Microfinance ... Whatever happened to Unitus?

Dear Colleagues

What a shock ... Unitus was a visible part of the micro-finance community, and the idea that it would suddenly shut down and fire its 45 employees raises all sorts of questions. There will be a lot of stories based on this event over the next couple of years, and this has already started. This story is from the Seattle Times ... the URL is" http://seattletimes.nwsource.com/html/thebusinessofgiving/2012378011_unitus_board_chair_discusses_r.html

Unitus board chair discusses reasons behind closure
Posted by Kristi Heim
Seattle nonprofit Unitus' operating cost of between $600,000 and $700,000 a month was a factor in the board's decision to shutter operations, said Joseph Grenny, Unitus board chairman.

The abrupt announcement two weeks ago stunned employees and supporters, and has prompted some donors to question the decision.

Grenny said the decision was made by a unanimous vote of the five- member board of directors in Utah days before the announcement, but the discussion about changing direction had gone on for more than a year.

Next month the board will announce more specifically what its plans for the new direction will be, Grenny said.

When it was clear that Unitus would be pursuing a different strategy, the board asked, "Do we need an organization that has this kind of expense rate to pursue those options?" Grenny said. "To continue on for months and slowly drip that out would be fiscally irresponsible."

Unitus supports 22 microfinance institutions and plans to "quickly wind down any ongoing engagements in a prudent manner that prioritizes the best interests of their clients," Grenny said.

As for foundations and individuals that have funded its work, such as the Omidyar Foundation, "the board takes its stewardship very seriously to ensure those funds are deployed for their original purpose -- philanthropic purposes that help the poor gain economic self-reliance," Grenny said. On its latest financial report, Unitus had about $11 million in net assets.

"We will have conversations with Omidyar and every one of our significant supporters about what funds are remaining and what those will use to accomplish," he said.

Today is the last day of work for most of Unitus' 45 employees; about a dozen will remain through end of August and a few through the end of the year.

SKS Microfinance, one of the earliest lenders to the poor that Unitus backed, plans its initial public offering in India in the next weeks.

Unitus Equity Fund, the for-profit arm of the Seattle organization, has a stake in SKS, which could end up benefiting Unitus.

Grenny called the SKS IPO "a validation of what we set out to do," in accelerating the amount of capital devoted to microfinance.

"The willingness to stop when something is accomplished isn't done much in the nonprofit field... organizations that don't contribute much continue on," he said. "Painful as it is, we're trying to do the right thing by the donors' intentions."

Many of my own views are contained in the following response from a US consultant working in South Africa. The text follows. This is the URL:
http://seattletimes.nwsource.com/html/thebusinessofgiving/2012398307_unitus_the_seattle-based_non-p.html

Microfinance mission accomplished? Hardly, expert says
Posted by Kristi Heim
The recent decision by its board to close Seattle nonprofit Unitus and shift its resources to "other strategic areas" prompted Adam Sorensen, a consultant working for the International Finance Corporation, to write a response questioning the actions. Here's his personal perspective:
Adam Sorensen, a Seattle native, is a microfinance consultant currently working in South Africa.

Unitus, the Seattle-based, non-profit microfinance organization announced 'Mission Accomplished' on the eve of July 4th by closing its offices in Seattle, Bangalore and Nairobi and dismissing its 45 staff members. Like the infamous declaration by George W. Bush in 2003, the decision by the Unitus board of directors is hardly justified. Despite the definitive claims of success, the closure of Unitus has only raised confusion about the organization and questions about the state of the microfinance industry.

The Chairman of Unitus, Joseph Grenny, who is also a Unitus co-founder, shocked the microfinance industry by declaring that Unitus' "central premise... has been validated - capital markets have embraced microfinance to the extent that there are tens of billions of dollars in microfinance capital now available." Although the recently-appointed, now-departing CEO of Unitus has not publicly commented on the closure, the longtime COO, Ed Bland, added that Unitus had become "unnecessary" in the microfinance industry, equating the growth of for-profit microfinance providers with the availability of commercial capital.

The declaration of victory refers to Unitus' goal to reduce poverty by rapidly accelerating the provision of microfinance to the poor using commercial capital. Until the declaration, the goal appeared far off. The Unitus web site accurately stated that "even after 30 years of industry effort, there remains a huge gulf between the supply and demand for microfinance services. Millions of families are still without access, and at current growth rates, the gap will not be closed for decades." Unitus tackled this challenge by raising capital and then channeling it to microfinance providers in developing countries, while providing consulting assistance to improve their growth and productivity.

By all accounts, Unitus executed its strategy well in India, with far less traction in other parts of the world. Since 2001, when it began hiring professional staff out of a converted bungalow in the shadow of the Microsoft campus, Unitus raised $40 million in donor funding to support 12 microfinance providers in India, three elsewhere in Asia, four in Latin America and three in Africa.

To fund the growth of microfinance providers, Unitus also created and spun-off two for-profit investment management and advisory firms, which mobilized a total of $30 million from investors, many of whom sought various blends of financial and social returns. In India, Unitus has partnered with well-managed providers that have achieved very rapid growth and demonstrated the viability of for-profit microfinance, including SKS Microfinance, which is due to issue an IPO for $250 million to $300 million in coming weeks. Elsewhere, Unitus has had less success introducing new sources of capital and driving growth, with significantly lower impact on the growth of providers outside of India.

While its contributions should be lauded, the Unitus' board's claims that a wave of commercial capital washed over the industry is unsubstantiated and dubious. Outside of India, Unitus' limited activities mirror the limited penetration of commercial capital in the microfinance industry. Globally, the microfinance industry remains financed primarily from subsidized sources, with truly commercial capital (i.e. non-subsidized) limited to a few large, profitable microfinance providers, many of which previously received donor funding.

According to the World Bank's Consultative Group to Assist the Poor, donors and investors each provided roughly 50% of total funding to the industry in 2009. Of investors' share, half was invested by the German government and four development banks - all public institutions - and another large, but unspecified slice was sourced from social investors. Regionally, subsidized funding is even more important in less-developed regions like Sub-Saharan Africa, where donors provide 75 percent of total funding in Sub-Saharan Africa.

As a non-profit advocating for commercial capital, Unitus unsurprisingly branded itself as a different kind of non-profit in the microfinance industry and the philanthropic world. It promised better results by bringing commercial discipline and business practices cultivated by the leading companies that it often recruited from. In keeping with its brand, Mr. Grenny has spun the closure of Unitus as a carefully planned, cutting-edge decision that was 18 months in the making and will bring better results for donors and greater impact on the poor.

For a non-profit organization preparing to close its doors, Unitus has recently taken a number of "innovative" actions including:

• October 2009: Hiring a new CEO with a long resume in microfinance
• April 2010: Announcing a $15 million partnership with the US government's Overseas Private Investment Corporation and Citigroup
• May 2010: Advertising staff positions for fundraising and regional offices
• May 2010: Announcing two new partners (Grama Vidiyal, India and AMK, Cambodia) for its social performance management initiative
• June 2010: Holding a fundraiser with the local microfinance community in Seattle

At an industry level, the trouble with the Unitus board's declaration and the unwinding of the organization is that there are serious issues facing microfinance providers, donors and investors. These issues challenge Unitus' view of the microfinance industry and its impact on the poor.

First, the 2007-08 commodity inflation bubble, followed shortly by the financial crisis and widespread economic distress, has pierced the oft-repeated assumption that microfinance is unaffected by the macroeconomic environment. Second, the rapid growth of microfinance providers, especially commercial players, in countries like Bosnia and Morocco has shown how uncontrolled microcredit extension can destabilize the industry at a national level. Finally, these difficult circumstances are compounded by an existential threat from a string of randomized-control trials have called into question the impact of microfinance as a strategy for poverty-reduction. Cumulatively, these developments demand the participation of Unitus as a proponent of commercial capital to spur the rapid growth of microfinance to reduce poverty - not a victory lap.

Although I have never donated to, invested in or worked for Unitus or its affiliates, I do have an interest in the microfinance industry. Since leaving the U.S. in 2005, I have worked in various roles to promote microfinance, from volunteer to manager to investor. While these experiences may qualify me as a member of the much-maligned 'international development complex', it is the interests of the poor and less-fortunate across the world that I hope to represent by questioning Unitus' departure from microfinance. If anything, I believe the economic hardships of the past three years have taught us that growth and opportunity are not guaranteed anywhere in the world. Without Unitus, there is one fewer reason why the poor and the less-fortunate may have access to microfinance tomorrow.

Granted, at least the Unitus board didn't splash their announcement across an aircraft carrier.

I think I would add that to this, that the decision of the quite small Unitus Board might well have something to do with personal objectives as much as it has to do with the health of the microfinance sector. At some level the Unitus decision reflects one of my own worries about the structure of the microfinance sector, specifically that there are a growing number of intermediary organizations and service organizations for microfinance that have really quite high costs and maybe rather low service value to the sector. I have started to observe that the fastest growing part of the industry is the non-operational overhead of the industry ... and, of course, this is the part of the industry of which Unitus was a part.

