Open letter to Mr Zuckerberg

Dear Mr Zuckerberg,

It’s with great interest but also with great worry that I have been following recent articles in the press about your wish to “give a large part of your fortune away”(Giving Pledge). I am a Dutch national, who has been advising African Governments for the last 10 years. My very first reaction was: “please don’t give it to development aid”. My next reaction was a bit more nuanced: “please consider how you give it away”. Moreover, what we really want here in Africa, more than your money, is your ‘brains’, your knowledge, and your capacity of being innovative, creative, challenging.

After so many years in the Aid Business, I have come to some conclusions on development aid that I want to share with you:

1) Reduce as much as possible “charity”; most countries in Africa are stuck in the Aid Trap. The only way to move out of this trap is developing a flourishing business sector. If you have time and if you are interested I can advise you on some good reading (for example work by William Easterly or Hubbard and Duggan).

2) One of the objectives of aid should be making itself superficial. Please come and assist terrible poor countries in getting rid of aid by setting up businesses, loan schemes and capacity development schemes (scholarships for example).

3) Come advise a Government of a poor country (for example of Burundi, the country of my current residence) by setting up some businesses and showing how they can abolish the “red tape” that makes life impossible for local or international companies.

4) Use produce from local producers to make high quality products.

5) Invest in energy. All over Africa I have seen a massive transformation the very moment a house, a street, a town is connected to electricity. Eco-friendly power is particularly well available (wind, sun, hydro power). Moreover, this will be an investment, not charity.

Allow me to challenge you. If you are considering giving part of your fortune to good cases, for example in Africa, please, do reflect thoroughly on the way you want to spend it. I would be more than happy to reflect / debate with you, if you so wish.

Yours sincerely,

Anthe Vrijlandt

International Advisor

Aid Coordination

BURUNDI

Book Review: Yash Tandon, Ending Aid Dependence

I used Yash Tandon’s ideas to prepare a course I gave at Burundi’s National University. Tandon’s ideas on “aid” and on “development” helped me enormously to assist students to deepen their reflections on the influences of aid on their country, Burundi, one of the poorest of Africa, just emerging from 15 years of conflict.

Tandon’s book on ending aid dependence starts by looking for a clear definition of “development” and a proper taxonomy of “aid”. This in itself is an interesting exercise, because it is contrary to OECD-DAC vocabulary. However, the link between the concepts of “aid” and “development” is even more fascinating. He argues that “development aid” not always leads to more development. It even might block real development. He is not the first to say this. He is part of a large community of researchers, searchers and politicians, like William Easterly, Dembisa Moyo, Dani Rodricks and many others.

He fiercely advocates the right of nations to self-determination and liberation from imperial domination. Africa and others can liberate themselves only if they take matters of development into their own hands – and do not leave it to aid and its delimiting and colonising conditionalities, such as the structural adjustment programmes of the IMF and the World Bank, and the Paris Declaration on Aid Effectiveness.

My admiration for his book is merged with the following main criticism:

1) Whereas Tandon thinks that, according to his own classification, only one type of aid is based on an ideology, I would argue that all types of intervention have an ideological foundation.

2) The solutions that Tandon proposes for “better aid” seem to me much closer to the Paris Declaration than he wants to admit.

3) His definition of Development could be made even broader than just the equation of the “social factor” and the “democratic factor”, minus the “imperial factor”.

4) It is remarkable that the highest form of solidarity, the ultimate type of aid, coincides with the work of Tandon himself.

The Horse and the Cart

Tandon proposes a rethinking of the whole issue of development aid. He argues that the debate has been constrained by conceptual traps and the limitations of the definitions provided by donors. According to him, the conceptual starting point should not be aid but development. The horse of development must be put before the cart of aid.

Development is too often confused with “growth” only (especially by the World Bank and the IMF), but Tandon offers a different definition: Development = SF + DF – IF, where SF is the social factor – the essential well-being of the people; DF is the democratic factor – the right of people to participate in decision-making that affects their lives; and IF is the imperial factor – the right of nations to self-determination and liberation from imperial domination. He states that his definition is in sharp contract to the mainstream orthodox economists’ definition as Development = Growth + Wealth accumulation. The wealth accumulation by the rich is assumed to ‘filter through’ to the poor by market-driven forces.

