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When working with USAID funding, the purchase of ICT can be a little complicated. USAID would always ask for the source, origin and nationality of all equipment. That is where the equipment was manufactured, where it was purchased, and the nationality of the companies involved.

The expectation was that all three would be from a set of limited countries specified in the implementing agreement via a geographic code. Geographic code 000 was the most restrictive - United States only - and a huge headache for any implementer.

Instead of buying computers, printers, etc from the local ICT company, USAID funded programs had to import all that equipment from the geographic code countries. Often even then asking for a waiver because as Apple demonstrates, S/O/N is a joke when it comes to modern computing technology. Almost all technology is made outside the USA, from a global supplier base, sold by multinational companies with only the vaguest sense of nationality, and often available in-country at competitive prices. Or as USAID itself says:

Because of the end of the Cold War and the subsequent globalization of the economy, this approach has become increasingly difficult to administer and, in some respects, obsolete. The costs of compliance with the complex regulation, and of the self-imposed and unnecessary restrictions on procurement in recipient and developing countries means that the foreign assistance dollar does not go as far as it would with a more straightforward regulation that reflects the statutory authority to procure in the recipient country and other developing countries, in addition to the U.S.

What's even more interesting, is that USAID didn't have to follow this rule - it was a self-imposed relic of the Cold War never updated even though Congress gave it the authority to do so in 1993. Well, finally, USAID has re-written the S/O/N regulation, and we should all cheer. With this Final Rule determination, we are free of restrictive geographic codes come February 7. Just read the detail from USAID itself:

(a) USAID has established principal geographic codes which are used by USAID in implementing instruments. This regulation establishes a presumptive authorized principal geographic code, Code 937, for procurement of commodities and services unless otherwise specified in the implementing instrument. Code 937 is defined as the United States, the cooperating/recipient country, and developing countries other than advanced developing countries, and excluding prohibited sources. USAID maintains a list of developing countries, advanced developing countries, and prohibited sources, which will be available in USAID's Automated Directives System, ADS 310.

(b) For purposes of procurements under the authority of the Development Fund for Africa, 22 U.S.C. 2293 et seq.; for any waivers authorized under Subpart D of this regulation; and if otherwise designated in an implementing instrument, the authorized principal geographic code shall be Code 935, any area or country but excluding prohibited sources.

What does all that mean? By default, we are hereby free to buy from you and me, Africa or America, based on the qualities of the technology, not where it was made or who sold it to us.

Open your wallet right now. Most likely, you have a debit card, a credit card, a health insurance card, and access to the massive financial infrastructure that these three cards represent.

The ability to store, save, use, and borrow money anywhere in almost limitless fashion, without worry about amount, theft, or even making change. Add in the freedom from a direct worry about health costs, and these three cards represent a level of financial freedom unknown to anyone in the developing world... today.

Mobile Money Revolution

Yet by tomorrow, there will be more people who have similar access to financial services, via electronic transactions on mobile phones. In fact, over the next five years there will be a mobile money revolution at the bottom of the pyramid as international financial institutions like VISA, Mastercard, and the like move in forcefully to service the next billion customers.

They see M-PESA transferring 20% of Kenya's GDP and the money that can be made offering mobile financial services to the BoP. But its not just payments and credit, there are also opportunities in many other types of financial services.

Here are two examples with insurance, which is usually the providence of in-person sales worldwide:

• In Ghana, Tigo Family Care Insurance provides life insurance for prepaid subscribers and their family members in the event of a natural death.
• In Kenya, the Syngenta Foundation's Agriculture Index Insurance Initiative uses mobile phones and weather stations to offer farmers affordable crop insurance.

Now we could go on, but listing examples of mobile money was not the focus of the Technology Salon on how mobile financial services are transforming the economics of international development. What really captured our attention was the realization that mobile phones are merely a conduit to the larger experience of electronic transactions, which include mobile money, but also the full gamut of wealth that is created, stored, and exchanged digitally.

Please join us for the next Technology Salon

Better than Cash

First let us agree that electronic payments systems (bank accounts, Electronic Funds Transfer (EFT), pre-paid cards, smart cards, mobile money) are a great benefit for everyone involved. Electronic payments systems:

• Increase access to basic financial services, including savings, lending, and e-payments.
• Reduce barriers to entry for fee-for-service business models
• Reduce the risk of money theft and increase personal control over financial resources
• Increase speed of payments both to and from consumers, businesses, and government
• Improve transparency, mitigate corruption, and reduce leakages in the disbursement of government funds.

