Fresh Ideas on the Future of Foreign Aid

GDN Next Horizons Essay Contest Winners Announced

The Global Development Network (GDN) is pleased to announce the winners of the Next Horizons Essay Contest 2014 which was held in partnership with the Bill & Melinda Gates Foundation on the future of development assistance.  The contest invited original and innovative thinking to inform the ongoing discourse on development assistance and its role in post-2015 development finance. The international contest received 1,470 submissions from 142 countries around the world.

The contest was judged through a comprehensive and strict multi-review stage process. The eminent jury comprising of international luminaries and experts has selected 13 essays judged to be the best and most potentially consequential on the basis of their originality, usefulness and analytical quality.

The members of the international jury panel were:

Jury Chair: Nancy Birdsall, President, Center for Global Development

  • Armida S. Alisjahbana, ex-Minister of National Development Planning and Head of National Development Planning Agency (BAPPENAS), Indonesia
  • Debapriya Bhattacharya, Distinguished Fellow, Centre for Policy Dialogue (CPD) & Chair, Southern Voices on Post-MDG International Development Goals
  • Elizabeth Ford, Deputy Editor, Guardian’s Global Development website 
  • Erik Solheim, Chair, OECD Development Assistance Committee (DAC)
  • Frannie Leautier, Partner & CEO, Mkoba Private Equity Fund
  • Gargee Ghosh, Director, Development Policy & Finance, Bill & Melinda Gates Foundation
  • Guillermo Perry, Professor, Universidad de Los Andes, Colombia 
  • Hiroshi Kato, Vice-President, Japan International Cooperation Agency 
  • Pierre Jacquet, President, Global Development Network
  • Winnie Byanyima, Executive Director, Oxfam International

The details of the 13 winners and their ideas are listed below in alphabetic order of their names.

ANG, Yuen Yuen (Singapore) - Making Details Matter:  How to Reform Aid Agencies to Generate Contextual Knowledge

This essay considers a central problem of reinventing foreign aid in the twenty-first century: how to reform aid agencies to promote a “best-fit” approach to development assistance. In the past, aid agencies pushed developing countries to conform to a universal set of best practices found in developed countries. By contrast, an emergent best-fit approach aspires to tailor aid programs to a variety of local contexts. While this new approach is widely embraced in principle, implementing it is easier said than done. This essay proposes a three-pronged strategy to adapt institutions within aid agencies to support a best-fit approach: (1) build a bank of non-best practices; (2) diversify expertise by creating separate career tracks; and (3) carve experimental pockets. This essay does not fit neatly into any one of the six themes specified for the contest; rather, it concerns all of the themes. Whether it is to use aid to improve governance, apply information technology, or design financial instruments, the overarching challenge is to empower and incentivize aid professionals to generate the necessary contextual knowledge to craft effective solutions for diverse developing communities. Read essay here.

BARA-SLUPSKI, Tadeusz Krzysztof  (Poland) - Towards a Holistic Approach to Digitization of Healthcare Delivery in Sub-Saharan Africa and beyond: Setting a New Agenda for the Digitization Endeavour and Direction of Foreign Aid

The Millennium Development Goals agenda is coming to an end. Sub-Saharan Africa (SSA) will only partially meet two of the goals. Healthcare delivery in the region has been deteriorating. Scarcity of quality, disaggregated and timely healthcare data exacerbates the problem. The global community recognizes the opportunity and need for digitization of healthcare service delivery in SSA and other developing countries influencing the direction of funds and policy. The recent decade was characterized with an explosion of information and communications technology (ICT) projects aimed at various areas of healthcare. Yet, most of the digital endeavours failed to achieve scalability, sustainability and faced problems in their implementation to bring the desired socio-economic impact through improving decision-making and increasing transparency of public services. Building on research conducted for the purposes of a Master’s Thesis at the London School of Economics and an LSE Research Project in the Gambia, this essay provides an understanding of the antecedents of this failure and proposes a new agenda for digitization of healthcare delivery in SSA and beyond. The overarching reason for failure of these projects in the Gambia and potentially other developing countries is not the lacking infrastructure, or higher level barriers identified in the academia but the lack of a holistic approach to digitization of healthcare delivery that starts with process mapping and understanding of the obfuscated reality behind the underlying healthcare delivery systems. This new approach calls for foreign aid to support public-private partnerships that through alignment of business interests with social goals will transform millions of lives. Read essay here.

