Values are everywhere these days, dripping off the pages of corporate annual reports and the subject of earnest discussions in non-profit strategic planning sessions. The World Bank, for example, advertises their core values as “personal honesty and integrity, working together in teams, empowering and respecting others, and enjoying work and family.” Who could find fault with that? These are laudable values, and if it is true that every single person in the organization around the world holds these values dear, then the World Bank must be a great place to work.
Give A Man A Fish
east meets west, international development, travel, vietnamCommentA few months ago, massive rains hit Hanoi and flooded most of the city. In my neighborhood, the streets were not flooded but West Lake had risen nearly over its banks, threatening to submerge the whole area. Everyone was a bit nervous, except for the fisherman. On every pole on the fence lining the lake near my house was perched a fisherman with a long bamboo pole, line attached to a multi-prong fish hook. The hook had no bait; these guys were jigging for carp, a fish that won’t bite on a baited hook.
Due to the floods, the lake was suddenly full of big, fat carp. Where did they come from? I don’t know for sure, but the best I can figure is that they escaped from nearby fishponds that had overflowed their banks. As I walked along Lane 12 one day when the rain was merely heavy and not torrential, the street was full of fish recently caught by the fishermen. On a normal day, each of these guys might pull in one or two tough urban fish – street fish, I think. That day, each cast seemed to reel in a nice, juicy fresh-off-the farm carp.
The Failure of Clean Water
east meets west, international development, vietnam, water and sanitationCommentI recently had the good fortune to spend an entire day talking about clean water with a group of colleagues from various agencies in Vietnam. We were in Dai Thu, north of Hanoi, at the Flamingo resort for a retreat organized by EMW in collaboration with the Vietnam Women’s Union and AusAid. The idea was to get an overview of the water and sanitation sector in Vietnam, and figure out how to position EMW strategically to push the creation of more water and sanitation systems.
What I heard was both inspiring and disturbing – according to a report from the Ministry of Agriculture and Rural Development (MARD), the majority of new clean water systems fail. This is the disturbing part; I’ll get to the inspiring bit in a minute. It sound difficult to believe, but the report says that between 60 and 70% of all new water systems built either by the government or by international agencies stop working in under two years, with most failing to last even one year and nearly 30% never working at all.
Banking on Results
east meets west, international development, vietnam, philanthropyCommentPhilanthropy suffers from an inherent asymmetry problem; there is a lack of feedback between the recipient of assistance and the source of funds, compounded by information obscurity.
In the private sector, this problem is much less severe. If I run a restaurant, for example, and the food is no good, people may come once but not return and I go out of business. Meanwhile, packs of professional and amateur reviewers publish their views, there are official inspections from the department of health and so on. There is substantial direct feedback as to whether I am doing a good job in the proper way at a reasonable price.
In the non-profit sector, however, if I am a donor and want to help large numbers of poor people in some far-away place, I give the funds to an intermediary, an NGO like East Meets West. East Meets then takes the money, implements the program, and writes up a nice report to send me. But how do I know whether what they say is true?
In most cases, I have no direct contact with the beneficiaries, and even site visits are arranged and controlled by the intermediary. There are no independent agencies that visit and verify that things were done in the right way, and that the recipients were pleased with the service they received. I don’t speak the local language, I have no idea if some other agency could have done the same job for less money, or if the people really wanted the project in the first place.
One way around this problem is through the use of independently-verified output-based aid, or OBA. This is an innovation in development finance that has been tried in numerous places over the past few decades, with a substantial increase in interest in the past ten years or so. (It is also called results-based financing, or performance-based aid.) The World Bank, for example, manages an OBA fund that has moved $3 billion or so in six sectors over the past ten years, including four grants to EMW (two are pending).
The basic idea is that financing comes after the results are delivered, not before. In our case, what we were required to for our clean water program (recipient of a grant of $4.5 million, see http://www.gpoba.org/gpoba/node/599) was to implement the water-supply program by building systems and connecting households. We borrowed the funds from a commercial bank and then build the water systems.
Under our agreement with the World Bank, we had to meet a large number of criteria for water quality, environmental review, open bidding from contractors, and so on. Everything is written down, reported on, and made available to the donor. The next step, once the projects were complete, was for the World Bank to send out an “independent verification agency” who conducted a random audit of our water systems to ensure that what we reported was actually true. They spent weeks in the field visiting rural villages and writing their own reports.
Once the World Bank was satisfied that we had met the terms of the agreement, they reimbursed us for the costs of the system at a level that had been previously negotiated to ensure that we covered our actual expenses, but at maximum efficiency. If we failed to deliver what we promised, we would not be reimbursed (thankfully, this has not happened). In other words, we as the intermediary agency had to take on the performance risk – no performance, no grant. Using this funding mechanism, EMW has brought clean water to 250,000 people in Vietnam over the past five years, and we are actively supporting the government of Vietnam to use this model on a larger scale.
OBA gets around some of the biggest problems in doing good international development work. It provides incentives for efficiency and innovation, it significantly increases transparency, it has a built-in mechanism for tracking results much more closely, and the result reports can be trusted because they are independently audited. In addition, the OBA only delivers 80% of the grant after the first verification visit; the rest comes only after another visit six months later, to see if the system is still working. So another benefit of OBA is that it provided an incentive to do programs that are durable and sustainable.
OBA makes the intermediary agency accountable for outcomes, not just for disbursement. It short-circuits the asymmetry problem and creates incentives to do the proper thing, at the right price, in a way that satisfies the beneficiaries. It’s not a panacea for all the problems of international development assistance, but we have found it to be a powerful mechanism for improving our programs and increasing our organizational capacity.
Racing in Regaldo
CommentMarch 2011 > Wet and cold barely begins to describe the conditions in Warnerville yesterday. The wind was howling, I could not even keep my canopy up; there was a section of dirt road featuring endless potholes filled with dirty water; some puddles on the main road were six to eight inches deep and spanned the whole road, and so on. Did I mention the cold cold rain?
Most classes were pretty small (mens 1-2-3 had 1-2-3 men in it), but the 45+ 4s turned out a good group. We headed out shivering and complaining, everyone trying to find some shelter in the pack. The wind came at us from all directions, so there was a lot of moving around.
There are only a few hills, one long with a flat dip in the middle and a few short, and the one at the finish. Just to stay warm, I attacked on a short one, and nobody came with me. There were a few half-hearted attacks on other sections, but nobody rode off the front. So when we hit the long hill, I attacked again, and rode hard up the second section and down the back, opening up a big lead.
I rode off the front for around 20 miles, I think. I was feeling strong, so I figured that I might be able to pull it off if the pack decided not to chase. I tucked into time trial mode, and fought the wind and the rain until they caught me before the dirt section, with only a few miles to go. I found out later that one guy rallied the pack, and got them organized to take turns pulling. He won the race in the final sprint.
I was able to recover in the pack, and then stay near the front. As we pulled into the final section the headwind and gusts were really tough, and then we hit the final hill at a good pace. The pack had started to split by this time with me in the second group. I was able to bridge up the to the lead group but unfortunately not to get into the top five. I finished in 7th place.
It sounds weird to say given the horrible conditions, but this race was the most fun I've ever had racing bicycles. A few guys from other clubs came by later to say "good effort" and one guy said he was cheering me on.