Africa needs the X Factor to achieve sustainable growth and development.

By Takudzwa Kufa
The “X Factor” is a title of a  musical show on a british TV. The title refers to this undefinable “something” that makes up for “star quality” in musical performance of the aspiring super stars competing for chance to get to next round or be booted out. For one to win or become the next “super star” they must be eXtraordinary in their performance. The idea is to launch eXceptional music careers after the show.

 

A new development strategy framework based on X Factor.

I am proposing a new strategic framework to guide how Africa must approach development based on the attributes of this show.  For Africa to have this star quality, our approach to business and development has to change in a way that brings some of these X Factor attributes right to the centre of our development discourse.  This new thinking borrows the following attributes from the X Factor Show (1) having eXtraordinary ambition to be a star (2) Simple and transparent process (process eXcellence) of the show, (3) aiming for exceptional results and (4) evolving contestants be experts in successive episodes. The X Factor in the context of African development will mean eXtraordinary national and organisational goals, eXpert participants (citizens), process eXcellence and eXceptional economic indices and development indicators.

Placing the X Factor at the centre of business, economic and development planning means that:

1) We Africans must aim to be eXtraordinary in everything we do, right from setting our vision and  goals right to implementation.

2) We Africans and our development partners need to be eXperts everything we do.

3) Africa needs process eXcellence to do more for less and achieve better and faster development outcomes.

4) We need to have smart development objectives and must aim for eXceptional results and measurable targets.

5) Once the X Factor becomes engrained in our thinking and attitude towards development, Africa can then focus on the following big siX thematic issues which I think are important for development and listed below.

Big Six Africa

 

The Big Six

  • eXceptional peace, security & social cohesion.
  • eXpertise in governance, organisational and culture change,  institutional reforms which including naturing of eXceptional moral character of the people and absence of corruption.
  • eXcellent processes for effective & efficient delivery of services and production of high quality goods.
  • eXcellent infrastructure built by local eXperts.
  • eXperts for development with educated, skilled & empowered citizens driving and managing the development agenda.
  • eXtraordinary performance in all sectors the economy  mining, agriculture tourism, trade and commerce  including eXploding exports of value added products to the rest of the world.

Worthless Currencies – An Argument for embracing dollarization

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Worthless Currencies – An Argument for embracing dollarization in Africa

By Isaya Taingwa

The use of weak and fragile currencies has made poverty worse in many African countries.  Weak currencies have left countries clutching bundles of useless cash, while real wealth is shipped elsewhere. Fragile currencies have turned political problems into economic crises through depreciation, rampant inflation and extreme poverty.  Africa should embrace dollarization to avert the poverty trap.

Dollarization can be a path to economic stability and growth if managed properly. It is unfortunate that governments which end up dollarizing only do so as a last resort due to an unwillingness to lose control of monetary policy. In reality, in a globalised world, they exercise little control over their weak currencies. Many countries have become poorer while sitting on billions of US dollar reserves to defend the local currency this while infrastructure, education and health institutions crumble. Why not put this money to better use through dollarization? With dollarization there is no need to maintain these mountains of foreign currency.

In Zimbabwe, voices are being heard calling for the return of the Zim-dollar. This is misguided, especially when the economic fundamentals have not been addressed. There are two main arguments often offered for having a local currency. One is that the country can have the ability to devalue its currency and ‘increase export competitiveness’. The second is that the government can increase liquidity by printing more money and pumping it into the economy to boost growth.  The arguments while theoretically sound have not helped in the African context.  Currency devaluation may work to increase exports in more developed countries like Japan as they have the infrastructure and capacity.  When it comes to African countries, the same has not and does not happen. The infrastructure and capacity does not exist.

To build the infrastructure, technology, machinery and materials will still have to be imported. A depreciating currency makes this unaffordable. This has seen many African countries slow down development and the poor being affected the hardest.  Other countries often follow suit and devalue their domestic currency, and it becomes a race to the bottom in creating weak currencies to ‘remain competitive’ in the export market.

Printing more money to improve liquidity in fragile economies has the effect of immediately causing a devaluation of the currency and as most African countries are net importers, the result is often inflation and deep poverty. Even medicines which are typically imported go beyond the reach of many, with savings becoming worthless.