I am sure I will revisit the Unitus decision again soon ... and maybe other information will become available. The question of industry overhead is also one that I will watch with interest.

Peter Burgess

World affairs ... about a G2 made up of USA and China!

Dear Colleagues

This is quite a long article, but quite thought provoking. I posted a fairly strong comment on the article to compare what is going on today with the USA and what happened in the UK and its global power when its economic power had disappeared! This post follows the article.

The G2 Obsession
By The Globalist | Friday, August 06, 2010

At varying intervals, U.S. strategists seem to favor one particular big nation or region on the world stage, with which they deem it wise to establish a rather exclusive club to run world affairs. Perhaps this is a peculiar remnant from the bipolar world order with the Soviet Union, which lasted from the 1940s to the 1980s. But that particular period aside, is this G2 obsession really a wise strategy for the United States?

First, in the 1980s, there was the suggestion that the United States should organize a condominium with Japan to run world affairs, at least in the economic realm. These calls ceased in short order once Japan’s economy foundered.

To be sure, the United States and China will matter a great deal in the global concert — but so will other nations and regions, which are not mere pawns on a U.S.-Chinese chess board.

Next, there was a brief period when observers suggested the United States should really make the EU its preferred partner. Soon enough, such a turn to the “old world” was replaced by the conviction that what lay ahead was really the Pacific century, featuring the United States and the nations of Asia as the new dynamic duo.

Those ideas took a back seat when the Asian financial crisis hit in the late 1990s. Since then, the merry carousel of “G2ism” has swung around two more times.

Under the Bush Administration, marked and marred by a great deal of contentiousness surrounding the Iraq invasion, some folks called for a return to the glorious 1940s, presuming that the United States and the United Kingdom were really all the world needed for proper management.

In the meantime, that idea has faded as well — and now there have been calls for some years favoring a new G2, featuring the United States and China. Proponents of that view — often the same people who previously made a career advancing a G2 with Japan and/or Europe — hold that there is little in world affairs that can be accomplished if these two behemoths don’t agree.

Conversely, they say, there are few limits if the United States and China are pulling in the same direction. This pairing certainly sounds more on target and more probable in the bigger scheme of things than its various predecessors. So what’s wrong with this picture?

One, the Chinese would never volunteer to limit themselves in such a manner. They have a crystal clear understanding of the fact that, in diplomacy, one always wants to maximize one’s opportunities — by maintaining constructive relations with a broad set of nations.

Two, with the myriad of issues that are dealt with on the global stage at all times, the array of issue-based coalitions is mind-numbingly complex — and, by definition, shifting across the areas.

Proponents of a new G2, featuring the United States and China, hold that there is little in world affairs that can be accomplished if these two behemoths don’t agree.

Three, the whole notion of a two-nation condominium that lies behind the concept of the G2 offers an entirely false comfort level. While the promise is that it just takes these two nations to agree in order to solve the world’s problems, it really masks a competition for who is top dog.

And in that race, the Chinese will certainly not want to limit themselves to talking to the United States to resolve matters. For all their inherent pride, the Chinese have a clear understanding that any presumable G2 arrangement is a complex, multi-level chess game involving a great many players.

So do the Europeans — because, like the Chinese, they too have engaged in these shifting coalitions for centuries, as have the Turks, as have many nations in Asia, and so on.

What Chinese strategists come away with when they hear American calls for a G2 is a great deal of pleasure — about what they consider an astonishing degree of naïveté on the part of the Americans.

They realize full well that the only time when the G2 really was a realistic proposition was the period of the bipolar world order, when the United States and the Soviet Union did have something of a chokehold on the rest of the world owing to their nuclear weapons.

But today’s global agenda is far more multi-faceted than in the nuclear age. That also applies to environmental issues, where there are suggestions of a G2-style grand bargain.

While it is certainly true that, on this especially crucial issue, it is pivotal for the United States and China to do their respective parts, the idea of a grand bargain is misleading.

Why? First, all nations will have to swallow hard to enable the world community to come up with an effective outcome.

For all their inherent pride, the Chinese have a clear understanding that any presumable G2 arrangement is a complex, multi-level chess game involving a great many players.

And second, many of the eventual compromises — depending on the specific items to be resolved — will break various ways. Some will find the United States and China on the same side, others on opposite sides.

To be sure, the United States and China will matter a great deal in the global concert — but so will other nations and regions, which are not mere pawns on a U.S.-Chinese chess board.

The basic idea of a G2 betrays a yearning for simplification that will prove ill-advised in a contemporary world characterized by rapidly increasing levels of complexity in issues of management and diplomacy.

That is why the Chinese, the only nation in the world with personnel resources across that entire set of issues that are much deeper than those of the United States, feel good every time they hear Americans invoking the G2.

To Chinese ears, it sounds less like flattery (which is the principal effect intended by the Americans) than an unintended concession speech from the United States about the superiority of China’s personnel and intellectual resources.

On personnel resources, by the way, the Chinese government’s bench is as deep as is the U.S. one when compared to the governments of large European countries. It will soon become a humbling experience, if decades of European envy about U.S. staffing levels is any guide.

The ultimate irony, of course, is this: The Americans believe that the Chinese are the upstarts — and want to create long-term goodwill by offering an inclusive partnership to the Chinese in the management of world affairs.

Meanwhile, the Chinese — proud of their traditions, their history and their powerful return to global affairs — believe the Americans base their offer on the wrong premise. To the Chinese, with thousands of years of history in the management of, and involvement in, world affairs, it is decidedly the Americans who are the upstarts.

The following is the comment that I posted in response to this Globalist article:

Dear Colleagues

A US world view always has the United States at the center of the circle or at the top of the pyramid. This reminds me of my youth when I was learning about the British Empire in English schools!

50 ... or 60 years on, what is going on with US perceptions is "deja vue", normal, but not very realistic.

Like the British who maintained more influence over world events for years despite their weakened economic status, it should be expected that the United States will do something similar ... unless they make some major missteps.

The BRIC grouping of countries ... Brazil, Russia, India and China ... together with the Middle East for Oil and Africa for minerals and the global economic power map does not much need Europe and the United States. Or does it?

The old industrial powers have one thing going for them ... a deep reservoir of human capacity, especially in the area of technical engineering and scientific understanding. This is very real and very important. Some might say that there is also financial sophistication, but I argue that this is a weakness rather than a strength because it diverts effort from things that have real value to those that merely create money profit.

Freedom ... that begets creativity and innovation is a US strength ... but not yet mobilized to make for an important future for the USA.

My own work on the development of meaningful metrics so that value is as well respected as profit may be helpful ... but the prevailing business news dialog has no place at the moment except for profit and capital market prices and GDP growth, ignoring everything that relates to the quality of life of the people as a whole. Changing the way we keep score could change the way we play the game!

Peter Burgess

Since I wrote this comment I have listened in on various conversations about the strength ... or lack of strength ... in the US economy. Many of the better known economists seem to be working with metrics and models that are sending all the wrong signals to decision makers, so it is not surprising that the decision making is excessively short term in outlook and the US economy ... together with other modern industrial economies ... prone to bubbles and bust.

Until there is some attention given to the value dynamic of socio-economic decision making, most of the modern industrial economies will flounder or worse. The metrics and models need to be reworked so that decision making becomes more focused on the productivity of society than just the profitability of a corporate organization. Money is a useful measure of business economic activity ... but value is a better measure of socio-economic activity. The idea that more and more consumption is progress is only part right ... it is right when the population is in need of more things, but it is dead wrong when the population has a surplus of things already.

The matching of the needs of people with jobs for people is a key ... as well as metrics for productivity that relate quality of life with the least consumption of scarce resources. The unemployed are potentially an abundant resource ... but where is the research, metrics and models that identify best use for this abundant resource. At the moment the models most in use help to justify employing Chinese and other low wage workers and unemploying workers in the US and other high wage economies.

If short term profit is the only metric in widespread use, the outcome will be an unmitigated disaster for the US and other once powerful modern industrial economies! It is time for some new metrics and models.

Peter Burgess

CSR needs value metrics to give it traction

Dear Colleagues

I am very much of the view that CSR needs value metrics in order for it to have traction. I listen in on different communities and dialogs including several that have CSR are their focus.

The following is a message from a graduate student working on an academic CSR thesis in which she asked readers to participate in a survey. We shall see in due course what was learned from the survey!

CSR Dissertation, help needed!!!
Given that Corporate Social Responsibility and the initiatives associated with it have become very popular, what’s really driving companies to embrace the CSR phenomenon?

I am a Masters student in Dublin Business school and I am conducting research for my dissertation on Corporate Social Responsibility.

I have now uploaded a survey that can get me even closer to answering my research question.

Please follow the link and fill out the new survey (it will only take a minute, I promise)

Thanks again for your help.

http://FreeOnlineSurveys.com/rendersurvey.asp?sid=ulczhbg0n2i2zv2784440

I completed the survey ... in large part because I was curious about what questions were going to be asked. I was not particularly surprised with the questions.

