development on development

Development on Development:

The Changing Role of Practitioners

Yigezu Sedi

Development on Development: The Changing Role of Practitioners

This edition replaces all previous copies circulated for comments.

© Yigezu Sedi, Addis Ababa, 2014

Rights and Permissions – All rights reserved. The texts in this document may be cited or reproduced without prior permission providing the source is acknowledged.

Development Practitioners and other readers are encouraged to send their comments to the author and share their experiences, observations and views. Address for correspondence:

Yigezu Sedi Tel. + 251-‐923-‐002755 E-‐mail [email protected] Addis Ababa, Ethiopia

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Table of Contents

Acronyms ............................................................................................................................. iv

Preamble .............................................................................................................................. 1 Why change? The push and pull factors .................................................................... 2

International Non-‐Governmental Organizations (INGOs) – at the crossroads! .......................................................................................................................... 2 The Golden Age ............................................................................................................................ 2 The world is changing, except INGOs ................................................................................... 3 Where the global converge with the local .......................................................................... 3 Holding onto the past ................................................................................................................ 4 Trapped by own snare .............................................................................................................. 6 Survival of ‘the fittest’ or ‘the fattest’? ................................................................................. 7 Confusing means with ends ..................................................................................................... 8 ‘Beating a dead horse’ ............................................................................................................ 10 Adding to problems or solutions? ...................................................................................... 12 Sitting on a two legged stool ................................................................................................ 13 Decisions alienated from contexts ..................................................................................... 13 Flexibility – the two-‐edged sword ...................................................................................... 13 Good not to do, not knowing the consequences ............................................................ 14 Good not to do, when not good enough ............................................................................ 14 Service Delivery projects: Busyness or Business? ........................................................ 15 The misgivings ........................................................................................................................................ 15

Multilateral and Bilateral Donor Agencies – link the missing links! .......................... 18

The Private Sector – the law of sowing seeds – you harvest what you sow! ............. 22

Governments – ‘the spent arrow, the missed opportunity don’t come back’ ........... 23

Local Civil Society Organizations (South) – prepare for greater opportunities and challenges! ................................................................................... 24 The faces of poverty ....................................................................................................... 26 Why the poor get poorer ....................................................................................................... 29

The informal sector – the misunderstood! ............................................................ 32 The ‘informal customers’ – who are they? ...................................................................... 33

Development partnership model – striking poverty from all corners ......... 36

Key references ................................................................................................................. 41

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Acronyms AfDB Africa Development Bank AusAID Australian Agency for International Development CCIC Canadian Council for International Cooperation CSOs Civil Society Organizations CSR Corporate Social Responsibility Danida Danish International Development Agency DFID Department for International Development GDP Gross Domestic Product GTZ Deutsche Gesellschaft für Technische Zusammenarbeit HLF High Level Forum IFC International Finance Corporation ICSW International Council on Social Welfare INGOs International Non-‐Governmental Organizations NGOs Non-‐Governmental Organizations LCSOs Local Civil Society Organizations PVCA Participatory Vulnerability and Capacity Assessment ROA Reality of Aid PSD Private Sector Development Sida Swedish International Development Agency UNICEF United Nations Children’s Fund UNIDO United Nations Industrial Development Organization USAID United States Agency for International Development WEF World Economic Forum

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Development on development: the changing role of actors

Preamble The primary purpose of this paper is to propose a new development partnership model applicable to developing countries at national and local levels. To build a case for the model, the global development thinking dynamism and the down side of the current development approaches, particularly INGOs’ organizational practices and service delivery projects, are briefly dealt with. Various thought triggering questions are posed over the course of the discussion. Effort is made to shade some light on thinking around poverty and the informal sector and how the two are linked together. The need to recognize, develop and engage the newly emerging development actors, the private sector and LCSOs, with peculiar comparative advantages to contribute to poverty reduction, is given due emphasis. Also working in partnership is emphasized over individual agency. Donors’ private sector development strategies are briefly discussed in light of contexts of developing countries with emphasis on areas that deserve more attention. However, in depth review and analysis of donors, INGOs and Governments’ development policies, strategies and programs are not the subject of this paper as they are covered elsewhere, and more importantly since the focus of this paper is on field realities and practices, thereby to bring to attention observed gaps in policies, strategies and programs. NGOs are grouped into two, International Non-‐Governmental Organizations (INGOs), North, and Local Civil Society Organizations (LCSOs), South, due to variation in capacities, organizational practices, opportunities, constraints and access to resources. LCSOs include NGOs, Associations, community based and other organized civil society groups that work for the poor. Many scholars have argued why INGOs need to change from global dynamism perspectives. This paper argues why INGOs need to change not only from the global, but also local and national perspectives. It concludes that INGOs are caught between two crushing forces, the global and the local/national, with no time left to waste. The longer INGOs continue with the current organizational practices and modes of operation, the more and more they lose relevance, the more it will be difficult to come out of crisis to regain momentum and rebuild reputation, both as an industry and individual organization. Poverty and the informal sector are briefly discussed, taking existing knowledge as a point of departure. However, the discussion focuses on looking at situations through the eyes of the poor, rather than scholarly definitions and concepts. Finally a development partnership model that brings together the main development actors is proposed. The model proposes strategies of capturing the opportunities and addressing issues discussed in the paper through bringing together the major development practitioners and suggesting harmonizing policies, strategies and programs. It is more of national and local levels, not global. The underlying assumption is that high-‐level policies, strategies and programs informed by field realities and needs are more effective in achieving their intended goals than otherwise.

Why change? The push and pull factors

International Non-‐Governmental Organizations (INGOs) – at the crossroads! As a point of departure, allow me to ask a wild question. Why the name NGO, calling an organization by what it is not, instead of who it is or what it stands for? Say why not ‘Friends of the Poor’ because friends care about what they do to friends. Even in the political arena, for that matter, why ‘opposition party,’ implying ‘fight?’ Why not ‘alternative party?’ A mystery, at least to me, because names, and hence reputation means a lot, at least to some, if not to all. If you bear with me and continue reading down a couple of pages, I will explain why. Over the course of writing this paper I am compelled to unravel the ‘left hand column’ concerning the shadow side of INGOs, from my two decades of experiences, observations and encounters, working at various capacities, from frontline up to Deputy National Director of World Vision Office in Ethiopia. Limitations of Humanitarian and Development INGOs’ organizational practices, development approaches and service delivery projects are discussed at a greater depth.

The Golden Age INGOs have been enjoying unprecedented favorable environment over the past couple of decades, as they were favorites of

donor agencies, thanks to the inefficient and less effective bureaucracy strained third world governments’ structures and systems, corrupt government officials, and the insufficiency of economic growth to bring the anticipated results of benefiting the poor. NGOs were perceived as sources of alternative and viable approaches to development vis-‐à-‐vis the staggering modernization and dependency theories in generating the hoped for results (Lewis and Kanji 2009). The same paper argues that their grassroots presence, flexibilities, and promotion of new development approaches, like empowerment, social development gender, environment, and participation contributed to their popularity. In effect INGOs went global from small-‐scale operation and low profile and their budget climbed from a few million to billions of dollars a year. The continuous flow of fund from donor agencies, and the generosity of individuals and foundations in response to appeal through mass media for humanitarian crisis and service delivery projects enabled INGOs become giant development agents. Now the situations, both external and internal to INGOs, that brought the favoritism and popularity, are waning in one or the other way, and it seems the end of the golden age is not so far. Global dynamism, pressure from national/local level and donors’ fatigue and skepticism about the impacts of their donations is to bear impact on how INGOs’ do business and their funding stream.

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The world is changing, except INGOs Development dynamism, in which new role players that were not visible as agents of development some years back, the private sector and LCSOs, with peculiar comparative advantages, is emerging. Also, governments are changing, becoming more and more responsive to humanitarian crisis (Kent, Armstrong and Obrecht 2013) and are striving to meet the millennium development goals. Political upheaval, unorganized civil society movements, with little role of NGOs, pressing governments to improve services, curb corruption and address various citizens’ issues is becoming the norm of the 21st century. Civil society movements to voice against actions of other countries that affect their interests and livelihoods, like the recent Greece civil society movement, voicing against EU, particularly Germany, for imposing austerity measures, is on the increase. Private sector development and public-‐private partnership to promote economic growth led poverty reduction is being built into donors’ development policies and strategies (Kindornay and Reilly-‐King 2013). What is more, attention given to LCSOs by donor agencies to enhance their role and ensure sustainability is on the rise (Giffen and Judge 2010). The growing interest of companies to engage in inclusive development (Harvard 2007) is a recent development. In the face of such huge changes taking place around them it is less likely for INGOs to continue business as usual, though, noticeable move to

change is not seen on the part of INGOs. Some still grapple with improving the old ways of doing business.

Where the global converge with the local INGOs’ challenge doesn’t come from the global alone, but also from local and national. The way INGOs do business locally, nationally and globally is getting questionable to fit into the changing contexts. The earlier days of being rooted in communities, with commitment to save lives and make a difference in the lives of the poor, is getting watered down as the ambition to become more and more visible and go global takes precedence over getting deeply rooted. INGOs, divergence from ‘their original values, style and approach’ as they continue developing ‘corporate-‐like’ culture, becoming more and more professional is discussed by Lewis and Kanji (2009). Moreover, raising funds through marketing poverty is becoming less acceptable, particularly among developing countries’ governments and citizens. There is little doubt that INGOs have contributed to saving lives in humanitarian crisis situations and the wellbeing of the poor, particularly in the areas of improving access to social services. However, compared to the resources invested and the life span of some development projects more could have been achieved. There are communities that have been in development nearly for three decades and yet haven’t developed resilience to shocks. A single

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season’s shortage of rainfall puts households back in emergency situations. The solution sought by INGOs under such circumstances is reinventing programming systems and tools, which might have some contributions to the poor performance, but neither the only contributing factor nor the only solution to the problems. Hence, looking at the less effectiveness and the unexpected negative consequences of INGOs’ service delivery projects, the way they do business at local and national levels, how they raise funds, where they invest most of their time and energy and the missed opportunities, change is over due, even without push from the global dynamism. What is more, recent developments in the south, that were not there some years back, particularly the proliferation of LCSOs to partner with, is a great opportunity not yet recognized by most INGOs. The fact that developing countries governments’ are increasingly restricting the scope of INGOs programs and projects needs more thoughts. So INGOs challenges don’t come from the global dynamism alone, but also from the local and national. It is jut like being caught between two grinding forces, with little time left before getting crushed. There are some exceptions, though, where some INGOs have changed their course of action to work with LCSOs (Edwards 2005) and others resorted to building capacities of and working with LCSOs from the start, except where contexts don’t

allow. They deserve appreciation, though there might be other areas where they need to improve.

