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3 May: How much will it cost? How will we pay back?

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The first chapter of the IMF 2020 Fiscal Monitor shows that, as of 8 April, G20 countries had provided 3.5% GDP of fiscal support to respond to the pandemic. To compare, in 2009 they spent 2.1% GDP to respond to the financial crisis. In addition, G7 countries have already put forth loans, guarantees and liquidity injections amounting to over 10% GDP. It is not yet possible to estimate the full economic cost of the crisis. But we are talking in trillions of dollars. To compare, the Global Preparedness Monitoring Board said that the 2003 SARS epidemic costed $40 billions, the 2009 H1N1 pandemic $45 billions, and the 2014-2016 Ebola outbreak $53 billions. And to recall, the Commission on a Global Health Risk Framework for the Future estimated, back in 2016, that global pandemic preparedness would cost $4.5 billion per year. Yes, that’s in billions of dollars. Globally.

I always enjoy Capitalisn’t, the podcast of Georgetown Kate Waldock and University of Chicago Luigi Zingales. In this episode they discuss who is going to foot the bill. They explain how debt works, and how there are two ways to get out of it: growth and taxes. To debate tax options and their effects on inequalities, they invite Nobel prize Gene Fama, challenge his conservative views, and get him to agree that a one-off wealth tax could help pay back in a fair way.

My graph this week is Vivid Economics’ green stimulus index which shows the “green” component of stimulus funding – ie how funds go to sectors improving climate change, biodiversity, and pollution — in 11 countries. And we do not see much green. 

My quote this week is from former World Bank President recently-gone-back-to-Partners-in-Health Jim Yong Kim [39’30’’]: “If we are using bazooka and nuclear options in fiscal and monetary policies, why are we using squirt guns in public health policy?”.

27 April 2018

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I read the Arbinger Institute’s “Leadership and self-deception” this week because it is about a man starting a new job. Like me. The messages were deeper than I had anticipated. Through the fictional story of this man, the book highlights the challenges people face when they focus on their emotions and insecurities rather than on the results they are trying to achieve. It shows how self-awareness leads to happier times at work and at home. The tone is somehow patronizing but it is a quick read that I found helpful at a time I am confronted with a new culture, new politics and new expectations.

I enjoyed Noah Kulwin’s conversation with Jaron Lanier in “One has this feeling of having contributed to something that’s gone very wrong”. Lanier, a virtual reality guru, who works at Microsoft Research reflects on what went wrong with the internet and social media platforms.  He describes a very centralized Silicon Valley culture where “this very open collective process [is] actually in the service of this very domineering global brain, destroyer of local interpretation, destroyer of individual voice process.” Lanier is publishing a new book entitled “Ten arguments for deleting your social media accounts right now” in which he unpacks the political, economic and spiritual arguments behind his call to action. Politically, social media is “empowering the most obnoxious people to be the most powerful”; economically, it is “centralizing wealth”; and spiritually, it is “lacking in empathy or any kind of personal acknowledgment”. An important perspective, I think.

My graph this week is from the Global Findex Database 2017 collecting data from 150,000 people through representative surveys in 140 countries and showing that two third of unbanked adults have a mobile phone. These are big numbers, illustrating the potential of mobile for financial inclusion. But the report also shows that these numbers are much lower for women, the poor, and the less educated.

My quote this week is from Elon Musk in “Progress, Precision, Profit”, an email to his Tesla employees: “Walk out of a meeting or drop off a call as soon as it is obvious you aren’t adding value. It is not rude to leave, it is rude to make someone stay and waste their time.”

22 April 2018: Management, Spring Meetings, ODA

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I got excited about this article and that podcast which align with my wish for human-centered management cultures to replace policy-centered ones. The Harvard Business Review’s “Co-creating the employee experience” shows how IBM uses design thinking, crowdsourcing, and prototypes to develop HR policies because “people are much less likely to resist the change when they’ve had a hand in shaping it”. Tom Peters’ “Excellence dividend” [H/T Kathleen Edison] shows why investing in people and their development is the only necessary strategy companies should truly pursue. That quote sums it all: “If it is not incredibly cool and fun and energizing for the boss to walk at 1am in the distribution centre with the front line people who are doing the work, do the world a favour boss: resign tomorrow!”  

