Devex Executive Review - Fall 2014 by Devex

Devex Executive Review Fall 2014

In ADBâ&#x20AC;&#x2122;s image China leads push for new infrastructure bank Also in this issue:

The evolution of the USAID administrator

Timeline:

Highlights from our development news coverage

Who should recruiters report to? What impact investing could mean for nonprofits

Exclusive to Devex Executive Members

Quotables The Development Executive Review is exclusive to Devex Executive Members — global development leaders who are innovating and shaping the business of development and working hard toward a singular mission: to make the world a better place.

“Much like the 'all you can eat' buffet, our global greed for land has no consideration of longterm effects.”

“In the twilight of the Millennium Development Goals, we have generated momentum and we must not waste it.”

To become an Executive Member, go to devex.com/executive.

- Monique Barbut, executive secretary of the U.N. Convention to Combat Desertification

- Charles Lyons, president and CEO of the Elizabeth Glaser Pediatric AIDS Foundation

“The most savage impact of climate change is increased hunger and poverty.”

"Inequality will become much more acceptable when the bottom is lifted upward by having better opportunities and access to value chains."

About Devex We are a membership organization serving a global membership of half a million professionals and 1,000 organizations in 100 countries with development business news, information and insights. Our motto is "Do Good. Do It Well.™" because we believe a more efficient global development industry can change the world. Learn more at about.devex.com Devex: Washington, DC | Barcelona | Manila | Tokyo

- Helen Szoke, chief executive of Oxfam Australia

- Kim Young-mok, president of the Korea International Cooperation Agency

An unexpected challenge Raj Kumar, president & editor-in-chief of Devex It wasn’t long ago that funding levels for development and humanitarian assistance seemed imperiled. In the wake of the financial crisis, headlines on Devex and elsewhere warned of the possibility of severe cuts to historically high levels of foreign aid. But the coalition of conservative and liberal aid supporters held — perhaps best evidenced by David Cameron’s politically costly aid push in the United Kingdom — and today’s funding levels remain at or near all-time highs in most donor countries. So while it may seem counterintuitive given the tough fights that were required to just maintain aid levels and in the wake of a growing conservative movement across Europe and continued tea party strength in the United States, I wish to make a prediction: Development assistance is likely to increase substantially over the coming decade. I wish I could say this new wave of funding will be due exclusively to the improved effectiveness of aid or a humanitarian groundswell, but my sense is that more

crises are coming and governments will need to act. Just look at what’s happened this summer from Syria to Iraq, Ukraine to Kenya, West Africa to Venezuela. In the Middle East, regional and sectarian conflict appears to be in its early stages. There is just a glimmer of Cold War sentiment on two fronts — between Russia and the U.S. and Europe as well as between China and its neighbors and the U.S. — but it’s enough to have repercussions in developing countries as it did during the real Cold War. Meanwhile, the changing climate is leading to more weather-related disasters and to drought, pestilence and health crises. Are we, the global humanitarian and development community, prepared for what’s ahead? That’s a subject for another column but my sense is we are not nearly ready. Nonetheless, even as donor countries lament their past mistakes — from funding dictators during the Cold War to wasteful spending during conflicts — they will almost certainly turn to our community in this new era of increased instability and crisis. The lead story in this issue of the Devex Executive Review is about China’s plans for a new Asian Infrastructure Investment Bank. This, like the BRICS bank which was founded this summer and is to be headquartered in China, and Venezuela’s still nascent Bank of the South, point to

emerging markets are becoming much bigger players, too, just as that a wave of billionaire philanthropists wielding their own theories of change are arriving on the scene.

Bob Gibbons, a member of the U.K. Department for International Development humanitarian staff, checks the aid package to be dropped over conflict-torn northern Iraq. Aid funding is likely to rise as more crises are expected to happen, suggests Raj Kumar.

a resurgence in the use of development assistance as a foreign policy tool. (So, too, does Canada and Australia’s moves to absorb their foreign aid agencies inside their foreign affairs ministries.) At the same time, a different trend — crowdfunding and the ability to target individual donations for specific projects and even specific individuals — is budding out of Silicon Valley. Global corporations whose futures are so closely tied to stable and growing

All of this is to say that what many of us in the development community assumed to be the paramount challenge ahead — not enough funding — may turn out to be the opposite: how to effectively invest a new surge of funding while avoiding mistakes of the past. As always, we at Devex will do our best to live up to our mission. So look out for more reporting and analysis from us on these trends and what they could mean for you, your organization and the important work you do.

