By Benjamin Kumpf, Head of the OECD Innovation for Development facility
As we are all too aware, the world is off track to achieve the Sustainable Development Goals (SDGs) by 2030. Progress will require major changes in policy, regulation, infrastructure, procurement, and planning, as well as social and behavioural shifts. And it will require a major increase in financing: the UN’s Financing for Sustainable Development Report 2024 puts the SDG investment and financing gaps at between USD 2.5 trillion and USD 4 trillion annually.
Given the sums involved, closing these gaps entirely with additional financing is unlikely. More finance must be coupled with a more effective use of resources. Specifically, effective scaling: increasing the reach and impact of an innovation or solution to create sustained positive change relative to the size of the problem.
What does this look like in practice? Take Kenya’s M-Pesa. In the 2000s, the UK Department for International Development (DFID, now the Foreign, Commonwealth and Development Office) noticed that Kenyans were transferring mobile airtime as a proxy for money. DFID facilitated a partnership with Vodafone and provided a £1 million investment. It then phased out its support as M-Pesa went on to scale as a highly successful commercial mobile money system.
But not all innovations are so successfully scaled. In fact, though scaling has received more attention in the development sector in recent years, too few initiatives in low- and middle-income countries currently incorporate it into their design and implementation strategies. Scaling takes time – decades, even. It requires deliberate, systematic action by public and private stakeholders. And it requires many participants. No single organisation is likely to cover or fund the entire scaling pathway, and a range of actors must step in as researcher, innovator, implementer, intermediary and funder.
Indeed, most development co-operation initiatives fail to scale in sectors such as agriculture, education, health and humanitarian response. In some contexts, development initiatives can even hinder scaling. For example, in Nairobi from 2015-17, international funders provided start-ups with comparatively easily-accessible grant funding and involuntary crowded out investors. As a result, many projects that initially had sustainable business models became grant-dependent.
If scaling is necessary but challenging, what should development organisations do? The recently published Guidance on Scaling Development Outcomes, by the OECD Development Assistance Committee (DAC), makes three main recommendations.
First, before asking what elements of a project can be scaled, organisations must ask whether an initiative should be scaled. Not all development initiatives are scalable, nor is trying to reach more people always the best outcome. Instead, the focus should be on an initiative’s optimal scale, which depends on the size of the problem and the number of people affected. Determining a project’s optimal scale requires working closely with in-country partners to balance the magnitude, variety, and equity of outcomes, and understand potential trade-offs. This can be a complex process, as the views and priorities of in-country partners can be complementary or conflicting. Scaling is political.
Second, the Guidance puts an emphasis on viable business models. Looking to the future of a development activity, it asks: who will implement and fund it in 10 to 15 years? How do we get from here to there? The Guidance identifies three business models for scaling development projects. These include:
Public sector adoption: Solutions are integrated into government programmes, supported by policies, regulations, and public financing. One example is the Lively Minds initiative to support rural parents in Ghana and Uganda. Parents are trained to run free educational play schemes for pre-schoolers and provide better home care for their children. After independent testing and evaluation, the programme is now being delivered by the government in Ghana.
Commercial business models: Market-driven approaches enable solutions to scale through private investment and consumer demand. For example, M-Pesa has increased financial inclusion in Kenya to 84% in 2021 from 26% in 2006.
Hybrid strategies: Public-private partnerships leverage both sectors’ strengths to ensure scalability and sustainability. Look to Hewatele, a social enterprise that is increasing access to medical oxygen in hard-to-reach areas in Kenya. Its innovative business model combines cost-effective technology with support services for healthcare facilities.
Finally, the Guidance emphasises the need to establish a phase-out or handover strategy from the beginning. Too many development organisations invest heavily in the initial stages of an initiative and fail to plan for the long-term. Yet this is particularly important in the case of a scaled solution, for which costs and oversight needs will expand and require continuous investment in operations and maintenance. This includes plans for how to continue scaling midstream, when international funders eventually phase out. Referring strategies must be based on an understanding of the local environment and what it will take to maintain operations at scale over time.
We will not achieve the SDGs if development co-operation is predominantly understood as implementing a one-off project or spending official development assistance budgets. Success will require more projects that scale. The good news is that we already have examples of development initiatives that do, and we know more about why others have failed. Now the Guidance offers a way to think about how to scale projects systematically, helping promote development co-operation with long-term impact.