While I agree with Tandon that a restricted definition of development, as only growth and wealth accumulation, is not appropriate, I still propose to include the “Economic Factor” in the equation; Growth defined not in the right-wing sense of the word, but growth as a sustainable and fair increase in the standard of living of the inhabitants of a nation. A sound and balanced economy seems to me a condition for development. I therefore suggest to change to formula as follows: Development = EF + SF + DF – IF.

The expansion of the formula has two advantages: 1) it is a more inclusive, more exhaustive definition, but also 2) it improves the image of the formula. It avoids being an all to clear left-wing target, but seeks the best of both worlds.

The Statues of Liberty

A critical aspect of Tandon’s definition of development is its political economy and historical context. The developing countries have gained their political independence, but in most cases they are still trapped in an asymmetrical economic, power and knowledge relationship with formal colonial powers that continue the process of globalisation, and the institutions of global governance (the IMF, the World Bank, WTO etc). This imperial project is countered by a “national project”, the project for self-determination, which is still on the agenda.

When I discussed “development aid” with the university students here in Burundi, we were looking for synonyms of aid. After some of the more obvious themes, like help, subsidy, materiel or financial assistance, one of the students mentioned “dominance”. After some giggling of the others, I provoked him to elaborate, and he explained so-to-say the psychology of aid. If my uncle gives me some money to study for example, he also has power of me. He can dominate me.

The dominating power of assistance is thus fully recognised, but leads us to a more philosophical question. Is the freedom of a nation or of a people the highest ideal? Is this still possible in our interconnected, global world? Moreover, are some nations willing to trade their independence or their freedom for security or for wealth? Do we “impose” freedom? Is “independence as the highest ideal” just one of the many possible ideologies or is it THE only possible aim.

The Rainbow

Tandon’s monograph provides a new taxonomy for development aid – in five hues – and very pedagogical, uses five colours. Development aid is therefore placed among a continuum from Purple Aid on the extreme left and Red Aid on the extreme right. Red Aid is defined as aid tied to conditionalities (Washington consensus, governance conditionalities, FDI conditionalities etc). Orange Aid, which is really not aid at all, should simply be called commercial transactions, even if it has concessional elements. Yellow Aid is military and political aid, included in his way of classifying aid, because of the connection between security and development. Green or Blue Aid, whose three components – the provision of global public goods, non-tied humanitarian and emergency aid, and compensatory finance – are according to Tandon segments of the totality of financial and technical an technological assistance that are genuinely developmental. Purple Aid is that which is provided for reasons of solidarity with the people(s) of the receiving countries, by raising awareness, building knowledge centres, empowering people or providing alternative strategies.

It is indeed refreshing to challenge to way in which the OECD classifies aid, as Tandon does. It is also more than useful to analyse the ideologies that come with material or financial assistance. Nevertheless, I would argue that all types of interventions have their own underlying ideologies. Also the sacred purple aid in Tandon’s categorization has its own underlying ideology, neutrally defined as a comprehensive vision or an explicit system of thoughts; to be precise, Tandon’s ideology of the best way of delivering aid is the provision of help to countries in order to liberate themselves from domination. It seems to me that it is difficult to find one type of aid that is totally detached from an ideology.

It is less refreshing to see someone of the calibre of Tandon to fall in the trap of ‘black and white’ thinking, where all non-governmental organisations are by definition the good guys and the Washington institutions are the bad guys. Moreover, wouldn’t it be possible that other types of aid, apart from purple aid, are also provided for reasons of solidarity? When the Belgian government invests in education or the British in improving health care for pregnant women, is their no notion of solidarity?

Tandon falls in another trap. His own occupation seems to be the best and most ideal way of delivering aid and of contributing to real development. Promoting Think Tanks as the ultimate form of solidarity, being the executive director of the South Centre, an intergovernmental think tank, is almost incredible. I remember from my time in the energy sector in Rwanda, that I genuinely thought that providing electricity to the largest possible part of the population was the ultimate form of promoting development. I think I would promote a bit more distance of one’s one activities.

