Governance Matters: Could you explain the vision of IDFC Institute and Artha Global, and why they and similar organisations are so important?

Reuben Abraham: IDFC Institute was a think/do tank focused on India’s transition from a low-income, state-led country to a prosperous market-based economy. I came to the Institute from working in academia with two critical insights from my time there. The first was that the timeframes of academics and those of government and policy practitioners do not necessarily match up. The second was that there is a tendency to think about problems in a technical way without accounting for the underlying political economy, state capacity constraints, and the limitations they create. The goal of IDFC Institute was to bridge the gap between the intent and implementation of policy, keeping those constraints in mind. Since then, we have started taking a more global focus. That is where Artha Global comes in, as it was established as a new entity to replicate some of our learnings from India elsewhere. 

Starting any new organisation is a great challenge. What were some of the initial issues that IDFC Institute faced and how can your experience benefit others? 

We did not have as sophisticated an understanding of the state capacity problem as we do now. People who have worked in developing countries will be familiar with the sort of situations we faced where we were convinced we had everything right, but later on found that nothing changed and we were left scratching our heads. We had to adjust a fair bit to account for state capacity constraints.

Building trust with our stakeholders was another significant challenge. As a new organisation, there is a huge trust deficit between governments and entities like us, which takes time to address. It is important to do the hard work of relationship-building, not just assume that doors will open because we have good ideas and are public-spirited.

The trust deficit you mention is a challenge for organisations, but it can also be a problem for governments if it means they miss out on opportunities to build their capacity and capabilities. How can governments engage better with organisations such as IDFC?

I think governments should be more proactive about seeking outside help. In an ideal world, in-house capacity is preferable, but sometimes that is not achievable, at least in the short run. Governments also need to look beyond organisations that are only selling them services. Unlike them, organisations such as ours tend to offer pro bono services to governments. Ironically, this approach engenders both trust and suspicion. Trust because there are no misaligned incentives, and suspicion because they assume there is some ulterior motive behind the provision of pro-bono or at-cost services. Obviously, I understand where they are coming from. There is a lot of snake oil around, but hopefully they can tell the difference with organisations that are genuinely trying to help. 

Can you give us an insight into how IDFC has helped government and what it has meant for their capabilities?

One example of a successful project we ran was the Safety Trends and Reporting of Crime (SATARC) survey.¹ This was a crime victimisation survey we ran across four large cities and more than 20,000 households in India. The survey was an attempt to assess people’s experience of crime and compare that with official records. Police and government colleagues were involved from the very start, including in survey design. Our starting assumption is that somebody inside government knows the problems much better than we do. Where we can help is in finding solutions and implementing them. 
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The results of our survey showed an enormous disparity between records of crime and people’s lived experience. Since then, India’s Ministry of Home Affairs has started rolling out the world’s largest crime victimisation survey. It is a reminder that the state can operate on a significantly larger scale than an organisation such as ours could ever achieve. Ultimately, our goal has always been to come up with demonstrable solutions, and then hope that the state will take them to scale. 

How did IDFC come to work to support the Government of India during COVID-19? What was IDFC’s role?

We started out working with the Government of Kerala. Essentially they had assembled a terrific group of experts, drawn primarily from the Keralite diaspora, to address the COVID-19 crisis. In Kerala, our role was primarily around data modelling, but we realised that we could act as a well-networked backbone organisation to provide a platform for a large group of experts working on COVID-19 response. 

We started by bringing together 15 experts, including some of the best minds in public health. Very quickly we realised that there was huge demand for such a platform, not just among governments but from the World Bank and other institutions. Eventually this group grew to 170 people from around the world. Of them, only one person — an infectious diseases specialist — was on our payroll. It demonstrated that a networked organisation or platform can convene global expertise, and have a major impact. 

A great analogy is with making a movie. You get a script, a producer, a director, a cast, cinematographers, and whoever else you need. After you have shot the movie, you market and distribute it, and then you disband. Perhaps on another occasion, this group comes back together to make another movie. Perhaps not. However, with good network maintenance and management, the expertise is always available. 

