Over Spring break, I went to Ghana on behalf of WomensTrust, a microfinance institution, to help fix their operations. Yet, I didn’t go as a white knight. I was not the savior for a poor, ignorant people, nor were the local people on the staff supplicants to my “developed world knowledge.” I was a partner, someone who had a few specialized skills that could help them and at the same time learn from them. I did not sweep in to grandly dictate to them how things should be. To do so would be to disregard the fact that they were intelligent human beings who knew the situation best—they were, after all, the ones living in it.

Although affording respect to these local people seems obvious, it has not traditionally been the way that Westerners have approached any type of “aid” when they visited upon Africa. The old model involved broad, context-less decisions made by detached overseers from the developed world sitting in temperature-controlled, wood-paneled rooms, sipping tea or coffee.

It was believed that just because something worked in the developed world, it would work anywhere. Pronouncements from the World Bank, the International Monetary Fund, and their precursors created monoculture cash cropping, paradropped aid, and numerous other disastrous policies that numerous critics (including Dambisa Moyo, author of Dead Aid, who recently visited Dartmouth) charge as having done nothing to truly help African countries. If anything, this sort of “aid” held them back. These so-called solutions imposed “growth” from the outside without truly developing the foundation for a healthy economy.

But in recent years, the sentiments of the development community have radically shifted. Microfinance and other “sustainable” forms of aid have been embraced as a market solution to poverty. While sustainable aid is not an end-all solution, ever since Muhammad Yunus and Grameen Bank demonstrated that the poor could and would repay small loans, international aid has been eagerly embracing this new form of development.

But there is still something in this new attitude towards aid that does not address a fundamental criticism of the old regime. While microfinance attempts to spur economic development through loans, which in turn create small businesses and build those local economies that were lacking before, its administration is still largely unilateral. While the intended target of growth is now bottom-up, the policies themselves are still very much top-down.

There may be some local staff. There may even be some representation in the leadership of these institutions by (rich) local people. But essentially, they are still too many of the same people from the old aid regime, making decisions from the developed world that affect people thousands of miles away.

This isn’t to say that most microfinance organizations trying to help Africa have bad intentions. In fact, I’d be highly skeptical if someone tried to claim that they have done no good at all.

The problem, however, with unilateralism, making decisions on high without local context, is that you ignore valuable knowledge that only people who live there know. The rationale before, which still lingers, is that this knowledge is of limited use—the reason that these people are in the state they’re in is because all they have is this knowledge! Although not stated outright, many aid organizations start with the premise that they are helping the helpless and the ignorant. Part of why microfinance was originally slow to catch on was because aid organizations believed that the poor were uneducated and too “unsophisticated” to put loans to any good use.

A recent book called Portfolios of the Poor reveals the folly of that belief. The researchers who wrote the book followed the lives of various families in developing countries below the World Bank defined poverty line of $2 a day. These families recorded their financial transactions in financial diaries, which the authors then analyzed. With these diaries, the researchers discovered that contrary to popular belief, the finances of the poor are not simple at all. The financial life of below-poverty-line families is actually more complicated than the finances of many rich-world families.

Smoothing consumption and “forced savings” are concepts that we learn in economics classes, and use to some degree in our daily lives—but we do so without the urgency that those in the developing world have. For them, money received tomorrow might mean there isn’t anything to eat today—or until next growing season. For them, finance is a matter of having food on the table or not. It is, in some cases, a matter of life or death.

In the developed world, we can have the best intentions but still not know how to best help. Many microfinance institutions give loans only for “business development” purposes. It’s a rational thing to do, academically—after all, if the poor develop a business that can provide them with income, they’ll have the cash flow necessary to repay the loan and raise themselves up.

Food on the table or other types of “consumption loans” don’t necessarily pass this intellectual muster. But oftentimes, in reality, having enough to eat and thus enough strength to work—or being able to send one’s children in school, or being able to pay for transportation to work, or scores of other “consumption” purposes—would do more for generating cash flow and “raising them up” than buying space for a stand.