I also took the liberty of responding to the post with the following comment:

Dear Colleagues

How I hate surveys! I have filled in the survey, and now have some idea of how the data derived from the survey will serve to do more to support misinformation than to build meaningful knowledge.

Corporate Social Responsibility (CSR) is absolutely essential for the future of the corporation ... its profits ... and for the future of society. I would imagine that there will be some analysis of specific cases in the course work, and I would expect that there is a big disconnect between what the CEO/CFOs are saying to the markets and what the CSR people are saying to the general public. Certainly the organization charts suggest that there are some critical problems with making CSR mainstream and relevant to business decision making.

Until there are meaningful metrics about corporate performance than embrace social value as well as money profit, the whole business of CSR will be ignored by markets and therefore also by CEOs.

Peter Burgess

Every time I find myself listening to stories about CSR I am struck by the almost total disconnect between the modest but very sincere efforts of the CSR staff and the huge scale of the corporate organization as a whole. One of the strengths of good accounting is the concept of "materiality" where analysis is focused on things that really matter, and other aspects of performance are left alone. Using this idea, CSR is really "not material" in the overall corporate scheme of things, and sadly, is only really a part of the corporate organizations PR operation.

This is not a "put down" of CSR, CSR is, in my view very important, but it is a call to do things that make CSR really relevant for society ... and part of this will be, I believe, the adoption of meaningful metrics that will give CSR some serious traction.

Stay tuned

Peter Burgess

Issues relating to sovereign debt ... and their cancellation

Dear Colleagues

A few weeks ago Liberia was able to get some $5 billion of debt cancelled ... and President Ellen Johnson Sirleaf called on the nation to celebrate. Commentators at the Washington based Center for Global Development (CGD) seem to think that this is something that we all should celebrate.

I am not sure about this.

In order to fund the development of Liberia, clearly there is a need for money resources but money itself has not been the "silver bullet" for development progress at any time in the past, and is only part of the equation now. Many of the people who have been in positions of power in the past are still alive, albeit not now in positions of active power, and the disappearance of the debt without an adequate accounting is a practice that seems to be completely inappropriate.

The following is the CGD posting. The URL is:
http://blogs.cgdev.org/globaldevelopment/2010/07/liberia%E2%80%99s-debt-relief-party.php?utm_

Minister of Finance Ngafuan speaks at CGD’s debt relief event as CGD’s Ben Leo, the IMF’s John Lipsky, and Minister of Planning & Economic Affairs Konneh listen in.

Liberia’s Debt Relief Party
Center for Global Development
By Ben Leo ... July 2, 2010

This week, Liberians celebrated in the streets – faces painted, drums blaring, and dancing with abandon. They’re not rejoicing over some recent triumph by the Liberian soccer team or a local festival. The streets of Monrovia were overflowing because of debt relief. That’s right, debt relief. On Tuesday, Liberia secured nearly $5 billion in irrevocable debt relief from the World Bank, IMF, African Development Bank, and bilateral creditors. It’s a massive sum – the equivalent of roughly $1200 for every man, woman, and child in Liberia. As President Ellen Johnson Sirleaf stated, “today, ladies and gentlemen, is a day for us, as Liberians, to celebrate.” And celebrate they did. And so should we.

Beyond celebrating Liberia’s monumental achievement, we also should take a step back and examine just how they did it. On Wednesday, CGD was privileged to host two of Liberia’s leading stars in the debt relief drama – Finance Minister Augustine Ngafuan and Economy & Planning Minister Amara Konneh – along with a member of the IMF’s senior management, John Lipsky. Their insightful remarks kept coming back to one central theme – the overriding importance of strong, responsible, and persistent political leadership. President Sirleaf and her senior team knew the road would be long and rough. But, they refused to give up and overcame each successive wave of seemingly insurmountable challenges. Take two quick examples:

* When the Sirleaf Administration assumed office in January 2006, it didn’t have a single computer, chair, desk, or paper clip. The previous transitional government stole everything – bolted down or not. And many civil servants hadn’t been paid in months – if not years. Despite this, they found a way to mobilize enough expertise to secure an agreement the next year that cleared billions of dollars of loan arrears to World Bank, IMF, and other creditors.

* Also, the Sirleaf Administration pushed through numerous controversial pieces of legislation in order to secure debt relief – such as establishing a new Anti-Corruption Commission – despite controlling only 10 percent of the Liberian Congress. A truly tremendous display of courage and consensus building.

The path ahead for Liberia will remain uneven. It continues to face massive challenges, such as high unemployment rates and poor infrastructure. However, if the government remains determined and disciplined, they have good odds of successfully tackling these challenges one by one – just as they did with debt relief.

There were several comments that supported the cancellation of the debt.

Dr. CM Driscoll Says:
July 7th, 2010 at 3:05 pm
Congratulations to President Sirleaf and her government officials. They have shown that it can be done: Africa can get out of debt and have a bright future as a full partner with the other countries of the world.

Milton Weeks Says:
July 7th, 2010 at 4:49 pm
Well done! This is a momentous achievement by the Liberian government and a process that has been achieved in record time, especially considering where this government started from. I am once again encouraged and impressed by the tenacity with which President Sirleaf and her officials pursued this process. Again I say, Well done

alice amsden Says:
July 7th, 2010 at 5:06 pm
How nice for Liberia! But did it have to cut a deal about how it would treat the foreign mining and plantation industries in the country? After all, Canada delayed an $8 billion debt relief deal for the Democratic Republic of Congo. Canada seems to have been worried about the DRC’s cancellation of some mining contracts. But according to Mineweb.com (”Canada blocks debt relief as Congo marks jubilee”) a World Bank decision on debt relief was postponed at Canada’s request (the IMF approved the request).

Chris Lane Says:
July 14th, 2010 at 5:05 pm
Alice:
There was no linkage between terms of foreign direct investments and the provision of debt relief. That said, independently the Liberian authorities did renegotiate rubber and iron ore concessions in their favor.

Three of these were totally in favor of the debt relief and only one had some modest reservations.

My experience with Liberia goes back to the 1970s when President Tolbert was the Head of State ... and I have stayed in touch with development matters in Liberia over the years. I have learned a lot about the scope of financial mismanagement during this time, and am of the view that the international community is a part of systemic mismanagement of resources ... including the IMF and the World Bank who have facilitated the breakdown of financial systems by ignoring report after report that included information about financial mismanagement.

Recently top model Naomi Campbell was called upon to testify at the War Crimes Court about some rough diamonds it is alleged she was given by President Charles Taylor of Liberia at an event in Africa back in 1997. It is fairly common knowledge that all sorts of deals were going on to bring munitions to Liberia ... and some of this involved rough diamonds ... with some of the munitions coming overland from Libya.

In my view cancelling a debt without an accounting is irresponsible ... the funds have gone somewhere with someone responsible. That person or those persons should not be "off the hook" ever.

That does not mean that new financing should be held up ... new financing to do things of value should be accelerated, and done with strong accounting and accountability. Every fund flow should be used to create value for the society ... and there should be accounting for this.

My experience with the IMF and the World Bank is that much of what they do is "high finance" and very sophisticated without very much contact with reality. To my mind this explains much of the crisis of development performance ... these institutions have been God's gift to the corrupt for a period of perhaps 50 years, and unlikely to change very much.

Money flows without accounting and accountability is absolutely ridiculous ... but it is what the top level organizations seem to be doing all the time. Incredible!

Peter Burgess

Where is the stimulus impact ... are there any metrics that will ever show this?

Dear Colleagues

I have seen some statistics about stimulus following the Bush era financial meltdown. I liked the article ... but I sense that the data were not very solid. They reported that China was spending the most, followed by the USA with an amount of $112 billion. The allocation of this money is 32% to energy efficiency ... with 29% to renewables.

But what am I seeing on the ground? I have traveled quite extensively and seen very little. The same goes for other friends and colleagues. I am not at all sure why this is! With these sorts of numbers I would expect to be seeing a lot more activity and jobs, but I am afraid the program has become like so many Washington centric initiatives, merely money for insiders and rather little for the economy as a whole.

I would like to see a jobs analysis ... by work classification and by location (preferably at the community level) and my guess is that there has been more money spent on studying the problem and doing the legal paperwork than actually doing the physical work.

There is a need for jobs ... and there is a need for more energy effectiveness. Courtesy of Washington there is funding ... but the actual mechanism to put need for jobs and need for energy initiatives together using the money seems to be impossible with the present structure of socio-economic organization ... and no measures to help pull the elements together.

When I listen in on the dialog around the capital markets courtesy of Bloomberg I am appalled at the disconnect that exists between the markets, the data, the dialog and the reality.

My expertise, such as it is, is in the area of data and metrics. The data and metrics being used at this point in history are fatally flawed. The corporate reporting uses profit measurements and that is about all ... and the economics are all sorts of statistics that relate to the components that make up GDP and are indicators of the possibility of GDP growth. Most of the data are based on small samples and sophisticated statistical manipulation that I do not trust. In the end there are numbers that represent not very much.

