There is lots of it, but it is not much use. Much of the information that
is available about development has an enormously high cost, but
dramatically smaller value. Value destruction at its best. Why is this
information not help much in making good decisions about
development. Why is so much data good for economic analysis and good
material for journalists, but little use in the effective management of
development resources. Where is the information to drive transparency
and accountability?
Vital for High Performance
Information
The data to understand needs and opportunities, to optimize allocation of
resources, use of resources and performance of development. A system to make
these data understandable and useful. An Internet based secure distributed
relational database makes it possible to manage the allocation and use of
resources, track fund flows and use of funds and give excellent accounting and
accountability and performance reporting to investors.
In order to move forward from the present state of failure, the first new
initiative must be information. It is not just a question of getting more
information, it is about getting the right sort of information. What is needed is
information will make it possible to manage development and make a success of
development initiatives.
There is a lot of information. But it is the sort of information that makes
economists happy, but not the sort of data that makes development easy to
manage. It is not the sort of information that supports excellence in accounting
and accountability.
The whole framework for success changes as soon as there is good information
easily available. Information is very very powerful, and it is no accident that
leadership likes to be in control of information and the communicators
At a peace rally in New York in February 2003, just before the Second
Gulf War, one of the banners read “One of the first casualties of war is
the truth”
Information is almost a “right” in a free society, and access to information is one
of the first things to go when leadership starts to control society. It happens at all
levels of leadership. It happens in all organizational situations. It is not just an
issue with respect to government leadership. It is just as rampant in corporate
and financial circles.
But in development there is a lot of data, but there is not much that can be used
for substantive analysis and for management. And to a great degree, important
development information is kept secret. One reason why this information is kept
secret or difficult to study is that it shows how terrible the allocation of resources
has been for development assistance. Some people, not really very many
however, are aware how little of the NORTH's resources are used to support
official development assistance. But few are aware how badly these resources
are allocated.
Accountability
The first step in making development better is to get the information that is
needed to hold the official development assistance (ODA) community
accountable for what they do and what they do not do.
I have helped developing country government staff coordinate
development assistance. It is not a pretty sight. On the one side there are
the local people, some in positions of considerable power who want
projects for their own reasons, some good and some not so good. On the
other side there are donors who want projects that serve their own set of
interests. A prioritization of projects to optimize the use of resources
and the realization of development progress is nowhere to be found in
most development coordination efforts. It should be. It can be. But not
without information that is accessible to the public and accountability
that goes beyond anything we are doing at the moment.
There has been a lot of talk about holding government in developing countries
of the SOUTH accountable for what they are doing in terms of resource
management and development, but there is far less talk about holding the
governments and the institutions of the NORTH accountable in the same way.
It is my impression that there is a big accountability problem in the
NORTH, just as there is in the SOUTH. My educated guess is that the
value diversion associated with lack of accountability in the NORTH is
an order of magnitude bigger than in the SOUTH. The diversion of
moneys from potentially high economic value adding works for the
SOUTH to much more “politically acceptable” but far less valuable
work is endemic throughout the ODA community. It has been a problem
for decades, and became front page news in connection with US plans
for reconstruction contracts after the Second Gulf War. As someone who
did planning for the reconstruction of Afghanistan after the Soviet
withdrawal in the early 1990s and participated in the failed advocacy
for the continued interest of the United States in the region at that time.
I am appalled at the information gap that ensures there will be little
enduring accountability for anything. Yes, historians may have a chance
at finding out what went on, but what about today's people.
The challenge is simple. There needs to be a universal accountability system that
is run independently of government and the official development assistance
(ODA) community and international financial institutions and corporations.
And this is not really a very big thing. It is not anything like as ambitious as the
WalMart data mining system. In its first stages it is quite a modest technical
challenge. Depending on “demand” it could evolve into a more highly
functional system in the future, but the first steps can be quite modest.
And with this information, there can be accountability.
But more important, with this information there can be improved management.
My most satisfying work was when I was a CFO working with a CEO
who understood the economic dynamics of his business, and who used
the financial numbers and the operations analysis that we were able to
do to confirm the decisions that he had already made. He knew what the
company performance had been based on past management information.
He made decisions to try to make it better as soon as there was
preliminary information that suggested an improvement possibility. He
looked to the next set of management information to confirm that his
decisions had been effective. If the information suggested something
different would be better, then that would be tried. This was excellent
use of management information, including the critical aspect of feedback
The opportunity is to do the same thing, but with development.
Independent, Neutral Data
An independent entity should run the information system
An independent entity should run the information system. The information
should be generally available for easy access except in circumstances where
there are valid reasons for maintaining data confidentiality. The entity should be
independent financially and not have to rely for funding on official
development assistance (ODA) organizations or beneficiary governments. The
terms of its funding should ensure that the information will not be tainted by
conflict of interest, and the operating entity should be financially strong enough
to be able to stand up to significant intimidation.
Management information
The main characteristics of management information are that they are: useful,
independent, reliable, and universal. How data can be converted into
information, knowledge and wisdom? What constitutes good “management
information”. How valuably is it? How does important data disappear from
public view, and how can this be fixed? What are the needs, resources, uses and
results from good public data? How can information be made useful,
independent, reliable and universal. How can data be used for achieving
development excellence and economic value adding? How much value does this
have? How should data be organized, what is the metadata and the best
information architecture now that amazing modern technology can be used.