The President with a Hammer

The body of Tandon’s book consists of the seven proposed steps that the developing countries need to take in order to exit aid dependence. The most difficult – indeed – is the first step: the psychology of aid dependence. Ending aid dependence is not a one-day project, because deeply embedded structures and the power of vested interests do not disappear overnight, as Tandon states with reason. Whatever the challenges, Tandon thinks that the first thing to do is adjusting the mindset, so that a critical mass of, for example, local assemblies and the national parliament would say ‘We have had enough of this dependence on aid. Development is our responsibility and not that of donors’.

Interestingly, living in a country – Burundi – that is going through an intense period of campaigning and elections, a substantial number of political parties dedicate some paragraphs on reducing aid dependence. It would be an interesting study in itself to analyse all those programmes. Nevertheless, I do not think that the present aid and development architecture, for example the Paris Declaration, is a real obstacle to the realisation of the national project, as argues Tandon. It is more than obvious that the Paris Declaration houses numerous paradoxes, but the basic philosophy, or ideology underlying the Paris Declaration – I hope – is the creation of more balance where we see asymmetrical structures now. Tandon clearly refused to use the Paris terminology of “ownership”, when he explains that the first step to end aid dependence is “the will to take the destiny of the nation into one’s own hands”. I agree that the restricted way of defining ownership by the Paris Declaration (a country has a development strategy) is not the right method for a nation to take its destiny into one’s own hands. But why can we not propose to push the thinking of the Paris Declaration a bit further (as the Accra Action Agenda already tried), instead of abandoning it completely?

Let me finish this review with an interesting example of the gap between imposed ownership and the work in the field by the highest leader of my country of residence. Within a few weeks, Burundi will hold presidential elections. The current president, H.E. Pierre Nkurunziza, is running for a second term, and one of his campaigning messages over the last weeks has been his boasting over the doubling of the number of classrooms during his five-year reign. This has mostly been done during weekly community works, where Nkurunziza was working as hard as the population, or during one of his very frequent visits to the beautiful hills of Burundi. He has also pushed for an increase of the spending on education. For the national budget of 2009 they increased spending on education by 50% and had 23% of their recurrent budget spent in the education sector. I will not go into a discussion of the challenges in the education sector, or into a discussion on the electoral process.

The issue here is the large gap with the donor community including one or two brave Burundians that have been working endlessly on a national education strategy, with planeloads of consultants and technical experts, writing, rewriting, correcting, approving, validating for the last five years, annexing a midterm expenditure framework and an action plan, coordinating and developing a basket fund of 24 million Euros, which for the last two years was only able to spend 0,6%. Now, let me ask you, who understands better the notion of “ownership” or of “the national project” (as Tandon likes to call it): we the donor community or the President with a hammer?

Bujumbura, June 5, 2010

Does China show us the "Fourth Way"?

The Washington post reviews three books (see also aidwatchers.com) arguing that an alternative to democratic capitalism is emerging: state (or authoritarian) capitalism. The success of countries like China, Russia and the those of the Persian Gulf has spawned national wannabes among regimes -- particularly in Africa -- attracted by the prospect of strong growth and limited democracy.

http://www.washingtonpost.com/wp-dyn/content/article/2010/05/28/AR2010052801859.html

The Rijnland Principles and Development Cooperation

Introduction

This paper is written after I read a book in Dutch by Rienk Goodijk, Herwaardering van de Rijnlandse Principes, on the so-called Northern European Rijnland Principles that are used in governance (both public and private), and that have some basic features that differ substantially from Anglo-Saxon models. The differences in it self are remarkable, but they also might shed an interesting light on different types of influences in Africa. Moreover, it can give important input on the discussions on the ideologies behind development assistance, particularly for private sector development. This paper will therefore first summarise Goodijk’s book and will subsequently brainstorm on some implications for development assistance.