A great example of all five of these benefits is the ability to pay for municipal water and electricity services via mobile money in multiple African markets. By making payments electronically, both consumers and government have more accurate records, consumers are able to save for and manage payments, and service providers can expand services with a higher expectation of payment, and more timely payment, therefore serving more customers, more efficiently.

In their Better than Cash program, USAID's new Mobile Solutions Office seeks to expand electronic payment system use by governments, for utilities but also government payments in everything from conditional payments (welfare, healthcare, etc) for citizens, to payroll payments for government workers, to pension payments for retirees.

The net effect of this shift to electronic payments will be much more efficient government programs. Yet the Mobile Solutions team isn't stopping with other governments, its goal is to transform the way USAID does it's programming as well. With language already in RFP's to encourage implementing partners to use electronic payments in their work, USAID will be pushing a move from cash payments to electronic payments for all its beneficiaries.

Barriers to Adoption

Before we get too far around the hype cycle, there are issues that will retard the growth of mobile financial services and the larger electronic payment systems. First, policy makers may have a grasp of what works to encourage electronic payments and use mobile financial services first-hand, but they don't often know how to steer their countries from the theoretical to the practical.

Next, at the business level monopoly mobile operators may be just as hard to convince to innovate as a highly competitive mobile phone marketplace with multiple players. Neither situation lends itself to interoperability, which is key for large-scale electronic payment systems and the mobile financial services they support.

Finally, not everyone has a mobile phone. Yes, shocking but true. So simpler systems like scratch cards and offline intermediaries will co-exist with electronic payment systems for years to come. Better that we recognize and welcome them than limit any payment system to one hardware delivery mechanism, no matter its revolutionary benefits.

USAID recently launched its second Grand Challenge for Development, All Children Reading, that follows on the earlier Saving Lives at Birth. Both of these endeavors are commendable.

USAID should be experimenting with new funding models to create programming flexibility and expand its impact. The "grand challenge" model is one that has worked in the past - with private industry and with US Government agencies. Yet, I can't help but notice that USAID has four challenges in its own grand challenge effort.

The Usual Suspects are the Winners

USAID likes to point out that 600 organizations submitted proposals to Saving Lives at Birth, with nearly half of the applications coming from outside of the United States and more than a quarter from developing countries. That's certainly a record. But look at who won funding - only 4 are from the developing world. Other winners like the World Health Organization may not be American, but certainly are not hurting for their own funding.

Now the reason for this is easy to see. With 45+ pages of submission requirements, there is a significant barrier to entry for Grand Challenge applicants who do not already know USAID processes. Streamlining procurement is an internal grand challenge for USAID throughout the agency.

For-profits are Penalized for Sales

There is a general perception that for any program to scale it has to have some level of program-generated income. USAID itself likes to trumpet mobile phones as the ultimate development intervention - powered almost exclusively by for-profit companies selling to consumers. However, in Grand Challenges, for-profit companies are uniquely penalized for generating program income:

Pursuant to 22 CFR 226.82, if the successful applicant is a for- profit organization, any program income generated under the award will be deducted from the total program cost to determine the amount of the Founding Partners’ funding. [...] It is the Founding Partners’ policy not to include profits of any nature under agreements.

Like the procurement paperwork, this issue is larger than Grand Challenges, but its impact is even more poignant here, where USAID is specifically looking for solutions that are affordable, sustainable, and scalable.

The Money is Too Small

Saving Lives at Birth offered $250,000 grants and All Children Reading has $300,000 grants, which sounds impressive if you don't know that the average USAID award is in the 10's of millions. In that context, even $300K is a rounding error. More importantly, the grants are not big enough to change business models. The usual suspects who will win the majority of awards will use the funding as an incremental addition to projects they're already doing. Even for original ideas from new entrants, $300K is not enough to attract start-up professionals who can take ideas to scale.

Rather than spreading itself so thin with 25 awards, USAID should concentrate funding into 10 awards of $700,000 or better yet, 7 awards of $1 million each - that's funding that will move the needle.