I argue that society needs a new system of meaningful metrics so that needs and resources pulled together to get the best possible outcomes. Every community has data ... but these data are not driving decisions and they should be. TheBurgessMethod aims to have profit and value equally important and available about community performance as well as organization or project performance. Value ... quality of life ... is a way more important metric for our society than what we have at the moment.

Sincerely

Peter Burgess

Haiti ... dialog with one of the LinkedIn groups

Dear Colleagues

Ever since the Haiti earthquake in January, I have been a member of a LinkedIn group Haiti Earthquake Disaster Relief (HEDR) that has been very effective in sharing a lot of information about the progress ... or lack of ... of the various rescue, relief and development initiatives.

Through this group and others, I have been trying to get some attention to the matter of transparency and accountability. I have been more than a little disappointed, and it is clear that without independent metrics of performance, all organizations are going to work on their own agenda without paying very much attention to what would be of the most value to society.

Early in August I wrote the following short comment in one of the many HEDR discussions:

The problems are many ... and the knowledge about these problems totally hidden from view. There are solutions, but it is impossible to implement useful solutions when the root cause of the problem is carefully hidden from view. Transparency would help. Accounting and accountability would help.

What is depressing and frustrating is that organizations that ought to know better have bought into the "no information" mode of operations including a lot of well known names in international relief and development.

While I have been quiet in the HEDR space recently ... I have been exploring data sources and not impressed with what I have been able to find ... but will keep trying.

Four organizations should be named as important data possibilities, but poor in practice: United Nations especially OCHA; the Clinton group of initiatives; the Red Cross community; and USAID/US government.

The health sector is interesting ... lots of money ... lots of volunteers ... lots of need ... some amazing stories ... and absolutely nothing to help with the accountability dimension. I had hoped that Partners in Health might be a good accountability leader but am very disappointed.

Stay tuned

Peter Burgess

I am not sure whether any of the organizations involved with the rescue, relief and development in Haiti are going to eventually come through with some sort of public accountability. Immediately after the earthquake I was quite optimistic, but not any more. Much of the NGO behavior has followed a familiar pattern where fund raising and "stories for donors" is the only contact point for the public.

My impression is that many ... if not most ... of the people working on the ground still do very good work to help satisfy huge emergency needs with rather modest resources. Having said that, it also seems to be a reality that in the aggregate the delivery of needed assistance is rather modest relative to the resources that seem to have been mobilized.

Attempts to "follow the money" do not result in clear explanations of resource use. The available information does not give much comfort to the researcher ... rather it becomes fairly clear that most of the organizations are doing rather little to mainstream public accounting and accountability in their activities.

I am more than a little frustrated by this ... but not surprised. Nothing is going to change unless there is a system of dataflow and accountability that is independent of the implementing organizations. This is, of course, the data architecture that has been emerging within Community Analytics (CA) for some considerable time.

Stay tuned

Peter Burgess

TO BE EDITED

Dear Colleagues

In a few days time there is going to be a conference in India on Social Performance Management as it relates to the microfinance industry. The conference is being organized by OikaCredit in cooperation with its Indian subsidiary.

I am fully in support of the idea of more "Social Performance Management" ... but am somewhat amused by the fact that there are an enormous number of "tools" to measure social performance, none of which seems to be serving the industry very well.

The following is from the tentative conference agenda:

Session 3
To demonstrate general tools available to measure Social Performance (We may select some of the tools from the following)

• SPM Rating and Assessment
• ACCION Social Performance tool
• CERISE Social Performance indicators
• FMO environmental and social risk audit
• Global Reporting Initiative (GRI)
• Transparency in Sustainability and Finance (TSF)
• Quality Audit Tool (QAT)
• USAID Social Audit Tool (SAT)
• FINCA Client Assessment Tools (FCAT)
• M-CRIL social Rating
• Microsave Social Management toolkit
• MIX Market social performance standards report
• Micro Rate
• GIRAFE Framework

CSR and the pharmaceutical industry

Dear Colleagues

I am very confused. At the end of July I attended an event at Fairleigh Dickerson University organized by NetImpact where CSR staff and consultants from the pharmaceutical industry talked about CSR and the industry. They made a very plausible case for the industry's interest in CSR and the CSR work they were doing ... except that it was their job to put a good face on the CSR that was being done.

During the Q&A, I tried to make the point that at a "higher" level the industry was maximizing profit but not maximizing value simply because profits are being measured and value is not being measured. Corporate performance is really only about profit and not at all about value. I asserted that if value was being optimized the pharmaceutical industry would not only be profitable but also be respected! The CSR panel acknowledged it would help if there were value metrics ... in fact they were very positive about the potential for a good system of value to strengthen what CSR was doing.

And then I read the following list posting in connection with IP and the international pharmaceutical regime. This makes everything the pharmaceutical industry CSR people are doing totally inconsequential. Hurray for profit ... and to hell with the affordability of life saving medicines for most of the population of the planet! The post was written by Donald Light, a professor involved with public health policy. IP and knowledge control is hardly at all about value ... but mainly about profit. This is the post:

E-DRUG: IPS: (India) Trade talks with EU put drug manufacturers on Edge
Aug 8

Dear Readers,

These so-called free trade agreements have usually raised trade barriers and prices for medicines because they include a strong IP clause, as if IP provisions are not high barriers to free trade. The greatest focus in recent times by the pharmaceutical industry has been on extending protection from normal price competition through "data exclusivity." You all probably know what that is, but essentially IP lawyers for the industry developed the claim that results of trials and tests done for the public regulator belong to the company, not the regulator. (This is not true of the test results on the cars we drive or the planes or buses we ride.) Thus, a generic competitor is prohibited from referring to it or invoking it when applying to market a medicine once patents have expired, even though the regulator has the data already! An authoritative article last year in the Journal of Health Politics, Policy and Law (34;6:979) (Adamini et al, "Policy making on data exclusivity in the European Union") details how advocates for the innovative branch of the industry inside DG Enterprise wrote, managed, revised, and got passed the longest data exclusivity protection in the world without any credible evidence that it increases R&D or innovation, only sustains high prices.

Data exclusivity operates regardless of patent status and in all countries in which patents are not registered. Thus, this European law harms most seriously ill patients in developing countries, not Europe. A big win for the industry in the U.S. reforms was to get DE extended to 12 years.

An important study of how these trade restrictions affect access of medicines for seriously ill patients is by Ellen Shaffer and Joe Brenner, "A trade agreement's impact on access to generic drugs," Health Affairs - web exclusive 2009; 28 (5): w957-w968, at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.5.w957.

The main point for legislators is that there is no credible evidence that longer patents or DE increases the development of therapeutically superior drugs, but there is clear evidence that they extend high prices by transferring more taxpayers' money to profits for drug companies.

Donald W. Light
Professor of comparative health policy
University of Medicine & Dentistry of New Jersey
Lokey visiting professor, Stanford University

Donald Light

The performance of the pharmaceutical industry might have been quite exceptional from the perspective of the stock market and financial investors ... but in terms of its contribution to global health it has done rather little compared to what could have been done ... and should have been done. This is caused in some part because the only universal measure of performance is the money profit accounting measure and there is nothing of any substance about the role of corporate activity on quality of life in society. With a value accounting system of substance, the pharmaceutical industry might well be working much more effectively in the interest of global health performance.

I am an optimist ... value accounting is going to be used sooner than later!

Peter Burgess

The analysis of Chris Whalen ... and where that has led me!

Dear Colleagues

I listened to Bloomberg Radio the other day when Chris Whalen was being interviewed by Tom Keene and Ken Pruit. I was surprised by the level of agreement that I was having ... something that does not happen very often with most of the Bloomberg interviews.

Chris Whalen's webpage http://www.rcwhalen.com/ helped me to understand his conclusions ... and from there to his other writings including for example http://www.rcwhalen.com/pdf/2010-PB-03_Whalen.pdf and the list of various writings http://www.rcwhalen.com/articles.asp.

Chris Whalen seems to know history and the dynamic of what has been going on with the banking and finance institutions in depth over a long time ... but has then correlated the workings of the system with the results of the system in a very meaningful way.

The Whalen conversation was helpful to me to position my own views about what I call the "real economy" relative to his views about banking and finance and economic performance.

As usual, I see the metrics as being a central element in understanding a way forward that will engage all the participants on the global socio-economic playing field and make it possible to achieve meaningful money profits while at the same time building corporate performance that does well using the triple bottom line of people, profit and planet ... and also takes care of the issue of resource allocation to critical assets that are important for our future.

Chris Whalen appreciates the complexities of the instruments that have been created by the banking and finance experts ... including the idea that these instruments rarely have a real value adding dimension and as such the banking sector is more fluff than substance. This latter is my wording ... Chris Whalen is more sophisticated!

