one of several defense firms expected to bid for a new State Department contract to support "criminal justice sector development programs world-wide," that could be worth up to $30 billion over five years.

Africa won’t be overlooked:

Africa—where few U.S. troops are stationed—is a major focus. Many countries on this continent already are, or risk becoming, failed states. While they previously hadn't been considered a threat to the U.S., that view is changing. Somalia's nexus of terrorism and piracy is one example of how destabilized countries can become a redoubt for al Qaeda or other terrorist groups.

The U.S. military is already overstretched between Iraq and Afghanistan. So the Pentagon is eager to send defense firms to fill the gaps, in the hope that investing millions in training or advisory programs today may stave off a regional calamity that could cost billions in the future.

"Africa certainly is an area of interest to our U.S. government customers, and what's important to our customers is important to us," said Lockheed's Mr. Stevens.

UPDATE: Vijaya Ramachandran reminded us on Twitter that she had a related post "Blurring the Line Between Defense and Development" on the CGD Blog:

In a little-noticed move in January, private military contractor DynCorp bought 100% of the shares of international development contractor Casals & Associates ....The .. merger suggests a blurring of the line between development and defense in the private sector, as well.

...what happens when unarmed development project managers and heavily armed private security providers work under the same company brand? How will local people respond to a company employed by both USAID and the U.S. military?

On the other hand, there are some clear advantages to the new approach....

Readers’ Submissions: Honorable Mentions in Best and Worst of Aid

The Aid Watch request for reader submissions for Best and Worst of Aid was our experimental attempt to use informal social networks to collect and spread stories about good and bad aid projects. In retrospect, it was only a partial success: we got a lot of submissions that couldn’t be totally verified, and many that did not explain why their submission deserved to be the best or the worst, problems for us to think about for the next time we try to run a contest, even an informal one like this. Our request for submissions, which we posted here on the blog and emailed to aid practitioner, academic, journalist and blogging contacts, netted double the nominations for Best of Aid than for Worst of Aid. We’re not sure whether to take this as a good sign (people are excited about some of the projects that they’re seeing make a positive difference in aid) or a bad sign (people still don’t want to talk about what’s not working, even when given the cover of anonymity; or alternatively, it’s harder to find well-documented examples of what’s not working).

Thank you to everyone who took the time to send us their ideas. Here are the entries we’ve chosen for honorable mention, according to admittedly non-rigorous and non-scientific criteria, from our readers’ submissions of the best and worst of aid.

(Honorable Mention) BEST new aid finance mechanism: Advance Market Commitment (AMC) for pneumococcal vaccines, nominated by Andrew Steer, Director General for Policy and Research, DFID What: In June 2009, a group of bilateral and multilateral donors launched an open offer to subsidize, at $1.5 billion, the purchase of more effective pneumococcal vaccines to fight meningitis and pneumonia in the developing world. Impact: According to the WHO, pneumonia is the single cause of death in children worldwide, killing 1.8 million kids every year. GAVI has estimated that the pneumococcal AMC will save 900,000 lives by 2015 and over 7 million lives by 2030. More generally, wrote Andrew, “the AMC could represent a radically new and better way to fund technology development and production.” Who is responsible: The AMC idea gained momentum in 2005 with the publication of a report, Making Markets for Vaccines: Ideas to Action by a working group organized by the Center for Global Development, lead authors Owen Barder, Michael Kremer, Ruth Levine, though many others have contributed to the development of this idea over time. Countries, organizations and agencies that have put up funding also deserve credit: Italy, the UK, Canada, Russia, Norway, the Bill & Melinda Gates Foundation, and GAVI Alliance partners World Bank, UNICEF and the WHO.

(Honorable Mention) BEST aid agency success story: Aid untying in Canada, nominated by Parker Mitchell, co-CEO of Engineers Without Borders, Canada What: In spring of 2008, Canada announced that it was untying all of its food aid, meaning that Canadian contributions to multilaterals like the World Food Program would no longer have to be in the form of food purchased in Canada. A few months later, Canada announced a plan to fully untie development aid by 2012-2013. These decisions represent recognition of a growing consensus among donors, and growing pressure from NGOs and watch dog groups, that tied aid undermines fair competition and the ability of developing countries to produce competitive goods and services. Impact: In 2008, half of Canada’s food aid and more than one-third of its non-food aid were tied to the purchase of goods and services in Canada. The OECD has calculated that aid can be made 15 to 30 percent more effective by untying it. As more donors untie their aid, pressure will increase on the outliers (including the US) to change their behavior. Who is responsible: CIDA, for carrying out these reforms, as well as the Canadian organization Engineers without Borders and other NGOs that lobbied for the change for over 4 years, and are still watching CIDA closely to make sure that they are on track to fulfill their pledge and are being transparent in how they share information about aid untying.