At Artha Global, we are trying to work the same way, curating, convening, and coordinating between experts to respond to windows of opportunity in public policy. This approach helps in engaging top-tier experts. After all, it is easier to get someone to work with us on a limited-time basis than it is to entice them to leave their current jobs and join us full-time. 

What are the most innovative ways you have seen governments learning from each other or working together even though they may be very different?

One really interesting new approach is the outsourcing of institutional capability. For instance, say you are an Indian passport holder, and you want to visit Mexico. The rules in Mexico say that if you have a U.S., European, or U.K. visa, then you do not need a separate Mexican visa to visit. The Mexican Government is essentially borrowing capability from countries they believe do a better or as good a job of vetting immigration risk. I do not know where this started but many countries have similar visa arrangements now, and it is hugely beneficial to all parties. Regulatory approval of drugs is another example. Countries could accept, say, a vaccine that has been approved by the US or European regulator because they trust their standards and capability, and avoid the time, pain, and cost of going through additional approvals processes. 

These approaches can be very useful for developing countries in particular, allowing them to progress without having to build all of the institutional capabilities that were assumed to be necessary before. At the very least it can buy them some time while they build indigenous capabilities.

How can governments position themselves to make the most of this learning or cross-pollination process?

There was a book released a few years ago called Unlikely Partners by Julian Gewirtz, who served in the Obama administration and is now advising President Biden. It tells the story of western economists who acted as advisors to China in the early 1980s. What the book shows is that, in effect, the most successful poverty reduction experiment in history — the growth of the Chinese economy — was kickstarted in part by a loose coalition applying lessons learnt elsewhere, including in eastern Europe. It is vital that governments reflect on such examples and remain open to new ideas. 

This is easier said than done, however. One observation during the COVID-19 crisis was that “not invented here” became a real problem. If we suggested that a solution had worked in a different country or context, we were often told the local situation was sui generis, and that there was not much to glean from others’ experiences. Shutting down schools for extended periods is a good example of the damage done by such an unwillingness to look elsewhere. No single government has all the answers, which is why it makes sense to be open-minded and look for replicable ideas. 

A lot of philanthropy is dedicated to setting up parallel structures, such as nonprofit hospitals, that may be necessary in the short term but which bypass governments, and in some cases undermine the development of the state’s capabilities in the longer term. How can we address some of the challenges preventing philanthropic capital from supporting the development of government capability?

There is no doubt that philanthropists’ involvement in building state capability can become very contentious very quickly. There are many people who will be quick to question their motives and incentives, so gaining trust is paramount. It is also important to remember that contribution (to problem solving) is preferable to sole attribution, which many seek. 

The late Archbishop Desmond Tutu once said that there comes a point where we need to stop pulling people out of the river and ask why they are falling in. Philanthropy tends to focus on pulling people out of the river, yet chances are that upstream intervention — state capability, governance, and so forth — would cost less money, scale up easier, and have massive impact. Upstream is where philanthropy is likely to get the most bang for its buck, assuming trust issues can be overcome. 

What can philanthropic capital offer that other sources of support cannot? And what might the limitations be?

Philanthropy can be very good at absorbing risk, because it is literally money with no expectation of return. Unfortunately, few philanthropists perform this catalytic, risk-absorption function, and instead tend to be risk-averse. In addition, policy interventions tend to take time to bear fruit, and the measurement of cause and effect is untidy because there tend to be multiple reasons for success, including simply being at the right place at the right time. This is all the more reason to provide patient, long-term core support in a field where there are no silver bullets. This is, unfortunately, not something that always appeals to philanthropists.

The other thing I will add is that complex problems tend to be multidisciplinary and multisectoral — but philanthropy tends to be organised in silos. Take the example of COVID-19. This would fit into the health portfolio of most philanthropic organisations. But what about the breakdown of supply chains caused by the pandemic? Or the breakdown of law and order? What about crowding in slums, leading to the rapid spread of respiratory illnesses? Are these public health problems or public health adjacent problems? Are they too complex for public health experts alone to solve? 

We face similar problems in addressing climate change, which is a hugely complex problem with many, many dimensions. Philanthropists must seriously reconsider how they organise themselves as they try to address challenges on this scale.