Challenges and opportunities of development aid actors

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By Fred Twesiime, Economist, Ugandan Ministry of Finance, Planning and Economic Development

 
The number and diversity of actors in development co-operation has dramatically increased. To give one example, only one or two donors assisted Mozambique and Zambia in 1964, but this increased to almost every one of the 37 donors in the OECD database by 1999.

Having more donors creates new opportunities for broader partnerships among different development actors. At the same time, it poses challenges for countries receiving aid and other types of assistance. It increases fragmentation, transaction costs and makes management of aid all the more challenging.

How can a country make best use of multiple aid sources while avoiding the negative effects of uncoordinated aid? How can we significantly reduce transaction costs and other negative effects of fragmentation?

The Busan 4th High Level Forum on Aid Effectiveness in 2011 agreed political intentions and concrete, time-bound obligations to address such challenges. This year, the Global Partnership for Effective Development Co-operation endorsed the Building Block on Managing Diversity and Reducing Fragmentation, designed to find innovative strategies to embrace the benefits of broader partnerships while reducing fragmentation and proliferation.

This initiative, of which I am co-chair, aims to make development co-operation more complementary and coherent at all levels. A recent report has examined how aid from different sources can best be managed at country level. Looking at countries working on these issues, we found that partner countries’ ownership plays a crucial role for managing aid diversity.

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We must embrace the benefits of broader partnerships while reducing aid fragmentation and proliferation.

For example, the Bangladeshi Government has paid special attention to managing aid diversity since 2006. This is a particularly thorny issue for Bangladesh, a low-income country that receives the bulk of its aid as highly fragmented project support. The government has developed a comprehensive structure for dialogue with donors, and worked intensively to harmonise implementation among donors. The country now aims to rationalise its aid by sector, based on donor mapping, comparative advantage assessment and agreements on division of labor.

Rwanda, often considered a forerunner on aid effectiveness, also has a relatively long history of managing its aid diversity. The Rwandan government mapped its donors in 2008 to discover that certain sectors were being over-provided for while others were under-aided. In 2010, the country started an extensive division of labor process based on the EU Code of Conduct on Complementarity and the Division of Labor, including donor performance assessments and joint programming.

Rwanda’s efforts are showing first effects. Aid management is smoother. In 2012, the fragmentation ratio dropped for the first time, down to 31% from around 40% in previous years. Rwanda has taken a strong lead in donor co-ordination, with its clear national aid policy and other strategies demonstrating the capacity to coordinate efforts. Donors’ positive response to the government’s quest for budget support rendered aid management less demanding than in the case of Bangladesh.

Experiences from Bangladesh, Rwanda and other countries show that reducing fragmentation and managing aid diversity is everything but easy. It relies on a strong leadership from the recipient countries, and on donors adjusting their aid streams to national strategies and agreed-upon sector rationalisation efforts.

The way forward lies in the development of aid management tools. What ingredients are needed to operate aid management systems well? We need a focus on results from donors and recipients alike. We need transparency and predictability as well as ownership and inclusiveness. These can help countries to better integrate aid in the implementation of their national development strategies and plans. Elements of good aid management such as aid management information systems, sector and donor matrices are also key.

Recipient country governments and donors should work together to create an enabling environment for good aid management. This requires concrete results-based national development plans and sufficient recipient government capacity. Donor alignment is also essential. Partner countries should also maintain consistent national development plans over the medium term, even when national governments change. There should be a clear framework for continuity and consistency in policies.

We must embrace the benefits of broader partnerships while reducing aid fragmentation and proliferation. This way, we can enhance the complementarity of development co-operation at both partner country and international levels.

Partner countries and development partners can learn a lot from each other’s experiences of managing aid diversity, attempts to reduce fragmentation and to rationalise aid. Now, we need discussion on the best way to foster global learning and to collect and communicate experiences on aid diversity management tools and approaches.


TWESIIMEBioFred Twesiime is an Economist at the Ugandan Ministry of Finance, Planning and Economic Development. He is also the Co-Chair of the Building Block on Managing Diversity and Reducing Fragmentation.

Transparency at the heart of Africa’s growth and prosperity

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By Donald Kaberuka, President of the African Development Bank Group

Today, Publish What You Fund is launching their annual Aid Transparency Index (ATI) in Washington, DC. The ATI is currently the only global measure of aid transparency amongst the world’s largest donors. I’m once again pleased to see that the African Development Bank has performed well, ranking eighth out of 68 organisations assessed, and gaining over 10 percentage points from last year.

