Can Development Cooperation Be Resilient to Major Crises? Only By Exploring the Uncharted

TEXT: Admir Malaj, Zenebe B. Uraguchi, Edlira Muedini – 30. June 2020

The COVID-19 crisis has revealed global interconnectedness as well as the fragility of our systems – health, economics, governance, and social. It has also exposed the brittleness of some progress made by development cooperation. What determines whether impact successfully survives shocks or dissipates?  

COVID-19 and resilience in a complex system

With the unfolding of the COVID-19 pandemic, resilience has emerged as a buzzword among policymakers, researchers, and development practitioners. Despite the popularity, there has been little understanding of the concept, its application to the nature of the pandemic and its unprecedented impacts on systems.

How does the pandemic fit into the concept and practice of resilience?

Research shows four types of resilience of systems. The first type is recovery. When a crisis hits, a system seeks status quo preservation and tries to return and recover a former equilibrium without adaptation. It is also possible that a system absorbs the shocks from the crisis and manages to create stability through its capacity to prevent, mitigate, and recover. This strategy originates from ecological resilience. The third type is co-existence. Part of evolutionary resilience, this means to live in a complex and continually changing world. As the fourth type of resilience, a system can also learn, adapt and innovate in a context of dynamic interactions within the system without necessarily returning to the previous condition.

Figure 1. Four types of system resilience.

What calls for adaptation and innovation

Researchers usually point out that the lower the intensity of a shock, the easier it is for a system to simply bounce back. During major crises with permanent impacts, however, those who adapt or, if the changes overwhelm the adaptive capacity, innovate and transform, are the fittest to survive.

What type of crisis is the COVID-19 pandemic? Its effects are exceptional in economic, social, and political terms.

Let us take economic systems. Despite increasing inequalities within countries, global economic growth has been performing quite well. The 2008 financial crisis shook many years of upward growth, but economic systems of different countries were coming out of the crisis after five years (since 2015) of adaptations. With the unfolding of the COVID-19 pandemic, the World Bank estimates that global gross domestic product (GDP) will shrink by 5.2%. Based on the International Labor Organization (ILO), half of the global workforce is at risk of losing livelihoods. A staggering 420–580 million people could be pushed under the poverty line based on the recent study of the UN-UWIDER, throwing the world at the poverty levels of 30 years ago.

Governance systems are another example. Except for a few countries and regions, the average level of global peacefulness has been improving. According to the 2019 Institute for Economics and Peace (IEP) findings, most people have seen past conflicts and crises begin to decrease. Using the three criteria of the level of societal safety and security, the extent of ongoing domestic and international conflict, and the degree of militarization, the 2020 IEP report shows that the economic consequences of the COVID-19 pandemic will increase the risk of severe deteriorations in peace and democracy over the next few years. The limitations imposed by lockdowns and reinforcement of special laws are threatening democracies worldwide. Controversial political leaders are taking advantage of this situation to reinforce their authoritarian position or accelerate their agenda. 

Figure 2. COVID-19 and its impacts on a new wave of tension and uncertainty. © 2020 report of the Institute for Economics and Peace (IEP)

                                     

While advances in research and development have enabled humanity to overcome crises in the past, the COVID-19 pandemic seems to have deeper and wider impacts within a short period. The COVID-19 pandemic is not a single separate event – it has affected the ever-changing and complex global systems on a deeper level. The term ‘panarchy’ perhaps characterizes the pandemic in a better way. In systems theory, panarchy emphasizes the nested interplay between stability and change, between predictable and unpredictable. Our response has to match the complexity of the crisis – instead of trying to wait it out and bounce back, we must adapt and transform.

Making adaptation and innovation part of project DNA

The COVID-19 pandemic has demonstrated how complexity creates more uncertainties. The systems in which development work takes place are complex adaptive systems. This means that designing, implementing, and monitoring/measuring development projects isn’t about following checklists or formulae. Sometimes, organizations tend to be intolerant of experimentation and risk-taking. They come up with procedures and processes to ensure things are done properly. However, in the face of a crisis, organizations need to create enablers for supporting adaptation and innovation (e.g. investments, flexibility in financial and administrative requirements). 

In addition to the more obvious hard skills, development organizations must ensure that their staff is ready to embrace learning. Staying in our comfort zone isn’t an option, or in line with the age-old cliché to ‘think outside the box’. This includes, for example, being better equipped to respond to new and actionable information. To learn and reflect, it is essential to recruit the right people with soft skills and an appetite to take appropriate risks and make course-corrections.