In Malawi, a recent 40% devaluation recommended by the IMF resulted in inflation of over 35% and increased volatility in the currency.  The inflation numbers that Africans accept as normal would not be acceptable in the developed world.  The Malawian kwacha has depreciated by over 4900% since 1994.  If indeed devaluations help anyone Malawians should be swimming in wealth, and yet today, most are wallowing in poverty.  Who is benefitting from these devaluations?

By the time corporate taxes trickle into government coffers when multinational companies ‘decide’ to pay annual taxes, inflation would have eaten into them.  The bundles of tax cash paid are almost worthless.  Africa has been robbed through use of worthless currencies. In many cases the government is left scrambling for foreign aid which is paid in real hard currency.  Some countries like Malawi depend on foreign aid to finance its budget up to 40% of spend.  Why should such a resource-rich country live on the benevolence of foreigners?

Weak currencies have been a key driver of brain drain across Africa.  According to the International Development Research Centre, there are more African scientists and engineers in the USA than in the entire continent!  Estimates put the cost of this brain drain at over four billion US dollars annually.  There are other push factors, but the prospect of earning US dollars is strong in luring African skilled workers abroad. Even those workers who are supposed to be working in government and taking care of monetary policy to defend weak currencies often end up taking up other posts abroad as academics or even doing menial jobs.  A stable strong currency can stop this tide.

The fragile and weak currencies used in Africa have failed to put real value on the goods and services that Africa supplies the world.  Even life has been undervalued by the fragile currencies. Recently, some Kenyans accepted the equivalent of four thousand dollars each for horrendous injuries including, castration inflicted upon them by the British during the Mau Mau uprising.  People in the developed world would have been surprised at the paltry sums.  What they do not realise is that this sum is actually a lot of Kenyan Shillings!  Bundles and bundles of shillings!  Sadly, these bundles become useless in a short space of time.  This case underlines how the currencies being used in Africa misrepresent the true value of not only products, but also life and people.  In a dollarized economy, where the real value of money is known, it is unlikely such paltry sums would have been accepted.

When an election is pending in a developing country, the tendency is for that currency to lose value against major currencies as investors become jittery.  When a civil war erupts, the story is the same. When there is a change in leadership, devaluation and inflation usually follow, making everything expensive, with the poor suffering the most.  Why should this be the case?  With dollarization, the residual fears of devaluation are eliminated and a country buys itself a degree of international confidence that insulates it from the vagaries of contagion. Even the recent unrest in Egypt can be traced to the Egyptian pound loss of value and subsequent inflation which brought people on the street.

In the mining sector it could be the same global company mining platinum both in Africa and Australia but the pay structure shows that workers in Australia are being paid 10 times more on average what a miner in Africa is being paid. Why should it be so?  The resource that is mined is still sold on the same market at the same price by the same company. There are other factors that contribute to salary differences but a large part of the answer can be found in the fragile national currencies which leave people trapped forever in low real wages.

What has happened in Europe has been a form of dollarization with countries using the Euro and ditching their own currencies. Although many economists have been critical about the performance of the Euro in recent years, many agree that the recession would have completely decimated many of the European economies if they were still using their previous fragile currencies.  A form of currency war would have erupted pushing some countries into the abyss.

Panama is the longest officially dollarized economy, with almost 100 years of experience using the system. Since 1904, Panama has used US dollar notes as its domestic currency and issues local coins known as balboa coins. Embracing the US dollar has helped in maintaining a low unemployment rate and the economy is among the fastest growing and best managed in Latin America. Ecuador also dollarized in 2000, and like Panama and Zimbabwe, has benefitted from the stability and low interest rates.

With dollarization, budget deficits cannot be financed by creating money, leaving only tax increases.  This can be seen now in Zimbabwe with the population facing a stricter tax system than under the local currency – toll gates, higher taxes on imports, infrastructure taxes and the list will grow.  What taxation does is lead to a population that starts asking its government questions as to how ‘my money is being used’.  The government should become accountable to its people and transparency will be the by product in the long term.

In Zimbabwe, one way in which dollarization can be made more practical is to issue coins which make daily transactions easier.  As has happened in Panama, these coins should be strictly limited to only 10% of the total money supply.  In this process, the government can make a few millions in seinorage. At one stroke, liquidity can be increased by 10%while making everyday transactions manageable.

