Wrong About China

When I was in Ethiopia, one thing that struck me immediately was how big and visible the Chinese presence there is these days. While my travels were mainly restricted to the north of the country, virtually every road I came across that was under construction (and there were a lot of these) had Chinese staff overseeing the work. There were entire camps for workers in the road building trade, proudly flying a much larger Chinese flag alongside the Ethiopian one.

China scares a lot of people in development. Over the last two or three years, increasing attention has turned to the role of ‘new’ or ‘non-traditional’ donors. These labels are generally applied by what we would think of as the establishment donors: the US, UK, Scandinavian countries and the major multilaterals. They consider the ‘non-traditionals’ to be those donors who come from outside their cabal of policy voice: South Korea, India, China and Brazil being the most prominent. Given that some of the ‘establishment’ donors are relatively recent additions to the group of large-scale donors, and some of the ‘non-traditionals’ have long-standing bonds of mutual support with other developing countries I don’t think these labels really work. I find it more accurate to group donors along the lines of when they themselves developed. The first set of donors, centring around Europe and America, are the ‘first-generation’ of developers while the rest can broadly be classed as ‘second-generation’ developers. These two sets have different approaches to development.

China is the big one among the second generation donors, and just as China’s policy approach to increasing the power and wealth of its economy has a lot of Western policy makers and economists worried, so has its approach to its relatively new role in Africa begun worrying Western aid agencies. Generally, Chinese aid to Africa draws three major critiques from the first-generation donors. These are:

  • China’s aid is too unconditional – they do not penalise poorly or repressively governed countries and do not require the same standards of fiscal and economic management prior to undertaking massive aid projects.
  • Their self-interest is too great an influence on their aid – they focus too much on providing business to Chinese firms and in extracting resources for Chinese use, rather than the unalloyed betterment of the aid-recipient country.
  • They are far too opaque a donor – they do not provide sufficient information on the volume, distribution and modes of disbursement of their aid. This raises worries that their aid is not very user-friendly. China, for example, does not appear in AidData’s data set as a donor.

Having worked for a few Governments that receive aid from China, and seen up close the good and bad of all donors’ practices, I’m beginning to feel that the first-generation donors are wrong about China. Not only are the some of the criticisms they make of China’s modus operandi either incorrect or hypocritical, it also seems that China’s presence as a donor has a positive consequences that are insufficiently remarked.

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We’ll always have Paris…

Of all the Declarations, in all the world...

News from this weekend suggests that DfID will be reversing its hitherto strong backing to the Paris Declaration on Aid Effectiveness. My initial reactions were of shock and disappointment. Shock because DfID has been an ardent supporter of the Paris Declaration and Accra Agenda for Action. Disappointment because it was so unexpected: it has a strong, highly competent aid effectiveness department and has also used the Declaration to push Government reform.

I’ve noted after viewing the original leaked memo that the original advice was in favour of maintaining the Paris Declaration as a commitment by DfID. Most of the other commitments dropped simply serve to cut the amount of ringfencing of DfID’s budget and therefore increase its flexibility to meet the needs of different developing countries.

The decision to rescind their commitment to the PD is a much more problematic one, however. The issues essentially break down as follows:

What has DfID Reversed?

The Paris Declaration on Aid Effectiveness (PD) is an agreement signed by donor agencies and Governments and aid-recipient Governments in 2005. The Declaration establishes a number of best practices in aid management that all parties promise to adhere to, and twelve targets which all parties are to be assessed on. These targets and commitments were strengthened by the Accra Agenda for Action (AAA) in 2008.

The idea behind the PD and AAA is to make it easier for Governments to manage, use and report on aid by simplifying the way aid is contracted, disbursed and evaluated. It also seeks to maximise the benefit to the developing country by untying aid and ensuring that aid be channelled through the working local process of the aid-recipient Government. Thus aid is promised to be channelled through the local budget process, use the local accounting and audit procedures and be evaluated according to local processes. It further stressed the need to make aid as flexible as possible by using fungible General and Sector Budget Support.

Recipient Governments also made pledges to improve their own systems: of audit, budgeting and so on, and to be assessed independently on them.