Rijnland Principles versus the Anglo-Saxon Western wind

Not only in Northern Europe, but also in the rest of the world and especially in Africa, corporate governance is more and more defined by typical Anglo-Saxon values. Even the credit crises of 2008 did not totally change the ideology behind many donor-funded activities in Africa. The Anglo-Saxon economic model is a capitalist macroeconomic model in which levels of regulation and taxes are low, and government provides relatively few services[1].

The Rijnland model is usually seen as a strong alternative for the Anglo-Saxon model. It is called the Rijnland approach because it was traditionally exercised in countries of the Rhine, like Switzerland, the Netherlands, Germany and France. Even thought these European countries differ in some details, they all adhere to this social model in its most characterising aspects. Let us now look into two of those characteristics and the main differences with the Anglo-Saxon model.

Stakeholders versus shareholders

A healthy enterprise, according to the extreme version of the Anglo-Saxon model, is perceived as an instrument to create – in the shortest period possible – as much monetary value for the shareholders, those who own a company, as possible. The board of a company will serve first and foremost the interests of the shareholders. Other stakeholders, like the employees, are taken less into account. Employees for that matter are just one of the parties with whom a company signs a contract[2].

The continental European approach attaches far more importance to the interests of all the stakeholders. The management of an enterprise needs to take very different stakes into account of many different actors, both within the company (employees, syndicates, etc.) and outside the company (society, environment, media, civil society, etc). The managers of an enterprise need to undertake a real balancing act between these stakeholders. A European company is thus more focussed on networks and establishes links and relations with partners. In this perspective, the longer term becomes more significant than just the shorter-term wealth creation for the stakeholders. Other values than money and power only are in the Rijnland model given importance as well: solidarity, quality, job satisfaction and even happiness.

Collaboration versus competition

The Northern European approach also has an influence on the relations within a company. Engagement of the employees, often called collaborators, is highly valued and stimulated. Consultation and participation of the employees are used to bind, encourage and motivate them. This is a game that can only be carefully played and might be more time consuming than the Anglo-Saxon model. The management structure in the Rijnland model plays the role of a broker between all the different stakeholders, to achieve balanced relations between employees.

The Anglo-Saxon model gives more significance to clear leadership, the Chief Executive Officer (CEO), as well as to a vertical power structure. Performance based payment and incentives create a tradition of fighting for your job and the zeal of controlling. Everything needs to be cautiously planned in detail, carefully implemented with strong hierarchal structures. Trust between employees gave thus way to an instrumental use of human beings (a horror for one the most famous of philosophers, Immanuel Kant[3]). People are recruited and contracted as instruments of an enterprise. Everything needs to be “covered”, meaning insured. Conflicts are approached in a legal fashion where a company or the employee has the right to claim his due. Collegiality and collaboration in a team are less attractive, because it will be impossible to show your contribution to an end result and the performance of a team cannot be personally attributed.

The Anglo-Saxon approach has several clear advantages for example in the area of running a company, better communication, and individual accountability.

The Golden Mean

Goodijk argues that the European model can influence positively the cold, legal and hierarchal Anglo-Saxon approach in its purest sense. Or even better, several of the best practices can be combined. All types of nuances are already in vogue, both in Europe and more and more in the United States and the United Kingdom. The end result will probably be a golden mean between the two typical models. The European approach, or the Rijnland Principles, will contribute the four following perspectives:

1. 1. A distinct vision on organisation structures and the way people function in such a structure.
2. 2. A focus on good governance in growing globalisation.
3. 3. Stimulating and organising of input, engagement and accountability of all stakeholders.
4. 4. Embedding of these typical forms of engagement and participation in the organisation.

The core argument that Goodijk makes is that people make the company or organisation. This is a vision – it seems – that Europe does not want to loose. This vision implies several other aspects. A company does not only exist to increase shareholders’ value, but can create a much larger value, including mutual trust, stability in relations, teamwork, quality of collaboration, loyalty to the structure and contributing to the overall organsation. The Anglo-Saxon approach can teach us more flexibility, unambiguous communication, sufficient accountability and clear leadership.