Devex Timeline

Highlights from our development news coverage USAID realigns $2.9B maternal and child health portfolio

In Brussels, G-7 leaders outline post-2015 global development priorities

04-05 On World Environment Day, World Bank unveils new measure for country wealth

05 Launched: $350M political risk facility to support agribusiness investments in Africa

Australia announces new aid paradigm

10-11

Global Partnership for Education wins $28.5B in new pledges (above: board chair Julia Gillard)

‘Localization’ takes the spotlight in Manila

For the 1st time, France adopts law outlining foreign aid policy priorities (above: Minister of State for Development and Francophony Annick Girardin)

19 AfDB kicks off search for Donald Kaberuka’s (above) successor

Among the changes: performance benchmarks for all foreign aid recipients (above: Foreign Minister Julie Bishop)

At the first-ever Devex Partnerships & Career Forum in Asia, industry players forge partnerships and map the future of Asia-Pacific’s development

U.N. open working group proposes 17 sustainable development goals

Gates Foundation and IsDB plan ‘historic innovation in development finance’ The $500M buy-down facility will leverage donor funds to enable low-income member countries to access premium-free market resources

China’s second white paper on foreign aid: roughly $14.4B in aid provided in 2010-12

10-13 June

At its inaugural session in Nairobi, the U.N. Environment Assembly calls for a post-2015 agenda that integrates the economic, social and environmental dimensions of sustainable development (above: UNEP chief Achim Steiner)

23-27

Some delegates perish in MH17 crash on the way to the Melbourne summit, which ends with an appeal for more support and cooperation to get to an AIDS-free generation

20-25

July

Barack Obama (above) commits ‘billions’ for Africa Pledges at the U.S.-Africa Leaders Summit also include Sweden’s $1B contribution to Power Africa

Ugandan constitutional court overturns anti-gay law

U.N. expert panel urges integration of sustainable development financing in national budgets

04-06 U.S. promises $180M to help feed South Sudanese facing 'the worst food security situation in the world'

A government spokesman says it proves the country has a functioning democracy and thus donors should unfreeze aid (above: President Yoweri Museveni)

Girl Summit: Thousands commit to help end child marriage and female genital mutilation (above: U.K. aid chief Justine Greening, summit co-host)

At Brazil summit, BRICS’ New Development Bank is born (above: Brazilian President Dilma Rousseff, BRICS summit host)

USAID revises ADS 220 operational policy to incorporate use of local systems

EU launches 1st-ever program for Africa as a whole, with funding of €415M for 2014-17 (above: European Commissioner for Development Andris Piebalgs)

13 Ebola becomes an international health emergency again (above: WHO Director-General Margaret Chan)

08 August

UN declares the highest level of humanitarian crisis in Iraq

Since the start of the year, fighting has displaced more than 1.2M people

Narendra Modi (above) wants ‘to HIT Nepal'

In Kathmandu, the Indian PM announces a $1B concessional credit line as part of a strategy supporting the development of highways, I-ways and transways in Nepal

500 days until the MDG deadline

Devex and U.N. Foundation spearhead a global conversation on the difference the Millennium Development Goals have made (above: UNF President and CEO Kathy Calvin)

01 Germany pledges $1B to Green Climate Fund (above: Chancellor Angela Merkel)

World Bank Group begins implementation of Jim Kim’s (above) ambitious reforms

The proposal, meant to strengthen existing policies, draws flak from civil society groups

Sorrow and urgency mark AIDS 2014

European Parliament’s Committee on Development members zero in on 2015 priorities

London summit yields 1st International Protocol on the Documentation and Investigation of Sexual Violence in Conflict (above: UNHCR special envoy Angelina Jolie, summit co-organizer)

World Bank releases draft safeguards

Sobering news on World Humanitarian Day: Attacks on aid workers hit record high in 2013 (460 victims, with 155 killed)

In ADB's image, China-led AIIB to test infrastructure alternative in Asia By Pete Troilo, Devex director of global advisory and analysis

