13 Failure Factors in Development Projects

For quite some time I’ve been interested about development projects. Why some succeed and some fail. I won’t go into specific examples of failed development projects. One particularly outspoken example is a TED talk by Ernesto Sirolli (first part).

“Like parking a truck with two trailers backwards”

What makes many well-meaning projects fail is the huge complexity and the indirect influence necessary for a project to work. I compare it to parking a truck with two trailers backwards (try that for a change :-) ) Here is a list of influencing factors:

  1. Complexity of governance
  2. Long project duration
  3. Complicated action chain from input to  output to outcome and finally to impact
  4. Lack of collaboration across disciplines and sectors
  5. Lack of professionalism
  6. Ulterior motives / hidden agendas
  7. Fundamental change of institutional environment during project
  8. Competition for resources
  9. Lack of proper need analysis / not doing the right things
  10. Redundant projects by different agencies
  11. Not learning from past failures / no independent project reviews
  12. Bad stakeholder management
  13. Population growth is neutralizing success

I am excited to see how FINCA’s founder John Hatch during his many assignments found himself documenting dozens of foreign assistance failures that came closer to destroying than assisting their intended beneficiaries. He longed to create an organization that would allow the poor themselves to manage their own development initiatives. (from wikipedia)

(photo by Cris Potter on StockMoney.com)

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Microfinance Reality Check

Microfinance promises a lot to many people. It depends on which promise we’re looking at: fight poverty, generate profits, provide financial services to the poorest, empower women, support entrepreneurs and create jobs.  Each has its own merits and each only provides a sliver of the “truth”. 

Take “fight poverty”. Only 50% of the loans are productive to start with. The other half don’t generate revenues and are used to buy food, pay school fees or medical bills. Obviously a non-productive loan is not considered a success in the narrow sense. But looking at the broader picture it might make sense to provide financial means to smoothen the income of the poor. And from an entirely different angle it is somewhat surprising that the poor repay their debts more easily than they save money beforehand.

Then there is the question of whom you ask: practitioners tend to have a more positive view based on anecdotes while quantitative researchers have a hard time proving positive impact and usually have to slice and dice the data to find impact, e.g. among rural female users of productive loans.

The existence of strong competition, market entry of traditional banks, new technologies and favorable regulatory environment all point to a potential success story, where efficient companies produce profits and operate in a sustainable manner.

To summarize: Microfinance services are helping, just not in the way microfinance’s foundational belief system says it does. If few clients actually use microfinance services in the way the original designers of microfinance programs expected them to, that doesn’t mean it is a failure. Microfinance does address the problem of income unpredictability. A stable, reliable source of credit, combined with savings, allows clients to meet their spending needs even as income ebbs and flows.

Hat tip to jaysupetran from Access Advisory for an in depth commentary oft the situation: Microfinance reality check.

(photo by Jovan J on Flickr)

How Words Shape our Thinking

Don’t ask me where I read cis-gender first, but the mildly unsettling touch has kept me in its grip for the last couple of weeks. What it means is simple: people who are comfortable with their birth gender. Which is like 99% of us. The “normal” people.

The effect on our thinking is substantial. The thoughts are no longer circling around normal and not-normal but instead are directed towards the fact that everyone has a gender identity and that cis-gender and trans-gender are related. It opens a window into the difficult choices and decisions a trans may need to take. It instills a gratitude for the cis not to need to reassign their gender.  It’s a politically correct term that has the power to bridge a gap.

How is this connected to my assignment in Tanzania? I might be perceived as bossy, rude or lazy when in fact I am being proactive, direct or thoughtful in my actions. Do we have credit or are we indebted? Is the glass half full or half empty? All a matter of cultural perspective and wording. What are your thoughts?

4 Good Reasons for “Gender Mainstreaming”

Gender Mainstreaming is a concept to bring women’s role to mainstream, i.e. by addressing the inequality between men and women. While the topic has some relevancy in the North it really hit me – smack in the face – when I learned about challenges faced by women in some developing countries (check out the gender gap index at the bottom of this post).

There are 4 gender-based obstacles in Microfinance and Microenterprise:

  1. Women lack access to banks or financial services in their own right (Men control cash income and their expenditure patterns do not support the household)
  2. Women undertake activities that produce low returns; women have a heavy domestic workload (Households are characterized by gender division of labor, unequal access and control of land, labor, and inputs, and unequal control of joint household produce and income streams from this)
  3. Women are not literate or educated; girls’ education is not prioritized (Women have a limited role in household decision-making; polygamy results in conflict, competition, and discrimination between wives; violence toward women is common)
  4. Women lack confidence to claim political and legal rights (Women lack legal rights to jointly owned household assets)

Source: The new Microfinance Handbook 2013

2013 World Gender Gap Index

Source: Wikipedia

(photo by Andrea Moroni on flickr)

When high interest rates are ok

Purchasing a ticket at a vending machine I thought I didn’t have enough coins so my son lent me one franc. Minutes later I found a franc in another pocket and gave it back to him. But then he asked for interest.

I was taken aback and argued that even the smallest Swiss coin (5 cents) would amount to 5% of what he had given to me. Even worse, the annual interest of a 5-minute credit of 1 franc costing 0.05 francs would be a staggering 525’600%. That’s what I would call “usury”.

However, son pointed out that without his contribution I would not have had a ticket and might have risked a fine of 100 francs. 0.05 francs therefore were more than reasonable to offset the risk. And if I had payed back a week later it would have been only 2’600% annual interest rate.

How does this tie into the world of Microcredit? In fragile condition a medical bill can be more than a family can afford on the spot. That’s when every way is fine to quickly raise money regardless of the cost.

(photo by Howard Lake on flickr)

Usury, no Interest or even Debt Relief?

