Rethinking international aid

{mosads}The resources needed for international development is huge. Whether non-communicable diseases or communicable diseases, treatment of children or education for children, or saving lives of millions of mothers, the global resource need runs into billions of dollars. Such an amount is not available despite billions of dollars made available from various governments, private foundations, and individual donations. Foreign aid is an investment so that low income countries gradually become more affluent and can fund their own development programs, thus saving millions of lives.

We live in an inter-connected world. Improving economic conditions and health in developing countries serve our greater goal of a better world and economic order. A better world which is economically progressing is in our best interest where trade will increase benefitting both developed and developing countries. Because of our collective investment and capacity building, we now see many low income countries (LIC) are contributing a lot more internal funds to health and education budgets. These countries now buy U.S. made technologies for their programs. National plans have become the driving force for strategic and large scale investments.

Micro credit, small investments, leads to large social gain through empowerment and economic well-being of millions of women and their families. These poor women now have incomes to fund children education and buy consumer goods. The Neglected Tropical Disease (NTD) Program of U.S. Agency for International Development is the largest public-private partnership which has leveraged $3 billion in donated medicines to benefit 250 million people in 20 countries in 6 years. NTDs are bacterial and parasitic diseases that disable people, thus causing loss in income leading to perpetual poverty. A small investment from the US government and private sector is contributing to sustainable programs in developing countries.

The Grand Challenge Exploration fund of Gates Foundation funds innovation which ranges from finding labor saving innovations for women farmers, next generation sanitation technologies, a lab-on-mobile-device platform for seed testing, Solar Thermal Standard for Vaccine storage rooms or a new system for dual bacteria/insecticidel crop protection. It is a small private fund, like a VC, seeking innovative ideas to test ideas that will have the most promise and impact in the development sector.  Many of these ideas have been taken to scale to benefit millions of people. It is harnessing science and technology with a smart investment strategy to save millions of lives.

UNITAID is a new initiative which uses market dynamics and small funds to encourage local production of generic drugs in developing countries so that millions of people have access to low cost, quality drugs to save them from communicable diseases. Such an initiative promotes expansion of local drug production capacity, partnership between global pharmaceutical companies, and encourages formation of new pharmaceutical companies in low income countries.

The Global Fund to fight AIDS, TB, and Malaria will soon have a new Executive Director from the U.S. It will have to decide on how to meet the demands from global community for ever increasing resource needs with sharper ideas and smarter initiatives. It has to make a choice between traditional investment model which can generate limited outcomes or pursue new strategies such as the one proposed here to partner with countries for greater impact. The World Bank has a new president, appointed by Obama Administration, who needs to rethink how World Bank invests its resources and what can it learn from many successful public-private initiatives of US Government and private foundations.

Venture Social Investment (VSI) is an effective medium for efficient use of resources. The venture capital approach is a good one because the VCs look at every investment proposal based on thorough analysis of potential outcomes, potential for scale, management structure, and implementation plan. They rigorously monitor implementation and take immediate steps when something is not going in the right direction. It is a partnership between the investor and the implementer. VCs are hands on managers but at the same time value good management. VSI could be a new thinking in the development assistance sector and use the techniques of the private sector to improve efficiency. VSI can accelerate use of existing technologies which are severely underused in poor countries to benefit millions of people. It can fund new technologies or systems or processes for a larger impact and accelerated improvements in low income countries.

Rahman is an international health specialist and is the founder of Center for Implementation Efficiency.