Whew, I think this was one of the most intense and contentious Technology Salons yet! After an hour of lively discussion around what “sustainability” and “scale” means to information and communication technology programs, we were just starting to pull back the layers around the topics.
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Sustainability Means Many Things
We quickly found that there were many definitions of sustainability and scale. Maybe too many, as these terms differed wildly across implementers and donors. It was even suggested that in the realm of ICT, development has an unbroken string of failures since none of the projects have scaled to the extent of mobile phones.
Before we cast out the entire body of work to date, much of ICT4D is done as experimentation – there is an expectation of failure while we figure out models that would work. At least we have mobile phones to show that there are ICT models that can scale, sustainably.
Government supported project sustainability
Donor Funding is a Sustainable Model
Mobile phones also show that beneficiaries must pay for at least a portion of ICT services. This both validates the service and makes it responsive to the beneficiaries. But they do not need to pay for all of it. In many cases, long-term external funding from donors, government, foundations, etc, can be the cornerstone of a sustainable program.
Great examples of this are in the education and health field. Universal primary education is a public good in many countries – paid in full by government entities which themselves can be funded indirectly by beneficiaries (taxes) or external funders (multi-lateral donors).
In the health field, health information is often created and supplied via free-to-beneficiary models supported by donors. And before anyone thinks donor funding isn’t sustainable, there are multiple countries that are in their third or fourth decade of multi-billion dollar multi-lateral donor agreements.
Different Time Horizons for Sustainability
Which brings us to time horizons. In development, we are often looking at projects with a three-year funding commitment, while in domestic private industry, three years is considered the initial start-up phase, with five years the usual time horizon for profitability. In the developing world, even successful organizations like Kick Start, consider 10 years a more reasonable break even benchmark.
So there is a gap between this pilot/start up phase, and a self-sustaining business model, that isn’t bridged by current financing. Donors are reluctant to fund “on-going operating costs”, yet venture capitol sees development investments as too risky, and development financing organizations rarely see above microfinance or below multi-million dollar financing.
Add to that gap, the reality that donor project requests don’t give much guidance around what they consider sustainability to be in their given time horizon, nor do many donor staff have the training to evaluate what models would be sustainable anyway, and implementers are often left to create fantasy sustainability plans and financing.
Sustainability Changes Over Time
In sustainability plans, there is also often the expectation that sustainable business models do not change, or if they do, they should always go from a donor or publicly supported program to one privately funded. In education, its often the opposite.
Educational innovations, like computers in classrooms, start with private schools which are funded through parental school fees. Then, once the benefit of that innovation is considered a basic necessity for a quality education, the government is expected to scale it up to all public schools.
It was suggested that while education and healthcare could be public goods, industries like finance or telecoms didn’t need public support. Then we were reminded of the recent troubles in the financial sector, and its billions in bailout funds handled by Central Banks around the world. In addition, Universal Service Funds helped spur innovation in rural telecoms that have come back to benefit all users.
How Do We Scale, Sustainably?
While we didn’t answer this question today, we did agree that the market works in the developing world. Mobile phones prove that if there is beer money, there is money for information and communication technologies. People will find a way to pay for what they consider necessities. Our challenge is to keep innovating, and nurturing that innovation, until we find another model that scales – lest ICT become a one-hit mobile wonder.
At least we can celebrate one small step towards scale – the Technology Salon is now replicated with Mobile Active’s the NYC Mobile Tech Salon. And like any good model, we’ve adapted to the local conditions – they’re meeting in the evenings, over beer, instead of the morning over donuts. Next, a San Franciscan conversation.
Thanks for running the show yesterday. A very lively discussion, and very enjoyable.
Re your writeup:
1 – donor funding as sustainable — I do not feel that the sense of the discussion is well summarized by the heading “donor funding is a sustainability model”. That seemed entirely controversial (as personally I believe it should be), particularly since the only ICT that HAS scaled — mobile phones — has done so largely as private enterprise, not a donor-funded activity. In fact, I believe the conversation began with a discussion of the idea that user funding should be considered firmly “on the table”. Personally, I think donor money in the best case should be considered more like start-up funding for tech projects than a “sustainability model”.
2 – lack of success for development ICT projects — while it is accurate to say that “it was even suggested that in the realm of ICT, development has an unbroken string of failures”, you should probably point out that after that suggestion, no one was able to step forward and contradict it — which points out again that donor funding seems okay to get things started, but not to keep them going. As I mentioned yesterday, if we don’t acknowledge that our current model for ICT related development projects is broken then we are unlikely to fix it. I might also get rid of the word “even”, which suggests that the opinion is somehow extreme or extraordinary when it is the opposite.
3 – web applications as a means of scaling — I think it worthwhile mentioning that making technology available to the development community as web applications, along the lines of Gmail (or EpiSurveyor), is an approach that has been almost entirely ignored by the development community, although it has been spectacularly successful in our own lives (e.g. Facebook, Amazon, Google Maps, Yahoo Mail, at infinitum).
Joel,
I thought we agreed that donor funding can be a sustainable financing source – the Pakistan government has relied on it for decades – but that we haven’t found models that works well with ICT4D.