Holding onto the past Borrowing an image from the movie “RED” Series One, in which Frank Moses and his friend Sarah visit Mark at his place (all character names), Mark comes out and points a gun at them thinking that Frank came to revenge. After some conversation and clearing the air of misunderstanding, Mark says ‘the last time we met I tried to kill you,’ to which Frank responds ‘that was a long time ago.’ Mark’s reaction is, ‘some hold onto things like that.’ So, for how long do INGOs hold onto the past? In all the changes, at all levels, there are opportunities and also new threats. There are situations in which the old threats are turning into opportunities, and opportunities are turning into threats. Once who were ‘adversaries’ are becoming ‘friends,’ and friends are becoming ‘adversaries’. The private sector is no longer seen as existing only for maximizing profits, but also as development partners. Third world governments’ working in collaboration with donors and access to funding is on the increase. It is the NGO sector that is holding onto the past way of doing business. Too much generalization! But there is truth in it. Coming to the core, INGOs mode of operation runs way behind changes at national and global levels. Notably the way humanitarian and development INGOs do business hasn’t changed proportionately with

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the changing world. INGOs were raising funds and designing and implementing humanitarian crisis and development projects. Still they raise funds selling poverty and plan and implement service delivery projects. Marketing strategies and the way projects are designed and implemented has shown incremental changes. But little has changed to the core business. On the other hand the potential of the private sector and LCSOs, with greater advantages over INGOs, in implementing some projects has not been harnessed. LCSOs are better rooted in communities to create awareness, mobilize communities, advocate and implement service delivery projects. In fact in some developing countries (e.g. Ethiopia) governments have introduced regulations that restrict INGOs involvement in democracy, advocacy and rights issues. Such rights are reserved for national civil society organizations. Moreover, promotion of business skills and entrepreneurship, technology transfer, innovating and linking local initiatives with the larger national and global economy are better done by the private sector than charity oriented INGOs. Over the years INGOs’ systems have evolved to harness the benefits of progress in technological development and to align with the changing tastes of donor agencies and the public, but looked at closely, there isn’t much difference, particularly when it comes to the core business. Looked at closely, by and large, the key differences between the approaches, guidelines, systems and tools of different INGOs is only in rearranging or altering

details, packaging and more importantly whose logo is on it. It is more of altering proportion of the different colors in a blend to make the resultant color look different. A typical example is the different PVCA guidelines on the websites of many INGOs. It is understandable to have different versions for different contexts and communities (say pastoralist communities, urban, settled agriculture or types of vulnerabilities and hazards), but not for different INGOs operating in the same contexts or communities. In fact such variations add to confusion than program quality. INGOs need to learn from war victims who spent the greater proportion of their lives in jungles without knowing that the war was over. Perhaps there are many more who died in jungles not from bullets, but from unnecessary suffering thinking the war is ongoing. Had they listened to FM radios or moved to the edge of the jungle, subjugating their fears, to listen to gunshots or watch how people live, they could have saved their lost lives and prevented their relatives and buddies from prolonged mourning. So when will INGOs come out of hiding in the jungle of project design, writing proposals, project implementation, developing systems and tools, conducting monitoring & evaluation, attending meetings, writing reports and marketing to pause, reflect and align to the changing world? There are two options to see sunlight, either by coming out of the jungle, INGOs themselves or waiting until somebody clears the jungle, which is inevitable.

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INGOs need to give more thoughts to their own review, analysis and implications of the global dynamism at the 2013 World Economic Forum in which they came up with key recommendations, to become facilitators, catalysts, brokers and enablers, with greater focus on local organizations, cross sector engagement, demonstrating higher level of accountability, increased engagement with businesses and to do away with working in silos (WEF 2013). The paper concludes that civil societies that evolve through these transformations will be larger, more energetic, better connected and more engaged. So here is where the name question becomes relevant. INGOs may survive forever as non-‐governmental organizations, without worrying about making a difference, of course, unless change comes from elsewhere, because the name doesn’t imply anything. But, not holding to the name “Friends of the Poor,” unless they change and behave as true friends to contribute. Likewise opposition parties, may not oppose for the sake of opposing, unless they have better alternatives for citizens, had the name been ‘Alternative Party”. Too much simplification!

Trapped by own snare Often INGOs become slaves of their own systems. This holds true, particularly as sophistication of systems and tools, and unfair requirements deter partnership with LCSOs and the excuse becomes ‘they don’t fit into our systems’, even if the outcome of the partnership is much greater than otherwise. The race for finding partners begins when it is part of the requirements of call for

proposal. Competition and fierce fight among INGOs over potential partners and running around to make friends overnight is the norm only to last until the proposal is submitted. The cycle continues when another call for proposal comes. This shows failure of INGOs to understand the very purpose of partnership with LCSOs, which is developing vibrant civil society organizations, but not winning competition to secure grant funds. Sadly, shortsighted INGOs limit the purpose of partnership to securing grant funds. On the other hand it is very difficult for most LCSOs to fulfill the stringent requirements, to mention a few, overall organizational capacity, profession and competencies of staff, amount of fund managed, partnership experience, types and number of projects implemented, geographical coverage, good audit grades and evaluation results etc., given the limited opportunities they have to develop these capacities and poor access to grant funds. In most cases LCSOs access donors’ funding through INGOs, particularly from donors that grant fund to INGOs from their own countries. To be legible for this funding many LCSOs face severe capacity constraints because of the short history of existence and poor access to capacity building opportunities. For INGOs the requirements override the objectives of developing capacities of LCSOs. What INGOs failed to understand is, if they don’t invest on low capacity LCSOs today, how do they expect to see vibrant LCSOs tomorrow? Developing these capacities requires proper understanding of the purpose of

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partnership and intentionality. At times INGOs serve their systems than communities and the poor. The argument is not to compromise industry standards, but there needs to be intentionality to create these capacities, not when call for proposal is released, but as part of their regular programs, which is lacking at the moment.

Survival of ‘the fittest’ or ‘the fattest’? Big trees often prevent any undergrowth or smother and kill if they start to grow, some unintentionally, as they are ignorant of the consequences of their actions and some exude chemicals to prevent undergrowth in their vicinity. The point, the effect is the same, be it by ignorance or intentional. The remedy is only trimming the branches since there is no any other alternative. INGOs are not responsible only for neglecting LCSOs, but also for smothering and preventing them from thriving, directly or indirectly, using their ‘oligopoly’ power. The moment giant INGOs enter into an area with inflated resources, the smaller, better rooted in communities, more efficient and effective, start to lose significance, because they have less to invest. Besides the salary and benefit scales of INGOs create unfavorable competition environment for LCSOs to hire and retain competent staff, important to develop capacity and become sustainable. Also the crowding out of LCSOs by INGOs, undermining their growth and effectiveness, is discussed by Steinle and Correll (2008) and Lewis and Kanji (2009).

Caught in the ambition of standing tall, head above others, many INGOs strive for visibility rather than making a difference. Edwards (2008) and Lewis and Kanji (2009) noted INGOs putting more emphasis on organizational sustainability and raising profile than community wellbeing. To meet these ‘ends’ various mechanisms are employed. Fierce competition over territories (geographical areas, types of programs and potential partners to secure grant funds), to name a few, is the norm. Geographic or programmatic territories are guarded from ‘intruders’ even in the existence of unmet community needs, resisting additional resources and interventions offered by other NGOs in fear of losing recognition to ‘competitors’. Here what IGOs failed to understand is, it is the internal consistency, proper positioning oneself within constituents and stakeholders, finding and creating niche in national and global civil society movements and development dynamism and mission accomplishment that sustains, not temporary gains. The overshadowing contradicts the core principle INGOs claim they stand for, viz. empowerment of communities and local civil society organizations and ensuring sustainability. From sustainability and societal benefit point of view having several small vibrant local civil society organizations, with less funds, but rooted in their communities to inspire and mobilize, eventually to become sustainable agents of change outweighs the benefits of having a few giant INGOs that may phase out tomorrow

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without developing successors. INGOs can better contribute through strengthening their role in global level advocacy and enabling and linking LCSOs to the global dynamism than replacing them doing service delivery at national and local levels. Abdel Ati (1993, quoted in Lewis and Kanji 2009) noted some detrimental effects of INGOs on LCSOs as follows:

“one of the most serious effects of the NGO system for long-term development prospects, has been to squeeze locally-based voluntary organizations out of the picture. These bodies were never able to compete with the foreign NGOs, given the differences in financial resources and logistical support, and the possibility of incorporating them into the system in the form of counterpart indigenous organizations has been passed over.”

So, is overshadowing to stand tall, head above others, a success or failure? Whose success? Is it mission-‐driven or mission-‐drift? It is disturbing to see mission and principles sacrificed on the altar of visibility. In actual sense enabling and delegating LCSOs to take on the baton deserves precedence over visibility. The failure originates in the mistake of using the wrong success factors, visibility, geographical coverage, number of projects, number of beneficiaries, to mention some, not number of lives changed or communities and civil society organizations empowered. Had the smothering trees known the benefits of undergrowth, they might have regretted. Because, it is the small under growing grasses and other vegetation that prevent soil erosion. The flourishing of LCSOs

has multiplier effects on INGOs’ program impacts and sustainability, though the credit may not go to their office as direct contribution. Whoever gets the credit it is the change in the lives of the poor that matters, not who gets the credit. INGOs need two levels of phase-‐out strategies, project and country. The common phase-‐out strategy is project level where it is built into program/project documents. Normally projects have sections on phase-‐out and sustainability to ensure continuous flow of benefits to beneficiaries following pullout from an area. However, INGOs lack higher-‐level transition strategies, namely county or regional. Had there been such strategies INGOs might have given adequate thoughts to building LCSOs capacity to take on the baton in working with project communities and their organizations as successors. Apart from LCSOs the existence of strong government structures and systems in some service delivery sectors (e.g. health system in Ethiopia) that allow effective service delivery, at least potentially, given some capacity is created and resource constraints are eased, is an opportunity sidestepped by INGOs in favor of putting in place parallel own structures and systems. Accompanied by effective accountability mechanisms such partnerships allow leverage on the already existing capacities ensuring effectiveness and sustainability. Confusing means with ends Sometimes INGOs’ are caught up in pursing means like increasing funding size, presence at

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humanitarian crisis hot spots, national and international media coverage, meeting with donor agencies and government officials for its own sake. In real sense these could serve as means to noble ends, change in community lives, though the way some are done are not ethical, but not ends by themselves. The pursuant of means as opposed to ends with earlier observations by Edwards (2008) and Lewis and Kanji (2009) where INGOs putting more emphasis on organizational sustainability and raising profile than community wellbeing is noted. The mistake of focusing on means, as opposed to ends, has led to graver mistakes. The ambition to go more and more global has led to extra investment on image building, diverting attention from grassroots impacts, eventually becoming shallower. This is revealed by, among others, recruiting leaders based on grant fund raising and management experience and building leadership teams around less important agendas as opposed to envisioning, providing leadership, inspiring and mobilizing staff and partners to accomplish mission, building capacity of LCSOs and taking the organization to the next level. What is more, the less attention given to what happens in the field is a good indication of what matters most to INGOs. The poor are out of sight of leaders, left to frontline staffs, whose energy is drained by pressure from the complex systems, collecting and encoding data, participation in meetings, sending information, taking pictures, hosting visitors, preparing proposals,

responding to queries, writing stories and reports the list goes on. Also INGO leaders’ giving less attention to grassroots impacts is manifested by the low priority of programs on their discussion agendas, the low support given to field staff, little review of various reports to provide feedback, apply lessons learnt and solve problems, and low frequency of field visits, to mention a few. INGOs’ leaders distancing themselves from the staff is also noted by Lewis and Kanji (2009). For some INGOs fund raising capacity by far exceeds program implementation, as manifested from huge under spending, not because all needs of the poor are met, but inability to use the fund. Thanks to the flexibility of donors to extend project period time and again, worst of all, not to mention how the underspent is spent, where systems allow. Downward accountability, easier said than done. Who holds who to account, anyway? Because power matters! Here the key question that needs to be answered by INGOs is, are the poor the means to raise fund or constituents who deserve to have a say on resources raised on their behalf? INGOs need a new vision in which they see themselves not as owners but stewards of resources entrusted to them to be accountable to their constituents.

