28 January 2012

Development Acumen and Achilles Heels?

This week, I met with CDC's excellent new CEO, Diana Noble. CDC is a development finance institution, set up by DFID, but not financed by UK taxpayers since 1995. CDC has been successfully recycling returns from investments into new investments. With the aim of having a bigger additive effect transformative change, they are focusing all new investments in South Asia and sub-Saharan Africa.
In the course of our discussion, Diana told me about the Acumen Fund, investing in "social enterprises, emerging leaders, and breakthrough ideas".
The Fund has an interesting "10 things we have learned to be true":
  1. Dignity is more important to the human spirit than wealth
Neither grants nor markets alone will solve the problems of poverty
Poverty is a description of someone's economic situation, it does not describe who someone is
We won't succeed in the long term without cultivating local leaders
Great people, every time, no exceptions
Great technology alone is not the answer
If failing is not an option, you've ruled out success as well
Governments rarely invent solutions, but they can scale what works
There is no currency like trust, and there are no shortcuts to earning it
Patient capital investing is built upon a system of values; it is not a series of steps
I like the fact that the Fund is reflective. I also like the focus on dignity, leadership, blends of grants and markets, patient investing, listening to customer feedback.
But the Achilles Heel of this sector is the lack of independent evaluation and verification of impact.
The claims of Acumen's success are loud: 55,000 jobs created and supported, and 86 million lives impacted. I could not find any evaluations on the website (the "knowledge centre" has photo essays, stories and update letters but no independent assessments of impact and sustainability).
It would be so much more reassuring if these numbers had been generated by independent and publicly available evaluations. This is one way of building trust.

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