WomensTrust is a microfinance institution (MFI) run on the ground by locals who also contribute concretely to the strategic direction of the institution in collaboration with a U.S.-based board of directors. The ultimate goal is to eventually make WomensTrust an entirely Ghanaian institution, a project that led me there in order to help finish implementing a management information system (MIS)—something I had chosen during a project that I headed through SEEDS Consulting (Social Enterprise and Economic Development Society) at Dartmouth. Essentially, an MIS is the combination of the IT systems and human procedures that capture, track, and process information in an institution. In this case, the MIS needed to track active clients, loans outstanding, loans needing repaying etc.—basic information for financial institutions, no matter how big or small.
In accordance with the mission of WomensTrust, however, I did not go to Ghana to just arbitrarily remake their loan processes and change how they did things. Before I could do anything, I had to first learn, observe, and understand why they did what they did—and only then offer changes that I believed would best benefit them. I wasn’t arbitrarily telling the Ghanaian staff how to do its job, nor was I blindly surrendering to how things were currently run. I assessed their needs and offered recommendations, just as a consultant in the U.S. offers his or her recommendations to a company’s management team. I wasn’t dealing with children. I was dealing with people worthy of respect—equal partners at the table who were fully capable of both giving and taking criticism.

I sat with them. I asked questions. I observed. While on the surface their processes looked like an irrational mess, the reality was much more subtle and complicated—which I would have never discovered had I waltzed in and assumed that I knew everything that I needed to know. I learned that they used a seemingly inefficient and chaotic agglomeration of paper and Excel for rational reasons. For instance, when I asked why they gave paper booklets to their clients with a mess of stapled receipts instead of formal statements like a bank, I learned that otherwise floating bits of paper could easily get lost in people’s busy lives. In a rural village, one can hardly expect something like online banking. On top of that, many of their clients were illiterate and the simplicity of a receipt per transaction, although messy, could be understood far more easily than lines of text on a bank statement. At the same time, the system truly was messier and more chaotic than it had to be, even with these considerations. Thus, after I understood these factors, I engaged the staff to create a new system that would preserve these elements of understandability while improving internal tracking. Although this is a simplified example, it illustrates the two-way nature of the process.

Engaging the local staff in this way, I quickly found that even though they were “unsophisticated people from Africa” who in many cases had little to no formal education, they most certainly knew what they were doing and were more than capable of this type of dialogue. One staff member, for instance, had only a sixth grade education but a sharp enough intellect to immediately grasp the fundamentals of why such data tracking was necessary—and, I might add, point out some omissions that I had made. Many of these concepts are ones that I’ve had trouble explaining to Dartmouth graduate students. The point here goes beyond mere respect for or deference to local context—instead, it emphasizes the need to understand, in situations like these, that outsiders like me deal with rational human beings, not children or “underprivileged people” to be understood in the abstract. It is this type of feedback and response from both sides that makes institutions like WomensTrust a bottom-up solution to the unilateralism that has previously created developing-world dependence on the charity of the West.

Ultimately, exactly what I did was less important than the way I approached what I did. Dialogue, the philosophy that drives WomensTrust and intitutions like it, is the key to successful aid. Even now, after acknowledging the failures of past development efforts, we often make the mistake of underestimating those we are trying to help. The importance of dialogue is slowly catching on as microfinance and other more “economy-building” types of aid mature, and as we discover their flaws when practiced unilaterally. But beyond the practicalities of the situation and whatever economic and psychological incentives underlie it, understanding this principle is a matter of basic respect. We must recognize that thosewe are trying to help are not merely some alien “other”—they are people like us. Far from wallowing in ignorance, these people are making their way in logical, rational ways though constrained by various challenges inherent in impoverished nations. It is these challenges that we should work together in overcoming. But in doing so, we must remember basic respect for these people as people. To do otherwise is not only patronizing on our part—it is crippling our efforts to truly make an impact.