However, despite good intentions, neither aid nor investment guarantee development outcomes. Every year, billions of dollars is spent on poverty reduction efforts globally. Despite such huge investment and efforts, why so many of the poor are still unable to manage a decent living? There are isolated cases of success stories, but a systemic change has not resulted out of such investments. What’s going wrong with investment on poverty reduction programmes?

A Wrong Theory of Change

When I reflect upon my 15 years of development work in one of the poor regions of the World, I find that the main problem is not always the wrong policy or program, but the lack of a clear Theory of Change (ToC) in program design, planning and measuring program impact (monitoring and evaluation). While programs exist at the higher level governance, the actual programs where the money goes lack a clear view of how change can be facilitated in the complex, and a politically messy world that sustained poverty.

Before I explain why this was the case, let me share a story of a poor man in the rural hinterland of Nepal, home of close to 10 million poor people (one-third of the total population of the country). The man struggles for a single meal every day. His life became even worse when he was persuaded by a development project officer to take part in a training, ostensibly aimed at improving his life (with all good intentions). The training did not work because it was about something totally new to him:  to learn to make a bamboo wall watch in the village itself. The poor man was convinced by the words of the officer that he could make some nice watches and earn money through selling them in the market.

Without being sceptical, the poor men took part in the training and in no time started making wall watches after buying bamboo culms in the village itself. Within a week’s time, he made a watch which he was dreaming to sell for an elected price of NRs 1000 (USD 10). He thought he was so lucky to get training from the project and could make this much of money at his own village, which he could never earn from his conventional labour work. Coincidently, the training time was the peak agriculture season when he could earn a good wage and save some money for the slack seasons. He clearly wanted to go with a new and modern option and he did.

But after a couple of months, he felt being cheated by the development project when he could not sell his watches in the market as assured by the project officer at the start of the training. He found no ways to sell them. He even approached the project officer and requested for help in selling his watches as per the officer’s assurance during the training. But he got no support from the officer – perhaps that was not included in the project plan, beyond conducting the training.

I happened to meet the man to know his experience with this poverty reduction project. He was panicking over the disastrous experience.  Dropping tears from his eyes in grief, he said: “Now, I lost all the faith to the development workers who come to me offering training or this and that of advice. They all are making false advice and assurance to the poor people like us. If you have also come to see me with a similar idea, please don’t try to ruin my life further”.

This led me to think why the project intervention went wrong with such unanticipated result, despite its novel goal of reducing poverty by enhancing skills. While reading the project document, I noted that the project has only two key elements: the end goal was poverty reduction, and one of the activities included was training and capacity building.

Why was the Theory of Change wrong?

In this case, watch-making training was considered but the program a magic bullet to get people out of poverty. However, the project lacked a framework of how this could happen and what needs to be done to make that happen, following the training. It also lacked a framework of who does what in different stages of the product development (wall watch in the story), what market niches are available, what networking among producers need to be done with the market brokers, and locating the ultimate users from whom the money flows back to the real producers. Giving training is just one activity that the project did, and even if the project had a limited mandate, it could have mapped out possible collaborations with other players, so that necessary actions could be undertaken other players towards ensuring jobs and incomes for the target beneficiaries.

All the steps, activities, intermediate goals that help the project to reduce poverty level as a final goal comprise what is known as a Theory of Change (ToC) in program management parlance. It is also known as impact pathways. This is precisely what was lacking in the project.

What lesson can we learn?

In essence, the project could have asked the following questions to formulate project’s impact pathways:

  • Did the product (wall watch in this case) have a market at all?
  • If yes, where was the market chain/supply chain before?
  • Was it appropriate to offer a new job option to people traditionally doing farming or agriculture labor?
  • Should the project help organise the producers so that they can collectively approach the buyers?
  • How could the project link the producers with the intermediaries to market their products on their behalf?
  • Should the project set any intermediary goals and put in place appropriate monitoring and evaluation mechanisms?
  • What are the actors who could have contributed to the marketing of the new product?
  • How could the project engage other stakeholders in the process for impact?

Unfortunately, the project lacked a clear theory of change and it does not seem to have considered these questions.

Had the project formulated a clearer theory change, it could have avoided giving a training with worse outcomes for the rural poor. Even if the project had limited resources and a narrow scope of objective, it could have put its limited resources into a well-defined impact pathway so that every dollar of money and every day of time spent would have some positive contribution to lives and livelihoods of the poor.

Thinking before acting, and acting with a clear theory of change, can make a lot of difference in international development.