Exclusive: France will launch an innovation fund for development chaired by Esther Duflo

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The Development Innovation Fund will be hosted by the French Development Agency in Paris. Photo by: Lucas Gallone on Unsplash

BRUSSELS – France will launch a Development Innovation Fund next year to test and expand solutions to poverty and inequalities, an initiative that its founders hope will “transform” the country’s approach to the issue. help.

The Development Innovation Fund, or FID, chaired by MIT economist and Nobel Prize winner Esther Duflo, will be an independent body hosted by the French Development Agency in Paris. In its first year, the French Ministries of Finance and Foreign Affairs will contribute 15 million euros ($ 18.3 million), although French MP Hervé Berville has told Devex that the annual amount is likely to increase.

For Pro subscribers: Esther Duflo: foreign aid risks becoming “irrelevant”
The Nobel Laureate says health ministers in low-income states negotiating grants with young Western donor bureaucrats “don’t make sense.”

“You don’t start the first year with 100 million euros, because you have to build your pipeline,” said Berville, a deputy from President Emmanuel Macron’s La République en Marche party, who proposed the fund in his 2018 report on the modernization of French aid. . Berville said discussions are already underway with potential donors, including the European Commission, ideally to increase the fund to € 25 million in 2022 and up to € 100 million in the years to come.

Macron was due to announce more details on Thursday to coincide with a meeting of the Presidential Council on Development, the day after ministers discussed a new law to increase French official development assistance to 0.55% of income gross national from 2022, up from 0.38% in 2016 The development council was postponed however, after Macron tested positive for COVID-19 and went into isolation.

FID scholarships will be open to the public and private sectors, including universities and researchers, with a particular focus on those planning to work in 19 priority countries for French aid, primarily in sub-Saharan Africa. Applicants will be assessed against three main criteria: evidence of impact, cost-effectiveness in achieving development results compared to existing approaches, and potential for scale and sustainability. The higher the subsidy – which could reach 4 million euros – the more strictly the criteria will be applied.

For Duflo, grants are “the equivalent of venture capital for social innovation”.

“I’m not talking about technologies like cellphones and solar batteries, I’m talking about innovation in political processes,” she told Devex in a video interview from Paris. “If we find a way to teach kids better in school, the benefits are huge.”

These innovations “can’t be monetized most of the time,” Duflo said. “They are useful nonetheless, even if no one is willing to pay for them.”

Berville said the focus will be on promoting “innovative ideas on really complex issues such as adaptation [to] climate change, education, health [and] gender equality, which can really transform public policies.

“What we also want to do with this fund is transform French aid. We could have many more projects funded on the basis of scientific evaluation and experimentation. ”

– Hervé Berville, French deputy

A 32-page overview of FID, shared with Devex, draws on the 10-year-old development innovation projects that are part of the US Agency for International Development, and the Global Innovation Fund headquartered in London.

An article written last year by Michael Kremer – who shared the 2019 Nobel Prize in Economics with Duflo and her husband, Abhijit Vinayak Banerjee – revealed that DIV’s first investment portfolio brought in more than $ 5 in benefits for every dollar spent.

Duflo told Devex that DIV has been “amazing” and “we need more”. But she said IVD’s status within USAID has oriented her work to countries that receive development assistance from the United States. Francophone Africa has been largely excluded from the “innovation movement” because most researchers do not speak French, “and there was no money,” she says.

Despite the absence of formal hurdles, Duflo added that most IVD grants are awarded to renowned researchers – including herself – in the United States. “It’s not a very good situation. We would really like not only the performers … but also the researchers to represent the world a little better.

To do this, the French fund will offer “Stage 0” grants up to € 50,000. These will help researchers, mainly from priority countries, to improve their proposals before requesting larger amounts.

Such project development assistance is “fairly unknown among funders … although it could create so much value,” said Anne Healy, a former director of DIV who now works with Duflo at the Abdul Latif Jameel Poverty Action Lab, or J-PAL. “These are precisely the organizations that have fewer resources and have a harder time investing staff time and resources in developing a proposal.”

The FID will aim to minimize standardized reporting requirements, with the prospect of grant payments tied to self-reported “milestones”. Healy said it made sense, provided the fund was rigorous in its initial assessment of applicants. After that, Healy said, the time spent on heavy reporting requirements was “time spent innovating, experimenting, testing and seriously engaging with governments.

Another novelty, at least in Europe, will be subsidies for the transformation of public policies of up to € 150,000. Duflo said the aid, which has proven popular and effective among J-PAL researchers, is designed to help scale up policies that governments are already prepared to fund on their own.

“You don’t need millions of dollars. You have to… pay someone’s salary enough junior for a whole year to get there and write the PowerPoints explaining the idea to people, write the flowcharts, ”Duflo said. “But it was very, very difficult to fund because nobody can touch it. So there is a kind of big funding gap for the little money. ”

The idea of ​​FID was born from conversations between Duflo and Berville before the latter’s report in 2018, and accelerated in discussions with Macron after the Nobel victory.

“What we also want to do with this fund is transform French aid,” said Berville, stressing the need to move from a disbursement mentality to an impact mentality. “We could have many more projects funded on the basis of scientific evaluation and experimentation.”

The fund will start with a staff of around 10 in its first year, including an executive director, deputy director, investment managers and an impact director, although most recruitments have not still started. Duflo has enjoyed being in Paris this year to prepare for the launch, but predicts that the management team will “run the show” largely once FID is operational.

For her, financing social innovation is one of the only two ways in which foreign aid still makes sense. The other concerns emergency situations, such as earthquakes or health crises, where the international community can quickly mobilize massive resources.

“It could have been COVID, except it didn’t happen,” she says. In an editorial she wrote with Berville and Banerjee for Le Monde this week, she called for a Marshall Plan to help low-income countries cope with the health and economic effects of the pandemic.

She made a similar point earlier in the year. “Nobody cared,” she said, “but hey, maybe now with the vaccine people have a little more ability to focus on that.

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