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Disrupting Development in the Digital Era

October 26, 2017

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Chris Proulx

Chief Growth Officer, US

Exploring the gap between the digital haves- and have-nots in international development.

When we explore the question of technology in our sector, conversation quickly turns to back-office systems for creating more efficiencies in accounting, finance, HR, and operations. Certainly, many larger NGOs have been implementing a wide range of enterprise systems that often integrate these functions more seamlessly while also connecting the head office and the field.

If you dig deeper and do a couple of quick Google searches about tech and development, you will quickly find articles about the introduction of mobile devices in our sector. Most notably, there is the use of mobile devices for data capture and other M&E functions. While not evenly adopted in our sector, the technology has been in use at some NGOs for as long as fifteen years. The methods are well understood and the technology has become widely available, increasingly accessible, and more affordable, especially in the context of potential cost savings in the M&E process.

Yet, these are examples of technology innovations which have now reached what is often referred to as the Plateau of Productivity.

Mobile Money, Blockchain, and More

These technologies are producing mainstream benefits and are widely adopted in many industries. However, it may be that organizations in our sector are still wrestling with their implementation. But this reflects our generally slow approach to adopting new technology rather than the fresh innovation our sector now needs. As Lauren Woodman, CEO of NetHope, recently noted on her blog, “only 30 percent of NetHope members have a digital strategy in place.

Disruptive technology has had major impacts on the travel, transportation, retail, and education sectors. Is the development and humanitarian sector immune to disruption or are we just not paying attention? With that question in mind, we can look ahead to the more transformative technology just now being piloted in our sector. At a recent Humentum finance directors’ seminar in London, we explored examples of new digital tools with potential big opportunities and big challenges for our sector. The discussion focused on the leadership and business model implications these technologies raise for our sector.

Consider the increased use of mobile money for aid disbursements. It is increasing financial inclusion and opening up new value chains for rural agriculture. We know the tech works because mobile money is active in 92 countries with over 170 million active accounts. But again, adoption by development organizations is lagging the private sector. At the same time, emerging research by GSMA, UNCDF, CGAP, and others seem to indicate that the challenges in our sector are related to human and cultural factors and not the tech. Issues such as trust, local customs, usability, business models, and geographic distances mean that NGOs need to take a more human-centered design approach to implementing a mobile money solution. Closer cooperation with the private sector to implement industry-standard solutions (as opposed to custom, one-off solutions by a single agency), and more NGO sector-wide collaboration could accelerate progress.

Emerging behind mobile money is the nascent use of blockchain in our sector. A recent report highlighted several advantages and opportunities for using blockchain, such as making aid disbursements more transparent and secure and for enabling digital identity management for displaced persons, the unbanked, and others (over 1.1 billion individuals worldwide). There are pilot projects addressing both opportunities in humanitarian settings, including work by the World Food Programme, START, and a UNHCR partnership with Microsoft and Accenture.

Weighing the Risks and Benefits

But blockchain is also raising serious concerns. Mercy Corps recently released their own report highlighting the risk to INGOs, noting:

Blockchain’s ability to remove the need for entrenched third-party intermediaries has huge disruptive potential. By replacing the traditional trusted intermediary with a new type of entity – a peer-to-peer distributed network – DLT (blockchain) is poised to revolutionize a number of industries, from finance, to legal, to insurance. To the extent that international NGOs function as guarantors of trust – trust that the funds donated will be used for an appropriate purpose, trust that the aid has been given to the right beneficiaries, trust that the development work that was contracted for was done on time and as specified – then NGOs too are poised for disruption.

Together, mobile money and blockchain have the potential to enable INGOs to deliver more responsive, more trusted, and more cost-effective programs—and they also have the potential to disintermediate INGOs. Do we have the leadership approaches, talent acquisition strategies, and financing tools to adequately experiment with and implement these technologies that could dramatically shift business models?

These digital technologies along with others such as drones, robotics, automation, and artificial intelligence taken together may transform the people-centric nature of our sector. Historically, our organizations have had people at the center of our mission, service delivery, and cost model. What if that changes (and changes fast)? What if using digital tools means that we can deliver increased services with fewer people? Have we considered what that means for the impact INGOs have in the communities where they work? Communities where jobs in development are a significant part of the local economy? Are we prepared to transition those communities to jobs in the new and emerging technology?

What about the impact on the localization agenda? Are local and national NGOs in the Global South also preparing to engage and use these new technologies as fast as (or faster than) INGOs? Or as a result of localization, will INGOs transition to new digital models while local and national NGOs are left with a larger share of a shrinking budget for traditional aid and development funding?

This is not simply an IT challenge, and it is not simply a challenge for our sector. Deloitte has highlighted that all organizations need new, shared leadership approaches that will enable an organization to be more agile and responsible in the digital era. The opportunity for all INGOs (including the 70% without a digital strategy) is to not write a digital strategy but rather to write a strategy for becoming a digital organization while enhancing our role in creating a more peaceful, just, and prosperous human experiment.

For organizations that have not yet started down this path, NetHope and Humentum have produced the useful Back Office Guide to IT.