The European approach argues that the management of an enterprise will need to be organised according to the principle that certain interests cannot become too dominant (those of shareholders or the CEO). A typical European company will thus maintain a balanced structure of its enterprise. Learning from the Anglo-Saxon model, the management should also pursue a balanced vision between loyalty to the organisation and sufficient flexibility for short-term contracts.

In this perspective, the European approach has a distinct vision on the ownership of a company. Formally the shareholders own a company, but a company as a collaborative structure, also belongs to those related to the company: loyal shareholders and loyal employees, those who deliver long-term capital and those who deliver long-term services. Long-term engagement and loyalty should be coupled with a right of say about the company.

The European model avoids as a consequence a “one size fits all”, top-down and legal approach. It therefore is characterised by a large amount of decentralisation and self-regulation. The European model requires a different kind of leadership, less hierarchal but more inspirational, participatory and binding; leaders who are able to encourage and stimulate the input and the engagement of staff. Horizontal consultations between employees and staff participation in decision-making structures are a welcome alternative to exaggerated fighting and controlling traditions.

The Anglo-Saxon experiences show us the usefulness of tailor-made solutions and contracts, as well as the dynamics of performance-based structures. Europeans might on the other hand have more longing for coherence and cohesion.

As already mentioned above, good governance in the European understanding is not solely focused on shareholders, but also on other stakeholders. The managers will thus need to activate the engagement of all the stakeholders and the Corporate Governance Codes of a company could reflect this vision. Such a vision has an implication for the composition and the functioning of the Board of Directors, which should become more professional (Anglo-Saxon) but keep a particular attention to the interests of all the stakeholders (Rijnland).

Each company could be thus asked to develop a covenant that explains the structure of consultations and forms of dialogue with all the stakeholders in order to promote genuine engagement of everybody and a bottom-up social innovation.

Some implications for Development Cooperation

Anglo-Saxon, Rijnland and African Principles?

If the fundamental statement of Goodijk is true that a basic difference exists between the Anglo-Saxon and the Rijnland business model what could be the implications for Africa? Might it be true as well that an African approach exists? And could it be true that this approach is very different from the Anglo-Saxon and Rijnland models? If they exist, how would we discover these differences? It will not be my task here to discover these differences, but if they exist or – worse – if we even don’t know whether or not they exist, this has large repercussions for the way we, Americans and Europeans, work in African countries.

Private Sector Development Programmes

The most obvious example can be drawn from the large programmes that we develop in the area of Private Sector Development or the Investment Climate. It is understandable that African countries, so badly looking for Foreign Direct Investments, should moderately adapt to those Foreign Investors. But does this mean that African countries should copy and paste someone else’s model, be it Anglo-Saxon or European? Let us look into this a bit closer.

The World Bank measures every year the ease of doing business in 183 economies. The results are published on a specialised webpage[4]. Ten indicators have been selected and are measured in each of the 183 countries by standardised case scenarios. The data are collected in a standardised way by around 8.000 experts and subjected to numerous tests for robustness. This way of proceeding has the clear advantage that a potential investor can compare one country with another country. Nevertheless, the standardised way of investigating has the great danger of comparing the incomparable, of thinking in blueprints, in a one-size-fits-all manner.

Moreover, the underlying philosophy or ideology seems to be more Anglo-Saxon than Northern European. Interestingly enough, in 2009, eight out of the top ten of Doing Business were typically Anglo-Saxon[5]. Most of the Doing Business indicators presume that less regulation is better. It is therefore difficult to tell whether the top-ranked countries have good and efficient regulations or simply inadequate regulation[6].

Our experience shows that low-ranking countries, like my current country of residence, Burundi, are eagerly pushed by donors to improve their ranking on the Doing Business index. Do these countries have a choice on what type of reforms would fit their situation? Do they choose between easy firing of redundant workers (Anglo-Saxon model) or creating engagement and loyalty of employees (Rijnland approach)? Do they easily give permits for construction, with high risks for safety and the environment? Are all the stakeholders being taken into account when as few as possible permits are needed? The bitter reality is that the discussion is not even encouraged. It seems that no Burundian institution, independent think-tank or university is advancing this debate.