(Honorable Mention) BEST uses of new technology to transform people’s lives: Mobile-plus, nominated by Diane Coyle, economist and author What: “The technologies and applications that are increasing the capability of poor people to affect and gain control over their lives - summed up as mobile-plus.” Impact: There is still much work to be done in understanding the impact that mobile technologies will have on the social and economic lives of people who use them. M-PESA, a mobile phone-based money transfer service which originated in Kenya, is now three years old and has more then 7 million customers transferring some $1.96 million per day; detailed research studies on its effects are beginning to emerge. More generally, Diane cited reductions in transaction costs, information gains created by access to communication, and the creation of an infrastructure that can be used to deliver other needed services like finance, as clear benefits of these technologies. Who is responsible: Innovators like the founders and funders of M-PESA in Kenya; its younger sibling M-PAISA in Afghanistan; Kiwanja.net’s Frontline SMS, and Ushahidi, a platform which has been used to monitor post-election violence in Kenya and to coordinate disaster relief in Haiti, among other applications.

(Honorable Mention) WORST half-baked idea for which we have almost no information: “Camcorders for the Congo,” nominated by Laura Seay, Professor at Morehouse College What: On Hilary Clinton’s tour through seven African countries last August, she announced a $17 million plan to fight sexual violence in Congo during her stop in Goma. According to the NYT’s coverage of the speech, the plan included “supply[ing] rape victims with video cameras to document violence.” Impact: Unclear, and that’s the point. Unfortunately the USAID does not give further details of the program on their website. We’d need a lot more information to understand exactly who is supposed to benefit from these video cameras, and in what way, especially given that much of the sexual violence occurs in remote areas in which people do not have reliable or affordable access to electricity. For a more-fleshed out description of the potential absurdity of this project, see Laura’s blog, TexasInAfrica, and the Wronging Rights blog. Who’s responsible: USAID…we think.

(Honorable Mention) WORST unsustainable health practice with Cold War-era origins: Project HOPE’s use of pharmaceutical company-donated, brand-name medicines, nominated by an anonymous reader What: Project HOPE was founded in 1958, with funds and donated drugs from pharmaceutical companies and the gift of US Navy floating hospital ship the SS HOPE. The ship’s goodwill missions abroad combined public diplomacy with aid. A study drawing on archival documents cites Project HOPE as an example of the pharmaceutical industry's Cold War era strategy to defend itself against a congressional investigation into US drug pricing practices. Today, the bulk of Project HOPE’s programming and budget goes towards shipping and distributing brand-name drugs and medical supplies donated by pharmaceutical companies to developing countries. Impact: Project HOPE does not publish evaluations on their website, and even looking at their external ratings, tax forms, and annual reports, it is difficult to gauge the impact of their overall work, which also includes health education. Our nominator voiced concerns about the unsustainable use of branded drug donations in developing countries with weak health infrastructure, where the demand for drugs and supplies needed locally likely does not match the supply available from rich-country pharmaceutical companies, and raised questions about the benefits to pharmaceutical companies who are seeking to increase their market share in the developing world and who might gain from the perception that certain brand-name drugs are preferable to generics. While there are cases where branded drug donations may be helpful, Project HOPE’s publicly-available materials don’t provide enough information to know whether theirs are. Who’s responsible: Project HOPE, pharmaceutical company donors

Stay tuned later this week for Best and Worst winners.

Do what you're actually good at? or what you should be good at?

We have just finished the annual ritual in which Hollywood pretends that its job description is making quality indie movies,  instead of what it is actually good at -- producing crowd-pleasing blockbusters. Avatar was not only in the latter category by $2.5 billion or so and counting, it even got good reviews from critics. But it couldn't win Best Picture under Hollywood's hypocritical self-fantasy that rewards what they think they SHOULD be doing. Wait, I feel another Aid Watch metaphor coming on. How many aid agencies and NGOs have tried to do what they SHOULD be good at, instead of what they are actually good at? Just because a cause is worthy, or of critical importance to development -- does NOT mean that YOU are good at producing what the customers want in that area at a reasonable cost. Women's empowerment, fixing failed states, promoting good governance, community-driven development, social services for the poor -- all sound like things your agency SHOULD do. But where is your evidence that you are any good at doing any of these things? What if you are good at something else?