How does data get used for management of development resources and how
does information get distributed? How can information be kept independent
and be reliability. How can the problems of errors, insecurity, hackers, fraud and
incompetence be managed? How can information be best used to make good
plans, to get well organized, to get funding, to implement well and provide
excellence in transparency and accountability?
What is management information?
I think of management information as being the least amount of information that
will enable good decisions to be made reliably. It is not a lot of information ...
just enough information so that a good decision can be made.
There are several levels of information: (1) data; (2) information; (3) Intel.; (4)
knowledge; (5) wisdom. They are all part of a family, and the best results are
achieved when all are in play together. Management information is a subset of
all of these levels, optimized to have the most value at the least cost.
The value of management information
Management information only has value if it is used ... and if it is good enough
so that good decisions can be made. Information that has gone through the
media edit and selection processes is rarely of much management value.
Management information is valuable not only when it informs with good news,
but also when the information advises about bad things. Whatever the facts,
there needs to be information, and there needs to be a way for the information to
be used to make decisions and make things better.
Good for planning
Management information is good for planning. Plans need to be prepared based
on a solid understanding of the situation ... something that is best done with an
appropriate set of management information. Planning is not done well when it is
merely a set of scenarios sitting on top of almost no information about the
situation, and planning is not the mere collection of information about the
situation, and rather little analysis of alternative possibilities.
Good for monitoring performance
Management information is excellent for monitoring performance. A good plan
will call for a certain level of expenditure and a related amount of activity and
result. Measurement of performance, and the resulting management information
facilitates comparison of actual performance with the planned or anticipated
performance. It is then easy to see whether or not performance is worse or better
than expected, and as a next step, it is possible to get an understanding of why
there are differences between the plan and the actual.
Good for identifying improvement opportunity
Management information helps to clarify key aspects of performance ... if actual
is better than plan, and there are some reasons for this, how can these reasons be
integrated into future planning and ongoing better performance. Management
information needs to feed into analysis and feedback and the planning and
implementation of improved performance.
Good for oversight
Management information is good for oversight. If everything is going according
to plan, based on review of management information, then there is little need for
additional physical oversight, but if the management information shows
performance issues, then the use of physical oversight might be appropriate.
With management information the oversight effort can be used to best effect.
Good for coordination
Management information is good for coordination. Coordination is easy when
there is an adequate framework of information. The basic information that is
needed to support the coordination work is information about the community,
the activities going on in the community, the projects, their funding, their
location, and so forth. By making the community ... the place ... the anchor for
the information, the relief and development activities can be related to a
location, and efforts made to get a fair geographic dispersion of activities around
the country.
Good for monitoring and evaluation
Management information is good for monitoring and evaluation. Many of the
issues that are addressed in a monitoring and evaluation exercise would
normally be included in a good set of management information and be available
in a timely way. In many situations good management information would make
the need for monitoring and evaluation redundant.
Accounting Information
Accounting provides a lot of information
Quite simple accounting provides a lot of information. Accounting should not be
just a vehicle for authorizing disbursements, but also a tool for managing funds
and managing performance.
Rather simple analytical methods will provide a lot of information about how
resources have been spent. At organizations like the IMF, this is sometimes
referred to as analysis by economic classification. In the corporate world there is
usually a code of accounts that provides a breakdown of costs in ways they best
suit the organization.
A little bit more analysis and all this information can be available also for each of
the cost centers or the activities of the organization.
All of this is from a conventional accounting system.
More analytical information can easily be obtained
More analytical information can easily be obtained to start to understand more
about the performance of the organization, and the performance of the
individual activities. I used to refer to this as key item control ... we used to get
some key measures that would be usefully related to the costs to get a measure
of how we were performing.
The key items were always the most relevant to the work that was being done ...
in one department it might be something to do with the way the trucks were
running ... in another department it might be related to the production of
castings and the use of energy. These measures all helped benchmark our
performance, and we were able to stay in control and make changes that
resulted in practical improvement.
When practical improvements were made ... the company performance as measured by profit also went up!
But what about value?
In the end however, what we are trying to create is durable socio-economic
value, and this is not easily calculated by reference to classical accounting.
However, one of the best ways of getting at value is to have a good
understanding of what good is being created as a result of the activities ... and
then using accounting common sense to put values on the outcomes.
Performance Information
Some of the best metrics are the simplest
A good place to look for examples of performance metrics is in sports. In
competitive sport, it is all about measurement. In individual sports, the metrics
are usually very precise but many are quite simple. In team sports some of the
measurements are very sophisticated, but very much understood by the fans.
There are also a big range of measures in most corporate settings. The main
measure may be profits, profit growth and stock value, but there are all sorts of
other measures throughout the organization so that everyone can monitor
performance and work to improve it.
In general terms the relief and development sector, government and the public
sector are woefully behind in measuring performance. The prevalent data is far
too aggregated to be of any real value in measuring performance .
Cost, price and value
Cost, price and value are very basic measures, and very useful to have for any
activity. How much does something cost is a very basic element of information,
and there is no excuse for not having this information about all activities.
Price is normal in the for profit world, and again is an easy element of
information to have.
Without going into too much detail, the difference between cost and price is
some measure of profit. In many activities that are conducted in connection with
social services and support, the price is zero ... the recipient of the services does
not pay anything.
But hopefully there is value, even where the price is zero. What is the value?
And how does this value compare to the cost? The difference between cost and
value is some measure of value adding.
Even though cost and value are of tremendous importance in measuring
performance, there has been very little systematic work to establish norms and
make them public.
