Going local on the SDGs - Placing Small, Medium & Growing Businesses at the Centre of Aid Responses.
Updated: Sep 1, 2021
Sarah Adomakoh, Founder & Principal, MWG
Local small and medium sized businesses bring creativity, innovation and cost-effectiveness to donor and philanthropy-funded socioeconomic development initiatives.. Their participation is usually overlooked and under-maximized.
For decades, foreign aid has supported the survival and growth of economies in Africa. Since the wave of independence in the1960s, African countries have received hundreds of billions of dollars through multilateral, bilateral donors, philanthropy, private sector investments and CSR support. There is unanimous consensus that foreign aid has achieved substantial "good" for Africa, saving the lives of millions and bringing many out of poverty. However, there is also wide consensus among donors and beneficiary countries, that when measured against the disbenefits and financial outlays, the benefits are not always welcome or felt by the most underserved groups.
Observing the big picture, Africa receives over $US130 billion in official and unofficial aid funds and development finance annually, from bilateral donors, multilateral donors, philanthropy, religious institutions, private sector, government and individuals in the form of official aid grants, loans to the private sector and remittances, etc. Some sources indicate that annually over US$190 billion is extracted from the continent in both tangible and intangible forms through debt repayments, international profits, illicit financial flows, brain drain, poaching etc. From this pattern of net inflows and outflows, we can conclude that the West is making solid returns on its aid funding to emerging market economies. Sadly, the outcomes of development aid are failing to reap far-reaching impacts that are sustainable beyond the medium-term. While the West continues to grow its profits from its disbursement of aid to Africa, the question remains; what is Africa real net gains from aid received, when weighed against both tangible and intangible adverse outcomes?
Exploring how disbenefits play out at micro or incremental levels within the context of aid development programmes across middle and low-income developing countries globally, is key to understanding the big picture. Take health development for example; programmes that avert death and physical ill-health have not translated into tangible well-being impacts that are felt and sustained at the bottom of the economic pyramid. Here's how this plays out...
A Life Saved must be a Life Lived
Tangible benefits of health development programmes often include 'life-years-saved'. Economic evaluations of development programmes demonstrate to us that when a life is saved there is a specific $$ value assigned to the years of life saved. This value is estimated by economists and health economists through various approaches. One simple view is this - All lives are equal and it is unethical to assign unequal value to each life. However, from the viewpoint of the individual, the value of their life rises with increased health status and other dimensions of quality of the life being lived. These additional dimensions relate to the realisation of the potential that each individual has for income generation, their social participation and contribution to social cohesion, mentoring, learning, and community development.
A rigorous 5-yr community-based research study that tracked the quality of life of people living with HIV and AIDS (PLWHA) after receiving life saving antiretroviral therapy, revealed that 5 years after suppression of viral load, the majority of those who did not have timely access to social support, and back-to-work assistance measures described themselves as 'healthy in body..alive..but waiting to die". They experienced increasing mental health and emotional well-being deficiencies, in some cases leading to poor treatment compliance, ill-health, depression, abuse and suicide. The best approaches and sustained quality of life measures, 5-years on, were reported in those that had received back-to-work support, coping measures, were empowered through community anti-discrimination policies and locally driven social-economic support strategies to enable them to increase their social and economic participation and give more meaning to their daily existence. Access to treatment alone and fragmented social support was not sufficient to sustain health outcomes beyond eighteen months.
This is just one example among several, of how millions of $$ spent on life-saving interventions in underserved settings, in absence of whole-person or harmonized system-changing interventions, often results in unsustained outcomes, hidden disbenefits and insufficient safety nets, creating unintended cycles of unmet needs.
This 5-year example of an aid-funded health development programme is one among thousands that demonstrates how it is vital to start off with life-saving interventions that are led, owned and designed by those most affected, or those acting with, and for them. Ultimately, this research helped inform a wider, more costly and comprehensive multi-sectoral public-private sector approach to solving a global epidemic of level one priority. For lesser visible and politically underpinned development issues, there is a need for acceleration by donors in bouncing back with timely, well joined-up, non fragmented responses that integrate sustainability structures into aid strategies. Such system-change interventions must typically have many synergistic components and public and private sector partners meaningfully involved at the outset, so that overall, interventions target the 'whole-person needs' and are focused beyond lives-saved, on attaining the true value of "lives lived" in various economic settings.
Only Local Businesses can Drive Sustainability
Over time, the levels of aid programme inefficiencies have reduced significantly as reported by international aid transparency bodies. Donors are striving to deliver tangible lasting impacts, but sadly, not quickly enough. The handing out of aid for high-cost, short to medium-term programmes, with implementation led by international development agencies and mid and large consulting firms, despite the benefits reaped, has also delivered avoidable fragmented approaches and outcomes as described previously. The procurement of these medium and large international entities, operating under avoidable large overhead costs, to lead aid responses has severely constrained the allocation of overhead resources locally, forcing local partners to operate under skeleton staffing and has slowed development leadership participation of local businesses, NGOs, social enterprises and communities in shaping and owning their development initiatives. The duplication of parallel structural and policy development projects led by international entities, further compounds this misallocation of aid funding.
Many well positioned local NGOs still struggle to survive, relying on trickle down, piecemeal and fragmented funds metered out by these very same international entities through which they are subcontracted to undertake the majority of work on the ground. Too many local businesses eventually close amid the millions of $$ disbursed by funders into development initiatives that impact the very constituents and beneficiaries they serve.
