Aid is hard
In the 1985 Playboy Magazine interview Steve Jobs talked about the problems with giving money:
“I’m convinced that to give away a dollar effectively is harder than to make a dollar. There are some simple reasons for that. One is that in order to learn how to do something well, you have to fail sometimes. In order to fail, there has to be a measurement system. And that’s the problem with most philanthropy – there’s no measurement system.
You give somebody some money to do something and most of the time you can really never measure whether you failed or succeeded in your judgment of that person or his ideas or their implementation. So if you can’t succeed or fail, it’s really hard to get better.”
I would add that when you give money, you risk creating dependency, twisting incentives, and creating a whole range of negative unintended consequences that are hard to measure and don’t need to be attributed to the action of giving money.
Also, most aid involves spending other people’s money on other people. The person doing the spending may be very well-meaning, but is in a situation where his or her best interest is primarily to look good within the organisation and only – at best – indirectly to ensure effectiveness of the money spent and its long term impact.
In a owner-managed business on the other hand, the business owner spends his/her money on himself/herself making effectiveness and impact top concerns.
I’m not saying that aid can’t be done well, just that’s hard, and like Steve Jobs says its easier to make a dollar than to give away a dollar effectively.
Looking at the economic impact of my business activities in the Ivory Coast, I believe I have created the following so far:
- 1 long term full time job (the taxi driver’s – assuming I’ll replace the taxi when it eventually breaks down)
- 2 long term part time jobs (the person that collects rents in Yopougon and the taxi manager)
- Affordable housing for 6 families
- Middle class housing for 1 family
- Assignments for the foreseeable future for an ivorian law firm I use to vet plots of land I’m buying, draftcontracts for the taxi and real estate businesses, and a few other things
- Work for an ivorian real estate agency that I am in the process of hiring to manage the Cocody house
- Temporary work for notaries and firms involved in selling land
- Real estate taxes and import duties paid to the Ivorian state (which under Gbagbo was questionable if it was anything to be proud of, given that a big chunk seem to have gone to arms purchases and to personal bank accounts of FPI bigwigs)
- Slightly more competition contributing to keeping transport prices down for woro-woro rides in Abobo
And I have done this with quite low costs. I fly to the Ivory Coast in economy class (got no big international organisation paying for me), get around in Abidjan by taxi (not in brand new Toyota Land Cruisers) and live at a friend’s house (as opposed to a luxury hotel).
And 100% of the cashflow generated by the business is reinvested in the Ivory Coast for the long term – as I’m quite upbeat about the economic future of the Ivory Coast.
So, it would be great to see an aid operation with an economic aim (like poverty reduction) have the same impact per spent CFA Franc as my little business venture, but I kind of doubt I will.
“The rich know best”
And to finish off, here is an excerpt of Bill Easterly’s brilliant AidSpeak dictionary based on twitter quotes:
“beneficiaries” : the people who make it possible for us to be paid by other people
“community capacity building” : teach them what they already know
“experienced aid practitioner” : has large number of air miles in account
“field experience” : I can’t bear DC anymore
“pro-poor” : the rich know best
“scale-up” : It’s time for follow on grant
“sustainable” : will last at least as long as the funding
“tackling root causes of poverty” : repackaging what we’ve already done in a slightly more sexy font