An interesting case in point is New Zealand aid. Before a major reform, its largest program was givng college scholarships to poor Pacific Islanders. I don't have any decisive evidence on how good they were at doing this, so this example is only suggestive, but a priori a scholarship sounds like a relatively effective way to help somebody help themselves -- the ideal formula in aid. Then the "SHOULD" nannies took over, and now the tiny New Zealand budget is divided among ALL the fashionable causes in development. (The picture below shows the breakdown between 37 possible sectors in foreign aid.)

As the New Zealand example shows (and it is characteristic of most aid agencies), the SHOULD criteria defeats the whole idea of specialization, and even tiny agencies wind up giving 5 percent of the budget each to 20 different causes. Since there are fixed overhead costs of operating in a sector (like employing sector specialists), this means that a lot of the aid budget is going to be wasted on overhead costs.

Who in aid and philanthropy will have the courage to stick to what they are actually good at? and resist pressure to pretend to do what they SHOULD be good at?

The War of the Causes in Aid

The development industry seems to be riddled with people whose main job is to divert money to their good cause. The advocates are united by a strong belief in the priority that should be given to their sector (education, water, AIDS etc). They convince themselves that they are speaking for real interests of the poor… Within many aid agencies there is a permanent state of low intensity bureaucratic warfare for resources…{staff} fight to defend and expand funding for the causes they work on. They deliberately stoke up pressure in private alliances with civil society organisations – many of whom they fund – to raise the political stakes through conferences, international declarations, and publications with the aim of committing funders to spend a larger share of aid resources on their issue.  ….But for the aid budget as a whole these are zero sum games, and everyone would be better off – and many lives would be saved – if it stopped.

This quote comes from a blog post by Owen Barder which is now several months old. For some reason we’re just seeing it now, but thought it was still worth sharing with our readers too.

He gives AIDS in Ethiopia as an uncomfortable example of this kind of advocacy distorting aid:

According to the World Health Organisation (WHO), in Ethiopia about 65% of the population (52 million people) live in areas at risk of malaria. Malaria is the leading cause of health problems, responsible for about 27% of deaths; and malaria epidemics are increasing. The HIV/AIDS prevalence rate among adults is 2.1% (2007) – that’s about 1.6 million people living with HIV.

Of $5.15 per head provided in aid for health to Ethiopia in 2007, about $3.18 per head was earmarked for HIV  while about $0.26 cents per head was allocated to malaria control.  Given the relatively low burden of HIV, earmarking 60% of health aid for HIV is excessive relative to other needs for health spending.

Of course it is right that we should try to make sure that everybody with HIV has access to medicines to keep them healthy, and … to prevent spread of the disease. But we should also make sure that people have bednets and drugs to stop malaria, provide childhood vaccination to prevent easily preventable diseases, ensure access to contraception and safe abortions, and, above all, enough funding to provide basic health services that would save thousands of lives and suffering.  Yet we are not willing to provide enough money to do all of this.  It is in this context that it is damaging to earmark 60% of health aid to HIV.

Owen is equally blunt about the way forward:

we should, as a development community, heap scorn and opprobrium on anyone caught advocating for more resources in their sector.  We need stronger social norms in development that frown upon this kind of anti-social behaviour.

Even more apparently even more not a big fan...

Another post from @transitionland:

Bill Easterly’s cheap, ignorant Afghanistan snark...

Some NGOs CAN adjust to Failure: The PlayPumps Story

Back in the 1990s, a billboard advertising executive in South Africa had a very good idea. Spinning on a merry-go-round connected to a water pump, children could generate plentiful, clean water without the time-consuming, hard work of traditional hand pumps. At the primary schools in South Africa where the first of these merry-go-rounds were installed, kids got a place to play, their communities got free drinking water, and girls and women, who bear much of the burden of collecting water for their families, got time to attend school or pursue other activities. Billboards lining the raised water tank brought in advertising revenue to fund the pumps’ maintenance, and spread public health messages about hygiene or safe sex.