BRINK, Jason Arthur (United States of America) - The AidDollar: Increasing the Utility of the  Donated Dollar through Highly-Targeted  Non-Cash Cryptocurrency Aid Distribution

International aid agencies and governments have long struggled with ways to both guarantee equitable distribution of their aid dollars and to ensure that their aid dollars are being well spent; this is very difficult to do in an international aid market filled with fraud and corruption. This paper provides detailed suggestions, with examples, for ways that some of the problems endemic to aid distribution can be solved through the use of highly targeted injections of cryptocurrency-based aid into an international aid market while leveraging public-private partnerships, established consumer technology, aid-entrepreneurship, and crowd-sourced compliance data to ensure that donated dollars arrive where they are intended. This essay seeks to offer suggestions of the ways that technology, combined with novel national and international organizations, could be leveraged to increase the efficacy of aid dollars and provide a pathway to social and economic improvement in areas receiving aid. Read essay here.

GUPTA, Abhay (Canada) - Doing it Wisely: Using Financial Innovations to Improve Aid Outcomes

International aid donors have asymmetric information about the beneficiaries and the project implementers. Different financial instruments can be used to deal with the problems of adverse selection and moral hazard. This essay discusses how the risks and the returns of these instruments can be used to align the incentives of various stakeholders with the objectives of the aid programs. Debt is preferred to grants if the benefits are private and marketable (e.g. agriculture, skills-training). The essay argues that for human development target areas with public and long-term benefits (e.g. primary education, vaccination), the project implementers can be motivated by using equity and options. The essay shows that the tiered structures of future payment streams using financial derivatives can facilitate behavioral nudging. These instruments can improve long-term outcomes by affecting recipient selection and by offering tangible returns for efficiency. For capital spending projects, providing grants and loans to the communities, which then fund the actual development through equity, can help solve the principal-agent problem. Less risk-averse implementers can leverage the original aid by using it as equity to generate more loans, if the downside is insurable through guarantee schemes. The author talk about the comparative usefulness of the financial instruments in generating spillovers and multipliers and how it changes with institutional setup, macroeconomic conditions  and implicit prices of expected outcomes. By increasing formal, non-cash and traceable transactions, the efficacy of these instruments can be measured easily with available methodologies (like A/B testing) and technology. Read essay here.

HEIN, Lars (Netherlands) - Towards an Investment Fund for Global Ecosystem Services

The degradation of ecosystems is one of the key challenges facing humanity. Often, the poorest sections of society are most affected by ecosystem degradation. A range of foreign aid mechanisms have been set up to assist developing countries with safeguarding their ecosystems and the services they supply. However the rate of success has been limited, and new models for foreign aid are needed. This essay describes such a new model. Once developed and operational, the proposed foreign aid model would serve as a long-term funding, monitoring and compliance mechanism. The model is built upon recent insights in the functioning of markets for ecosystem services and new developments in remote sensing technologies. It would involve an investment of around US$ 35 million in order to develop and establish a ‘global investment fund for ecosystem services’. This fund would apply market principles to compensate land owners for the opportunity and conservation costs of sustainable ecosystem management in order to conserve key ecosystem services. The fund would be complementary to existing market mechanisms for sustainable ecosystem management, and would differ from them by a rigid application of market principles, a cost-efficient global monitoring program, a focus on legal enforcement, and the global scale at which it operates. The fund presents a new approach to foreign aid and ecosystem management, and would make an essential contribution to sustainable development. Read essay here.