The objective should be to leverage the dollarized economy to produce local goods and services that outweigh the need to import.  As long as imports exceed exports, moving to a local currency would not be prudent for Zimbabwe.  The idea that untapped resources can be used to support a currency is clap trap.  A currency can only be supported by hard currency or minerals that can be readily converted to hard currency.

The good news is that even if a government wanted to de-dollarize for political reasons, this cannot be achieved overnight due to the practicalities involved. In a recent interview, DRC governor, Jean-Claude Masangu Mulongo whose country is de-dollarizing, conceded that ‘the process could last up to a decade’. Once an economy is dollarized, as is the case in Zimbabwe, getting rid of the dollar is not going to be easy.  Why hurry when the benefits outweigh the cost?

Zimbabwe and other African countries with fragile currencies should embrace the dollar, to avoid the continuous volatility that is endemic in these currencies; to control externalisation which is more rampant when citizens and companies are forced to use fragile currencies; to ensure that in old age, citizens can look to their savings when they retire and not be at the mercy of inflation and devaluations; to reduce the need for foreign reserves; to reduce time and resources used on unnecessary monetary policy tinkering; to discourage the brain drain; to ensure the work that Africans do is valued and to give citizens an opportunity in the long-run to access the global market.  Ultimately, dollarization should be maintained to ensure stability and discipline in government spending.  Lower interest and inflation rates should lead to a stronger economy.  It may take time but ultimately, liquidity will also follow a stable economy supported by a good fiscal policy.

Money has got three basic functions – medium of exchange, unit of account, and store of value.  For far too long, Africans have been left clutching bundles of kwacha, naira, shillings and cedi, while real wealth is shipped elsewhere.  The weak currencies provide a platform for the transfer of this wealth. Dollarization can help ensure that as African economies are developing, governments stick to the basics and that real wealth is created and retained. Africa and Zimbabwe must embrace the basics.

Isaya Taingwa is a Chartered Certified Accountant based in London.  Can be contacted on itaingwa@gmail.com

Aid Effectiveness: Lean Six Sigma & Lessons From The Food Industry

By Takudzwa Kufa

The Business Case for Improving  Aid Processes

Large sums of aid money are frequently reported in the media as been pumped into Africa without producing the expected sustainable and transformative change in the lives of the African people. The reasons for failure of aid in Africa have been a subject of many studies and debates by various development experts with the likes of Dambisa Moyo putting forward arguments for abolishing aid altogether in her book Dead Aid. Internal inefficiencies of aid organizations and their implementing partners are some of the many indictments of aid performance in Africa often cited by critics of aid. Large non-profit organizations (NGO)  and international NGO (INGOs) can have very complex systems and processes which are often the limiting factors to the efficiency of aid delivery work and the transformative effect of that aid. For example a big donor and grant making organization responds to a need such as provision of the health care facilities to a rural village in Somalia. It does this by making donation to fund recruitment of health care workers with the grant being made through an implementing UN agency known to have very complex processes and bureaucratic systems. Because of its very complex systems this UN Agency then takes thirteen months to recruit a project manager who in turn take another nine months to get approval to recruit the health workers needed on the ground. So for close to two years, the resources were available, but the people’s lives were not being transformed due to lack of operational and organizational effectiveness of implementing organization. Such inefficiencies and waste has been the story of aid in Africa whose delivery is very slow, wasteful and short-changing to both the donor and beneficiary community.

In these times of austerity, with the economies of major donor nations in recession or slowdown, there is increasing pressure from their public to cut aid budgets. Calls for greater scrutiny on how the tax payers contribution to international development aid is spend are now making frequent headlines in the developed world media. According to The Guardian 16/11/2012, whilst Britain has committed itself to meet the UN target of spending 0.7% of gross national income on development assistance, its coalition government is increasing coming under strong pressure from the conservative party back benchers to reduce foreign aid spending at a time of deep budget cuts at home. The Taxpayers ‘Alliance, Britain’s independent grassroots campaigner for lower taxes published a report titled Lost Along the Way putting an argument that the current way in which UK aid is delivered by the Department for International Development (DfID) does not give value for the UK Taxpayer. They raised objections to international call for increasing aid without taking considerations to public concerns about aid effectiveness. The report attempts to calculates how much of each UK taxpayer’s pound given to international development through DfID ultimately gets to the intended recipients, It goes further to estimate how much DfID cooperation with intermediary organizations  (such as the UN, EU or Oxfam) costs the UK taxpayer. It questions the efficiency of DFID and its development partners who include well known INGOs  and Civil Society Organizations (CSO). This report noted three interesting observations:

1) For every pound given by the taxpayer towards international development and humanitarian assistance, 5 pence is lost in the administration of DfID itself.

