The Development Mutants Are Coming … and We Care

The Development Mutants Are Coming … and We Care

Mutants are organisms that mutate due to a change in their composition or structure. In the development industry, we are starting to recognize mutants that slowly, but inexorably, are beginning to compete in the space historically reserved for international financial institutions. How can we understand these changes? And how can we use these mutants to improve lives in Latin America and the Caribbean?

Let us start from the beginning. There is no industry or sector that is immune to the disruption caused by the digital revolution. New digital tools have paved the way for the emergence of new companies and institutions, which disrupt an order that, in many cases, has lasted for decades. There are no exceptions. Not even for the development industry.

But change is not new for the development industry. In fact, in the 70 years since the Bretton Woods Conference to regulate the international monetary and financial order after World War II, the definition of development and how to achieve it has been in constant evolution. Development is now conceived as much more than economic growth: It includes the quality of institutions and conceptions of distributive justice. Our institutions have adapted to these changes. What has not changed, however, is that the most central positions in the development field remain indisputably held by a handful of institutions.

Many of us who work at these institutions think that this centrality is being challenged, and that the appearance of new actors in the development field is inevitable and their growth is only a matter of time. One of the first challenges we face is how to create a sense of urgency inside our institutions, which are accustomed to decades of almost-undisputed leadership. The second and most significant challenge is how to use these new actors to accelerate development. This is the mission of the Inter-American Development Bank (IDB), and to achieve it, we have been seeking ways to identify these new actors and define strategies for adapting.

During our search, we found a blog post by Nesta, an innovation foundation in the United Kingdom that welcomes the era of the development mutants. These mutants are heterogeneous organizations of different sizes and sectors that share some common characteristics:

  • First, by definition, they are constantly adapting to new challenges and needs
  • Second, their work combines many disciplines and imagines many futures, even the most unlikely
  • Third, when thinking of a solution, they focus more on the resources the beneficiaries already have, rather than their needs

One example of such mutants is Give Directly, an unconventional charity that operates in Kenya and Uganda, transferring cash directly to poor families, without conditions. The organization uses satellite technology to identify their beneficiaries, and mobile platforms to make payments. Approximately 90% of the donations reach their beneficiaries directly.  Essentially, Give Directly removes the intermediaries from the transfer process, seeking more efficiency while at the same time, emphasizing sophisticated results evaluations. A study conducted in 2013 by Jeremy Shapiro and Johannes Haushoffer from Princeton University found that some of the results of the transfers included poor families reducing their likelihood of suffering hunger, increasing their assets, and investing in their own small enterprises.

Give Directly challenges not only conventional charities, but also international financial institutions (such as the IDB, World Bank, and others) that finance multimillion-dollar programs that make conditional cash transfers. These programs have proven successful, but their efforts to target the correct beneficiaries and their administrative costs make them expensive compared to the model of Give Directly.

That said, is Give Directly the future of economic development programs? Can we compare a model that transfers only a few million dollars to the massive programs of the international financial institutions? Is it possible to incorporate Give Directly’s design to large-scale public policies? What about the supervision and evaluation that international financial institutions conduct to ensure accountability?

One more example of a mutant: Multilaterals have worked for many years to strengthen national statistics offices in countries to obtain reliable numbers for inflation and other indicators. PREMISE is a U.S.-based startup that uses a completely different methodology—volunteers take pictures of food prices and analyze the data using an algorithm. This model has proven to be 25 days faster than the national statistics office of Brazil at collecting data that show a rise in food prices. However, this model raises the same questions as Give Directly.

We don’t have the answers yet. What we do know is that mutants such as Give Directly and Premise present us with two options: ignore them, or learn from and partner with them. For us at the IDB, the answer is clear: More than representing a threat to our jobs, mutants show us a way in which new technologies and the digital revolution can redefine the concept of development. We begin to see development in two new and complementary approaches. The first (belonging to the international financial institutions) bets on a series of experiments based on data, with an emphasis on results, quick feedback, and new iterations. The second (belonging to the mutants) emphasizes the constant improvement of executing projects, with less emphasis on technical solutions that sound elegant a-priori.

To us at the IDB, there is no question that development mutants are coming. Our mission is clear: We will learn from the mutants by becoming them.

From the Multilateral Investment Fund Trends blog