Transparency is a key priority for us and we have been working hard to ensure that the principles of transparency are embedded in the way we do business.

In 2013, we launched our new disclosure policy, putting greater transparency at the heart of our work. It is based on the principles of good governance; particularly transparency, accountability and the sharing of information on our operations. These principles underlie our ten-year strategy for inclusive economic growth across the continent.

Our decision to publish with the International Aid Transparency Initiative – or IATI – reflects these commitments. The data we publish covers a wide range of information on the Bank’s public and private sector projects. We are proud to say that we were the world’s first multilateral development bank to provide private sector and precise geographical data through IATI.

But why are we investing in transparency? Good economic governance and management are central in the pursuit of growth and prosperity in Africa. Without comprehensive, accessible and timely information on aid, governments cannot take charge of their own development and stakeholders are not empowered with the information they need to follow development spending and drive results. Poor information undermines the ability of countries to integrate aid into planning, budgeting and reporting processes and undermines ownership and domestic accountability.

To unleash Africa’s potential and make sure the benefits of growth accrue to this and future generations, development needs to be managed sustainably.

That is why, in 2011 at the Busan High Level Forum on Aid Effectiveness, we – along with other development partners – agreed to implement IATI. We promised to do this by 2015 and we are making good progress.

One of the keys to IATI’s importance is that the data is in a standard and comparable format. Producing this standardised data is incredibly important. It means that information can be aligned not only with other aid information, but also with data from other economic sectors of activity.

The ability to link different datasets together is crucial if we are really to harness the power of transparency and build a fuller, timelier picture of different resource flows. The UN High-Level Panel on the Post-2015 Development Agenda has called for nothing less than a data revolution. Joining up different datasets and ensuring that they are standardised must be at the core of the data revolution if we are to properly realise the potential of open data.

What we have achieved so far has not been easy.

Our aim is to ensure that transparency is more than a watchword, but that it is truly embedded in the way the Bank does business. We have been working hard to improve the quality of the information we produce and how we present it – not only for our own transparency and accountability purposes, but also so that others can use the information to inform their own work.

For example, at our Annual Meetings this year we launched MapAfrica—A new web-based tool that locates all our projects on a map. It allows everybody to see for themselves where and what we are doing to create economic opportunities for the people of Africa. Just to give you one example out of many, you can find out how we are helping Africa meet its energy needs and where we are building roads.

We are now working to develop a feedback tool which will allow stakeholders to tell us what they think about the work we are doing. This is just one way we are opening up our information to help us become more effective in our activities and learn as we go along.

Last year we launched a new Results Measurement Framework, designed to underpin our 10 year strategy by enabling us to better measure our impact. An each year we publish our results in our Annual Development Effectiveness Review. By bringing together evidence of our strengths and our weaknesses, we learn what is successful and strive for even greater effectiveness.

Greater transparency, however, should not be seen as a silver bullet. It is a means to achieving an end, namely more effective use of public resources and, ultimately, stronger accountability to the people we serve.

This is an area where we have a real opportunity to make tangible progress. IATI truly has the potential to transform the way aid is managed and it is crucial that we continue to work to meet our commitments over the next 15 months and beyond.

We must all invest in this agenda because by investing in better information we are investing in better development.


KaberukaBioDr. Donald Kaberuka is serving his second five-year term as President of the African Development Bank Group (AfDB). During his service at the AfDB, he has presided over a major redirection in its strategy for development and poverty reduction in Africa.​​

You can tune in to the launch of the 2014 Aid Transparency Index on Wednesday October 8 at 09:00 EST here

Whose Knowledge? The challenges for North-South development co-operation

Farming for Development: Agriculture in China

By Xiaoyun Li, Chair of the China International Development Research Network

 
The varying degrees of participation in the Global Partnership for Effective Development Co-operation’s High-level Forum in Mexico demonstrated how wider stakeholders’ co-operation has ever been. More than 1,500 participants from more than 130 countries with different agendas and expectations took part in the conference in Mexico on 15-16 April, 2014. Northern partners offered their willingness to work with all parties to tackle global challenges under common goals with differentiated responsibilities. However, the legitimacy of the forum has been debated. The decline in the participation of China and India, as well as apparent disagreement from Brazil, despite its attendance, raised questions over how this new partnership can be further developed. It would be very difficult to imagine the future of the partnership without participation of these three countries.