2) For every pound given by the taxpayer (towards international development and humanitarian assistance) and then spent by DfID through multilateral organizations, 5 pence is lost in the administration of DfID itself. Of the remaining 95 pence, approximately 15 pence (on average) is lost in the administration of the multilateral organizations.

3) For every pound given by the taxpayer (towards international development and humanitarian assistance) and then spent by DfID through INGOs/CSOs,  5 pence is lost in the administration of DfID itself. Of the remaining 95 pence, approximately 19 pence (on average) is lost in their administrative and other non-front line functions.

The report concluded that

International structures and organizations represent a highly bureaucratic approach to development; one that will consume an even greater share of the UK’s overseas assistance as spending grows. New and radical development strategies must be deployed, for as progress in the developing world falters, people would be right to question whether the current approach is delivering the best value for money.”

Alongside other topics of transparency and accountability the debate on improving aid effectiveness has been played on international arena as well. The Paris Declaration on Aid Effectiveness (2005) and Accra Agenda for Action (2008) saw the Heads of multilateral and bilateral institutions resolving to take far reaching and monitorable actions to reform the management and delivery of aid as they looked ahead towards UN first 5 year review of the millennium development goals (MDGs). They recognised the need to increase the volume of aid and to increase its effectiveness whilst reaffirming their commitments to the High-Level Forum on Harmonization in Rome (February 2003). They resolved to (1) scale up for more effective aid (2) adapt and apply to differing country situation (3) specify indicators, timetables and targets, (4) monitor and evaluate implementation in addition to establishing partnership commitments on principles ownership, harmonization, alignment, managing for results and mutual accountability of aid.

From the above paragraphs, it is clear that this agenda for increasing aid effectiveness set locally and coordinated at international level has far reaching implications for organizational and operational strategy for the whole aid industry. This international drive to improve aid delivery, management for maximum positive impact, poverty reduction, achieving MDG goals and value for money has set in motion various strategic improvement initiatives by international development aid agencies (AusAID, DfID), their partners who include receiving governments, multilateral institutions (IMF, World Bank), bilateral, international NGO and Recipient Societies Organizations.

The Australian Government (AusAid) goal is to become the “world leader in aid effectiveness” as stated in their new aid policy document  An effective Aid for Australia Making Real Deference- Delivering Results” published 2011.  The supporting framework document” The Australia Comprehensive Aid Policy Framework 2015-16″ published 2012 goes further  to set  (1) an agenda for managing aid for improved results and performance (2) establishes a performance framework for reporting results, a framework placing emphasis on operational and organizational effectiveness. Concerns about poor aid effectiveness are shared by charitable and philanthropic grant making organizations as well. Tamary Diaz Otero on her Blog Effectiveness of Aid: How to Improve with Diminishing Resources 28/12/2011 quotes results of a survey by Devex partnered by McKinskey & Co which reported that only 35% of NGO participants to High level Forum on Aid Effectiveness HLF – 4 in Busani thought that projects they manage achieve intended purpose.

These debates on aid effectiveness brings to the fore the strategic and business case for improving the whole processes of aid management.  The quality of aid delivery is failing partly because of poor performing organizational processes performed by actors in the aid industry. A strong argument can be made that processes in this industry are not managed and aligned to deliver appropriate outcomes efficiently. Without changes in processes the narrative of Aid in Africa will continue to be stories of vaccines taking two months to be delivered to a community reaching recipients well after the outbreak has killed many people, a story of administrative costs as high as 50 cents for every dollar spend, the largest fleet of 4×4 SUV Toyota Land Cruiser utility vehicles, latest model of laptops and mobile phones.

