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The future of aid

2008-08-26

Yash Tandon

The following is an excerpt from the concluding chapter of Yash Tandon's new book, Ending Aid Dependence, published by Fahamu Books, September 2008. For more information please visit, http://www.fahamu.org/publications.

For far too long the debate on development aid has been constrained by conceptual traps and the limitations of the definitions provided by the donors. If the recipients or beneficiaries of aid are to own the process, as present trends in the development literature sug- gest, then the conceptual reframing of the issues must itself change its location from the North to the South.

The conceptual starting point is not aid but development. The horse of development must be put before the cart of aid. Growth, admittedly, is an important aspect of development, and indeed there is no need to labour the point (as some orthodox economists and the World Bank attempt to do defensively). But growth is not the same as development. In this [book], we have defined develop- ment, following in the footsteps of Julius Nyerere, the founding president of Tanzania and the first chairman of the South Centre, as ‘a long democratic process, that starts “from within”, where people participate in the decisions that affect their lives, without imperial interference from outside, and aimed at improving the lives of the people and realisation of the potential for self support, free from fear of want and political, economic and social exploitation’. We put it as a formula: Development = SF + DF – IF, where SF is the social factor – the essential well-being of the people; DF is the democratic factor – the right of the people to participate in decision-making that affects their lives; and IF is the imperial fac- tor – the right of nations to self-determination and liberation from imperial domination.

This is in sharp contrast to the mainstream orthodox economists’ definition as Development = Growth + Wealth accumula- tion, where Growth = Open markets + Foreign investments + Good governance (as defined by the West), and the wealth accumulation by the rich is assumed to ‘filter through’ to the poor by market- driven forces.

The most critical aspect of our definition of development is its political economy and historical context. The developing countries have gained their political independence, but in most cases they are still trapped in an asymmetrical economic, power and knowledge relationship with the former colonial powers that con- tinue to dominate the process of globalisation, and the institutions of global governance (the IMF, the World Bank, the WTO, WIPO, WCO, OECD, EU Commission, etc). The developing countries are making heroic efforts to disengage from this lock-in situation (demanding policy space, for example). Some of them (the so- called newly emerging industrialised countries of the South) have indeed succeeded or partly succeeded, but the bulk of the devel- oping countries are still trapped in the shackles of history. Africa, especially, is identified as a continent that has not fared well. From this trap, Africa and others can liberate themselves only if they take matters of development into their own hands – and do not leave it to aid and its delimiting and colonising condi- tionalities, such as the structural adjustment programmes of the IMF and the World Bank, and now the Paris Declaration on Aid Effectiveness.

In other words, the national project, the project for self-determination, is still on the agenda of political action for developing countries. Its counter, the imperial project, is also still alive, but gradually weakening. Its ideology – the Washington consensus and globalisation – crafted after the dominant paradigm of free market liberalism and Western systems of governance, democracy and the rule of law, has lost credibility and legitimacy. This is not to undervalue the importance of democracy or the rule of law. Without these there would be anarchy and oppression. But these values cannot be imposed on the developing countries from outside, and certainly not loaded on to the wagon called ‘development aid’, followed by sanctions against those who fall short of Western donor expectations. The experience of Zimbabwe, tragic in its consequences, is an example of the curse of Red Aid, swallowed by a government and a people who had sacrificed so much to win their political independence. It is for this reason that the case of Zimbabwe has been analysed in detail in this monograph.

The fundamental reason why the relationship between ‘aid’ and ‘development’ is not fully understood is because of the way both terms are defined in the OECD-DAC vocabulary, definitions which have also been adopted by the United Nations. These are self-serving, West-centric, value-loaded and arbitrary definitions. It is argued here, for example, that there is no good reason for excluding what I call Yellow Aid (or military and political aid) from the definition. This kind of arbitrary exclusion ignores the military and political assistance provided by countries in the South too, for example, the liberation of Southern Africa. Worse still, it places military aid under the carpet, outside of a rational discourse within its political and ethical context.

In this context, it is argued that the 0.7 per cent has acquired a ‘mythical’ status. It carries an ethical-moral dimension, and provokes a lot of passion, particularly among civil society and in the North. This is an understandable reaction from NGOs and civil society organisations that have a strong affinity with the South on grounds of solidarity, but they have an imperfect understanding of the structural problems with the aid architecture. For the developing countries, the 0.7 per cent is a weapon to hold the North to their promises, even when the last 40 years’ experience should have made them wiser. An extended and expanded version of the 0.7 per cent model is the ‘booster’ model of aid. This is based on the assumption that the resource gap in developing countries (in particular, Africa) should be filled by a massive dose of aid over a number of years until the countries take off, like an aeroplane. The proponents of both the 0.7 per cent and the booster models need to question the resource gap theory. They will then understand that the developing countries do not have a resource gap. It is a gap unwittingly or deliberately created, directly as a result of the activities of global corporations and the misdirected policies of the IMF and World Bank. The irony is that the booster aid is still packaged within the framework of the very conditionalities that are part of the problem and not the solution.

This monograph provides a new taxonomy for development aid – in five hues – in a more rational and comprehensive classification. Development aid is placed along a continuum from Purple Aid (based on solidarity) on the extreme left and Red Aid (ideological aid) on the extreme right. In between are Orange Aid (which is really not aid at all, and should simply be called commercial transactions); Yellow Aid (already explained above); and Green/Blue Aid (whose three components – the provision of global public goods, non-tied humanitarian and emergency aid, and compensatory finance – are segments of the totality of financial and technical and technological assistance that are genuinely developmental. These are part of the global good not only from the national (recipient) country’s perspective, but also from the global perspective. One implication of this classification, for example, is that global civil society in the North as well in the South might find they have more affinity with Purple Aid, and perhaps also with Green/Blue Aid, than with aid of the other three colours.

The body of the book consists of the seven steps that the developing countries need to take in order to exit aid dependence. The most difficult is the first step – the psychology of aid dependence. The dependence psychology has not only occupied the minds of leaders in many (if not most) developing countries, but it has also taken roots in mass psychology. It is not necessary to attempt to summarise the seven steps. Much more can be written on the subject than is contained in this monograph. The important point is that the process has to begin somewhere and very soon. It is an agenda that has to be captured by the people themselves at community and grassroots level. However, it also requires an enlightened and visionary leadership at national, regional, and continental levels.

It is argued here that the present aid and development architecture at the international level is an obstacle to the realisation of the national project. Three power asymmetries – economic power, political power and knowledge power – are deeply embedded in the existing structures. It is a continuing battle for the developing countries to try and secure policy space within the constraints imposed by these asymmetrical structures.

The present debate on the Paris Declaration on Aid Effectiveness (PDAE) is located in this larger context to explain the circum- stance in which the OECD’s Development Assistance Committee (DAC) and the World Bank and IMF are trying to retain their relevancy and legitimacy, both of which have been severely eroded as a result of the changing geopolitical and economic realities of the last decade or so. If the OECD, the World Bank and the IMF do not achieve what they hope for at the Accra conference on aid effectiveness (September 2008) and the Doha Monterrey Review Process (November–December 2008), then they could face oblivion within the next decade. For the DAC its oblivion is a historical necessity in any event. At best, it should remain as a body to coordinate policies for OECD member countries. As for the World Bank and the IMF, they can salvage themselves if they pull out of Red Aid, withdraw to their original missions, and give voice to those who have suffered most from the developmental failure of their policies and the financial volatility of the last two decades.

In this broad historical and political perspective, the Development Cooperation Forum (DCF) of the UN and the fast evolving South–South relationship can play a very positive role. However, it faces many challenges, and its future is still largely uncertain.

At the end of the day, we need a truly heterogeneous, pluralistic global society that is based on the shared values of our civilisation, and the shared fruits of the historical development of the productive forces of science, technology and human ingenuity. Only on this basis can we build a global society that is free from want, exploitation, insecurity and injustice.

*Yash Tandon is the executive director of the South Centre, Geneva, an intergovernmental think tank of the developing countries. Dr Tandon’s long career in national and international development spans time as a policymaker, a political activist, a professor and a public intellectual. He has written over 100 scholarly articles and has authored and edited books on wide-ranging subjects from African politics to peace and security, trade and the WTO, international economics, South–South cooperation and human rights. He has also served on several advisory committees.

*Please send comments to editor@pambazuka.org or comment online at http://www.pambazuka.org/

Aid: Rethinking old concepts

2008-08-26

Benjamin W. Mkapa

The following is the foreword to Yash Tandon's new book, Ending Aid Dependence, published by Fahamu Books, September 2008. For more information please visit, http://www.fahamu.org/publications.

The primary and long-term objective of this monograph is to initiate a debate on development aid, and to lay out a doable strategy for ending aid dependence. An exit strategy from aid dependence requires a radical shift both in the mindset and in the development strategy of countries dependent on aid, and a deeper and direct involvement of people in their own development. It also requires a radical and fundamental restructuring of the institutional aid architecture at the global level.