In 2000, the idea won the World Bank’s Development Marketplace award. In 2006, Laura Bush announced $16 million in funding from USAID/ PEPFAR and private foundations, with the goal to raise $45 million more to install 4,000 pumps in Africa by 2010. Jay-Z pitched in with concerts and an MTV documentary. PlayPumps announced plans to expand, first to Mozambique, Swaziland and Zambia, and then to Lesotho, Malawi, Ethiopia, Kenya, Tanzania and Uganda. The nonprofit launched a sophisticated social networking campaign, and successfully raised money for “100 Pumps in 100 Days” on World Water Day in 2007 and 2008.

Sadly, somewhere along the way, PlayPumps stopped being a smart homegrown idea and became a donor-pleasing, top-down solution that simply didn’t fit many of the target communities.

The charity WaterAid wrote a position paper on why they did not adopt the PlayPumps technology. For one, they said, PlayPumps are too expensive. At $14,000 each, they cost four times as much as traditional pump systems. The mechanism requires specialized skills to repair and so can’t be fixed with local labor, and spare parts are hard to find and expensive to replace. WaterAid also decried the system’s “reliance on child labour.” A recent critical commentary in the Guardian calculated that children would have to “play” for 27 hours every day to meet PlayPumps’ stated targets of providing 2,500 people per pump with their daily water needs.

An aid worker and engineer in Malawi documented some of these problems in a brilliant series of blog posts. His anecdotes and pictures give limited but compelling evidence that PlayPumps in his area are not being used as the inventors intended:

Each time I’ve visited a Playpump, I’ve always found the same scene: a group of women and children struggling to spin it by hand so they can draw water.

He also suggests one reason why PlayPumps might be slow to get that crucial feedback:

[A]s soon as the foreigner with a camera comes out (aka me), kids get excited. And when they get excited, they start playing. Within 5 minutes, the thing looks like a crazy success…. I’ve always figured that as soon as I leave the excitement wears off and the pump reverts back to its normal state: being spun manually by women and kids.

Does the story of PlayPumps carry a broader lesson about the aid world? Suppose the organization had charged ahead with a Twitter campaign to raise millions for THE solution to water problems in Africa, while reality kept diverging from their rosy picture.  Then PlayPumps would represent the triumph of bad but photogenic solutions in a broken aid marketplace.

BUT last fall, the CEO announced instead that their inventory would be turned over to the organization Water for People, where PlayPumps would be just one option out of “a portfolio of technologies from which communities can choose.” This seems like the right outcome. We can ask why it took so long to see the flaws in the PlayPumps model. But in contrast to the official aid world, where the old failed solutions keep getting recycled across 60 years, this is real progress!

China in Africa myths and realities

In recent years, journalists and pundits in the West have looked on China’s economic engagement with Africa, including foreign aid, with growing alarm. An NYT op-ed a few years ago called China a “rogue donor,“ giving aid that is “nondemocratic in origin and nontransparent in practice, and its effect is typically to stifle real progress while hurting ordinary citizens.” Other negative stories about China in Africa include China abetting genocide in Darfur by supplying arms in exchange for Sudanese oil; propping up corrupt government in Zimbabwe; swooping in to undo the anti-corruption work of the IMF or the World Bank in Angola or Nigeria with offers of no-strings-attached loans; and generally ignoring environmental, safety and labor standards on projects in Africa.

So the idea that China’s aid to Africa could be in any possible way better, more credible, or more effective than Western aid to Africa may be a hard sell. But Deborah Brautigam, author of the new book The Dragon’s Gift: The Real Story of China in Africa, argues that focusing only on the China threat makes us blind to the real opportunities Chinese engagement offers for African development.

Part of the problem, says Brautigam, is that there is very little information about what China is really doing in Africa, and in this vacuum, “myths sprang up and were rapidly accepted as facts.” Brautigam fills this void and dispels, or at least complicates, some commonly held beliefs about China in Africa.

In other areas she finds evidence to back up criticism of China’s Africa policies, but argues that we should not see China’s stance towards Africa as static; it is evolving and can sometimes be influenced by international pressure. Throughout, some of Brautigam's best insights come from asking "compared to what?":  The book seeks to compare Chinese aid to Western aid as it really is, not as we wish it were.

A few examples of China myths and partial truths:

1) China targets aid to African states with abundant natural resources and bad governments

Actually, China gives money to almost every single country in Sub-Saharan Africa, excluding only those that don’t acknowledge the One China policy. There is little evidence that China gives more aid to countries with more natural resources or specifically targets countries with worse governance. China is not alone in its interest in natural resources in Africa, and natural resources are not the primary motivating factor for Chinese aid: like all donors, US definitely included, China is motivated to give aid by a mix of political, commercial, and social/ideological factors.