The Paris Declaration has two very big positive points. The first is that it seeks to increase the ability of local actors to respond to their own problems flexibly and not be dictated to by a multitude of individual donors. It thus helps reduce the coordination problem of aid and encourages local solutions and visions of development.

The second major benefit, related to the first, is that it moves the lines of accountability of aid. Instead of aid money being handled by the donors, in which case the donors are accountable to their own taxpayers and no-one else, it creates dual accountability. First the donor gives money to the recipient Government to use. That Government is thus accountable to the donor, and must show that the money was used appropriately. But far more important than this, because aid money is now on budget and managed by local Governments a second line of accountability is created: of the recipient Government spending the money to the local electorate. Through the budget debates in Parliament, these people have the chance to contest the use of aid through their elected representatives; they also have the ability to vote a Government out of power if it doesn’t use aid money well. The Government now has to justify aid money in the same way it does tax money.

Additionally, the PD addresses lots of smaller, niggling issues that seriously hamper the capacity of Governments, for example setting a target for the reduction of cumbersome and time consuming donor missions by combining them.

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In Need of Sexing Up: Audit

The art of defenestration.

Sidney J. Mussberger did not want to talk about the Audit.

We’ve said before that some of the most important issues in development are the least romantic and photogenic. One of the issues missing a glass slipper is audit. Let’s be frank for a moment: audits are boring. They are boring to do, boring to read about (except in the rare occasion that they bring to light spectacular mismanagement of funds) and they are boring to talk about, except in their most condensed forms. I have never been the most patient meeting attendee, but two things are guaranteed to have me pining for the release of defenestration: macroeconomic data reconciliation meetings and audit meetings.

Yet, I actively seek out both. Beneath the stolid veneer of number crunching, these are the areas where the Government’s intentions for economic management and the use of public funds are best revealed in their most unforgiving light. After the complaints, arguments and counterarguments that the Lancet article about resource management brought up, this is a timely point to make. The only really legitimate argument that can be made against Governments substituting aid money for their own spending in a sector is if the allocation of funds by Government is grossly inappropriate – otherwise the complaints make a mockery of good budget management and the concept of local ownership of development processes. Yet for all the cry and hue, it’s interesting that no-one has actually looked and examined how many of the countries ‘guilty’ of reallocation have been audited.

If a Government is audited, it should be relatively clear where money has gone. Once this is the case, the whole fungibility argument becomes obsolete: it doesn’t matter what money facilitates bad spending. Bad spending should be minimized regardless. If this is done and reveals no horrorshows, then fungibility of aid is not an issue: all spending is at least justifiable, with no money spent on a new Range Rover for the Minister of Finance’s nephew or a shopping expedition to Paris for the First Lady. The role of donors here is crucial, because it must be played very carefully. A donor that bullies the Government into submitting to an audit by auditors appointed by the donors will face a serious backlash: it is not their Government or money to audit (they can of course audit their own programmes) and they are infringing upon the sovereignty of the state in question. Any canny politician can easily spin this as a case of ‘modern imperialism’ and reject the audit findings, however well-intentioned they were.

Rather, a donor can only advocate for an audit to be initiated by a third party, following legal procedures put into law by the Government. The donor’s role here is to remove all excuses for not holding the audit: to train the supreme audit body, to make sure they have the equipment they need, to provide the legal experts to make sure that the laws governing audit are drafted adequately. This is all fairly obvious and very common. But this is of course only half the story. If the audit is released without any explicatory documents and very little press, its impact outside a small coterie of finance geeks and development agencies will be minimal. The power of audit is to stimulate accountability, and a Government should be accountable to its electorate, those who pay tax to fund it and expect services in return.

This is the insight that lies behind the recent increase in interest in demand-side accountability. Essentially, the idea here is to give civil society groups the ability to scrutinise the myriad information that a Government can produce and to articulate the demands of the electorate better. Again, this is a tricky role for donors to play, because it leaves them open to charges of political partiality. What they must do, therefore, is focus on providing skills to all parties that desire them – and not advice. In Tanzania and Malawi, I have noticed an upswing in this kind of work, and initial signs that NGOs and CSOs are engaging more with budget processes, audit and the like are encouraging. This is probably the one area where I think donors tend not to spend enough time working with non-Government actors. Continue reading

Is Aid Working? Is this the Right Question?

