Last week, Chris Blattman asked if philanthropy is killing business in Africa, citing the trend of big-time aid hijacking the workforce of the countries in which it operates. Many smart and potentially creative local people find that their best economic opportunity is to drive ex-pat staff around in 4x4s on monitoring and evaluation trips.
I couldn't agree more with Chris. We have to look at "the other side of the ledger" and consider whether all that aid money is serving and growing local economies or just cycling back through to where it came from.
Unfortunately, most aid is programmed in a top-down way, often through central governments or large organizations. These traditional aid channels are not known for generating much innovation. Instead, the innovators come from outside the usual aid channels.
Take International Development Enterprises and its treadle pumps, which can irrigate an acre of land for a total of less than $150 over a 10-year period. Contrast this with diesel pumps under government programs, which cost over $1,500 to set up and then incur operating costs of $175 annually.
IDE's model requires some modest subsidies up front, but it delivers a technology that promotes economic growth through increased yields, reduced costs and greater access to markets.
There are other treadle pumps out there. And the best way to surface them is through an open-access aid marketplace that allows groups like IDE to compete with other organizations to deliver the biggest bang for the least buck.
That is why I like the World Bank's Urgent Evoke project. It is an online game that has already elicited ideas and solutions to global challenges from almost 20,000 people worldwide.
Like the treadle pumps, many of these ideas are potentially self-sustaining and encourage entrepreneurship and business savvy, such as producing a fire retardant that can stop fires in densely populated shacks in Cape Town and can be sold at a tenth of the price of commercial fire retardants.
Another idea is to build a platform to teach business skills, to enable individuals to easily create new business and to create a business ecosystem in South Africa.
One entrant would produce energy and gas from waste using a biogas digester, and the output would be sold as fuel for profit by marginalized, economically disadvantaged people, including the elderly, the unemployed and people with disabilities.
Or, small-scale farmers will be trained in organic farming and linked up with domestic markets and local capital sources.
Currently, the top projects from Urgent Evoke are vying for funds and a permanent spot on GlobalGiving.
This approach provides venture capital for development ideas with a goal of injecting a much bigger dose of innovation into the aid system. Like in any venture capital approach, some ideas will succeed, and some won't. But they all will have a shot.
Urgent Evoke isn't the full answer to Chris' dilemma, but it's a positive sign of what could be. The more open-access funding mechanisms aid donors adopt, the fewer smart people in the developing world will be driving 4x4s in circles around the capital city. And more of those former drivers will be creating real economic opportunities for themselves and their neighbors.