Calls for the NGOs to deliver noble cause efficiently and calls to take lessons from other industries are becoming louder as development policy makers, academics and practitioners recognize the need to apply better management science to challenges of global poverty ( management4development, 2012).  In a recent presentation at Ted Talks,  Melinda Gates of the Bill & Melinda Gates Foundation challenged NGOs to take lessons from corporations like The Coca-Cola Company who manage to deliver a coca cola to the most remote part of the world efficiently. She questions why NGO involved in provision of condoms, sanitation and vaccinations fail to do the same. She identified that Coca Cola works with real-time data, it is capable of responding immediately to market demands, it taps into local entrepreneurial talent and it has a global network of marketers and distributors who ensures that every remote village can demand and get a coca cola (m4d, 2012). What she failed to identify is that at the heart of this efficiency is a culture of  process excellence and total quality management (TQM) principles guiding the company’s operations management. Efficient operations management at Coca Cola are guided by Lean Six Sigma  (The Coca Cola Business Process Excellence Program) and Total Quality Management (TQM) principles contained within The Coca-Cola Quality System (TCCQS). 

Lean Six Sigma is an improvement tool whose origins is part car manufacturing  and part telecommunication industry i.e Toyota Production System and Motorola.  At the heart of this tool is the systems thinking and process approach to management therefore potentially capable of  being used in any organisation. INGOs  and whole aid industry in Africa can benefit from this tool if properly implemented. Ironically Toyota produces the very reliable and NGO preferred motor vehicle used in aid operations Africa, the Toyota Land Cruiser.  Some international NGOs like World Vision International have rightly identified that the impact and effectiveness of their work is closely related to performance of their internal organisational processes.  They have looked outside their own industry for process improvement tools. World Vision embarked on a Lean Six Sigma program in their East Africa Region, World Vision Process Excellence (Parris 2012)

TQM is a way of thinking about the whole organisation, goals, structure, products, processes and people, that aims making the right things to be done right first time (CQI, 2012). This thought process can change attitudes, behaviour to ensure better outcomes.  In an INGO this thinking  will mean activities are done right first time. Rather than relying on monitoring and evaluation (quality control) at the end of the projects, quality of outcomes is built and assured at every stage of the process and that systems are geared towards quality of project and meeting stakeholder expectations.

Whilst Coca Cola is a multi national corporation (MNC) motivated by profit to achieve processes excellence, efficiency, waste reduction and fast response times to customer demand, INGOs and Aid organisations especially those involved in humanitarian and relief work are now facing the same pressure to respond quickly to stakeholder demands and to produce bigger impact for less despite being none profit driven.  According to Parris 2012, in spite of their unique challenges,INGOs have support functions such as Human Resources, Finance, Supply Chain and IT that are similar to MNCs. The challenge for the NGO industry in Africa is to look outside for suitable tools that can deliver the required process improvement and cultural change.

Lean Six Sigma: Lessons from the Food Industry

In these times of global economic slowdown the UK food industry continue to experience significant pressures on manufacturing margins which makes operational efficiency crucial to its profitability. Consequently in recent years lean manufacturing and Six Sigma have become buzzwords in the food industry as manufactures look up to both methods for improving operational efficiency, creating new organisational structures,  process excellence, continuous improvement and a lean culture.  Likewise NGOs are faced with limited resources in these times of global austerity and coupled with the increasing pressure in donor countries for reduction of aid, operational efficiency has become key factor to successful outcomes of NGO projects and programs. Aid organisations can also benefit from proven improvement tools such as Lean Six Sigma (DMAIC) also referred to as Lean Six Sigma.  The NGO sector can learn from the food industry efforts at improving operational efficiency and transformation to new organisational cultures of customer focus (stakeholder), process excellence and continuous improvement using Lean Six Sigma.

As highlighted earlier Lean Six Sigma (DMAIC) is a combination of two methodologies. At the heart of both methods is the system thinking and process approach to management.

Lean is a method for achieving continuous improvement (kaizen) in organisational performance through elimination of waste from the total organisational process, but it cannot continually deliver improved process capability and stability. On the other hand Six Sigma is a structured approach for reducing product and process variability (stability) and increasing process capability but does not always bring improvements in process flow, speed and flexibility, hence the need for combining the two. So for the Lean Six Sigma to work, the supporting organisational structures should be designed to facilitate uninterrupted flow of the core work process, focusing on eliminating waste and maximising customer value.

DMAIC is an abbreviation for Define, Measure, Analyse, Improve and Control. It is a five step pathway providing a common structure for integrating Lean and Six Sigma methods. The DMAIC improvement cycle is the core process used to drive Six Sigma projects.  All of the DMAIC process steps are required and always proceed in this order. DMAIC is not exclusive to Six Sigma; it can be used as the framework for other improvement applications. It is a data-driven improvement cycle used for improving, optimizing and stabilizing business processes and designs. NGO and Aid organisations can benefit from it too by using it as a guide to answer questions about their performance, solve problems and drive improvement.