2) The Chinese don’t hire Africans to work on their projects

This depends on how long a company has been working in Africa, and how easy it is to find appropriate local labor. Ultimately, it also depends on African governments themselves, who have the power to dictate what proportion of project staff must be local (as Angola and the DRC have done). Brautigam also points to the stark contrast in standard of living between Chinese workers and managers in Africa, who tend to live in extremely simple conditions, and Western advisors, who more typically live in expensive housing or hotels. While Western experts may be fewer, they cost their projects a lot more.

3) China outbids other companies by flouting social and environmental standards

This one’s true but evolving…Brautigam portrays China as “on a steep learning curve,” struggling with environmental and corporate social responsibility issues at home and abroad. She gives some evidence that China and Chinese companies are becoming increasingly sensitive to international perception on these issues and may be inching towards international standards.

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This Wednesday (February 10) NYU’s Development Research Institute and the Wagner School are co-hosting a lunchtime seminar and book launch event with Professor Brautigam. Click here for more information and to RSVP.

UPDATE: This event has been cancelled due to inclement weather and will be rescheduled. People who have already RSVP'd will receive an email when a new time is confirmed.

How the war on AIDS was lost

There was an alarming article in the Wall Street Journal on the reverses of previous advances in AIDS prevention in Uganda, plus running out of US funding for AIDS treatment. The war on AIDS is being lost. Here are the facts:

1. There were an estimated 2.7 million new infections worldwide in 2008; 1.9 million of them were in Sub-Saharan Africa.  The number of people added to treatment each year is also increasing rapidly, but not rapidly enough to keep up with new infections. Worldwide in 2008, 1.1 million people were added to treatment; 825,000 of them in Sub-Saharan Africa.
2. New global funding for AIDS has grown rapidly over the past decade, but funding from the US government for major programs  PEPFAR and the Global Fund (a large portion of total AIDS funding)  now appears to be leveling off.

Despite the goal of “universal access to treatment” (a Millennium Development target that was supposed to be met by 2010),  only 44% of people in need of ARV treatment in Sub-Saharan Africa were actually receiving it. Now, as the WSJ story and other reports document, sick people are being turned away without treatment, and many who contract HIV in the future will have no hope of treatment.

Last year the WHO country representative in South Africa warned that "At the rate we are going, with new [HIV] infections rising it will be almost impossible ... to keep providing free treatment to those who need it."

How did this enormous tragedy occur? Perhaps because the global health community concentrated on AIDS treatment and neglected prevention (which they never figured out how to do). As was pointed out by David Roodman in Monday’s blog post, public attention and activism is a finite resource. In AIDS, virtually all of it was spent on treatment (led by the 3 Bs - Bono, Bill Clinton, and Bill Gates - and 1 W) and very little on prevention.

Despite AIDS  getting unprecedented amounts of funding, funding was never going to be unlimited.   So there was going to a treatment funding crisis sooner or later, as Mead Over recently pointed out.

This current crisis was anticipated by writers like Helen Epstein, Daniel Halperin, David Canning, and Over. All have issued pleas for emphasizing AIDS prevention and given practical advice on doing prevention. All have been ignored.

Will there at last be a new war on AIDS that emphasizes prevention, that saves the next generation?

Dropping Haiti’s debt = sending old shoes

The following post is by David Roodman, a research fellow at the Center for Global Development (CGD) in Washington, DC. Last week my colleague Michael Clemens blogged in this space about the “The best way nobody’s talking about to help Haitians.” So as a complement, here’s what I think is the worst way that everybody’s talking about to help Haitians: cancelling Haiti’s debt.

I am not suggesting that Haiti’s foreign creditors should stick to their guns in order to teach the country a lesson about the sanctity of international debt contracts. Canceling or reimbursing Haiti’s debt payments over the next, say, five years, just as was done after the Asian tsunami, would make eminent sense. That would constitute debt relief but would not require debt cancellation.

Why not just cancel the debt outright, as the One Campaign, the Jubilee Debt Campaign, and Oxfam have demanded?

