…is that there is no secret. One approach to a successful aid project just is to immerse yourself in the local community, put local people in charge who are themselves highly motivated, be adaptive and flexible to respond to whatever the local people think about how they can help themselves, so that you customize the “standard project designs” to fit local circumstances. Most aid projects fail because there is nobody in the field making all these necessary adaptations and fixing unanticipated problems as they arise. The moral of the story is: be a Searcher and not a Planner.
All of these generalities came to mind when I visited the project Women’s Trust in Pokuase, Ghana yesterday, which I had also visited two years ago. I had a favorable impression then, and even more yesterday. An American, Dana Dakin, decided to start an NGO to help poor women on the occasion of her turning 60. The result, Women’s Trust, is a micro-credit initiative just for the medium-sized town of Pokuase on the outskirts of Accra. It seeks out female entrepreneurs and backs them with its small loans (the initial loan is less than $50, then increases with successive loans). The permanent staff is Ghanaian, led by the formidable Gertrude Ankrah, including accountants, loan officers, and computer whiz kids.
One success story is Sarah Ankrah (Ankrah is a very common name here), who received a 3000 Ghanaian cedi loan (at the time 1 cedi was equal to 1 dollar). Sarah now runs the largest bakery in Pokuase. Every day she gets up at 2am to go through 8 large bags of flour to have bread ready for her customers first thing in the morning. Women’s Trust microloans allowed her to grow by avoiding the extortionate rates charged by the flour suppliers (a 9% interest rate for a loan of only 2 weeks), which had previously eaten away most of her profits. Now she employs 8 women and 4 men. Her son Sammy became the first member of the family to go to college. Sarah perceives her market as “unlimited,” and is dreaming now of buying a delivery van to scatter her loaves far and wide. She repaid the 3000 loan and took out a new loan from Women’s Trust of 4000.
Sarah Ankrah and her workers cut up and shape the dough.
Similar success stories abound. Women’s Trust has diversified into new areas as opportunities arise. Bright kids from Pokuase whose school careers and life prospects would have ended prematurely get scholarships. Mothers bring in their babies to Women’s Trust to be weighed as a check on good nutrition. A handicraft operation crochets strips of plastic from recycled garbage bags into colorful handbags (two large orders from the US have already been received).
This kind of aid project is based on a lot of personal, face to face interaction, developing trust and a shared vision, so it is small scale, it has to let things proceed at their own pace, it can’t meet rigid pre-set output targets, it could never be judged by a rigorous “randomized controlled trial” methodology. In short, it involves the kind of tacit knowledge and individual adaptation that could never be converted into a routinized project implemented by the official aid bureaucracies. It breaks all the rules, and it works.
13 Comments
Nice article, it’s great to hear about these successes. Might I suggest more circumspection in the use of words such as “extortionate”? Nine percent for two weeks is certainly a higher interest rate than we see in rich countries, but that most likely reflects local problems with credit markets rather than malfeasance by individual lenders.
From what I’ve seen in West Africa and read from case studies you have a valid point. Most of the best projects and products in every field (sports esp.) are labors of love for some “champion.”
But there’s a big problem with relying on the world to spontaneously produce these champions. First, its clear that too many problems are left on the table if we rely solely on a few people dedicating their lives to fixing everything and have no concern for scalability and replicability. Second, it’s not as if there is nothing to learn in terms of best practices and that every great project is built up by trial and error. RCTs provide the best insight into best practices
Agreed, always good to hear a success story and to witness positive change. But, to use your words, it also whiffs dangerously close as another micro-finance scheme/option germinated by a “planner”. “Successful aid”, from another perspective, would mean creating comprehension of the system in such a way that would would then enable further independence (and not another loan!) while creating powerful communal change and thus opening up the door for many others through social organization and contemplation… not just creating another cog in the never attainable, never fulfilling, mechanism of consumerism.
I think this is a great story of success and certainly contributes to the tally for searchers against the planners. My concern however is for what is not said in the story because readers must have the context within which the story is told. How many loans have been given out and how many of them share similar success? Were any of the other ones planners and how did they do? If this story has been singled out for success, is it because of the searcher mentality or is it something else like the industriousness of Sarah Ankrah? If each loan is $50 dollars and one cedi is equivalent to one dollar, how many loans has our entrepreneur already taken to get to 3000?
Other than what has not been said, I applaud the efforts of Dana Dakin and the Women’s Trust but flinch at the planner and searcher dichotomy.