According to Wikipedia “Usury is the practice of making unethical or immoral monetary loans that unfairly enrich the lender.” Some people went further. Historically, or rather religiously, even taking interest was frowned upon, to say the least. The image above depicts Jesus as he expells the usurars from the temple.

Thou shalt not give him thy money upon interest, nor give him thy victuals for increase.” (Leviticus 25:37 in the Old Testament)

“And if you lend to those from whom you expect repayment, what credit is that to you? Even sinners lend to sinners, expecting to be repaid in full.” (Luke 6:34 in the New Testament)

“O you who believe, you shall not take usury, compounded over and over. Observe God, that you may succeed.” (Al-‘Imran 3:130 in the Qur’an)

To sum it up: usury was a no go, interest taking was frowned upon and a call for debt relief was issued in a number of ancient societies.

Debt forgiveness is mentioned in the Book of Leviticus, in which God councils Moses to forgive debts in certain cases every Jubilee year – at the end of the last year of the seven year agricultural cycle or a 49-year cycle, depending on interpretation.

Debt forgiveness was also found in ancient Athens, where in the 6th century BC, the lawmaker Solon instituted a set of laws which canceled all debts and retroactively canceled previous debts that had caused slavery and serfdom, freeing debt slaves and debt serfs.

In addition, the Qur’an supports debt forgiveness:

If the debtor is in difficulty, grant him time till it is easy for him to repay. But, if ye remit it by way of charity, that is best for you if ye only knew. (Qur’an 2:280 )

(Source: Wikipedia)

But how is this related to microfinance? Interest rates lower than from informal moneylenders, suicides of credit defaulters, debt relief are just a few hints.

(photo by lds.org)

Is there Hope for Africa?

It is not correct to judge a whole continent, yet Robert Guest’s book “The Shackled Continent” has made a couple of valid points why Africa as a whole is stuck.

Some blame the climate. Most African countries are tropical. Parasites and diseases are abundant. Asia also is hot, with better growth and less conflicts.

Some blame historic Europe for the arbitrary borders, slavery and colonialism. It looks like nowadays African countries don’t touch the border situation out of fear to spark more conflicts. Slavery was existing centuries earlier than when Europeans sold Africans to America. Colonialists left some useful things in place, like roads, clinics and law. These factors cannot explain the apparent lack of success.

If these days Africans still feel inferior (what Steve Biko called “colonization of the mind”) it is pretty much unfounded on an individual level. Yet it might keep too many from reaching their full potential, especially if combined with poverty.

HIV/AIDS is another challenge ravaging in some African countries. Countries addressing it responsibly acknowledge how it spreads. Failing to do so has wiped away a generation of productive people in some countries.

Many countries throughout history proved that success and wealth is not a matter of climate, natural resources or a favorable history. Instead it is self-made and based on participating in markets for skills and goods. Cutting down on corruption and deliberate mismanagement also helps.

There are also some hopeful candidates in Africa: Botswana, Senegal, Ghana, Burkina Faso and South Africa all are showing remarkable progress.

(photo by G.S. Matthews on flickr)

Tanzania in Comparison

To get more of an idea about Tanzania I will compare it with Singapore, Switzerland and the United States – all countries represented to the 2015 cohort of Credit Suisse’s Global Citizens.

Tanzania Singapore Switzerland United States
Nation founded in 1964 1965 1291 1777
Size by rank 31 192 136 3
Population (rank) 50 mio (26) 6 mio (116) 8 mio (96) 318 mio (4)
Population growth rate 2.8% 1.9% 0.8% 0.8%
Life expectancy at birth 61 years 84 years 82 years 80 years
Infant mortality by rank 49 220 203 169
HIV/AIDS prevalence rate 5.1% 0.1% 0.4% 0.6%
Obesity prevalence rate 5% 7% 18% 33%
Literacy rate at age 15 68% 96% 99% 99%
GDP per capita (PPP) $ 1700 $ 62,400 $ 46,000 $ 52,800
Social Progress rank 116 46* 3 16
Population below poverty line 36% 25%** 8% 15%

* Malaysia figure
** officially no data is available, therefore best guess according to this source is shown

A Brief History of Tanzania

Tanzania is home to some of the oldest hominid settlements, hence the nickname “cradle of mankind”. Hominid jaw fragments unearthed by archaeologists are thought to be 3.6 million  years old. 10’000 years ago hunter-gatherers were living in the area. It lies where routes link the sea with the great lakes (Victoria and Tanganyika).

1000 years ago trade with Roman subjects must have taken place as Roman coins were found. Portuguese captured the the island of Zanzibar in 1505.  Early 18th century the Arabs took over and  traders moved inland in search of slaves and ivory. Then came the Europeans, first exploring, then carving up Kenya and Tanzania between the British and Germany in 1886.

German East Africa – as Tanzania was called back then – was a fertile land for sisal, coffee and cotton.  The tribes profoundly resented the German presence and staged attacks against them. When reinforcement from Germany arrived in 1905 it didn’t take long to brutally squash the attacks. Only it didn’t stop there: the Germans destroyed villages, fields and grains; deliberately causing a famine that killed a quarter million people.

At the onset of the First World War the British took German East Africa. After the war treaty of Versailles they obtained a formal mandate to govern it and the name was changed to Tanganyika.

In 1964 Tanzania emerged as a republic with President Nyerere implementing socialist ideas. Education was soaring while creating cooperatives brought down productivity. When stepping down after 20 years he admitted that his economic policies had failed. He had however managed to keep  tribalism out of politics and the introduction of one common language (Kiswahili) helped bridging gaps.

Recent conflicts occurred in Zanzibar due to irregularities during election, when government forces killed 35 protesters and wounded 600 in 2001.

(photo Soaring Flamingo on Flickr)

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