The President of Turkey, Recep Tayyip Erdogan, has been in the news recently. He is showcasing 800 pairs of scissors he has used over the years to cut ribbons while commissioning projects at various times of his leadership. It is clearly a thing of pride for him, as it is for many politicians and government officials. I am not sure of the true origin of the expression, “white elephant”, and how it found home with infrastructure projects particularly in the development game. I am sure, however, that a big part of why we still have them has a lot to do with pairs of scissors and ribbon. We love the fanfare of the project initiation. Not so much the outcomes.
These things can be quite formulaic for practitioners in the game. Sometimes we don’t even need to rely on the literature assuring us of the multiplier effects of certain infrastructure investments before we delve deep into carrying out all of the analysis and box-ticking of commercial terms, in order to demonstrate the inevitable success of our preferred project. We will use that quite arbitrary economic impact assessment model (whichever one that gives you the most favourable answer) to work out that the envisaged project will yield X potential jobs, create Y potential small businesses, and contribute Z amount of GDP growth to the economy. We are, typically, incentivised to show these multipliers to support the funding decision for projects of this nature.
We get into full ‘man of system mode’ in these instances, and tend to miss blind spots. A classic blind spot for example was the Lake Turkana fish processing plant project in the 1970s. Sponsored with donor funding from the Norwegian government, one of the project’s many aims was the provision of jobs for the Turkana people through fishing and processing for export. One small detail was either missed or spotted and ignored: they are historically nomads with no history of fishing or of eating fish. I encountered something similar more recently, with a similar tribe, but this time for oil and gas development. The offer on the table was education for the citizenry and a very simple question was asked: what makes you think that is our pressing problem?
A more recent project is the Chad-Cameroon oil pipeline. It was one of four case studies I considered in my book on cross-border oil and gas pipelines and the role of the transit country (shameless plug, again). The World Bank threw its resources at this project and the funding was conditional on, among other things, it being spent with strict international supervision for the development of the people of Chad. President Idris Deby, however, had other ideas. He simply threatened to kick out oil companies from Chad if there was resistance towards oil money going to his government’s budget and for the purchase of weapons, and that was that.
There are those that are unlikely to commence, beyond of course the pomp and pageantry that characterised a ribbon cutting event at the onset. Nigerians are all too familiar, for example, with the Ajaokuta steel processing project, one that has produced pensionable workers over a period of two generations. Never mind the small matter of whether or not the project did the most fundamental thing it was supposed to do in the first place. Development practitioners at the time likely saw the multiplier effect, probably ran some variation of the Leontief production function, convinced everyone who cared to listen of its critical importance to Nigeria’s development, and quite likely celebrated when funding for it was initially secured and, of course, when the ribbon was cut. Various Nigerian governments till this day are still trying to get this project going, billions of dollars after.
Recognising that these projects can and do turn into post-ribbon-cutting duds, a few things have improved in the project screening and investment decision processes over the years. For example, whole models and reams of tables consider various risks and mitigating measures for these risks. The screening process increasingly goes through some really exhausting box-ticking exercises that sometimes leave you wondering how many people involved in the process would still remember what the basic purpose of the project was. In my cynical view, this too is a classic head-buried-in-the-sand response by practitioners whose incentive to support such projects never really changed over the years. The pair of scissors and ribbons were already decided on.
These projects have carried on and will likely carry on. For example, an even more recent project is Ethiopia’s light rail project which was celebrated as an example of one that had escaped all the white elephant tell-tale signs of trouble. It had a determined government to make it happen, support from the international finance community, and the blessing from advisers in the development game. It nevertheless found itself in serious debt and accusations that included an inadequately prepared feasibility study. Its earnings and running cost are solar systems apart, the latter closer to Pluto.
In all of the preparation for these projects, the focus is almost always on supporting the government to get it established. There is usually scant attention paid to the actual market. Did you ask, as in really ask, what the market was missing? The evidence, from most of these projects well after the ribbons have been cut, says “no” or at least “not quite”. I will end this note close to home, away from the developing world, but exhibiting the same pairs of scissors and ribbons. There is a shop next door to where we live. It was not always there. It was insisted upon by government regulation, as part of the conditions given to the estate developer during construction (you had to include some measure of public housing and / or local amenities such as a shop). The shop is now under its third ownership and these owners are already considering moving on. The market simply is not there. But none of that mattered when regulations required its establishment. Build it and they will come, right?
"..education for the citizenry" - the absence of that on many fronts is the reason why 'Elephant projects' will always be with us. We will forever oil emotion, ego, selfishness, corruption, etc in decision-making.
I believe more in the scissors than I do in the pencil. ~ Truman Capote