NGO processes shares in principle similarities with some food manufacturing processes which makes the food industry a good candidate for the NGO/ Aid industry to assess and benchmark  for leading practice outside (some call it best practice) .  Unlike the car manufacturing where Lean Six Sigma  originates from, the standards of process outputs  “What good looks like” in both industries are not always defined in absolute objective figures that are too narrow specifications e.g. 2 mm. “What good looks like” can be a range of acceptable subjective colours and flavours, or some objective stakeholder/customer satisfaction measure. Consumer judgments of a good product are rooted in emotions, sensory and cultural perceptions. The judgement of good aid outcome is not a straight measurement.  The NGOs industry in Africa share another similarity with UK Food manufacturing. They have a common “waste stream”  i.e. “the waste of talent and skill”  The UK food industry attracts a highly qualified migrant labour force made of doctors, lawyers and engineers and graduates from east Europe and Non EU migrants to do menial packing operations because of better wage compared to their countries of origins. This class of workers have been reported to have better work ethics than local labour and have be credited for delivering huge efficiency for the food manufactures. But with limited opportunities for career progression and low social mobility for ethnic minorities in England this labour force is prone to run out of steam and motivation with huge implications quality of output. The NGO sector in Africa employees the largest number of Ph.Ds, master’s and undergraduate degree holders. It has a layer of so many experts doing work that can easily be done with none graduates. This over concentration of skills creates bloated administration costs; creates bureaucracy, over processing of work, unnecessary process gates, loss of motivation, a disproportionate focus on research aspects of projects and too much report writing. In addition to others, this similarity in the character of outputs and a common process waste stream makes a compelling case for NGO management to benchmark processes with food manufacturing.

Challenges for Process Improvement In Africa

Aid delivering organisations (NGOs) work with various local partners who makes the challenge to driving process improvement a much bigger than just taking consideration of their internal organisational processess. External stakeholders, partners, environmental and cultural contexts must be taken into consideration. So the pace of effectiving change depends on other organisations and supporting business environment.

Africa has its unique set of socio economic challenges that shape organisational behaviour and with implications for process excellence on the continent. African organisations especially NGOs are managed  by arguably some of the most educated citizen of the continent but somehow they have structural, organisational, economic, social and culture specific characteristics that make processes slow, output low and waste high.  There are limited jobs or economic opportunities in Africa and in many organisations those who don’t agree with change cannot just walk away or resign. The natural instinctive reaction to change is self-preservation and change has to preserve people’s jobs and economic interest. Decisions that involved  change are considered carefully taking into account what’s in it for me and my family or constituency. In typical african organisation proposals about change are debated over and over again in very inclusive and bureaucratic fashion. Decision making in African culture often aims at reaching consensus and maintaining good relations as an overriding objective (Khoza,  2006). But development of this prized consensus can be subjected to some sort of bargaining arrangements, consequently making the resulting change outcome not the most economically efficient but just the most face and relationship saving. These economic and cultural factors among others slow down the pace of change in Africa and NGOs should learn to navigate this terrain in a smarter way to achieve faster organisational changes prerequisite to process improvement.

Job security and remuneration concerns in Africa seldom provide economic incentives to slow down organisational processes. For example computerization was resisted for the greater part of the 1980s and 90s in Zimbabwean private and public organisations because of concerns that extra process efficiency would cause work redundancies. Business leaders under the pressure of workers unions and personal interest avoided computerisation  in favour of manual inefficient systems. This partly explains the lower level of ICT literacy and use in both public and private sectors in Zimbabwe compared to other countries such Rwanda and Kenya. So in Africa sometimes there are economic interests to make systems and processes slow and worse if slow systems  present opportunities for economic rent seeking, processes are designed and managed to be slow even starting at strategic levels.  African countries have probably some of the most staffed civil service sectors compared to private sectors yet poor service is the norm, accepted and expected. Processes in civil service sectors are made slow and inconveniencing so that people are incentivised to give bribes to rent seeking officials if they want faster services.  Absence of strong leadership will, management commitment, suitable performance matrices, visible KPIs and data driven structured problem solving (tools Lean Six Sigma can bring) shields these problems from being solved right from their root causes. NGOs in Africa interface with these organisations as partners, service providers and regulators with huge implications for their own efficiency. In the NGOs sector where per diem rates are paid for attending meetings and conferences, there are economic interests for organizing travels, training, meeting, drawn out project schedules and unnecessary visits,  all which contribute to slow delivery, inefficient and ineffective outcomes.

