aid

Why the private sector shouldn’t deliver aid

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Delivering development and humanitarian projects is a big business, and a very profitable one. DFID will spend well over a billion pounds through the private sector in 2013-14, about 11% of its budget. This blog argues that using the private sector to deliver aid exacerbates some of the worst aspects of the development sector, leading to short-term, unaccountable aid projects.

Private sector contractors are typically selected through an open tender; competitors bid to win a contract, demonstrating that they can deliver quality outputs at the lowest possible price. Motivated by profit and drawing upon private sector expertise, contractors could be more efficient than NGOs, more reliable than local partners, and cheaper than direct delivery by DFID. It’s a seductive logic, and something we’re all familiar with; I go to the burger joint down the road because it sells the tastiest burgers at the lowest price.

However, open tenders encourage the winners to deliver aid in the worst possible way. Businesses typically win contracts for five years or less, and so have an incentive to focus on the short term. Cynically put, their economic interest is served by perpetuating the situation which they benefit from, rather than building local capacity or handing over to local partners.

Moreover, the accountability of private sector contractors is exclusively to their funder. There is no incentive to involve local communities in their work, which slows programmes down and costs money. Effective monitoring and evaluation can be deprioritised; why spend money on something which might make you look bad?

Of course, you could level similar accusations against other methods of delivering aid. In particular, NGOs are also dependent on funders, and tender for bids. Perhaps NGOs have a moderate countervailing force; they’re generally set up with an explicit social rather than financial purpose, which can affect the incentives that the staff work under. At some level, most senior managers in NGOs are required to care about more than burn rates and deadlines. In private sector contractors, by contrast, directors are often not from the development sector, and will have no institutional incentive beyond profit (even if they do have individual beliefs or desires to help). (See the comments below for more discussion on this.)

A lot of the current problems in development and humanitarian work come from misaligned incentives. The people who deliver aid have little incentive to think about the long term, to listen to or involve the people who they are delivering aid to, or effectively monitor and evaluate programmes. The only way the sector will improve is if donors think harder about how to improve these incentives, perhaps through longer-term partnerships with organisations sharing the same aims. Spending more and more money through tenders to the private sector is a big step in the wrong direction.

Footnotes:

By ‘private sector contractors’ we mean operators that are primarily driven by a financial imperative. This doesn’t necessarily include all those working in the private sector – though if they’re not primarily driven by financial imperatives then I would view them more as NGOs.

This certainly isn’t an argument against engaging with the private sector. The private sector is a key source of income and employment, and a more functional private sector in developing countries (including increased access to multinational firms, I think) should be a key aim of development projects. That’s a very different case from saying that the private sector should be a significant deliverer of aid.

Finally, as you can probably tell, I am quite short of ideas for ways that donors and governments could genuinely align incentives so that deliverers of development aid are not encouraged to focus on short-term, unaccountable projects. Ideas welcome in comments!

Aid Workers and Risk – Part 1

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This is the first in a three part series on aid workers and risk. Follow us via email (click the link on the right) or twitter (@aid_leap) for the next installments. Part 2 is available here. Part 3 focuses on South Sudan and is available here.

Humanitarian aid work is a dangerous occupation: this is not news. Publications such as the yearly Aid Worker Security Report do much good to highlight some of the risks faced by aid workers. However, this blog argues both the nature and the risks faced by aid workers are misunderstood by many agencies and aid workers.

During a training  at a major INGO aimed at preparing aid workers for their first deployment, I was presented with versions of these two charts:

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I was told the first chart showed the risks to humanitarian aid workers had increased dramatically in the last decade, while the second showed which countries where the most dangerous for aid workers. Unfortunately, as we’ll show on this blog, neither of those conclusions can be made from the data presented in these charts.

Without knowing the number of total aid workers, data on aid worker victims (either by country or by year) doesn’t provide much information. The graphs above don’t tell us anything about risk because they don’t have any information about the number of aid workers: has the number of aid workers stayed constant during the last decade? Is the number of aid workers in Somalia and Syria the same? I think not.

In the UK, London has 8 times more people killed or seriously injured in traffic accidents than Cambridge. But it would be very wrong to conclude London is 8 times more dangerous than Cambridge. London has more traffic accidents than Cambridge because it has a great many more people and cars.  The same applies to aid worker victims. All other things being constant, one would expect twice the number of victims if one doubled the number of aid workers.

From XKCD.com

From XKCD.com

There is very little available data on the number of aid workers in different countries/years. Most aid workers know just how difficult it can be to count the people who benefit from aid interventions. I feel we should have an easier time counting the number of staff. Humanitarian Outcomes, who are responsible for the Aid Worker Security Database and many works on aid worker security, are working on a new database to fill the evidence gap on the number of aid workers.

With the 2013 Aid Worker Security Report about to be published, we are likely to see quite a bit of these graphs. I’d like for more people to understand what they mean – and what they do not mean. Hopefully this year we’ll see less articles drawing the wrong conclusions from the data. In particular, I’m hoping for less articles claiming ‘The data says X country is the most dangerous for aid workers!’

We know that the number of aid workers has increased over the last decade. Without taking variations in the number of aid workers into account, the Aid Worker Security Report doesn’t demonstrate an increase in risk. I know the authors understand this well: they presented great data on risk in their Providing Aid in Insecure Environments: 2009 update. While I recognise the lack of data is a problem, I feel this limitation should be noted in the report, for the benefit of those who will mistake absolute numbers for risks or rates.

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Definitions and further reading:

The misunderstanding is mostly due to a lack of understanding of the meaning of risk. There are many definitions of the word risk, but most of these relate to the probability of uncertain future events. Risk is a measure of probability. To understand risk, one has to understand probabilities. And therein lies the problem.

Aid workers should be interested in risks and rates (or relative risks and rate ratios, which are the comparisons of risks and rates respectively). Risk (also called absolute risk) is the probability that an event will occur. Whereas ‘rate’ is a measure of the frequency at which an event occurs.

Data for this blog was obtained from Humanitarian Outcomes (2013), Aid Worker Security Database, https://aidworkersecurity.org/, as well as from the Aid Worker Security Report 2013 Preview.

This link has a list reports drawing on data from the Aid Worker Security Database.

Prefer more academic papers? Death among humanitarian aid workers, while from 2000, is a good place to start. For a review of the literature over the last 5 years, you could try this paper.

Prefer reading blogs? You could try NGO Security.

Want more resources? Try some of these.

Is all of this too depressing? Comics about risk from xkcd here and here.