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‘Beating a dead horse’ The continued change in programming systems and tools, sometimes the next being on pipeline before its predecessor fully takes off, without significant alteration to the core business,

shows the struggle to keep head above water. Here the failure of INGOs is failure to detect their position on the operation curve. As incremental change continues, with little change to the core business, the marginal return continues to decline at an increasing rate until it reaches zero (Figure 1, Box 1). If the cost of developing and implementing these systems and tools is taken into account the return could be even negative. Such incremental changes are good at complicating processes

and adding more catchphrases, sweet to the ear, impressing audiences and reaping applause, onto the already overloaded long list of acronyms, only to see crash landing the next morning, thanks to the shabby feet. Who knows INGOs’ systems and tools infant mortality

rates because they lack official birth certificates? As I write this paper I couldn’t stop thinking of children playing kites. To someone standing too far to see the string kites appear to be on mission, like drones. Only those who are close enough to see the strings know they go nowhere. The glowing INGOs’ catchphrases etc. that make their leaders feel good and excite outsiders, but weak to inspire and mobilize staff and partners for action

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and lack the how of translating into action, are little better than flying kites, going nowhere. The resources and time invested on inventing these slogans could have been used on community projects to make a difference. It is not only the declining gain from frequent changing of systems and tools, at costs ranging in the tens of millions of dollars, raised in the name of the poor, sometimes to discard even before they get off the shelf, but also the low implement-‐ability and tremendous stress it puts

on front-‐line staff, that make such changes worthless. Often the process steps require multiple professional skills (for some positions four or more) and sacrificial life style, rare to find, if not entirely impossible. Leaders require of staff qualities that are difficult to model. It is not uncommon to hear staffs say, ‘is this for research conducted by universities or development tool?’

The origin of such systems is the head quarters and the developers are international consultants and/or head quarter based experts hired for this purpose, with limited field experience. The contribution of frontline staff to the change is limited to providing feedback when the systems are ready for implementation. The prudent way of changing systems, particularly when the objective is to improve impacts on the wellbeing of the poor, is to begin with the field, not the other way round. However, the common practice is to develop

systems and tools and push them downward. So it is not surprising to see new systems being trimmed back at implementation to the extent that there is no significant difference between the old and the new. So, when will INGOs stop beating the dead horse of improving systems to train and embark on the young horses of becoming enablers, advocates and working in

Box 1 – phases of programming systems and the declining marginal return 1) Phase I (up to x1) – basic programming systems and tools were not in

place. Most INGOs, particularly the pioneers, passed through this phase. Fund was raised and utilized spontaneously.

2) Phase II (between x1 and x2) –programming systems and tools (assessment, design, implementation management, monitoring and evaluation) and other organizational, human resource management, procurement and financial systems were introduced and continuously improved, particularly as donors’ requirements became more and more stringent. The gain was significant.

3) Phase III (between x2 and x3) – INGOs continued developing more complex systems and tools to enhance competency until it reached the peak of the operation curve (x3). As a result systems became more and more complex, with less and less contribution to program outputs/ outcomes (change in the lives of the poor) and implement-‐ability. Actually the marginal return beyond x3 is zero or negative.

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partnership? Companies say they need CSOs that connect them with communities (Harvard 2007). It is far from reality to conclude that the private sector has become a perfect world to benefit the poor. Unless handled with care it can accentuate inequality and deepen deprivation. However, there are companies that are ready ever than before to engage in inclusive development and this potential needs to be tapped. Donors are increasingly interested to extend support to LCSOs to enable them assume more responsibilities, thereby to ensure sustainability (e.g. Sida, Billing 2011). Governments are changing. Civil society movements demanding justice and better services and fighting corruption is on the rise throughout the world. Whereas, INGOs still beat the dead horse of business as usual.

Adding to problems or solutions? At times programming approaches contradict the basic principle that INGOs preach. In most rural contexts the poor don’t consider themselves equal with others. At community meetings their poverty tells them to choose the most inferior seats and to maintain their silence. If meetings are conducted under tree shades, their poverty tells them choose dusty spots under the sun, at peripheries, without anyone telling them where to sit. If seats are provided their poverty tells them choose floor, leaving the best available for development agents and the better off from their communities. It is not uncommon for the poor to choose the worst even when the best is available.

To avoid identification with dependence on charity, often, grownup children refuse their pictures from being taken and those who participate in development projects refuse visit by donors. I remember a guy we worked together for the same organization say, ‘now I can mix with others.’ The secret is he bought a good travelling bag while on a workshop abroad. Before he used to feel ashamed for using a travelling bag that doesn’t match with that of his colleagues. The poor refrain from participation in holiday gatherings, attending funerals and other occasions just because their clothing code doesn’t match that of others. In public transports it is not uncommon to see people feeling uncomfortable sitting next to the poor because of poor clothing and hygiene practices. The poor understand the reason when seats next to them are vacant until all others are occupied. The ‘unlucky’ last person to sit next to them keeps his space to avoid the ‘unacceptable’ clothing code and poor hygiene. Needless to say, the message to the poor is they are not worthy enough to mix with the better off, which dictates to keep their distance all the time at all places. It is under such contexts that some needs assessment tools require communities to gather and rank members according to level of poverty/wealth. The poor observe others identify them with deprivation, ranking them at the very bottom, of course, with which they have already identified themselves. This accentuates the already deep-‐rooted negative self-‐

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image and inferiority complex. The contradiction process continues as the poor are later taught to exercise self-‐actualization and self-‐respect as empowerment strategy. Here, the point is, if research and other studies and surveys involving people require fulfilling certain ethical standards, the poor don’t deserve less. INGOs need to find tools that build self-‐confidence while identifying needs, cannot be overemphasized.

Sitting on a two legged stool While the outcomes of some projects are not commensurate with the investment, worst of all, they lock beneficiaries into less productive and unsustainable livelihood strategies, preventing them from seeking other viable alternatives, with dire long-‐term consequences. As availability of aid money locked INGOs into the current mode of operation, which otherwise might have changed their course of action [Edwards 2005], several INGOs’ projects have locked the poor into unproductive and unsustainable livelihood strategies. A classical example is where subsistence agriculture is promoted in contexts where produce from degraded small plot of land cannot meet even a few months dietary needs of households or where the ecosystem doesn’t support traditional rain-‐fed agriculture, whatsoever. Such projects are not different from a two-‐legged stool that stands upright as long as someone sits on it balancing his/her weight. The moment the person stands to walk the stool is on its side. Panic sets in when people fall back into emergency situations after being in

development programs on which tens of millions of dollars was spent for decades.

Decisions alienated from contexts At times the weak linkages between country specific contexts, priorities and issues and higher-‐level decisions, made at headquarters elsewhere, culminate in overriding national interests and priorities. This is revealed in several ways, including how the office is structured and staffed. In rare INGOs where the systems allow local board development, countries that have boards managed to resist decisions that don’t align with contexts and uphold national interests, while those that don’t have their boards have to abide to decisions similar to those overturned by other countries. The fact that citizens can influence, through the general assembly and boards, decisions pertaining to organizational and operational practices of LCSOs to align with contexts and priorities of countries is a great opportunity not available for INGOs.

Flexibility – the two-‐edged sword Whereas, some positive aspects of INGOs’ flexibility were observed (Lewis and Kanji 2009), it is worthy to note some of the detrimental consequences. In some INGOs’ such opportunities are seized to create environments that allow doing things their way. Spontaneous alterations to organizational structures and maneuvering of policies, paving the way for actions that are otherwise illegitimate, are not uncommon. Using such

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mechanisms people not wanted on staff, particularly for reasons other than underperformance, are terminated and replacements are hired in a manner that suffers lack of transparency and accountability. Likewise unguarded flexibilities allow redirecting funds to activities other than the originally planned, often less important, simply to avoid under-‐spending. Needless to say, contribution of such actions to organizational success and mission accomplishment is doubtful. In fact there are cases where they are detrimental to the organizations, particularly in ensuring effective flow of benefits to the poor or safeguarding staff wellbeing and job security.

Good not to do, not knowing the consequences There are other crucial issues. Observations confirm many INGOs’ projects, particularly those free handout seasoned, perpetuate inefficiency and erode people’s self-‐respect and confidence, breeding dependency syndrome. Observing people preferring to remain poorer than earning small increase in income, when the opportunity cost of losing entitlement to free handout outweighs, is common. Under such circumstances the only mechanism by which beneficiaries ensure access to free handout is by sabotaging development interventions. Therefore, there is time and situation when doing nothing is better than doing a lot, and the wisdom to discern between the two prevents many damages from happening.

Good not to do, when not good enough Several INGOs’ programs, specifically those that focus on agricultural and economic development, fail integrating local actions into the larger national and global economy. Here too there are INGOs, though the projects may not be representative of the entire operations, which deserve appreciation for creating opportunities for the poor to benefit from export markets and fair-‐trade opportunities. For most INGOs’ projects, trend in supply, demand, prices and other economic, institutional, infrastructure and demographic factors, important to decide on product type and to plan linkage to allow progression out of subsistence mode of production, is not part of the equation. Projects are designed in isolation, based on local needs, giving little attention to economic and other dynamisms. In fact, this hardly falls within the competency area of charity oriented INGOs. Promotion of entrepreneurship, transfer of business skills, technologies and innovations, crucial to development is better done by the private sector, than charity oriented INGOs. Under such circumstances INGOs can do better by engaging the private sector, particularly as their engagement in development is on the rise, limiting their role to intermediation.

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Service Delivery projects: Busyness or Business?