In the same week I have been having conversations with people outside the world of New York and banking and finance. While many are unemployed ... in the USA say 20% of the workforce or 15 million people ... there are 80% who are employed and earning. It was pointed out that a huge number of people were not buying because in reality they had most everything they needed ... two parents ... two cars ... two houses ... two children and they really did not "need" much more. Of course this makes GDP look awful, but GDP is a "silly" measure anyway. Is the country better off when people spend even when the spending is beyond their means, done on credit, and for things that people really do not need or want!

Hunting and fishing are pastimes that give many people a lot of pleasure ... they have little product that gets measured, but they produce happiness in all sorts of US communities.

So why is it that bigger is considered better by the stock analysts ... why is more and more the measure of prosperity? And the answer is that there is no good reason. Quality of life is not just about more product ... it is very much about enough and not so much about more. The metrics need to get changed.

One of the elements of the metrics system that should be in play is the "balance sheet" ... and specifically the relationship between what people have and what people owe, or might owe in the future. The balance sheet needs to be used at the individual and family level ... at the community level, the organization level, the government at all levels, and at the national level. Surprisingly the balance sheet is absent from many parts of the society ... and without balance sheet the checks and balances that are so valuable are also missing.

There are people hurting as a result of the economic meltdown of the past few years ... but the statistics suggest one sort of problem when in fact there may be a very different problem. Again this argues for the sort of metrics that serve to identify the problem in a practical and specific way. Good programs are going on in some places but not in every place ... bad things are happening in some places, but not in every place. The metrics have to be specific enough to help get resources allocated to where they are specifically needed ... not merely being some high level statistical model that has zero reliability around cause and effect. In other words we have to work on metrics in order to have metrics mean something!

In analysis of the economy as in many forms of analysis ... good analysis will show that the good is better than one might expect and the bad is a lot worse than one can imagine. They are both realities. The average of the good and the bad is really meaningless.

And applying this to the data flows and to media ... there is some good media ... but "OH MY", there is some bad!

Peter Burgess

Network collaboration holds big possibilities ... but takes work!

Dear Colleagues

I would like to share this exchange ... there are a lot of people interested in the potential of networking and using the power of the network to facilitate development progress. The first message is from David Barnard of SangoNet.

On Mon, May 3, 2010 at 10:19 AM, David Barnard wrote:

Dear all

This is a critical year for Africa as we head towards the United Nations Summit on the Millennium Development Goals (MDGs), to be held from 20-22 September 2010 in New York. With only 5 years before the MDGs are to be achieved, it is important that all African stakeholders, including citizens, review the progress made in recent years and develop a set of priorities for engagement and advocacy in Africa, and towards building a redefined relationship between Africa and the international community.

Against this background, African Monitor (http://www.africanmonitor.org), a Pan-African organisation monitoring development funding commitments to Africa and facilitating the involvement of African voices in the development agenda, and various partners, including ONE and the Southern Africa Trust, are facilitating consultations around the continent to develop a citizen-driven agenda for Africa in the second decade of the 21st century.

The face-to-face consultations are complemented by an e-consultation process, referred to as #AfricanAgenda2010, to leverage mass input and collaboration. The target is to generate feedback and responses from 10,000 people. The e-consultation will be a useful tool to solicit people’s perspectives on what they think are the key emerging priorities for Africa. This exercise will identify trends and common issues or priorities in a timely manner along with the face-to-face consultations which explore emerging issues in greater depth.

Coordinated by SANGONeT, the #AfricanAgenda2010 e-consultation is open to all African citizens, including in the Diaspora.

Your participation is crucial to the success of the e-consultation process.

• Complete the #AfricanAgenda2010 Survey -
http://www.surveymonkey.com/s/W835YB5;
• Comment on the issues, challenges and priorities raised during both the face-to-face and e-consultations - africanagenda2010@ngopulse.org;
• Assist us in raising awareness about this process by encouraging your friends, colleagues and people in your networks to also complete the survey.

The final outcome of this consultative process will be a document highlighting key emerging priority issues for Africa for 2010 and beyond. It will be presented to the African Union and shared at other strategic platforms at country, regional and continental levels, with special attention to those that can implement its recommendations by 2015 and contribute to poverty reduction and sustainable development across the continent.

For more information about #AfricanAgenda2010, refer to
http://www.ngopulse.org/group/africanagenda2010.

Thank you for your participation and support.

David Barnard
Executive Director
Southern African NGO Network (SANGONeT)
Tel: (+27) (11) 403-4935
E-mail: dbarnard@sangonet.org.za
URL: http://www.sangonet.org.za / www.ngopulse.org
Twitter: http://twitter.com/sangonet
"Linking civil society through ICTs"

I learned of this because of a message from Tobias Eigen who is the creator of the Kabissa network.

From: Tobias Eigen
Date: Mon, May 3, 2010 at 4:43 AM
Subject: Re: #AfricanAgenda2010 - Have your say about Africa's development priorities
To: "a research list on civil society, ICT and south-south info-politics"
Cc: SANGONeT

Dear David -

This is a terrific initiative - congratulations! I've crossposted your letter to Kabissa (http://www.kabissa.org/node/4334) and distributed it to members of our community blog. Please let me know if you'd like to do this differently and how else Kabissa can support #AfricanAgenda2010. You could add it to our organization database, for example, and we can display the logo on the Kabissa frontpage. I'd also be glad to use Kabissa to promote and raise awareness about the ngopulse.org platform which is a terrific resource.

Warm regards,

Tobias

Tobias Eigen
Founder, Kabissa - Space for Change in Africa
Membership is free. Join at http://kabissa.org
Become a Facebook Fan: http://facebook.com/kabissa
Follow Kabissa on Twitter: http://twitter.com/kabissa

And then I followed up with the following. My aim was to have not only the survey information in the dialog but the broader agenda of better metrics about society bearing in mind the old saying that only what is measured gets managed.

Dear Colleagues

I agree with Tobias, this is a great initiative ... and I will help all I can!

My "agenda" has ... or at least my goals have ... much in common with SANGONeT and Kabissa. Broadly stated I want to see more socio-economic progress ... everywhere!

I read engineering and economics at Cambridge and graduated almost 50 years ago. The expectation at that time was that there would be huge socio-economic progress everywhere around the world largely because of the end of the colonial era ... and the progress with science and technology.

50 years later science and technology has delivered ... but our socio-economic decision makers have not. After graduating from university, I qualified as a Chartered Accountant and I think it is fair to say that modern technology is a million times more cost effective than the accounting tools I worked with at the start of my career ... so why are the data used for decision making so poor?

This is a question that I worked on in the early days of corporate computerization. People need data that are helpful in improving their personal situation ... their personal performance. They are not helped by data overload and additional complexity. They need data that are clear and relevant. They need timely feedback.

The financial sector debacle of the last few years reflects a fatal flaw in the key metrics of society. Markets do a good job of allocating resources ... but only when the information being used makes sense. In the case of the capital markets the key metrics are corporate profit, stock market prices and GDP growth ... and using these metrics money has successfully been allocated to making more and more immediate profit at the expense of society, the environment and the future.

I argue that the information used for the capital markets should be not only those that relate to money profit, but there should also be metrics about value. Every business on the planet works with profit accounting. Every community on the planet should work with value accounting. These need to be combined as information that guides the allocation of resources and the markets that do this.

Value is important ... but it is subjective and it is not easy to quantify. It can be done ... and in the work we are doing with Community Analytics (CA), value is quantified in a "standard value" framework. Simply put, standard value is to CA what standard costs are in cost accountancy.

In regular accountancy, the organization does the accounting and does the reporting. Observers are able to use these reports to draw conclusions. The impact of the activities of these organizations on community is not part of the reporting. Initiatives for organizations to report double and triple bottom line performance have not been very effective ... for a number of very good reasons.

In the CA framework, the community is the reporting entity. Data about progress of the community shows the progress of the community, and data about the activities of the community help to ascertain the performance in whatever form makes the most sense. Some of the activities of the community are implemented by organizations with profit reporting ... many activities happen in a variety of not for profit settings and in the informal sector ... many activities are the responsibility of public bodies. ALL of these activities end up progressing the community or not.

In money profit accountancy for the organization the balance sheet is an important presentation. The difference between two balance sheets is an indicator of progress for the organization. A balance sheet of a community has the same ability to be a measure of progress for the community. This makes it possible for a relatively small amount of information about the community to give a very powerful metric about socio-economic progress.

I am committed to the idea that if you change the way the game is scored, you will change the way the game is played. Others have observed that you cannot manage what you do not measure. I have used the idea that good management information is "the least amount of data that gets good decisions made reliably".

I have also a high respect for decision making at the lowest level of an organization or a society ... the purpose of data is to guide these decisions so that there are good outcomes. I am always being impressed by ordinary people doing extraordinary things ... and conversely totally depressed by powerful people doing dumb things, and never being held accountable because the data are missing!

My dream ... hope ... plan ... is to combine what I have described with the capabilities of modern technology, and specifically data and the mobile phone, the Internet and the Cloud!

