“Nepalis are a stingy lot,” she told me in between the sips of coffee that was cold. “They never donate for a good cause—no matter how good the cause, and no matter how rich they are.”
I twirled around that conversation in my head for a long time. By virtue of being a Nepali, and not having been as generous as perhaps I could have been, I suppose I was implicated by reference. It is not just Nepalis, I thought in defence. People all over the world, and not just individuals, even governments are a stingy lot when it comes to contributing money for a good cause. [break]
But all that shouldn’t be an excuse. I resolved to be a better person. I would be more generous when I could.
That posed another problem I hadn’t fully anticipated. Where do I give? How do I know that my contributions will produce the results I have been promised it will?
Take political parties, for instance. All of them have now opened up bank accounts for contributions towards their election campaigns. Let’s suppose I decide to support them. Not just one party over another, but across the board. Say, I make a contribution to all of the parties. Does that guarantee a stable political future? Will parties actually deliver a constitution and a better future for me like they have all promised in their manifestos?
It was my turn at a tirade the next time I met her for coffee.
“I can’t be sure,” I told her, “that my contributions will yield an outcome. I mean I don’t doubt that you will gather your books, medical supplies and clean drinking water and strut to the remotest part of the country; that you will encounter children in need; that you will help each one of them. But how do I know that it will produce a result? How do you guarantee that all of your tireless toil will result in an educated or a healthier child with a brighter future?”
She looked up at me from the empty cup with a bit of a cringe on her nose. She had finished the coffee, while still warm I assume. “Heartless bugger,” I imagined her thinking to herself, “trying to shake down a Nepali for a good cause is a bit like trying to crack open a stone as if it were an egg. There is no yolk—it is a stone, after all.”
She is correct. Our generosity is limited. Our government is even stingier. It spends a lot less on health, education, sanitation and drinking water—the basic stuff—for the poor than it ought to and certainly far less than what it could afford.
There is no doubt that we need to be more generous, open our hearts more directly to those less fortunate and in need. But there must also be an element of what I told her over coffee. We also need to be smarter with where we put our money and how we create the incentives for development.
Almost all of what we spend on development goes to finance inputs. We pay for teachers, not education outputs. We pay for doctors, not better health. Of course, you can’t get one without the other. You can’t get education without teachers. You can’t get good health without doctors. But the rewards and the incentives are clearly on expanding inputs—more teacher, more doctors—rather than on enhancing outputs.
Consider this. Suppose you were to go to China to buy televisions. You visit many different factories. You evaluate different products. Would you sign a contract to pay for the inputs to the television or the television itself? Clearly, you would sign a contract for the latter—you agree to purchase a certain number of televisions of a specific kind and quality. The producer takes your payment and purchases the material that he or she needs to make that television. But the risk of converting the inputs into a television rests entirely with the manufacturer.
It should be the same with developmental outcomes. We should focus on signing contracts for developmental outcomes, not just finance inputs to the process.
A television is tangible. Social service outcomes are often not. It is possible to count televisions, to measure its quality and test the product. Social services are less discrete. But within that fuzziness, there are several instances where services can be easily measured and monitored.
One example is renewable energy. Our government spends millions of rupees each year, thanks to the generous support of our donor friends, helping take small solar systems to rural areas. These funds subsidize the up-front cost to customers. It is one of Nepal’s most successful programs. At the same time, the program spends a large amount of resources validating that the systems have been installed, ensuring that they are working properly and layering in complex control mechanisms to enforce warranties when some components fail.
With the same level of monitoring, it would be more effective to change the support from input (when the small solar home system is installed) to output (when the energy from the system is produced). This does more than just change the point in the process where the support is injected. When coupled with a market approach, this system allows markets to correctly price the need for support.
As an example, say the government commits to purchasing 100 units of energy for selected poor households. As suppliers compete to fill that need, the extra financial support the government has to provide beyond what the customer has to pay is correctly priced through competition.
Energy isn’t a fair example—its units are easy to count and measure. Other social services, like education, health or sanitation, are far more complex. The idea of creating ‘development commodities,’ which can be measured, monetized and traded, is not new. But this idea has long been shelved for monitoring and measurement challenges. That science is now changing. The ability to turn complex intangible services into commodities that can be measured, monitored and traded is now available. A mix of technology, analytics and science is making it possible.
The benefit of adopting such an approach is that it truly opens the door to private sector in the development process. It moves the development process away from the monopoly of government to a broader market place that can be more competitive and effective.
Development is Nepal’s biggest industry. For it to produce meaningful and lasting impact, everyone must profit from the process: not just the end-beneficiaries but also the delivery agents. That requires a competitive development market place, with outcomes as products.
Maybe then the coffee will still be warm when we are done talking.
bishal_thapa@hotmail.com
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