The misgivings NGOs have been implementing humanitarian and development projects financed by donor agencies, foundations and individual donors. However, gains from many of these projects are not commensurate with the investments, project life and efforts made. This discussion is limited to factors that could have been minimized or avoided through careful design and effective management of project cycles and risks. External factors such as conflicts, global dynamism, change in government policies and unexpected natural calamities are not considered. The first reason, as discussed in the poverty section, is the use of project inputs by the poor to cover unmet consumption requirements. Second, development projects distributing inputs below the minimum threshold to generate income above consumption level allowing saving, investment and asset creation are less likely to succeed. This results from thin distribution of resources to reach as many beneficiaries as possible. A typical example is where farmers are provided with a few numbers of livestock like poultry, sheep, goats, few kgs of improved seeds, or a few quantities of fruit seedlings. Production from such inputs cannot meet household consumption requirements and allow asset creation, and saving and investment. In the absence of investment and asset creation, the poor remain

trapped in poverty and vulnerable to shocks. Third, development projects fall short of meeting their intended goals because of wrong assumptions regarding the capacity of the poor to contribute production factors that are not part of project inputs/ activities. For example a project might distribute improved seeds and train farmers in production skills. The underlying assumption is that farmers will contribute the remaining factors of production, viz. land, labor, fertilizer, draught animals, tools and chemicals. Moreover adequate and timely rainfall is expected. Farmers may or may not have the right mix of these factors of production, the land could be degraded or the expected rainfall might not come at the right time in the right amount. Under such circumstances projects cannot meet the intended objectives. And farmers cannot raise their income above consumption level for saving and investment. Fourth, the poor are trapped their entire life in humiliating and crippling effects of poverty. They have tried several things and failed. Their experience tells them ‘they can’t’ and robs the confidence and trusts they need to adopt new technologies. There are trauma-‐counseling programs for people who pass through various kinds of shocks. Although the poor pass through many shocks, abuses, humiliation, deprivation and several others as they experience hunger, going without decent clothing, poor shelter, burying their loved ones from untimely death due to preventable diseases or starvation etc., their situations are not taken

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into consideration. They are skeptical whether the new interventions will work or not and fear risks of failing. Although trauma counseling may not be feasible it is worthy to spend adequate time with the poor to build confidence and prepare them for action, which is non-‐existent in most cases due to pressure to spend the money allocated to projects and report back to donors. Development agents move into communities and start the first conversation with needs assessment, to move onto project design and implementation when there are many other questions that the poor grapple with before embarking on project implementation. Hence, development projects are taken to the poor before understanding their situations, building confidence and preparing them for genuine participation. The need identification processes are not deep enough to develop adequate understanding about their situations. In actual sense implementation of such projects should have been preceded by education and working with the poor to develop confidence and trusts and start with what they can and committed to do, following their pace, however slow it might be. This is the mystery of the success of smaller NGOs’ managed projects with limited fund to allow spending quality time with the poor before rushing to implement physical activities. Giant INGOs that implement projects of hundreds of thousand of dollars with less time to understand contexts and prepare the poor, rushing to implement physical activities, are just like sowing before

cultivating the land, only to see smothered results, barely bearing fruits. In this regard the assumption of INGOs is that community participation solves these problems. In the first place the type of participation pursued by development projects don’t go deep enough to understand contexts and community background. The focus is on needs identification and labor and resource contribution. Hence participations rarely secure genuine commitment to development projects. The greatest and sustainable thing development actors can do for the poor is to ignite self-‐initiation. The self-‐initiated go to a greater length to achieve more using their creativity. Self-‐initiations can be followed by creating opportunities, be it with our without development projects. Self-‐initiation is not about economic or social activities, but kindling inner desire to act and succeed at individual, household or community levels. The self-‐initiated find their own ways and solutions to overcome problems and may not totally rely on external support. Fifth, development projects fail achieving their objectives because of failure to address the root causes. The underlying cause could be wrong systems at local or national level, small size fragmented land holding, growth in population at a rate exceeding development, soil degradation, climate change etc. Development projects that treat symptoms cannot be sustainable and bring lasting change in the lives of the poor.

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Sixth, the dependency syndrome, in which people prefer remaining poorer than earning small increase in income because of the opportunity cost of losing entitlement to free handouts outweighs, is discussed above. Seventh, INGOs have created the wrong perception of being a godfather. This holds true, particularly where various kinds of free handouts are provided and where loans are nominal, signaling to communities that it is OK not to repay. This has also created the misunderstanding that NGOs are there not necessarily to solve development problems, but for themselves as it is in their interest to implement projects. Under such circumstances people expect NGOs to do everything for them, including maintenance of malfunctioning equipment, machineries, water supply schemes, irrigation canals, buildings etc. because communities think that NGOs want to see them functioning, which in some cases happen to be true. Eighth, underperformance due to ill health and ignorance contributes a lot to poor project performance. The poor suffer from malnutrition and poor health care starting from embryo, right through childhood up to adult, with the resultant negative effects on mental and physical development and productivity. As adults the calorie consumption doesn’t meet their maintenance and productive requirements. As poor health and ignorance are added onto the debilitating long-‐term effects of malnutrition on mental and physical development, productivity suffers a lot.

Ninth, weak follow-‐up of implementation of project activities and poor technical support to communities has its share in undermining project success. This is particularly true for large INGOs’ projects where development agents are busy with office work and activity implementation, with little time left to follow-‐up implementation. Projects appear to be successful as reporting is often on activity accomplishment and fund utilization, but not results. Tenth, often mismatch between project activities and beneficiaries’ preparedness for implementation is observed. The poor are expected to implement project activities that require high technical skills, adequate knowledge of why the technics are required and commitment to implement as per the technical specifications. Often projects are taken to communities expecting the same results as in commercial farms or demonstration sites. Examples are management of improved livestock breeds, which involves feeding, sanitation, hygiene, and disease control etc. or row planting, spacing, weeding, disease control of improved crop varieties. Farmers may lack the necessary skills, lack knowledge of the importance of the procedures or may not be ready for the intensive works. Such gaps lead to low productivity or entire failure of projects. Eleventh, perhaps one of the killers is where prosperity turns out to be a curse, not a blessing. The rush by development agents to spend money and distribute inputs, with little time to think on what, who and how to spend has left many projects barren.

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Seeds are scattered on uncultivated lands among thorns, only to see weed smothered and barren crops, not to worry about the harvest. Sadly, it is emptying bank accounts and warehouses that count most, not the results. ‘Burn rate’ is the language of some finance people, or ‘excellence in execution,’ switching to the glossary of some leaders. The objective is the same, empty bank accounts and warehouses. Countries’ performance is rated by ‘burn rates.’ So it is not surprising when decades old multimillion-‐dollar projects suffer sustainability problems and people continue to live in poverty. There is no doubt that halving the amount of money and doubling the amount of time spent with communities could have generated better results. It is here where LCSOs could have come in for effective and efficient implementation to make a difference. Alternatively, I wish these projects were implemented by the private sector, because keeping costs down matters a lot. Last, but not least, like any other society, delinquency has its share in undermining success of development projects and perpetuation of poverty. Addiction to some kind of behaviors, less industriousness, and spending on consumption than saving, even when earned income allows, at least forced saving, undermine projects’ results. However, these cannot be taken as representatives of entire communities. Hence failure to understand the various complexities leads to ill design and implementation of development projects only to panic when people fall back into

emergency situations after being in programs for years. To windup this section, more than ever before it is time for INGOs to shift their operation curve to create ample room for maneuvering through working in partnership, engaging the private sector and enabling LCSOs. Initially this could be bewildering from entering into the unknown, but the long-‐term outcome is rewarding not only for the poor, but also for INGOs themselves. The good news is there are a few pioneers here and there. INGOs are at crossroads and the waiting time is counting down. It is time for INGOs to find and create niche in the global sociopolitical, economic, development approach and civil society movement dynamism, both as an industry and individual organization and to revisit the way they do business at local and national levels to be relevant and better contribute, doing away with the ambition of standing tall, head above others, and investing in the wrong business. Unable to decide and move on, the only option is to pull to the side to meditate and give way for others to overtake.

Multilateral and Bilateral Donor Agencies – link the missing links! Donors’ are becoming more and more strategic in aligning with the global dynamism as evidenced by agendas of High Level Forums and individual donor’s strategies, particularly in relation to enhancing aid effectiveness through increased public private cooperation.

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Discussions, reviews and analysis of major bilateral donor agencies’ strategies on private sector development are covered elsewhere (e.g. HLF4 2011; ROA 2012; Kindornay and Reilly-‐King 2013). Furthermore, equipping and mandating Partner Countries’ governments to enhance ownership of aid funded development programs, equipping CSOs to enhance their role and contributions, and developing and working with the private sector as drivers of economic growth and development are given due attention at High Level Forum discussions (HLF2 2005, HLF3 2008, HLF4 2011). Moreover the major bilateral and multilateral donor agencies have developed strategies of promoting private sector development to enhance economic growth led poverty reduction (e.g. DFID, AusAID 2012, USAID, 2009; UNDP, 2007 and 2008). As the aim of this paper isn’t thorough policy and strategy analysis, but to inform them, in light of contexts and realities of developing countries, it focuses only on perceived gaps. Accordingly, some cautionary points are raised throughout the document for consideration. The world has a history of pursuing certain theories, concepts, policies and programs for sometimes only to discard and drastically shift to another at recognizing certain limitations. By and large correcting errors of and continuing with the past, or moving forward with what worked well and rectifying what not worked well is not given due consideration. A typical example is the history of microfinance institutions. Formal

banks were unable to reach the poor because of the misconception that the poor cannot invest in business, make profits and repay their debts, later disproved by the pioneer microfinance institutions. Here the question is once the misconception of banks is disproved and workable systems are developed, say using group collateral instead of property, why haven’t mainstream banks leverage on their proven banking experience, access to capital, reputation, extensive geographical coverage and good capacity to offset risks, institute systems that enabled microfinance institutions to reach the poor instead of going with two parallel financing systems for ever? Say why isn’t microfinance department created within the formal giant banks? The history of the world breaking in to two blocks, eastern and western isn’t any different. Looking at the negative effects of private companies on working conditions and income disparity eastern block countries resorted to dismantling the entire system. The remedies sought to solve the problems were privatization and public ownership, among others, only to kill private sector entrepreneurship and innovativeness, creating another monster. For eastern block countries addressing the failures and harnessing the benefits of market was not part of the solution. It was just like throwing out wheat grains with chaffs. After decades of bitter experience these countries returned to rebuilding what they destroyed, some starting from where they stopped decades back. Also the gross abandonment of economic growth as poverty

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reduction strategy only to pick it up after decades (Stuart 2011) has some commonalities with the above. A mystery! So is donors’ intention to entirely drop past approaches, including what worked well, in favor of the newly emerging, or is there possibility of continuing with what worked well? The current trend seems that private sector development is going to be the dominant approach for donor agencies. Some concerns related to this approach and the need to ensure that the benefits of economic growth flow to the poor through introducing complementary policies and strategies are discussed in Oxfam Research Report (Stuart 2011, ROA 2012). Moreover, the importance of installing functional accountability and transparency systems cannot be overemphasized. Following the above general comments this paper picks up some key specific points that need to clearly come out in donors’ private sector development or complementary strategies. The first, which didn’t clearly come out in donors’ private sector development strategies is the role of civil society organizations in promoting inclusive development. CSOs can play significant role in linking the private sector to the poor. This is one of the needs identified by the private sector companies themselves (Harvard 2007). Hence the role of CSOs in the private sector development strategies need to come out clearly. One of the missing links!

