Making Aid Obsolete

When I was a child, we were told to eat our vegetables because people in India, China, Africa (pick one) were starving. The question of how my eating vegetables was supposed to help those poor people remained unanswered. What we did presume was that they would be helped by missionaries, and then, with more up-to-date information, by massive inputs of something called foreign aid that well-meaning governments like our own sent to the governments of the needy countries.

A few decades on, all those assumptions have gone topsy-turvy. At about the turn of the millennium, a raft of studies and books emerged to argue that too much of what was forked out as foreign aid was achieving no good at all. In books such as White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good, by William Easterly, or The Trouble with Africa: Why Foreign Aid Isn’t Working by Robert Calderisi, we were told that money got frittered away by inefficient bureaucrats or found its way into the bank accounts of kleptomaniac politicians while the poor remained as desperate as ever. Over a period of 60 years, in Easterly’s estimation, rich countries had paid $2.3 trillion for development in poor countries only to see children in Africa and parts of Asia still dying from entirely preventable diseases and women still walking kilometres to collect water or firewood. Easterly, an American, and Calderisi, a Canadian, had both worked for the World Bank, as did Dambiso Moyo, a Zambian-born Harvard-educated economist who weighed in a few years later with Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa. Other substantial African voices joined the discussion. Kenyan economist James Shikwati told the German magazine Der Speigel, “For God’s sake, please stop the aid,” his main critique being that huge bureaucracies were supported by aid money and that corruption and complacency were promoted. If the West were to cancel such payments, he argued, normal Africans would not even notice. “Only the functionaries would be hard hit.”

What was happening was that the kind of foreign aid we had become used to, and had come to believe was right and good, was taking a beating while, simultaneously, something equally extraordinary was taking place. Many of the countries I had worried about while staring into my plate of vegetables stopped being poor. India, China, Brazil and a number of African countries suddenly leapt out of poverty and into some sort of international middle class. This they achieved not through the assistance of foreign aid, but via the good old-fashioned market system.

Due to trade and technologies, vast swathes of populations in countries formerly considered backward and poor were increasingly prosperous, with all the material and lifestyle benefits that implied. There was a wrinkle, of course. While countries might no longer be poor, the people in them as well as elsewhere still were and, because of the success around them, were now, in fact, less visible and arguably worse off than ever. This produced an entirely novel challenge, one that a group of 14 scholars and researchers—all but one of them attached to the University of Toronto—attempt to address in a new book, Innovating for the Global South: Towards an Inclusive Innovation Agenda.

Setting out their thesis, Janice Gross Stein, one of the book’s three editors—the others being Dilip Soman and Joseph Wong—writes that established ways of doing business will not be good enough. Development assistance faces “fundamental challenges,” she says, reiterating the observation that the majority of the world’s poor no longer live in poor countries but in middle-income countries that generally neither receive nor want development assistance and concluding that “development assistance is no longer a state monopoly but rather a partnered activity in a field crowded with non-government organizations, foundations, and the private sector.”

Is there a way to reach these billions with the bright light of progress and a better life? The writers of the nine essays think there is. But it will involve extensive implementation of a notion offered over and over throughout the book as well as in the title: “innovation”—doing things better and with greater and more efficient impact.

A bit of a reader warning: this is hardly a tome you will want to take to the beach. It claims to be aimed at a wide audience, but that audience is specialists, “from governments seeking to foster an innovative culture or to design suitable funding models to inventors and innovators seeking to figure out how best to scale their innovation for social good, and from commentators to practitioners.” It is (as the language of the above sentence itself attests) policy wonk stuff, written by people who study policy and are, for the most part, more comfortable around the minutiae of technical tweaks than the broad strokes of geopolitical philosophizing. This is not a bad thing, but should be noted by those of us who are not ourselves specialists. That said, if you are prepared to wade through the statistics and technical language, you will get the gist of a novel approach built, yes, on innovation, but also on local, small, entrepreneurial, technology-centred strategies. Where the book is particularly enlightening, even for the lay reader, is in its itemizing of examples of strategies and innovations that are changing the lives of local populations as well as the ways both we and they think.

The ideas and the schemes pour forth loaded with the kinds of buzz words we will probably hear a lot in the next decade: “appropriate technology,” “frugal innovation,” “inclusive innovation,” “integrated innovation,” “embedded innovation.” We are told that “India’s leadership in frugal innovation goes beyond downsizing, it involves starting with the needs of poor consumers and working backwards. Instead of complicating or refining their products, Indian innovators strip them down to their bare essentials, making them affordable, accessible, durable and effective.” Demand-side rather than supply-side economics has turned out $3,000 cars, $300 computers, $30 mobile phones that provide nationwide service for just two cents a minute. (It makes you wonder why we cannot have a bit of that over on this side of the world.)

Rahim Rezaie, a joint research fellow at the University of Toronto, makes the obvious point that innovations have disproportionately benefitted those of us in high-income countries. The high costs of pharmaceutical research and the attendant patent protection brings to mind the fact that cheap anti-retroviral treatments for HIV/AIDS were not available to high-need Africa until a South African court ruled in favour of generics manufactured not in the West but in India. This changed the world for AIDS sufferers, although it cost the pharmaceutical multinationals a fortune.