No Funding or Time for Scale

While the Saving Lives at Birth at least had the option of supporting a promising project with up to $2 million in transitional funding, the All Children Reading challenge doesn't. As it's currently written, the grant applicants can only expect a one-time disbursement of $300,000 that should be used within two years. Have there been any projects that scaled to 100 million children in the developing world with just $300K and in less than 2 years?

Again, rather than putting multiple small bets on 20+ ideas, USAID should concentrate its funding on a few projects for a longer term, with a specific focus on funding the actual scaling-up activity. Better yet, why not fund initiatives that are already showing reading impact? I can think of at least five proven approaches that would all scale to millions of students with $1 million each over five years, and USAID could still bet $500K on 4 more new ones.

The United States Agency for International Development (USAID), the Australian Agency for International Development (AusAID), and World Vision (collectively referred to as the “Founding Partners”) are seeking game-changing innovations with the potential to dramatically improve reading skills and low literacy rates among primary grade children.

Through a multi-year initiative called All Children Reading: A Grand Challenge for Development (ACR), the Founding Partners will collaborate to achieve the goal of global action to improve child literacy.

While recognizing that there are many factors required to improve student learning outcomes in primary grade reading, the Founding Partners have established the All Children Reading Competition to focus on two needs that are both important and largely unmet in low- and lower- middle income countries: teaching and learning materials and education data.

The All Children Reading Competition will support innovative approaches that draw on current research findings related to effective instruction in primary grade reading as well as technology, information, and communication advances that may lead to substantial impact on student learning outcomes at scale. In this context, “innovation” refers to novel business or organizational models, operational or production processes, or products or services that lead to substantial and sustainable improvements in student reading in primary grades.

We seek innovations that produce development outcomes more effectively, cost efficiently, and that reach more beneficiaries. Innovative and potentially transformative solutions may be funded through grants to support new ideas as well as emergent practices, products, or programs.

The Founding Partners are calling on for-profit companies, non-governmental organizations and associations, academic/educational research institutions, faith-based organizations, civil society and foundations—together or in partnership—to take up this challenge. Applicants are encouraged to “think outside of the box,” using creative practices and methodologies to develop innovations clearly linked to improving student learning outcomes in primary grade reading.

Background

Over the past decade, governments in many countries and the international community have rallied around Millennium Development Goal 2: ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling.2 As a result, there have been significant increases in primary enrollment worldwide, particularly in low income countries.3 However, learning levels are very low. In Mali, Pakistan and Peru, for example, more than 70% of children in the primary grades could not read at grade level and many could not read a single word after two or more years of schooling.4 One major international assessment, the Progress in International Reading Literacy Study (PIRLS), found that the average student in low-income countries is performing at the fifth percentile of the OECD distribution worldwide an estimated 35 million girls remain out of school compared to 31 million boys.

USAID has been working to close the gap between boys and girls by assessing the degree of educational disadvantage that girls face, identifying gender-related obstacles, and implementing remedies to remove and overcome these obstacles.

Learning levels of a country’s population are directly correlated with rates of economic growth. A 10% increase in the proportion of the population with basic literacy skills translates into a 0.3 percentage point higher annual growth rate for that country. Other research has shown that early grade reading competency is critical for continued retention and success in future grades. Though it is clear that children’s futures are not solely dependent on reading instruction, reading is a critical and necessary precondition for skill development. Children who do not develop reading skills during the primary grades are on a lifetime trajectory of limited educational progress and therefore limited economic opportunities.

In recognition of the importance of basic literacy for individual and national development, the first goal of the new USAID Education Strategy: Opportunity Through Learning (2011-2015) is focused on improving the reading skills for 100 million children in primary grades by 2015 (See Appendix 1). USAID will measure the performance of its programs primarily through the improvement of reading skills for primary grade students after two years of schooling, consistent with international measures adopted by the Global Partnership for Education (GPE, formerly the Education for All-Fast Track Initiative).

The new Education Strategy also specifically states that USAID education programs will take measures to increase gender parity and improve gender equity at all levels of education, with gender-sensitive interventions tailored to the specific gender issues present in a country’s educational system. The importance of this for gender equality extends beyond any single project in that it sets a clear strategic directive: USAID education interventions that target girls or boys should be based on sound gender analysis, meet an identified need or demand, promote learning outcomes, bring about systemic change, and work to transform the power dynamics between the sexes.