The lesson from this story is supported by Mortenson and Relin in their book 3 Cups of Tea.
By working with local people and letting the local people organise the project, schools, in this case, can be built for a reasonable amount of outside (aid or other) money.
Bill-
Great anecdote and I agree with your conclusions. There are, however, ways to build these successes into the industry, but it will require aid systems to be much more decentralized, less driven by top down targets like the MDG’s with much more flexibility built into the system. This will also require a shift of decision making power from Washington, New York, Geneva, London,etc. to recipient countries where program managers and their local partners (donors and beneficiaries) will have the ability to change course, fix problems and discover solutions as they go along.
Hi Jeff,
I agree with the analysis that it must be less top down. However, this movement has already occurred with many aid agencies for quite some time now and although some gains have been made the system in general is still found wanting. The best way to eliminate top down practices is by empowering the beneficiaries with much more that just aid. Political, economic, and academic empowerment are sustainable practices that are regenerative in nature and transform for generations. But to practice this type of assistance would mean for all practical purposes and end to the humanitarian enterprise. What do you think?
Tomás-
It’s true that donor agencies have for some time talked about local empowerment and decentralization, but there has been a big gap between the rhetoric and the reality. If aid is truly decentralized, it means allowing local stakeholders to define success and redirect resources as needed. I don’t think this means an end to the humanitarian enterprise, but I agree it is problematic. I don’t think adequate attention is paid to the problem of the moral hazard of aid and how to manage it. The mere existence of aid resources changes what local social entrepreneurs do.
So aid that is ’small scale’ and understand local conditions, works. How do you apply this learning to building a ’small scale’ better national road network then, that provides market access for people like Sarah if they’re in a rural/agricultural community instead?
Isn’t there still a place for donor investments in broader public goods? Entrepreneurial microfinance is great but what if all the basic structural obstacles to market efficiency remain unaddressed? And what if (like roads or electric grid) those require investments in the millions or tens of millions USD? You talk about an unused 4-lane aid funded road, surely that’s ’simply’ an issue of improving Ghanaian goverance: better market research, public scrutiny and consultation on infrastructure investment decisions. Or do we throw out the baby&bathwater?
Excellent post, and just linked back to it at:
http://humanitarianrelief.change.org/blog/view/links_for_a_slow_monday_evening_including_of_course_witches
Surely microcredit schemes run by people living in the communities where they operate is nothing new. Nor is putting flexible, adaptive people in charge,(if local conditions and politics make it possible.)
What is new is that many organizations are getting better at measuring how well these things are working so that they can adapt to local conditions even better. Anecdotes like this one are great for donor reports, but even projects that fail miserably can find such stories.
I applaud Women’s Trust and appreciate your writing about the organization’s work. Still, it would be nice to have something more concrete on which to judge its success than just Sarah Ankrah’s story (and I’m giving the benefit of the doubt here that Sarah is not related to Gertrude Ankrah, the organization’s leader). No, I don’t need randomized controlled trials, propensity score matching, or anything like that. Just some basic info on how many people have been helped in how many years, how many of them turned their loans into something lasting, how many defaults, how much does the program cost, that sort of thing.
Surely you’re not saying that just because it’s local and flexible, it’s success can’t be reasonably evaluated?
Being a Searcher doesn’t mean you’re off the hook.
In addition to the success of the WT in their own programs, they also worked with me to develop a microlending program and train office staff for The Yonso Project two years ago. We have learned a great deal from them and adapted a similar program model to fit our area in rural towns of the Ashanti region in Ghana.
I don’t know the statistics for WT operations, but I know ours. We have on average at least twice as many women applying to us as we can issue loans to. We have neighboring towns asking us every week to expand operations into their towns and since starting in just the town of Yonso, have expanded into three more neighboring towns as well. We have average on-time repayment rates of over 100% across the board. We have only had one default in the two years we’ve been operating out of 250 loans issued so far. Our program, while still small, has grown to the point where it is actually profitable and can cover the expense of our office staff and also contribute a little back to our other programs.
How does one measure the success of a microlending program in comparison to others when each has a different program with different goals? Programs have to be measured by looking at how their repayment rates, borrower satisfaction, and reputation compare to their goals. Some programs are more profit oriented, focusing mainly on high repayment rates and financial growth while others focus on public benefit, offering many free services and running at a loss for the betterment of the community.
I hope this bit of unrandomized, uncontrolled information is helpful.
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