Can innovation jumpstart development transformation?

EDITOR’S NOTE: What is the impact of innovation and technology on development? Center for Global Development President Nancy Birdsall lists nine things she’s learned in this article on the Global Development: Views from the Center blog.

I participated last week in a conversation about innovation and technology for development at the Brookings Blum Roundtable in Aspen. Amazing changes are happening out there that exploit new information technologies, improving the lives of the poor and vulnerable. But a big unanswered question for me is clicks to bricks (see #8 below: Are crowdsourcing and open access innovations being matched by innovations in making government accountable and delivering public services?) I am more convinced today that web-based innovations are helping poor people become their own change agents in making their lives more livable. But are they going to generate sustained growth (economics) or undo the elite duplicity that in low-income countries sustains corrupt public institutions? (politics).

It was a great conversation. For a list of participants and some excellent background briefing notes go here. Twitter conversations can be found at #Blum2012.

Here are a few things I learned.

1. Mobile money is hot. It’s prevalent in more than 70 countries. But in value terms more than half is in just two countries: Kenya and the Philippines. The bullish on its benefits for poor people are focused mostly on how to spread the business model that developed in Kenya to other countries. They are less focused on the question of the enabling environment: Why Kenya and not Mozambique? Did it matter that there’s a single telecom that dominates the market and could “manage” the regulators at the critical moment? Did it matter that the Central Bank Governor when M-PESA took off was accommodating instead of nervous and risk-averse? That the bank regulators and supervisors hadn’t yet thought about rules for telecom companies doing money transfers (adequate provisioning/know your customer) and that restrictive rules hadn’t yet been written in stone? I’d like to see the mobile money enthusiasts get together with the policy fix enthusiasts in Nigeria, India, Peru, and Egypt.

2. There’s been less progress so far on mobile money for credit compared to mobile money as a payments system (for transfers between urban and rural households, or from government payrolls to rural teachers, etc.). The Kenyan Equity Bank leadership is trying to add credit and other banking services (savings, insurance), presumably in collaboration with the telecom company, that would really be transformative. Will Kenya lead again, and if so why?

3. “Donors are scared of subsidizing profits,” a participant remarked. Well, I knew that before. But it needs to be said more often to open the door to more use of limited official donor money as equity capital where equity (as opposed to debt and grant money) is what makes most sense to crowd in private sector scale-up of innovations in service delivery, or access to new products. (It was Chatham House rules – I can’t identify the speaker). For off-grid renewable energy projects at prices the rural poor can afford, perhaps public money can provide the first loss guarantee that helps pull in multiples of private capital. Some of that is happening already thanks to OPIC and funds like the Climate Investment Fund at the World Bank – but not yet at scale, and not yet for clean energy that reaches the rural and off-grid poor.

(On official fear of profit-making: DfID is opening the door to donor support of low-cost private schools in Pakistan, despite some resistance from some NGOs worried about private profits. You can read about the pros and cons of that in this exchange between Justin Sandefur and Kevin Watkins.)

4. Google Map Maker took more than six years to get off the ground. The project got cancelled five times and its leader fired twice. The public sector has no monopoly on resistance to innovation. Crowdsourcing of mapping, including by the poor using their mobile phones, means information from poor people can be aggregated to expose elite duplicity, whether it’s land grabs in urban slums by politically connected developers or vote manipulation at rural polls that protects political insiders. (What about licensing? I think the World Bank and Google have come to an agreement but not without a push. Go here to read about the issue and about some development advocates’ fears concerning profit-taking with the open source democratization of development.)

5. Raj Shah is not at all discouraged by the tremendous obstacles he faces at USAID. On the contrary, he is energized by the obstacles he has already surmounted. His speech at the roundtable featured “open access development”. For a hint of the obstacles USAID faces in Pakistan, see our recent report card on U.S. development strategy there; USAID gets good grades but not the U.S. “whole” of government.

6. I learned about Ushahidi and Global Pulse. One is a non-profit initiative and the other (more amazingly) a UN initiative using crowdsourcing for development. There’s also Lighting Africa.

7. Some people are reasonably worried that mass networks will lead to the California-zation of politics in developing countries, i.e. public demands that, without good information on tradeoffs for people, and without political institutions to channel those demands, lead to bad decisions in the public sphere. Crowdsourcing and open access cannot substitute for good institutions.

8. Clicks to bricks. We don’t know enough about the effect of the institutional and governance context into which data and information, now so much easier to amass, goes. How to translate the information poor people provide on global platforms like Ushahidi into poverty-reducing change at the political and policy level? Clicks to “policy” bricks.

9. Climate change is the problem from hell where the human brain is concerned i.e. we humans have trouble thinking ahead. Well, I already knew that but just can’t resist reminding readers who have gotten this far.

Republished with permission from the Center for Global Development. Read the original article.