As soon as I arrived in Mexico, I was immediately asked at the hotel reception: “Why didn’t China come? Will China still come?” These questions reminded me of the situation at the Busan Forum on Aid Effectiveness in 2011. China did take part in that event, but in a relatively lower profile group. It is natural to ask why China, India and others have been reluctant to participate in this ever-open forum. Wouldn’t these countries like to share their responsibilities for international development? With South-South Co-operation given high recognition at the Global Partnership’s High-Level Forum, why were those countries still unhappy? Are they really so difficult to “engage”?

To respond to those questions, one should briefly review how this new partnership was developed, and, importantly, note the huge knowledge gap that existed at that time, affecting real and equal communication.

Development assistance after the Second World War was provided mainly by the United States until the 1960s. The US called for the establishment of the “Development Assistance Group” in 1960 with 11 allies. This was the first expansion of a Western-oriented international development agenda. The group was then further institutionalised into the Development Assistance Committee (DAC) within the Organisation for Economic Co-operation and Development in 1961. This Western-dominated international development agenda continued until the new century, alongside other forms of international aid provided by other players like the former Soviet Union and Arab countries. The Rome from different stakeholders, particularly from recipient countries. From a Chinese perspective, the subsequent formation of the Working Party on Aid Effectiveness and The Busan High-Level Forum signalled further expansions of the Western-dominated international development discourse. The West has been using a similar approach through its controlled institutional structure and well-elaborated framework to secure the “buy-in” of others in order to sustain its basic agenda. China and, I believe, others have been very cautious not to be “bought in”.

China and others felt very much in the position of being “engaged” even though the partnership has a well-legitimised governance structure. The question was not so much about the structure, as the approach and framework which are deeply rooted in Western-based knowledge for development. The modern knowledge for development is very much a marriage of neoliberalism and neo-institutionalism. It addresses “conditional change” – that social transformation or poverty reduction must be based on “good governance”. Furthermore, international development co-operation works only upon a good institutional base, therefore, building good institutions should be the major task of such assistance. Alternative development stories – from China for example – provide different perspectives, for instance,firstly to prioritise infrastructure and agriculture even if they do not run entirely against this norm.

In my view, the West has established well-elaborated knowledge production systems via huge tax-payer funding to constantly generate seemingly undeniable theories, creating the field of Development Studies, and producing ‘independent development industries” to justify, modify and sustain this development business. This has at least created deep knowledge and path dependence, even if we ignore the element of self-interest possessed by the development industries. This system intends to continue while China and others might find difficulties in owning this process, or phasing in to share the costs. This knowledge dominance has affected to a certain degree the mutual and equal communications between the North and South. At the same time, in recent years we have witnessed other actors playing an increasingly important role in development co-operation, for example the Arab donors, civil society and philanthropic foundations.

Rather than completely joining the system, China and others insist upon South-South Co-operation by advocating a “non-interference” policy toward partner countries focusing on an “, or not focusing on immediate institutional reform. The South-South Co-operation providers also felt that a knowledge gap existed between Southern and Northern partners. Unlike the mainstreamed development knowledge produced by the West, South-South Co-operation providers have little knowledge on their own development assistance, while large bodies of knowledge are generated by Western research institutions.

It is essential to have a balanced knowledge base for real and meaningful development co-operation between the North and South. This co-operation relies upon an interaction of knowledge, reflecting each side’s comparative advantage.

Think tanks from South-South Co-operation provider countries during the Global Partnership’s Mexico High-Level Forum agreed to develop a network focusing on generating its own understanding of its members’ development assistance. This initiative will not only help South-South Co-operation providers to strengthen and improve their development assistance programmes, but also aid mutual communication between North and South in international development. The Global Partnership can serve as nuanced platform for think tanks from the South to share their knowledge with those from the West. Also, the Global Partnership can facilitate exchange among southern partners to strengthen their solidarity. The voice from Southern countries about their own development can be better heard here, as the platform is widely attended.


LiBioXiaoyun Li is Dean of the College of Humanities and Development at China Agricultural University, and Chair of the China International Development Research Network. He is also a member of the Rising Powers in International Development Advisory Council, as well as the Future International Cooperation Policy Network.