My reality is that I do not know technology well enough to do it well ... but why does this have to be a constraint when there all sorts of good people who can do all of this better than I can!

Is there a way these ideas about metrics fit into you initiatives ... bearing in mind that "What gets measured gets done!".

Sincerely

Peter Burgess

Who is driving?

Dear Colleagues

The investment publication Barrons had a headline this past Saturday "Who's Driving?" with the cartoon image of President Obama and GM President Whitaker struggling for the steering wheel. The article was, of course, about the planned GM IPO that would have repay the Government some or all of their stake in the company.

Who's Driving
by ANDREW BARY
Washington and GM have very different goals. But both are eager for an IPO that could value the car maker at $60 billion.

However, before I read the article, I thought the cover image was about the economy and the election rather than about the specific case of GM. From this perspective the cartoon image of President Obama driving an automobile and the question "Who's Driving?" led to all sorts of thoughts including the image of Obama with a car full of his Democratic family all with their own ideas of where the car should be going ... and few Republic relatives all of whom were quite clear that where the he was taking the car was all wrong. In my version of the story Obama kept on driving with a steady hand in spite of all the noise and hoop-la that was going on.

The image resonates well ... most families have had experiences like this on a holiday trip ... and the driver had better just keep on driving without losing his or her cool.

The road map available to President Obama is not reliable ... and the metrics are not very helpful. They are not particularly encouraging in confirming he is on the best path to success ... but not really very informative anyway. I have always said that the purpose of data is to help to make good decisions ... but these data do not exist. All we have are rather unreliable statistics that show the ex-post facto results of a whole portfolio of actions that have taken place in the past ... both distant past and recent past. Actually getting cause and effect from any of the statistics is just plain impossible ... and the correlation that people try to draw from the statistics are really laughable except that the unreliability factor of the data are rarely talked about!

An anecdote or two maybe a way forward in the political realm ... but decision making needs a lot more than this. The way forward can be about anecdotes, but organized into a system of dataflows that enables analysis of what specifics worked where and when and especially why and how they worked in each and every particular case.

I am troubled because the prevailing metrics are most likely to encourage decision makers to make bad decisions ... missing the good decisions that would make the USA perform much better much sooner. I have traveled a lot both in the USA and around the world ... and people could be a lot happier that they are with quite modest changes. But the changes have to be quite specific to the needs of the group ... and not the typical Washington model of "one size fits all" which really translates into "nothing fits anyone"!

A good driver watches the road ... collects the data and drives accordingly. In terms of data, there are not much worth having for President Obama to drive in the best possible direction. This should be changed sooner rather than later. We use social networks to connect people ... why don't we use social networks to connect the data ... to connect the dots, and to replicate things that work well.

And while we are about, why not use the data to discontinue what does not work at all. So called "pork" sometimes has huge value for the community ... sometimes the pork produces pure boondoggle ... and there should be data to show the difference. The system of accounting and accountability is broken ... perhaps better said is missing. The budget is passed as a result of market forces otherwise known as "horse trading" and once passed the moneys are spent ... but with proper accounting and accountability the value from the spending would get put on the record and the decision makers can be accountable for their waste. This is not complicated but it does take commitment ... and up to now there is none.

I for one do not like to see the driver without a map and essentially blind because the metrics about our society are so out-of-touch with modernity and reality. The USA can and should do better and do it soon.

Peter Burgess

World Bank and UN procurement practices

Dear Colleagues

When I first had reason to study World Bank and UN procurement practices in the 1970s it was clear that there were issues in need of attention ... and equally clear that the work in improving procurement practices was totally inadequate to the problem at hand.

Over time the problems have grown ... and the procurement practices become more and more complex, but not really very much better. In fact, I would argue that the procurement practices are worse now than they were decades ago.

I have always been bothered by the World Bank's use of improved procurement procedures to address issues like corruption. This has the perverse effect that small efficient low cost suppliers can really never get anywhere near a World Bank procurement contract. The paperwork essentially limits bidding to those that really know the complicated procedures and everyone else is out of contention. As a result contract prices are way higher than they need to be ... and the public pays a big price.

This would be less of a problem if there was good cost accounting and systems to report the actual costs of work done under World Bank and UN funding. Such data are difficult ... perhaps impossible is a better word ... to obtain. The over-invoicing of World Bank and UN contracts is a huge problem ... but completely off the radar. Prices agreed are not easy to access ... and for good reason (that is for bad reasons!).

The very low status of the accounting function in the World Bank and the UN is part of the culture ... and critical to its inability to either be accountable internally, or to the greater public. I have been aware of the problem based on personal observation for a very long time ... but it was refreshing to read a book from 2008 called "Backstabbing for Beginners" by Michael Soussan that tells some of the story of accountability ineptness in the UN within the infamous UN Oil-for-Food Program for Iraq.

Once in a while the World Bank and UN does something remarkable ... and there is the ongoing hope that this could become the norm ... but change is going to be very difficult in large part because many of the key decision makers are well aware of the sort of embarrassment that good metrics would make visible.

I want to see good metrics deployed so that these organizations are made to account ... but while I work in one direction, the World Bank and the UN are marketing their practices into the educational sector so that the World Bank and UN practices are considered "best practice" when in fact they are nothing of the sort!

Metrics are powerful ... but nobody really wants to see what good metrics will show!

Peter Burgess

NGO accountability ... World Vision and its stories!

Dear Colleagues

I started to write this post in May ... almost three months ago. The delay changes little. My views are as valid today as they were months ago ... and in fact years ago.

The NGOs are great story tellers ... and World Vision is one of the best. The stories help to raise a lot of money which then gets used in a variety of relief and development settings around the world. The text of the story below and is accessible at this URL:
http://www.worldvision.org/news.nsf/news/clean-water-niger-201005-enews?Open&et_cid=15365458&et_rid=&campaign=1059388&cmp=EMC-1059388&wvport=sp&wvsrc=enews

Villages in Niger that no longer need to wish for clean water wells
May 2010

A wish for clean water comes true for villages where dirty water and disease were once the norm. Now, with deep wells and water pumps installed by World Vision, good health is common.

In the village of Mekaka, Niger, women and girls are gathered around the village well. Their lively conversations match their fast-paced arms pulling up heavy water containers from a 130-foot deep well.

Drawing water in Mekaka takes an average of four hours each day. Hadiza Moussa, now 50, started to draw water from the village well when she was 8 years old.

Hadiza says girls come to the well and work beside their mothers once they are strong enough to help. For girls, drawing water is a higher priority than attending school; therefore, they often miss class to help at the well.

However, in Mekaka, drawing water will not always be this difficult. The village is part of a World Vision sponsorship project area, and two water pumps will soon be drilled here.

“We’ve seen the change in people’s lives, in other villages where there is already a water pump,” explains Hadiza. “Women spend less time fetching water, and it is less tiring, so they have more time and energy for their families.”

A change in the community

Drawing water from traditional wells in Zakara Hanou, another village in Niger, once took over three hours of intense labor. However, since the construction of the boreholes by World Vision, that same task now takes 30 minutes to accomplish.

Hassana, a 14-year-old girl, remembers how hard it was. “I had to lean over the deep, dark well, and when the bucket hit the water, my heart was beating so fast and the rope burned my hands,” she recalls. “I got dizzy looking down into the well, but had to keep steady to finish the work.”

Prior to the boreholes, women needed to pull the rough plaited ropes, 130 to 200 feet in length, which would often cut their hands. However, the installation of the water pumps made it easier. Women now have more time to spend with their families, girls are able to attend school, and Chief Saidou Abdou even says the boreholes brought peace to the village.

Before, disputes would break out in line at the well, and villagers would quarrel over the water. But now, they no longer have this problem.

If you could see this village as it was five years ago, you’d realize how much our community has changed,” says Chief Abdou. “No other [non-governmental organization] came to our village, so World Vision was a God-sent presence to us, as they came here to help.”

‘Drink to quench our thirst’

The health and well-being of the Zakara Hanou villagers has improved significantly since they got access to clean, safe water.

“The well water was smelly and unclear,” says Chief Saidou Abdou. “When we used to drink it, we were always sick, and our children had stomach problems.”

And how have things changed? “The water that we pump out today is crystal clear, it tastes good, and you don’t even have to put it through a sieve to take out insects and dirt. Now we can drink to quench our thirst,” he says.

“Many children in our village were sick with [trachoma],” adds Harouna, Chief Abdou’s wife, “but now that water is clean, we don’t have problems anymore.”

Three ways you can help

>> Thank God for how the well in Zakara Hanou village has already changed the lives and improved the health of the children and families there, and pray that the village of Mekaka will soon enjoy the same benefits. Pray that someday soon, every child would have access to clean, safe water.

>> Donate now to World Vision’s Water and Sanitation Fund. Your gift will help us dig deep wells for safe water access, provide purification equipment, distribute water storage containers, develop sanitation systems, and more.