This is just one prevailing aspect of development aid that has led the development community to experience significant socioeconomic and structural gaps in achieving sustainable growth outcomes. Such high-cost firms and international NGOs (iNGOs), while absolutely vital for progression towards the SDGs, tend to be less flexible, cost-intensive and more risk averse than small and medium growing businesses. They therefore have a lesser propensity for exercising innovation in how they partner, and how they tackle development problems and fulfill needs. It is well documented that innovation is often observed through more agile operations of small and medium growing business, social enterprises and non-profits.
In summary, lack of optimally directed, committed and consistent resources that empower and sustain community and business-led development systems has exacerbated the slowness to maximize development impacts.
Motivated partially by these resource allocation and accountability gaps, and through learning from our mistakes in missing the mark for 2015, out went the Millennium Development Goals (MDGs), and the Sustainable Development Goals (SDGs) were born. The local and global development community is now in recovery and catch-up mode simultaneously, to accelerate the reaping of gains that should have been won so far, and felt at the grass roots in time to meet the 2030 SDG targets. With the SDGs comes greater focus on fostering sustainability in terms of economic growth, environmental control policies and partnerships required for promoting sustainable ventures that survive and thrive beyond the programmes funded by donors and philanthropists.
Businesses and far-reaching partnerships will accelerate progress towards SDGs
The time has come to reevaluate how aid funding can be more effectively deployed by all providers (donors, philanthropists, private sector corporations, impact investors), with well focused resource allocation towards novel and functional business partnerships, to result in maximized impacts, and reduced cost inefficiencies and wastage through avoidable overheads, to bring about long-term sustainable development.
This applies to all nations and regions of the world: For example, commercial small and medium-sized businesses located in empowerment zones and underserved communities in high-income countries must be financially supported by philanthropy and through better targeted government incentives that maximise on their positioning within their local markets and communities. The businesses must be supported in partnering effectively within their local business ecosystems and beyond these, in order to deliver sustainable economic empowerment strategies within their operations.
Localising the SDGS for Global Impact
Unfortunately, the development community is not on track to meet the majority of the169 targets set for achieving the 17 SDGs in their entirety, by 2030 unless drastic and rapid revisions to increase the cost-effectiveness of donor funding and on-point allocation of private-sector resources are taken up. What is needed are far-reaching shared value multi-stakeholder partnerships, from grass roots youth, community organisations and NGOs, to policymakers, international supporters and large corporations, that start with the collective power of local small, medium and growing businesses and their operations at the centre of development-focused SDG initiatives.
Accountability is key - We must reach the point at which each and every dollar spent can be unanimously described by the taxpayers, private sector consumers and impact investors as a "dollar well spent". These are the paying customers and true funders of the world's development programmes
Rapid progress requires a shift from focusing on the hard-to-tackle country and regional system bottlenecks and structural constraints to growth, to focus on real needs with an urgency that drives disruptive innovation led by local businesses and their ecosystems. Innovations that bypass these constraints, and system and policy bottlenecks that slow down progress. Rapid progress also requires the active shifting of all key local and global actors from the life-saved to the life-lived mindset. A good place to start is with well-targeted procurement of lean local innovative businesses functioning as implementation leads in development programmes, and building sustainable, aligned vertical and horizontal shared-value partnerships that address the big picture and adopt evidence-informed integrated (building blocks) approaches.
Donor agencies must give intensive focus to restructuring procurement approaches, observing and reproducing successful partnership structures and at the same time, direct resources towards supporting implementation of development strategies and sustainable programmes through local business operations that are lean, agile, closer to the problem, able to seamlessly identify needs and run a pipelines of low-cost experiments integrated within their operations and therefore, learn adapt, implement and relearn rapidly.
To accelerate impact, greater attention should also be given and aid resources deployed in delivering business leadership support local to small medium and growing businesses for-profit/non-profit businesses that have potential for high social value creation and generating commercial revenue through either their existing supply chain and employment operations, service delivery, product development, their CSR investments, or more recently, by reconstructing their business models to seamlessly support delivery of innovation and outcomes through their operations and shared value reallocation of resources into local development initiatives, working closely wth donors, supportive intermediaries and other funders.
Investments into local small and medium purposeful businesses should be rapidly scaled-up through support and funding of development projects that;
Demonstrate meaningful leadership participation of these local purposeful non-profit and commercial businesses in rolling-out medium and large scale development projects in close working partnership with seasoned international development agencies and professionals.
Strengthen capacity of local businesses to measure and report on their contributions to SDGs
Strengthen local data sharing ecosystems for collaborative impact and understand the contribution of business to the SDGs
Seamlessly or explicitly build and strengthen entrepreneurial ecosystems for ensuring protection of local business innovation, business growth and promoting their sustainability.
About MarketWorks Global
MWG is a start-up formed in mid 2019. Through the combined experiences of our founders, international development experts and advisors we've spent18-months before our launch, testing an emerging fourth sector model that places collective business leadership and entrepreneurial ecosystems at the centre of development responses. We have a strong crosscutting focus on strengthening functional project implementation partnerships between development agencies and local small and medium-sized businesses to increase purpose with profits within the small business community. Not surprisingly, we are beginning to see and experience promising results. We're young and growing, Join us or follow us on LinkedIn to receive updates on our case studies, research, insights and resources on emerging trends and successes in small businesses operating as highly effective leaders and partners in accelerating achievement of SDGS targets.
This blog reflects the views of the author only.