NGOs in Africa provide the prized jobs which normally pay in dollars or higher salaries in countries where an average employee has more than his or her family to feed. In African countries amidst low employment levels, absent social security and low safety nets for the poor and unemployed, those employed are expected to look after an extended family of siblings, in-laws, cousins and parents. Finding employment with an NGO comes with higher salaries but even higher extended family and community expectations for help with medical, school fees for their kids or even use of 4X4 vehicle for family and community funerals etc. People have so many distractions of phone calls or even visits from grandmothers or uncles from the village who can even turn up at work to ask for money. This societal pressure distracts some NGO employees from efficient working.

As an African migrant worker in the UK food industry, I draw upon my experiences and observations working in the food manufacturing in a quality assurance function and my project management and development work in donor funded projects in Africa to argue a case for the use of Lean Six Sigma in delivery of aid in Africa. Its impact is more than profit and savings but leads to more saved lives and improved livelihoods. Creative Lean Six Sigma process improvement programs can deliver significant gains if their deployment strategy & process, educational support, training support, systems support and change management processes are managed correctly addressing the unique local cultural organizational contexts. In the food industry we use Lean Six Sigma (DMAIC) is to create brilliant processes which add value, minimize waste, which are capable, available (when required), with flow and flexibility. I see a huge opportunity and role for use of Lean Six Sigma in improving aid effectiveness in Africa. It can be applied creatively under the drive of stakeholder’s requirements “voice of the customer”  to provide powerful tools that drives out process waste, improve process speed in the non-profit sector (NGO) most importantly drive out the culture of waste that defines the industry today. Organisational improvement practitioners in the NGOs and aid industry in Africa must draw upon Lean Six Sigma to proactively direct organisations, solve problems, continuously improve processes and achieve organisational effectiveness.

Lean Six Sigma: Creating Excellent Processes for Better Outcomes

The lean methodology is based on the Toyota Production Systems (TPS); whose three key features are 1) Cost reduction through waste elimination and increase flow 2) Continuous improvement (kaizen) of processes and 3) Employee involvement. These concepts when exported from manufacturing to the non-profit sector they can create NGOs with brilliant processes which are efficient at reducing waste and maximizing flow.  Efficient processes in the context of NGOs are processes that are simple, visually organised with clear work flows, mapped value streams, standardized and integrated with clear responsibilities and scope, defined roles, policies, and outcome objectives.

Just as in TPS where processes that are empowering to the employees are promoted, a lean NGOs needs to have processes empowering to stakeholders. This means processes in a lean NGO ensure decisions are made locally, stakeholders participate in processes and the processes are geared towards capacity building. Participatory approaches including team work are part of the organisation’s processes.  Just like in TPS, processes of a lean NGO must be continuously improving. For processes to be continually improving they need to be performance monitored, measured and corrective and preventative actions taken to address root causes of failures. The focus is on improving the quality of organisational processes which in turn actually reduces cost more than the focus on cost itself according to the “The Toyota Way”.

The phrase Six Sigma in a manufacturing organization would refer to a measure of quality that strives for near perfection i.e. less than 3.4 defects per million opportunities (outputs).  Six Sigma the tool, seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes.  Developed at Motorola in the 1986, Six Sigma is complementary to lean. It uses a collection quality management and statistical tools to gives a rigorous structured methodology for reducing product and process variability.  It has strong focus on critical to quality customer (CTQ) requirements. It requires rigorous analysis of data to resolve problems. It is concerned with identifying sources of variations; designing, setting and managing of process performance, complexity, capability and reliability. It takes a project based approach to continuous improvement. It is about identifying and quantifying key sources of variations, eliminating and controlling them. Pande, Neuman & Cavanagh, 2003 in their book The Six Sigma Way summarized six key critical ingredients required for an organisation to achieve six sigma capabilities,

  • Genuine focus on customer ( Genuine stakeholder focus)
  • Data & Fact Driven Management
  • Process Focus, Management & Improvement
  • Proactive Management
  • Boundaryless Collaboration
  • Drive for perfection