Roger C. Riddell, pimping his new book about foreign aid,  has written an interesting piece for Open Democracy about how aid should be assessed and where the main battlegrounds for improving it lie. Some highlights:

Aid’s supporters cite cases of aid to press the general case that “aid works”, aid’s critics cite particular examples of aid’s failures to try to make the general case that “aid doesn’t work”.  The result is that public discussions of aid are characterised by a lack of effective debate and engagement, conducted more like ships passing in the night

Unfortunately, I really think he’s right in this assessment. The Easterly-Sachs-Moyo contretemps a while back demonstrated this. It took the appearance of idealoguery rather than debate at times. Without wishing to cast aspersions, in general I do think some of the aid cheerleaders have a habit of shouting down dissent.

Riddell also worries that we are quickly getting to a point where

… the case for development aid, and the moral basis that underpins it, [is] driven exclusively by performance-based management, the results culture and “value for money” starting-points that have come to dominate contemporary discourse on public expenditure …  Why should the case for or against development aid be driven so centrally by evidence of past or present successes, or failures?  What room is there for providing aid to learn and to innovate?

… those countries which need aid the most are precisely the countries where aid is least likely to work well … many of the causes and manifestations of their poverty are in their turn likely to lower the effectiveness of the aid provided – lack of skills, weak institutions, underdeveloped and distorted markets, an inadequate regulatory framework, poor public accountabilities and a lack of transparency of government expenditures due to fragile democratic systems and weak civil societies.

Again, I have sympathy for part of this, but not all. Yes, the Thatcherite revolution in England has put quantifying success to the fore at the expense of more nuanced discussion. A balance needs to be restored. That said, while aid to learn and innovate is fine, we must never lose sight that past successes in development (not just aid) is all we have to go on with any real evidence. It’s within our knowledge of how development has happened that we should be innovative; new ways of using aid to push for development is good, as long as its based on a solid understanding of what development is and how it has and continues to happen.

He’s no aid cheerleader, however:

… the evidence indicates that development occurs without aid, and that the process of development is influenced predominantly by what happens within recipient countries, shaped by the commitment and capability of aid-recipient country governments and by dynamic changes to the respective power and voice of different interest groups within the national political economy.

… the evidence suggests that choices made by donors of who to support and for how long … have often been inappropriate, or wrong.  This has often been because they have been based on an inadequate or superficial understanding of the complexities of the political economy of aid-recipient countries, and, at times, because they have been based on trying to import and impose alien and inappropriate state, governance and institutional models … The notion that donors have sufficient understanding of the complexities of aid-recipient countries to engineer a desirable social, political and cultural transformation often in a complex ethnic setting, and that they have the “right” to engage in such engineering needs far more debate.

Finally, he concludes that the aid question is not whether or not it ‘works’, but how we can close the gap between what aid should be capable of and where it is now. He presents a number of issues that need to be debated more: incentives, predictability and so on. No answers, at least not in the article, but some interesting questions.

As someone who works in aid effectiveness professionally, there’s nothing earth shaking in here for me and indeed I think it misses out some crucial questions, but this is a really good introduction to the problems in foreign aid. It goes beyond the number throwing and global picture analysis and actually specifies some of the systematic issues that the practical and political realities of giving and using aid throws up. Definitely worth a read. The full article is here.

Owning Up to Ownership

In 2005, Governments of developing countries and all the major donors in the world signed the Paris Declaration on Aid Effectiveness, which enshrined five principles or norms that would be at the centre of all development assistance. These were:

  • Country ownership of the development process
  • Alignment to national processes and strategies
  • Harmonisation of donor practices
  • Managing for development results; and
  • Mutual Accountability

Though there are various flaws in the ideas of Paris Agenda, our means of expressing them and our pursuit of their outcomes, the basic stuff of the agenda is important and fully worth pursuing. The premise is that aid can be delivered in much better ways to maximise its effectiveness subject to constraints external to the delivery of aid, such as policy, trade barriers and so on.

