Is our work leading to measurable progress on the SDGs? Accountability is key. How accountable are donors and their grantees in achieving measurable improvements towards the SDGs?

Donor agencies will respond by citing the evaluations of their four-to-five-year funding cycles. Discussions will focus on impacts - such as ‘over 300 farmers trained’ or ‘over 500 hectares of land used agroforestry practices’ or ‘USD 10 million invested in guarantees for rooftop solar’. Donors will also discuss the audits conducted on their grantees to ensure that spending is aligned with contractual rules.

Grantees, including us at the Shamba Centre, also work tirelessly to achieve the contracted deliverables, on time and on budget. We account for every donor dollar – reporting on when and how it was used. We also report on our ‘impact’ - over 300 policy makers attended our meetings; our social media post attracted over 150 reactions; and our recommendations were discussed by donors who are now setting up a ‘task force’ to take them forward.

But to what extent are these donor dollars moving the cursor towards measurable improvements on the 17 SDGs, their 69 targets and the associated 231 indicators? In other words, has the training for 300 farmers and the adoption of agroforestry practices on 500 hectares of land improved soil and biodiversity? Did the donor task force result in new laws or enforcement on a scheduled phaseout of pollutants such as pesticides?  

Responses to such questions have always eluded us; even further, the question is now creating a fault line in the development profession at large. How so? We are witnessing public backlash against development assistance in donor countries and the disillusionment across the G7 that the low carbon, ‘leave no one behind’ agenda is too expensive, too difficult, and too slow. 

The downside of working towards activities and outputs
We are not implying that the development profession is not accountable – far from it. Rather, the problem is that we are accountable to tasks rather than to goals. We remain busy undertaking activities and producing ‘outputs.’ We then mistake outputs for outcomes. 

For example:

In adopting agroforestry on 500 hectares of land, we might present the project as follows:

• Activities: planting and cover cropping

• Outputs:  number of trees planted or areas cover cropped

• Outcomes: increased resilience of 500 hectares of land

Are we asking ourselves if the agroforested areas are sequestering carbon, improving biodiversity and soil fertility and by how much? Alas, no! We assume that this is happening, but we do not hold ourselves accountable for it.

In organising a meeting for 300 policymakers, we might present the project as follows:

• Activities: a two-day conference with one SME deal room

• Outputs: ‘15 barriers to low carbon ag tech’ identified

• Outcomes: recommendations to government and donors on ‘improving the technology-investment environment.’

Are we asking how these recommendations will trigger a percentage point improvement in the tech investment environment? Not really. We hope it will or we even ‘trust’ it will, but we do not think so far down the line. Instead, we are too busy developing the agenda, getting 300 policymakers to attend, and drafting the final report.

Outcome finance changes our mindset

In outcome finance, payments are made contingent on achieving pre-defined and measurable outcomes. Rather than simply financing activities with the hope that they will lead to results, outcome finance ensures that funds are tied to real, measurable outcomes. By tying financing to outcomes, we are forced to design with the end (or the outcome) in mind.

Let's look again at the example of adopting agroforestry practices on 500 hectares of land. If payments are tied to incremental improvements on carbon sequestration, biodiversity, and soil fertility, we may design the project very differently.

For example:

• We may select companion trees, vines, shrubs, and grasses that grow and support each other in a symbiotic manner.

• We may include indigenous species, drought resistant strains and food crops that can be rotated as per the seasons.

• In certain areas, we may seek to use cover crops to optimise carbon sequestration and nitrogen fixing during planting cycles and then use these crops to produce green fertilisers.

• Instead of training hundreds of farmers, we may set up field schools for farmers to continuously innovate. As such, farmers can seek several rounds of outcome payments that will bring more ecological stability to their farms and lands.

Similarly, with the example of a meeting for 300 policymakers, the project design will differ if our contract payments are tied to outcomes on improving the technology investment environment with a target of USD 100 million in investment facilitation. In this case we would certainly not hold a meeting for 300 policy makers. Instead,

• We would start by modelling the responses to different investment incentives.

• We would use these results to then engage with national investment promotion authorities, donors, existing foreign investors, and their domestic counterparts on an investment aftercare offering that will be sufficiently attractive to mobilise a re-investment of USD 100 million.

Introducing Shamba Ventures

We have set up Shamba Ventures, a special purpose vehicle, to execute outcome finance transactions at the landscape level. Building on the ten-year track record of our partner Quantified Ventures, we are offering outcome finance that is not only tied to tangible results but innovates even further.

Our starting point is the recognition that achieving measurable results on the SDGs is inherently uncertain, especially as climate change happens in real time. SMEs, farmers – all stakeholders - require at least a three-to-seven-year transition period during which expenditures are high, and revenues are low (see Figure 1). This early-stage funding gap poses a major barrier to the achievement of meaningful outcomes.