An example of red tape

I’ve written previously about tangible expenditures in the world of development – expenditures that may be sub-optimal. Today I want to talk about intangible costs, particularly those that arise as a result of bureaucracy and red tape. We’re all anecdotally and/or theoretically familiar with these problems in the development context. I’d like to highlight a specific example garnered from a primary source.

In the interests of disguise, let’s consider the following actors:

• A country in Africa: Africania
• A most-well known development bank: RFDI (really famous development institution)
• A leading global accountancy: LGA

Background:

• Ministry of Agriculture (MoA) in Africania decides it needs some funding from RFDI for a project
• Project divided into multiple components, each with a different implementing agency (IA)
• Leading global accountancy (LGA) hired to manage a project

Here is the process:

• Step 1: IAs report budget projections to LGA
• Step 2: LGA consolidates and corrects and sends projections to MoA
• Step 3: MoA approves projections (after possibly altering) and sends to Ministry of Finance (MoF)
• Step 4: MoF receives request for funding and sends to local disbursement office of RFDI
• Step 5: Local disbursement office of RFDI approves and submits proposal to RFDI headquarters in the US
• Step 6: Money sent from RFDI headquarters in the US to Africinia government account in London
• Step 7: LGA makes a request for withdrawal from that account and sends to MoA
• Step 8: MoA approves/changes withdrawal request and sends to MoF
• Step 9: MoF approves withdrawal request, includes it in budget expenditures and sends it to Central Bank
• Step 10: Central Bank withdraws money and sends it to MoF account
• Step 11: MoF hangs around a bit, delays, and sends it to MoA account
• Step 12: MoA hangs around a bit and sends money to project account
• Step 13: LGA can now disburse to IAs and project beneficiaries

Wow!

Of course, by now the circumstances under which the original projections were reported (step 1) are likely to have changed significantly. So, many times there are mismatches between available funds and expenditures.

I realize many of these steps are in place to avoid corruption and misdirection / misallocation of monies, but surely there are at least some efficiency improvements in the offing!

Development in 5-star

What percentage of the global development community’s budget, I wonder, is spent on 5-star comforts? By this I mean on such items as: business class (or better) air travel; 5-star (or better) hotel accommodation; $30 (or higher) meals per head; conferences / retreats / workshops at 5-star (or better) venues; etc? I would wager: a quite significant proportion.

There is, of course, the argument which follows: to address development problems we need to attract top talent; to attract top talent we need to provide the resources and opportunities to achieve a certain minimum standard of living – or we will lose talent to other sectors.

For many ‘expat’ development practitioners, because they have been brought-up in relatively comfortable western environments, I can see how it would be very difficult to permanently adapt to a considerably tougher living environment. While many are willing to take significant pay cuts, not everyone is willing for (or cut out for) life in a village with no electricity (at least not long-term). For top ‘local’ talent, meanwhile, simply the fact that the opportunity cost of other options – given their skills and qualifications – is quite high, would see them also demand a fairly high salary to work in development.

I would offer that these arguments are reasonable and justify expenditure on good salaries and comfortable travel arrangements in the development sector.

But it is a step-up from paying someone enough (and by this I mean even as high as the 95^th percentile in the local income scale) to be able to live quite comfortably while doing development work in Asia or Africa or Latin America, to spending lavishly on 5-star hotels, business class air travel and annual staff retreats.

The question is: should there be some limits? Are private sector style trappings needed in order to attract and retain talent for the development challenge? Even if not needed, do they have the effect of motivating people enough such that the cost-benefit trade-off is positive? Is it justifiable for NGOs, multilaterals, developing country governments and western government development arms to spend on these additional comforts?

I’m not sure where I stand. I would say that it needs to be evaluated on a case-by-case basis, because I’ve experienced both sides of the spectrum: instances where the value-add outweighs costs as well as instances where the cash could have been more useful had it been left as a tree. An example on the plus side: there was a retreat I once attended at a resort in Southeast Asia, where a small group of NGO managers went through a 2-3 day visioning and strategic planning exercise. While it is impossible to directly attribute cause and effect in such cases, the subsequent successes of this group of NGOs gives me comfort that the retreat was well worth the expense. For an example on the flip side, here is a direct quote from a former World Bank infrastructure finance consultant*: “On a trip to the Middle East – business class, via a rest stop at the Park Lane Sheraton in London, with an automatic upgrade to suite – I spent two weeks at the InterContinental Hotel in Amman, Jordan, ostensibly to help organize a conference on infrastructure finance. I had little to do beyond ensuring that the PowerPoint projector worked correctly. The most pressing task was composing a birthday greeting to King Abdullah on behalf of the World Bank and the senior government officials attending the conference.” Another recent example, though not directly related to development: http://www.nation.co.ke/News/-/1056/606104/-/ujr7c6/-/index.html .

I look forward to getting your comments.

* Former WB consultant and current writer, J. Maarten Troost, from his novel “The Sex Lives of Cannibals”.