Weekly Roundup – 12-14-13: Is wishful thinking sustaining or stopping global development?
It was a big year for off-grid solar energy. How big? An analysis by Greentech Media, finds off-grid solar companies in developing nations raised $64 million in investments and grants in 2014. According to Greentech:
“The numbers were boosted by two large deals: $20 million in debt and grants to Kenya’s M-KOPA Solar, and $23 million in venture funding closed by Tanzania-based Off-Grid Electric.
M-KOPA and Off-Grid Electric are representative of the new wave of solar companies attracting capital. Both companies use mobile payment platforms that give customers the ability to pay for electricity as they need it, rather than investing in an entire solar system.”
Another noteworthy investment mentioned by Greentech was Schneider Electric’s $2.5 million Series A round in SunFunder, a crowdfunding site for solar projects in emerging markets.
(Incidentally, NextBillion also tracked investment and technological trends in distributed energy enterprises earlier this year through our Going Off Grid Series).
The $64 million figure is an exciting tally and I imagine it might be on the conservative side. There’s no reason not to be optimistic about the deal flow around off-grid solar for 2015. Hopefully we will see more development banks – which many observers believe have been far too timid in financing off-grid companies – jumping into the game as a result of some of these smaller deals.
Helping Millions Instead of Making Millions
Speaking of getting off the sidelines and into the game, I was inspired by Peter Tufano’s story of doing just that. Tufano, the former dean of the Saïd Business School at Oxford, is profiled this week in The Financial Times about his venture, the Doorways to Dreams Fund.
Tufano tells FT about D2D’s mission of creating a national system of prize-linked savings accounts in the U.S., “similar to the UK’s Premium Bonds programme that has operated for more than 50 years.” (NextBillion recently published a post by Timothy Flacke, executive director of the Doorways to Dreams Fund, on the effort, which is here).
“I used to write on the board . . . ‘rather than help thousands of people make millions of dollars, let’s help millions of people make thousands of dollars’, and I decided I would do it,” Tufano, the Harvard Business School graduate, told FT. “My colleagues at HBS thought this was just a statement that someone would make to get tenure. It sounds politically correct and they didn’t understand that I was serious about it.”
As inspired as I was by The Financial Times piece, I’m just as ambivalent about this essay in The New Republic (or what’s left of it): Stop Trying to Save the World: Big ideas are destroying international development by Michael Hobbes. He puts forth his thesis with many well-worn examples of failures, including the PlayPump. The subject of his ire is his belief that the never-ending quest for scale is leading to considerable dysfunction.
“I can see why it’s appealing to think that, once you find a successful formula for development, you can just scale it up like a Model T. Host governments want programs that get more effective as they get bigger. Individual donors, you and me, we want to feel like we’re backing a plucky little start-up that is going to save the world. No international institution wants to say in their annual report: “There’s this great NGO that increased attendance in a Kenyan school district. We’re giving them a modest sum to do the same thing in one other district in one other country.
“The repeated ‘success, scale, fail’ experience of the last 20 years of development practice suggests something super boring: Development projects thrive or tank according to the specific dynamics of the place in which they’re applied. It’s not that you test something in one place, then scale it up to 50. It’s that you test it in one place, then test it in another, then another. No one will ever be invited to explain that in a TED talk.”
And in an interview with Slate’s Mike Pesca this week, Hobbes says the pressure to scale not only stretches project managers well beyond the limits of their expertise, it leads many to paper over their mistakes to keep the funding spigot open. The interview starts at the 13:40 minute mark of the podcast.
I don’t doubt Hobbes’ sincerity in shining a light on what he sees as the “fad diet” ethos of today’s global development. Incremental change isn’t sexy, but often that’s what is really needed, he says. Certainly, not every business or project should be scaled, and donors and doers must have the courage to quit when the writing of failure is on the wall. But at the same time, bold ideas like the Gavi Alliance would not have delivered on seemingly audacious goals without first setting them. For all of their drawbacks, the Millenium Development Goals have helped focus energy and resources. And who’s to say the aforementioned Doorways to Dreams won’t succeed as a result of taking a nationwide strategy rather than a more incremental approach? The boldness of big ideas can easily revert to folly, but it’s also what leads to systematic change, be it economic or social. As the Wilco song goes, “what would we be without wishful thinking?”
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