It was the week of the IMF and World Bank Group Spring Meetings. What caught my attention came mostly from the IMF. Managing Director Christine Lagarde unpacked the trade tensions that were the main backdrop of the Meetings in her Hong Kong speech. In her Beijing speech, she flagged the debt and broader fiscal challenges that the Belt and Road Initiative faces in its expansion phase, and launched the China-IMF Capacity Development Center to train Chinese diplomats. The World Economic Outlook chapter on “Manufacturing jobs” debunked the long held view that development requires moving from agriculture to manufacturing to services. It documents the shrinking contribution of manufacturing to job creation at the global level and shows that some developing countries have skipped the manufacturing stage by rapidly developing service sectors with high productivity (eg telecom, transportation, financial intermediation).

My graph this week is from the OECD 2017 Official Development Assistance (ODA) figures. ODA stabilized at 146.6 billion in 2017 with two trends in reverse gear: (i) a decrease of in-donor spending (i.e. money spent on refugees in rich countries), and (ii) an increase in funds going to poorest countries. ODA remained mostly disbursed in the form of grants but the share of loans grew (+13% from 2016). The broader trend, pointed to by World Bank President Jim Kim, is that since the 1990ies, the ODA share of financial flows going to developing countries has dropped significantly to reach 9% today, reflecting the shrinking financial power of development organizations.

My quote this week is from Zuckerberg in his Ezra Klein interview: “It’s just not clear to me that us sitting in an office here in California are best placed to always determine what the policies should be for people all around the world.”

Core funding of the UN, the end of an era?

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Browne and al’s “Sweden’s funding of UN funds and programmes: analyzing the past, looking to the future” reviews the funding patterns of  the UN development system (UNDS). The paper was commissioned by the Swedish Experts Group on Aid Studies, an independent policy evaluation/analysis function kick-starting topical conversations within the Swedish government.

The background for the study is the rise of earmarked funds to UN funds and programmes: from 58% of the total budget in 2007 to 80% now. Its findings and recommendations were discussed this week with Sweden’s State Secretary for International Development, a panel of respondents in which I participated, and about 100 civil servants from different ministries and SIDA. A key issue was the funding strategy Sweden should adopt moving forward. A key concern was whether, by being one of the last long-standing core-funding supporters, Sweden was being “taken for a ride” (the title of the event).

The report reviews the finances and effectiveness of funds and programmes. It uses CEB data cross-referenced with data from agencies. UNICEF is portrayed as an exemplary agency having grown in size thanks to non-core contributions, but having strategically redirected these resources towards pre-identified needs to service its mandate (pp 58-61). The recommendations, presented by the authors as “doable” and received by the State Secretary as “helpful”, go from an ask for harmonized definitions to a call for Sweden to “withdraw its non-core funding from UNDP with the aim of encouraging it to emphasis its original central funding and coordination role within the UNDS rather than its role as an operational competitor within the system.” Ouch.

Other recommendations ask Sweden to (i) redirect its core support towards the most effective organizations and humanitarian work, (ii) champion predictable funding for normative activities, and (iii) request agencies to improve their messaging around the importance of core funding. Part of the discussion this week picked up on these. The Secretary of State noted how powerful field results were to advocate for core funding. Several speakers underlined the critical role of core funding for normative and humanitarian work, two functions presented in this report (and many others) as the undisputed comparative advantage of the UN. I used UNICEF illustrations to show how core funding supports universality, the role of first responder in crises, long term investments, the bridging of humanitarian and development work, and the delivery of results for children on the ground.

A thought-provoking table in the report (see below) was used to remind the audience that the core/non-core funding trend was not affecting all multilaterals similarly. One speaker argued that the UN should consider adopting a replenishment system akin to International Financial Institutions (IFIs) and most global vertical funds. Several participants supported this idea while others wondered whether the decrease of UN core funding was more a matter of political will than of technical fixes.

 

 

Another recommendation of the report is for Sweden to sponsor an independent international commission on UN funding. Having worked for several such commissions including two financed by Sweden, I was asked to react to this suggestion. The proposed mandate of the commission being rather narrow (“to review definitions and rationalize the allocation of UN funding”) and the terms of reference rather prescriptive, I suggested a more strategic and forward looking framing. Indeed, the report did not, in my view, do justice to the second part of its title: “looking to the future”. What are the key drivers of change that will influence development finance, and UN funding, in the coming 10-20 years? What would the UN funding debate look like in a future where financial technology combined with digital peer-to-peer platforms could become the norm for international financial transactions? How will more frequent disasters influence the nature of UN funding in particular as these shocks also affect richer countries potentially reversing their aid-eligibility? Could traditional donors increasingly channel their resources via IFIs transforming UN agencies as mere implementing partners in a shrunk UNDS? Could new donors increasingly channel their resources via multilateral organizations and revitalize the UNDS? Etc

My main take away from this conversation and what I read on the topic in the context of UN reforms, is that we should develop “what if” funding scenarios, one of which focusing on a further decrease of core funding and direct support to UN operations.