Performance comparisons
Performance should be measured “relative to what?”. There are many different
comparisons that are possible including: (1) compared to a prior period or
previous performance; (2) compared to a different place or a different
organization; (3) compared to the best ever; (4) compared to the plan or to the
budget; and so on. Comparison gives perspective to the measurement.
Some measurements are useful without any reference to a money unit. Fuel
consumption can be measured in miles per gallon, and this gives a better
measure of engine performance than when the measure is converted to cents per
miles which will vary whenever the price of fuel changes.
The idea of profit in a corporate business organization is common. Its equivalent
in the not for profit organization should be value adding associated with any
activity and the organization as a whole, but this is rarely computed. Most not
for profit accounting systems are not set up with this sort of analysis in mind.
Accounting provides a lot of performance information
A good accounting system is a source of a lot of information, especially
information about costs. Integrating cost analysis with the general accounting
has advantages, but also can become too detailed and too clumsy. There are
techniques that can be used to get at useful information without getting buried
in detail, including making use of standard costs and doing variance analysis to
validate the standards.
Other source of data and analysis
In the corporate world industrial engineering, operations research, value chain
analysis and other approaches all help to build an understanding of how costs
behave and how operations can be improved to reduce costs and improve the
outputs. Something similar is needed in the relief and development community,
and something similar is needed in Iraq.
Bottom of the pyramid
Results are best seen from the bottom of the pyramid ... how has the quality of
life of the ordinary person improved? How can this be measured in an efficient
way ... low cost, reliable, accurate, timely.
It seems that measurement of progress at the community level has potential. The
community is where people live, and it is the economic and social activities in
the community that provide most of the elements for quality of life. Measure
progress at the community level and it serves to measure the progress at the
bottom of the pyramid. If the community makes progress ... the people progress.
Progress must be converted in some way into value, something that can be done
using the balance sheet concept from corporate accounting. And the cost of
getting this progress should be ascertained from fund flows and the activities
that have been funded.
Socio-Economic Statistics
Accounting rarely uses statistics
Accounting rarely uses statistics ... rather accounts make lists and add them up.
A good accounting system will probably make several lists of more or less the
same thing and reconcile any differences ... and if they cannot be reconciled, will
find out what went wrong and then be in a position to ask some pointed
questions about how and why resources have gone missing. This is basic boring
work that gets control of money and other assets, and keeps control of them.
This may be boring ... but it is important work. And when it is computerized, it
is still important.
This contrasts very much with the statistics that abound in the analysis of socioeconomic issues. The same sort of accounting information is not available for
many of the measures that are interesting in the socio-economic arena, and
statistical methods are the only way ... but too often in my experience statistical
method is used where more basic techniques would have given better answers.
Massive amount of socio-economic data
There has been decades of work collecting socio-economic data, and there are a
multitude of profiles of the failure of development. The data on this are
overwhelming. It is disappointing to find that almost none of the data
concerning results is related much to the activities and costs that were involved
in reaching this state.
Massive amount of writing ... rather less numbering
There is a massive amount of writing, but not very much information about
costs and values. The writing is replicated and used for workshops and reports,
but rather less for decision making and the mobilizing of the resources needed
to make substantial progress.
When information become useful, in so many cases, it needs to be made secret.
The lack of open access to information means that poor performance cannot be
seen, and nobody is then held accountable.
We know the results are unsatisfactory, but we have very little ability to see the
information that would tell how much it has cost and how little has been done ...
and specifically who is accountable for poor performance.
Collection of Information
Getting facts ought to be easy
Getting facts ought to be easy, but it is not. The management information
needed is just not easily accessible, even if it exists at all. There are a number of
problems that need to be addressed, including: (1) the academic practice of
being secretive about the data; (2) the basic lack of relevant data collection; (3)
the practice of doing very small samples and using statistical method for
analysis; (4) the lack of any systemic framework for logical storage of data in the
public domain and easy access to this information.
Nothing here is new
There is nothing being suggested here that is new. The quest for more data has
been on the agenda for a long time. The difference is that we are looking for
decision making data, and not merely data that can be analyzed and included in
some ad-hoc research or annual publication.
Maybe a lot of information has been collected
One of the constraints on decision making in Iraq appears to be the limited
availability of management information and much depth of knowledge about
the country. I do not know how much information has been collected about Iraq,
but it is not easily accessible and I doubt that it is the sort of information that I
would want to make decisions about making progress in Iraq.
Maybe a lot of information exists but few know it exists, where it is and how to
make use of it.
As much as possible, collection of data done for one purpose can be used for
other purposes. Data that are collected initially to make local implementation as
effective as possible can be used to provide information at a more aggregated
level. Data that are needed for the best possible implementation are normally a
lot more comprehensive than the reporting that is needed for donor oversight,
and it should be relatively easy to format the information in a range of different
ways to satisfy a number of users.
High cost to collect, low value unless used
Information costs a lot to compile and analyze. It is ridiculous that the
information and knowledge about development should be so difficult to find
and use. As it stands the cost of information is very high, and because of its very
low utilization for development planning and implementation it is low value.
Think value management
Think value management and cost effectiveness in any work done related to
data collection and information analysis. Constantly looking for the best
relationship between resources used and value realized will result in better
knowledge for development.
Small samples and statistics is not accounting
The practice of doing very small samples and using statistical method for
analysis is academically satisfying, but in terms of accounting and management
information it is unsatisfactory. Decision makers need very reliable data, and
statistical method only gives this in limited circumstances. It may work for
research, but for management unreliable statistics is a poor substitute for a
modest amount of good accounting information.