A more immediate objective is to start a dialogue with the OECD’s Paris Declaration on Aid Effectiveness, which forms the basis of a high level meeting in September 2008 in Accra, and to caution the developing countries against endorsing the Accra Action Agenda (the ‘Triple A’) offered by the OECD. If adopted, it could subject the recipients to a discipline of collective control by the donors right down to the village level. And this will especially affect the present donor-dependent countries, in particular the poorer and more vulnerable countries in Africa, Asia, Latin America and the Caribbean. A simple schema (Table 1) at the end of this Foreword illustrates the differences between the strategy of the Paris Declaration on Aid Effectiveness and the South Centre’s aid exit strategy. Beyond the Paris Declaration, there is still the question: What then? There has to be a strategy for ending aid dependence, to exit from it.

There are countries in the South that have more or less graduated out of aid, such as India, China, Brazil and Malaysia, and there are others which will soon self-propel themselves out of aid dependence. In fact, aid was never a strong component in the development of either India or China. They have been reliant on their own domestic savings and the development of a domes- tic market through the protection of local enterprises and local innovation. They have opened themselves up in recent years to the challenge of globalisation and foreign competition only after ensuring that their own markets were strong enough. Brazil, on the other hand, was an aid-dependent country until only recently. Both Brazil and Malaysia have succeeded in ending their aid dependence through strong nationally oriented investment and trade policies. These included supporting and protecting the domestic market and export promotion, as well as the currency, fiscal and monetary policies that go with them.

In an earlier period, during the 1960s and 1970s, the so-called tiger economies of Korea, Singapore, Taiwan-China and Hong Kong ended their aid dependence mainly in the context of the Cold War. These countries were able to use the opportunity provided by the Cold War not only to draw substantial capital from the West, mainly the US, but also to build their production, infra- structural facilities (banking, finance, transport, communications, etc) and export capacity. They took advantage of the relatively open US market to export the products of their early manufacturing growth. They benefited from the fact that the US needed them to fight communism in that part of the world. This enabled them to initiate state-supported industrialisation without having to account to institutions such as the World Bank and the IMF, to import technology without having to pay huge fees for intellectual property rights, and to build strong reserve funds.

This book is not about them, although valuable lessons can be learnt from them. We are now living in a different period of history. This book is about countries that were neither able to take advantage of the Cold War period, nor had the benefit of a large domestic market and entrepreneurial class to develop an endogenous development strategy. We are therefore talking largely about the hundred or so countries that fall within the classification of least developed countries (LDCs), the middle-income countries that are not LDCs but are still struggling to become economically independent from foreign aid, and the vulnerable, small and island economies. Geographically, these countries occupy the huge land mass of Africa, large parts of Asia and Latin America, the Caribbean and the Pacific islands.

The message of this book needs to be seriously considered and debated by all those that are interested in the development of the countries of the South. If this means the rethinking of old concepts and methods of work, then let it be so.

*Benjamin W. Mkapa, President of Tanzania 1995-2005 was President of Tanzania 1995-2005.

*Please send comments to editor@pambazuka.org or comment online at http://www.pambazuka.org/

Aid effectiveness: the question of mutual accountability

2008-09-03

Charles Mutasa

The issue of development cooperation especially aid can be traced back to the United Nations resolution 2626 of 1970 on the international development strategy for the second United Nations development decade where rich countries pledged to give 0.7% of their gross national products as development assistance after recognising the role that aid could play in fostering development in developing countries. The next 30 years that followed saw aid being manipulated and used to meet political ends such as recruiting and rewarding southern allies during the Cold War. The question of aid for development seems to have taken a lull in this period and only surfaced again after the signing of the Millennium Declaration.

The financing for development conference held in Monterrey in 2002 that followed sought to examine the internationally agreed development goals adopted during the past development decade, and the Millennium Development Goals (MDGs) that originated from the 2000 Millennium declaration, for their financial implications and to indicate ways of mobilising the financial resources needed to achieve them. The outcome of the conference on financing for development was a turning point in international economic cooperation. The adoption of the Monterrey consensus at the summit level on 22 March 2002 not only signalled a new partnership in international economic relations but also reaffirmed the advantages of the new approach toward consensus building taken by the international community.

In February 2003, leaders of the major multilateral development banks and international and bilateral organisations, donor and recipient country representatives gathered in Rome for the high level forum on harmonisation. They committed to take action to improve the management and effectiveness of aid and to take stock of concrete progress, before meeting again in early 2005. The high level forum concluding statement, the Rome declaration on harmonisation, sets out an ambitious programme of activities, which includes among other things agreements to streamline donor procedures and practices, ensure that donor assistance is aligned with the development recipient's priorities and most importantly to implement the good practices principles and standards formulated by the development community as the foundation for harmonisation.

The Paris Declaration of March 2005 represents a landmark achievement that brings together a number of key principles and commitments in a coherent way. It also includes a framework for mutual accountability, and identifies a number of indicators for tracking progress. There is a general recognition that the Paris declaration is a crucial component of a larger aid effectiveness agenda that could engage parliament, gender groups, civil society actors, new lenders, global funds and foundations in a more direct manner. In the Paris declaration, donors and partners committed themselves to monitoring their progress in improving aid effectiveness against 56 specific actions, from which 12 indicators were established and targets set for 2010 (OECD 2007).

Although the international post Paris process has represented a significant amount of work (in terms of surveys, analysis, consultation process, evaluation of the Paris declaration etc), there still remains the need to ensure that the Accra agenda for action is more ambitious, securing strong input and impact, reaffirming the Paris commitments, reflect on the midterm review of the Paris commitments, and include guidance on areas where further progress is needed.

THE PARIS DECLARATION

The purpose of the 2005 Paris declaration on aid effectiveness is to improve aid delivery in a way that best supports the achievement of the MDGs by 2015.
It highlighted the importance of predictable, well aligned, programmed, and coordinated aid to achieve results. See Paris declaration on aid effectiveness, ownership, harmonisation, alignment, results and mutual accountability. One of its five key principles is mutual accountability in which donors and developing countries pledged that they would hold each other mutually accountable for development based on the other four principles of ownership, alignment, harmonisation, and management for results. The Paris declaration emphasises accountability in relation to parliament and other domestic stakeholders, which can only be feasible with effective structures for dialogue (Tjonneland 2006). Although these commitments build on the content of previous agreements, notably that which is expressed in the Rome declaration of February 2003, the Paris declaration is more comprehensive and reflects a broader consensus.

The Paris Declaration flags CSOs (civil society organisations) as potential participants in the identification of priorities and the monitoring of development programmes. However, it does not recognise CSOs as development actors in their own right, with their own priorities, programmes, and partnership arrangements. By taking a narrow view of CSOs’ roles, the Paris declaration fails to take into account the rich diversity of social interveners in a democratic society and fails to recognise the full range of roles played by CSOs as development actors and change agents. CSOs are often particularly effective at reaching the poor and socially excluded, mobilising community efforts, speaking up for human rights and gender equality, and helping to empower particular constituencies. Their strength lies not in their representation of society as a whole, but in their very diversity and capacity for innovation, and in the different perspectives that they bring to the issues when engaging in policy dialogue (OECD 2008). CSOs operate on the basis of shared values, beliefs, and objectives with the people they serve or represent.

This responsiveness to different primary constituencies explains the extensive diversity of CSOs in terms of values, goals, activities, and structure. It also explains the particular emphasis on human rights and social justice, including women’s, children’s, and indigenous people’s rights, which many CSOs take as a starting point for their development work. As the commission of European communities (2008) noted civil society were the ‘missing link’ of the Paris declaration. Civil society is a fully fledged player in development. It has to be included in the process and supported in its efforts to define its own principles of aid effectiveness. The same applies to parliament, local authorities, gender groups and others who are increasingly vocal in their wish to become stakeholders and actors in development.

Overall, human rights principles and standards should be upheld and promoted through results achieved and strategies used to achieve Paris declaration targets and indicators. Synergies between the human rights and aid effectiveness agendas should be sought and further developed in the ongoing roll-out of ‘Paris’ if other cross cutting policy issues such as gender equality and environmental sustainability are to be considered at the Accra third high level forum on aid effectiveness (OECD 2006). There is much potential for the international human rights framework and the Paris declaration to reinforce and benefit from each other. The application of the principles and partnership commitments of the declaration can help advance human rights in a changing context of more aligned and harmonised aid and new aid modalities.

ACCOUNTABILITY AND AID EFFECTIVENESS

Accountability is now a buzzword in contemporary development discourse. When accountability works, citizens are able to make demands on powerful institutions and ensure that those demands are met. [IDS (2006) ‘Making accountability count’ IDS policy briefing No. 33] The concept of accountability describes the rights and responsibilities that exist between people and the institutions that affect their lives, including governments, civil society and market actors. International financial institutions and donors have been consistently criticised for using aid to further their own interests. The current patterns of accountability in which donor agencies hold recipients accountable, and are in turn accountable to their own taxpayers must change. Donors continue to use unfair, undemocratic and inappropriate policy conditionality, in a way that skews recipient accountability away from the citizens of poor countries. The civil society message has been loud and clear that this 'one way' accountability should be replaced by a system of genuine mutual accountability, which balances the legitimate interests of donors, recipients and, most importantly, poor people. In this regard, civil society continues to monitor whether international financial institutions and donors use aid for their own purposes or for primarily reducing poverty and promoting development.