How we can benefit from better tax administrations

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By Michael Keen, Acting Head of the TADAT secretariat

 
No one likes paying taxes. But everyone benefits when collection of those taxes is efficient and fair. For almost all developing countries, building more effective and trusted tax administrations is critical. This helps finance much needed social spending, infrastructure, and reduce dependence on aid, now subject to its own pressures. It’s also a key pillar in building accountable, effective and respected government institutions.

Achieving this is partly down to good tax design. But it is also largely a matter of building strong tax administrations. This is not easy. A new instrument being developed at the International Monetary Fund with donor support and technical input from a wide range of experts — the Tax Administration Diagnostic Assessment Tool (TADAT) — aims to help.

The tool — which is welcomed in the Communiqué of the First High-Level Meeting of the Global Partnership for Effective Development Co-operation — provides an independent, standardised, evidence-based, quality-assured, all-round assessment of the performance of a tax administration. All of these adjectives are critical, as will become clear. TADAT provides, in effect, a revenue-side analogue to the highly successful Public Expenditure and Financial Accountability (PEFA) framework.

The technical design of TADAT will be completed in the next few months. The tool itself will be posted on the TADAT website for public comment in a few weeks. It has already been piloted in three countries – in Zambia, a low-income economy; high-income Norway; and the emerging economy of South Africa. Countries differ greatly in circumstances, culture and organisational/legal structures, and it is important that the tool be robust enough for use under a wide range of circumstances.

With several more pilots planned, results have been uniformly encouraging so far. All three pilot countries have found the tool extremely helpful. One striking regularity is that administrations often found that they were not performing as impressively in some areas as they had thought — but that they were also not doing as badly in others as they had feared. This is exactly the value of an independent, standardized assessment.

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The TADAT Wheel

TADAT works by evaluating a tax administration in each of nine ‘Performance Outcome Areas’ (POAs), shown in the TADAT ‘wheel.’ This starts with taxpayer registration — making sure all are in the tax net who should be, and that records are up to date – and goes all the way to looking at how tax disputes are handled and whether the tax administration is working transparently. A score is given for each area, with 27 ‘indicators’ forming part of 54 detailed ‘dimensions.’

This is all much simpler than it may sound. Take, for instance, POA 5: Payment of Obligations. Clearly any tax administration wants to make sure that taxpayers pay on time and in full – so one of the two indicators here is timeliness of payments. We can assess this by looking at such things as whether VAT payments are made on time, recording an ‘A’ if the proportion is above 90 percent to ‘D’ if it is below 50 percent.

This exercise doesn’t aim to reach some overall score or country ranking. Nor does it come up with immediate recommendations or advice. This is diagnosis, not prescription.

The idea, rather, is to help countries themselves to identify their own tax administrations’ relative strengths and weaknesses, and develop reform strategies accordingly. TADAT’s standardization and rigid insistence on firm evidence for all assessments will make a major contribution to more effective development co-operation, helping donors and other stakeholders identify and agree on the areas where support is most needed, coordinate their efforts and debate the issues in an agreed framework.

And with repeat assessments, TADAT will give a systematic and structured view of progress being made.

Importantly, TADAT is not only for developing countries. Tax administrations in all countries face the same basic challenges, and indeed the years since the 2008 financial crisis have exposed weaknesses in many tax administrations in advanced economies, and lent renewed urgency to fair and effective tax collection in many more. At the same time, many have been asked to do more with fewer resources. For them too, a hard-nosed and independent assessment of their strengths and weaknesses can provide an invaluable perspective in deciding their own priorities for improvement.

Its implementation is being overseen by a Steering Committee of enthusiastic donors – the European Union, Germany, Japan, Netherlands, Norway, Switzerland, and United Kingdom along with the IMF, World Bank and South African Revenue Service. A technical advisory group provides, well, technical advice. Day-to-day operations are overseen by a small secretariat within, but at arm’s length from, the IMF.

This secretariat will be responsible for developing the tool, and — crucially — for assuring the quality of TADAT assessments.

These assessments will be undertaken by a wide range of organisations: regional development banks, international organisations, consultancy firms and others. A key element of the TADAT philosophy is that assessments should be undertaken only by tax administration experts specifically and extensively trained to do so. Over the next few months, a core goal is to build up a highly professional pool of accredited assessors to undertake the substantial work ahead and ensure that the unique and exciting potential of TADAT is fully realised.


