Monday, January 28, 2008

Sustainable Development for dummies (Part 3 – The way forward)

This is the third of 3 blog posts in which I try to explain very briefly my view of what “Sustainable Development” is, based on my experiences in Rwanda.

In my last post, I concluded:

Development Aid is sustainable when it leaves behind an independent and exponentially growing sector, that continues to grow and respond to future environmental, social and economic challenges.

So how do we create such independent exponential growth? Experience in creating sectors in Europe and Africa have shown that to “jump-start” a sector from the outside, you need to work through 3 development stages:

To illustrate this development, you could look at the development of the German solar energy market from the 1990s up until now. This market started with a small demonstration programme called “100 roofs”, then it the government introduced an even larger “1000 roofs” programme and finally the government introduced a law guaranteeing a fixed price for solar electricity to private and public operators. The solar electricity market took off and is now one of the largest solar energy markets in the world.

This model shows a logical progression, in which each stage prepares for the next one: Pilot projects in phase 1 test technologies and methods that could be used in a larger national programme in phase 2; Larger national programmes in phase 2 sensitise the population and create independent organisations, institutions and companies for phase 3. Finally, the independent sector development on a national level in phase 3 can create the exponential growth required for sustainable development.

A poorly designed development aid project would be one that counter-acts this development. For example, if a country has a growing private textiles industry (phase 3) and a donor brings in free clothes to distribute to the poor (phase 1), then this will damage or even destroy the local clothes and textiles businesses.

Sustainable development is hard to achieve. It is unclear whether such a complicated issue is within the abilities of a large, bureaucratic, inflexible and uncoordinated donor industry. Time will tell: If in the next 50 years we achieve as little development in Africa as we have in the last 50, we will once again have failed.

Tuesday, January 15, 2008

Sustainable Development for dummies (Part 2 – Market Cycles)

This is the second of 3 blog posts in which I try to explain very briefly my view of what “Sustainable Development” is, based on my experiences in Rwanda.

Whether it is the government, aid agencies or NGOs attempting to develop a country, the final aim is the same: to give an impulse to the development of independent sectors. Energy specialists try to create entire energy sectors, health specialists attempt to create a national health sector, economic development specialists try to create a whole range of vital economic sectors. The development of a new sector generally follows the following 4-stage profile (adapted from a product life cycle):

I. Sector introduction stage

  • demand has to be created
  • cost high
  • volume low
  • no/little competition

II. Growth stage

  • economies of scale
  • volume increases significantly
  • public awareness
  • competition begins to increase

III. Mature stage

  • market is better established
  • volume peaks
  • increase in competitive offerings
  • prices tend to drop
  • differentiation, diversification of product or service.

IV. Decline, Stability or new growth stage

  • volume stabilises leading to a focus on efficiency rather than growth
  • volume declines e.g. if a replacement product/service is introduced
  • new growth stage can be triggered if changes in the market or the product create new demand

Development aid simply doesn’t have the resources or the mandate to guide the entire product cycle. For example, how can development aid hope to supply electricity to hundreds of millions of people in Africa?

The aim of development aid is to guide a sector through stage I so that the market and the government can take over an exponentially growing sector.

This is a key point in understanding the role of development aid. Understanding this principle, also allows us to better assess the sustainability of a development aid intervention. If indeed we are successfully guiding a sector through stage I of its development, we would expect to see:

  • Exponential growth
  • The creation of new independent market actors and institutions

Our new definition of sustainable development aid would then be:

Development Aid is sustainable when it leaves behind an independent and exponentially growing sector that is able to respond to future environmental, social and economic challenges.

This is an ambitious aim. And I would guess that less then 10% of development aid projects succeed in fulfilling this aim. Leaving behind a sector independent enough to continue the work after the end of your project is not easy.

Tuesday, January 01, 2008

Sustainable Development for dummies (Part 1 – Dynamic societies)

,This is the first of 3 blog posts in which I will try to explain very briefly my view of what “Sustainable Development” is, based on my experiences in Rwanda.

The buzzword of the decade is “Sustainable Development”: development that is environmentally socially and economically sustainable. The days of environmental exploitation, rollercoaster-capitalism and social exclusion need to end if we are to survive. We need to protect the environment, manage our economies better and help the poor.

What does sustainability mean for development aid projects? The answer of many of my colleagues in development would be something like this:

Development Aid is sustainable when the results achieved remain indefinitely, without destroying the environment, becoming unprofitable or causing social problems.

Sounds reasonable. If for example, we train 10 fishermen to fish better, those 10 fishermen continue to fish better after the training project has ended. Ideally, the fishermen pass on the better fishing methods to their children. And also, to ensure that their lake is not over-fished, they create a cooperative to manage fishing rights.

Unfortunately, things are not that simple in reality. The sustainability of the project will be threatened by three types of challenges:
  • Maintenance: people will need to be retrained, cooperatives need to be revitalised and new fishing equipment needs to be maintained. An intelligently planned project can generally reduce this problem.
  • Changes in the market: If the regional fish price collapses, if fishes migrate or people start eating less fish, the fishermen will have to respond to the changed situation. For many, this will mean finding a new occupation. Whilst the project might teach people to fish better, it doesn’t necessarily teach people how to look for vocational training by themselves.
  • Population and demand growth: As the population and the economy grows, so will the needs of the people. People will need to further improve the efficiency of their fishing methods. But people will also need to find other occupations and create new industries. Basically, we don’t need to train fishermen, but micro-businessmen who will fish whilst it is profitable, and who will constantly look for new and better opportunities.
Basically, the problem is one of a constantly changing, dynamic and independent society. People will only succeed if they don’t need help from the outside to respond to such developments. There needs to be constant innovation, improvements, entrepreneurship and development for any improvement to be sustainable.

Our re-definition of sustainability could look something like this:

Development aid is sustainable when it leaves behind an independently functioning society and economy is able to develop and respond to future environmental, social and economic challenges.