Second, there are many LCSOs that require organizational capacity building to become effective agents of change. Currently they experience sever capacity constraints due to inadequate access to resources and poor networking. INGOs have the potential to become catalysts, capacity builders and enablers by coming out of implementing service delivery projects though they are caught up in direct implementation of service delivery projects. Hence, donor agencies, as shown in the below model, can facilitate linkages between INGOs and LCSOs to happen and continue functioning. The missing links! Third, Donors’ private sector development strategies need to consider developing countries contexts, capabilities and priorities. Bridging the gap between takeoffs of poverty reduction through private sector led economic growth deserve greater attention. Judging from available documents strategies of transiting from the present approach to private sector driven development didn’t come to the surface. In most developing countries private sector development is at an early stage and the necessary enabling environments and facilitative regulations are not in place. Hence, creating the necessary environment for the private sector to make significant contributions takes time. Moreover, the benefits of economic growth aren’t something to be realized by the poor immediately. And there are activities and community situations that are not readily suitable to intervene through the private sector, given the poor

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institutional and infrastructure development state. Under such circumstance abrupt discontinuation of current approaches, namely direct support to governments and NGOs’ development programs and projects for the poor and vulnerable groups, could create gaps and the poor might suffer as a result. Programs for the disadvantaged and vulnerable groups like women, children, the socially excluded and the poorest, who are less privileged to immediately benefit from opportunities created for the wider society through economic growth can prevent unnecessary sufferings. These groups are always left behind unless supported by targeted programs. Fourth, from current strategies it seems the focus of donors is more on economic growth and channeling aid funded programs through the private sector. Focus on companies’ direct engagement with the poor through including them in their value chains seems to be limited. Hence engagement of companies with the poor through including them in their value chains and investment in innovations and technologies that benefit the poor deserve greater space in donors’ strategies. Fifth, equally important is how to make the process multi-‐actor multi-‐sector approach to address the complex and multidimensional aspects of poverty and to leverage on strengths of different actors. From review of various donors’ private sector development strategies, it seems the focus is only on the role of governments in

creating an enabling environment. This could lead to losing the comparative advantages of other actors, as the private sector may not fit into all situations of developing countries’ contexts. As indicated above CSOs can link the private sector to the poor, implement projects not suitable for the private sector or work with communities that may not be readily included in private sector development approach (Fig. 5). Hence the need to focus on partnership approach, as opposed to single agency, needs greater consideration. Sixth, in pursuing private sector driven development understanding the contexts, capabilities, needs and priorities of specific countries and locating where the ‘aid effectiveness’, fit into the broader development puzzle is important as opposed to looking at things in piecemeal. Finally, there needs to be ways of harmonizing donors’ strategies and programs. At country level donors may benefit from talking to one another to prioritize areas of intervention as per comparative advantages. To maximize benefit flow to the poor instituting accountability structures and reporting mechanisms that allow measurement of gains and learning by doing is necessary. Likewise the need to guide the process to protect the opportunity from being grabbed by self-‐centered companies and elite groups cannot be overemphasized.

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The Private Sector – the law of sowing seeds – you harvest what you sow! The private sector contributes to development through creating sustained economic growth, creating jobs, contribution to increased government tax income, contribution to formulation of development policies and poverty reduction programs, investing in infrastructure, building institutions, availing goods and services that benefit the poor, transfer of skills, availing technologies, building human capital, innovating and inclusion of the poor in companies’ value chains [Harvard 2007]. The private sector contributes 90% to jobs of developing countries (AusAID 2012). While some of these contributions are inherent to the private sector, e.g. economic growth, job creation, contribution to government tax revenue, creating markets for suppliers and availing goods and services, others require intentionality and extra commitment on the part of the private sector. Moreover, being intentional can enhance contributions of the inherent to poverty alleviation, e.g. using labor as opposed to capital-‐intensive technologies to create more jobs. In this regard some pioneering companies have started remodeling their core business systems to include the poor into their value chains (UNDP 2007) of which examples are listed in Harvard University Economic Opportunity Leadership Dialogue paper (Harvard 2007], demonstrating what could be done.

Not withstanding the above the potential of companies in creating economic opportunities for the poor through integrating into their value chains hasn’t received the attention it deserves in the past (Harvard 2007). At present attention given to the role of the private sector in economic growth and development is regaining momentum, particularly among donor agencies, (Kindornay and Reilly-‐King 2013), this time with better understanding of how best to contribute to poverty reduction, as evidenced from review of literature, dialogues ongoing around the world and the increasing direct engagement of companies with the poor. The move appears to be promising particularly vis-‐à-‐vis the unsatisfactory results and scale up problems of fragmented project based development approaches, the increasing willingness of companies to engage with the poor and the potential of companies to create vibrant economies through integrating local initiatives with the larger national and global economy. Hence, it appears development of and through the private sector as poverty reduction strategy is to dominate development agendas in the foreseeable future. The private sector can only contribute to development, if it develops. Businesses can thrive only in an enabling environment, currently unfavorable in most developing countries (AusAID 2012). Existence of rule of law, infrastructure such as roads, power and communication, stable macroeconomic environment, educated and healthy workforce, good governance, peace and political stability, functionality of markets and access to finance are decisive for

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private sector development (UNIDO 2008, AusAID 2012). Currently the private sector in many developing countries faces unfavorable business climate and restrictive regulations (IFC 2014). A study conducted on Ethiopian urban youth unemployment shows that the government emphasizes preparing the youth for employment with little focus on creating enabling business environment and reforming regulations that determine private sector development and hence job creation (Kellow, Ayele and Yusuf 2010). With regard to regulations as the World Bank doing business report shows most developing countries are ranked at the bottom (IFC 2014). To alleviate these problems in sub-‐Sahara African countries the African Development Bank has developed a strategy that runs from 2013 to 2017 (AfDB 2013). Several benefits flow to the private sector as a result of engaging in inclusive development. Private sector companies fulfill their moral obligations, secure license to operate, build positive image among communities, and develop reputation. In the long-‐term they benefit from the demand and supply of inputs created by a vibrant economy and enhanced company sustainability. Moreover, the private sector can benefit from incentive packages made available by donors and governments for companies that engage in inclusive development. The incentives may include, but not limited to exemption from tax, priority access to government contract awards, public services, infrastructure and capital, and risk

offset initiatives. The law of sowing seeds!

Governments – ‘the spent arrow, the missed opportunity don’t come back’ The global dynamism creates great opportunities for governments of developing countries to leverage on, though it is not without its own challenges. The point is since the dynamism is not to be stopped or reversed, the noble choice is to prepare to make best use of available opportunities, while also striving to minimize or avoid the negative effects. The right business climate and supportive regulations prevailing, the private sector can substantially contribute to economic growth thereby to significantly contribute to poverty reduction. Furthermore, the right opportunity created, civil society organizations can play significant role in building capacities of the poor and intermediating them with the private sector. Both the private sector and CSOs can contribute to shaping policies through open dialogue. The readiness of donor agencies to promote private sector development is an opportunity, though further works need to be done to better understand specific country contexts, potentials and priorities to inform county level strategies and programs. Governments’ role in guiding implementation of the approach in such a way that it

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benefits the poor to the maximum is indispensable. In effect the key role of governments is to make the dynamism function effectively through creating the right environment for businesses and civil society organizations. In creating conducive environment for private sector development the major roles of governments are improving governance, ensuring peace and security, developing infrastructure, investing in human capital development, creating stable macroeconomic environment, improving financial services, developing institutions and expanding markets through trade. All of these are long-‐term and require sustained and continuous efforts. Furthermore, governments need to improve doing business situations through reforming regulations, improving technologies, developing staff capacity and ensuring accountability. Some studies have shown that inadequate capacity of staff can adversely affect doing business. Hence, reforming regulations needs to be accompanied by staff capacity building. Governments need to promote harmonization of policies, strategies and programs across agencies and sectors through creating and sustaining development partnership model. Strengthening systems of leveraging on comparative advantages of each development actor can enhance the process. Governments will benefit from creating vibrant national dialogue forums to inform policies and programs.

Local Civil Society Organizations (South) – prepare for greater opportunities and challenges! While the recent proliferation of LCSOs in the South is good news they face various constraints that are less of a problem to INGOs. Among others, inadequate organizational capacity and poor access to grant funding and in some countries government restrictions pose severe constraints on LCSOs. Problems of organizational capacity and access to fund form vicious circle, where they cannot access funding because of low organizational capacity and because of scarcity of resources they cannot develop organizational capacity and recruit competent manpower. Since they cannot recruit and retain competent staff they cannot develop quality project proposals, develop wide network to seek funds, effectively monitor project implementation and produce good quality reports, which in turn limit possibilities of accessing grant funds. And the cycle goes on. So LCSOs are trapped in low level of organizational capacity and inadequate performance. To be eligible for grant funding, organizational structure, staffed by qualified and competent personnel, existence of key organizational and programmatic documents, geographical coverage, suitable office premises, volume of previously managed fund, good audit grades and evaluation results, recommendation from previous funding organizations, among others, are asked by most funding

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agencies. Since several LCSOs are unable to meet some or most of these requirements, chances of accessing grant fund is slim. When grant fund is available, in most cases, donors want their money to be spent on project activities, with little consideration for governance, leadership and other organizational capacity development, including head office staff salary and benefits, office rent and purchase of capital items like vehicles and office equipment. This puts LCSOs in a difficult position since they can’t run projects without developing the right organizational capacity through hiring competent staff and accessing relevant technologies. While the focus of donors on direct benefits to communities is acceptable, equally important is giving adequate consideration to the needs and situations of LCSOs, particularly as most have history of a few years to develop the necessary capacities. In some contexts local fund raising is extremely difficult due to the negative image created by INGOs. NGOs are perceived by the society as swimming in money, donated by developed countries, their leaders and staff enjoying luxury life style through exorbitant spending on expensive vehicles and office equipment and high salary and benefits. Hence giving to NGOs is considered as wastage and benefiting their leaders and staff, not the poor. Second, in some developing countries the culture of giving to institutions is not well developed. People give to religious institutions and beggars to conform to

requirements of their beliefs, but giving to charities is less of a priority. Third, the low income of the majority and pressure to meet personal, family and extended family needs take precedence over giving to charities. Owing to these factors opportunity of local fund raising by LCSOs is slim. Exceptions are ethnic based Associations where fund is raised from members of specific ethnic groups to be used for communities of the same ethnic groups. Hence, LCSOs are severely constrained by shortage of funding and inadequate organizational capacity. The limited access to international forums and capacity building opportunities, and reluctance of INGOs to partner with and build LCSOs capacity all contribute to the problems. In the existence of such constraints LCSOs can hardly thrive and play roles expected of them. In some contexts (e.g. Ethiopia) NGOs’ overhead cost is restricted to certain percentage, uniform for all NGOs, in spite of the volume of funding they manage. INGOs managing tens or hundreds of millions of dollars have greater advantage since the absolute figure available for overhead cost is very high, in fact for some more than what they need, while LCSOs struggle to keep themselves within the allowable limit. Hence they can’t invest in developing organizational capacity and recruiting competent staff competing with INGOs. Unable to survive due to lack of capacity, poor access to resources

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and inability to meet requirements many LCSOs close their office every year. INGOs and donors could have rescued these organizations had there been intentional support and capacity building efforts. LCSOs need to develop their own organizational capacity to effectively work for and with their constituents. They need access to essential capital, including office premises, equipment, vehicles and technologies. They need to develop governance and leadership capacity and recruit and retain competent staff. They need to work on developing understanding of and aligning with global civil society ethical codes of conduct and operational standards. They need to be networked nationally and globally to be current and come out of being trapped in local maxim. As a capacity development strategy some donors conduct needs assessment and training though it falls far short of what is required to develop vibrant LCSOs. Given the necessary capacity is developed LCSOs can thrive to assume greater roles of awareness creation, advocacy, inspiring and mobilizing citizens for action. They can implement service delivery projects more effectively and efficiently than INGOs due to their comparative advantages, like better rootedness in communities, and smaller size that allows close connection with beneficiaries etc.

