A new model for development aid in Africa and it works
Monday, October 5th, 2009
There must be a better way.
A brief conversation with Philip Berber of A Glimmer of Hope and one of the stars honored at this year’s Clinton Global Initiative.
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Governments from around the world and bi-laterals such as the World Bank have poured $568 billion into Africa in the past 42 years through a plethora of aid agencies. Meanwhile, the standard of living across the continent has steadily declined since the 1960’s. The impact of aid projects managed by these agencies has not been measured, preventing them from identifying best practices. Consequently programs that do not work are often repeated.
The opacity surrounding where the aid money goes is astounding; accountability and transparency do not come naturally to the elite in the Aid Industry, they generally live in fear of oversight by Congress or the local equivalent. Simply put, big aid is perhaps the most inefficient ‘business’ on the planet.
There has to be a better way. So contrast the old way with the methods deployed by Glimmer of Hope which will have invested $35 million in over 4,000 projects between 2001 through 2009. Their field is Water and Sanitation, Health, Education, Veterinary Service and Micro loans in Ethiopia. All delivered by Philip Berber’s ‘better way’ clearly articulated in this video:
International Aid: A better way
However efficient - and 100% of donated funds reach the aid recipients - this amount would appear to be a mere pilot program within the Aid Industry, the so called ‘Lords of Poverty’ - the title of a book that had a profound impact on Philip Berber, the organization’s Chairman back in the early 90’s.
The Lords of Poverty: The Power, Prestige, and Corruption of the International Aid Business was a bestseller that earned the 1990 H.L. Mencken Award honorable mention for an outstanding book of journalism. In the book Hancock investigates why huge aid projects often fail and demands a response from those in the industry.
More recently the theme has been up dated and with far less of a rant by William Easterly in The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good and less well in Dead Aid by Dambisa Moyo, a book which Philip Berber regards as just a re-hash of ideas in The Lords of Poverty.
As controversial as these books may be, they point to decades of arrogant leaders and front line workers in the ‘development aid business’. Their good intentions but patronizing approach to the aid for which they are responsible have demonstrated a singular inability to come up with a business model that works.
Just how inefficient is the Development Aid model?
During the Bush administration $80 million was appropriated for Malaria reduction in Africa, but less than 10% of the budget reached the intended beneficiaries. This information was not volunteered, The World Bank and USAID don’t ‘do’ transparency, it had to be dragged out of them.
Oversight chairman Senator Dr. Coburn wrote to Paul Wolfowitz at the World Bank, requesting reform & accountability of the controversial malaria initiatives. To read the letter, please click here.
To read the response from the World Bank, please click here.
The World Bank had faced scathing critiques in 2006 in a few key areas: the Bank’s reliance on ineffective drugs to treat malaria; the Bank’s failure to make use of effective mosquito control techniques to prevent infection; and, finally, the financial disarray of the Bank’s malaria program – both in accounting for how funds are spent, and for not keeping its promises about the amount of funding to have been directed to malaria in past years. For more background and news coverage of accusations of medical malpractice and financial mismanagement in global malaria control, please click here.
To hammer home the point, here are some excerpts from:
The Trouble with USAID By Roger Bate writing in American Interest
“The most important U.S. aid vehicle, the United States Agency for International Development (USAID), has failed disastrously in its mission.
· Data from USAID’s Buy American Report, the best available assessment, indicates that over the last decade between 70 and 80 percent of funding appropriations were directed to U.S. sources. In gross terms…foreign aid sustained 200,000 U.S. domestic jobs.
· Former USAID Administrator Brian Atwood stated, “Foreign assistance is far from charity. It is an investment in American jobs, American business.”
· Despite the Agency’s claims that it takes a “comprehensive approach”, it spent less than 10 percent of its $80 million malaria budget for 2004 on purchasing these interventions (most on only one intervention–bed nets).
· So what of the other 90 percent? Some sleuthing reveals that about $10.5 million is dedicated to researching and testing a malaria vaccine, and the rest is spent on “capacity building”, “technical assistance” and “strengthening” or “supporting” government health ministries in malaria-affected countries.
· USAID does not disclose any details as to what these categories actually mean, but as Agency malaria staffers explained to me, many involve U.S. consultants giving advice to government ministries. For example, the consultancy Management Sciences for Health (MSH) received $64.3 million from USAID in 2003 (the last year for which figures are available) for dispensing such advice. MSH is active on many malaria projects, and its 2003 IRS Form 990 illustrates how USAID malaria funds are typically spent: Between 52 and 70 percent of MSH’s program expenses are dedicated to compensation and travel. That amount is separate from what MSH designates as overhead.”
Compare this sad, disgraceful story of less that 10% of the taxpayers money eventually reaching malaria sufferers in Africa with this video: A New Approach to International Aid in which Donna and Philip Berber describe their 100% promise and why they decided to launch A Glimmer of Hope.
With the organization covering all overhead cost, the 100% promise means that the Berber’s $35 million of impact investing is at the very least 4 ½ times more efficient than the $80 million malaria program administered – one should say totally mismanaged – by USAID.
Speaking on the phone with Philip Berber recently, he stressed the importance of economics and designing the right - and airtight - channels of distribution. Without carefully designing the entire channel of distribution, flawed, leaky and failed models will be the inevitable result.