It is also becoming increasingly clear that no organization can tackle the impacts and adapt and innovate from the COVID-19 crisis alone; partnership is crucial for addressing complexities for better resilient systems. The crisis is a reminder that development cooperation is shifting from the ‘we will help you’ approach to ‘we contribute’ and ‘we learn’ from your experience. For organizations like Helvetas, navigating the uncharted territories is only possible together with partners who are reinventing themselves to respond to the demands and use the crisis as a source of innovation. Solutions mainly (if not all) come from people within the countries that aspire to have better lives.

Resistance to change has never worked.

Going deeper: Here’s how it works in practice

We would like to share with you a few examples of innovation and adaptation in practice – from Albania and Moldova in the times of COVID. You can find more stories in Helvetas Inclusive Systems blog

When asked about how he responded to the crisis, ‘I have retained all my staff,’ was the first statement from Ylli Sula, the owner and CEO of recruitment service Profesionisti and Unipro Balkans Training Academy. Both are part of the Çelësi group, located in Tirana, Albania.

How did his companies adapt? One of the strategies was diversifying their client base to bigger companies that are more resilient to shocks such as the pandemic. For example, fewer individuals were buying Unipro online trainings, possibly because of financial difficulties brought on by “COVID-19”. The platform focused on marketing services to big companies. They were happy to invest in training employees while the workload slowed down due to the quarantine.  Another alternative service that helped the company stay afloat was offering the platform to individual trainers and companies for uploading and running their own courses.

‘What distinguishes our business is the ability to continuously innovate our products and services. Digitalization is becoming a must-COVID strategy. Also, having the right processes in place to respond and adapt in such situations is critical,’ adds Ylli.

Similarly to Ylli Sula, the owner and CEO of online job portal duapune.al Dritan Mezini is trying to retain his staff. He believes that it costs less to keep employees than find new ones later. To adapt, he launched new services. For example, duapune.al has been consulting clients on how to draft ads for jobs done remotely and in other special quarantine circumstances. It offered technical and training support for online meetings and co-working. The company even used the quarantine to become more socially responsible and offered free services to healthcare firms searching for staff due to COVID-19.

In both examples from Albania, businesses have approached the crises as a moment to reflect and act smartly and strategically. Clients diversification and new value-adding services were some of the embedded business strategies these companies have introduced and applied more strongly during the pandemic, which, in turn, have contributed to their economic resilience.

We are proud to say that all three companies – Unipro, Profesionisti and duapune.al – are our partners. The RisiAlbania project of the Swiss Agency for Development and Cooperation (SDC), implemented by Helvetas and Partners Albania, supported these companies in the past to design innovative and flexible business strategies. Today, they remain resilient through adaptation and transformation without us – what more can systems thinkers hope for?

In Moldova, when the state of emergency was announced, some businesses thought that the lockdown would be over within a few months and introducing changes was unnecessary. Others reacted immediately because of the difficulty absorbing costs even for a short period.

The OPTIM project of SDC implemented by Helvetas in partnership with the Chamber of Commerce and Industry and Mesopartner supported businesses to adapt to the crisis by shifting their operations online. For example, agricultural producers and retail chains shifted to e-commerce. While Moldova is advanced in exporting/outsourcing its IT services, the absorption of technology in the domestic market is not at a high level. Some of the OPTIM partners have opened online sales for farmer’s produce; some restaurants introduced Google forms for online orders before they could set up a proper site for ordering food.

Informed businesses are better positioned to make sound decisions during a crisis. Even if there is support coming from the government or other sources (e.g. donors), many of the small businesses need advice on how to effectively use their scare resources, as well as how to navigate new regulations and requirements. The COVID-19 pandemic became a test to the relevance of business cooperation. Associations like HORECA or Alliance of SMEs of Moldova, whose members were hit hard by the lockdown measures, responded by giving legal, fiscal, and business development advice to all members and non-members. For example, they helped small firms to avoid being ejected from their premises by renegotiating terms and conditions with landlords.

The case from Moldova shows that the internal governance structure of actors influences their agility to respond to crises. This contributes to the capacity of small businesses to rebound, reboot, and possibly reinvent themselves.

The road ahead….

Lockdowns are by default a weak response to the COVID-19 pandemic. The crisis is not either a health or a wealth issue. To use the fairy tale of the ant and grasshopper, winter always comes, and we should be ready for the cold weather. The moral of the story is that one has to work hard and plan for the future in order not just to survive and recover, but also to co-exist, adapt, and learn. That readiness means we should build resilient systems, and that cannot be done in one day. It is a long process that needs commitment through good times and bad times. 

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