Posts Tagged "risk"

Verifying micro-actions – how precise do we need to be?

Posted by on Nov 13, 2012

When I am in an area of relative poverty compared to my home country, I am sometimes aware that I am paying over the local market price or being in some way ‘fiddled’. I have a souvenir from Koi Chang hanging in my kitchen that reminds me how well a beach trader ran rings round this MBA.  I liked his product better than the one I had bought only minutes earlier and wanted to swap. I ended up giving him my first purchase and some money in exchange for one of his products. He walked down the beach  with exactly the same number of items to sell and some spare cash. I was embarrassed by his superior skills and mocked by my wife. But  the relative value of my drop in holiday pocket money  was dwarfed by  his increased earnings for the day in real terms. My money was entering the local economy and probably more useful there in than back in the UK. In the development sector, we are very sensitive about corruption and the need to verify that our aid has gone to the right people and been spent on the  specified inputs. If the UK government, for example, are to persuade the media to let them...

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Where’s the money going?

Posted by on Oct 12, 2012

One estimate has two cents in every aid dollar reaching the beneficiary (source: Jeffrey Sachs). Project and administration costs can strip off 10-20% each time a layer is introduced, e.g. the UK DFID contract a fund manager who contracts a UK-based INGO who contracts an in-country programme office who in turn contracts local partners. Fiduciary risk is high, with capacity problems in-country stalling project start-up and rollout, funds being misdirected or misappropriated and items being damaged before reaching the beneficiary. Many of the micro-actions amenable to promotion via mobile phones require no intermediary at all except to produce the media that stimulates reaction and monitor and track performance. Experience to date has shown that partnerships are sometimes needed, for example in providing eye tests or glasses. Recruiting young people to try new products will also require partnership with supply and logistic agents. With all these considerations, the micro-action model still seems to greatly reduce the cost and complexity of intermediaries compared to many other attempted...

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