There’s an undercurrent flowing through the halls of the Asian Development Bank these days. For some ADB staff, it’s causing uncertainty. For others, a fear of marginalization. Yet it’s being brought about by something that nearly every organization or business in the world faces: the threat of competition. Public sector development organizations are normally protected from this threat. Donor agencies vie for talent, new sources of development finance crop up and aid budgets are squeezed, but industry competition, in the traditional economic sense, is not commonplace for established aid donors. That changed for the Manila-based development bank when, during the October 2013 Asia-Pacific Economic Cooperation meeting in Indonesia, Chinese President Xi Jinping announced plans to establish the Asian Infrastructure Investment Bank. With proposed starting capital of $50 billion, the China-led multilateral development bank would be well-financed from the start, share member countries with ADB and target ADB’s markets and clients. Some potential members have already signed memorandums of understanding related to AIIB membership, and Chinese officials continue to make their

rounds in an effort to attract international interest in what is well-understood as a Chinese initiative. “At a time when ADB faces a number of challenges, AIIB is the biggest,” according to one senior ADB official who did not want to be named, citing the sensitivity of the issue at the bank. “No matter if the new bank is formed in 2015 as planned or years from now, ADB needs to be prepared. There’s real pressure.” Despite the similar mandate, AIIB is calling itself a “new-type” bank and Chinese planners have deliberately sought to differentiate its business model from existing multilateral institutions. In contrast to ADB’s broader mission to alleviate poverty in the Asia-Pacific region, AIIB will focus exclusively on infrastructure development, mostly dams, ports, roads, bridges and railways. AIIB

ADB ASSISTANCE BY SECTOR

planners have also used terms such as “clean,” “simplified” and “efficient” in a not-so-concealed effort to juxtapose it with ADB’s reputation as a slow-moving bureaucracy that issues loans to developing countries in Asia with too many strings attached. But how the Chinese reconcile their fast and flexible infrastructure development philosophy with MDB standards will likely determine AIIB’s future development impact and shape the potential rivalry with ADB. New business model patterned after old ADB No one is disputing the existence and general size of the Asian infrastructure gap. Estimated at about $800 billion per year, Asia’s infrastructure finance needs are big enough to accommodate a new development bank for the region. Publicly, both ADB and AIIB officials have been quick to highlight that gap and stress the prospect for cooperation, partnership and cofinancing between their banks to help close it. So far, that’s where the harmony starts and ends.

2013, US$ billion

Transport & ITC

5.1 3

Finance Water supply & other municipal infrastructure

1.9 1.7

Multisector Public sector management

It’s a competition that is likely to play out in terms of distinct approaches by the two multilateral banks.

1.2

Agriculture & Natural Resources

1.1

“The Chinese have always been into hard infrastructure for their multilateral borrowing portfolio,” according to Richard Ondrik, who helped establish ADB’s Beijing resident mission and served as its acting representative during his 15-year career with the bank. “AIIB is going to try to mold itself in the image of the ADB of the 1970s. The business model itself was not flawed at the time, but it is also not possible to implement in today's environment.”

0.8

Education Health & Social Protection Industry & Trade

“Because the opportunities for infrastructure development in Asia, though vast, are by definition finite, and the pool of funding to finance those needs is also finite, there is clearly competition between a new AIIB and existing institutions,” said Ernie Bower, senior adviser and Sumitro chair for Southeast Asia Studies at the Center for Strategic and International Studies and co-author of the book “Decoding China's Emerging ‘Great Power’ Strategy in Asia.”

5.6

Energy

0.5 0.1 Source: Asian Development Bank Annual Report 2013

ADB President Takehiko Nakao

Chinese President Xi Jinping

Read more at devex.com/aiib

“China's intention on the infrastructure development is benign, but not altruistic.” - Yun Sun, a China expert and fellow with the East Asia Program at the Stimson Center, a Washington-based think tank.

Impact investing: What’s in it for your nonprofit?

The evolution of the USAID administrator

By Flavie Halais, Devex correspondent

By Pete Troilo, Devex director of global advisory and analysis

Wondering how your nongovernmental organization could benefit from impact-investors? You’re not alone. The Nonprofit Finance Fund recently surveyed U.S. nonprofits, and 20 percent of respondents said they will be seeking funding other than grants and contracts — such as loans and other types of investments — within the next year. In addition, 26 percent are considering pursuing an earned income venture as a way to diversify their sources of revenue. And the timing couldn’t be more perfect. Global investors are expected to commit 19 percent more capital to impact investments this year than they did in 2013, according to a joint study from JPMorgan and the Global Impact Investing Network. A growing percentage of their portfolio is projected to be deployed to sub-Saharan Africa and Asia as well. It’s safe to assume that impact investing will play an increasingly important role in the funding of organizations involved in making an impact in developing countries. While the appeal of impact investing is undeniable, nonprofits should know that taking investors on board is a major step and implies a vast number of changes in the way they operate — changes that might conflict with their mission. When would it make sense, then, to transition to a revenue-generating model and when would it be better to remain a “traditional” nonprofit? Here are some thoughts on what impact investing means for your organization.