If donors are serious about promoting accountability, dialogue and making an effective contribution to the fight against poverty they must radically improve the quality of their aid. Failure to target aid at the poorest countries, runaway spending on overpriced technical assistance from international consultants, tying aid to purchases from donor country's own firms, cumbersome and ill coordinated planning, implementation, monitoring and reporting requirements, excessive administrative costs, late and partial disbursements, double counting of debt relief, and aid spending on immigration services all deflate the value of aid.

While some tensions remain between the CSO community at large and governments, especially in the South, we are witnessing a steady shift in the attitudes of both the government and civic groups. Each, at long last, is recognising the critical and indeed, legitimate role played by the other in achieving consistent, sustainable long term development. For the sake of accountability and other reasons, there is a growing realisation that civil society needs to engage government officials, donors, politicians and parliamentarians more determinedly. This reduces opposition and increase support and accountability for national, regional and global policies; it works for greater burden sharing of the cost and benefits of policy. For effective aid delivery, ordinary citizens have to be involved not only at implementation stages, but also at the initiating, evaluating, monitoring and institutionalisation stages. Inconsistent and incoherent policies on the part of donors have to a large extent made policy dialogue and accountability difficulty. Conditionalities stressed by donors especially on governance matters cause recipient countries to account to them at the expense of accounting to their citizens - visit Reality of Aid. Too much aid is project based, according to the donor's priorities rather than those of recipients and so on. Aid quantity is insufficient while its ‘quality’ is not good enough and the transaction costs of aid are still too high. Involving reciprocal obligations over the long term as well as monitored relationships and commitments could be a significant new mechanism to improve the effectiveness of aid and give added confidence to the development relationship.

MUTUAL ACCOUNTABILITY AND CONDITIONALITY

Mutual accountability is unlikely to function in a way that does not include donors calling governments to account over basic human rights violations. Accountability in aid effectiveness will not work if the framework used is restricted to donor recipient government relations without going further to include other stakeholders at national level (Uvin 2004). Improving transparency and accountability on the use of development resources is also an important objective of the Paris declaration. Partner countries have a big challenge to ensure that information and disaggregated data is accessible and transparently shared with all stakeholders. Capacity building here becomes necessary for aid effectiveness. Strengthening the credibility of the budget as a tool for governing the allocation and use of development resources can not only improve the alignment of donor support, but also permit parliamentary scrutiny of government policies on development, which is key to deepening ownership. Broadening and reinforcing CSOs involvement in aid effectiveness from inception or design stage allows independent assessments of the adherence to the commitments under the Paris declaration. Multi-stakeholders monitoring of progress reinforces accountability. Donors will also need to improve the transparency and predictability of aid flows by sharing timely and accurate information on intended and actual disbursements with budget authorities.

Ownership and conditionality represent the core issues in aid effectiveness – as ownership is the defining issue in development, while donor conditionality poses one of the gravest challenges to country ownership. The process of deepening the understanding of development partnership and advancing aid effectiveness reform requires further interrogation into the issue of ownership and conditionality from the southern context of development as well as taking the circumstances and needs of the poor as the starting point as well as the final destination or goal. While it is clear the policy conditionalities affect ownership negatively, fiduciary conditionalities also need to be reformed to promote national ownership and alignment.

In discussing mutual accountability between development and country partners the problem of conditionality is central. Dealing with conditionality is of the great importance for developing countries and is related to the ability of the various international agencies and institutions to impose political conditions on development assistance that restrict independence of action and limit the right of each country to define and implement the public policies it deems most appropriate to safeguard the rights and well-being of its people and the principle of ‘national ownership’. Many consultations held in developing countries in the last three years pointed out that conditionalities are antithetical to Paris declaration principle of country ownership and accountability (DFID 2005).

In instances of unreformed supply driven technical assistance aid effectiveness have been patchy and piecemeal especially at the national level. This continued policy conditionality through tied aid undermines ownership. It is, therefore, important if development partners are to build effective development partnerships that increase the volume and maximise the poverty reduction impact of ODA (official development assistance) based on the recognition of national leadership and ownership by developing countries to end all donor-imposed policy conditions. Thus the outcomes of both Accra and Doha should interpret the terms of national country ownership as democratic ownership and elaborate on its implications in the context of countries' obligations to international human rights law, core labour standards, and international commitments on gender equality and sustainable development. In line with this it becomes important to consider the creation of an independent monitoring and evaluation system for aid at international, national and local levels. At the international level, new independent institutions will be needed to play this role, in order to hold donors to account for their overall performance.

The emergence of new donors and creditors, public and private, who are contributing to financing for development, has brought in more resources and diversity to the aid architecture. It is estimated that between 2002 and 2006, net disbursements from non-OECD (organization for economic cooperation and development) donors increased by 60 per cent. These resources are both complementary to other resource flows and an important catalyst in achieving poverty reduction goals in developing countries. Non-OECD donors bring unique perspectives and contributions to the development agenda based on their own experience. Without proper management, non- OECD donor resources could prove ineffective at poverty reduction and counterproductive to maintaining the recent improvements in good governance, particularly where institutional and technical capacity is weak.

RECOMMENDATIONS

In line with the discussions above, it is important that regular and systematic spaces be provided for effective parliamentary and civil society participation in policy dialogue on aid and development effectiveness in all stages of the development process, and that this be recognised as standard practice that needs to be actively promoted at all levels. In this regard, it becomes vital to put in place structures, work frames and policies that govern the relations of these stakeholders with government and donors. Much focus must be put on responsibilities and division of labour to avoid duplication and unnecessary conflicts (OECD 2008).

There is growing concerns at the decline in the levels of ODA in recent years. It is, therefore, necessary for Accra to call for the sharp increase in ODA by a number of donor countries, and call upon all donors to honour their ODA commitments and to improve the effectiveness of ODA in support of nationally owned development strategies. Emphasis here is given to the special importance of continued work towards durable solutions to the debt sustainability and management problems of developing countries. Demonstrating tangible changes in sustaining the momentum and achieving progress in the commitment is key and inspirational for both development partners and recipient countries.

Further, there is need for the Accra agenda for action to consider how it brings on board those that are outside its Paris declaration framework. Emerging lenders such as China need to be engaged not only with the view to win them to the OECD framework, but for coherence and consistence in global partnerships and development cooperation. Besides, there are also big donors that need to be part and parcel of the joint assistant strategy at national levels.

Accra and Doha are important steps on the road to enhance development cooperation for the realisation of internationally agreed development goals, including the MDGs, and to promote dialogue and find effective ways to support this process. There is need to put mechanisms and indicators that work for medium to long term results that go further than Accra. The challenge now is to use the momentum of both Accra and Doha to implement the agreed global development partnership, scaling up efforts on the part of developing countries and the international community. Policy guidelines emanating from both Accra and Doha will need to be translated into concrete actions. This is a technical as well as a political task since the policy instruments have to be identified in detail, in an effort to ensure that they can become operational as each country’s circumstances warrants.

* Charles Mutasa is the executive director of the African Forum and Network on Debt and Development (AFRODAD).

* Please send comments to editor@pambazuka.org or comment online at http://www.pambazuka.org/


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China and India in Africa: challenging the status quo?

2008-09-03

Sanusha Naidu and Hayley Herman

‘Equality and mutual benefit’ are reflected today in Chinese leaders’ frequent emphasis on aid as a partnership, not a one way transfer of charity, -quoted in Deborah Brautigam’s, China’s African Aid: Transatlantic Challenges\

India intends to be a partner in Africa’s resurgence- Prime Minister Manmohan Singh address to the Nigerian National Assembly in 2007


The rise of China and India has indeed created a new set of impulses in the international system. Not only are these two emerging giants making notable waves in the way that international finance, trade and investments are being shaped but also in the way that the rules, which govern the global governance regime are being influenced. Nowhere is this more apparent than in the realm of the international architecture on aid effectiveness. While the debate rages on around whether China and India are new or reemerging donors in the world today, their behaviour as development partners is certainly changing the global aid picture and most importantly in Africa.

Over the past several years, the politics of aid has been an overarching issue in Africa’s development debate. Since 2000 the Group of Eight industrialised rich states (G8) have been promising to double aid to Africa. Unfortunately these promises have largely been unfulfilled with the G8 countries opining that aid money has been misused by African recipients, or that African governments are not conforming to the conditionality of good governance and democratic reform. From the African side the prescriptive nature of the aid policy of traditional donors, their inertia and shifting of the goal posts around what constitutes this doubling of aid has been equally frustrating.