Personally, I see an issue with what we mean by “sustainable.” If that is fully privately financed, then by definition, donor funding isn’t sustainable. But I see programs in health and education that start out as fully donor-funded pilots that are now becoming government programs.
A promising one in ICT4Health is Baobab Health in Malawi. In education, I see private schools leading the ICT4E movement, with public schools following as parental pressure pushes government to equalize access.
In these verticals, funding will always be more public than private, as they are considered government responsibilities.
It looks like your meeting was excellent and wish I had been in WDC to attend. Great summary and follow-on discussion. Here are a few thoughts based on my experience in this space:
1. Sustainability – let us not get too complicated here. The issue is simple, the solutions may be complex. As to issue, it boils down to if we get something started, will it be here next year, two years from now, five years or ten years from now–either in its original form or something that has morphed but has its roots in what was launched.
Keys here are likely; a) local demand–does whatever is being done have sufficient value-add, and b) is this value-add in demand sufficiently that financing resources can be acquired (from whatever source) to keep it running.
2. Scalability – the same applies to scalability. The issue here is that if a workable (and sustainable) solution can be found to one in one or a small set of locations, can the approach be replicated in other settings.
We know iCafes can thrive in urban settings. Can they be deployed in secondary cities, or even rural villages? If so, what adjustments are required?
3. Sources of Funding for Sustainability – there are a wide range of business models that address the sustainability issues. As discussed, it could be a pure public-sector financed public good. It could be a pure for profit model. It could be supported by private foundations or donors.
And potentially, it may well be through a combination of several sources at various stages in the life-cycle…a donor perhaps supporting the start up, a government that provides subsidies, a carrier initially providing discounted bandwidth, and possibly ultimately via users who pay for the services they consume.
Sustainability should not be viewed so narrowly that it is defined as a pure user-pay model. Rural telecom is still subsidized in the U.S. through our universal service programs–has been working for decades.
4. Limitations of Donors re: Sustainability – the simple truth is, donors are a lousy source re: sustainability for two key reasons;
a) their development assistance model is project based–projects have beginnings and endings, and with the ending, funding comes to a close, and
b) donors are typically public-sector and therefore most often are delivering public goods where revenue-generation based on the value-being-added, are often ignored.
When the efforts are private-sector oriented, it is rare that solid for-profit models and expertise get built into the project.
5. Universal Service Funds as One Potential – the reliance of universal access or universal service funding for supporting ICTs is a model with longstanding in many countries to offset the high cost of delivery into rural areas and the low revenue generated either due to low population density or income.
Ongoing subsidies to compensate for delivering telecom is the norm…and it is an approach that ensures sustainability–most often in combination with an acceptable user fee. USAID through it’s Vietnam LMI project in Vietnam worked closely with the the Government of Vietnam to get their USF up and operational to where it now collects from and redistributes to the telecom carriers, approximately US$ 60-80 million each year to support buildout and subsidies for serving rural populations.
Here is where a donor in partnership with the government developed a sustainable funding source that targets rural populations.
6. Value of PPP for Sustainability – due to the short-term project orientation of donors, the reliance of public-private partnerships has real value re: sustainability.
The notion here is to bring in partners that can add value to ensure long-term sustainability, while the donor provides the start-up capital and expertise.
In another USAID Last Mile project, this one in Sri Lanka, the LMI provided funding that was used to launch a franchise of EasySeva rural iCafes in approximately 55 communities. Partners included U.S. high tech firms with an interest to expand their market base, and a local carrier with an interest to expand their broadband services. USAID’s funding ended after about 20 were in place, but others stepped into continue the expansion.
The EasySeva centers themselves are owned and operated by local entrepreneurs and 3+ years later an estimated 50 out of the original 55 are still in place. There are some successful examples, though as the discussion indicated, many, many more failures than success stories.
I would argue that current donor funding schemes are not sustainable, for it is not the funding scheme we are trying to sustain but self-reliance within the country, correct? It is not sustainable to funnel millions into a country that actually drops GDP per capita. As a small effort to correct one aspect of this, I am working to align the requirements of donors who contract consultants that implement health information systems in low-resource countries so that these contracts match the country’s long term health system architecture, not the donor’s processes.
As a completely unrelated comment – I think it’s ironic to serve donuts at a meeting related to health.
And just to make the conversation even more interesting, see my recent Educational Technology Debate post on ICT4E sustainability, Sustaining Rather than Sustainable ICT4E. My position: any ICT4D project can only be sustainable if, in addition to having the traditional elements of sustainability in place (policy, financing, infrastructure, capacity, etc), it addresses individual motivations.
From the Twitter crowdsource we have these examples of sustainability:
Kevin Donovan: How about IFC loans to African telcoms? Or the IITs? Or Chinese distance education
Phat Controller: How about DFID funding for mpesa or Computers for Schools programmes Swaziland and Kenya?
How are those “examples of sustainability”? They’re just suggestions for how to finance things, and haven’t even been tried yet — much less shown to be sustainable.