KeenBioMichael Keen is Deputy Director in the Fiscal Affairs Department at the IMF, and Acting Head of the TADAT secretariat. For more information on TADAT, see www.tadat.org or contact secretariat@tadat.org.

Local priorities to achieve effective development

Secretary-General Ban Ki-moon visited MDG Project in Mbalmayo.  He was shown a water purification process and visited a radio station

By Célestine Ketcha Epse Courtés, Mayor of Bagangté Municipality, Cameroon

 
I think that it is crucial to take local priorities as the starting point for development co-operation.

Let me give you a very concrete example of why this is important. As mayor of Bagangté Municipality in Cameroon, I developed a project to provide drinking water to my citizens. With support from the International Association of Francophone Mayors, we built a well and held a large campaign to explain the need for citizens to pay taxes to ensure long-term sustainability of the drinking water system.

This was working well, and access to water was increasing. Then all of a sudden, our central government decided to launch a project in my region to provide free drinking water to citizens. This would cancel out all our efforts! I therefore told the government that we already had a programme to provide my people with water access and that this new project was unnecessary and potentially unsustainable in the long term. I am convinced that charging citizens for a service makes them take better care of the network, and ensures long term sustainability, as maintenance will be easier when people feel that the service belongs to them because they pay for it. I explained that if the central government wanted to invest in my community, their support for access to electricity would be far more useful. This example is a typical one.

Unfortunately, the Ministry refused to change or transform their project to improve the existing network.

Secretary-General Ban Ki-moon visited MDG Project in Mbalmayo.  He was shown a water purification process and visited a radio station

 

In too many countries, local priorities are not taken into account, or not sufficiently known.

As a Champion on Development Co-operation for the global organisation of United Cities and Local Governments, a function shared with eight other mayors from around the world, I aim to increase recognition of local governments’ role in development. I see it as my task to feed lessons from my local reality into international discussions on making development co-operation more effective, coherent and accountable.

Local governments are on the front line of dealing with development challenges, and identifying solutions to them. It is only natural that they take a leading role in the elaboration of development strategies for their areas. A formal consultation mechanism should ensure that these are included in national development strategies. What’s more, local governments and their associations should be supported to have the capacity to engage in this dialogue.

Local government development co-operation as effective solution

Let me get back to my example from Cameroon. Our well project was supported by an association of local governments from abroad, with help from experts from other local governments that knew the kind of services we deliver and how to do this effectively. This helped to make the project a success. This “decentralised development co-operation” had a high degree of ownership and local traction, based on my local government’s priorities.

This kind of co-operation between peers is based on long-term relationships, resulting in trust, transparency and good dialogue between partners. This is very important to achieve sustainability. It can be done in a very cost-effective manner since the co-operation initiatives build on the existing local governments themselves and use existing staff within the municipal organisations. This avoids the need to set up parallel structures that could lack the political leadership of the partner itself.

The cost of not working with local governments

Strengthening local governments is crucial to achieve development goals. A top down approach by central government can result in development policies ill-adapted to local needs and contexts. Development partners such as multilateral organisations, states, and civil society should understand that the cost of not working with local governments may be high, missing local ownership, as seen in the case of the water project in Bagangté.

For a start, their action might not be sustainable when not embedded into a local public policy designed to meet the needs of the citizen. Embedding development priorities in local public policy ensures their continuation and follow up because municipal policy is attached to a concrete workplan with a budget. This bottom up process is very important.

There may also be duplication of work at local and national levels, with a risk of confusion on the mandates of different levels of government. Bypassing local government may also generate distrust among citizens.

I believe that local government development co-operation initiatives can provide national governments with a broad range of experiences to help them respond to issues, challenges or disasters that have effects at the local level. It is crucial that local governments become true partners in national dialogues on development priorities, policies and strategies.

It is also important that reviews of development co-operation commitments such as the Busan commitments give more attention to the role of local governments in national debates on development priorities and implementation. It is good that UCLG is back on the Global Partnership for Effective Development Co-operation’s Steering Committee.

I think UCLG should also explore, within the Global Partnership, how the post-2015 development goals will be implemented. It is in this regard important that more focus is placed on who can help achieve which goals, as opposed to just focusing on what should be achieved.

