A systems perspective to supply chain development

In classic economic theory, making products cheaper by reducing the cost of goods (COGS) can mean removing the intermediaries in the supply chain where margin might be absorbed. This means system actors, such as agents, middlemen/women, traders, small retailers (kiosks) are vulnerable to the disintermediation. However, in low-income countries, this has a system wide effect: this will limit the supply of goods and services to marginalized populations, such as smallholder farmers or the urban poor and this will reduce employment and revenue generation by cutting the poor out of the system. Moreover, in times of desperation, this will naturally create conflict and instability that will have even more far-reaching effects beyond the original supply chain.

Things to remember:

• For real wide-scale change, take a step back and think more systemically and less narrowly and think about the wider impact of any intervention in business operations, pricing and COGS. 
• Rather than a focus on cost, price and money, consider gains that bring about long-term growth, such as quality, value and service-driven loyalty
• Yes, eliminating supply chain actors may reduce the cost of goods along the way, but there is no guarantee that this will be passed on to the customer.  
• Intermediaries are the backbone of a system and agents, traders, kiosks are ever present in a market - work through them rather than against them or by sidelining them
• Look at where the incentives lie. For a supplier, that wants to shed certain costs, who might be willing to take them on? Who might benefit? Who might see the value in managing this transaction directly? This is essentially the origination of outsourcing.
• Consider how the market could function better. As a supplier, you may be incurring a huge cost getting products to the consumer. However, if a retailer can offer a better coordination function, then it would make more sense to switch to wholesale operations. Many retailers in developing countries do this albeit with  need for capacity building around effective management. 

RCTs in poverty reduction and development: why are some practitioners abandoning RCTs?

This blogpost about ethics in international development is about a randomised control trial (RCT) in Kenya. In the experiment, some households in Kenya were given unconditional cash transfers of either USD 404 or USD 1525. The researchers found, unsurprisingly, that the lucky ones were happier and that their unlucky neighbours were unhappy. The paper is aptly titled “Your Gain is my Pain”.

Most importantly, however, the blogger reflects on why this type of research is done at all: "Am I the only one to think that is not ethical dishing out large sums of money in small communities and observing how jealous and unhappy this makes the unlucky members of these tight knit communities?" 

For myself, as a development practitioner with a systems thinking perspective, RCTs can come across as having very limited usefulness and application. They can also be quite machine-based: they either choose to wilfully ignore human behaviour or they simply limit their interactions with other disciplines (psychology, sociology, anthropology) so that they can create more simple hypotheses. Thus, it is felt that the applicability of an RCT for complex problems (such as systemic poverty) is limited.

The RCT we have seen from Kenya seems to fall into that trap too. This RCT seems to need to test the notion that poor people in Kenya might not exhibit the same reactions and behaviours as other people. As if the nature of the human condition (in Africa) is under exploration. To me, this is strange and feels like the original hypotheses might have been drastically distilled and reduced down to overly simplified thoughts.

I wonder how the findings would actually be useful to policy and projects. Who might need proofs from an RCT that Kenyans are like any other human being? How could such research be useful for development planning at an economic or social level? Why is the notion that proving that desperation, jealously and unhappiness occurs among very poor people is valuable? I would also wonder what long-lasting impact this type of research would have on social relationships in the communities in the future.

Globally, there is a large community of development practitioner who feel that RCTs in poverty interventions are not ethical and not useful. From my conversations with them, they make the following points:

1. In many RCTs, an assumption is made that the the groups will not be communicating with each other. However, it is actually very difficult to have demarcated and clear boundaries for the treatment groups to be adequately isolated. People talk. Information can flow through multiple channels and through multiple mechanisms (face-to-face, mobile phone, internet, etc) across groups, geographies, social hierarchies, institutions, etc. 
2. In RCTs, people might be very desperate because of the psychological and social impact of poverty and crisis. In this case all the RCT does is exacerbate that desperation and exacerbate those behaviours that present themselves when people are in desperate situations. The results are therefore naturally biased and skewed and outlying when compared to any group at any point in time. This is not adequately recognised in RCTs and thus not at all reflected when RCTs attempt to influence policy and project applications.
3. Over time, the RCT can have a lasting negative impact. Those RCTs which test the type of reactions as the one featured here in Kenya - jealousy and unhappiness - can damage social relationships between individuals and groups even after the trial has ended. Real people are not as adept to switching off their pain and trauma (and any additional feelings of betrayal, anger, envy, frustration, etc.) as machines might be able to! 

What does a market system specialist like me do?