World Vision invests more than US $250 million per year in education and focuses on impact for children and youth ages 3-18 through four strategic objectives that foster the development of functional literacy, math and essential life skills as key outcomes of education: 1) increase children’s access to equitable, quality and sustainable early childhood education and primary education, with special attention to the most vulnerable groups; 2) strengthen community involvement in the education for all children; 3) increase youth’s access to quality educational opportunities, with focus on out-of-school youth; and 4) foster enabling environment for learning through partnership and advocacy with communities, governments, private sector, universities, donors and civil society organizations.

Education is the flagship sector of the Australian aid program. Australia’s commitment to education access and quality includes a clear focus on improving the quality of learning. Australia has three pillars for its investments in education:

1. improving access to basic education opportunities for all so that children and youth complete a basic education;
2. improving learning outcomes so that children and youth achieve the basic skills necessary for productive lives; and
3. driving development through better governance and service delivery so that partner governments support quality education for all.

Objectives

The All Children Reading Competition will encourage innovative thinking and design to bring new knowledge to the challenge of improving primary grade reading rapidly and at scale in certain countries (see Appendix 2 for a list of Eligible Countries). Applications from and relating to low- and lower-middle income countries are particularly encouraged. While recognizing that there are many factors required to improve student learning outcomes in primary grade reading, the All Children Reading Competition seeks innovations in two areas that are both important and largely unmet in certain low- and lower middle income countries.

Innovations in Teaching and Learning Materials to Improve Student Reading

Teachers and children must have access to appropriate teaching and learning materials, respectively, for classroom instruction and reading practice. Children who report having textbooks score higher on reading tests and those who report having other books at home score even higher.8 Recently developed programs supporting the development of materials to schools, communities and homes are beginning to report impact on student learning.9 However, textbook provision in developing countries continues to be inadequate, let alone provision of supplemental reading materials.

Innovative and affordable approaches are needed to overcome barriers to the design, production, distribution/delivery, and use of high-quality durable and consumable materials (narrative, expository, and instructional) in appropriate languages for the primary grades in developing countries.

Innovations in Education Data to Improve Student Reading

Education data is necessary to support decision-making, incentives, transparency, and accountability needed to improve reading. A lack of quality data on student learning and related issues (e.g., teaching methods, student and teacher performance, absenteeism, and school-level financing) hinders the development and implementation of effective educational policies and supportive classroom/school-level/community action. The potential impact of data on student learning has been very visible over the past few years, with the development of Pratham’s Annual Status of Education Report (ASER) approach to data collection by civil society, now used in India, Kenya, Mali, Pakistan, Uganda and Tanzania as well as USAID-supported Early Grade Reading Assessment (EGRA) which has now been used by governments, civil society and donors in more than 40 countries.

These assessments have created widespread awareness of student learning levels and some efforts to improve learning in the countries where they have been implemented. But much remains to be done to prioritize and collect performance data, disseminate the data to varied audiences and make it easier to identify and use key data for decision-making.

Innovative and affordable approaches are needed to improve efficiency and effectiveness in the collection and use of education data. A particular need is cost-effective and streamlined approaches for the measurement and reporting of student learning data (classroom-based and system-level testing) to inform instruction, policy development, and resource allocations in developing countries.

Illustrative Areas of Interest

We are interested in funding innovations that will result in (1) widespread access to improved teaching and learning materials and (2) better education data to support decision-making, transparency, incentives and accountability; both of which are essential to advance the goal of All Children Reading in the primary grades. In this context, “innovation” refers to novel business or organizational models, operational or production processes, or products or services that lead to substantial and sustainable improvements in student reading in primary grades.

The illustrative areas of interest listed below are not meant to be exhaustive or limiting in any way.

Innovations in Teaching and Learning Materials to Improve Student Learning

• Support the production of and/or access to language and level-appropriate narrative, expository and instructional materials for emerging and beginning readers and their teachers;
• Support the development/editing/printing of texts of similar difficulty in two or more languages/scripts;
• Address the challenges of materials distribution in developing country contexts;
• Benefit children with special needs and/or learning disabilities;
• Foster parent and community involvement in children reading;
• Support large numbers of teachers in remote locations in their effective and continuing use of new materials;
• Help students, teachers and communities develop high quality materials locally;
• Bridge gaps between school and home and support a community reading culture in contexts where family literacy and school involvement levels are low;
• Leverage existing learning resources such as community libraries, digital libraries and
  other learning platforms; and
• Create differentiated learning experiences and support individual student practice in low-resource classroom settings with high student : teacher ratios.