While the G8 and the DAC members are stumbling to find practical ways to ensure that aid is being effectively used to promote sustainable development across the continent, subtle changes are beginning to show with the increasing and deepening footprint of China and India across the continent. Their use of soft power coupled with generous financial packages, and notwithstanding the rhetoric of South-South cooperation has found traction amongst African leaders. But what really makes China and India attractive as development partners for many African governments is the parochial view that Beijing and New Delhi understand Africa’s development needs and are not preoccupied with setting high governance benchmarks that could undermine the delivery of aid, prolong the implementation of projects and emasculate development.
Welcomed by African governments as alternate sources of development finance and for their less cumbersome procedures, these two Asian partners have modelled their development finance on a framework of concessional loans and aid for resource security and infrastructure reconstruction. China’s development assistance to Africa best illustrates this.

China’s increasing penetration of the African market and role as an alternate development partner has raised significant issues regarding the impact this will have for Africa. Will it see new forms of aid dependency? Or does Beijing engender a more inclusive and cooperative engagement with its African partners? What dynamics underpin China’s development assistance to Africa and are African governments more pragmatic in their aid relations with China, drawing on their experience with traditional donors? Fundamentally is China’s use of development assistance entrenching Africa’s indebtedness, leading to a new form of debt risk for African governments? Finally is Chinese aid meeting the expectations of improving the livelihoods of Africa’s people?

Balancing China’s role in Africa is the increasing presence of India in the continent. Similar questions are being asked of India’s development assistance. But perhaps a more significant question is: who will be the better development partner for Africa?

Seemingly then China and India as Africa’s ‘new donors’ has certainly sparked a debate amongst western and African commentators alike. Much of the debate focuses around whether China and India disburse their aid differently and what implications this has for existing western donors in Africa. This is obviously motivated by the fact that China and India are non-DAC donors and somehow represent a challenge to the status quo. Indeed China and India have become significant development partners to most African countries, but their development assistance still remains a negligible portion to that of the DAC and multilateral donors who remain Africa’s main development partners.

DEFINING CHINA AND INDIA’S DEVELOPMENT ASSISTANCE

At the very outset it must be stressed that by not being DAC members, it is complex and perhaps cheeky to measure China and India’s aid through the lens of the DAC definition of Overseas Development Assistance (ODA) with its main objectives of promoting economic development and welfare at concessional financial terms, and loans including a minimum grant element of 25 per cent. But since no other structure exists by which to gauge China and India’s behaviour as donors or until such time both formalise their own evaluation frameworks, China and India will be measured against the DAC consensus. In so doing there maybe certain overlaps with the DAC definition of ODA, but for purposes of clarity and distinction we define China and India’s aid as development assistance mainly because of the controversy and sensitivities that surround this topic and in keeping with how both countries perceive their behaviour.

What makes China and India interesting developing partners is that both of them have until fairly recently been recipients of large ODA disbursements. In the last three to four years this situation has altered with a significant decline in their inward aid flows as a percentage of GDP (Gross Domestic Product), which has been offset by their concomitant rise as development partners. [Between 1990 and 2003, China’s aid as a percentage of GDP declined from 0.6 per cent to 0.1 per cent. During the same period India’s aid decreased from 0.4 per cent to 0.2 per cent. See Manning, R. (2006): ‘Will “Emerging Donors” change the face of International Cooperation’, Development Policy Review, 24(4), pp. 371-85] But this does not suggest that ODA flows have dried up altogether. Instead China and India continue to receive limited multilateral and bilateral aid simply because their rising global economic status, middle income profile and transition from aid recipients to aid donors has raised the bar around whether China and India continue to qualify for further international development assistance. To this end western donors are reviewing their country assistance programmes to both countries (Davies 2007, p. 33). And this is becoming more explicit in the Chinese case. The UK’s Department for International Development (DFID) China office recently had their programmes assessed in London to determine their success and set out what the next stage of their engagement with Beijing should be as China transitions into a fully fledged aid donor. Similarly, Japan, which is currently China’s largest bilateral donor, has indicated that they will be scaling down their aid programme to Beijing by the end of 2008.

In India the situation appears more complex. New Delhi seems to have taken on a more aggressive engagement with its donor partners by asserting that it wants to exert more control over its aid flows. An early announcement in 2003 and following the 2004 Asian Tsunami disaster where India refused humanitarian assistance but instead provided disaster relief to its neighbours signalled New Delhi’s intentions to be independent and manage its own domestic affairs without interference from western donors. While there remains some donor activity, it would appear that the Indian government chose this symbolic gesture to demonstrate to its development partners that it still remains a sovereign state that must be respected (Price 2004, Jobelius 2007).

Both China and India have very similar aid strategies. It is a mixture of both monetary and non-monetary forms of assistance. According to McCormick:

‘Monetary aid includes grants and concessionary loans. Non monetary aid includes debt relief, ‘free’ or low cost technical assistance, access to scholarships or training programmes, tariff exemptions and outright gifts of buildings, equipment, or other capital goods (2008, p.79).’

Clearly Beijing and Delhi apply both types of aid in their development assistance packages to Africa. Based on this it can be concluded that there are some broad correlations with the DAC ODA definition, particularly where the promotion of economic development and welfare are the main objectives at concessional financial terms. To this end China and India concur that their development assistance to the developing world is precisely aimed at creating conducive conditions for economic self-sustainability and social development. In Africa this seems to be the official rhetoric for disbursing development assistance.

While there may be some broad overlaps with the DAC definition as applied by the traditional donors, there are some grey areas as well. In 2007/2008 the Centre for Chinese Studies based in South Africa conducted an assessment of China’s aid policy and practice to Africa where it became abundantly clear that no one approach can best encapsulate China’s aid policy or for that matter if there is an official aid policy (Davies, Edinger, Tay and Naidu 2008, p. 2). According to the authors:

‘In order to interpret China’s aid policy, one can take various different approaches. One approach assumes that the Chinese government defines aid according to two different formats: “co-operation” and “ODA”. One respondent differentiated between them by suggesting that “cooperation” refers to foreign direct investments and contracts with Chinese companies, while “ODA” refers to concessionary loans, debt relief and grants. Trade concessions may also fall into this category. However, there were conflicting views from other respondents, who identified only the transfer of funds between governments (including the funds involved in donations of aid in kind), as constituting “aid”. These conflicting definitions offered by both Chinese government and well positioned academic sources reflect the ambiguity in Chinese foreign aid policy circles. There is clearly no official definition of aid at present’.

On the other hand, India’s development assistance involves a cross sectoral provision of capacity building, skills development, credit lines and scholarships. While Delhi’s aid policy encompasses a broader range of aid distribution, it is also more limited in scope as it does not look to provide grants in aid (Indian Technical and Economic Cooperation Division, 2006) as traditional definitions would indicate. Rather it opts for development of human resources and education, which again results in complexities surrounding the conceptualisation of India’s aid policy.

In sum then, the provision of aid by China and India appear to align more closely to their rising global status, endowed by their historical experiences and underscored by the act of benevolence. [For a concise understanding of China’s aid system see Deborah Brautigam, op cit.] This is captured by the emerging logic of China and India’s involvement in the Non-aligned Movement (NAM) and the idea that as Beijing and Delhi become prosperous they will be able to give back to the poorer countries by assisting them to develop (Snow 1988, Glosny 2006). Nevertheless trying to pigeon hole or compartmentalise the aid policies of each country into neatly defined boxes proves difficult, particularly as China and India’s donor activities in Africa are often inextricably viewed together with their commercial interests and investment projects. Therefore, to develop some synergy with regard to how China and India interpret their development assistance and to make the distinctions less complex, especially in relation to the DAC ODA definition, McCormick’s paradigm of monetary and non monetary forms of aid is probably better suited in assessing China and India’s development assistance activities across Africa.

* Sanusha Naidu is the Research Director of the China in Africa Programme based with Fahamu in South Africa.

* Hayley Herman is the Research Manager at the Centre for Chinese Studies, based at Stellenbosch University in South Africa.

* Please send comments to editor@pambazuka.org or comment online at http://www.pambazuka.org/

REFERENCES:

Africa-Asia Confidential (2008) ‘Delhi reaches out’, vol. 1, no. 4

Agrawal, S. (2007) ‘Emerging donors in international development assistance: the India case’, IDRC, Canada

Beck, L. (2007) ‘China factors changes rules of Africa aid game’, Mail and Guardian, May 18.

Bombay Chartered Accounts Society Newsletter (2006) http://www.bcasonline.org/webadmin/ContentType/attachedfiles/NlJuly06.pdf, accessed 10 July 2008.

Brautigam, D. (2008) ‘China’s African aid: transatlantic challenges’, The German Marshall Fund (GMF) of the United States, Washington (www.gmfus.org).

Broadman, H. (2007) ‘Africa’s silk road: China and India’s new economic frontier’, World Bank, Washington

Davies, M., Edinger, H., Tay, N. and Naidu, S. (2008) ‘How China delivers development assistance to Africa’, Centre for Chinese studies, Stellenbosch

Davies, P. (2007) ‘China and the end of poverty in Africa – towards mutual benefit?’, Diakonia, Sweden

Domain-B (2005) ‘Exim Bank extends $30-million LoC to Burkina Faso’, 15 October, http://www.domainb.com/finance/banks/exim_bank/20051015_extends.html, accessed 10 July 2008.