Economic Development

• Develop retail networks in developing countries to get products and services in the hands of low-income marginalised consumers
• Help aid programmes do more systemic social welfare through systemic safety net programmes
• Improve the enabling environment for MSMEs and the informal sector  

Social Business and CSR

• Look at supply chain interventions that go beyond the value chain approach and take more of a systemic perspective that actually deliver benefits to poor farmers 
• Identify different areas where CSR can be better programmed by way of a market systems approach
• Integrate the private sector into market systems approaches that have historically focused on socialist mechanisms (large State, community associations, NGOs)
• Work with system actors to identify areas where market systems development will make a difference

Behaviour Change

• Train practitioners on behaviour change and behaviour change methodologies to help projects deliver systemic solutions 
• Design behaviour change tools to improve the adoption and commitment of poor people to long terms savings and investments practices

Article - In health, let countries run their own programmes and take a systems perspective

A nice blog on lessons learnt in global health. Advice? Let poor countries run their own programmes and take a systems perspective ...

This blog was originally published here on the Guardian website.

Lessons in global health: let poor countries run their own programmes

In 2008, Square Mkwanda found himself in a quandary: international pharmaceutical companies had just donated millions of dollars worth of drugs to treat Neglected Tropical Diseases (NTDs) in his native Malawi but the civil servant had no money to distribute them and they were stockpiling in the ministry of health’s warehouses. “I thought, what am I going to tell pharmaceutical companies? That I let billions of kwachas’ [Malawi’s currency] worth of drugs expire because we couldn’t spend just a few millions to distribute them?”

So he talked to his minister of health and they managed to free up enough funds to distribute the drugs in eight districts. By 2009, the distribution programme had reached all 26 districts and was entirely funded by Malawi. Seven years on, Mkwanda, who is the lymphatic filariasis (LF) and NTD coordinator at Malawi’s ministry of health, proudly announced that Malawi has interrupted transmission of LF (pdf), the second country in Africa to do so.

Putting neglected tropical diseases under spotlight

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Leadership like that demonstrated by Malawi was one of the key themes in thethird progress report of the London declaration on NTDs, produced by the consortium Uniting to Combat NTDs and released at the end of June. The report said: “Endemic countries are demonstrating strong ownership and leadership, in variable financial, political and environmental circumstances, to ensure their NTD programs are successful in meeting 2020 targets. Countries are achieving elimination goals, more people are being reached, and the drug donation program for NTDs, the largest public health drug donation program in the world, continues to grow.”

In the wake of the Ebola crisis and in preparation for the sustainable development goals, these success stories are important best practice examples for the global health community as it rethinks how to effectively deliver sustainable programmes. Recognising the opportunities for lessons learned, the World Health Organisation called the elimination and control of NTDs a “litmus test for universal health coverage (UHC)” – one of the targets of the new development agenda.

Other countries are joining Malawi to take charge of their public health initiatives. Bangladesh, the Philippines and India are now financing 85%, 94% and 100% of their NTD programmes respectively. Motivated by growing evidence of the impact of NTDs on child development and productivity (and as a result on economic growth) 26 endemic countries met in December 2014 to sign the Addis Ababa NTD Commitment, in which they agreed to increase domestic investment for NTD programme implementation. The Addis commitment was an initiative of Ethiopia’s minister of health Kesetebirhan Admasu. Explaining why more governments are showing interest in this work, Admasu said: “NTDs are not only a health agenda, but a development agenda too, for which the poor pay the highest price.”

These country-owned programmes come in different guises but at the heart of every successful one is an integrated, multi-sectoral approach. Ethiopia for instance requires that every partner working on trachoma implement the fullSAFE strategy – Surgery, Antibiotics, Facial Hygiene, Environmental Improvements – and not just the ‘S’ or ‘A’, on which development programmes tend to focus.

Brazil decided to include NTDs in its national poverty reduction programme, which has other development targets such as education, water and sanitation. Municipalities, who implement the programme, are given free rein to tailor interventions to best suit their circumstances (a peri-urban municipality would have different issues from an Amazonian location for instance). 

Other countries used the single funded programme they had – onchocerciasis in Burundi’s case – as the building block to a fully integrated, multi-disease programme. There the ministry of health put in place a dedicated NTD team and worked with national and international partners to build a national programme that has been immensely successful. By end of the programme in 2011, national prevalence of schistosomiasis had been reduced from 12% to 1.4%. 

Will the SDGs be the last hope for lost causes?

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Country ownership doesn’t just encourage policymakers to come up with strategies to reach their entire populations with health interventions but it also enables them to practice good resource management. Mkwanda says that NTDs brought good discipline at the ministry of health. “As with NTDs, we sit and budget. And we do not segregate diseases – integration isn’t just for NTDs, it’s for the whole essential care package.” 

