Wednesday, August 18, 2010

Donors’ stupid rules

We have a nameless donor here which gives money rather generously to the Government of Lesotho. One of the things it funds is training sessions for civil servants. This is good. But it asks for the exact number of people who will attend first. If fewer people attend then money spent on, for example, lunch is expected to be returned.

This makes sense since why should it pay for people who were not there? It is also useful since it does want to account for all its money and minimize corruption opportunities.

But it makes it practically impossible to organize any training session. For example, if 25 people sign up to any course, then it is highly unlikely that 25 people will attend. There are many genuine reasons for this; for example, people get sick here, regularly and at short notice. People also often have to look after other sick people at short notice. Cars are not of the highest quality and regularly break down preventing people from getting to work. Emergencies happen at work and people have to do something at very short notice. Meetings that have to be attended are called at short notice and people often don’t know until the last minute that they have to go abroad for work. All this means that, there will never be the 25 people who were expected at the course.

So funds have to be returned but there is no Government money to fill the gap. The paperwork is tiresome. And, all in all, it probably isn’t really worth the effort.

Unfortunately, this donor, is seeking to minimize corruption opportunities to almost zero and to ensure that organization is at 100%. But neither of these are optimal.

Risk should be optimized, not minimized.

For example, I choose to cross the road, despite the fact that there is a risk. I get in a car, eat in restaurants, drink more than I should. I sometimes even take the risky decision to leave my house in the morning – and that despite the impact on my blood pressure of going to work, some days! All this because taking some risk is worth it for the benefits.

In this case, the result of minimizing the risks is that the training doesn’t happen – so there are no benefits either.

Secondly, if only total perfection is acceptable, we wouldn’t do very much.

I see this constantly in the Ministry of Finance. Partly due to other people being constantly critical of work, there is a culture of ensuring that everything that is done, is as perfect as it can be. This means that a long time is spent perfecting documents. The cost is high in terms of time but there is very little value added usually. The concept of diminishing marginal returns doesn’t really sink in. So everyone produces very little work but makes sure that when something is done, there is very little to criticize on it, or – more likely – involves either management or a large group of people so that no one will take any criticism. That also ensures that any work will take a long, long time to do.

It is a real pity that donors, which should be setting good examples, are sometimes worse that Government in terms of stupid petty rules that encourage laziness by giving excuses not to do anything, discourage taking the initiative – indeed punish it, and being cautious to the point of not getting anything done.

Why even bother?

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