An elusive dream of traditional donors is to show that their international development projects can lift thousands of families out of poverty.
Foreign aid does an enormous amount of good for the world’s poor, but many times when the projects end, the beneficiaries remain poor. There’s no clear evidence to show that official development assistance has actually been responsible for reducing poverty.
Both the World Bank and the U.S. Agency for International Development are seeking and proposing new approaches involving the private sector, so companies are sometimes seen as donors and at other times as implementers. The market approach is often mentioned, but then all but forgotten with concerns over procedures for procurement, accounting for public funds and tracking progress. That’s why 3 paradigm shifts are needed to steer international aid programs in the right direction to help people overcome poverty:
1. The buyer should be recognized as the central figure linking suppliers with market demand.
2. Development projects should help people respond to market opportunities.
3. Instead of seeking project success, development programs should emphasize client success.
The buyer-led approach to development projects doesn’t select poor communities to become the targets for assistance, but rather begins with buyers found largely in commercial urban centers, and then links back to potential suppliers. Often the buyers will take the projects into unfamiliar territory — not necessarily where the project might have targeted, but where poverty is still rife.
How do suppliers respond? Most buyers find small producers to be problematic — poorly prepared, not organized for productive purposes, politicized, skeptical of “outsiders” and often located in remote areas with limited infrastructure. And these are exactly the situations where international development programs can be most useful.
Client success is thus the goal: small producers should be seen as clients, not as beneficiaries. We should focus on their success in carrying out productive activities in value chains, as successful (in a traditional way) development projects often weaken the chain by providing subsidized inputs and services.
Changing focus from beneficiaries to clients
The Rural Competitiveness Activity project in Bolivia, funded by USAID and implemented by Chemonics along with a local partner, addressed these paradigm shifts and accomplished impressive results. Project monitoring and external data sources showed that 10,000 rural families overcame the barrier of extreme poverty as a direct result of project support.
Following the buyer-led approach, the RCA project facilitated contacts with domestic and foreign buyers of more than 25 different products and helped rural families respond to market demand by organizing themselves to become serious suppliers. Producer groups developed business plans that received project support, graduating in a single year to double family incomes and continue to grow thereafter.
However, the approach required the reengineering of virtually every aspect of project implementation, focusing not on project success, but instead on the success of business clients — groups of small producers, as I explain in my recently published book “The small farmer can: Buyer-led approach rescues rural Bolivian families from poverty.”
If development programs fail to embrace a serious shift in paradigms and focus, the results cannot be expected to produce any lasting change. We will still provide much-needed ODA and assistance to the poor, but the beneficiaries will remain poor. And it should come as no surprise that the RCA project in Bolivia required the re-shaping of traditional approaches to project implementation in order to achieve the impressive results.
This may be the only development project in history to date to show that a large number of families lifted themselves out of poverty as a direct result of the buyer-led approach, which in the future should become the norm, rather than just a stated focus of a few international development initiatives.
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