Since Private Sector & Development review examined technical assistance (TA) in 2011, international development has transitioned from Millennium to Sustainable Development Goals. This article identifies key success factors and evolutionary paths identified in interviews with 20 participants, recipients and TA providers.
1/ Recipients’ choice. TA succeeds when it starts with what matters most to the recipient (not to the investor or funder) at that point in time. Other objectives will then be far more likely to succeed. “The recent TA significantly resolved the question of capital adequacy for mortgage finance institutions financing property entrepreneurs and resolved many questions in our debt capital-raising endeavours. It is this kind of targeted and insightful support that is of great service.” comments Paul Jackson, CEO of TUHF, an inner-city housing company in South Africa.
2/ Timing and organizational readiness. In contrast, Jackson notes that adopting new initiatives is much harder for recipients. “New initiatives take time, and bad TA decisions get made when TA funders pressurize beneficiaries without understanding the nuances.” Funders need to be far more patient if they want new ideas to succeed.
3/ Engaged boards. Major TA initiatives must involve the board, and organisations need a governance structure that supports the project. This is especially important when things go wrong, says Ghalib Nishtar, CEO of Khushhali Microfinance Bank, the fastest growing SME bank in Pakistan.
A TA project’s success is often determined by the chemistry between the recipient and the people delivering the service. Consultants must have strong interpersonal skills and cultural sensitivity.
4/ Recipients contribute to TA costs. Financial institutions receiving TA should share the cost, says Nishtar. “The board takes far more notice when I tell them we are spending our resources.” For more resource-constrained financial institutions, an alternative is insisting that they contribute dedicated staff and/or invest in improving operations vs. cost-sharing.
5/ The right consultants. A TA project’s success is often determined by the chemistry between the recipient and the people delivering the service. Consultants must have not only the right technical expertise, but also strong interpersonal skills and cultural sensitivity.
WAYS TO IMPROVE TA
Shifts in TA are underway, yet the following changes will accelerate impact:
6/ Cede control to recipients. “The biggest change that needs to happen is that donors stop focusing exclusively on their own strategies and ensure that they are also deeply connected to the strategy of the government or NGO they are funding,” says Natasha Quist, Deputy Director, West and Central Africa for the Bill and Melinda Gates Foundation. Nicholas Colloff, Argidius Foundation’s Executive Director adds, “Foundations should fund organizations with talent, including small, local organizations that can deliver value. Give more, including TA; use the evidence, but understand the nuances; fund unpopular items that matter, like core expenses; respond quickly; and stand by commitments.” Ceding control will require the parties to be flexible and adaptable to change.
7/ Local and regional players and service providers. The bulk of TA should be provided by regional and local firms and experts, liberating aid and reducing air miles. This will incentivize local people to enter the development field, increase long-term trust relationships and local support, and reduce cultural misunderstandings. Paul Jackson of TUHF, cautions, however, that funders should still retain balanced collaboration between local and international experts.
8/ Fund ecosystem interventions. “An ecosystem approach entails various interlinked players being embedded within the system, rather than coming from outside,” reflects Klaus Niederlander of Ambient Assisted Living Association. He adds that TA projects differ where, firstly, long-term investment and human and technical resources are required over a 10–15-year timeframe to achieve real economic, social and societal impact; and secondly, where the focus is on human and social capital development, rather than on financial and economic capital.
9/ Improve impact investor returns with TA. Venture capitalists understand that money is a commodity and that access to people, knowledge and markets drives business success. Hans Perk, Regional Director Africa for Oikocredit, a $1 billion impact investment fund, for example, understands the value of TA and is partnering with CapPlus to provide TA to Oikocredit’s investees.
Nicholas Colloff agrees with this approach as Argidius’ evidence points to TA being the driver of impact. In an independent evaluation of another organization, fifteen TA and capital beneficiaries credited their success as much to TA as to capital infusions. Subsidies to offset first losses, forex losses and lower returns – while necessary – should not be confused with the delivery of TA services that equip recipients to deliver greater impact.
10/ Fund core support and innovation. Continued innovation is key to greater impact, but it requires resources. With sufficient support, TA providers can create innovative partnerships and approaches to meet local organisations or governments’ needs, or experiment with new funding mechanisms and approaches such as sector-focused entities, seed stage support, and research and innovation funding agencies.
EXPANDING TA FUNDING
TA has improved, but greater development impact can be achieved by genuinely valuing the role of TA with the seriousness attributed to capital and aligning TA with capital infusions from the outset; delivering more TA services through local and regional firms complemented by international expertise; increased accountability to recipients; providing sufficient and flexible funding for realistic timetables, core expenses and innovation; and expanding TA funding and grants critically needed to catalyse and accelerate impact.