finance

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

Posted on December 3, 2017 Leave a Comment

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

Posted on November 3, 2017 Leave a Comment

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

Posted on June 30, 2017 Leave a Comment

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.”

19 May 2017

Posted on May 19, 2017 Leave a Comment

Delivered earlier this week during the Belt and Road Summit, Zheng Bijian’s “China’s ‘One Belt, One Road’ (OBOR) plan marks the next phase of globalization” presents OBOR as a global game changer. Indeed, this is the biggest infrastructure plan ever: 65 countries, 62% of the world population and 30% of global GDP. The total investment need is $5 trillion. China already pledged $113 billion, 9 of which in the form of aid to poor countries. More funding will come from the BRICS’s New Development Bank and the Asia Infrastructure Investment Bank. Unless you are in the Americas, chances are that what you do is somehow connected to this initiative. I guess, even if you are in the Americas, there will be externalities. Looking at power dynamics in the region, much of the talk focused on India’s lack of support. Next summit scheduled for 2019.

Danny Hernandez’ “How our company learned to do better predictions about everything” is what I shared when asked about best practices to improve organizational data literacy. Let me be clear here: I don’t know anything about best practices in that area. But I read this interesting article the day before I was asked the question. The company is Twitch, an Amazon offshoot. It invested in growing the predictive skills of every single staff member irrespective of functions and ranks. An initial phase warmed up employees by asking them to play with past company metrics, like “how much do you think our sales grew last quarter?” Once they got comfortable, they were asked to make predictions that would impact their work, like “how confident are you that you can complete this project in 3 weeks?” At first, Twitch employees were not excited: they did not believe in predictions, were afraid of making bad predictions, and thought that there was not enough evidence to make good predictions. But after the training, 96% of them said they would recommend it to a colleague. This initiative improved Twitch’s collective forecasting capacity. And it boosted efficiency as employees got better at evaluating ideas, defending funding proposals, and setting expectations. Other good ideas I heard this week: have data days in your teams or spend 10 minutes everyday on data issues. I am adding the latter to my daily routine.

CBinsights’ “From virtual nurses to drug discovery: 106 artificial intelligence startups in healthcare” maps the growing AI health market which is revolutionizing the whole industry from direct assistance to patients, to diagnosis, to drug discovery and mental health treatment.

My quote this week is from Elon Musk’s “The future we are building – and boring”: “I am not trying to be anyone’s savior. I just want to think about the future and not be sad.“

12 May 2017

Posted on May 12, 2017 Leave a Comment

The Economist’s “A growing share of aid is spent by private firms, not charities” is worth reading as it crunches US and UK aid data to put numbers behind this trend: 25% of USAID and 22% of DFID spending went to private firms in 2016, both on the rise. The drivers behind this growth are: a shift from project-delivery to system-shaping requiring technical advice that firms are best equipped to provide; a “doing more with less” aid culture leading to more outsourcing; and private contractors’ ability to quickly match time-bound freelancer teams with complex development problems. Private contracts are also getting bigger leading to the market concentration of contractors and a growing number of consortium where small fish are used as “bid candy” by lead contractors. The Economist documents some of problems associated with these trends including higher delivery costs and risks of frauds, calling for aid agencies to take a close look at their bidding and contract practices.

WFP’s “At the root of exodus” puts numbers on the food/conflict/migration nexus. It models data from 88 countries with negative net migration and 178 countries with outflow of refugees during 1990-2015. It shows that the number of people migrating increases by 1.9% for each percent increase in the number of food-insecure people, and by 0.4% for each additional year of conflict. It also shows that migration can increase food insecurity both for those leaving and those staying behind, and that food insecurity is a significant determinant of the incidence and intensity of armed conflict. The study complements these findings with qualitative data collected through focus group discussions with 231 migrants from 10 countries in Greece, Italy, Jordan, Turkey and Lebanon, and validated via 570 household phone surveys in Jordan, Lebanon and Turkey. Once on the move, food and economic security are key determinants of whether people keep going or settle. Half of Syrians interviewed in Jordan and Lebanon want to move elsewhere while only a quarter of those in Turkey plan to.

My visual this week is from the Developing Human Connectome Project which just released its first open access data. The EU-funded project aims at creating 3D brain maps of fetuses and newborns to understand how the human brain develops and what triggers certain afflictions like autism. Adult brain maps already exists. So these guys are focusing on the 20-44 weeks post-conception window, and doing MRIs on hundreds of babies in the womb.

My quote this week is from Eurasia Ian Bremmer’s “The wave to come”: “Nationalism is alive and well, partly because the problems that provoked it are still with us. […] Now here’s the really bad news: an even larger crisis is coming. The popular fury convulsing Europe and the U.S. may well spill over into the rest of the world. Just as the financial crisis, which began in the West, produced rumbling aftershocks around the globe, so the nationalist explosion will rattle the politics of countries on every continent.”

28 April 2017

Posted on April 28, 2017 Leave a Comment

Tim Urban’s “Neuralink and the brain’s magical future” is a deep dive on the evolution of the brain from the first nerve appearing in a sponge 600 million years ago all the way to the future of brain-machine interface (BMI). I like Urban’s explain-this-to-me-like-I-am-a-5-year-old blog posts. They are long but entertaining. You can tell he spends hours going down the rabbit hole and processing tons of information to extract what the reader needs to know and to select the funniest, weirdest, and most beautiful illustrations. The post came out as Elon Musk launches Neuralink, a company developing BMI to connect humans and computers. Neuralink is the latest addition to Musk’s electric car/mega-battery/rocket/hyperloop futuristic empire. Musk’s plan is to “bring something to market that helps with certain severe brain injuries (stroke, cancer lesion, congenital) in about 4 years. [And he thinks that] we are about 8 to 10 years away from this being usable by people with no disability.” Before that announcement, the timeframe for having commercial BMIs for people without disability was 2050. So let me bring this home: his plan could make BMIs part of the “how” of reaching the SDGs.
When asked why he invested in this field, Musk responds that he tried to raise the alarm bell about the possible dangers of artificial intelligence [remember? the group of concerned tech/scientists writing that warning letter] with no traction, so he decided to go ahead and develop BMI options for the social good.
Should we invite him to the UN for an early conversation about BMI governance issues? He may enjoy this trip back in time. But in addition I would suggest that someone from the UN flies to San Francisco now to convince Musk to add an ethicist to Neuralink’s 8-member core team.

UNEP Inquiry’s “The financial system we need” is the second edition of a report that takes stock of the financial system’s alignment with sustainable development. It records a steady growth of sustainable finance initiatives across the banking, investment, and insurance sectors; a rapid expansion of the green bond market ($118 billion); and a growing number of supporting policies and regulatory measures (210 in 60 countries). While these represent only a fraction of the global financial system (eg. green bonds account for less than 1% of total bond issuance), the green movement has successfully infiltrated the finance world over the past decade and offers a number of lessons and opportunities on which the social sector can build from the pricing of externalities to the design of new financial instruments to the engagement with the G20.

My visual this week is from the WEF’s gender gap report browser. It’s the visual story of a decade worth of gender data from 144 countries. It is not new but was nominated for the 2017 Webby Awards for best web campaign, eventually given to UNWomen for their “Women footprint in history“, also really cool.

My quote this week is from Feedback Labs Dennis Whittle’s interview with Denver Frederick “when you put people into a system that does not face competition and that is top-down, and it has too much power, you get a culture where people are trying to impress each other more than having an impact on the ground where they are working. They’re listening to the voice of their colleagues rather than listening to the voice of the people that they seek to serve. That creates strange dynamics that are really unfortunate and sad.”