Ellis, J.L. (2007) ‘China EXIM Bank in Africa’, China environment forum, Washington, Woodrow Wilson centre for scholars

Engineering News (2008) ‘China leads new financiers in Africa – World Bank’, Reuters, 11 July

Foster, V., Butterfield, W., Chen, C. and Pushak, N. (2008) ‘Building bridges: China’s growing role as infrastructure financier for sub-Saharan Africa’, trends and policy option no. 5, World Bank and PPIAF, Washington

Engineering Export Promotion Council, http://www.eepcindia.org/exim-bank.asp, accessed 10 July 2008

Exim Bank of India annual report 2005-2006, http://www.eximbankindia.com/ar06.pdf ,accessed 10 July 2008

Exim Bank of India website http://www.eximbankindia.com/press040707, accessed 10 July 2008

Exim Bank of India press release archive, http://www.eximbankindia.com/old/whatsnew-main.html , accessed 10 July 2008

Eximius: Export Advantage, http://www.eximbankindia.com/exp-adv-mar08.pdf , accessed 10 July 2008

Glosny, M.A. (2006) ‘Meeting the development challenge in the 21st century: American and Chinese perspectives on foreign aid’, China Policy Series, national committee on United States-China relations, no. 21.

Indian ministry of external Affairs, http://www.meaindia.nic.in/ , accessed 10 July 2008.

Indian Technical and Economic Cooperation Division (2006), ‘A note on Indian Technical and Economic Cooperation (ITEC)’, New Delhi ministry of external Affairs, http://itec.nic.in/about.htm accessed 12 July 2008

InfoDrive India, http://www.infodriveindia.com/Notifications/Exim-Bank-s-Line-of-17475.aspx, accessed 8 July 2008

Jobelius, M. (2007) ‘New powers for global change? Challenges for the international development cooperation: the case of India’, FES briefing paper five

Manning, R. (2006) ‘Will “emerging donors” change the face of international cooperation?’, in Development Policy Review, vol. 24, no.4, pp. 371-385

McCormick, D. (2008) ‘China and India as Africa’s new donors: The impact of aid on development’ in Review of African Political Economy. vol. 35, no. 1, pp. 73-92

Naidu, S. (2008): ‘India’s growing African strategy’, Review of African Political Economy, vol. 35, no. 115, pp. 116-128

Nigerian Exim Bank, http://www.neximbank.com.ng/NEXIM%20Bank%20and%20Exim%20Bank%20India%20Sign%20Line%20of%20Credit.htm, accessed 10 July 2008

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Price, G. (2004) ‘India’s aid dynamics: from recipient to donor?, Asia programme working paper, Chatham House

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Snow, P. (1988) The Start Raft: China’s Encounter with Africa, Great Britain, Weidenfeld & Nicholson Ltd

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Wang, J.E (2007) ‘What drives China’s growing role in Africa?’, IMF working paper WP/07/211, August

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Lost in a haystack: gender equality in aid effectiveness

2008-08-26

Florence E. Etta

Early in September 2008 the world will hold another one of its mega gatherings in Accra Ghana - the third high level forum on aid effectiveness. World leaders will convene to append their priceless signatures to a document now popularly called the triple A, which stands for the Accra Agenda for Action. The triple A, an outcome document ostensibly from the three days of intense discussions and lobbying is actually a prepackaged condensation from evaluations of the implementation of the Paris declaration and consultations about them conducted between 2006 and 2008 in all the regions of the world. It includes promises to expand and include more of the actors/agents of development such as the civil society organisations (CSOs) who were sidelined in the earlier rendition of the Paris declaration. It charts the broad actions that will no doubt occupy many development actors between now and December 2011 when the fourth high level forum on aid effectiveness takes place.

This paper attempts to show how and why the text of the triple A had to be different from the Paris declaration. The custodians of the Paris declaration insistently make the point that the triple A does not overtake, override nor overwrite the Paris declaration. The former only reasserts the latter.
BACKGROUND

For over three decades assertive programming in human rights, social justice and in particular women's rights have generated and expanded the literature and instruments, created a number of global and local institutions and, above all, popularised the notion and language of (universal and attainable) human rights. The investments have been massive and in many instances the gains have been significant. But the results cannot be said to be equivalent to the value of investments.

Despite being on the international development agenda as a programmatic commitment for over 30 years and with a good number of multilateral, bilateral and private development institutions in addition to many international non governmental organisations pursuing the cause, gender equality and women's empowerment has still not been fully achieved in most parts of the world as in Africa. This is despite the multiplicity of signed, ratified and even domesticated legal instruments designed to protect (and assure) these rights. It would seem that development aid has failed women and the cause for gender equality. Clearly a paradigm shift is required to assure aid effectiveness. Has this come in the form of the Paris declaration?

The global aid architecture has undergone significant changes since the turn of the century. Spurred by development failures in many developing nations, rising donor disenchantment with the reach, depth and sustainability of NGOs (non governmental organisations) led and inspired transformation coupled with their generally weak governance, many donors renewed their commitment to working directly with and through developing country governments. On the other hand, calls for good governance and participation in public policymaking were growing louder and louder. Beginning with the Millennium Declaration in 2000, which gave birth to the contemporary global development framework - the MDGs (Millennium Development Goals), a number of significant high level meetings led to the charting and adoption of a number of landmark declarations. The Monterrey consensus in 2002 together with the Marrakech roundtable in 2004 led to the crystallisation and juxtaposition of the notions of ownership, alignment, harmonisation, and managing for results in relation to aid effectiveness. In March 2005 a declaration was signed in Paris now popularly called the Paris declaration, which has become the lighthouse document for aid effectiveness currently shaping the contours, architecture and discourses of global aid. The Paris declaration consolidated commitment among a sizeable number of donors and their development partner countries and actors to implement changes in the planning, coordination, monitoring and evaluation of aid.

Major reviews of the Paris declaration suggest that the narrow focus of the Paris declaration on efficiency and structural reforms of aid delivery mechanisms has limited positive impact on development or aid effectiveness in general and gender equality in particular.

AID EFFECTIVENESS

The European network on debt and development suggests that aid is effective if it is helping to tackle global inequality and poverty. The advisory group on civil society and aid effectiveness states in a concept paper of 2007 that ‘Aid effectiveness means the extent to which aid resources succeed in producing sustainable development results for poor people’. According to the advisory group on civil society, aid effectiveness is important because it:

- draws attention to the big picture, to ensure that the ultimate objectives of the aid system as a whole are being met;

- can help to ensure that the international aid system remains true to its primary purpose in the face of competing interests of a political or bureaucratic nature, institutional imperatives, foreign policy goals, or commercial objectives;

- provides a framework for enquiring into broad lessons of good practice and establishing a consensus on how aid could be improved’, (Paragraph 46).

From a gender equality perspective aid would be considered to be effective if it reaches and sustainably transforms the lives of poor women and men, if women and men equally contribute to and benefit from the investments and from the fruits of development. Aid is thus said to be effective if it delivers on development, reduces poverty, brings about gender equality, the advancement of women and the protection of their human rights and national growth.

THE PARIS DECLARATION

The Paris declaration is currently the guiding framework for aid effectiveness. This three year old declaration with targets for the year 2010 is shaping the contours, architecture and discourses of global aid. As the lighthouse document for aid effectiveness, it has been described by the organisation for economic cooperation and development (OECD, 2007) as:

‘An ambitious attempt to increase the impact of aid on development by promoting more mature partnerships between donors and partner countries. It also seeks to enhance partner countries’ ability to manage all development resources more effectively; and enable their citizens, and parliaments, to hold governments accountable on its use. As well as committing all parties to the Declaration to a clearly specified set of actions and behavioural changes, it also calls for periodic monitoring at the country level, so that the governments of developing countries and their external partners are increasingly accountable to each other for the progress being made’ (OECD, 2007,Chap 3).

The Paris declaration is laid out in three sections namely the statement of resolve, partnership commitments and indicators of progress. Much of the discussions and contentions to date have revolved around the five principles that underlie the partnership commitments: ownership, alignment harmonisation, managing for results, and mutual accountability.

The statement of resolve highlights the raison d'être of the declaration as the scaling up of aid, identifying the management and implementation processes of the new approach, including the adaptability to differing country situations, the specification of targets and their timelines. It also suggests a monitoring and evaluation schema. Two monitoring and evaluation exercises have been conducted to date in 2006 and 2008.

The second section, of the Paris declaration contains 50 partnership commitments in relation to the five principles of ownership, alignment, harmonisation, managing for results, and mutual accountability. The commitments are partner specific so that the responsibilities are clear.

The third and final section of the Paris declaration is the table of 12 indicators and targets to be achieved by the year 2010. Each of the five principles has one or a set of measurable indicators: ownership has one indicator, alignment has seven indicators, harmonisation two indicators, managing for results one indicator and mutual accountability also has one indicator. It has been suggested, on account of the heavy emphasis on the principle of alignment, as shown by the number of indicators attached to it, that the Paris declaration is principally an instrument to improve the efficiency of aid not necessarily its effectiveness.

