Efficient Seed Funding; lessons learned

“Forms of help that overrides or undercut people’s capacity to help themselves are unhelpful help” David Ellerman, 2005

The advantage of seed-funding as opposed to the micro-lending is that, it takes financial pressure off beneficiaries and allows room for the right beneficiaries to make good use of their seed-funds. I have observed that impact of seeding funding for starts up in Nigeria is not as impact in terms of producing a good amount of successful profit making ventures.  Further, the reason for this is an all-encompassing factor between the beneficiaries, fund-ers and NGOs. This post will mostly focus on the role on NGOs based on lessons I have learnt in the last two years working on such projects. As NGOs, we urgently need other approaches to planning and monitoring our work which focus on the people involved in development and how much value we are adding to their efforts to improve their own – and other people – lives.

Monitoring is crucially important. It drives continual learning and improvement. It allows NGOs to respond to the world around them, rather than assuming that the rest of the world stays still. Every NGO project has to monitor many different things: expenditure, activities, outputs, processes and results. This will take significant management time and skills. We need to be much disciplined about monitoring as little as possible of what matters most.

More and more people are writing about how feedback can improve the quality, accountability and the end result of seed funding. Recent discuss on this issue focuses on how more serious pilots can use feedback systems at scale-up on impact.  In Nigeria, the common thread of handing out lump sums of seed funding to a third party to co-pilot start-ups has achieved very minimal result, as such funding gets spent in the process of achieving result than the actual project. I have used a localized version of DFID’s major piloting exercise on using feedback systems to improve aid in documenting the process for an SME seed funding scaling up purposes.

Here are lessons I have learnt so far.

Factors that determine how much NGOs can contribute to other people’s attempt in helping themselves hinge more on the NGO’s:

  • credibility with key collaborators
  • understanding of their context
  • technical skills,
  • networks,
  • funding,
  • Management capacity
  • Accountability, accountability, accountability.

NGOs should naturally consider where people’s needs are greatest in relation to other sources of support. But this should not over-ride the other factors listed above. Even the biggest NGOs cannot tackle all the problems of ensuring seed-funding projects are successful. NGOs should aim to provide as much high quality assistance as they can, within practical management constraints, not just as much assistance as they can.

The following is evident from my observation and comparison to impact of seed funding in Nigeria;

  • Beneficiaries’ organizations are mainly focused on rising profit/revenue for their organisation and mainly composed of businessmen as opposed to individuals working for development. Although they received a few training, remained institutionally weak and had very limited technical capacity to follow through on projects.

Prompting the question; should such organisations be in total control of how these monies is spent or should donors device a more efficient method of monitoring their funds? Depending on whose opinion counts on this question, most donors in Nigeria do so for publicity and not necessarily concerned about the impact.

  • Local development organizations showed very little appropriation of the intervention. They were getting paid to perform a task. Period.

The following are lessons from my observation

  1. Focus on the priorities.The initial rush of what needs to be done to achieve result can be overwhelming, don’t try to do everything at once. Accept initial levels of chaos and confusion and be open to using the pilot scheme as a learning curve. Immediate priorities probably include: (a) understand  how things similar projects have worked so far, and who is doing what; (b) develop initial plans based on local needs not what donors have to give; (c) think ahead when organizing initial work, so it will be relevant as the project progresses. Prepare to adapt priorities as circumstances change in the coming stages. Build a road map to desired goal but device various routes (plan) in getting there, if the plan doesn’t work, change it.
  1. Who should control the money? Generally, in, developing countries seed-funding is perceived as free money and the beneficiaries of such funding usually have little or no income as such, “free money” given to such people is unlikely to achieve intended result. As such, donors and middlemen otherwise known as incubators/NGO needs to establish methodologies that curbs such risk. A suitable approach is for NGOs to influence what they are doing and define complementary roles, preferable give out the funds to beneficiaries in stages on a need assessment and accountability bases. For SME, I believe using seed-funds to get and pay for everything on a need basis might be a more efficient method.
  1. Work with local experts; the notion that foreign experts are better is not necessarily the case, yes we can learn from them, but, imputes of local experts is vital to the success of these projects. They know who lives (or lived) where and how things work. Though they probably do not have strong capacity to deliver relief. NGOs should listen to city, municipality and barangay leaders when they are (a) designing relief activities and identifying who to give relief to, and (b) reviewing how to improve their activities
  2. Go the extra mile to find the most vulnerable and worst affected people (e.g. adolescent girls). They are likely to have specific needs and to be easily ignored or side-lined by mainstream relief efforts. NGOs can play an important role in making sure they benefit fully from official relief. Though this will likely need special attention and more resources; it’s usually worth it. We had a team that didn’t look like much, I was so quick to write them off, on a second look and in the long run, they turned out our most significant success story.
  3. Build up two-way communication with the local public. NGOs should provide more information to the public and beneficiaries about how to get in touch with them (a lot of issues were resolved and better result was achieved because of this for us). Every time an NGO logo or noticeboard is put up, it should include contact details of named members of staff. NGOs should be transparent about their plans and budgets. They should make use of local media outlets. They should ensure that local people are involved in designing projects. And they should systematically ask local people for comments and feedback about the projects they intend to run – and respond to their comments. Donors should support this flexibility.
  4. Accountability: A typical seed funds project in Africa starts off with headlines such as “Mr A donates $1M to CCHub for budding ICT entrepreneurs in Nigeria” or in form of a hackathon “do A to win X thousands of dollars. What usually happens in such scenarios is the funds gets spent by the middlemen in the process and nothing comes out of it. This is so because, Mr A, does care about the outcome of such donation, it was done for publicity media attention. The middlemen/Incubation centre/NGOs gets richer and nothing changes in the ecosystem. Impact seed-funding is more suitable approach, and that can only work where the donors follow their money. Devising a more direct method of disbursing such funds and getting numerous members of all the teams to sign is a more efficient method.

 

Please share your lessons with me in the comment box.

Thank you

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About rebeccaidd

Fun, passionate, inquisitive exploring development
This entry was posted in Africa, Development, Development and Economic growth, Economic Growth, Poverty and tagged , , , , , , , , . Bookmark the permalink.

3 Responses to Efficient Seed Funding; lessons learned

  1. Christopher says:

    Very insightful. I completely agree with your points. Have you heard of the YOUWIN projects? what are your thoughts?

    • rebeccaidd says:

      Thanks Cris. Yes I have heard of the YOUWIN project. I thought it was a fantastic idea, however, the success or failure of such projects is heavily dependent on the implementation process. In this case, the government is too involved. A better way would have been for the government to outsource it to job-creation/youth NGO in each state and not as someone’s contract or needing funds release approval from Abuja. Its should be run by an independent qualified NGO paid to do so. Keywords;”NGO and paid”.
      Also, I don’t believe in equal-handouts; should be done on a need by need basis, everyone who you try to help is going to be at varying stages requiring varying sort of help. Secondly, the framework should have been developed in such a way that it focuses mostly on already existing SME and incorporate basic skills training for all beneficiaries, as opposed to such a huge project doing what rural NGOs are doing i.e.teaching people how to make soap. I am not as positive as the finance minister on how this project is worth the rave and can create substantial amount of jobs and or improve young people’s livelihood

  2. Chad says:

    The YOUWIN to me is a success and will should NGOs be paid to implement projects, aren’t they non-profits?

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