In a Perfect World…

Perfection in a few easy steps...

DfID’s recent review of its aid operations has been covered in quite some depth by Jonathan Glennie over at the ODI blog. While I’ve some reservations on some of the changes in policy, the focus on value for money is a good one, and they’ve clearly given a lot of thought as to who is using money effectively, and where their aid has additive value. These are good things.

If I had my way, I would have liked to have seen a few neglected development issues placed more centrally in DfID’s approach. These issues generalise to other donors, too – very few address them.

1) Transformation

This one is a drum I beat regularly. Development tends to be conceived as a process through which countries move from one position on a continuum to another – an improvement of a system that is already in place. In fact, historically, development can be better characterised as a process in which the economy, polity and society undergoes a profound rupture and transformation, to become a modern capitalism. In economic terms, it is a structural break.

What I would like to see is a stronger focus on research on the prevailing economic systems in each developing country: has true capitalism been established? Are there remaining pre-capitalist forms (these are extremely common, particularly in agriculture)? And from this work, I would like to see a greater emphasis on making the transition easier – how can the process of change be instigated or shepherded, and how can the costs of it be mitigated. This is a call for a more country-specific approach to research and economic policy.

2) Labour Rights

DfID has closed its funding to the International Labour Organisation. The reasoning was that it was not an effective organisation. This may be true, but labour rights are one of the most neglected areas in development, even though there is real potential for donors to make an impact here.

In many developing countries, conditions of work are appalling. This is true in both agriculture and in industry. There are three areas in particular where donor action could have a significant impact on this. Firstly, donors should be working with aid-recipient Governments to ensure that basic workplace standards are legislated effectively. This wouldn’t be a revolutionary step by any means. Some of Unicef’s more effective work is providing just this kind of legislative support and advocacy for child protection law. Secondly donors should be providing services to ensure that workers have access to legal representation or even just a better source of information regarding what their rights are and what the minimum standards of work are. This is not information widely known, particularly in places where employment is scarce and workers are scared of making complaints. Finally, donors can also regulate the minimum labour standards of companies based in their own countries who hold factories abroad.

All this, and I haven’t even mentioned support for Unions.

3) Demand-Side Accountability

Last week, I spoke about how the impact of transparency is limited by the effectiveness of accountability systems and feedback mechanisms. One of the constraints to accountability in many countries is a failure of civil society organisations and individuals to use information to assess the performance of individuals and groups in positions of authority and to use whatever avenues exist to demand change.

This is another area where donors can get involved in, though they need to tread carefully to maintain their political neutrality. Donors should be looking to strengthen the capacity of major CSOs to do analysis, and to communicate their ideas widely (though making sure to avoid politically-aligned CSOs), and should also seek to ensure that civil society representatives (local Government politicians, community group leaders) are fully aware of what their rights are in terms of demanding change, and how they can publicise grievances.

I’m not so naïve as to think that this will resolve all issues of accountability, or that repressive Governments will suddenly start paying attention to grievances they have long ignored, but better and more public expression of grievance is in itself a good thing. It will help develop a critical mass behind movements for change, and will force Governments to respond in one way or another.

4) Salaries, Management and Assessment

This is one area where all donors need to reconsider their policy. Donors routinely claim that they cannot fund salaries for civil servants, because it is recurrent funding, and they should be involved only in development projects with a defined time horizon, as their presence is temporary.

I say ‘hogwash’. First off, if donors are so clear about their time frames for exit, they should have exit plans in place. Virtually none do. Secondly, and more importantly, supporting civil service salaries would go a very long way to ensuring that the rest of the aid being provided is used much more effectively, not to mention locally generated resources. I’ve written before about how many developing country Governments are understaffed and underworked (a difficult double act to achieve, but possible). Increasing salaries is one part of the response. There are plenty of very sharp, well-qualified people in developing countries who could do important civil service jobs very well; many of them prefer to work for donors or NGOs. By supporting better salaries, Governments would attract better staff and be able to discharge their duties better. Ideally, the brightest and best should be working for either private sector initiatives or the Government, not third parties.

Of course, just increasing salaries is not enough – it needs to be coupled with real contestability of jobs and accountability for performance. Staff need to be assessed, and know that they need to perform to keep hold of their well-paid jobs. What’s more, they need to have good management structures. Donors should be pushing for all of this: better salaries to attract and retain good staff, better management to get the best out of them, and better accountability for performance to keep them on their toes. This model of high salary, good management and performance assessment was used in East Asia to great effect even when resources were scarce. All can be supported by donors, though ultimately the will must come from inside the Government, which may have vested interests that need to be overcome.

At present, all of these issues are lost to direct donor action. Donors monitor macroeconomic performance without supporting the Government in attempts to transform the agricultural sector. They complain about labour standards but do little work with labour. They call for accountability and support Government institutions designed for information sharing and audit, but don’t support the civil society to use these institutions sufficiently. And they complain Government performs poorly, but do not spend enough time helping them retain and manage staff. They are not glamourous issues, but they are important.

4 thoughts on “In a Perfect World…

  1. MJ

    March 8, 2011 at 2:17pm

    Hi Ranil,

    Interesting idea on the salaries issue. I completely agree with you that the exclusion of salaries due to defined time-horizons is utter hogwash, and that the result is a shortage of able people within govt. My country experience is fairly limited, but around here at least civil service reform has been bogged down for a long time with entrenched resistance to change. (The parallels with rich countries, e.g. teacher pay in the US and elsewhere, of course, should not be forgotten.) However, if donors were playing a more active role – i.e. actually paying some of the salaries – they would have a greater voice in how pay is managed. This, of course, rather begs at the whole question of country ownership, but since this is a principle honoured more often in the breach than not, you are right to call the donors out for drawing imaginary lines in the sand. Any rate, a full economic ‘transformation’ surely cannot be achieved without breaking some eggs!


  2. c-sez

    March 8, 2011 at 4:55pm

    But DFID do major direct budget support still (DBS). Are you saying that’s not paying any salaries…? Take your point though that the issue of salary calculations and performance is rarely put on the table.

  3. Ranil Dissanayake

    March 9, 2011 at 6:15am


    good point about GBS – but I’ve become ever more skeptical about how untied GBS really winds up being, having been involved in GBS reviews in two countries several times in the last six years. When the volume of GBS received depends on performance on indicators heavily biased towards certain sectors and types of outcome, it does pretty much guarantee that money gets directed where the donor wants it.

  4. Ranil Dissanayake

    March 9, 2011 at 6:16am

    and by untied, I of course mean ‘fungible’.

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