The new aid agenda dominated by the Paris declaration is seen as attempting to perform two related functions:

1. increasing the resources for doing development, and;

2. better management of aid in order for it to more effectively deliver development and poverty reduction.

To this extent the declaration of principles and commitments attempts to shape (change) the conduct of both aid-givers and aid-takers to ensure that aid does indeed lead to genuine development and the transformation of lived realities. Yet the Paris declaration is silent about the most disadvantaged poor, many of who are the world’s women. There is one mention of the words ‘gender equality’ in the entire Paris declaration. Many of the major reviews of the Paris declaration to date suggest that the narrow focus of the Paris declaration on efficiency and structural reforms of aid mechanisms will have a limited positive impact on development effectiveness in general and gender equality in particular (DCD/DAC, 6-2006, 7).

Gender equality is a fundamental human right, an issue of social justice critical for growth and poverty reduction. No global instrument or mechanism purporting to be at the service of transformatory development can be insensitive to dimensions of poverty, which is itself sensitive to gender, social exclusion, illiteracy etc. To be effective therefore aid in any modality must necessarily support gender equality, the advancement of women and the protection of human rights.

As the Paris declaration moves from formulation through implementation to monitoring, and to the target year of 2010 there is an urgent need for activism around its accountability for gender equality. One practical way to do this is to engender the Paris declaration.

ENGENDERING THE PARIS DECLARATION

On account of the global reach and critical importance that the signatories, the participating countries and organisations ascribe to the Paris declaration, it is imperative that all development workers treat it with weighty seriousness. Thus if a critical dimension such as gender equality is left out or is given treatment that does not correspond to its important role in development effectiveness, it must not be left unchallenged and unheeded. The words gender equality appear in paragraph 42 of the Paris declaration as follows: ‘similar harmonisation efforts are also needed on other cross-cutting issues such as gender equality and other thematic issues including those by dedicated funds.’ Although the Paris declaration provides the framework and principles that could support gender equality and women’s empowerment, the inescapable conclusion is that in its current or original form, the Paris declaration is gender blind.

It is this paradox of gender insensitivity on the one hand, and the great potential to foster gender equality and the empowerment of women on the other, that has captured the attention of gender equality advocates, activists and researchers. Globally, gender equality enthusiasts, women’s rights activists have been working to make this potential lodged in the Paris declaration evident and overt. Organisations such as UNIFEM, Association for Women’s Rights in Development, the OECD’s Development Assistance Committee (DAC) Network on gender equality, to mention a few, have supported the engendering of the Paris declaration and this work is still ongoing.

Although all the sections of the Paris declaration require revision to make them gender sensitive, much of the engendering to date has centred on the commitments, their underlying principles and the indicators. The DAC network on gender equality suggests that the donor community ‘use the implementation of the Paris declaration’s principles and commitments to:

- harmonise approaches to support for gender equality;

- implement concrete actions, focussed on results and impacts;

- be responsible and accountable for … gender equality and women’s empowerment’.

They offer specific suggestions as do many other women organisations about how some, each or all of the commitments, can be made more gender sensitive so as to respond to gender equality and women’s empowerment.

Work supported by UNIFEM in Africa and undertaken by a six member expert group on new aid modalities, along with the African gender and development evaluators network, resulted in the generation of 29 gender sensitive indicators to correspond to each of the 12 Paris declaration indicators. It cannot, therefore, any longer be said that measurements and assessments cannot be made of the gender equality and women’s empowerment dimensions of aid effectiveness because there are no indicators.

In addition to the twenty nine gender sensitive Paris declaration indicator set now available as a global public resource, many commentators have suggested that the performance assessment frameworks that include gender equality indicators be used as one way to go.

The clamour for good governance and accountability has popularised results oriented management and/or managing for results in development evaluation. These approaches deploy frameworks that are based on the logic model. Since it has been observed that none of the current assessment frameworks of the Paris declaration explicitly incorporate the monitoring of gender and social equity, one model was generated by Florence Etta working with and as a member of the UNIFEM new aid modalities expert group since 2006.

GENDER EQUALITY ASSESSMENT AND ACCOUNTABILITY FRAMEWORK

Gender equality assessment and accountability framework is a results oriented assessment framework, which can be used for any monitoring or evaluation exercise sensitive to the issues of gender equality and women’s rights. The framework matrix (7x4) identifies the monitoring and evaluation dimensions/issues at four levels (rows in the matrix) of input, output, outcome and impact. Each row has an identified and corresponding expected or desired result as well as their indicators. These in addition to other desirable/common dimensions of a monitoring or evaluation plan such as sources of information/data; methods of collection etc constitute the columns. Aid flows constitute the input or first level/row. At this level the desired result is high aid volumes for the ‘right’ programmes, sectors, projects or institutions, which target women and girls, their empowerment and or gender equality.

The entire Paris declaration with its 12 indicators along with the corresponding or complementary gendered indicator set, are regarded as output indicators. The expected results at this level are aid efficiency and effective aid management.

Full scale support for gender equality otherwise known as gender mainstreaming is treated in this framework as fitting at the third or outcome level. The desired results would be gender mainstreaming in all sectors, projects, programmes receiving aid irrespective of their nature where there is routine use and application of gendered tools and techniques in project implementation and in the monitoring and evaluation of results and impacts.

At the fourth and highest level of impact, the transformation of gender relations, more equitable sharing and control of and benefits from resources (and development) would be the expected result. At the lower first and second levels the place and role of aid is very visible but at the higher third and fourth levels the fact that aid is effective ought to translate into more global development outcomes so much so that the direct contribution and thus attributions of change from the effects of aid and of growth become increasing difficult to disentangle. It is for this reason that the indicators at this level appear less and less tied to aid. We however acknowledge that aid by itself will not lead to development.

The programme logic/model subsumed by the framework can be represented as follows: aid flows (input) → efficiency and effective management of aid effectiveness (Paris declaration) (output) → gender mainstreaming in all in aid interventions (outcome) → gender equality and women’s human rights upheld globally (impact).

CONCLUSION

Aid can be no more effective than the Paris declaration is blind. So perhaps it is just as well that the text (of the Paris declaration) cannot be changed as the custodians tell us. For lost in its power and beauty is gender equality and women’s empowerment. The triple A however shows great promise for in its embrace of multilevel consultations and changeability a rich harvest for aid effectiveness is possible.

On account of this we are hopeful. Hopeful and encouraged to use the opportunities offered by the new aid modalities and the tools that have been and continue to be developed in a new way to generate pictures of aid effectiveness that are not partial but whole in the hope that a future we envisage of genuine, sustainable and equitable development can be reached.

History, however teaches that hope alone never delivers justice. Gender equality and women’s rights activists, programmers, supporters and all who fervently desire a world rid of gender based injustice should continue the militancy that has accompanied the preparation for the Accra high level forum well beyond September 2008. As this work moves forward it will be informed and guided by strategies, approaches, tools and techniques that are suited to the task in hand. Never before has this convergence happened.

* Florence E. Etta is currently an independent research, monitoring and evaluation consultant in the fields of Information and Communication Technology Policy, Information and Communication Technologies for Development, Education, Environment, Gender and Development.

* This article is an extract from a longer paper which will be included as a chapter in the forthcoming "African Perspectives on Aid in Africa" book published by AFRODAD and Fahamu

*Please send comments to editor@pambazuka.org or comment online at http://www.pambazuka.org/


REFERENCES: Accra Agenda for Action, Second Draft, June 2008

Civil Society and Aid effectiveness- concept paper (draft of September 17 2007) http://sitesources.worldbank.org/ACCRAEXT/Resources attached 4/7/08

Etta, F, Reference Guidelines for Integrating Gender Equality in the Aid effectiveness Agenda, Final Report of paper commissioned by UNIFEM NY, June 2007.

Eurodad, Turning the tables Aid & Accountability under the Paris Framework, 2008 April

FEMNET, Recommendations of the International Consultation of Women’s Organisations and Networks and Aid effectiveness, Communiqué at a Regional Consultations On Aid effectiveness 26th & 27th May 2008

OECD, DAC Network on Gender Equality: Paris declaration Commitments and Implications for Gender Equality and Women’s Empowerment, July 2006

OECD, Regional Workshops on the Paris Declaration, Emerging Common Themes and Key Messages, November 2006

OECD, Working Party on Aid effectiveness and Donor Practices, Consultation with Civil Society Organizations, February 2007

OECD, Working Party on Aid effectiveness and Donor Practices, Draft Concept Note for the Accra High Level Forum on Aid effectiveness’ March 2007. OECD- Development Co-operation Directorate, Development Assistance Committee, Gender Equality, Women’s Empowerment and aid effectiveness, DAC, April 2008

Payne L. & S. Neville, Aid Instruments, Social Exclusion and Gender, Background Paper for DFID’s internal guidance on Aid Instruments, March 2006,

UNIFEM, NY, National Ownership and Gender Equality key to Development Effectiveness, April 2008

United Nations, Trends and Progress in international development cooperation, Secretary General, New York July 2008

Wikipedia http://er.wikipedia.org/wiki/Aid-effectiveness

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Mozambique experience on aid effectiveness

2008-08-26

Marta Cumbi

African countries and donors share the belief that aid has the potential to contribute to economic growth, reduce poverty and achieve the Millennium Development Goals (MDGs). However, the way both donors and recipient countries are performing for delivery and use of aid undermine this potential. Some of the conditionalities imposed to aid recipient countries to access aid reduce the extent to which it can contribute to poverty reduction and achievement of the MDGs by forcing governments to implement policies that lead to unemployment, bad quality of public services and reduced capacity by citizens to access basic services. Privatisations, cuts in government expenditures in public services such as education and health and adjustment of prices of essential goods like water, electricity and transport to reflect market prices result in unemployment, shortage and lack of motivation of civil servants as well as incapacity of poor people to access these essential services are some examples of such conditions.

