An eBay for Development

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By Peter Schwartz
Red Herring (July, 2002) — In the summer of 1968, I served in the U.S. Peace Corps in Ghana. Off in the distance, we could see the recently finished Akosombo Dam on the Volta River, which was then filling the largest man-made lake in the world. The lake occupied 4 percent of Ghana 's land area and the flooding permanently displaced 80,000 people.

The dam, a World Bank project, was capable of meeting West Africa's energy needs at the time. However, while we could see it, we were getting no electricity from it. Ghana had gone so far into debt to build the dam that it couldn't afford the infrastructure need ed to get the electricity and irrigation water to the people who need ed it most. The resulting economic instability contributed to a cycle of coups and bad government that undermined any potential Ghana had.

Today, the electricity that the dam produces is vital to the Ghanaian economy. The dam is typical of many World Bank-financed projects: good in the long run, but highly disruptive and often destructive in the near term.

In the '70s, I was on the board of the Portola Institute. Based in Menlo Park, California, the institute is the original home of the Whole Earth Catalog, the bible of counterculture. As part of an attempt to change the dynamics of development, we oversaw a project that was intended to reduce the ecological and cultural disruptions caused by development in Tanzania. We helped people build windmills for pumping water and found ways to strengthen their earthen building materials . The problem was that we could help very few people ourselves, and when we tried to promote the model, we found that the people we were trying to help wanted modern technology, not just better versions of what their ancestors had used. Despite our best intentions, the project died later in the decade.

Good intentions like these go awry because most project developers suffer from near-sightedness. They think they know better than people on the ground what is needed, based on their theories of development. The problem is that the people who need economic development often don't have the resources to spearhead those projects. Governments talk to the World Bank about their projects instead of meeting with local communities and social entrepreneurs. In addition, the channels of funding are highly attenuated. The World Bank, large multinational companies, and the largest foundations are the only groups that have the resources to find and implement opportunities for development around the world. They tend to focus on large-scale organizations in the developing world and they're very conservative in their project choices.

Now two entrepreneurs, Dennis Whittle and Mari Kuraishi, who both formerly worked at the World Bank, have created a new kind of Web-based service to change the dynamics of development projects. DevelopmentSpace, a service of their company ManyFutures, is bringing together those with projects that need funding and those who want to fund such projects. DevelopmentSpace also provides some pro bono consulting to improve the quality of the proposals.

Say you live in a village in Tibet, and you want to find a way to bring solar power to your village. With DevelopmentSpace, you might put your proposal online and find a funder interested in supporting renewable energy projects in the developing world.

DevelopmentSpace is an ideal Web application - an eBay for development. It creates an efficient marketplace for ideas to find money. And it enables those at the forefront of development, who actually understand the realities, to find people and organizations (not necessarily the huge development agencies) that are willing to be innovative. Since the service launched in February, it has developed 50 projects, including the above mentioned solar energy project in Tibet, an eye clinic in Nepal, and a project for bringing Web access to women in Cameroon . (Revenue comes from transaction fees and paid ancillary services.)

So what is the prognosis for DevelopmentSpace? It's possible that, like other Web markets, it could fail to gain traction and go bust quickly. Or, another scenario is that, like the Tanzanian project, it might work for the donors but have little impact in the targeted countries, and ultimately fade to irrelevancy. Finally, it just might just have a huge impact, becoming a crucial new mechanism for making aid available in a highly distributed fashion. The early signs are very positive.