From NGO to social enterprise There are several ways in which investors can participate in the capital of an organization, but in many cases these require a return on investment — through debt repayment or equity shares, for instance. Your NGO should be equipped with a steady revenue stream that will allow it to deliver on this return, or at least with a strategy to reach financial sustainability in the foreseeable future. Read more at devex.com/impactinvesting4nonprofits

How U.S. nonprofits are working to bring in new money in the next 12 months Based on a survey of 5,019 nonprofit leaders

31% will change the main ways in which they raise and spend money.

26% will pursue an earned income venture.

20% will seek funding other than grants & contracts, such as loans or other investments. Source: Nonprofit Finance Fund’s 2014 State of the Nonprofit Sector Survey

The U.S. Agency for International Development has been around for over half a century. As the primary U.S. government foreign aid agency, USAID currently works in more than 100 countries across Africa, Asia, Latin America and Europe, and commands the majority of a yearly U.S. foreign aid budget of approximately $30 billion. Earlier this year, the agency refined and refreshed its mission statement: “We partner to end extreme poverty and promote resilient, democratic societies while advancing our security and prosperity.” That’s a serious duty for USAID leaders in today’s highly interconnected, unstable and inequitable world. Much of that responsibility inevitably falls to the USAID administrator who is appointed by the president and confirmed by the Senate. Since 1961, when John F. Kennedy created the agency, there have been 16 different administrators who oversee billions of dollars, manage a staff spread across the globe and make decisions that affect the lives of hundreds of millions of people in poverty.

“Devex has done a service for the development community by focusing attention on administrators of the U.S. Agency for International Development from the agency’s founding up to the present.” - Andrew Natsios, former USAID administrator (2001-2006) Yet, despite holding an office with such global influence, USAID administrators operate in relative obscurity. They are rarely remembered for good or bad. Even reconstructing a proper list of administrators and their dates of service takes serious effort. The lost sense of history helps explain why we have had such a hit-and-miss track record of administrators. Without some appreciation for why the job is important and what has separated people who perform in the role from those who do not, we almost make it easy for administrations to appoint people with far less experience than they need to succeed. The collective oversight is even more puzzling when you

USAID Administrator Rajiv Shah at an event hosted by the Center for Strategic & International Studies in celebration of the U.S. aid agency’s 50th year.

factor in that USAID has been summoned repeatedly to the front lines of the world’s most dire situations — from famines in Asia and Africa to the AIDS epidemic to the reconstruction of Iraq and Afghanistan. To advance the conversation, Devex is contributing one chronicle of events. Our five-part series, “USAID: A History of U.S. Foreign Aid,” and interactive timeline guide readers through a history of America’s premier aid agency by exploring the USAID administrators’ greatest accomplishments and sharpest setbacks within the broader context of American foreign policy. Read more at devex.com/usaidhistory About the series author: John Norris John Norris is the executive director of the Sustainable Security and Peacebuilding Initiative at the Center for American Progress. A member of U.S. President Barack Obama’s Global Development Council, he previously served as the executive director of the Enough Project at the Center for American Progress and was chief of political affairs for the U.N. Mission in Nepal back when the country was emerging from a decadelong war. Earlier in his career, John worked at the State Department and USAID.

Recruiting Insight 4 questions to ask when deciding where to house your recruiting team By Kate Warren, Devex senior director and editor for careers and recruiting

Typically considered a human resources function, recruitment in international development plays a critical role in the business development process as well. Many organizations grapple with placing recruitment under a standard HR model, having their recruiters report to a business development or project team instead, or developing a hybrid approach. If your organization is trying to decide where to place this important function, here are four questions to ask, based on discussions with veteran recruiters across the industry:

1. Where does the majority of your recruitment fall? Are you more frequently recruiting for the home office, projects in the field or at the proposal stage? If home office hiring is a priority, a more standard HR recruitment model will likely make the most sense; if most of it is for proposals, it’s more efficient to place it under business development. Many organizations also sit project recruitment functions within the program teams since they are closer to the needs in the field.

2. Which is more important: innovation or consistency? If quickly identifying and onboarding candidates is a priority be it for tight proposal turnarounds or to rapidly respond to disasters in the field, a decentralized structure where recruiters are embedded in the business development or project teams is deemed the most nimble approach. Recruiters will more likely develop innovative strategies to build pipelines of experts and grow your network of candidates which will allow you to quickly respond to changing needs. Without strict human resource oversight, though, it can be challenging to maintain consistency in your recruitment process across project and proposal teams. Compliance with legal hiring standards, documentation and reporting can often fall to the wayside opening you up to potential liability.