• The benefit would be low. Most outstanding loans to Haiti are repayable over 25–40 years and charge 2%/year or less in interest. So while the face value of Haiti’s debt is impressive—some $1.25 billion, not counting the $114 million in new IMF credits—the debt service over the next few years will be tiny. The IMF projects (table 7) the cost at $18 million for fiscal year 2009/10, rising to $34 million in 2011/12. Even those figures are high since the U.S. government is paying the $9 million/year interest on Haiti’s loans from the Inter-American Development Bank. Perhaps half the rest is owed to Taiwan and Venezuela, whose susceptibility to press releases from western NGOs is uncertain. So as little as $25 million in debt service may be in play over the next 3 years.
• Lobbying for debt cancellation crowds out other more important issues. Activist groups and politicians have limited time, staff, and political capital. Instead of fixating on dropping the debt, why don’t activists and politicians campaign to hold public and private donors accountable for avoiding the mistakes of past disaster relief efforts? Why don’t they take on textile interests in order to open our borders to “Made in Haiti”? Why not, as Michael argued, push for a Golden Door visa that would allow at least a few tens of thousands more Haitians into rich countries to work?

Reforming trade and migration policies, even getting donors to respond more effectively to disasters, requires confronting entrenched interests. But activists are at their best when they take on the tough fights. We owe it to Haitians to strive for what is best for them, not easiest for us.

A couple of weeks ago here on Aid Watch, Alanna Shaikh blogged under the title, Nobody wants your old shoes: How not to help in Haiti. Beyond the specific advice, she was voicing a big idea close to Aid Watch’s heart: so many aid efforts go awry because the giver decides what the receiver needs.

I fear that calls to cancel Haiti’s debt are the old shoes of political activism. Debt relief will hardly help Haiti recover from the quake. And in a crisis, if you’re not helping, you’re in the way. Let us do the equivalent in the policy realm of sending cash, by advocating reforms that will do far more to alleviate the suffering.

The best way nobody’s talking about to help Haitians

The following post is by Michael Clemens, a research fellow at the Center for Global Development in Washington, DC, and an affiliated associate professor of public policy at Georgetown University.

The earthquake two weeks ago hit Haiti hard because Haiti is poor. The rich U.S. had similar earthquakes with far less carnage. So, what would do the most to lift Haitians out of poverty?

Start here: What has done the most, to date, to lift Haitians out of poverty? That answer is easy. Leaving Haiti brought more Haitians out of poverty than anything else that has ever been tried: any aid project in Haiti, or any trade preference for Haiti. See my note and video posted the day before Haiti’s catastrophe.

Of all the Haitians who live either in the United States or Haiti, and who live on more than $10 per day—at U.S. prices, adjusted for the fact that things are cheaper in Haiti—how many live in the U.S.? (That’s a barebones poverty standard, just one third of the U.S. “poverty line” for a single adult.)

82 Percent of Haitians above this poverty line are here in the United States. (I calculate this with Lant Pritchett here, ungated version here.) Only the top 1.4 percent of people in Haiti had that living standard even before the quake, and there is no evidence that Haitian emigrants come primarily from the extreme tip-top of the income distribution. So for most of Haitians who left, leaving Haiti was the cause of leaving poverty.

The Obama administration decided that for the next 18 months it will not deport any Haitian. But the U.S. has only been deporting about 1,000 Haitians per year recently. More importantly, the U.S. has forcibly stopped and repatriated about 5,000 Haitians per year for the past 20 years—people who never made it to the U.S. And this policy surely deterred thousands more each year from even trying. When Gallup asked people in Haiti last year if they would leave permanently if given the opportunity, 52 percent said yes. The U.S. is actively blocking the most effective poverty reduction strategy for Haitians.

When I talk about leaving Haiti as a development strategy for Haitians, some thoughtful people argue that this “can’t be the solution for Haiti.” Compared to what we all wish for in Haiti—rapid emergence from poverty for everyone there, in their homeland—leaving Haiti is a terrible solution. But compared to what is actually likely to happen in Haiti, continued poverty for decades at least, leaving Haiti is the principal solution to poverty. This is the right comparison, not the comparison to a prosperous Haiti that must remain a fantasy for now.

The best thing the United States could do for Haitians would be to let them in, either temporarily or permanently. We are now accepting about 21,000 permanent Haitian immigrants per year, and just a few hundred temporary workers per year. If we really wanted to raise Haitians out of destitution, we could absorb many times more than this. To say that we shouldn’t because it wouldn’t be the end-all solution is like saying that a lifeboat shouldn’t fill its ten empty seats just because there are 100 people in the water.