So who is Philip Berber?
And how did he come to create and design what the former US ambassador to Ethiopia Tibor Nagy boldly declares to be “the silver bullet for Africa” after closely examining A Glimmer of Hope’s highly integrated model in operation on the ground.
According to the Austin American Statesman: “Philip and Donna Berber met in a London disco in 1982. Philip was from Dublin. Donna was from London. They married in June 1985.
The following month, Donna and Philip went to the Live Aid concert at London’s Wembley Stadium, which raised money for famine relief in Ethiopia.”
So it may have been while watching David Dimbleby the presenter of Panorama, the longest-running current affairs documentary series in the world, or it may have been a 1984 BBC report by Michael Buerk highlighting the famine that had hit the people of Ethiopia that formed the early seeds of Philip and Donna Berber’s epiphany.
What we know for certain is that the young couple was in the crowd of 82,000 on July 13, 1985 for the Live Aid rock music concert at Wembley Stadium, London. The event organized by Bob Geldof to raise funds for famine relief in Ethiopia, was billed as the ‘global jukebox’, with the event taking place simultaneously in JFK Stadium, in Philadelphia attended by a further 99,000 people. Other concerts inspired by the initiative happened in other countries, such as Australia and Germany. It was one of the largest-scale satellite link-ups and television broadcasts of all time: an estimated 400 million viewers, across 60 countries, watched the live broadcast.
Moving from his native Dublin to London in 1979 Philip Berber worked in marketing before founding his first start-up in 1988 called Financia. The company provided advanced financial market analysis and predictive technologies. Then in 1991, the Houston-based financial markets predictive technology company, Frontier Financial, bought Financia and as part of the arrangement the family agreed to transfer to Houston.
In 1995, they moved to Austin where Philip started CyBerCorp, an online trading company.
In 2000, the Berbers sold CyBerCorp to Charles Schwab Corp. for $488 million.
The couple pledged to put $100 million of Schwab stock in an endowment for international charity work. Selling at the top of the market with restrictions on the timing of selling the plummeting Schwab stock clearly affected the size of the new endowment. Today, the endowment is worth over $60 million.
On the phone Philip allowed that he was still skeptical about the new social enterprise and was not fully won over until he saw video of Donna handing out bread in Addis Ababa. In this video: Why Ethiopia? Philip explains that his real epiphany did not blossom until his first trip to the country with Donna at which point he dropped his commercial activities to devote himself full time to the organization.
We discussed the role of a number of celebrities and their endorsements of African causes. The good ones are deeply involved, travel to Africa to see how they can be of genuine help. He quotes Bono as using his celebrity as ‘currency’ and he invests that intangible into an array of tangible goods. Another is Matt Damon, he and Donna helped finance Matt’s movie Running the Sahara.
As Jakuko, the Finnish jogger and blogger put it:
“Running The Sahara movie It took me this long to get a Running The Sahara DVD, but it was worth the wait! Great desert, great issues, great movie!
Three dudes running across the desert 50 miles a day would be interesting enough for me in itself, but there’s the added weight of the water. The sad fact is that a child (under five years old) somewhere dies every 15 seconds because lack of clean water. That means during this 3-minute trailer alone another dozen kids bite the dust.
So let’s watch this movie and then make our move, right? Check out h2oafrica.org website for more information.”
Philip’s views on scalability: humanitarian aid in the form of clean water, sanitation and schools takes a great deal of time to coordinate with local government and other critical partners. Philip Berber’s business model is scalable at the pace he has set for A Glimmer of Hope. Far more scalable, however, is the organization’s entry into Micro Lending. By careful selection of the best three or four micro lending banks operating in Ethiopia the Berbers can scale faster because they do not need to recreate the infrastructure their partners already have in place.
Philip is less sanguine about the scalability of Jeffrey Sachs’ initiative Millennium Villages - The Earth Institute, Columbia University. The program is well funded but the business model is ‘flawed’. A passionately driven social entrepreneur might be a more appropriate leader for such an ambitious project; an academic economist is unlikely to meet his targets. Philip visited one of these villages in Ethiopia to find the water well needed urgent repair and promptly offered his crew to fix it. The offer was declined in what sounded like an acute attack of NGO-itis; we will do it our way, thank you.
How Philip uses leverage: The organization’s overhead is currently running at about $2 million a year. But the effectiveness of the business model has attracted an important group of partners, including the Michael & Susan Dell Foundation, charity: water, H2O Africa and Whole Planet (Whole Foods) all have chosen A Glimmer of Hope to be their implementing partner for major initiatives in Ethiopia.
With substantially more money coming in than their modest overhead, there can be no question that this passionate, energetic Irish/British/America duo of social entrepreneurs has achieved the goal of true sustainability and the glimmer grows brighter with every project they complete.
The hope is that the World Bank, USAID and their brethren take note.
Mission and project data:
Offering hope and help, with dignity, to those who suffer unnecessarily from the injustice of poverty
8 years • 2,954 water projects • 308 education projects • 157 health projects
46 Veterinary projects • 33 Micro-irrigation projects • 4,000+ microcredit loans
Over 2 million people served through Integrated Rural Development
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