Data Design – MetaData
Organize the data
There is a need to organize data and start to get it into the relational format so
that it can be accessed easily by anyone with a basic knowledge of SQL.
There is a need for logical organization of management data. There is no widely
used logical organization of management data for relief and development
decision making. There is no universal metadata system so that the data are
comparable.
There is text ... a lot of it. There are few numbers, and the numbers are difficult
to understand. Until the information is organized so that it has the
characteristics of management information, it will be difficult, if not impossible
to get a relief and development sector that is driven by facts and especially facts
about performance.
Incredibly badly organized
In the international relief and development sector, there is a lot of data, but most
of it is incredibly badly organized. There are a very large number of different
database systems in use and almost no compatibility and coherence between the
different sets of database tables. There are a large number of data collections that
have been compiled using spreadsheet software without consideration of the
(meta)data design and long term implications of spreadsheet data
administration. On the other hand, there are data stored within very
sophisticated and expensive systems that could just be as well be in a simple
spreadsheet environment.
Need for database design improvement
There is a lot of data, but little of the data are organized so that the database
structures can be used in an easy and analytically powerful manner. Even some
of the most well known large international organizations still use disorganized
spreadsheets as their “database” more than 20 years after the relational database
model was adopted for large scale information management. There are a lot of
data hidden behind software that is good, but too expensive for most people to
be able to afford, including most of the GIS software.
Use database technology
Modern database technology enables information to be much better able to be
stored and retrieved, but use of the technology should not limit access but
improve access. Much more use should be made of the relational model for data
storage, and there needs to be much more training in how to design efficient,
easy database systems with proper normalization.
Data Quality and Reliability
Problem of misinformation
There is a problem of misinformation that manifests itself in many ways. Heavy
reliance on aid for most of the last two decades has created a need for a
continuum of crisis in order to sustain the community that benefits from the
crisis industry. This is unfortunate, and makes it difficult for true development
success to be recognized and success replicated.
Drought ... or Just a Dry Spell?
In the past few years there has been dry weather in Niger. It is difficult
to tell whether this was a serious drought crisis or a mere manipulation
of the information so that the donor community could mobilize
emergency assistance when it would have been better to use resources in
a more developmental fashion.
The data and the presentation of information are easy to spin ... and the
result is poor decision making, and continuing failed outcomes.
Use peer review to reduce bad information
There needs to be quality control over information on development and socioeconomic progress. One way to get better information is to have systems of
feedback so that there can be comment about the data and some sorting out of
data that are valid and data that are unacceptable. This has some of the
characteristics of peer review.
Use the data ... they get better
When data are used, the data are rapidly improved. People will not tolerate
criticism based on data that is wrong, and they will explain exactly what is
wrong, and what would be right. Correct the data based on this feedback ...
correct any systemic data management problems if that is needed. Soon the data
and the analysis will be improve, at which point people getting criticized are
faced with good information, and perhaps really poor performance that needs to
be improved.
>br>
Easy Access to Important Information
Secrecy ... hiding corruption and inefficiency
By having easy access to important information, there are all sorts of good
benefits, notably making corruption more difficult and making inefficiency less
acceptable.
Easy access means more than putting information on a website ... though that is
better than nothing. Easy access means that the information can also be seen in
ways that are meaningful.
Important information ... or management information is not have one little bit of
information in a multitude of different forms ... it is about having rather little
information in a way that is useful and tells the story clearly.
Reports ... report design
Easy access to important information is probably best obtained from well
designed reports. Easy access to important information implies that information
is being delivered in some form of report ... not merely as a bit of information
that still has to be related to a lot of other bits of information in order to have
much meaning.
Repositories to facilitate easy access
Knowledge about development should be available both in public and private
institutions. It is much more cost effective to have multiple copies of information
than to have to recompile basic information.
MetaData ... and organizing data
Having a strong organizing function for the data can go a long way towards
getting the information into a form that is easy to access and produce useful
management reports.
Academic Community
The academic community and information
The academic practice of being secretive about the data, though promoting the
conclusions derived from the data, may be something to do with the way in
which academic credentials are evaluated and awards made. The effect of the
practice is to make use of data much more difficult, and the reduce the socioeconomic value of the academic efforts.
The academic community has a key role to play
The academic community is a community around a common interest. In another
context I have written rather unfavorably about the academic community.
A View of the Academic Community
The academic sector has several important impacts on relief and
development performance including: (1) substantial use of relief and
development funds; (2) a substantial influence on thinking and public
perception about relief and development; (3) a big role in “teaching”
relief and development to students and future policy makers; and (4)
being controllers of information about relief and development.
The academic community has a challenge to show that its work in the
relief and development area is net value adding. There is some evidence
that relief and development resources are being used to a considerable
extent to fund academic programs while there is little tangible benefit at
the community level in the “south” where needy beneficiaries live.
But in the situation in Iraq the academic community has a huge and urgent role
to play. There is so little knowledge about Iraq in the world community ... and
without knowledge it is wishful thinking that policy will be optimized.
Accordingly it is important that academics in Iraq become as much engaged as
they can be in helping well-wishers to understand the depth of the culture and
the issues that bring Iraq together and might possible make it break apart.
For our part, that is the international community, we should make it possible for
Iraqis to talk about their country in as many places as possible and help with
better understanding of the possibilities.
