Podcast: Income-generation for the poor. Is it just about money?
In this issue of the IMC podcast, Sajid Chowdhury is joined by special guest Tim Bene to discuss design and management issues in poverty reduction programmes. Tim has reviewed or evaluated nearly 100 projects and programmes in more than 20 countries.
SC: Hello from IMC Worldwide. My name is Sajid Chowdhury. Today, I’m joined by very special guest, Tim Bene, who strives to improve aid effectiveness by taking a results-oriented approach to appraisal, formulation, monitoring and evaluation. He has reviewed or evaluated nearly 100 projects and programmes financed by donors such as the EU and DFID and implemented by a wide range of international organisations, consulting firms and NGOs in more than 20 countries. Tim, welcome to the show.
TB: Thanks, Sajid, and it’s good to be catching up with you.
SC: Now, there are many types of development approaches that seek to reduce poverty, including social protection, rural or community development programmes, and private sector development in the form of Making Markets Work for the Poor or M4P.
Many of these involve income-generation for the poor, and we’re going to talk about some common design and management issues. But first, what do these projects and programmes actually aim to achieve? Is it just about money, or is there something more? Tim?
TB: Well, if they are income-generating activities, then obviously, cash is going to be a part of it. But nowadays, one realises that with poverty reduction programmes that what we are looking for are signs of poverty reduction, and income is not particularly the best one of those to look at. Nowadays, everybody realises that poverty is a multi-dimensional thing.
In addition to cash availability, savings and so on, it’s got to do with the assets that one owns, the position that one has in society, empowerment, availability of sanitation and stuff like that.
…there is a tendency for projects to try and get off at a gallop, so they are rather prone to doing anything without really thinking through whether those are the right interventions.
There are many different characteristics that one can look at, and depending on the type of poverty level that we are talking about, from the extreme poor up through to people who are somewhat less poor to those who are borderline not poor, one would have a number of indices of these characteristics that one can create to say what kind of level we are starting from and what kind of level we want to go to.
And probably a better way of measuring poverty is to use a kind of index like that than to look at simple changes in income. But what tends to happen with a lot of projects is that they get stuck with a logframe or something at the beginning that they have to put an indicator into.
It seems like the easiest thing to do is put in an indicator of cash because they haven’t yet worked out their multi-dimensional indicators or something like that. And so that goes in, but in fact, actually, even changes in income can be fairly difficult to measure anyway. So I think the other indices are a better bet to go for.
SC: And so, Tim, just the basic question: how do you determine how much money people need to be taken out of poverty?
TB: Yeah, that’s a very interesting question, and one that isn’t really looked at very much by a lot of programmes that are involved in poverty reduction.
It would be ideal to try and do something like a household business plan for each of your beneficiaries so that you can determine which of those features that I just described that we really want them to improve in, and to sort of tailor-make some interventions that can help them get the right amount of money that they can afford to do that.
But the fact is that most projects are dealing with thousands of beneficiaries. In Bangladesh, with DFID, there are projects that are dealing with hundreds of thousands, even up to a million beneficiaries, so you simply can’t do that.
So you think ‘Well, maybe we can make general categories of people who are sort of at various levels in what you might call the hierarchy of poverty, and we could try to aim certain interventions of one kind or another to be appropriate to whichever level that a beneficiary falls in.’
But I haven’t seen many cases where that’s happening, either. So what happens frequently in examples that I have seen have been that the ones who appear to be more capable get allocated or somehow get hold of the interventions that are likely to give the better amounts of money, and those who are less capable, or weaker in society, unfortunately tend to get the lower-value interventions, if they get any at all. And so unfortunately, that’s the reverse of what we would like to have happening.
I think the correct message we should be putting out there is that projects must start with much better-defined objectives. And that means perhaps to develop a proper theory of change rather than simply putting indicators in a logframe.
SC: So if we reflect on all that, on the current state of development programming, what’s the key learning that we could take away from this, and secondly, what do you envision are the kind of management decisions that could to be made in response?
TB: Well, I think the first thing is that there is a tendency for projects to try and get off at a gallop, so they are rather prone to doing anything without really thinking through whether those are the right interventions.
So for instance, I have seen a number of places where I go to visit a project, and I ask the people ‘This intervention that is supposed to be producing income for the beneficiaries, so what is the potential income gain that they can get from this?’ Very often, they can’t even answer that, and then I say, ‘Well, OK, so the beneficiary that you are dealing with–how much money does he or she need to make the gain that you want them to gain to reduce their poverty?’ And they can’t really answer that one, either.