The faces of poverty The poor, the misunderstood! What is poverty? How do the poor make a living? How does it feel to be poor?

Attempt is made to answer these questions from the poor’s perspectives, not theories or concepts from literature, framed by different schools of thoughts and scholars’ professional background, economic, social, religious, political or psychology. Everyone has his/her own view and definition of poverty evolved over centuries. However, for the poor, poverty is more of personal than it is economic, political, religious, psychological or social. To shade some light on what poverty is, how it feels to be poor, from the poor’s perspectives, how the poor are trapped in the vicious circle of poverty and how the poor are associated with the informal sector, some points are coined together. For the poor, poverty is much more than what we watch on TV, read from literature of various schools of thoughts, front pages of newspapers or from fund raising advertisements. Only the poor can tell what poverty is and how it feels to be poor. Life is “above the dead, below the living,” is how the poor express their situations in Ethiopia. I think we don’t need wasting time looking for any other definition. They have said it all, ‘above the dead, below the living.’ In mathematical expression, ‘The Dead < Life or situations of the poor < The Living’. I am not sure what they want to communicate, but imagine half body dead, right or left side, or the living put among corpse, or corpse put among the living, all without place. You can imagine how embarrassing it is to be out of place and that is how the poor feel. The poor feel out of place at community meetings, in public transports, at any encounter with the better off because of past traumas, being

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outliers by dressing codes, hygiene practices etc. They don’t consider themselves worth participating in social, religious or political issues equally with the better off. That makes much more sense than any other theory or definition, hearing it from those who live it, not those who preach it. By the way, this expression is also used when people pass through agonizing sickness, or any other life threatening situations. Poverty, ‘life above the dead, below the living’, is a reality, experienced by billions. Only those who live it can tell what it is and how it feels to be poor. For that matter, even the poor themselves cannot explain the full extent of how it feels to be poor, because language cannot express some aspects poverty. Who else knows how the poor feel when they see their own, children, brothers, sisters or neighbors half body naked, skin dressed skeleton, devoid of muscles, sometimes lying on ground, pictures on newspapers, fund raising advertisements, or magazines, sometimes journalists warning us that we might find the picture disturbing? They live what is disturbing to us to watch on TV. Amazing! No communication media can express how it feels to be poor. In fact we don’t even ask them how it feels to be poor. In an instant world we don’t have the time and patience to listen and understand. Because donors want that proposal on table right away or wait for us to spend the money and send reports. If compressed, our long list of needs assessment questions boils down to four. ‘Who are the poor? What are their needs? What can we do for them? What can they contribute?’

And that is the end of it. Getting answers to these questions, we think we know everything and rush to design a project. But we know not the poor themselves, but what they told us about themselves, because they know what we want to know. Not only that, they know what they don’t want us to know. Below you will see the kinds of things the poor don’t want us to know. The poor the misunderstood! Who can tell the agony of a mother who has nothing to give her starving and crying child, whose sleeping pill is exhaustion from hunger and crying? Who knows that mothers beat their children crying of hunger, not because they cry or they don’t love their children, but because they are angry with themselves for having nothing to give? Unlike us, the poor get angry with and blame themselves. Who knows how a mother feels when she sees her child dying in her arms, slowly getting cold and being unable to open his/her eyes, from starvation or lack of the little money she needs to take her/him to a clinic next door? We may know infant and child mortality rates from UNICEF reports, but for poor mothers it is a real life experience, not statistics. Who knows how mothers who take their own children to streets to abandon, not to see them again, because they have nothing to feed, cloth, educate or get treatment when they are sick feel? Who knows how a mother who shares just one bed sheet with her children at night feels when they pool the sheet between them to cover the partially exposed body

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from cold, sometimes blaming one another, murmuring, crying and quarreling, hardly falling asleep the whole night? Who knows how the poor feel when they wash their clothes in a nearby river, sitting there naked until it dries, because they don’t have another to wear? Who understands how fathers or mothers who rent out their children as domestic servants, when children of the better off in their communities go to school, feel? Who knows how the poor living in a grass thatched roof liking house feel, while keeping moving around at night to find dry spots to sleep? Who knows how children serving as domestic servants, looking after livestock, fetching firewood and water, doing household activities, beaten in failing to please any of household members, feel when children of households’ they serve go to school, well nourished, get treatment when sick, well clothed, and talk languages they cannot conceptualize? Who knows how poor children who somehow managed to attend school, wearing torn and filthy clothes, going without shoes, poor hygiene, subject to bullying from other students, feel? The hopelessness and frustrations of a child! Poverty is real and personally experienced by the poor. The misery, the inferiority complex, the hopelessness, the anxiety, the negative self-‐image, blaming oneself for crimes they haven’t committed, the anger, the degrading effects of poverty! So it is not exaggeration when the poor say, life is ‘above the dead, below the living.’ The poor do everything at their disposal and work so hard to cope,

survive and to come out of poverty, if possible. Eating wild food that is not normally part of diet, rummaging on refuse, buying and consuming the inferior because that is what they can afford or begging, you name it. Sometimes it is the lucky that gets the inferior. Several go to bed without eating. Being desperate for survival several engage in activities of not their choice. Whatever it might take, including their health, self-‐worth, even the worst form of labor, children and women being the most affected. I never forget a story of a mother I heard from a caretaker nurse who was working in a therapeutic feeding center during the 1984/85 Ethiopian famine. She saw a mother carrying a child on her back eating for herself, but not feeding the child. The caretaker nurse approached and told the mother to feed the child, to which she agreed. After attending to other mothers the nurse returned and for the second time found the mother not feeding the child, but eating for herself. This time, a bit irritated, she said to the mother ‘feed the child’. Returning for the third time, after attending to other mothers, and finding her not feeding the baby again, the caretaker got angry and this time decided to feed the child herself, only to find that the child on her back was dead. Alarming! Isn’t it? But the trick is the dead child on her back was a ticket to enter the feeding center to eat. This is one of the many things poverty can do to the poor. Doing the inconceivable. I believe other mothers were also getting angry with this woman labeling her as selfish and cruel. This is the kinds of things that the poor don’t want us to

29

know, because they know it denies them entitlement to benefits. Any information that denies them entitlement to benefits is not told. Unlike us the poor get angry with themselves, but we get angry at the poor, not ourselves, without knowing them or their situations. We have made our mind that they are entangled by drudgery or risk aversion, complacence, or bound by some kind of evil spirit, depending to which school of thought we belong, while the truth is different. The poor, the misunderstood!

Why the poor get poorer The poor are trapped in a system that doesn’t support progression out of poverty because of income that barely meets household consumption needs. They have little to save and invest in businesses or create assets. On the other hand household size keeps on increasing because of poor family planning practices. Since income from regular activities doesn’t meet household consumption requirements, the unmet consumption need has to be met using different mechanisms, as shown below. f(h); I = C < Cr; where f(h) is current household size, I is current income, C is consumption possible with current income (I), and Cr is consumption requirement of households, given current household size. Since earned income doesn’t meet consumption requirements

there is consumption gap (deficit) (Cd); Cd = Cr – C; where Cd is consumption deficit or unmet household consumption requirement, usually met through borrowing, additional casual labor works, making handicrafts, selling firewood or charcoal, petty trading remittance or safety net programs. The poor consume tomorrow’s income today through borrowing. During peak agricultural seasons they work as laborers on others farms and earn some income to meet household present consumption needs. Hence, they have less time for their own farming activities, which reduces production. In the absence of other alternatives development project intervention inputs are used to meet the unmet consumption needs, where inputs are either consumed or sold to buy consumable goods and services. Where all these possibilities don’t exist households are trapped in consumption deficit, suffering from starvation, malnutrition, lack of clean water, poor clothing, going without health care, lack of education for children, poor housing, sanitation and hygiene practices. The consumption deficit (Cd) is balanced as follows to create equilibrium; f(h); Ir = I + Ia = C + Ca = Cr

30

where Ir is the required income to meet required household consumption needs (Cr), Ia is the additional income obtained through the above mechanisms, and Ca is the additional consumption made possible through the additional income (Ia). In this way required income and consumption requirements are balanced.

This has two implications, first if Ia is met by borrowing, the cycle continues by repaying and borrowing to meet the unmet household consumption needs. The cycle goes on as the low income and debt repayment hamper saving and investment or asset creation, which in turn accentuate vulnerabilities. As other vulnerability factors, like

poor health, gender and social issues, loss of household breadwinner or means of earning income etc. are added onto the burden, the poor fall into emergency situations with the slightest hazard occurring (Fig. 2) If Ia comes from development project inputs the interventions are

not implemented and development projects’ don’t meet their objectives. However, in the existence of unmet consumption needs its less likely for the poor not to consume project inputs. This is the first and one of the reasons why development projects fail achieving their intended objectives.

Low$

Income$

Consump.on$

Deficit$

Borrowing$Debt$

Repayment$

No/Poor$

Savings$

No$

Investment$

No/Less$

Assets$Vulnerability$

Disasters$

Other$Factors$

of$Vulnerability$$

Saving$and$Investment$ Income$&$Assets$ Consump.on,$Vulnerability$&$Disaster$

Fig.$2$K$The$poor:$trapped$in$the$vicious$circles$of$low$income,$consump.on$deficit$&$vulnerability$$

Subsistence$

Economic$Ac.vity$

Lack$of$

Opportuni.es$

Poorer$

Hazards$

Coping$

Strategies$

Sell$

Assets$

31

Furthermore, as household size increases from h to h1 a new consumption requirement (Cr1), which is greater than Cr is created. f(h1); Cr1 = Cr + Cd1

where h1 is the new household size, Cr1 is the new consumption requirement to meet the needs of the increased household size, Cr is the old consumption requirement, and Cd1 is the new consumption deficit, greater than Cd, due to the increased household size. Here the need to meet Cd1 puts additional

stress on households and push them deeper into poverty. In some contexts household size increases at a greater rate than income and households get poorer and poorer as they continue sharing

the small available resources among members. Not only that, in rural areas as land degradation worsens, and variation in the amount and distribution of rainfall intensifies due to climate change, production declines sharply, again making households’ situations worse off. Hence the real income, available for consumption to each household

Box 2 – The poor: trapped in the vicious cycles of low income, consumption deficit and vulnerability The poor are trapped in three vicious circles. The lucky sustain in the first circle, where income from subsistence economic activities inhibit saving and investment, but at least meet basic household consumption requirements. This holds true for areas that are less prone to impacts of climate change and other hazards, landholding size is adequate for household labor, and soil degradation is not severe. Incomes, in cash and/or in kind, obtained can meet household consumption requirements, but don’t allow saving and investment, keeping households in subsistence economic activities, which could be farming, handicrafts, petty-‐trading, fishing or casual labor (blue lines) etc. They are susceptible to falling into the second vicious cycle, entering into borrowing due to inability to meet family consumption requirements (brown lines). This dwindles capacity to meet future consumption requirements and asset creation due to debt repayment. The third circle, where households are vulnerable to hazards owing to poor asset creation and other vulnerability factors, including but not limited to disease, disability, age, women or child headed households, or reliance on handicrafts as a livelihood strategy etc. Households use various coping mechanisms, including reducing meal size and frequency, taking up inferior jobs and selling productive assets. As a consequence of selling productive assets like farm tools, draught animals, breeding livestock, planting materials and perennial crops, they come out of disaster situations to return to subsistence economic activities with less capacity and poorer than they were before disasters (red lines). Hence to prevent people from getting destitute implementation of targeted disaster mitigation, prevention, preparedness and response programs is essential.