Communications
Modern information and communications technology (ICT) can get information
instantly anywhere in the world where there is Internet infrastructure. How can
Internet infrastructure become universally accessible. What is slowing down
deployment of modern ICT? Who cares enough to ensure that information
access becomes available for everyone? What are the possible solutions that can
be implemented? Is community centric communication a way to start? How can
this become a part of the universal global Internet infrastructure?
Information for fund raising
The ORDA community is responsible for around $50 billion of fund flow for
relief and development. How can these resources which are used inefficiently be
displaced by private fund flows that are used efficiently? Fund raising outside
the ORDA framework needs to be established, and the right sort of information
made available so that it can be scaled up from millions to billions. This is
entirely possible with the effective use of information.
Implementing - Management Information
Open access to information
We need to have information easily accessible about the socio-economic
situation in communities ... and there needs to be dialog about how resources
can best be used within these communities to improve the situation in the
communities. At the end of the dialog, the priority should truly be the priority of
the community and not the priority outsiders think that the community should
have.
Performance measurement ... value adding
The most important metric is value adding which is the delta between the cost
and the value of any activity. But rather few people think in terms of value
adding and what this means for activity design and the best way to use
resources. Most people understand the idea of cost as a component of
performance ... usually less cost is better than more cost ... and in general this is
right. But this idea is also limited. With this idea doing something that costs
nothing ... staying in bed ... in the ultimate in performance, and this clearly is not
the case.
What is important is the delta between the value being generated and the cost
being incurred. To measure the value adding, it is therefore necessary to
measure the value. Value is, of course, subjective, but it is also the most
important. What value do people in a community see when the contractors are
spending money and doing the work? This is why work done that reflects what
people need and people want is so important. If people can see value ... or even
if people have reasonable hope for value ... then the work of contractors is worth
paying for.
Accounting and accountability
Accountants should be required to do much more to report information for
public accounting and accountability. To the extent there is no requirement in
law, it makes sense for the public to agitate to get the information. It also makes
sense for decision makers to call for better information because they are aware
that there is going to be an accounting and the people who are responsible will
be held accountable. People avoid responsibility and accountability if the
opportunity to do so exists. It is a reason why there needs to be a robust
structure to ensure that accountability does not get left out.
Reason for Accounting
My approach to accounting is simple. Assume that everyone is a crook.
Design a system so that even in a world where everyone is crooked and
corrupt, the money stays where it is meant to be, and is used in ways
that are intended and that value is received from the use of money.
And the same goes for other parts of the system that are needed to
control other valuable assets, especially inventory and easily movable
assets.
One of the key elements of control in a good accounting system is the
idea that not financial transaction can take place without two people
being involved and that everything is checked. I like to see an additional
measure, and that is the amount of resources consumed should have a
right relationship with the amount of value in the transaction.
The idea of “transparency” and “accountability” needs to be put into play as a
practice rather than merely being conceptual dialog. What this means is that
there needs to be easy and open access to a lot more information. If there is
adequate and quite basic accounting applied everywhere, then there will not be
space for corruption and abuse, and they will be substantially diminished of not
completely eliminated.
Though accounting and technology are both less costly and easier to implement
than at any time in history, there are vast areas of the global economy where this
information is either non-existent or very secret and not accessible to the public.
When it comes to setting the stage for peace ... these sorts of information are
powerful in terms of demonstrating that the funds are being disbursed and
being used in ways that are of value to the community.
Community information
People who live in a community have a lot of ideas about how their community
can be improved ... but there is rarely any support for these local ideas. Once
there is a mechanism in place so that local ideas can be turned into local action,
it is amazing how much latent potential can be mobilized.
One of the keys is to figure out how the potential of people can be maximized ...
and then the potential of the place. Some places are richly endowed with
resources, other places are less endowed. And it is essential that planners
understand the difference.
As much as anything there needs to be a lot more information about socioeconomic status and performance. This information needs to be about the civil
economy at the community level. This information includes all aspects of the
local civil economy including the accounting of relief and development fund
flows, their use and the value of the interventions.
Accessible information
The idea that information about fund flows into relief and development
activities in a community should be secret is nothing more than a huge excuse
for hiding information about performance, and indeed incompetence, and
corruption. Make this information easy to access, and a big part of the problem
of corruption will go away.
Specifically, there should be an easily accessible database about all the
communities in the country with some key metrics about the community and its
socio-economic status, together with some basic information about all the
community development activities that are going on, and the fund flows
associated with them. What this database will show more than anything else is
how little money can make a big difference in the quality of life of a community
when it is used well, and how large amounts of money often do very little. This
is a dirty little secret of the international relief and development community,
and the big spenders in big government and especially the military
establishment.
In order to have a new era of accounting and accountability, there should a
public version of the corporate idea of an “open books” policy. In other words,
all these fund flows should be visible to the public, and accounting and
explanations available. The accounting principles are not complicated at all ...
and the technology to keep track of accounting transactions ... the relational
database ... has been around for almost 30 years, but now vastly faster and more
powerful since it was first described in 1978 courtesy of Moore's Law and the
rapid increase in power and the decrease in cost.
Information ... Intelligence
There may be some differences between information and intelligence, but more
of both is needed. Without adequate information the civil economy does not
progress, and without intelligence military activities are not successful.
Getting intelligence to ensure security for the community is impossible when the
community is at war with the police and the military ... and indeed, at war with
itself.
But getting intelligence in a community that is embracing a civil economy and
getting help in accelerating socio-economic progress is quite possible. A
community that has hope and is progressing rarely wants to have the future
compromised by violent intervention ... by guns and mayhem.