Dr. Lancet discovers hitherto unsuspected need for aid criticism

The Lancet has issued a severe editorial blast against the aid agencies (both official and NGO) for Haiti aid efforts. (Link requires free registration.) Alanna Shaikh points out where the Lancet is off base.

The Lancet knowledge universe has the perception "the aid sector" has "largely escaped public scrutiny." Who ever heard of any those obscure *&^%$#@ criticisms of foreign aid? That "coming age of accountability" crap? Sigh.

But, forget all that, here's a belated welcome to the concept of aid criticism, Dr. Lancet! Here's what you have already accomplished.

First, you analyze the political economy incentives of aid agencies:

large aid agencies can be obsessed with raising money through their own appeal efforts. Media coverage as an end in itself is too often an aim of their activities. Marketing and branding have too high a profile.

Second, you note these political incentives could cause some needs to be neglected and others not, with the unhappy result:

when viewed through the distorted lens of politics, economics, religion, and history, some lives are judged more important than others

Third, no matter what  aid can do and/or cannot do, you note coordination between agencies is (actually will always be) a disaster:

relief efforts in the field are sometimes competitive with little collaboration between agencies, including smaller, grass-roots charities that may have have better networks in affected counties and so are well placed to immediately implement emergency relief.

You're off to a promising start in so far having shown an impressive grasp of the obvious, Dr. Lancet! Welcome to the aid accountability movement!

Too much of a good thing? Making the most of your disaster donations

The global outpouring of support for people affected by the South Asia earthquake and tsunamis of 2004 added up to more than $14 billion. One notable fact about this $14 billion is that it represents the most generous international response to a natural disaster on record. Another is that it exceeded the total estimated cost of damages from the storm by some $4 billion, or about 30 percent.

What drove these record-breaking sums in the aftermath of the tsunami was not aid from governments, although that too was large. It was private individuals and companies who reached into their pockets and gave generously, to the Red Cross, to UNICEF and other UN agencies, and above all to what is estimated to be the largest proliferation of NGOs that had ever implemented relief efforts in a single disaster.

We don’t yet know how the Haiti response will compare. We do know that donor pledges to help those affected by last Tuesday’s earthquake in Port-au-Prince, pushed along by texting and twitter campaigns, have also been fast and plentiful (while no list seems totally comprehensive, there are tallies of pledges here , here and here).

And we know that some of the same conditions that made the response to the tsunami so generous are at play in Haiti as well. For one, the proximity to the Christmas season, when many Western donors are predisposed to be thinking about giving, and have holiday charity solicitations fresh in their minds. For another, the barrage of media coverage, especially (from Haiti) television stories featuring dramatic rescues that underscore the heroism of American-funded rescue teams.

Relief agencies having a lot of money to draw upon had many real, positive consequences for the survivors of the tsunami in South Asia. Quick-response relief efforts received praise from evaluators and local populations. But the unprecedented pledges in answer to post-tsunami fundraising appeals didn’t solve all problems, and in fact amplified some existing ones—like competition among NGOs, funding decisions based on media and political pressure rather than actual needs or capacities of affected countries, and weakening humanitarian impartiality.

The authors of one report by the Tsunami Evaluation Coalition* found that generous funding “exceeded the absorption capacity of an overstretched humanitarian industry” and actually served as a disincentive for NGOs to work together and pool resources and information. It also caused inexperienced NGOs to proliferate, and encouraged even experienced actors to work outside their realm of expertise.

Some NGOs that found themselves with unexpected amounts of money to spend responded by extending the time horizons or scope of their programs. Only Médecins sans Frontières was quick to admit that they had enough donations for the tsunami and request that additional funds help people elsewhere, a move which initially drew criticism from other NGOs. (MSF posted a similar statement for Haiti last week).

Humanitarian aid is supposed to be allocated according to the principle of impartiality -- the idea that assistance should be offered according to need, not nationality, or political belief, or even how compelling a particular disaster may be to donors. This may be an impossible ideal, but consider that the $14 billion for survivors of the tsunami works out to about $7,000 per person, and compare that to the roughly $150 per person for Somalis affected by civil strife in 2005, or $3 per person for the 2004 floods in Bangladesh.

It may seem callous to suggest even by analogy that the flow of funds going immediately to Haiti be in any way stemmed or diverted. But the effects of big fundraising appeals are complex, and not as temporary we might assume: “The scale of the resources to be spent will distort agency programmes in favour of tsunami-affected areas for years to come,” found another report.