Laura Freschi posted an interesting piece on Aid Watch recently about the MCC’s evolving conception of the Ownership norm of the Paris Declaration, a discussion that’s worth broadening out. The central idea behind the PD’s conception of ownership is that local actors should determine and direct the development agenda, and donors should only support this. These local actors include civil society, NGOs and Government. They are to be brought together by Government in the design of a national development plan which forms the basis of the coordination of aid efforts.

Working in development among donors or in Government, Ownership is a ubiquitous phrase. It’s a major theme, or at least mentioned, in almost every policy document and plan I’ve read in-country since around 2006, when the Paris Declaration really sunk into the collective consciousness of aid agencies and some developing country Governments.

Yet conceptions of what ownership is remain muddled. In most cases, Ownership is confused with ‘consultation’ or ‘participation’ or even ‘leadership’. These are not the same thing. Ownership implies direction, drive and origination of an idea from a source. If the idea is external, the drive to implement is external, but it is implemented by a Government or local source and attributed to their leadership, ownership has been co-opted into an activity, but does not actually exist.

Put a different way, meaningful ownership is an active concept, not a passive one, defined by power and by action. The Royal Family may have a ceremonial role in England, but the Queen’s speech is in the voice of the Prime Minister, and her role is entirely passive. No one would consider that the ownership of policy originates from the Queen.

What this means is that ownership cannot be given or bestowed. It must be taken. Developing country actors must assert their vision and demand donors reconcile themselves to it. This is not to say that donors should have no voice: I believe one of the most powerful and useful functions of donor organizations is its role in policy dialogue. Despite this, though, for ownership to exist, they cannot have a more active role than advocacy.

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Some thoughts on MDGs 2.0

You can have any development policy you want, so long as it's the MDGs

You can have any development policy you want, so long as it's the MDGs

A few weeks ago I found myself watching The Biggest Loser, one of those weight-loss reality shows. Several men and women were going through an intensive weight-loss program, each competing to see who could lose the largest proportion of pounds every week. They were already several weeks into the competition and all of the remaining contestants had lost a lot of weight already. Consequently, many found it increasingly difficult to shed those extra pounds. It didn’t help that each group went through the same exercise regime each week: forced to pursue the same objectives, regardless of their current condition.

I hope the analogy is clear -  we development bloggers are not known for our wonderful analogies (sorry Bill). One of the main criticisms of the Millennium Development Goals was that, as global, uniform targets, they imposed unfair expectations and an inflexible framework on many developing countries. Chris Blattman, in an unsurprisingly reasonable critique of the MDGs, put it nicely:

Once again, whatever humanitarian gains are achieved by 2015 risk being labelled as failures merely for failing to reach unrealistic and under-informed expectations.

Development must be a bottom-up process. We say this a lot, but my meaning is slightly different: development cannot be driven or dictated on a global level. While we will forever disagree on the nature and degree of government involvement in the development process, I think we can all agree that recipient governments are the key element to making it work. Whether they do this by mostly staying out of the way or providing the public goods essential for progress is still up for debate. Through planning or searching, each country must start at scratch and find their own way to the end of the maze. As a global community, we have a collective responsibility to help countries find their way – but they know the terrain better than we do.

The MDGs represent laudable goals for putting a dent in human suffering, but they also implicitly shape the way that policy is created at the domestic level. Since their inception, the they have dominated the policy debate in nearly every donor-recipient relationship on the earth. Not only does most donor assistance revolve around the targets, but after so many years of exposure, many recipient governments just mimic the same framework when creating their own policy. If you’re a firm believer in the Paris Declaration, this is truly a nightmare, akin to the brilliant scene in Monty Python’s Life of Brian, where Brian tells his fervent followers that they’ve all got to work things out for themselves, to which they reply, in unison: “Yes, we’ve all got to work it out for ourselves! Tell us more!

This would be fine if the cookie-cutter approach to reaching the goals worked in every context. In some places it has, but in many we see stagnation. The only way to deal with this is by letting recipient countries take the reigns, not only in the policy debate, but also in goal-setting.

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