Successful policing depends on intelligence, and this comes from the police
knowing their community and learning things slowly and right.
Missing Management Information
Mainly Economic Data, Not Financial
The relief and development sector has a huge amount of data, but it is not very
useful for decision making. It is almost entirely economic data, usually
developed through statistical method, and rarely the sort of information,
management information, that is needed to make practical decisions.
A lot of the data are aggregates at the country level ... macroeconomic
information. This is a good way of seeing results, but not a good way of
measuring performance. Data aggregated at the country level may help in the
comparison of countries, but it does very little to understand the good and the
bad within a country.
The relief and development sector is managed by staff who have training in
many disciplines including economics, public policy, political science,
international affairs and others, but rarely are trained and experienced in
accountancy. For decades there have been studies that have collected
information and used the information within the framework of the study, but
rather little effort has been made to get accounting information organized into a
system that helps to measure the performance of the relief and development
sector.
There are many different datasets that are part of the information pool in the
relief and development sector. In fact, each of the major specialized agencies of
the United Nations engages in collecting data about their sector ... and this
information is interesting, and valuable. Broadly speaking, however, this is all
data associated with the economics of the relief and development sector, and not
the performance of the sector.
Ignorance is Bliss
“Ignorance is bliss, 'tis folly to be wise” was one of the little phrases I
remember from a radio talk show in the 1950s, or was it the 1940s. Over
the years I learned to respect information and knowledge, and I still
believe that good information is a powerful aid to making good decisions.
The Best Advice I Ever Got
A tutor at college advised me to “Get the data, do the analysis, understand the results and draw your conclusions.” He also observed that too much that was in print and common knowledge was just plain wrong, and needed to be worked on.
In the corporate world ... management information has been embraced.
In the relief and development sector it is largely absent.
In summary ... lots of information. Little of it of very much practical value.
Why is so much data compiled?
There are many drivers to compile data ... not many of them of much value for
relief and development performance.
Donors have become very comfortable with funding studies and reports. The
money is usually paid to nationals of the donor country, and tangible, albeit
valueless, reports are produced at the end of the work. The study develops data,
and the report makes it available, though usually not easily.
Modern PC technology now makes it easy to compile data, and manipulate it in
various ways. It is also easy to merely copy data so that it appears that there is
more data than there really is.
And yet a paucity of useful information
The relief and development sector institutions have a huge amount of data, and
a lot of studies. But all of this does not translate into very much useful
information that makes it possible: (1) to make good decisions; and, (2) to hold
people accountable for subsequent performance.
Much of the information is driven by the questions that are asked by economists
and the numbers economist use. But as a practical matter how do you improve
the Gross National Product (GNP) ... or the Per Capita Gross National Product.
Analysis of the GNP can help a bit, but not very much, and in fact, there are a lot
of ways in which information about GNP can end up encouraging absolutely the
wrong decisions.
Perhaps one of the saddest results of an economist's mindset is that people tend
to be forgotten as assets and the power of the economy, but rather the number
that GNP is divided by to calculate per capita GNP. Thus more people result in a
lower per capita GNP ... a bad outcome ... when a better interpretation would
have been that people actually were the power behind creating the GNP in the
first place.
Accounting
Accounting in the corporate world is very strong ... it is used everywhere. It
helps managers control the resources and optimize performance. But the
accounting and the analysis of financial aspects of relief and development is
primitive.
Accounting is one of the key tools of management. It is central to management
information, but plays rather little role in the management of the relief and
development process. Without good accounting, there is little financial control
and anything goes.
In the corporate world, accounting has been very effectively integrated into the
MBA culture and used by management in every possible way to optimize profit
performance. But in the relief and development sector, accounting is still at its
most primitive and not much removed from the minimal clerical activity needed
to prepare some budget numbers and vouch disbursements. The systems are
archaic and incapable of being used for decision making.
The timeliness of the reports shows how much priority the leadership has
assigned to the preparation of submission of accounting reports. If it were not so
serious it would be laughable.
Lots of Accounting ... and No Information
I have characterized the type of accounting used in the relief and
development sector as being “voucher based bookkeeping”.
All disbursements are “supported” by vouchers which show that the
disbursement was “authorized” according to the procedures. Therefore,
the accounting is right.
What a travesty! This is a system designed to make corruption about as
easy as it gets, and the fact that this system has not been fixed is a
terrible measure of institutional incompetence and institutional
corruption. Some people do not know how to fix it, and some people do
not want it fixed.
In a good financial control system the authority to disburse is checked
and the value received in connection with the disbursement is also
checked. When value must be received for every disbursement, it is
difficult for funds to be used inappropriately.
In the relief and development sector, much of the fund flow moves from
institution to institution without actually creating much value ... but
hopefully at the end of the chain there is value. It does not matter how
many hops the money has to make, there should be a financial control
step to relate value to the money disbursed.
Is this complicated? Why has it never been done?
Why are there no metrics about relief and development performance and
an accounting for the use of all the money that can easily be audited? Is
it a question of incompetence or corruption?
UNDP information going backwards
Going back as far as 1978, UNDP was called upon by resolution of the General
Assembly to prepare country level development cooperation reports. These
reports detailed all the official relief and development assistance projects being
implemented in the country, and were a very interesting and useful dataset.
They were not particularly well prepared by UNDP's staff mainly because
mostly the staff used for the work were junior and lacked the necessary training
and experience to do a good job. Many of the supervisors were not skilled in this
work either. But the information was still the best available. These Development
Cooperation Reports have been discontinued in recent years, and the reason is
not at all clear.