Applying of Six Sigma tools to NGOs will go a long way towards improving the quality of outcomes since knowledge of stakeholder requirements and effective data driven measurements (DMAIC) mandates  them to consider 3 important actions about their processes (1) process improvement (2) process design/redesign and (3) process management. Processes that are critical to stakeholders (CTS) requirements must be designed/redesigned, improved and managed to be effective. Effective processes are simple, reliable, delivering measurable and transformative results. They produce high quality outputs or outcomes in a timely manner. The second implication of applying Six Sigma to an NGO process environment is that processes are made appropriate to the objectives of the organisation. Appropriate processes are those processes with the capability of delivering transformative outcomes with minimum variation (consistency). They are a result of good stakeholder engagement process; they are designed for the stakeholder and flexible enough to adapt to change.  To achieve this required capability, suitable technological innovations and solutions must be applied to processes when possible.  Typical technological solutions that can improve the capability of NGO processes include those which bring about automation, computerization real time data monitoring, analysis and reporting e.g. a mobile phone communication and productivity device/application (mobile apps) . For example if there was a mobile phone application that exist  and is available for use by village nurses in Malawi to report  daily logs of HIV anti-retroviral drugs collected by HIV patients at their rural village clinic. This mobile app would allow an NGO providing anti-retroviral drugs to keep abreast with real-time data for performance monitoring and evaluation, better management of stocks, better supply chain coordination, less time wasted visiting the project, faster response times and timely problem solving.  These technical solutions must be fit for purpose with the user environments and project conditions taken into consideration.

In summary non-profit organizations can do much more with fewer resources to transform more lives by using this integrated approach (Lean Six Sigma) which creates brilliant processes which are appropriate, effective, efficient, empowering and continuously improving , the AEEEC Processes’

Andrew Parris at World Vision East Africa Regional Office championed the use of Lean Six Sigma in the NGO sector in 2010 by developing the best framework for implementing brilliant processes in a not for profit organization   “Process Excellence in World Vision”.  He identified the similar process attributes above which I have given an acronym AEEEC.  These process attributes have guided the implementation of  World Vision Process Excellence Program and have already been reported as having increased process speeds by factors of 40-80 percent in  recruitment and procurement processes.  World Vision has found that implementing Lean-6-Sigma does not only make works more productive but makes it more enjoyable to staff.

World Vision AEEEC Processes

Six Sigma within an NGO environment goes further than just describing excellent process attributes. It can be used to improve project/programme planning, monitoring and evaluation in addition to implementation process. Its DMAIC pathway is evaluative hence it can be used together with the program logic models to understand the rational behind project intervention and to justify with numerical facts and data modifications to the logical frameworks. Six Sigma can play the role of a framework for managing community projects, adding value to stakeholder analysis processes by providing a framework for learning, planning and evaluation of community needs. It can be used as a strategic directing tool aligning organisational strategy to processes measures KPI and providing technical solutions. Implementing Six Sigma in NGO will involve changing culture, a new process management approach that focus aims at managing processes in a systematic way across functions  and breaking silos and aligning functions.

Six Sigma

 

Applying Lean Six Sigma to NGOs:  The Deployment Strategy 

Embarking on a continuous improvement program is like setting on journey to a destination called “Excellence”. This journey to “Excellence” involves the whole organization working together creating brilliant processes.  The organization has already appreciated the importance of internal organisational processes in achieving successful development outcomes. They now know that they needs to change from one place to another by embarking on this journey, solving problems, improving processes and finding excellence along the way.  Such a journey plan naturally raises a few questions about when to start, where to start from, how to make it happen and how to identify arrival at the preferred destination “Excellent”? I will answer the questions later.

Lean Six Sigma is one of the preferred vehicles to take an organization to destination “Excellent” A licensed driver and trained crew
(project teams) who are capable to steering the bus through various stages of the DMAIC road that lead to “Excellence” are required. The crew must be well trained, committed and motivated to facilitate a pleasant journey whilst ready to answer questions that arise along the way.

Improvement practitioners within organisations are the drivers who use Lean Six Sigma tools to proactively solve problems in a structured way, design/ redesign and improve processes within sponsored projects. The challenge for many organisations is sustaining the gains from and from these projects. These sponsored projects are implemented through project team structures whose organization, roles and responsibilities must be clearly defined and aligned

deployment