HONIG, Dan (United States of America) - More Autonomy for Donor Organizations & Their Agents (Sometimes): Bringing Organizational Behavior and Management Theory to Foreign Aid Delivery

Management practice is the low-hanging fruit of foreign aid delivery, the area where marginal investment is most likely to yield results.  Leveraging over 100 in-person interviews and econometric analysis of the world’s largest database of development projects (over 14,000 projects over 40 years), which the author has assembled, the author argues that for some (but not all) foreign aid tasks the move towards output measurement and away from field agent autonomy is likely to be detrimental to performance. More generally the author argues that there is inadequate attention paid in foreign aid to applying the rich, evidence-based literature on organizational behavior and optimal performance; there is good reason to believe that the impact of aid can be improved greatly simply by thinking more deeply about how organizational structure affects performance and how optimal structure is a function of recipient country context and the specific task being undertaken.  Much attention and treasure is spent on elements of the development equation that, while very important, are not terribly tractable to external intervention (e.g. political will, corruption). It is high time that we concentrate on the levers of development that are fully within the control of aid donors and we have reason to believe are also significant determinants of outcome: management, incentives, and organizational behavior in aid agencies. Read essay here.

HORROCKS, Isabella (New Zealand), HORROCKS, James (New Zealand) - Catalyzing Investment in Social Enterprise: The SEE Fund

Social enterprises are an important tool for human development. Social enterprises have designed innovative (and profitable) ways of delivering a whole range of development initiatives including affordable education in Kenyan slums, reducing child mortality in Ugandan villages and improving food security in Rwanda.  While impact investors have shown growing interest in supporting social enterprises to achieve greater impact, the flow of investment is hampered by a lack of exit opportunities. The Social Enterprise Exit (SEE) Fund can change this. The SEE Fund could be created by international development institutions like the IFC, USAID and private foundations. The mandate of the SEE Fund would be to take minority stakes in successful social enterprises, providing an exit opportunity to the founders and early investors. This would positively impact human development outcomes in three main ways. Firstly, it will release existing capital to be reinvested in other social enterprises needing growth capital. Secondly, it will attract more capital into social enterprises. Thirdly, it will attract a wider pool of entrepreneurial talent to create and to grow successful social enterprises.  The SEE Fund could also catalyze change in the impact investing sector more broadly, proving the viability of a liquid secondary market. The long run consequences of this could be a sustained increase in investment flowing into social enterprises, improving the lives of millions of the world’s poor. Read essay here.

KENNEDY, Raymond Sikander (United Kingdom) - Surfing the Wave: How to Capitalize on the New Breed of Global Funds

The aid effectiveness agenda has stalled. Despite substantial research and evidence to support changes to the way donors act, little or no progress has been made in a number of critical areas. What gains there have been may be temporary. This essay, which focuses on the health and education sectors, seeks to articulate a pragmatic response to these failures. It largely accepts the underlying predilection of bilateral donors to make sub-optimal decisions in a number of areas. The essay also largely accepts the reality that most multilateral organizations are remarkably resistant to reform. Since 2000 a new wave of global institutions has been created which offer a solution to these challenges. These public-private partnerships offer a solution not because they are perfect institutions at present, but because they can be perfected. They have shown themselves capable of reform, largely because they had better institutional structures and governance arrangements at their creation. They have also proved their political agility and fundraising prowess. They are here to stay and may threaten existing ineffective multilaterals. It is time bilateral donors realized that if they are to fulfill the laudable missions they have set themselves, they must accept that they are part of the problem. They should invest money and time in those multilaterals that were set up in an accountable way originally and have demonstrated that they can reinvent and reform themselves. Sectors outside of health and education could learn from these experiences and might also benefit from new, more effective public-private partnerships. Read essay here.

LARRAURI, Helena Puig (Spain), DAVIES, Rodrigo (United Kingdom) - Building on Open Data and Information Technologies: The Future of Resources, Narratives and Collective Intelligence for Development

The past decade has seen the emergence of two parallel data revolutions that affect development programming. First, the Open Data movement has pushed organizations - governments, non-profits and companies - to publicly share information and allow public scrutiny. Second, the increasing availability of free, open source and user-friendly information technologies is enabling a growing number of civic actors to collect, process and analyze their own data. The confluence of open data and community-driven data are changing the way development is done. This essay explores the processes that are being set in motion in the development project “marketplace” by these twin data revolutions. It describes three examples of the ways communities and organizations are building on these developments: by organizing and leveraging new resources, creating new narratives, and building collective intelligence. These changes present networked, decentralized alternatives to established ideas, and are beginning to exert some pressure on incumbent processes and stakeholders. The authors argue that the development sector has the opportunity to engage with and support the growth of these so-called alternative infrastructures into ones that complement incumbent infrastructures. To do so, development organizations must learn to allow communities to shape their priorities about where and how aid is deployed and focus programming on creating an enabling environment for this organic process to happen in a constructive, democratic manner. While this may seem like an uncertain, radical future, it is the natural corollary of giving millions of people open access to data, and the ability to generate and share it. Read essay here.