And so really the first thing to do is for project managements at the beginning to slow down and to start thinking about those basic questions before they get into actually delivering the interventions themselves.
And the second thing is that there is a tendency by the donors really to set targets, and quite often, those targets are set in a financial way because that’s the most convenient way for donors to measure what benefits they are getting.
So they might say ‘Let’s have a project that is going to improve the income of 100,000 people by 100 pounds a year each.’
The difference between someone who gets 100 pounds as a lump sum or as four smaller lump sums or as 30p a day, in terms of what they can do with it and how it is going to help them to improve their poverty status is quite significant.
But even when you do that, there’s a risk that firstly the project will average that out, so they might be able to find one or two income-generating activities that can actually make about 200 pounds a year for the beneficiaries, but they will be probably rather expensive to carry out, so they will only do it for a small number of beneficiaries.
And then a rather large number of beneficiaries might only get 50 pounds a year or less of benefit from the intervention that they are given.
But you can’t really average out the effect on poverty. So even though the average of that might come to 100 pounds, the ones getting 200 pounds are definitely likely to improve their poverty status, but the ones that are only getting 50 pounds might not improve it.
And the other thing about that is that we have to consider not only the income itself, but the distribution of income throughout the year.
So most of these projects are related to agricultural or let’s say rural communities where the income-generating activities are frequently agricultural ones.
Some agricultural produce comes just once a year, is harvested once a year, and so the sale is done maybe not on the exact same day but within the same period of time, a small period of time, when they get their 100 pounds of benefit, assuming that the activity can produce that.
Another activity might be something like small-scale animal production, where they might be able to sell an animal say four times a year, in which case, we would say that if it was going to achieve a 100-pound a year benefit, that would be 25 pounds for them 4 times a year.
And another example might be something like where they are baking bread, where a baker can only bake a certain number of loaves a day.
So his income is constant, everyday it’s going to be the same. Or where someone is doing a dairy business and is selling milk, so she can only get a certain amount of money every day, but it is daily. And so what would that be, that might be 30p a day or something that she gets.
So the difference between someone who gets 100 pounds as a lump sum or as four smaller lump sums or as 30p a day, in terms of what they can do with it and how it is going to help them to improve their poverty status is quite significant.
With 30p a day, she might not be able to do an awful lot with that, whereas 25 pounds a quarter can help you to send your children to school or something like that, and of course 100 pounds a year, you can buy a useful asset if you get the lump sum.
So I think those are some of the things that project managements could usefully look at in terms of improving the quality of their poverty reduction programmes.
SC: So, Tim, you have covered what management could be doing differently, and you have also covered what donors could be doing differently. I just wanted to ask you, is there anything that you think evaluation teams can be doing differently in communicating this message?
TB: Yeah, that’s a good question, Sajid. There are definitely lessons out there that we know but are not getting applied. And I think it’s perhaps because we express them in the wrong way.
So we talk about people needing to redesign their interventions to make sure that they fit the needs of stakeholders and so on. And that’s a message that’s a bit difficult to give. Obviously, it’s useless to give at the end of a project when you do an evaluation. It may be helpful if you do a mid-term review.
But I think really the correct message that we should be putting out there is that you need to start your project with a much better-defined objective.
And that means perhaps to develop a proper theory of change rather than simply putting some indicators in a logframe. And if we could engage with a lot of projects a little bit during their inception periods and help them with that, I think that might be very helpful. Anyway, I think just getting it out there in a podcast like this might also be helpful, Sajid, so thanks for giving me the opportunity to do so.
SC: Well, Tim, I would really love to keep this going, but we are just about out of time. So I do really want to thank you for being here today.
TB: It’s been a pleasure, Sajid. Thank you very much.
SC: And to our audience, I do want to say ‘Thank you for being with us.’ We are going to continue covering this issue on our Twitter account — @imcworldwide. And we will also post the transcript of this podcast to the IMC website, and you can find that at imcworldwide.com. Thank you again for being with us, and join us next time for the IMC podcast.
On 18-19 June, IMC Worldwide will be at the European Development Days (EDDs) in Brussels to share how we foster innovation to improve lives in low-income countries and generate fresh ideas with the development community.