Why Was the DCR Discontinued?
I have been a user of the UNDP Development Cooperation Reports (DCRs) and I have helped in their preparation.
Some “north” countries objected strongly to UNDP doing this work.
They considered their bilateral assistance to the beneficiary county to be
a private matter between their aid agency and the recipient government.
This was very “convenient” because it allowed a lot of valueless work to
be delivered ... that is valueless to the “south” though of some benefit to
the donor country.
My guess is that UNDP agreed to stop the preparation of the DCR
because of pressure from donor countries that do not want their bilateral
aid projects to be subject to any form of easily accessible analysis,
evaluation or accountability. In return I would not be at all surprised to
find that UNDP received funding commitments that it otherwise would
not have had.
Around 1990 UNDP starting preparing the Human Development Report, and
the associated Human Development Index. This was an attempt to provide
metrics that would measure global progress not so much in terms of standard
financial economics, but in terms of parameters that were important to the
quality of human life.
What is really sad is that this new and impressive new data about relief and
development results was not related in a systemic, and quite simple, way to the
economic resources being used to maintain this state of human development. A
great opportunity was missed.
OECD DAC Reporting
The international community routinely uses the information published by the
OECD Development Assistance Committee (DAC) as the definitive information
about relief and development fund flows. Based on several attempts to use the
data, I do not believe this information to be at all reliable.
There is an appearance that the DAC information flows are more self-serving for
the donor countries, being primarily a compilation of information supplied by
the donor countries with little or no verification by anyone. The DAC
information does not provide end to end accounting of relief and development
fund flows. Until this is available and easily accessible in the public domain
there will be abuse of relief and development sector resources. This needs to be
fixed as a matter of priority.
DAC Data Accuracy
I have tried several times to reconcile the information available in
individual “south” countries project by project with the aggregate
information published by the OECD Development Assistance
Committee (DAC). I was unable to get the figures even close to
agreeing, suggesting that the DAC information which is sourced from
the donors is nothing more than self serving information with little
tangible reality.
I am not sure why the numbers do not agree. One issue is that the
numbers are not subject to any form of external or independent
validation. Another is that the methodology of reporting is inadequate.
This is a long standing problem and not yet addressed seriously by
anyone.
Some of the DAC reporting seems to be carefully designed to be almost totally
useless. For example reporting about Foreign Direct Investment without giving
a sector breakdown to facilitate analysis without the oil and gas sector, or
without the mining sector is practically worthless ... unless of course the goal is
simply to show how big the FDI fund flows are in aggregate.
Reporting in the ODA world
I have been shocked at the accounting and the use of information in the ODA world.
Delayed Accounting is No Accounting
I tried to get some basic financial information within the UN system
some years ago, and was told that the information would not be
available for about 12 months or so. The explanation was that the
accounting information had to go from the field offices to the specialized
agency's head office and then it would come to New York.
As CFO for an international company a few years before, my
requirement was that every operation around the world would submit
their complete monthly accounts two business days after the end of the
period closing.
If we did not get the accounts (sent by telex) at the end of 48 hours, we
waited a day for telephone contact, and a day later either the company
President or myself would be on a plane and arrive in the offending
office perhaps 24 hours later. It took just six months for a company that
had had no financial controls to embrace the value of analytical financial
and operational information. More important, the company's profits
improved and staff were highly motivated and quickly made the
company's performance as good as anywhere in the industry.
Who wants good accounting?
Does anybody want good accounting? Almost nobody.
Management Accounting for UNDP
Some years ago (around 1992) I made a presentation to the UNDP
Administrator's Office about “Management Reporting and
Responsibility Accounting” and afterwards was given the feedback that
none of the senior staff present had any understanding of the key words
or ideas that I used in my presentation: (1) accounts and accounting; (2)
responsibility; and, (3) management. Clearly this was a problem, but if
you are operating without these things, why would you ever want to
install them.
Around that time others were making efforts to improve this situation,
and a very strong professional accountant was brought into UNDP on
secondment from one of the most prestigious accounting firms in the
USA. After just a few weeks his role as Chief Financial Officer was
completely eviscerated by making his work purely advisory, and
effectively worthless.
Who understands accounting?
The shrimp project in Yemen is an example of how little
understanding there is of accounting and the way accounting reports
are prepared.
World Bank Staff Have No Appreciation of Accountancy
Shrimp Project in Yemen (YAR)
I worked with a World Bank mission in Yemen (YAR) to help assess
progress on a shrimp project based in Hodieda. Though the project had
been in the construction phase for almost two years the World Bank had
not yet seen any project accounts in English. I was told the project had
no accounting based on the fact that the World Bank had asked for an
audit of the accounts, and an audit had not yet been done.
When I visited the project site I found, in fact, that the project had quite
well prepared accounts every month in Arabic with all the detail needed
for analysis. Not surprisingly, the Chief Accountant and the accounting
staff were Arabic speakers, as were all the project staff, so it was normal
that the accounts would be in Arabic.
I am not an Arabic speaker, but the Chief Accountant and I were able to
create a spreadsheet template in one afternoon so that his Arabic
accounts could easily be understood by English speakers ... and then this
information could easily be compared to the project budget. It says
something about the World Bank that they would wait almost two years
to get such a basic and simple thing done?
The relief and development sector is destined to maintain its low performance
status as long as the staff have little understanding of accounting.