On the other hand, recipient countries still face challenges in ensuring good governance, adequate institutional capacity and coordination of activities at different levels. Corruption practices without an appropriate mechanism of imputing responsibilities, lack of coordination across sectors and weak institutions and systems combined with the absence or weak donors’ coordination and harmonisation practices undermine the full potential of aid.
BACKGROUND

The Mozambican government has been putting in place policies and strategies aimed to promote economic growth, reduce poverty and reach Millennium Development Goals. Over the last 17 years the country has embarked on structural adjustment programmes to reinvigorate the economy and reduce poverty. Development partners have been instrumental in providing resources to finance government development efforts given that internal resources are insufficient to respond to growing needs. Thus, Mozambique has been an aid dependent country for a long time. Over the last years overseas development assistance has remained strong constituting 29 per cent of gross domestic product in 2000 and 16 per cent in 2005. In absolute terms grants and loans to Mozambique excluding IMF (International Monetary Fund) and highly indebted poor countries grants amounted to $724million and $926million for 2000 and 2005, respectively (GMD 2007). In 2007, aid covered more than 50 per cent of the state budget.

Despite this level of development assistance flow and impressive economic growth averaging 8 per cent over the last 5 years, Mozambique continues to be highly dependent on foreign aid. Moreover, 54 per cent of the population still lives in absolute poverty meaning that the government will continue to seek external assistance to pursue its development agenda in line with its five year development plan, poverty reduction strategy programme/plan of action for the reduction of absolute poverty (PRSP/PARPA) and MDGs. Hence, Mozambique needs to engage its development partners in a permanent dialogue to improve the quality of aid in line with the present aid effectiveness agenda.

AID EFFECTIVENESS

The ultimate goal of aid is to support governments in their efforts towards the development of countries, institutions and the people. Looking at aid flow overtime and development indicators one can conclude that the achievements have been lower than desired. It is within this context that donors, governments, civil society organisations and other development actors started seeking ways to make aid more effective. Several gatherings have been taking place with the view to defining strategies and actions to promote aid effectiveness. The Monterrey consensus of 2002, the Amsterdam high level meeting, the first high level forum on aid harmonisation held in Rome in 2003 and the second high level forum held in Paris in 2005 all made commitments related to aid effectiveness, in which donors and partner countries shared responsibilities in making aid work. In particular the Paris declaration set five guiding principles to monitor the course of actions to be undertaken by donors and partner countries namely:

(1) Ownership: partner countries exercise effective leadership over development policies and strategies and coordinate development outcomes;

(2) alignment: donors base their overall support on partner countries’ national development strategies, institutions and procedures;

(3) harmonisation: donors’ actions are more harmonised, transparent and collectively effective;

(4) managing for results: managing resources and improving decision-making for results and;

(5) mutual accountability: donors and partner countries are accountable for development results (high level forum, 2005 ‘Paris declaration on aid effectiveness’.)

It is against this background that this paper seeks to explore the Mozambique experience on aid effectiveness in terms of mutual accountability and donors’ alignment to national programmes and harmonisation and assess the implementation of policies to advance the country’s and peoples’ agenda setting regarding the delivery of aid.

OWNERSHIP OF DEVELOPMENT PROCESSES

Ownership implies that partner countries exercise effective leadership over development policies and strategies and coordinate development outcomes. It means that governments play a leading role in the definition of the development agenda and strategies, ensuring the participation of all stakeholders, namely civil society, private sector, the parliament and the public at large and taking responsibility for development outcomes.

In Mozambique the development agenda has been spelled out through different instruments:

(1) agenda 2025: a long-term vision that sets development objectives for a 25 year horizon. It was formulated by a group of counsellors composed of reputable citizens from different political parties, private sector, academia and civil society;

(2) the government five year plan which is inspired by the agenda 2025 and sets development objectives and strategies for five years. This plan is formulated by the government with the participation of government officials;

(3) PRSP/PARPA: a medium term plan that sets objectives and strategies for poverty reduction over a five year period; and;

(4) medium term expenditure framework: a fundamental tool for the construction of plans and macroeconomic frameworks for short and long-term, aims to indicate the amount of financial resources needed to implement activities over a three year horizon, to respond to policies defined within the five year plan and PARPA.

The implementation of the five-year plan and PRSP is done through annual plans termed plano económico e social (economic and social plans) and their monitoring is ensured by Balanço do plano económico e eocial.

By definition, PRSP is formulated in a participatory manner involving all stakeholders ranging from government officials to civil society organisations, private sector, individual citizens and donors. From a simple consultation in the first PRSP, the second generation was characterised by increased civil society and private sector participation in the planning process as well as in the production of contents, excluding the macroeconomic framework. A similar structure was created at the provincial level to allow for more citizen participation in this exercise. Parliamentarians, though, did not take part in the process.

Although the PRSP exercise is considered satisfactory, it faced some constraints that require due attention. Unlike donors that have policy experts, both government and civil society organisations faced capacity challenges in terms of human resources and/or expertise to meet the needs of this complex exercise. This has resulted in external influence to the process. The formulation of medium term expenditure framework with its subordination to macroeconomic framework set by the IMF leaves little room for the government to expand its budget to respond to felt national needs. On the other hand, the fact that the government has to comply with commitments set within multilateral and bilateral agreements make national programmes underpinned to external agendas. Thus, there is a need to strengthen the capacity of national actors to promote a true ownership and reduce the conditions that undermine national leadership. On the other hand, parliamentarians should exercise an oversight role in the definition of development agendas to safeguard national interests.

DONORS ALIGNMENT TO NATIONAL PROGRAMMES

According to the Paris declaration, donors should base their overall support on partner countries’ national development strategies, institutions and procedures. In Mozambique donors have been channelling their resources through different mechanisms implying different types of alignment with their respective conditionalities. These are general budget support, sector wider approach and project support. Through the general budget support mechanism donors channel their resources to the state budget. To coordinate their activities regarding the delivery of aid through general budget support and sector wider approaches, development partners came together to constitute parceiros de apoio programático (partners for programmatic support), presently composed of 19 bilateral and multilateral donors. This is indeed a space where these development partners seek to join efforts to honour their commitment to support the national agenda in a transparent manner.

It is estimated that 30 per cent of total partners for programmatic support portfolio representing 80 per cent of the overall aid flow to the country goes to direct budget support, the rest being channelled to sector programmes through sector wider approaches (GMD 2007). Direct budget support funds are aligned to national programmes as their allocation depends on government priorities. However, some conditionalities are attached to them in the sense that access to these funds relies on broad agreements and acknowledgement that appropriate development policies are in place. For all direct support funds the government uses its own systems to allocate funds to different projects and programmes and implement related activities.

Since 2004 the conditionalities have been expressed in terms of memorandum of understanding through performance assessment framework in which the government and its development partners commit to underlying principles for the delivery and use of aid. Thus, the government commits to peace and democratic political processes, the rule of law and human rights, good governance and probity in public life, combating poverty in line with PARPA and sound macroeconomic policies. Development partners on other hand commit to: alignment on government systems, predicable funding, transparent conditions, harmonisation and capacity building.

Sector wide approaches consist of sector budget support and common basket funds in which partners for programmatic support and non-partners for programmatic support participate. Different conditions and procedures as well as transaction costs are associated with these funds. Whereas in the sector budget support there is no interference in terms of definition of priorities and external auditing, in common basket funds there is a significant rigidity in both. In Mozambique five main sector wide approaches can be identified namely for education (FASE) funded by seven donors with $57million commitment for 2007; health (PROSAUDE) supported by 14 donors with $120million committed for 2007; agriculture (PROAGRI) funded by seven donors with $30million committed for 2007; HIV/Aids with $12million committed for 2007 and public finances (UTRAFE) with $8million committed for 2007(GMD 2007). An example of common basket funding is the funds for drugs and medicine estimated at $14million for 2004.

Partners for programmatic support memorandum of understanding are playing an important role in the alignment of aid for both direct budget support and sector wide approaches because it has also been influencing donors through sector memorandum of understanding to base their priorities on PARPA, promote transparency and plan and execute capacity enhancement. As a result, the agriculture and education sector have new and improved memorandum of understanding and for the health sector a new memorandum of understanding is in preparation.