>> Sponsor a child in Niger. Your love and support for a boy or girl in need will help provide essentials like clean water, a building block for a healthy, hopeful, and productive future.

There is no question that some of the work done by World Vision is very good ... but there is a very big question about the relationship between the amount of money raised and the amount of good work that gets done. As far as I can tell there is solid "accounting" at World Vision, but everyone knows that good accounting tells very little about performance unless there are people in management and associated with the accounting unit that are interested and experienced with cost accounting and performance metrics. World Vision has not shown me up to now that they are skilled in these matters ... yet the money flows that World Visions handles are huge.

I cannot prove this ... I do not have access to any of their internal accounting ... but the easily accessible published material shows the multi-million scale of their operations ... how much raised and how much spent ... but does little to inform about the amount of value that these moneys were actually able to deliver. Even if millions of dollars were to be mis-used, the publicly accessible accounting would never show the problem ... there is no accounting whatsoever for the value of the work an organization like World Vision does.

This problem is not limited to World Vision ... every NGO is in the same situation. They do very basic reporting to the IRS and that is about all. It is not good enough and NGO performance is not going to change for the better until there is some substantial reform in the progress and performance metrics that get used!

As I write I realize that the good news reported in the World Vision story of May was overtaken some weeks later by tragic drought stories in the same country ... the disconnect between the depiction of fact about good works on the one hand and the depiction of fact about tragedy a little later should not be possible. Again it is reliable independent and useful metrics about socio-economic situations and organizational impact that is missing.

Peter Burgess

////////////////////////////////

The text associated with pictures in the World Vision article not copied here:

Mariama, 6, smiles as she pumps clean water into a container in her village of Zakara Hanou. The girl used to suffer from trachoma, an eye disease, because of unclean water. But such illness is no longer a concern for her.
Photo ©2009 Dana Palade/World Vision“

Sponsor a child in Niger. Your love and support for a boy or girl in need will help provide essentials like fresh, clean water — the foundation of health and hope.

Story and photos by Dana Palade, World Vision Niger. Edited by Gabrielle Kim, World Vision U.S.

Thanks to World Vision water projects in Niger and elsewhere, children like this boy no longer need to worry about the absence of a resource as critical as clean, safe, fresh water.
Photo ©2009 Dana Palade/World Vision

Market metrics ... livestock prices down 50% in Madagascar

Dear Colleagues

I started a response some weeks back ... the news in the IRIN article is no longer "new news" but the issue remains the same. According to the IRIN article, livestock prices in Madagascar were down 50%. The article almost explains why ... but stops short of connecting all the critical dots! In fact the article merely provides one datapoint!

This is the URL of the article. The text of the article is copied at the end of this post. http://www.irinnews.org/report.aspx?ReportID=89330

I have done considerable work with the private sector in Madagascar. The country ought to be a wealthy ... but it is not. Politics and government are mainly to blame ... they have been dysfunctional for decades.

Though my work in Madagascar was in a different sector and different part of the country ... I have done work with livestock and pastoral communities in other parts of the world, notably in the Horn of Africa. The price of livestock tells you a lot about the state of the economy and the state of the weather. As the IRIN article observes, livestock are not only a component of the agricultural economy, they also represent a store of wealth.

MADAGASCAR: A financial crisis on the hoof ... Zebu prices are plummeting

AMBOHITSAHATAZA, 1 June 2010 (IRIN) - Far from the world's financial centres, isolated from sub-prime mortgages, collateralized debt obligations and collapsing investment banks, Madagascar is going through a financial crisis of its own, and stock prices are plummeting.

As in most of rural Africa, wealth is measured in livestock. Joseph Rabemamamtsoa, leader of Ambohitsahataza village in Amphany district in the southwest of the island, told IRIN that the value of his zebu - sturdy cattle with long horns and a fatty hump on their shoulders - had halved. "Normally, we could get up to 300,000 ariary [US$140] for a good animal; now we are lucky to get 150,000."

Not only has the value of individual animals dropped in the past few years, the average size of herds has also dwindled. "In a good period one rich family will have between 20 and 40 animals, now they have only 10," Rabemamamtsoa said. Poorer families - most of the roughly 1,700 villagers - now had none.

The Malagasy government's Early Warning System (SAP) noted that the average price of a zebu in southern Madagascar had dropped from A221,000 ($103) in March 2008 to A110,000 ($51) in March 2010, which was in line with the 50 percent devaluation experienced in Rabemamamtsoa's community.

Breaking the bank

In local terms this is a financial meltdown: people in the south of Madagascar depend on their zebu for more than just meat, milk and draught power to pull carts and plough the fields; their herd of zebu are their life's savings, insurance, their standing in the community. "It is what we value most," Rabemamamtsoa said.

Lundi Perole, a civil engineer and head of Hiara Hampandroso (Develop Together), a local NGO that helps communities build resilience in the harsh dry conditions of the region, said a large herd of zebu meant social prestige and importance.

They prefer not having water to drink for themselves than having their zebu without water. He has helped build water harvesters with the help of UN World Food Programme (WFP) Food-for-Work projects, in which a community works on projects geared to restoring self-sufficiency in exchange for food aid.

On his desk there is a huge pile of envelopes with requests from communities. "Most are for water catchment basins for cattle," he said. "The decision of what to build is taken by the community. We are in the south, [where] water is the big problem. They prefer not having water to drink for themselves than having their zebu without water."

The importance that Malagasy attach to their zebu cannot be underestimated: "It is their life and their death," Perole commented. Cultural practice dictates that a deceased person's zebu be slaughtered and the skulls set to decorate the tomb - the more skulls on a tomb, the greater the wealth and status - although outsiders often consider the practice destructive.

A buyers market

Drought lay at the heart of this local recession, and the consecutive years of scant rain had pushed families beyond their ability to cope, Perole said.

By the end of April 2010 the government projected that a record 65 communes in the south would face hunger in the coming months - surpassing the 45 of the previous year – and some 866,000 Malagasy would probably need assistance by June 2010.

"Food prices are increasing beyond the purchasing power of the population, reducing their access to food," said Krystyna Bednarska, head of the WFP in Madagascar.

Official figures indicate a rising cost of living in southern Madagascar: the price of one kapoaka (a small tin can) of maize, the staple food, rose from A130 ($0.06) in July 2009 to A230 ($0.11) by February 2010 in some areas.

Alexandre Huynh, Emergency and Rehabilitation Coordinator at the UN Food and Agriculture Organization (FAO), said poor harvests meant families were forced to sell off assets - like their prized zebu - to make ends meet.

"Zebu provide a solution to purchase food during lean seasons and food shortages, but ... as the sale becomes critical to the family, and as numerous households sell their animals at the same time, prices [fall] extremely low," he said.

"When the crisis has passed, [people] try to repurchase animals, but at the normal, and higher, market price, which directly contributes to their increasing destitution and current heavy de-capitalization."

The loss of local wealth is keenly felt. Rabemamamtsoa said the zebu were being bought and trucked to cities, like Tulear on the southwest coast, "But even up to Antananarivo [the capital, in the north]."

One of the perennial questions is why there has been little or no significant investment in the essential infrastructure of the country in decades ... what has been done to invest in water supply so that drought is less of a problem. The problem of water has been an issues for a very long time ... since the 19th century but there was a time when "development" included making big investments in water infrastructure and doing it well. For the past fifty years hardly any water infrastructure has been done to benefit local people, though some major projects have gone forward where rich elites have been major beneficiaries ... the Lesotho Highlands Water Project in Southern Africa and the Three Gorges Project in China come to mind and there are others.

With good development leadership Madagascar could be a reasonably wealthy country ... but this leadership is not coming either from the government nor from the international experts in the multilateral organizations. Madagascar is a big place with all sorts of potential! What a waste!

Peter Burgess

Malaria ... reinventing the wheel

Dear Colleagues

I was copied on this message because the value dimension of our work is included in the Integrated Malaria Management (IMM) initiative of Dr. Novak.

"Low-Cost Cell Phone-Based Applications for Priority Global Health Diseases"
On Thu, Aug 19, 2010 at 2:21 PM, Robert John Novak wrote:

Kate, the recent Gates call for a "Low-Cost Cell Phone-Based Applications for Priority Global Health Diseases" was a operational part of the LOI that we submitted to you. We already have a operational system. Why are you re-inventing the wheel! I guess the next thing that will be solicited is a applied GIS based surveillance system to manage malaria control operations.
Regards, Bob
Robert J. Novak, Ph.D.
Professor of Medicine
Division of Infectious Diseases
William C. Gorgas Center for Geographic Medicine
University Alabama at Birmingham School of Medicine
220 Bevill Biomedical Research Bldg.
845 19th Street South
Birmingham, AL 35294-2170
205-975-7614 FAX 205-934-5600

I think my response is self explanatory:

Dear Dr. Bob

I would like to add my "two cents" to your message.