I hope that together we can ensure that the level of government closest to citizens, becomes more equipped to address the upcoming new set of development goals, which should be in line with our own priorities at the local level.


CourtesBioCélestine Ketcha Epse Courtés is mayor of Bagangté Municipality, Cameroon and Champion on Development Co-operation for the global organisation of United Cities and Local Governments (UCLG). The UCLG Champions are supported by the UCLG Capacity and Institution Building Working Group, which has its secretariat within the International Co-operation Agency of the Association of Netherlands Municipalities (VNG International). For more information contact uclg.cib@vng.nl.

Progressing Aid Effectiveness in the WASH sector

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By Clare Battle, Policy Analyst, Aid Effectiveness & Sector Strengthening, WaterAid

As the 2015 deadline for the Millennium Development Goals (MDGs) approaches, the Water, Sanitation and Hygiene (WASH) sector continues to face serious challenges that are hampering progress. Although the world has met the MDG target for drinking water, 748 million people still lack access to an improved drinking water source, and 2.5 billion people cannot access a basic toilet. Sanitation is among the most off-track of all the MDGs, with the percentage of people with access to improved sanitation barely increasing since the MDGs were agreed 15 years ago.

Yet despite these considerable challenges, ambition is increasing. As negotiations for a new set of post-2015 global development goals move forward, there is growing expectation that universal access to water and sanitation by 2030 will be a key pillar of a new framework to eradicate extreme poverty. Such international commitment would amount to an historic opportunity.

But the step change needed to meet this goal would not only require significantly more investment; it would also require a different way of doing business.

Governments, donors, the private sector and civil society will all have a vital role to play in ensuring sector resources are put to good use. They must strengthen the country processes needed to deliver permanent WASH services that reach everyone. One particularly important area is the effectiveness of development aid. Many developing countries remain heavily dependent on donor funds to deliver WASH services, and effective aid that enhances recipient country governments’ capacity to extend and sustain WASH services is crucial to achieving permanent universal access.

However, evidence suggests that aid to the WASH sector is not currently as effective as it could be. Fragmentation remains a challenge, and donor commitment to strengthening national institutions and addressing national priorities is sometimes trumped by desire to maximise short-term impact. Statistics show that project type interventions accounted for 88% of water supply and sanitation aid in 2012.

There is therefore an urgent need for the WASH sector to improve its understanding of how aid can optimise progress, and to foster mutual accountability for sector performance. A new report by WaterAid – released last month – is a useful starting point, drawing on previous work both within and beyond the WASH sector. It looks at how the health and education sectors have tackled the challenge of strengthening mutual accountability, with case studies in Ethiopia and Timor Leste providing examples of current practice in the WASH sector.

These studies demonstrate the complexity of development co-operation in the sector. In Ethiopia, the Government has launched its One WASH National Programme (OWNP), with the vision that development partners will align around a unified set of country-owned systems. But despite donors’ broad commitments, there are concerns that headquarter rules and perceptions of risk will limit how far they can align with these policies in practice. In Timor Leste, new Water and Sanitation Information Systems have marked important progress in monitoring WASH sector results, but there are still major technical and political challenges to effectively link monitoring to planning and resource allocation. Both countries also face challenges in increasing transparency and strengthening mutual accountability in the sector.

WaterAid’s report aims to support the sector in addressing such issues. It proposes a series of common practice and performance measures that capture the most important facets of effective WASH aid. It also explores the types of institutional arrangements that could be used to monitor practice. This provides the first step towards a global framework that can introduce greater scrutiny and mutual accountability into development co-operation in the WASH sector.

wateraidquoteWe must ensure that the WASH sector’s work to strengthen mutual accountability is closely linked with global efforts to improve the effectiveness of development cooperation.

Over the coming months WaterAid will work closely with other members of the Sanitation and Water for All partnership (SWA) to increase our understanding of current practice in aid to the WASH sector, and to develop a bold roadmap to make it more effective. But the Global Partnership for Effective Development Co-operation also has an important role to play in ensuring development resources are translated into improvements in sector performance. There is clear evidence that momentum created by global agreements such as the Paris Declaration and Busan Partnership Agreement (and their associated monitoring processes) can drive progress and improve the effectiveness of development co-operation among WASH sector actors. A globally coordinated dialogue that maintains momentum around these principles is therefore invaluable. The WASH sector also has much to learn from initiatives to strengthen country processes in other sectors, such as health and education, as well as much to contribute from its own experiences. The Global Partnership can play a unique role in facilitating such dialogue and exchange by doing more to reach out to sector actors, and using their experience and expertise to strengthen the Partnership’s own work.