The solution is not to stop donations to organizations doing good work in Haiti. Haitians need international help to rebuild now. The point is rather to give money in such a way that mitigates the negative effects of this compassionate onslaught of giving, and encourages the international system to allocate funds effectively and fairly. Other, good blogs have already discussed some strategies; I give you three of them:

1. Don’t restrict (or earmark) your donations to be used only in Haiti, but rather allow your chosen NGO to spend the money you donate as they see fit. If you don’t trust them to allocate your funds effectively to where they are most needed, then why are you giving them money in the first place?
2. Take up the Philanthrocapitalism blog's advice to give an equal amount to "someone suffering just as much, but less dramatically, elsewhere in the world."
3. Space out your giving. Organizations with a history of working closely with Haitian communities will still be there in six months. They will probably be there in a year, and probably in five years too. They will need your money then as well, when the spotlight has shifted to the next disaster.

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*ALNAP (Active Learning Network for Accountability and Performance), is the repository of many useful documents from the Tsunami Evaluation Coalition. ALNAP has also produced lessons learned reports on Responding to Urban Disasters and Responding to Earthquakes 2008, among others.

Crazy academic research on disaster relief

Sigh, do U.S. strategic interests influence even disaster relief aid? (Ungated version.) Could humanitarian aid cause governments to under-invest in disaster prevention, causing natural disasters to have worse effects? If so, then past disaster relief could induce worst disaster outcomes now (And I thought MY ideas were unpopular)

The amount of news coverage of disasters is heavily influenced by the country's popularity with US tourists.

News coverage is also higher when there are no other big competing news stories. This variation in news coverage is unrelated to need, of course, but has a major effect on the amount of disaster relief aid.

How does this likely affect aid to Haiti for the earthquake? News coverage has been high from major media, and aid flows seem likely to be high.  (Although Haiti doesn't pass the much more severe test of making ongoing headlines in my hometown newspaper, the Bowling Green (OH) Sentinel-Tribune, where today's headline is about a new stoplight.) Still aid could have been even higher if Haiti were very central to US strategic interests (imagine an earthquake destroying Kabul) or a major US tourist destination (a Cancun earthquake that killed US tourists might even get covered in Bowling Green, triggering even larger relief aid).

Goat loans reach the end of their tether

The following post is written by Diane Bennett and Dennis E. Bennett. “Yes, but is it scalable?” is a question often asked of development interventions. Sure your life-saving malaria net program works in one village, but will it work throughout the whole country? Yes, cash transfers worked in Mexico but will they work in Sierra Leone?

Everyone knows that development interventions should be scalable. But sometimes… everyone is wrong. In our experience working in South Sudan, very short-term, totally unscalable solutions may be just the thing to address specific short-term problems and avoid perpetuating aid dependency.

In 2003, communities displaced from their homes by decades of conflict  were trying to re-establish themselves in Upper Nile, but local leaders found their energies consumed by the demands of growing grain to feed their families. To maximize their efforts on community development, we wanted to improve the food supply and infuse capital into villages, while respecting local mores. For Dennis, a banker who helps multi-billion dollar institutions manage their risk, the problem was an unfamiliar one: how to infuse capital into a cashless society?

Our research found tribes in the area bartering with grain, gold, goats, chickens and cattle. The small amount of circulating bills barely survives local termites, which can devour a pile of cash in just a few hours. Grain is commonly used, but attracts rats, which in turn draw poisonous snakes. In addition, grain needs seed and time for cultivation, depends on unpredictable rainfall, requires storage for excess supplies, and is more vulnerable in times of war. Searching for a better cash-less solution, we found goats. Goats are portable, require relatively little care, and since tribes in the region universally trade goats, this solution doesn't exclude anyone.

We made three loans of three locally-sourced breeding goats each (one male, two females), for a total investment of $300.  The loans were two years, and “repayment” was a reciprocal set of goats (from the progeny), so there was no interest or expense. The loans went to three community leaders, chosen by the communities. Our intention was to reinvest the “repaid” goats back into the village, making the program self-perpetuating. But the villagers had other plans.

Of the three loans, only one was repaid to us, an abject failure in finance terms. Instead, goats were contributed to other villagers to start herds, “paying it forward” rather than paying us back. Instead of continuing with our program, borrowers assumed responsibility and perpetuated the project not just to feed their own families, but to help the whole village.

Five years later, these villages no longer need external food assistance, this program no longer exists, and we can say the Yamachoma (grilled goat) is delicious.