32

member, could be even less than before unless other alternatives are created. Under such circumstances people migrate to the urban seeking a better life, often only to find themselves in a more difficult situations. To design appropriate poverty alleviation programs, understanding of the causes and the levels at which to intervene is important. What is more, the extent of immediate and long-‐term consequences of the causes worth considering. As often said addressing the root causes, as opposed to symptoms, has lasting and significant impacts. However, addressing root causes is often long-‐term and may entail suffering of the poor. Yet, while addressing the root causes is the preferred solution situations of vulnerable people may not allow waiting until the required changes happen. Hence, long-‐term programs like poverty reduction through promoting economic growth needs to be complemented by short-‐term programs/projects for the poor and vulnerable. As shown in Figure 2 the fundamental cause of poverty is lack of opportunities. In turn lack of opportunities lends itself to various local, national and global system problems that constrain access to basic services and materials, restrict choices, undermine human capital development and marginalize participation in decisions that affect their lives. Children are born to households without access to education, health services, clean water supply, poor nutrition etc. They have to support families through working on farms, fetching firewood and water, or

earning income from casual labor. Grown up, they share family land to become farmers themselves and the chain continues as opportunities further dwindle. Some end up in cities searching for better life only to find themselves in more difficult situations. While governments are responsible for human capital, economic, infrastructure and institutional development of their countries such changes may not happen at the required pace because of various reasons, including unfavorable global economic and political environment and the less preparedness and poor capacity of third world governments themselves. Hence the need for external support cannot be overemphasized.

The informal sector – the misunderstood! Moving onto the second point, the informal sector is the best choice available to the poor. Informal, not because the activities themselves are illegal, but because they are not registered, lack legal status, not bound by regulations that their formal sector counterparts experience and are not taxed. The informal sector accounts for 14% to 38% of the GDP (Charmes 2006) and 50% to 75% of the employment (Chen 2010), excluding agriculture, in the different regions of developing countries. This figure is much higher when agriculture is included. Millions of young energetic women, many of them teenagers, sell vegetables, fruits and other merchandize on streets and

33

pavements across developing countries’ cities, towns and villages (Fig. 4). For these women, being on streets without protection in itself is a risky business as they are vulnerable to various kinds of abuse. But there is little choice. For some of them, the value of their products doesn’t exceed a dollar, ten dollars at most. Some hold a child in one hand and their products in the other, as they run from law enforcing government designated personnel, to remove them from streets, even to seize the little products they sell. Products valued at a dollar or less

are not exempted from seizure. From literature the poor are those who live on less than 1.25 Dollar a day. Whereas, for some of these women the entire portfolio worth less than a dollar. Hence, identification of the informal sector with tax evasion or bad regulations is only half the story. The informal sector, the misunderstood! Of course not only misunderstood. The discovery itself is surprising. Man has landed on the moon, discovered and invented uncountable things, many beyond conception for most of us, from sub-‐atomic particles up to giant stars and

galaxies, from simple toys up to space shuttle, from microorganisms up to the giant extinct creatures. But the informal sector that existed for thousands of years, and from which billions make a living was discovered in the early 1970s (Chen 2010). This indicates the capability of mankind and yet how ignorant we can be when it comes to things that are close to our home and far more important than many of the things that we vey much care about. Sadly, the neglect of the sector still continues as evidenced by the scanty studies dedicated to understanding

and finding ways of tackling constraints that informal sector faces and lack of attention on development agendas of governments and donors.

The ‘informal customers’ – who are they? Moving deeper into the sector, who are the customers of the informal sector? If there is informal sector, then there should be ‘informal customers’, those who buy from the informal sector, not in a strict definition of the informal sector, but to indicate that they buy from a sector that doesn’t have legal status and taxed, so that the customers

34

don’t bear taxation costs. In urban areas often the customers, particularly food products and clothing, are casual laborers, the unemployed or low wage employees who work during day time and go out to purchase food items after work, because they have to earn the money they need each day. Why do they choose the informal while the formal is at their door? In fact why, when better quality products are available at the formal? To get a better picture of the situation looking at the goods and services available at the informal sector is essential. Taking situations in Ethiopia as an example the customers are those that can’t survive otherwise. On formal markets better quality food products are sold using standard measurements, kilos, liters or volumetric containers. Minimum amount is attached to sales because of using standard measurements and selling small amount that the poor can afford is not attractive at the formal sector. The informal sector solves these problems. Sales are available at as low as five or ten cents. Vegetables and fruits are sold in head count. A single orange, lemon, banana, mango etc. is available for sale. A bunch of potatoes, garlic, chilies or tomatoes etc. is sold at a few coins. In urban and semi-‐urban markets often these are low quality products, some removed from stocks of formal markets before getting spoiled, e.g. overripe fruits and vegetables like banana, orange, mangoes, tomatoes, or small sized and less quality like onions, garlic and potatoes, with less demand on formal markets, or just a

small amount produced at urban periphery backyards of the poor. In rural areas and villages, small proportion of what is produced is sold to buy things not produced on farms in exchange, even when the products don’t meet family consumption needs. Some are landless, minority groups, denied even the little available opportunities, or can’t produce enough from the very small plot of land they cultivate to meet household consumption needs. Or they cannot produce enough because of low productivity attributed to shortage of rainfall or land degradation. Hence they augment family income by engaging in petty trading, where they buy produce from farmers and take to villages and small towns for sale. Women travel tens of kilometers carrying goods on their back because they can’t afford paying for transport, even when available. Hence the greatest share of the informal sector is a coping strategy and means of survival, as confirmed by others (e.g. UNIDO 2008, Sundquist 2011)), for business owners, employees and customers, and that is where most population of developing countries belongs. So from the number of people that depend on the informal sector for sustenance, as business owners, employees or customers, ignoring or suppressing the sector will be another structural adjustment. The poor and the informal sector, the misunderstood! Needless to say, if the informal sector is neglected, worst of all considered as a headache to

35

governments, the entire poverty reduction target is missed. Because that is where the poor are (Chen 2010). Moreover, any strategy that pursues gender equality cannot overlook the informal sector, because that is where most women are (Bertulfo 2011, Fig. 4, Cover page). According to UNIDO 84% of the non-‐agricultural employees in Sub-‐Saharan African countries are women (UNIDO 2008). Even from the informal sector, unfortunately, women are double disadvantaged by specializing in lower value products, compared to their male counterparts (cf. Cover page, Figures 3 & 4). The poor cannot wait until the entire economy is transformed and job opportunity is created, the magic of trickle down. In fact their employability in the formal sector is questionable because of lack of skills that the formal sector requires. Of course one cannot deny the heterogeneity of the informal sector. Hence, the need for differential treatment can’t be overemphasized. If the informal sector is disregarded the probability of going back to square one, the structural adjustment, inflicting unnecessary pain on the poor owing to bad decisions, history repeating itself, is not impossible. God forbid! similar mistakes from happening again. Tomorrow might have something good, but today’s poor may not survive to see tomorrow’s bright sun. Malnutrition, disease, and ignorance don’t wait until tomorrow. They claim their share now and today. Hence, consideration of the informal sector in the private sector development strategy is of great importance as far as poverty reduction is concerned.

What can be done is not the subject of this paper, as it requires further study to develop deeper understanding of the sector in different contexts, the types of incumbents, the very reason why they are engaged in the sector and their capabilities and constraints to come up with corresponding strategies, programs and intervention packages. Notwithstanding this fact, the informal sector can appear on high-‐level development agendas of governments and donor agencies for subsequent work out on what next. DFID private sector development strategy recognizes two contributing factors, those pushed underground by unfavorable regulations and social exclusion, and those caught up in the sector by lack of opportunities (DFID Strategy). One of the recommendations of IFC to AusAID is to consider the base of the pyramid, including the informal sector in their private sector development strategy (IFC 2011). Also the Canadian Council for International Cooperation recognizes considering and addressing the needs of the informal sector (CCIC 2004). If the USAID private sector base of pyramid development approach (USAID 2009) goes down deep enough to cross the border between the formal and informal to create continuum to move from informal to MSMEs, possibilities of making a difference is promising. However, at crossing the border different sets of policies, strategies and packages of interventions are required as the two are in entirely different worlds, facing peculiar opportunities and constraints.

36

On the other hand, it is the opportunity, skill development, access to credit and services, physical place and protection that they need. Organizing to leverage on collective power may help a lot. Workable systems put in place, many incumbents of the informal sector, particularly those in urban areas, can thrive and graduate to the formal sector or exit to join employment opportunities created elsewhere, given the necessary skill is developed. Development partnership model – striking poverty from all corners The model is a partnership of five key development actors, donor agencies, the private sector, governments, INGOs and LCSOs each with specific roles and responsibilities in contributing to the common goal of poverty reduction (Fig. 5, Table 1). As deemed necessary, elements of the model can be adopted between two or more partners. For example in some contexts only the national level dialogue forum could be easier to start with, or INGOs can start by partnering with the private sector companies or LCSOs. Donors may start by developing and engaging the private sector, influencing policies and building capacities of governments or promoting role shifting by INGOs. Hence the model doesn’t necessarily require partnership of the five actors. To make the model simple and clear details are omitted. In engaging the private sector in development, INGOs and private sector companies are expected to co-‐

create appropriate products, process and systems in participation of communities and their institutions and specific vulnerable groups like people with disabilities, women and children. Once generic systems, products, processes and tools are created they can be replicated or tailored to specific contexts. Likewise INGOs and LCSOs can co-‐create systems, products and process using similar approaches. The model enables linking local, national and global level initiatives. At local level partners co-‐create processes and products bringing together their unique strengths and link it with national levels through national level dialogue that constitutes the private sector, donor agencies, governments, INGOs and LCSOs. Benefits of the model The model has the following key benefits.

a) Enables to see the whole picture (Agencies, Roles and Target Groups) and gaps

b) Informs high level policy regarding what needs to happen and how it is to happen on the ground

c) Enables harmonizing policies and programs across agencies, sectors and themes

d) Promotes sharing of responsibilities as per comparative advantages of actors and facilitates holding one another accountable

e) Enables prioritizing and focusing on what matters most

f) Creates opportunity for dialogue

37

g) Enables leveraging on one another’s strengths

h) Creates favorable resource mobilization environment through transforming linear fund raising into contribution for common cause. Funds

available and gaps will be more predictable.