Innovations in Education Data to Improve Student Reading

• Develop simple approaches to allow school and local level managers to prioritize, collect, analyze and use key education-related data at the school level to improve instruction and learning outcomes;
• Improve school, regional and national level resource planning to improve learning outcomes;
• Consolidate and analyze disparate sources of education data at the local, regional, national and international level;
• Widely disseminate education-related data in easy-to-understand ways to a variety of audiences;
• Deliver data and information to improve teacher preparation and professional development;
• Assist teachers and education officials with rapid and efficient student assessments and teacher evaluations; and
• Provide data to support the development of appropriate incentive systems for teachers and officials based on teacher performance and student results.

What We Will Not Fund

• Applications that are not focused on improving student reading in the primary grades;
• Applications that do not present a coherent plan showing links between the proposed
  innovation and the education system context
• Applications that do not propose program in eligible countries (see Appendix 2 - Eligible Country List for the full list of eligible countries); and
• Solutions that are not applicable, affordable, sustainable, and scalable in eligible countries.

Steve Song recently wrote a great post on 3 reasons why M4D may be bad for Development where he says that:

Mobile operators have entrenched themselves with development agencies as the saviours of access and give generously to m4d development programs. Development agencies have rushed to embrace mobile operators.

While the latter is surely true, mobile phones are all the rage at USAID, I do not see the mobile operators "entrenched" with development agencies, nor do I see them giving "generously" to M4D programs. At least I don't see them involved with the implementers of aid agency programs. In fact, with the exception of Nokia and Vodafone, none of the major mobile line operators (MTN, Safaricom, Airtel, Glo, etc) seem to even notice the development sector.

When juxtaposed with the efforts of technology companies like Intel, Microsoft, and Cisco to support the development industry, the disengagement of the mobile operators is even more striking. I propose there are 3 reasons why mobile phone companies are not entrenched and not giving generously to M4D implementers:

1. Mobile technology doesn't need donors
   The startling rise in mobile phone adoption has primarily been consumer driven - built on millions of micro scratch card transactions without many donor dollars amongst them. So mobile phone companies (handset manufactures, network operators, and their respective ecosystems) don't feel the need to adapt to donor business practices, all of which seem very rigid and constraining when compared to the free-wheeling retail marketplace.
2. Donors can't adapt to private industry's speed
   Mobile technology lives by quarterly targets. New models, pricing plans, and consumer services start, blossom (and die) in 3 months or less. Most donors can't even issue an RFP in 3 months, often taking over a year from idea to contract award - an eternity in the mobile space. In addition, donor agencies require specialized business practices and expertise that might as well be a whole other language to private industry. And don't even get started on the contracting constraints imposed by government purchasing departments who are used to domestic acquisitions.
3. Implementers can't afford in-house mobile expertise
   Last but not least, the implementers who do know how to work with donor agencies, and could be a bridge between the development and mobile communities, often can't afford the mobile expertise. Mobile phone application developers, like other hot IT skills, are commanding salaries that are well beyond international development. Remember, the unwritten rule in development is that no one makes more than the contracting officer at the donor in charge of the contract.

These reasons were inspired by Roxanna Samii's post where she says, "enough with pilots, let's get serious about mDevelopment," and concludes with this great summation of the mobile phone in development issue:

So, quite frankly speaking, I see private and public sector as two separate circles, who are continuously struggling to find an intersection point. However, the reality is that public and private sector live in different time zones and do not seem to have found their preferred collaboration tool which allows them to seamlessly work together and indeed create a win-win situation!

This should be a fair warning to those at donor agencies and within implementers who get all giddy about mobile phones and think that mobile line operators will be just as giddy about their M4D idea.

Working with mobile operators is not easy. Mobiles phones are not an all-encompassing panacea. And just maybe, not the right bet to make at all. Remember that according to the World Bank, broadband Internet access beats mobile phones in boosting GDP.