MACHARIA, Stephen Mwangi (Kenya) - Scaling the Impact of Development Assistance

Aid has played a big role in tackling some of the most pressing problems that humanity faces. In spite of the heavy deployment of aid to solve various problems, the world is still replete with stories of hunger, disease and illiteracy. In recent times, technology and an ever growing population demand a change in tact in how problems are addressed and how aid is deployed to solve these problems. Market based, and pro-poor solutions are currently making ripples in social change circles. Impact investing is one of the channels through which aid can be harnessed to scale the impact that individuals and foundations with a desire to make the world a better place can use. There has been increased focus on how donor funding can be more targeted at provision of transformational capital to provide solutions to the problems at the grassroots level. By unlocking capital for use in such business, grant makers will bring environmental conservation to scale, create employment and improve the livelihoods of the global poor.  Impact investing is sustainable and can have a catalytic and productive effect on impact investing and hence a scalable positive impact on social and environmental spheres. Read essay here.

PORTMAN, Will (United States of America),  CARNEGIE, Alison (United States of America), ARONOW, Peter (United States of America) - Adaptively Deploying and Evaluating Aid: An Integrated Approach

Recent advances in the design and analysis of randomized control trials have resolved many concerns about the fairness, efficiency and limitations of experimentation. In adaptive controlled trials, who and how many recipients get an experimental treatment, is determined in part by the observed performance of the intervention thus far. When an intervention is shown to be promising in a particular place or for a particular institution in a given study, resources are shifted to optimize expected welfare in a manner that is anticipated by the experimental design. Adaptive controlled trials, thus, provide a principled way to resolve the tension between maximizing aid impact and preserving scientific rigor in evaluation. The authors argue that, insomuch as we seek to apply the same standards to aid that is applied to medicine, adaptive controlled trials provide a state-of-the-art approach for optimizing human well-being and knowledge, yielding great welfare gains for generations present and future. Read essay here.

ROBINSON, Susannah Elizabeth (United Kingdom) - What Goes Up, Must Come Down: the Role of Open Data in Improving Aid Accountability

Open data and technology are increasingly seen as a way of improving communication between aid donors and recipients. There is however a recurring problem in the feedback loop connecting open data collection and application in development programs. Technology is increasing the capacity of central authorities to collect data, but failing to disseminate this knowledge back down to communities in targeted national policy. This essay looks at how technology can be used to improve both the collection and application of data in development programs related to primary health care in developing countries. Its potential role in overseas aid for the recent outbreak of Ebola virus will be used as a case study. The approach highlights the need to engage communities by ensuring their input influences government and donor health programs, emphasizing the communication as much as the information aspect of ICTs in development. By doing this, a self-perpetuating feedback loop will be created where health need shapes health supply. This minimizes the wasting of limited aid resources on programs which are medically or contextually irrelevant to a community. Read essay here.

WILES, Kevin Peter (South Africa) - A Social Project Finance Model

The essay acknowledges at the outset the challenge of securing development funding solutions for social projects. Examples are provided of real projects that highlight funding problems. Using a case study approach, the ideas and principles are identified on which a new development funding model is proposed. It has been named “A Social Project Finance Model.” The words in various combinations speak to its essence. Three key principles and a co-ordinated approach to their application form the crux of the proposed Social Project Finance Model. First is the identification of those elements of a project that can attract commercial funding. Second is the re-planning of a project to a sustainable first phase and securing committed funds for this phase rather than for the whole social project. Third is the pursuit of “socially-friendly” financial instruments. These comply in form with known market instruments, but are adapted to replace the stringent commercial terms with returns or outcomes that are aligned with the social objectives of the projects. The practicality of implementation is discussed and a recommendation presented to make the Social Project Finance Model a reality. Read essay here.

Supported By: