Agility trumps analysis for international NGO strategy

The holiday season for those of us grappling with the management of international NGOs can’t come soon enough. Over recent months the sector has behaved like a rabbit in the headlights, frozen by the complexity of strategic decisions which seem no longer to fall within our humble intellectual capacity.

NGO programmes to improve people’s lives in poor countries may be changing radically because the major participants are becoming restive.

Aid donors talk about channelling funds direct to social welfare organisations in the beneficiary countries. Recipient governments openly crave the end of aid dependency. Such talk implies cutting out the intermediaries in London and Europe – which busts the international NGO business model.

However, these political assertions remain unsubstantiated, especially in the very poorest countries where NGO strategy traditionally has most to offer. Donors are as spooked as ever by fears of losing tax-payers’ money to corruption and poor standards of project delivery. The old device for laying off this risk to experienced international non-profit organisations, piggy-backing their robust standards of governance, has not yet been consigned to history.

This interplay between politically fashionable grandstanding and uncertain reality creates an impossibly shaky evidence base for strategic planning. The outcome is inertia, accompanied by blogs and papers by NGO researchers, typically those who don’t have to make the decisions.

At the same time, the challenge of strategic complexity has been downplayed in some quarters as just another chapter in the business school textbook. This tells you to wait for events to unfold and then change your plans, however surprising the detail. The secret is to have the organisational agility to react quickly and decisively.

That approach works quite well in project management, subject to a sympathetic sponsor of your project. But it doesn’t work at all well in strategic planning which, by definition, calls for bets to be placed on which way the wind will blow. And it certainly doesn’t work well for finance which hates surprises because the damage they cause tends to be irreversible.

Hence the unspoken sense of inadequacy amongst overseas development NGOs. In contrast to those overconfident investment banks who “didn’t see it coming” in 2007, we see everything coming from all directions and feel overwhelmed.

It doesn’t help that the big global issues we care about are hitting the same insoluble wall. The abandonment of international law on refugees, the disintegration of Syria and Greece, the platitudes of climate negotiations – such failures occur, not because nobody cares, but because the politicians are out of their depth.

Even in my own domestic microcosm, problems weigh heavier than the capacity of well-intentioned local governance to resolve them. A necessary regeneration of part of Winchester’s city centre is patently too complex for local government officials and representatives. Even my cricket club is floundering in its response to the pace of change in sport. Perhaps we should welcome the era of artificial intelligence after all.

The vacation period this year may therefore fulfil less the traditional stress relief than a desperate need to rediscover the old confidence in decision-making. A simple choice of ice-cream flavours will feel like salvation.

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How can big aid organizations become Fit for the Future? – blog by Duncan Green

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Guilty as charged on science of GM food


I have to confess to intellectual lethargy in siding with opponents of genetically modified (GM) crops as the answer to global food security. In the New York Times last week, Mark Lynas was right to invoke hypocrisy in those who lambast the ignorance of climate change denial whilst deploying comparable disdain for scientific opinion that GM food is safe for the environment and for consumption.

That’s not to say that I’m convinced by Lynas’ assertion that “there is an equivalent level of scientific consensus on both issues.” GM science has nothing to match the Intergovernmental Panel on Climate Change, independent peer-reviewed analysis of scientific papers, whose verdicts presented to global decision-makers betray barely a whisper of doubt on the underlying premise.

Understanding the technology of splicing genetic material from one species into another is fiendishly difficult. The healthy flow of excellent books about genetics tend to explain how evolution works in nature rather than how to intervene.

I therefore flounder about in the relative vacuum of GM science, influenced more by individuals who I admire, such as Anne Glover. Her position as Scientific Adviser to the European Commission was allegedly terminated on account of her support for GM crops.

When in doubt on climate science, I seek reassurance by superimposing informed common sense on expert opinion. I have a reasonable grasp of how elements such as carbon and nitrogen move in slowly changing cycles through land, ocean and atmosphere, in different chemical combinations.  Tampering with the carbon cycle within a couple of hundred years to the extent of increasing atmospheric concentration by 40%, with ocean acidity in close pursuit, strikes me as the height of folly for intelligent civilisation. This sort of precautionary principle science has no need for 1,000 page reports.

However, I’m uncomfortable with the common sense approach on GM crops because it’s too damning. Tinkering with millions of years of evolutionary struggle seems indefensible, reflected in inflammatory anti-GM headlines and public opprobrium.

The weakness of this populist stance is that it focuses on the principle of genetic modification, rather than its impact. Our food is already dosed with chemical additives, our bloodstream a cocktail of toxic pollutants, our environment in a spiral of decline. A little genetic deviation seems unlikely to be material, subject to the normal standards of food testing. I concede that I’d have no problem with eating the stuff.

However, this is a policy of despair, a resigned tolerance of unsustainable agriculture, riddled with unanswered questions about allergies, collapsing ecosystems and water scarcity. These problems cannot necessarily be laid at the door of GM crops, but the world’s poorer countries are entitled to question the wisdom of importing a US model of food production.

This direction of travel in the search for global food security has a solid foundation, backed by important US donors and the powerful agribusiness lobby. They argue that Africa cannot feed itself without radical transformation of its current low yields.

The debate therefore moves beyond GM science into concerns about inappropriate exercise of corporate power within weak national economies. Key GM food technologies are locked up in a tiny number of large companies, led by Monsanto. The worst case scenario would see a monopoly of so-called “climate-smart” seed varieties, protected by a smothering matrix of patents and locked into proprietorial chemical products – the agricultural equivalent of Microsoft’s Windows operating system recognising only the Internet Explorer browser.

Understanding the potential role of private finance in agriculture in the world’s poorest countries is almost as difficult as the technologies deployed. But we must bracket the topics together – it’s not enough to brandish scientific endorsement of GM crop technology.

Meanwhile, here in the UK I fully expect that, if returned to power in Thursday’s election, a Conservative administration will facilitate the introduction of GM crop planting over the course of the next parliament. Public resistance will fail unless better informed by science.

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How I got converted to GMO Food – Mark Lynas in New York Times

Biodiversity Access and Benefit-Sharing – Tread Softly Briefing

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BP projections defy divestment logic


Like many of a certain age, I’ve been happy to indulge in nostalgic Star Trek sound bites prompted by the death of Leonard Nimoy. I’m less comfortable with developments over the last fortnight which have seen international bond and equity markets apparently content to boldly go where no man has gone before.

The European Central Bank is about to embark on an orgy of printing money, the device known as quantitative easing. The objective is to keep interest rates low and release resources for banks to ramp up lending. But interest rates are already negative for gold chip borrowers in the eurozone, a phenomenon not normally featured in economics textbooks, nor in the experience of contemporary bankers.

This tolerance of negative yields in bond markets has a curious parallel in the oil and gas sector of equity investment. Current share valuations assume that reserves on a company’s balance sheet will be exploited, contradicting international climate agreements which resolve indirectly to leave most fossil fuel resources in the ground. Share prices are therefore heading for a fall, unless we prefer our children to live in a world which will have warmed by more than the two degree tolerance threshold.

BP has meanwhile published its influential annual Energy Outlook 2035. Seeking to reinforce the legitimacy of current stock prices, it concludes that “(global) demand for oil will increase by around 0.8% each year to 2035.” Shamelessly, the report acknowledges that “such a path would be materially higher than one which would be generally regarded as consistent with limiting the rise in global mean temperatures to 2 degrees…..the projections are based on our view of the most likely evolution of carbon related policies.”

In other words, BP invites investors to value its stock on the assumption that the UN climate negotiations will fail; by obvious extrapolation, other sectors of the stock market dependent on fossil fuels should be valued on the same basis.

However, there’s no reference to the other side of the equation – the long term investment risks associated with a global economy grappling with the impact of runaway climate change. Like the negative-yielding bond market, this notion of equity valuations defying political and environmental gravity leads us into unchartered waters.

Both markets justify their offside positioning by reference to the untouchable pursuit of economic growth, as currently measured and as currently powered by fossil fuels. Any consequences are viewed as acceptable collateral damage, subservient to this higher goal.

The collateral damage of global warming in excess of the two degree tolerance threshold is recognised as particularly acute for the world’s poorest countries – which also struggle with the volatile capital flows already brought about by quantitative easing programmes in the US. In the UK, these programmes have generated windfall profits for banks, whilst reversing two generations of progressive housing policy. The property market has become the playground of owners of cheap capital, squeezing out young middle class purchasers.

Bond and equity markets are therefore displaying curious similarities. Both offer perverse negative returns; and their valuations are blind to the consequences of unconditional economic growth, the most pernicious of which is the intergenerational injustice of deteriorating access to environmental and monetary capital.

Institutional investors come across as unwise and rudderless in drifting across their increasingly dysfunctional universe. We could do with more of the boldness and leadership of the lamented USS Enterprise.

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Unfortunately, two of the best recent articles on these topics are both gated, but they are:

The riches and perils of the fossil-fuel age  by Martin Wolf in the Financial Times

Draghi ready for last roll of the dice  by Philip Aldrick in The Times

Alan Rusbridger (Editor of The Guardian) has also written a major article on keeping carbon in the ground

BP Energy Outlook 2035

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Gates Foundation needs vaccine for infectious optimism


The Annual Letter of the Bill and Melinda Gates Foundation is an offspring of the Berkshire Hathaway annual newsletter for investors, famously produced by Warren Buffet who is now a co-trustee alongside the Gates.

Whereas the Sage of Omaha read the runes of wealth and capital, Bill and Melinda inform us what’s trending in their thoughts about global poverty. Any international NGO jostling for crumbs of the Foundation’s largesse ignores the Letter at its peril.

Key headlines of the 2015 Gates Letter convey a rather breathless faith in unhindered global poverty reduction. “Our big bet for the future” asserts that “the lives of people in poor countries will improve faster in the next 15 years than at any other time in history. And their lives will improve more than anyone else’s.” The section on Farming predicts that “Africa will be able to feed itself” by 2030.

I have no quarrel with these statements, either as credible predictions or as desirable outcomes. I do worry that the wording reflects a shallow interpretation of the UN’s draft Sustainable Development Goals (SDGs), with which the Gates Letter associates, encouraging us all to do likewise as Global Citizens.

The new Goals have a rights-based sting in their tail that was missing from their predecessor, the Millennium Development Goals, and which is not recognised in the Letter. If approved in their current form, the 2030 Goals will anticipate availability of water and sanitation for all, sustainable energy for all, decent work for all – and above all, the end of extreme poverty and hunger.

Most development professionals believe that the encouraging progress of recent years does not alter the reality that elimination of poverty and hunger will be incredibly difficult. There’s simply not enough evidence that economic growth, as currently measured, reaches out to the “bottom billion”.

As for Africa feeding itself, we know that India is currently self-sufficient in food grains but nevertheless wrestles with appalling statistics for hunger and malnutrition. Hunger represents a failure of distribution, not productivity.

The broad-brush acceleration of better lives predicted by the Gates Letter is exhilarating but it won’t be enough to achieve the SDGs.

These Goals deserve our support because they will leverage governments into deploying economic tools that proactively assist the most disadvantaged households. The elimination of poverty and hunger compels the rebalancing of government spending priorities in both rich and poor countries in ways that are currently unfashionable. It compels intervention and compromise to calm conflict situations to an extent for which the international community shows little appetite.

The big bet therefore involves a very big ask. The Gates Letter skirts around that inconvenience; indeed it’s possible that this reality is unpalatable to the Gates Trustees and the Davos elite that were encouraged to sign up last week.

This is a shame because every word of the Letter’s final section, the “A Call for Global Citizens” is pitch perfect in its appeal to individuals to sign up to do something, however modest, in support of the SDGs. But a global movement to call governments to account for their promises to achieve the Goals will falter if it’s unprepared for the inevitable setbacks.

Let’s hope that future Gates Letters will gently introduce the political elephant in the room, rather as the Sage of Omaha had to break the news in 2009 that investment in his shares was not after all a utopian casino.

Painfully aware that griping at the natural optimism of philanthropy is unwelcome, I sought refuge in a very different report in my inbox. Subtitled Food Riots and Food Rights – and funded somewhat improbably by the UK government – the research analyses the causes and consequences of food-related riots that brought the 2007/08 crisis of rising food prices to a head.

It was the title page image that instantly resolved my dilemmas over optimism versus caution in human development goals. Like Gates, the Food Riots report adopts the imagery of African children to turbocharge its message. There the similarity ends.

Gates annual letter 2015

Them Belly Full

Which of these images* tells us more about the challenge of eliminating poverty and hunger in Africa in the next 15 years?

*I’ve been unable to trace a photo credit or copyright statement in either report. I hope it’s self-evident that the reproduction here is for purpose of debate and not to derive any personal benefit.

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2015 Gates Annual Letter

Them Belly Full but We Hungry: Food Riots and Food Rights

Open Working Group Proposal for Sustainable Development Goals

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Oil price collapse fuels case for divestment


“Economists have been thrown into confusion. Almost no-one in the profession predicted the oil price collapse in advance.”

The folks at 350.org might chuckle at this pre-Christmas self-flagellation from the Financial Times blog. Since embarking on its “Do The Math” divestment roadshow in November 2012, the environmental campaign group has noisily predicted the eventual collapse in value of fossil fuel reserves that underpin oil and gas company share prices. As the group’s then Chair, Bill McKibben, said at the time: “you can have a healthy fossil-fuel balance sheet, or a relatively healthy planet …. you can’t have both.”

Hundreds of institutional funds, including the Rockefeller Brothers Fund, have since opted for a healthy planet and started to offload dirty energy stocks. Many more fund trustees will be wishing they had followed suit. The energy sector of the US S&P index fell 16.5% over 2014, missing out on the all-time highs in other sectors. The oil and gas sector performance in the UK stock market was even worse.

If divestment campaigners were trading as investment advisers, this would indeed be the month for industry awards and mega-bonuses. In reality, of course, the campaign targets the long term responsibilities of investment fund managers, with little suggestion that fossil fuel assets will become “stranded” in such a short timeframe.

Nonetheless, the unusual conjunction of a predicted trend in valuation and the floundering hopelessness of investment professionals elevates the divestment movement, if not exactly to financial wizardry, at least to a position of greater strength.

I sense there are two broad directions of travel opening up in this context. One is that divestment campaigns could evolve beyond the focus on fossil fuels. Companies whose asset ratings depend on stable availability and pricing of ecosystem resources, especially food and water, are vulnerable to long term degradation. Biodiversity campaign groups might hook into the work of 350.org and its partners.

The second lesson from 2014 might be to look ahead to the challenge of empirical demonstration that the divestment scenario is being fulfilled. How can we detect the DNA of action on climate change in the cauldron of oil markets? One or two commentators have suggested that greater efficiency of energy consumption has been a factor in recent price falls. But most economic commentary on the tumbling oil price has exploited tools of supply and demand that have barely changed since the 1973 oil crisis.

If it were possible to prove by economic analysis that a fraction of the 2014 dip in share prices for the oil and gas sector was attributable to mitigation of emissions, the case for divestment would be strengthened – just as the case for climate loss and damage litigation is boosted by scientific evidence that global warming has contributed to an extreme weather event.

There’s some tough research lining up here. But fund managers are accustomed to paying top dollar for their economic advice. Traditional economists now have two chronic failures of anticipation to account for – the 2008 banking collapse and the 2014 halving of the price of oil. The first failure has been viewed charitably as misfortune; this second oversight might vacate some corporate territory for new voices.

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Global Divestment Day (Feb 13/14)

The dark side of the oil shock – Gavyn Davies on FT.com

Climate Justice Briefing

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