Saturday, December 11, 2010

Best Aid Intervention - What is it?

Best Aid Intervention. Is there such a thing as the best aid intervention? And if there is, what is it? Can we define it as a development approach that is equally successful, cost-effective, and sustainable when implemented in any country or region of the world?

Girls Education

First thing that comes to mind is girls' education, on which I wrote before in Girls and Education-Why Do They Matter? Yet despite my own devotion to the cause and many great studies on the subject(check out "Because I am a Girl" by Plan International thanks to @KeshetBachan for the link), we have to acknowledge that girls education is NOT the most cost-effective tool. Nicholas Kristof, one of the most prominent supporters of girls education, states: "While we argue that educating girls does stimulate economic growth and foster stability, for example, it is also true that one of the most educated parts of rural India is the state of Kerala, which has stagnated economically." The example of the former USSR republics (almost all of which have literacy ratings around 90%) also proves that education is not always the key to economic development and high per-capita incomes. Therefore, girls' education is not a panacea(but oh how I wish it were!)and not the best aid intervention.


Is it microfinance that has gained huge numbers of supporters since the beginning of the new millennia with the help of its main champion, the Nobel Peace Prize winner, Muhammad Yunus? Probably not. Not because of the SKS IPO controversy, Andhra Pradesh crisis, or the infamous Norwegian documentary, but simply because microloans do not fit the needs of all the poor people. Believe it or not, poor people are not equally poor and have different needs! To me, out of all the criticism that microfinance industry has received recently, the not-everybody-wants/can-(to)-be-an-entrepreneur seems to be the most viable. In addition, there hasn't been enough research on microfinance effectiveness, while some of the few researches that came out had actually come up with negative results.

On the other hand, there is an undeniable need for financial tools developed specifically for the poor, which is strongly supported by the research summarized in the brilliant "Portfolios of the Poor." Thus, microfinance still has a shot at becoming the most effective development tool... with two big "ifs". If the industry continues working on the diversification of its products, a prerequisite stressed in the latest CGAP report. And if microfinance shifts its focus back to its poor clients, away from the wealthy investors.

Seasonal Migration (of people)
Would you be surprised if I told you that seasonal migration is a more effective development tool than microfinance, deworming (one of the cheapest aid interventions!), or conditional cash transfers? That's exactly what this article states!

But does the success of a seasonal migration from Tonga to New Zealand mean that this approach will be equally effective in raising incomes elsewhere? Probably not. The article itself states that this type of policy will be most effective for small island nations and its results will depend on governments and international organizations. (Knowing these limitations, we can take seasonal migration down from the "best aid interventions" list right away.) Moreover, the article's daring conclusion is nothing but a suggestion based on very few one-sided researches.

Does it mean that there is no such thing as the best aid intervention, a perfect development approach creating miracles all over the world? Well, miracles do happen all over the world (look at Kenyan M-PESA for example!), it's just that they are brought about by different forces and different aid interventions.

The world and its people are simply too diverse for one aid intervention to be equally effective everywhere. There will ALWAYS be exceptions to the rule. As I see it, the best aid intervention, is actually a combination of all of the above + many more great development approaches implemented at the right time in the right place.( Concerning the last 2 points, i.e. "at the right time at the right place", I recommned to check out this great post on World Bank blog: Revisiting the "country-specific solution"

I am very interested in your opinion. Do you think best aid intervention actually exists? Maybe you have a different definition of it or would have used different examples? I would love to hear your thoughts!


  1. Thanks for the post. I agree that we are only at the beginning in our learning about microfinance.

    Muhammad Yunus had the courage to try something new, and that he did. Now it is time for the world to join him in his efforts, to promote, improve and expand his cause.

    You may be interested to know that Yunus is featured as Hero of the Week over at

    Here is a direct link:

  2. Interesting post. It's asking more questions like you do here that will lead us to better answers and solutions. I agre that microfinance is not a silver bullet but I believe it is an effective tool for jumpstart many millions of the world's poor. We shouldn't hate it for what it's not but appreciate it for what it is and find other solutions to fill in the gaps.

  3. Thanks for the comments, guys! @Jensen, Professor Yunus is one of my role models, whom I greatly admire.

    @Brady, I am sure that despite all the recent troubles, microfinance will be able to reinvent itself. There is definitely a huge potential for increasing financial access to the poor.

    If you are interested in microfinance and poverty alleviation, I can recommnend you, an online community for microenterprise and microfinance practitioners, where all things microfinance are discussed in detail :)