Why 'cost-effective' development is not a panacea

A street scene in Barangay La Paz in Abra, a province in northern Philippines. Funding do not reach the poorest communities in far-flung places in the country. Photo by: Jonathan S. Igharas / CC BY-NC-SA

About 25 years ago, the poorest ten percent of Filipino families took home two percent of the country’s total income. Today, in the era of the Millennium Development Goals, the poorest families still get the same share of the national income.

Why do the poor remain as poor as before despite an outpour of government money and international development aid to meet the MDGs?

Aid partners say that projects aimed at helping the poorest and most excluded sectors of society are just too expensive. And as governments and development agencies are pressured to deliver on their development goals, they are encouraged to fund “cost-effective” programs that show wider impact and achieve results faster.

“The way the MDG targets are structured, they are very much on governments delivering cost-effective outcomes that show they are making progress on those globally-agreed indicators,” Neva Frecheville, post-MDG policy analyst at the U.K.-based Catholic Agency for Overseas Development, told Devex. “But in fact it pushes governments towards engaging or addressing those who are easier to reach.”

The demand for impact has also made the poor that are hard to reach even poorer than before. 

“Aid-funded projects have huge funding, but how do they target beneficiaries? Always it’s about cost effectiveness for greater impact,” Nanet Antequisa, executive director of Philippine-based NGO EcoWEB, told Devex. 

The impact of this cost-effectiveness mindset is included in a report by CAFOD that details the harsh lives of 1,420 people in Uganda, Bolivia, Zimbabwe, and Philippines. Their daily struggles, the report notes, are compounded by multiple pressures spanning natural disasters to financial hardships. 

“Often the interventions are unable to respond to increasing number of pressures,” said Antequisa.

Exclusion from stage one

In the Philippines, exclusion happens from stage one.

“The poorest are already excluded from the planning stage,” Antequisa said. “The government says they don’t have enough operational budget to fund the needs of the poorest, so they help those who are easier to reach.”

The communities that are hard to reach are those living in the mountains or far-flung islands, and the Philippine government, Antequisa noted, likes to have more impact: “That’s why those who are funded are those communities which have capacity or have shown capacity.”

The same applies to foreign aid-funded projects, even if most aid implementers want to include the poorest of the poor in their projects.

“But these projects [have] short timeframes. How can you develop the capacity of communities in the short-term?” Antequisa complained. “It is the designing of the projects that fails to factor the realities on the ground. We have those challenges and limitations of including the poorest of the poor.”

For instance, the Philippine government’s conditional cash transfer program is partially funded by foreign aid and seeks to provide cash for pregnant mothers and children in exchange for regular medical checkups and school attendance. Filipino indigenous peoples interviewed by Antequisa told her they were excluded because they couldn’t provide birth certificates, one of the requirements to become a beneficiary. 

“At least now, the poor are able to receive some cash, but if you look at it, are we really addressing poverty? No. It’s palliative,” said Antequisa. “Poverty is not only about lack of money or lack of food. People who live in mountains, for example, need access to markets, control prices and the capitalization to improve their lands. We need a lot of interventions to really address the poverty situation.”

Designing for whom?

Other poor families told Antequisa when governments or development groups plan community projects, they are not consulted nor their suggestions heard.

Most decisions still come from the top, be it the government or international donors.

“The programs are not anchored on what the community needs or what the community sees as effective and appropriate,” she said. This is a key finding from the CAFOD report which the international community has to address in crafting the post-2015 agenda.

For Frecheville, the architects of the new development framework should look at “differentiated approaches” for the very poorest.

She hopes one of the recommendations made by the U.N. High-Level Panel on Post-2015 will eventually come into force: No target should be considered achieved unless all relevant income and social groups are able to achieve them.

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About the author

  • John Alliage Morales

    As a former Devex staff writer, John Alliage Morales covered the Americas, focusing on the world's top donor hub, Washington, and its aid community. Prior to joining Devex, John worked for a variety of news outlets including GMA, the Philippine TV network, where he conducted interviews, analyzed data, and produced in-depth stories on development and other topics.