Sometimes it is best that the West backs off. We are told that it is not just companies in the traditional West that are innovating, but local initiatives in India, China, Brazil that are changing the game dramatically. Joseph Wong, who holds the Canada Research Chair in Democratization, Health and Development at the University of Toronto’s Munk School of Global Affairs, offers up an interesting example. He describes the Aravind Eye Hospital in the southern Indian state of Tamil Nadu whose innovative cataract surgery has gone a huge distance to eliminating needless blindness by reducing the costs of individual surgeries to $30 each from the western standard of up to $3,000 per eye. My reaction was praise for the innovation that the Indians have been able to achieve along with dismay that back in Canada or the United States or United Kingdom the surgery still costs a hundred times as much. Again, it is surely we who need to innovate and learn from the Indians—although that is a side issue.

The small-scale, almost intimate nature of many of the schemes, and the fact that they frequently were initiated without a great deal of self-serving fanfare, reminded me of a fellow I know named Ian. Ian used to travel back and forth between Canada and Kenya where his job was to provide technical support to a University of Manitoba–founded medical research clinic. Looking around at the people he was living and working with, he became interested in innovations he believed might improve local lives. His first venture was to take a gas barbeque from Winnipeg and assemble it for the cooks at the restaurant he frequented in Kenya to liberate them from heavy use of charcoal. He then supplied more gas burners to a group of non-profit schools so they could introduce a breakfast program without having to use firewood or charcoal. The materials were purchased locally and presented to the school with the expectation parents would in some way then pick up the ball. “The idea,” Ian told me, “was that the parents would get together every few months to chip in to fill the tank with propane or butane.” It seems to have worked, the school was even able to get a grant from the Bill and Melinda Gates Foundation to experiment with pawpaw seeds ground into the maize meal porridge that would effectively rid the children of worms. The gas burners sealed the deal as they had a steady supply of cooking power. Ian followed up with a micro-finance program out of his own pocket through which he helped his Kenyan friends purchase video cameras so they could film weddings as a side business. When they started paying back their loans, he expanded his program to assist others to open bicycle taxi businesses, set up barbershops and
the like.

But back to the book, where a fascinating and enlightening discussion concerns how culture can get in the way of making things better or even different. The Tata car in India was supposed to revolutionize mobility for the poor by making available a cheap car at $3,000. It did not sell. What was not understood was the degree to which a private automobile is considered a status symbol. With that in mind, nobody wanted to be seen in a cheap car that was available to everybody. Get the price low enough, though, and some technological innovations prove to be not only democratic but revolutionary. In Kenya I observed a program where cell phones—virtually universal because program and hardware costs are so far below what we are accustomed to in North America—have been put to use in the service of medical care with apps that tell people when to take or renew their various medications.

In the business of development, common sense and cultural knowledge and sensitivity go a long way. The landscape is littered with ideas that were not completely thought through. In the back corner of a Nairobi hospital I recall seeing a dusty MRI machine. It had been donated by the government of China but came without a service contract; when the expensive piece of equipment broke down, that was it. One of the chapters in the book relates the story of walkers used by people with mobility problems discarded outside a hospital in the Gambia. Donated by a well-meaning charity, their tiny wheels rendered them useless on the rugged unpaved or broken pavement streets of Africa. Another white elephant was a thousand “PlayPumps” installed across the continent on the premise that children frolicking on a playground carousel would simultaneously (and unwittingly) perform the chore of pumping water from underground aquifers for their mothers to take for household use. It did not work. “The reality was that children do not play long enough to pump sufficient water for the needs of the communities, and adult women do not use such pumps because they feel it is undignified to play on a carousel.”

There are some wonderful examples of low-cost miracles, such as $1 incubators for premature babies, as well as strategies to make existing practices more effective—for instance, the filtering of drinking water through the cloth women use for their saris in order to eradicate cholera—or building on technologies that have been widely adopted—again the medical uses for cell phones. The ultimate question, though, is how to finance it all. Where the buck stops—or starts—reveals what aid is really about. Back in the days of the missionaries when the financing came from nickels and dimes collected in western and northern Sunday schools, the objective was converting the heathen, perhaps hand in hand with pushing the agenda of colonialism or imperialism. With government-to-government aid, the real objective was frequently positioning within the larger politics of the Cold War or, more recently, the “tied aid” or conditional aid that worked hand in glove with either foreign policy or domestic industrial needs (hence the largest recipient of Canadian government aid over the past decade has been Afghanistan, where Canada participated in a decade-long war).

What is it now? Where will the money come from and what are its motives? Murray Metcalfe’s essay on new financing models postulates that development in the Global South in the 21st century “will look nothing like what the twentieth–century models based on foreign aid and multilateral agencies envisioned. Instead, real development will stem from two familiar forces—technology innovation and local, entrepreneurship-focused new enterprises.” To achieve this, he envisions something more like the risk capital that financed Silicon Valley. This implies that profits will have to be available (how else will you lure investors?) even if, as in Silicon Valley, a bunch of failures accompany every out-of-the-park home run. There is very little discussion—only a mention—of the Grameen Bank whose micro-loans (much like those my friend Ian made) revolutionized the lives of thousands of small operators, proved financially successful and won its Bangladeshi founder, Muhammad Yunus, the Nobel Peace Prize in 2006.

So where will the substantial investment Metcalfe postulates come from? Should we hope that the privileged (and inspired) young who march off to donate time building schools and orphanages in Africa will return home to become such venture capitalists? Should we be alarmed that governments may be less and less part of the game? Answers to these questions are not offered in the book, but it is important that they continue to be asked.