The story gets even better as countries in the global south, such as Brazil and Nigeria, are not just coming up with their own programmes but also funding others’. Marcia de Souza Lima, deputy director of the Global Network for Neglected Tropical Diseases says the new funding streams will guarantee that NTD programmes outlive traditional support (a large proportion from philanthropic foundations) but she concedes it also makes them susceptible to leadership change – although recent elections in Brazil and Nigeria suggest this hasn’t been the case.

Article - Apparel sourcing opportunities in Madagascar and Mauritius

An interesting perspective on apparel industries in southern Africa. The video also includes evidence of how intra-Africa trade is supporting the growth of the apparel industry where the exports of fabric from Mauritius go to Madagascar to feed producers and workshops.

Madagascar and Mauritius are not small fish third-tier suppliers. Their factories supply to major global retailers - CMT cited in the Mauritius segment of the video supplies to Puma, Marks and Spencer, Topshop and H&M.

Working with the private sector in market systems projects

What have I learnt working with the private sector in market systems projects?

Identify the systemic constraint and address the change at that leverage point. It is important to identify what is stopping the private sector from already reaching out to these markets. In one project, we found that livestock inputs suppliers were interested in developing distribution networks in very poor marginalised pastoralist communities but what had stopped them in the past was a lack of experience in in these markets. For them, lack of experience made the cost of market entry and market testing too high. The project therefore supported a market entry testing process for the firms. Each one carried out market research, tested their own distribution models and learnt from successes and failures. Over time, specific firms saw market potential and fully immersed themselves in the process, often evolving their strategies to respond to their insights on market dynamics.

From the outset, build in a pathway to market outreach with the private sector. In one project, we solicited proposals from firms to provide business services to agriculture firms working with smallholder farmers. We added a question asking firms to describe a) what they would try and find out about the market through the grant and b) how they would design market outreach and development strategies beyond the grant to continue interactions with market actors. The outcome was that firms better understood the catalyst nature of the grant. This also aligned expectations and incentives and all subsequent discussions between the firms and the project focussed on what was being learnt about the market and how the firm would scale out in the future.

Look at the market actor and seek out evidence of internal leverage points. Many firms will have engaged with hard-to-reach markets in the past. They may have made investments that have not worked out, or at least, invested in some basic research (codified or tacit) to test the water. When talking to firms about partnerships, look for resources that are vestiges of this history (a person, a report, a process, etc.). These can be put into the mix. A project can layer in additional resources, or improve the functioning of the resource, or help scale out out the resource, etc. In one project, we found that a university had set up an internship programme for agribusinesses students. However, this internship was not very successful because the university did not have the networks and knowledge to develop relationships with the private sector in rural areas. The project helped build these relationships. At the same time, the project helped train the interns who then on-trained rural firms> Over time, the university gathered enough knowledge to develop appropriate short courses for these rural firms – incorporating the expertise from the project as well as through the interns.

Has Africa outgrown aid? #bbcafricadebate

A fascinating debate! I collected many of the comments made on Twitter and reflected on my own experiences and insights. I then looked for any common messages and themes of the debate.

Addressing the dangers of aid

• Aid needs to change; but saying that Africa has outgrown aid suggests that Africa is a child that needs raising
• Aid can be a political tool of foreign donors forcing governments and people into agreements that are 'unfair' and 'unjust'
• Aid needs the support of better systems to monitor how it is being spent BUT aid can be limited in effectiveness when most time is spent time reporting and appeasing donors 
• Aid is lumped in with transparency to appease donors, but not other valuable system actors, such as the citizens
• Aid must be flexible to the changing nature of dynamic systems and economies

Making immediate changes to aid

• Aid must be better communicated to African citizens so that they are not "voiceless citizens"
• Aid must start to recognise the different roles for aid in the different economic and market systems in Africa 
• such as, from Rwanda and Ethiopia, to Kenya and South Africa, to Ghana and Nigeria, to Sierra Leone and Senegal, to Tunisia and Eqypt to Chad and Niger
• Aid must not be delivered at the mercy/desire/will of donors with demanding reporting standards; not every last penny spent can be tracked and it is more important to see broader outputs and outcomes than a tick-box of donor-driven activities

Developing a future role for aid

• Aid must be re-conceptualised towards trade, economic development, market systems and business for poverty reduction and systemic resilience
• in the social sector, this might mean applying systems thinking to public goods for better access by all 
• Aid has a role to play in security and anti-terrorism as well as in institutions building and strengthening
• Aid might eventually play a long term role in the economy as remittances and FDI - aid has been sent by African diaspora for decades and diaspora are looking for new ways to send money home and invest in local businesses
• Aid needs to be re-designed to prevent being a tool for corruption; aid needs better practice-driven local leadership, stewardship and management