As you know I have been active in the international relied and development industry since the 1970s ... and before that was the CFO of a company operating in 26 countries around the world. I think I know something of how good information can make a huge difference in operational performance ... and I would argue that good information improves performance in almost any environment by a factor of 10 or maybe 100. It is no wonder to me that government execution of almost any works is high cost and low impact, simply because the management information dimension of the work is usually missing ... whether it is the Government of the USA, or the UK or France or Russia or Nigeria!

I have been attracted to Integrated Malaria Management that you have initiated because it is an initiative that is based on the best possible use of data for planning, operational execution and performance assessment.

I am amazed at how little information based work is being done by the global health community which has adopted more than anything else what I refer to as the UN model for management. In this model a lot of work is done assessing what is going to work based on academic papers and historical studies, and then virtually nothing is done to check that the work done conforms to the suppositions made at the outset. When assessments are done they are usually done by "friendly" independent organizations who know the rule that you only get the next assignment if this current assignment produces the results that are wanted! With this structure not very much can be trusted!

As a fully independent observer of the international relief and development sector ... and with considerable practical experience in the sector ... I am appalled at the waste of money both within the official development assistance (ODA) organizations and the increasingly important private philanthropy organizations. The sad reality is that the money is not actually wasted but diverted to "special interests" of all sorts. As an old accountant I learned to "follow the money" as an audit clerk ... and I am not impressed by the "leakiness" of almost all the financial control systems in place that allow funds to flow to self-serving interests at the expense of beneficiaries.

I cannot for the life of me understand why a world where information technology is now a million times more powerful than when I started my career and the accounting is many times worse. There is a systemic dysfunction here that should be cause for great alarm.

From what I know of the global malaria sub-sector, things are not encouraging and I would suggest that the money will run out a long time before the malaria problem is controlled unless there are some serious rethinks of the approach to allocating resources into this sector.

While I am incredibly disappointed at the progress that has been made with the IMM initiatives and the deployment of meaningful metrics for planning and assessing malaria control interventions ... I am confident that those of us who are committed to a world with better metrics are going to prevail. It is human nature to want to win ... but scorekeeping has never been trusted to the players alone ... scorekeeping has an independent dimension that is essential for trust.

Peter Burgess

Relief and development sector performance ... starting with Save the Children UK

Dear Colleagues

I am, I think, starting to sound like a broken record. I just posted this comment on a blog written by Rica Garde, an Economic Policy Officer with the Development Policy Team at Save the Children UK about their recent report "Addressing the Inequalities in Child Survival". The text of the blog is at the end of this post and may be found at URL:
http://www.savethechildren.org.uk/blogs/2010/08/addressing-the-inequalities-in-child-survival/. This is my comment:

Dear Colleagues

I am always surprised at the rather "obvious" conclusions drawn in well publicized papers from well known organizations like, for example, this paper on child survival from Save the Children (UK). There is something wrong with the whole of the global relief and development industry ... and I am not really sure what it is!

When I first did work in this field in the 1970s I was immediately struck by the poor management processes in use compared to the corporate sector where I had been involved in Management Information System development and had been a Chief Financial Officer of a complex international company. In my corporate career I had been actively engaged in helping to improve performance and profitability ... but the same level of attention to progress and performance in the relief and development sector was totally absent. The situation has not improved very much of the subsequent 30 plus years.

Spend a couple of days in any country in the world and it is pretty clear that national averages are totally useless in managing anything ... yet they are almost the only data points being widely discussed. The national average reflects neither the good that should be replicated or the bad that should be eliminated ... and I would argue using advanced common sense that what one does to replicate good is rather different from what one does to eliminate bad.

The availability of "reports" is pretty impressive ... but they overwhelm as much as they inform. Somehow the management process is not working because while there are good things to write about, the scale of bad things remains ridiculously large. I argue that it leadership was doing its job and the systems were working there would not be multiple billions of people poor, hungry and in ill-health.

I can go on ... but will not, except to observe that until we get the metrics and measurements right, there will be little or no progress in relief and development and in the socio-economic status of most people on the planet. The incentives to do nothing by make profit for corporate organizations and to make a profitable career for "me" are just too powerful at the moment, and they ignore absolutely everything associated with value that contributes to quality of life and a stable planet!

Peter Burgess

The number of reports published by Save the Children and other relief and development organization is impressive. The URL to download the report referred to in this blog is: http://www.savethechildren.org.uk/en/54_12286.htm
and and lot more reports about development progress are located at:
http://www.countdown2015mnch.org/reports-publications/2010-report/2010-report-downloads

The problem is that all of these reports do not add up to a system of accounting and accountability for progress ... they are good if you have the time to study them, but most decision makers are busy and these reports are overtaken by all sorts of other matters, many of which should not be in play. More on that subject later!

This is the text of the blog.

Addressing the inequalities in child survival
Tuesday 17 August 2010

Every year figures on child deaths are released to track how countries are progressing towards Millennium Development Goal 4 — to reduce the under-five mortality rate by two-thirds between 1990 and 2015.

Reductions in under-five mortality are usually reported as national averages however, masking the unequal progress across different groups within a country.

A new Save the Children paper entitled “Inequalities in child survival: looking at wealth and other socio-economic disparities in developing countries” outlines a number of important issues surrounding children’s unequal survival prospects.

Across the developing world, countries with lower levels of under-five mortality tend to have more inequality in child mortality between the richest and poorest households.

Child deaths are more concentrated in poor households in developing countries that have reduced under-five mortality the fastest. This suggests that these countries made progress at the expense of poor households.

A few, like Egypt, however have managed to improve child survival and narrow disparities in under-five mortality between the rich and poor at the same time. Cases like these prove that inequalities in child survival can be avoided.

Unequal survival chances between rich and poor children are driven by a host of factors. Poor households often lack clean water and sanitation, cannot afford to buy nutritious food and have no access to medical care making their children more vulnerable to diseases.

These deprivations are both driven by and contribute to poverty, joblessness, low female education, weak health systems and poor governance. Wealth is an important but not the only determinant of inequalities in child survival. Unequal survival outcomes are present across gender, ethnicity, caste and tribe.

India perfectly mirrors the child survival story in the developing world. While under-five mortality has fallen in India, high and sustained growth rates in recent years have not been enough to put the country on-track for the MDG 4 target.

Child survival varies in different parts of the country. Southern states like Kerala and Tamil Nadu have brought down under-five mortality way below the national average, while northern states are lagging behind.

For example, the under-five mortality rate in Rajasthan is more than twice that of Tamil Nadu. The poorest children in India are three times more likely to die than those from the richest households.

Girls are less likely to survive to their fifth birthday than boys, and so are children from scheduled castes compared to the average under-five population.

There is some good news however. A of number of poor countries have shown that it is possible to make a dent on child deaths with limited resources. Bangladesh, which is on-track to meet MDG 4, has significantly improved child survival with only modest economic growth.

It has done so by rolling-out effective but inexpensive interventions widely, ensuring that the poor is not left behind. For example, coverage for immunisation against measles—one of the most common causes of child deaths—went up from 62% in 1996-97 to 80% in 2007 among the poorest households.

Coverage gaps in measles vaccination between boys and girls have effectively disappeared in the past decade according to the Countdown to 2015 Decade Report. Other socioeconomic disparities in under-five mortality still need to be addressed in Bangladesh however, such as unequal survival chances in urban and rural areas.

World leaders will meet in a UN Summit in September to accelerate progress towards the MDGs. With only five more years to go before the deadline, it is just right to put pressure on national governments and donors to agree on an action agenda.

We should not forget to press them for a more equitable achievement of the goals. In the case of child survival, meeting MDG 4 at the national average but leaving poor children behind makes it a shallow achievement.

To better understand these issues, read our paper and engage in the debates in the run up the Summit.

While I am a strong critic of the metrics used for corporate performance with a total focus on profit performance without much reference to anything else ... but at least there are widely followed metrics about the profit performance of each independent organization.

In the relief and development sector, there are not even the metrics to compare the performance of different entities in the sector. Of course money profit is not a meaningful metric in relief and development ... but after so long I would have expected some metric to have been development that would be both useful and universal. My solution to this is a "value" based standard for impact which can be related to a money cost for the organization as well as a "value" based consumption of resources that would, for example, handle the value of volunteer efforts.

When there is a humanitarian disaster there is a media focus on the plight of the affected people and organizations raise money to address the disaster ... but it is also arguable that the poor half of the world's population live a permanent disaster. This being so, then the question is what should be done to have metrics that focus clearly on the reasons for the poverty and those who have the possibility to do something about it ... those that are responsible.

This may be complex and it is difficult to use national average data as a way to identify responsible parties, if not impossible ... but similar data at a community level is way more easy to understand. The private sector and the public sector are possible culprits ... the for profits and the non-profits ... the available resources, organization and the systems of governance. But the culprits are also the solutions ... and, in our view, it is meaningful metrics that are going to change the that get made and the behavior of people and organizations so that the outcomes reflect positive socio-economic progress and efficient and effective performance.

More on all of this another time.

Peter Burgess