Sunday , 20 April 2014
Latest Articles
You are here: Home > Intl Community > Effectiveness of Aid: How to improve it with diminishing resources?

Effectiveness of Aid: How to improve it with diminishing resources?

There is an international concern, especially from developed countries, about the efficiency and effectiveness of development aid. These concerns continue increasing, even more after the economic downturn of the last couple of years.  Member States and Donors have been paying more attention to their aid budget, asking for more accountability and proof of impact to the sponsor Intergovernmental (IGOs) and Non-Governmental Organizations (NGOs).

The current scenario is something relatively new for IGOs and NGOs.  Since the early 1980s, the budget allocated for these organizations increased exponentially, continuing at the same rate for nearly 30 years. There were few requirements about the quality of the services provided and evaluation of the projects implemented. Now the picture is completely different. Just this week, the US congress cut $8 billion of international aid assistance. IGOs and NGOs have a new (and enormous) challenge:  How to make their systems more efficient and effective with fewer resources?

To have a better idea of the current situation and as a preamble of the Fourth High-Level Forum on Aid Effectiveness held at the beginning of this month, Devex partnered with McKinsey & Co. and conducted a survey to find out how professionals in the development community view the effectiveness of the development sector. Only 36% of participants agreed that most aid projects achieve their intended purpose. Also, more than 50% of participants think that overhead costs and inefficient contracting and procurement processes contribute to at least 10% of the leakage in the international aid system.  A vast majority of the participants agreed that to improve the efficiency and effectiveness of these organizations, a system-wide reform is required. This survey showed the need for different operational approaches and methodologies for IGOs and NGOs.

How can IGOs and NGOs allocate the limited resources available to projects that actually help people escape poverty? How can they implement quicker and cheaper solutions? How can they discover innovative ways to finance those initiatives?

Perhaps NGOs and IGOs should start looking for what other sectors, private and public, have been using to increase their effectiveness. This is not the time to reinvent the wheel; it’s time to apply methodologies that have been proven to work.

For example, one methodology that has been used for the last twenty years in the private and lately, in the public sector is Lean Six Sigma. By the late 1990s more than two-thirds of the Fortune 500 companies had begun using Lean Six Sigma to reduce cost and increase the quality of their products and their services. In almost every industry and public sector these methodologies have served as a promoter for system-wide reforms.

What is Lean Six Sigma?

Lean Six Sigma is a powerful proven method that combines Lean and Six Sigma methodologies. It always focuses on the customer. The Lean approach is based on reducing cost through process optimization. It has helped companies reduce their cycle times and remove non-valued added activities resulting in cost reductions. Six Sigma, a more data oriented approach, focuses on removing unwanted variation in the final product (or service). Even though Lean Six Sigma has traditionally been used for operational improvement, prominent companies have demonstrated its potential for other types of applications.

For NGOs and IGOs, Lean Six Sigma can enable better results with the current resources available by eliminating inefficiencies (and improving the effectiveness) and building a more modernized mobilization capability. To implement this system, it’s important to have everybody associated–from the head of the agency to the workers in the field constructing water pipes– involved in the process.  Most importantly, the voice of their “customers”, the people that will benefit from these projects, must be heard and taken into consideration. In terms of budget, the benefits from going through this process should equate to between 20% and 40% increase in donor’s contributions. This process will also help identify projects that are most valuable and needed… The customer (people) is ALWAYS the priority.

By improving the effectiveness of aid, we will also improve the lives of millions of people in a sustainable way.  Surely, there are more of “out of the box” ideas that can be applied too.

What do you think? Do you have any ideas?

Written by Guest Writer Tamary Diaz-Otero. Tamary is a Puerto Rican engineer with interest in international development and world economics. She has a Master in Industrial Management and a Master in International Relations. Tamary is currently living in Puerto Rico.

8 comments

  1. The solution is in the hands of the people. The problem is this. The amount of food is diminishing. So how have we been reacting? Try to make more money to buy more food. This doesn’t make any sense. What DOES make sense is to make more food. We have been conditioned to believe our governments are in place to help feed, clothe, and house our people. Nothing could be further from the truth. Governments are organizations which are in place to control people, and force them to produce wealth for the wealthy. Lets take a look at this for a moment. What do most companies actually make or produce? Garbage. Junk. Toys. And for what? The generation of revenue. Where does this money go? iDON’T have it. It goes to the wealthy. If the problem is not enough FOOD then make more FOOD! Did you know it has become illegal for most farmers to produce reproductive seed bearing food? This is so they have to participate in the money system to operate their farms instead of distributing the food freely and directly to the local people. They have to buy seeds which cannot be grow without the use of chemicals. Eventually, the farmers cannot afford to operate their busineses, and are forced to sell their lands due to rising food production COSTS. Who sets the price of these costs? Chemical companies. Who owns these companies? Wealthy stockholders. Who allows these price increases? Our governments. So who are the farmers selling there lands to? The highest bidders. Who are the highest bidders? Other farmers? No. Land “developers”. What are these developers building? Industrial parks. Expensive housing. Factories to produce more GARBAGE, JUNK, AND TOYS!!! Who buys this garbage? The people. WE ARE CAUSING THIS FOOD PRODUCTION AND SUPPLY PROBLEM UNDER THE WATCHFUL EYES AND APPROVAL OF OUR GOVERNMENTS!!! IT IS THEIR JOB TO KEEP US ASLEEP TO THESE FACTS!!! Stop trying to make money. We can’t eat it. Start making food. “I can’t make food” BULLSHIT!!! PARTICIPATE IN A LOCAL COMMUNITY GARDENING PROJECT!!! Or better yet, start one! “I don’t have any money to start one.” BULLSHIT!!! Weren’t you the one I overheard at Starbuck’s bragging to your neighbor about the home renovation or vacation you’re planning this summer? I’m certainly guilty of it, I’m trying to plan for trip to Rome, and NYC this year. I’m suddenly rethinking my plans as I write this… I’m no longer going to say “Something needs to be done.” I’m changing that to “I’m DOING SOMETHING ABOUT IT!!!” Catch me at a local community garden this Spring, Summer, and Autumn. Hope to see you all there. Maybe we’ll grow some peppers together and I’ll make us a nice little stirfry. Free of charge.

