Posts Tagged ‘stability’

the politics of funding and the funding of politics

October 1, 2008

discussion on the politics of giving development aid, and receiving

key takeaways:

the aid business is an industry. complete value chain. lobbyists, consultants, bureaucrats, … and it will fight to maintain itself. expect more of the same.

agricultural subsidies in japan, eu, us works in the same way with over representation in political systems. think US senate.

many donors do not want the bottom line. look what they look for. a photo with a celeb, a dinner with hi-society?.

who are NGO accountable to. usually people on the outside. this will effect how an NGO function

i am left with what i came in with. common business ideas are not present:

  • bottom up over top down. ‘start with the customer’.
  • effectiveness, % overhead, ‘lean and mean’.
  • agree on what you measure, and ‘measure and analyze’.
  • accountability. ‘who is in charge’.

what is very present

politics and ‘holding on’. stability even in really bad governments. maintain the current.

e.g. aid in africa during cold war. anything so that it does not become communist


  • increase transparency, despite resistance. measurements and results have attribution issues which can hurt colloboration
  • china and its aid policy based on concessionary loans competing for natural resources especially in africa. like american aid in the 50s. big projects. big companies. CNOOC Chinese off shore petrol company.  see a paper ‘the side principle’

interesting organizations:

  • DAC- third party for measurements. chaina is not a member of dac. promoting transparency
  • MCC US common entity for foreign aid

look kaplan at harvard, linda bilmes, balanced scorecard for NGOs.

mckinsey nonprofit. paper on motivation of donors. similar to cars. it is not fuel effeciency per $


theory is that there are 7 deadly sins in the structure of develpoment aid

  1. impatience (with institution building)
  2. envy (collusion and coordination failure)
  3. ignorance (failure to evaluate)
  4. Pride (failure to exit [sunk cost, with notification])
  5. Sloth (pretending participation is sufficient for ownership)
  6. Greed (unreliable as well as stingy transfers)
  7. Foolishness (underfunding of global and regional public goods)


opposition party was spending more time with ‘donor’ community, then with own constituents. the ‘stage’ was not internal politics

registration was very low. reflection? little hope?

is aid effective? not really, but can manipulate the little data that exists

why is there not more effect?

game theory:

someone in the host country wants aid. sets political system to get it (guess what, and maintain it)

there are providing organizations, and different implementation organizations (ofter, foreign) with local implementation partners, finally recepients

who do you think aid is helping?

so lack of accountability, measure and monitor, and reporting. a very broken and corrupt system. and breakdown in motivations along the way. very relevant construct to VCs.

in ‘donor’ countries, ‘how many votes will i be getting for doing this?’ vs agricultural subsidies

if the above is a vertical model, you can expand it horizontally along the country axis. there are horizontal politics as well.

motivation and politics of certain ‘donor’ aid programs are complex. e.g. food aid, reduce excess capacity, raise prices for farmers.

woody allen jokes from ‘annie hall’ which are apropo

about giving foreign aid:
Alvy Singer: [addressing the camera] There’s an old joke – um… two elderly women are at a Catskill mountain resort, and one of ’em says, “Boy, the food at this place is really terrible.” The other one says, “Yeah, I know; and such small portions.”

about getting it:

person: doctor, my brother thinks he is a chicken

doctor: bring him in

person: oh, no, we need the eggs