“White Man’s Burden” once more

In 2009, William Easterly published his now famous White Man’s Burden. He criticises energetically neo-colonial behaviour of mainly Europeans and Americans, who come to Africa with a blueprint plan, “the Planners”. They seem to have THE solution for ending poverty. He vigorously argues for more modesty because our (the white man’s) interventions have the same problems as the ones of the old colonials: the excessive self-confidence of bureaucrats, compulsory top-down planning, slight knowledge of the local conditions and little feedback of the local population about what works and what doesn’t.

The differences between the two White Man’s models – the Anglo-Saxon and the Rijnland models -, makes visible the ideologies behind our interventions and how little we leave to local approaches.

Yash Tandon shows how grants and loans are very often tied to explicit or implicit ideological conditions; that the recipient country needs to create an enabling environment for foreign investments, that is needs, for example, to open up its economy to trade and financial liberalisation, that is must not undertake any nationalisation or appropriation of assets tied up with the grants or loans without market-based full compensation, that intellectual property rights must be protected, ... and so on[7].

Conclusion

We have given a short summary of the differences between the Anglo-Saxon and the Rijnland approach. What will be our mindset when we develop projects or programmes in African countries? Will we use one of these approaches as our ideology? Will we use the Anglo-Saxon model “pure-sang” when we propose to improve the business climate, with extreme deregulation and short-term value creation as the main aspects of it’s philosophy?

Or will we introduce the more Northern European model, with it’s focus on consultations, “not money only” value creation and sustainable entrepreneurship.

Will there be a third model possible: The African model? Will we, the neo-colonials, be able to listen to the propositions for such a model? Do we have the time, with all our short-term contracts, to reflect and search for the characteristics of a possible African model? Will we have the patience and the modesty to listen to the outlines of it and to appreciate its benefits? And, finally, will we start funding those who dare to describe this “Third Way” and those who develop alternative strategies?

Further reading:

- François Giovalucchi and Jean-Pierre Olivier de Sardan, Planification, Gestion et Politique dans l’Aide au Développement : le Cadre logique, outil et miroir des développeurs, dans La Revue Tiers Monde 198, avril-juin 2009. It shows the ideological configuration behind the Logframe approach. According to the article, a logframe matrix tells us a story of easy causal relations, of easy measurable indicators and of any given group of people as a community. Moreover, it give the (false) impression that the author of the logframe will be able manipulate any social phenomenon. Elements that are not fall out of his or her control are “hypotheses”.

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[1] http://en.wikipedia.org/wiki/Anglo-Saxon_economy

[2] This article starts by resuming the book. This whole chapter therefore gives citations or summaries of the book in Dutch by Rienk Goodijk, Herwaardering van de Rijnlandse Principes. Over governance, overleg en engagement, Assen 2008. I did not indicate the exact pages or chapters of the book.

[3] Kant stated in his Kritik der praktische Vernunft that one has to « act so as to treat people always as ends in themselves, never as mere means. » The idea here is that everyone, insofar as he or she is a rational being, is intrinsically valuable; we ought therefore to treat people as having a value of their own rather than merely as useful tools or devices by means of which we can satisfy our own goals or purposes. Other people are valuable not merely insofar as they can serve our purposes; they are also valuable in themselves.

[4] www.doingbusiness.org

[5] 1) Singapore, 2) New Zealand, 3) Hong Kong, 4) United States, 5) United Kingdom, 6) Denmark, 7) Ireland, 8) Canada, 9) Australia, 10) Norway

[6] World Bank, Can a Civil Law Country Succeed in a "Doing Business" World? Chapter 1.

[7] Yash Tandon, Ending Aid Dependence, 2008, p. 26. He would call this kind of ideological tied aid “Red Aid”. Similar to this reasoning is an article by François Giovalucchi and Jean-Pierre Olivier de Sardan, Planification, Gestion et Politique dans l’Aide au Développement : le Cadre logique, outil et miroir des développeurs