Off budgets constitute a big proportion of aid in Mozambique. Although the real extent of the funding is unknown, it was estimated that more than 30 per cent of external funding for 2003 was off budget. This affects the efficient and effective government role in planning, budgeting and executing this proportion of aid. On the other hand, the endless processes for complying with a variety of donors’ procedures rise transaction costs and bring a burden to government capacity.

An independent evaluation carried out to monitor partners for programmatic support performance for 2006 showed that donors are using the public management systems and are also increasing their overall budget support, although it remains below the target level.

Despite the improvements stated above, some constraints still face the delivery of aid in Mozambique: lack of common understanding about the meaning of quality of aid, ideal amounts to be allocated to different sectors and the role of the government. On the other hand, there is a high proportion of off budgets. There is also weak coordination, which is reflected in the high portion of sector aid as opposed to direct budget support. In addition, there is a big concentration of donors in few sectors such as education and health and overlaps due mainly by the donors’ rules and policies from their own countries and constituencies as well the nature of the sector. Moreover, sectors requiring big amounts of resources do not attract funding from small donors. Bureaucracy from donor countries is also a factor that makes aid ineffective, as they have to go through lengthy procedures before disbursing the funds. Finally, technical assistance that is not demand driven and therefore not aligned to national priorities and the requirement of co-funding of ten to 15 per cent of project costs reduce the impact of aid by increasing the cost of aid with non priority cost and delays in the disbursement of funds when the government is unable to present its share in project costs and therefore, being penalised for non compliance with commitments.

HARMONISATION OF DONORS’ PROCEDURES

Within the Paris declaration principles harmonisation means that donors’ actions are more harmonised, transparent and collectively effective to ensure that transaction costs are kept at acceptable levels and that the burden of multiple reporting is reduced. To this end, in 2000 the partners for programmatic support came up with a formal coordination framework designated joint donor programme for macro financial support. In 2004 this mechanism was replaced by a memorandum of understanding between the partners for programmatic support and the government of Mozambique in which they outlined commitments for the improvement of quality and effectiveness of programme aid and built a partnership based assistance approach under the poverty reduction strategy. One of the immediate partners for programmatic support goals and condition for signing the memorandum of understanding was the improvement of direct budget support. In addition, the partners for programmatic support committed themselves to work in six areas namely align assistance to government policies and systems, reduce transaction costs, increase predictability of aid flows, eradicate bilateral conditionality, promote transparency and enhance government’s capacity. Monitoring was to be implemented through the performance assessment framework mentioned in the previous section.

Despite these commitments there are still major constraints regarding donor harmonisation: single practices and procedures, sometimes including less consensual indicators; bureaucracy in the process of funds disbursements, single and independent evaluations, etc. Examples of these practices are World Bank’s reluctance to use government procurement in some of its programmes and the millennium challenge account individual practices. These behaviours bring serious strain to government capacity and can discourage other donors currently committed with harmonisation procedures and conditionality reform. In addition, failure to meet those differentiated indicators can result in the interruption of funding. Another constraint is the reluctance of some donors to support value added tax on aid in kind. Whereas United Nations Development Programme is currently paying this expense other donors like the African Development Bank and the European Commission do not.

MUTUAL ACCOUNTABILITY

Mutual accountability means that donors and partner countries are accountable for development results. To meet this objective, they clearly define their roles and responsibilities and install a system through which an evaluation of performance is carried out. As mentioned in the previous section, the Mozambican government and the partners for programmatic support designed a performance assessment framework that monitor progress in the implementation of the poverty reduction strategy programme against the commitments made in the memorandum of understanding. The performance assessment framework defined by donors and the government is based on the matrix of indicators that are part and parcel of PARPA. The government and partners for programmatic support also created two important spaces for dialogue and mutual accountability: the joint review and the development observatory.

Joint review is an exercise carried out twice a year (April and September) to monitor progress towards compliance with commitments set out in the memorandum of understanding. The April joint review makes an evaluation of the implementation of the economic and social plan and determines the allocation of resources by donors according to their satisfaction with government performance. The September joint review discusses donors’ pledges to the state budget. This space was originally for donors and the government but since 2007 it was expanded to include civil society.

Development observatory is a forum in which the government, donors and civil society organisations meet to evaluate progress made regarding the implementation of PARPA and takes place once a year. This forum has also been replicated in the provinces and it is supposed to bring subsidies to the national development observatory and joint reviews. To take advantage of this space, civil society organisations have produced annual reports reflecting citizens and civil society organisations perceptions about government’s performance towards poverty reduction and what they can or have done to contribute to such efforts. These reports and their respective recommendations are presented at development observatory for consideration.

While the joint review is a decisive forum in terms of donors’ aid commitments, the development observatory is a dialogue platform without binding consequences regarding the decisions made that are seen more as recommendations.

Overall there is a positive evaluation regarding the creation and pertinence of these two spaces because they allow for a systematic monitoring of both government and donors’ performance within the framework of commitments set out in the memorandum of understanding. Joint review in particular can be seen as a platform where the government and civil society can influence the agenda for aid delivery. However, there are also some constraints and challenges facing the effective use of these spaces.

1. Whereas lack of government compliance with its commitments result in cuts in disbursements, there is no mechanism to force donors to comply with theirs;

2. Performance assessment framework indicators are quantitative and do not reflect civil society concerns with qualitative evaluations;

3. The realisation of development observatory is not aligned with the joint review and planning cycle at central and provincial levels. Joint review being a decision-making point regarding funding, this should be preceded by both provincial and national development observatory and these should take into account the planning cycle at district, provincial and central levels, to accommodate input from these levels;

4. Government lacks adequate capacity (human and technical) to cope with the joint review exercise, which requires qualified people to be active in different working groups;

5. There is a power imbalance between donors and government in this process, with the government in a weaker position;

6. There is no clear definition of civil society role in the joint review and no feedback mechanism on its recommendations to the development observatory;

7. Civil society does not participate in the true negotiation forum under joint review in which heads of cooperation and high level government officials make decisions around aid issues;

8. The government is more accountable to donors than to its people;

In addition, the government has been strengthening its internal systems: introduction of medium term expenditure framework, roll out of e-SISTAFE – an electronic system for the management of public finances, improvement of the procurement system and setting up of anti-corruption units.

Despite these achievements the government has to improve its capacity at central, provincial and district levels, especially regarding costing of its activities and monitoring; strengthen coordination of activities among ministries; improve governance regarding the rule of law and use of public goods; improve democracy and further reduce poverty through equitable distribution of income, reduction of regional disparities and provision of support to national entrepreneurs. Above all, the Mozambican people have to set their genuine development agenda in an inclusive manner on which all aid efforts should go.

CONCLUSION

Mozambique has been an aid dependent country for a long time, which poses some constraints in terms of the definition of its own development agenda. Some conditionalities attached to aid have reduced its impact making the government less accountable to its people and by excluding some segments of the populations that aid is supposed to serve.

In order to reverse this situation, the Mozambican government and its development partners have been putting in place some mechanisms and procedures to make aid more effective. The establishment of partners for programmatic support forum and formulation of memorandum of understanding and performance assessment framework, the creation of joint reviews and development observatories are all efforts aimed at improving the effectiveness of aid.

As a result of these efforts donors have been trying to improve their performance through increased alignment of their aid to national programmes, using some government procedures and systems, taking steps to harmonise their procedures and engaging in mutual accountability exercise. On its part, the government has been putting in place improved systems and procedures to manage public resources, ensure good governance and combat poverty.

Despite these positive actions, some challenges still face both government and donors to make aid more effective. National programmes are still influenced by external agendas weakening the government leadership role. Although with a decreasing trend, donors still put money where they have vested interest not necessarily where government priorities are. Donors are also using their own procedures and systems for part of their funding resulting in high transaction costs and strained government capacity. The government on the other hand needs to further improve its capacity for coordination and planning and institute more reliable systems and procedures. It also needs to further improve governance and reduce poverty.

The space created by joint review and development observatory should be better utilised to making it a truly democratic arena in which the government and civil society can influence the aid agenda while ensuring equal accountability criteria for both government and donors. The government should also use this space to get leverage from civil society and other national actors for better dialogue and negotiation with donors.

Finally, the government, donors and civil society organisations should reflect on whether aid is being channelled to a development agenda that truly reflects the development needs of the people of Mozambique and if aid effectiveness efforts are being directed towards the right development path.


* Marta Luis Cumbi is the Director for Cooperation and Advocacy at the Foundation for Community Development in Mozambique. She is a member of governing boards of the Mozambican Debt Gorup, Mozambican Education Network, Forum for African Women Educationalists - Mozambique chapter, Southern African Network against Child Abuse and G20 (a national civil society platform advocating for poverty erradication). She is also a vice coordinator of SADC National Commission for Human Development and Special Programmes Committee. She is a board member of CIVICUS and FAWE Prominent Educationalist.

* This article is an extract from a longer paper which will be included as a chapter in the forthcoming "African Perspectives on Aid in Africa" book published by AFRODAD and Fahamu.

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