3 November 2017

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It is always good to have a quick read through the OECD DAC high level meeting communique. Two specific points caught my attention this year. One, the club of 30 richest countries agreed on the accounting rules for in-donor refugee spending. Certain costs can now be reported as official development assistance (ODA) during the first year of refugees in host countries with no cap on expenditure levels (Annex II). Provision of food, shelter, healthcare and education, rescue at sea, and voluntary resettlement costs are eligible. Spending associated with detention, border control, return and resettlement following asylum rejection is not eligible. Two, DAC members decided to explore the possible “reverse graduation” of rich countries affected by natural disasters or humanitarian crises (paragraph 41). This decision was triggered by the U.K. seeking ODA eligibility when supporting their Overseas Territories in the Caribbean following hurricane Irma. This is important as there has been, up to now, no rule for high income countries experiencing crises-induced GDP drops to be re-instated as aid recipients. As these two developments have implications for the redirection of ODA away from the poorest countries, these conversations are worth monitoring and, I would argue, engaging with. For the second-time in 40 years of its existence, the DAC high level meeting allowed civil society participation and NGOs issued common statements – a possible entry point.

In “It is time to end the opacity and secrecy of social media” Ghonim and Rashbass suggest to develop standardized public interest APIs (application programming interfaces) to improve the transparency of social media. The idea is to create “public good” algorithms to scan and surface problematic content and sponsors on digital platforms.  I found this interesting because it does not only look at the symptoms of the on-going social media crisis. As we have argued before, the root causes of the problem have to do with the ethics of digital platforms design and what drives their expansion (money, not societal progress). But, of course, there are also limits in using tech to fight tech.

My graph this week is from Heidrick and Struggles in “To understand whether your company is inclusive, map how your employees interact”. It shows the results of a network analysis done with employees of a large professional services firm to understand whom they trust and turn to to ask for help with decisions. In that particular example, we see that women (red dots) have less connections than men (blue dots); that there are more same-gender ties than cross-gender ones; and that women are less central than men in the innovation network. This type of evidence is key to understanding diversity and inclusion at a deeper level than counting the number of staff from different groupings.

 

 

My quote of the week is from Pekka Kuusi’s “Social policy for the 60s: A plan for Finland” (H/T Ronald Wiman) referring to the universal child grant system introduced when Finland had a GDP per capita equivalent to that of 2015 Namibia: “A heavenly gift to a country where there was scarcity of everything – except of number of children”.

30 June 2017

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Nelson and Detrixhe’s “The World Bank’s “pandemic bonds” are designed so investors pay in the event of an outbreak” explains how the just-launched pandemic bonds work. Investors who buy bonds basically act as pandemic insurers. This allows the Bank to release money to poor countries as soon as an outbreak occurs. Take Ebola, $100 million could have been made available as early as July 2014 with such instruments but “money did not begin to flow on this scale until three months later, by which time the number of deaths had increased tenfold”. So that’s a useful tool. And investors are ready to take the risk: the pandemic bond sale was 200% oversubscribed. These instruments have been used for years by insurance companies to transfer risks of natural disasters to financial markets. And they could be applied to other emergencies beyond health and natural catastrophes.

Ziad Haider’s “The case for a Global Council for Refugees” calls for the creation of a new structure that would bring together private efforts supporting refugees. It illustrates how the private sector already helps refugees, mostly around getting jobs. It points to similar business alliances in other areas, e.g. the Global Business Coalition on HIV/AIDS. It lays out the main functions a Global Council for Refugees would play: repository of existing initiatives to avoid duplication; one stop-shop for partners; peer-to-peer catalyst, and advocacy amplifier.

My map this week is from IFAD’s “Sending money home: contributing to the SDGs, one family at a time” which presents the flows and trends in remittances during 2007-2016. The report is full of great facts. 1 billion people are involved with remittances: either sending or receiving. Half of remittance senders are women. Remittances flows to developing countries grew by 51% over the past decade while migration from these countries only grew by 28%. And look at Asia-Pacific: remittances increased by 87%!

 

 

My quote this week is from Iraqi Nori Sharif, the videographer of the brutally disturbing “Nowhere to hide”: “It is difficult to diagnose this war. It is an undiagnosed war. You can see all the symptoms: death, pain, sorrow. But you don’t understand the disease.”

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