One would expect the corrupt and inefficient people in an organization not to
want good strong accounting. Without decent accounting these people can go
about their corrupt business without having to bother very much about being
caught and being held accountable.
But good accounting is opposed by good and efficient people. Too many of these
people have learned somewhere that accounting costs money and has little
relevance in the area of relief and development. They seem to think that
accounting is only for the corporate for profit sector and to prepare tax returns.
They do not seem to “get it” that having accounting and internal control helps to
manage resources and get the money used in the best ways possible. Maybe
they just do not want the hassle or they do not want to have to face any level of
possible criticism.
In the relief and development sector, the end result of decades of operation
without very much management accounting is huge inefficiencies in the use of
scarce resources. This is a very bad outcome since external money and materials
are very in very short supply, and not by any means adequate for the work that
is needed.
Knowledge
Knowledge. What knowledge is there? Is everything known that needs to be
known. How to stay up to date. How to train new people. How to update
knowledge and be in the global knowledge community. How to get
knowledge si that it is used in the most valuable way?
Technical knowhow and local knowledge
Knowledge
One of the world's greatest successes of the past century has been not only the
creation of knowledge, but also its distribution.
So why is it that when it comes to development, the value of knowledge seems
to be missing.
All the knowledge needed to have success exists. The fact that knowledge has
not driven success in development is a problem of process rather than a lack of
knowledge.
Knowledge is one of the few things that costs almost nothing to replicate. It may
take millions of dollars to discover some new bit of knowledge or to carry out
some research. But telling people about the discovery costs next to nothing.
Constraining the communication of knowledge
The NORTH is constraining the communication of knowledge by making
knowledge into a business rather than a profession. Yes, people should get paid
for doing good work, but reasonable and fair pay is different from purely
maximized earnings and pay along the lines of recent corporate examples.
Books, even good books, do not cost much to print and distribute. Especially text
books that are “required” for courses. But corporate publishing organizations
are charging very high prices for these books. This is an evil practice, and
tolerated because it is now an expectation that communicating knowledge is
expensive, when it could be and should be cheap.
The NORTH's publication industry, instead of being at the forefront of making
knowledge more and more easily accessible, is driven by a business model that
limits access to the few who have the resources for their expensive books. The
publishing industry is doing well in purely financial terms, but as an industry
that should be of enormous value in the global economy it is failing terribly.
The Free Public Library
One of the great creations of the last century is the free public library. It is a
wonderful idea that makes it possible for ordinary people with limited resources
to borrow books and either learn from them or enjoy them or both. It was an
amazing vision for Andrew Carnegie of steel industry fame to endow free public
libraries at the end of the 19th century, and help ordinary people gain any sort of
knowledge that existed in print.
Indigenous knowledge
What people in the SOUTH know about their environment and their
communities is very valuable. Far too little of this knowledge has been
mobilized to improve the performance of development.
Most indigenous knowledge does not exist in forms that are easily accessed by
the academic community in the NORTH and others who only use books and
other systems for documented knowledge.
It is a long time since I realized that there was a lot to know. But more
important I realized that because I did not know it, that did not mean
that it was not known
The SOUTH's community knowledge is not at all well documented. Yet this is
the information that people in every community in the world, and the SOUTH
particularly live with every day and know very well. The experts from the
NORTH know almost nothing of community knowledge in the SOUTH, and yet
do all the “planning” for these communities and allocate the resources. The
feedback to get community knowledge into the planning processes and the
processes to allocate resources virtually do not exist.
It is no wonder that development has not succeeded when the critical
information and knowledge about communities is excluded from the processes.
Intellectual property
One of the problems is that the corporate NORTH has taken to making
intellectual property more and more like other property. This should not be a
problem, but will be. Almost certainly the ideas of intellectual property are
going to be used to increase the wealth owned and controlled by the NORTH at
the expense of the rightful owners of the intellectual property or knowledge
Language
Good development is going to have an impact on people who maybe do not
read or write. They probably do not speak English or French or Spanish or
Russian. But they have to understand what is going on and what the advantages
are going to be and what actions they can engage in to help. The thinking had
better be clear so that it translates into other languages safely. My personal
experience with this has made a big impression on me.
My company prepared a fisheries development plan for the FAO. We
wrote the report in English. It was forwarded to the government of the
country in question (which used English as its international language).
They summarized the report in Arabic so that it could have wider
circulation which was a good idea, and I got a copy of this Arabic
summary. I had it translated back into English. To my horror the
translators, who knew nothing about the technical nature of fisheries,
and especially of fisheries population dynamics, had translated and
summarized the report in a way that concluded that every fish in the sea
could be fished and the fishery would be “sustainable”. This made
absolute nonsense of the conclusions of our work and guaranteed that
any decisions to do work done based on their summary would be an
economic failure.
The development arena is populated by people from many cultures, many
backgrounds and with many different types of training. It is easy for
professional sophistication to be misunderstood. Ideas need to be simple and
ideas need to be sound. But simplification is not accomplished by taking out
important elements. It is achieved by making basic changes in the process so
that the various steps are simple and the various steps are relevant.
Knowledge is foundation for maximizing potential
“Knowledge is power” was written a long time ago, but is still as valid as ever.
Knowledge is abundant in both the NORTH and the SOUTH. But there is a
different set of knowledge in the NORTH and in the SOUTH. Knowledge in the
SOUTH is the critical resource for success in community in the SOUTH.
Knowledge in the NORTH is more connected with technology and ways to solve
technical problems.
|
|