Success factors

a) Continued commitment of partners to the partnership is essential

b) Functional accountability structure and transparency need to be put in place

Challenges of the model

a) Coming together to form partnership of organizations with varying missions, priorities and interests

b) Harmonizing policies and programs across partners and sectors might not be easy due to differing priorities and interests

c) Sub-‐optimal commitment of partners to the partnership,

objectives and roles Kicking off the model Since lots of reviews, discussions and developing strategies and guidelines have been going on it is timely to proceed to the next step. The point of departure could be putting together lessons learned so far from pioneers, painting the big picture and charting roadmaps. For this to happen Multilateral and Bilateral donor agencies are better positioned to spearhead the process. As per the model the role of multilateral and bilateral donor agencies is to facilitate forging the

Enabling(environment,(Markets,(Regula5ons,(Incen5ves,(Engage(

Co9crea5on(

Influence(policies,(Build(

capacity(

Dialogue(Forums(

Develop,(Mobilize,(Incen5vize,(Engage(

Developing(Countries'(

Governments(

Private(Sector(

Bilateral/Mul5lateral(

Donor(Agencies(

Developing(Countries'(

Governments(

Communi5es(

Fig.%5%'%Development%Partnership%Model%

Promote(role(shiIing(

Access,(Protec5on,(Gradua5on/(exit(strategy(

Bilateral/Mul5lateral(

Donor(Agencies(

((LCSOs(

INGOs(

Influence(policies,(Build(

capacity(

Skills,(Innova5on,(Technologies,(Linkage((&(Economic,(Social,(Environmental(

projects(

Create(enabling(

environment(

Share(informa5on,((Intermediate,(Engage(

Raise(awareness,(Build(capacity,(

Organize,(Mobilize,(Advocate,(Deliver(

Services(

Informal(Sector(

Formal(Sector(Base(of(Pyramid(

Build(capacity(

Build(capacity,(Enable,(Delegate(

Table 1 – Key roles and responsibilities of development partners

Agency Roles and responsibilities

Multilateral and Bilateral Donor Agencies

ü Co-‐facilitate creation and development of the partnership ü Co-‐facilitate dialogue forums for partners to come together

to contribute to development policy formulation, share experience, what worked and not worked well, lessons learned, concerns and improvement proposals.

ü Influence government policies to create an enabling environment for the private sector and NGOs

ü Build governments capacity to invest in human capital, infrastructure and institutional development

ü Promote and support private sector development and engage in poverty reduction programs

ü Engage the private sector in development; call for proposals can be tailored to enhance roles of the private sector-‐NGO partnership, clearly defining roles and responsibilities, funding share, accountability systems etc.

ü Promote role shifting by INGOs from project implementers to catalysts, capacity builders, intermediaries and enablers;

ü Build LCSOs capacity to assume increase role in awareness creation and mobilizing communities for change

Third World Governments

ü Co-‐facilitate creation and development of the partnership jointly with donor agencies

ü Co-‐facilitate dialogue forums for partners to come together to contribute to development policy formulation, share experience, what worked and not worked well, lessons learned, concerns and improvement proposals

ü Create an enabling environment and reform business regulations to promote private sector development

ü Address market imperfections and failures ü Create an enabling environment for NGOs ü Develop informal sector policies and programs to create

access to credit, services and infrastructure, develop skills, provide protection, facilitate graduation to formal sector or exit

ü Create incentive packages proportionate to resources invested by the private sector on poverty reduction projects (e.g. exemption from tax, priority access to services, contract awards etc.) for companies

ü Invest in human capital, infrastructure and institutional development

Private Sector

ü Integrate inclusive development into companies’ strategies and business processes, altering process steps or technologies, if necessary, to allow inclusion of the poor into companies’ value chains

ü Transfer business and entrepreneurship skills, avail technologies and innovate technologies relevant to the base of pyramid

39

Table 1 – Key roles and responsibilities of development partners Agency Roles and responsibilities

ü Implement economic, social and environmental projects that benefit the poor

ü Create linkages across businesses both vertically and horizontally

INGOs

ü Link the private sector with the poor through • Collecting, processing and availing information

virtually and direct contact • Intermediate the poor with the private sector to start

businesses ü Develop capacity of potential business candidates – train,

organize, facilitate access to basic services, credit and infrastructure

ü Build LCSOs capacity to enable assume roles of implementing partnership projects and community capacity building and mobilization

ü Partner with and delegate LCSOs to implement service delivery projects

ü Raise community awareness and mobilize for action ü Link local and national initiatives with the global

LCSOs

ü Develop own organizational, governance and leadership capacity and staff competencies

ü Create understanding of and align to CSOs ethical and operational standards

ü Improve transparency and accountability, including to constituents

ü Raise community awareness and mobilize for action ü Build communities leadership, technical and institutional

capacity ü Advocate on behalf of the poor ü Work in partnership with INGOs in implementing service

delivery projects ü Implement projects that may not fall within the domain of

the private sector or reach community sections that cannot be readily included in private sector driven projects/approaches

Joint/common responsibilities

ü Contribute to dialogue forum through sharing what worked well and what not worked well, lessons learnt and improvement proposals

ü Co-‐create partnership systems, products, processes and tools; define roles, responsibilities and accountability structures

ü Institute transparency and accountability systems

40

partnership, and putting energy into the model to create and sustain momentum through promoting development and engagement of the private sector, influencing INGOs to become catalysts and capacity builders as opposed to implementers, enabling governments and influencing policies, strategies and programs to create favorable environment for the private sector and NGOs, and enabling LCSOs. The model allows partners to work together effectively and coherently, while the role of donor agencies will be more of creating, maintaining, lubricating and fueling the engine to enable partners function together effectively (Table 1). As the model develops and functional accountability systems are put in place tensions and skepticisms among the different actors will be transformed into opportunities through transparent dialogue to come up with win-‐win solutions and holding one another accountable. New approaches to resource mobilization, call for proposal, incentive packages for companies that engage in inclusive development, government roles and INGOs’ practices etc. are expected to evolve as the partnership develops. The role of INGOs will shift from implementer to capacity builder, catalyst, enabler, advocate, working in partnership, intermediation, information dissemination and linking local/national with global. These roles have multiplier effects, and allow INGOs to be strategic as opposed to being bogged down by

pressure from service delivery project implementation. Governments are the key role players in the partnership as they are responsible to make the model work through creating favorable environment for the actors and promoting accomplishment of roles. Formulation and implementation of enabling macro-‐economic, sector and thematic policies, ensuring security and functioning judiciary systems, good governance, fighting corruption, investment in human capital, institutional and infrastructure development, reforming business regulations, market development, support to the private sector and civil society organizations, all crucial for sustainable development fall in the domain of governments. Local Civil Society Organizations need to develop their organizational capacity to realize their comparative advantages. They need to develop governance and leadership capacities. They need to develop understanding of and align to global CSOs codes of conduct and operation standards. Widening networks nationally and globally with like-‐minded organizations needs to be strengthened. They need to enhance their engagement in community awareness creation, organization, inspiring and mobilization for increased engagement with and to hold authorities accountable. Furthermore LCSOs need to give attention to developing genuine participation and implementation of service delivery projects that don’t fall within the competency area of the private sector and communities where companies are not ready to intervene.

41

Key references 1) African Development Bank

(2013) – Private Sector Development, Supporting the Transformation of the Private Sector in Africa: Private Sector Development Strategy, 2013 – 2017, African Development Bank Group

2) Bertulfo, L. (2011) – Women and the Informal Economy, AusAID

3) Billing, A. (2011) – Support to Civil Society within Swedish Development Cooperation, Perspectives No. 20, School of Global Studies, University of Gothenburg

4) Charmes, J. (2006) – Measuring Contribution of Informal Sector/ Informal Employment to GDP, Institute of Research for Development, Paris

5) Chen, M. (2010) – Informality, Poverty and Gender: An Economic Rights Approach, Oxford University

6) CCIC (2004) – Briefing Note, International Policy Review, Trade and the Private Sector, Supporting Livelihood Strategies of the Poor, Ontario

7) DFID – Private Sector Development Strategy: Prosperity for all: Making Markets work

8) Edwards, M. (2005) – Have NGOs’ Made a Difference, From Manchester to Birmingham with an Elephant in the Room, Economic and Social Research Council

9) Edwards, M. (2008) – Just Another Emperor: The Myths and Realities of Philanthrocapitalism, Swan Hill, New York

10) Stuart, E. (2011) – Making Growth Inclusive: Some lessons from countries and literature, Oxfam Research Report, Oxfam

11) European Commission (2011) – Development in the Concept of CSR

12) High Level Forum on Aid Effectiveness 2 (2005) – The Paris Declaration

13) High Level Forum on Aid Effectiveness 3 (2008) – Accra Agenda for Action

14) High Level Forum on Aid Effectiveness 4 (2011) – Expanding and Enhancing Public and Private Cooperation for Broad Based and Sustainable growth, Bussan, South Korea

15) IFC (2011) – Contribution to the Australian Aid Effectiveness Review, The World Bank

16) IFC (2014) – Doing Business 2014: Understanding Regulations for Small and Medium-‐Size Enterprises

17) Kharas, H. (2013) – Reimaging the Role of the Private Sector in Development, Brookings Institutions

18) Kellow, N. Ayele, G., Yusuf, H. (2010) – Enabling the Private Sector to Contribute to the Reduction of Urban Youth Unemployment in Ethiopia, Addis Ababa Chamber of Commerce, Addis Ababa

19) Kent, R. Armstrong J. and Obrecht, A. (2013) – The Future of Non-‐Governmental Organizations in the Humanitarian Sector, Global Transformations and their Consequences, Humanitarian Futures Programme Discussion Paper for Start Network, Kings College, London

20) Kindornay, S. and Reilly-‐King, F. (2013) – Investing in the

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business of Development: Bilateral Donor Approaches to Engaging the Private sector; The North South Institute, Canadian Council for International Cooperation

21) Lewis D. and Kanji N. (200) – Non-‐Governmental Organizations and Development, Routledge, London

22) Reality of Aid (2012) – Aid and the Private Sector: Catalyzing Poverty Reduction and Development? The Reality of Aid, The Reality of Aid International Coordinating Committee, Philippines

23) Russon, J. – The Contribution of business to poverty alleviation, a conceptual framework, Queen's University Management School, Belfast

24) Sida (2004) – Policy Guideline for Sida’s support to Private Sector Development, Sida

25) Steinle, A. and Correll, D. (2008) – Can Aid be Effective Without Civil Society? The Paris Declaration, The Accra Agenda for Action and Beyond, ICSW

26) Sundquist, B. (2008) – The Informal Economy of the developing World: The Context, The Prognosis and Broader Perspective

27) UNIDO (2008) – Creating an Enabling Environment for Private Sector Development in Sub-‐Saharan Africa, Vienna

28) UNDP (2007) – UNDP Private sector strategy – promoting inclusive market development, Final Version.

29) USAID (2009) – The Role of the Private Sector in Poverty Alleviation at the Base of the Pyramid, Speaker’s Corner Summary Report

30) World Economic Forum (2013) – The Future Role of Civil Society, World Scenario Series, world Economic Forum

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