Catalysing private sector development or boxing it in a log-frame?

If you have ever tried to describe the logic and results of something you do in the form of a 'logical framework' (log-frame) for a donor,  and are interested in how private sector growth contributes to development, then this is for you.  But if log-frames mean nothing to you, this blog is probably neither useful or interesting for you.

I've just seen a summary of a discussion comparing log-frames with 'theories of change' on the Knowledge Brokers'  Forum, highlighting the complexity that can get missed in a tabulated log-frame.   It contrasts with another discussion I've had recently about whether employment is the best indicator for a donor-supported investment fund.  This all prompts me to share our internal discussion about the challenges of log-frames for the Business Innovation Facility.

The logic behind for investing donor resources in both Business Innovation Facility and Innovations Against Poverty is clear, but the chain of logic is not short or simple.   Donor input reduces risks and transaction costs for private sector activity that has high social impact, but would - if left to the market alone - probably be under-delivered.  But BIF and IAP input is catalytic: we cannot say that $x delivers $y benefit.    The ratio varies - some project thrive, and some don't.  The benefit varies too - it's certainly not just measured in jobs, and not just in numbers of low-income consumers reached.

It would be a lot simpler if the results of BIF or IAP could simply be tracked as numbers of jobs - and make it easier to do a log-frame, which donors use to identify indicators of success and what needs to be tracked.   Here are a few reasons why, in my role as Learning and Results Manager for BIF and IAP, I have argued against over focusing on employment as an indicator of success:

Various reasons why a simple 'increase in employment' indicator does not really work for BIF, or more generally for this type of project 

• where projects reach producers in the value chain,such as groundnut farmers, they gain market access, secure sales, chance to diversity or take up improved varieties, but it is not 'new employment'.  It may not even be increased income, but security, less fluctuation etc.

• roughly half of projects and much more than half of BoP beneficiaries will focus on the poor as consumers:  access to communications, healthcare, information, more efficient or safer technology.    This is not just about lower-priced goods and services, which could be converted into money saved indicators. Often it is about improving access or quality.   eg mKrishi, ischool, 

• our analysis of the Portfolio so far, suggests that direct impacts on people at the Base of the Pyramid (BoP) are just half the story.  The most significant impacts in some projects will be systemic effects, on what others do and trajectories of sector development.  In a few cases where this is replication of the business model, you could count this as 'scaling up' and add indirect beneficiaries to direct beneficiaries.  But often it is more of a sideways impact.   eg others adopting aflatoxin-management, others others investing in services for farmers that can be used via a mobile application

• even in projects that do directly benefit BOP people with jobs and income, it is nigh on impossible to do a baseline with those specific poor groups.  Businesses do not start with fixed client groups and then serve them, as a classic donor project does.  They start with a product then secure the suppliers or market.  BIF could invest in more baseline analysis with likely BoP participants, but it could be an expensive/risky investment, and we would have to choose in advance where to focus. 

• BIF's engagement is directly with companies and we rely on them for reporting results.    Business should be able to report numbers of BoP people reached directly, as clients, buyers, suppliers, distributors etc - although even this reporting of BoP people reached is proving a challenge in some.   Where payments are involved, they will know those.  But to delve deeper into the incomes earned, the full-time equivalent employment in the supply chain, or which employment is net new jobs, is not their core business.   To go further is  an extra operating cost of the business, which affects competitiveness.   As our job is usually to help companies reach break-even, it is hard to demand something more that will go against that. 

• If companies themselves cannot report the data, then BIF and IAP could fund external assessment.   Average BIF spend on a larger 'cost-sharing' project is £30,000 - £50,000 and only £10,000 or so on shorter engagements.   To do an impact assessment at each project to assess BoP impacts could easily cost more than the grant.   This is why we have opted to do deep dives' in a small selection of projects in Year 3.

• we have to ask what BIF is all about:  a multiple of 40 + 100 projects, or catalysing up-take of inclusive business by exploring and demonstrating how it works.  If the real impact is in developing inclusive business as a business practice (and a donor practice), then we should measure that.  Now there is a new challenge.

• Debates about what to measure and what framework to use can get technical and boring, but this is a live debate. Defining success affects what counts as successful.   More and more initiatives that aim to combine private sector growth with development impact are being supported.  Jim Tanburn asked in this Network, whether the  Donor Committee on Enterprise Development should prioritise seeing through a smaller number of fully-fledged tracking systems, or engaging more people in the approach.  The essence of the DCED approach, to my mind, is that it focusing you on the chain of logic, and the need to assess it.  My belated answer to Jim, is that getting more of us to be clearer on our chain of logic and our story of change is the first priority.