  2. The photo above shows a substancial plot of land which could potentially produce food but cances are the local government won’t allow it. However, if a land developer wanted to purchase the land for a condo complex, factory, or office building, those people would be evicted in a heartbeat. Question: In your area, where are the most expenesive homes located? Probably on the riverfront. Another question: where are the most fertal soils found in nature? Along the river. So who put those homes there? Land developers and the wealthy.

    • Tamary Diaz Otero

      Thanks for your comments Kevin. I understand your concern, but the point of this article is not criticizes what IGOs/NGOs are currently doing. The intention is to start a constructive discussion about what things can be done, especially about the functioning of these organizations, to improve the effectiveness of the services provided.

      • I must offer apology for the content of my initial reaction to your article, and I admit my reply was emotionally driven and largely ill informed. I have had some time to review your article, and I am still a lay person when it comes to the ideas mentioned, but it sounds like these kinds of programs and technologies are designed to streamline the aid process by simplification of policy and procedure. If this is correct, then I would definitely support a program as long as it only involves the immediate removal of unnecessary componants involved in the delivery of aid to reduce costs and increase the actual aid which is delivered. So often do we here about tons of aid that sit unused and undelivered on airport tarmacs because of unnecessary red tape AND no scissors to cut through! I still maintain that government involvment is one of the things that should be reduced in the process of aid receipt. We should all be willing to demand 100% accountability from our governments to ensure the aid is delivered into the hands pf the ones who need it the most, as quickly and efficiently as possible!

  3. I believe Lean has great potential to improve efficiency and equitability of development aid. Lean is intrinsically demand-driven. At the core of lean lies a customer/beneficiary focused bottom up approach to process innovation, which empowers people at the basis. Moreover, the transfer knowledge taking place in lean interventions contributes to the sustainability of change and the introduction of a culture of continuous improvement.
    My career in international relations made me aware of the potential and the need to enhance the impact of development aid. My studies in development studies and an MBA brought me on the path of lean seven years ago. Since then I have discussed the application of lean with numerous development practitioners. Though I was able to arouse some interest, RBM and LogFrame were still very much top of mind. Maybe now, with non-profit organisations across the world venturing on the path of lean, the time is ripe to give lean a try in development aid.
    Herald Voorneveld, the Netherlands

  4. Dear Tamary, thank you for your provocative article. I fully agree with you. I work for World Vision, and in East Africa we are implementing Lean and Six Sigma process improvements to reduce waste and variation in our processes. While we are still in the beginning stages,we are already seeing sigificant reductions in process span time (40-80%) in some of our key processes (recruiting and procurement). WV Staff are catching on and making these changes, and they are having an impact.

    Andrew Parris, Ph.D., World Vision East Africa Regional Office in Nairobi, Kenya
    P.S. Anyone working on Lean and Six Sigma in NGOs, please contact me at Andrew_Parris at wvi.org

  5. Large NGOs often have complex systems & processes which limit their effectiveness, delivery & transformative capacity of aid they administer. Lean Sigma (DMAIC) combines Lean & 6 Sigma methodologies. It is a framework for defining, measuring, analysing, improving and control processes. Improvement practitioners can use these tools to proactively solve problems & improve NGO processes within sponsored projects. These sponsored projects are delivered through an infrastructure of black belts, green belts and yellow belts. Lean/Sigma creates processes which reduce waste, add value, flow, capable, stable, and available & flexibility.
    Lean Six Sigma fundamentally changes an organization to a new culture that seeks to achieve process excellence. As Andrew has rightly pointed out, with Lean/Sigma, NGOs can do more to transform lives with fewer resources through creating excellent processes which are appropriate, effective, efficient, empowering and continuously improving. I have given these processes an acronym AEEEC processes. They provide two verbs and three adjectives that describe the story about non-profit and NGOs which is a story.
    Embarking on any continuous improvement path is like undertaking a journey where one does not know the exact destination called improved state. Lean six sigma is one of the preferred vehicles to take you there because of its DMAIC pathway.

  6. Dear Takudzwa, it’s great how we see things so much the same. As you, I earnestly desire to see more NGOs follow the path to excellence that Lean and Six Sigma offer. There’s such a HUGE opportunity (need) for it, and the impact can be so beneficial – not more profits, but more lives saved and more children and families living fuller lives. In World Vision we have also found that improving processes makes work not just more productive, but also more enjoyable to our staff! I developed a vision for Process Excellence back in 2010 that has the same five elements as you’ve identified. That means we must both be onto something. ;)

    Here’s the link to my summary of Process Excellence: https://dl.dropbox.com/u/105229807/WV%20Process%20Excellence.One%20Page%20Summary.2010-08-09.pdf

    Looking forward to continuing the conversation…

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Scroll To Top