3. Are your recruiters development or HR experts? Recruiting rock star recruiters is a challenge for many employers. So to attract the best talent, consider where your existing and potential recruiters would prefer to work. Most of the recruiters we spoke with consider themselves development professionals and get more satisfaction out of working closely with business development and project teams. However, recruiters who come from a human resource background can feel out of place and without opportunities to grow in the HR career path if placed outside of an HR function.

Executive Appointments July 1 marked the first day for the World Bank’s global practice directors. July also saw important personnel movements in Europe: Desmond Swayne replaced Alan Duncan as minister of state for international development, while Linda McAvan became chair of the European Parliament’s Committee on Development. Other key appointments include: ADB: Juan Miranda, managing director-general; Wei Shang-Jin, chief economist; Tang Dingding, chair of the Compliance Review Panel AECOM: Clarence T. Schmitz, member of the board of directors African Development Foundation: John W. Leslie Jr., member of the board of directors (nominated) Aurecon: Giam Swiegers, CEO (effective Feb. 1, 2015) Australian Trade and Development Business Network: Jim Redden, chair CARE International U.K.: Laurie Lee, CEO CONCORD: Johannes Trimmel, president DAI: Christopher Lockett, senior vice president and managing director of DAI Europe FHI 360: Deborah Kennedy-Iraheta, chief operating officer Ford Foundation: Kofi Appenteng, chair of the board of trustees; Paula Moreno, member of the board of trustees GAVI: Dagfinn Høybråten, chair of the board (reappointed) Global Fund to Fight AIDS, Tuberculosis and Malaria: Carole Presern, head of the office of board affairs; Harley Feldbaum, head of strategy and policy Grant Thornton: J. Michael McGuire, CEO-elect GRM Futures Group: Ed Abel, president of the U.S. business unit; Farley R. Cleghorn, chief knowledge officer and global health practice leader IFRC: Elhadj As Sy, secretary-general International Crisis Group: Jean-Marie Guéhenno, president and CEO International Initiative for Impact Evaluation: Emmanuel Jimenez, executive director International Relief and Development: Kris Manos, interim CEO KPMG: Jan Mattsson, special adviser on sustainable development MAP International: Steve Stirling, president and CEO Overseas Private Investment Corp.: Carmen Amalia Corrales, member of the board of directors (nominated) Oxfam South Africa: Sipho Mthathi, executive director Peace Corps: Carrie Hessler-Radelet, director Rockefeller Foundation: Ravi Venkatesan, member of the board of trustees U.K. Independent Commission for Aid Impact: Alison Evans, chief commissioner (preferred candidate) United Nations: Prince Zeid Ra'ad Zeid al-Hussein, high commissioner for human rights; Mary Robinson, special envoy for climate change U.S. State Department: Nancy Stetson, special representative for global food security VSO International: Jim Emerson, CEO

FPO

4. What knowledge management systems do you have in place? A common challenge for organizations that take a more decentralized approach to their recruitment is sharing information on candidates across teams. Without a strong centralized system in place, it can be hard for one arm to know what the other is doing. Project teams competing for the same person, or hiring someone who performed poorly on a previous project are all frequent scenarios if you do not have a way to track your relationships with recruits across departments. Read more at devex.com/recruitmentwhereto

Share this publication, keep it as a reference or recycle it knowing that Devex supports sustainable forestry. Photo credits: Xi Jinping, Andris Piebalgs: European Union; Takehiko Nakao: Asian Development Bank; Raj Kumar, Pete Troilo, Kate Warren: Devex; Bob Gibbons: Cpl Neil Bryden RAF / MOD / Crown copyright 2014; Rajiv Shah, Charles Lyons: Center for Strategic & International Studies; Monique Barbut, Flavie Halais: personal collection; Helen Szoke: Oxfam Australia; Kim Young-mok: KOICA; Angelina Jolie, Yoweri Museveni: U.K. Foreign and Commonwealth Office; Julie Bishop: Australian Department of Foreign Affairs and Trade; Annick Girardin: French Ministry of Foreign Affairs; Achim Steiner: United Nations Environment Program; Julia Gillard: Global Partnership for Education; Jim Yong Kim, Donald Kaberuka: World Economic Forum; Angela Merkel: Tim Reckmann; Dilma Rousseff: Roberto Stuckert Filho; Justine Greening: Russell Watkins / DfID; Narendra Modi: Sri Lankan President Mahinda Rajapaksa’s office; Barack Obama: Pete Souza / The White House; Margaret Chan: USAID; Kathy Calvin: Rick Bajornas / United Nations; Invest or spend photo: Shutterstock.com

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