We must ensure that the WASH sector’s work to strengthen mutual accountability is closely linked with global efforts to improve the effectiveness of development cooperation. Only then can we successfully catalyse the step-change in performance needed to realise our ambition of sanitation and water for all.


BattleBio

Clare Battle is a Policy Analyst at WaterAid, an international charity that transforms lives by improving access to safe water, hygiene and sanitation (WASH). Her role includes leading WaterAid’s work to improve aid effectiveness and strengthen country processes in the WASH sector.

Using domestic revenue to build democracy

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By Peter Moors, Director General for Belgian Development Cooperation and Humanitarian Aid

 
Revenue authorities are central to building viable and accountable democracies. This idea is gaining traction in sub-Saharan Africa. Governments are recognising that social services and infrastructure will increasingly have to be financed with domestic revenue. Reinforcing the tax system in order to raise this revenue is central to strengthening the state and fostering good governance. A transparent and efficient tax system simultaneously bolsters intra-societal relationships and the relationship between citizens and the state.

Belgium believes that international assistance for domestic resource mobilisation is an important catalyst for broader governance reforms and development.

Domestic resource mobilisation is crucial in building sustainable states, representing an excellent investment for the development community. It is a vital avenue to finance human development and recovery and can provide an eventual exit from aid dependency. This vision was widely shared at a focus session that Belgium co-organised with Germany and the Effective Institutions Platform at the first High-Level Meeting of the Global Partnership for Effective Development Co-operation in Mexico earlier this year.

As the 2014 OECD Fragile States report points out, mobilising revenue in fragile states is a key element of a functioning civil service and robust state-society relations. It should be seen as a vital process whose positive side effects for society and stability are at least as important as the financial outcome itself. In many fragile countries, however, revenue authorities must be (re-)built from scratch. In this regard, Belgium is offering assistance to the Burundian authorities.

'Back To School' Programme in BurundiOfficial Development Aid for building tax systems can yield impressive returns on investment. The case of Burundi clearly demonstrates how effective revenue reforms can transform a developing country’s fiscal position, increasing country ownership.

Burundi, like many other fragile developing countries, has not yet been able to collect sufficient tax revenues to finance the necessary services and public goods to help the country meet the Millennium Development Goals. In 2009, however, the Burundian government began taking measures to improve public financial management in the face of out-of date legislation, weak governance structures, excessive bureaucracy and opacity over organisational roles and low skill levels. These efforts included a tax revenue modernisation programme and the creation of the Office Burundais des Recettes (OBR – Burundi Revenue Authority).

The OBR’s initial goal to improve the proportion of tax revenue contributions to GDP by 1% before 2016 was already achieved by 2011. That year, the OBR collected tax revenue that was nearly 60% higher than in 2009 – the year before it was set up – and one-third higher in real terms. By 2012, Burundi almost doubled its domestic revenues in comparison with the base year of 2009. In that year taxes collected by the OBR rose to BIF527 billion (US$350m), 75% more than in 2009, and the contribution of tax revenues to GDP was 16.7% against 13.8% in 2009. By 2013, the OBR was the most improved revenue administration in East Africa, having a score of 16.4 on the East African Bribery Index, down from 35.7 the previous year. This is a clear indicator that the OBR integrity policy is producing results.

Although the OBR has made very good progress in its brief five-year history, establishing a fully functioning revenue authority is a long-term project.

Burundi’s government is now generating a great deal more revenue from domestic sources, but there are insufficient domestic resources or external funding for the massive infrastructural development and expansion of public services required to consolidate the relative stability experienced since 2005. Burundi’s tax base remains narrow and for many years, fiscal revenues have formed just 20% of GDP, compared to an average of 45% in OECD countries. Annual GDP growth of around 4% is half of what the country needs to make real headway towards achieving its Poverty Reduction Strategy and Vision 2025. Until there is a significant rise in GDP per capita in Burundi, tax revenues will unfortunately be insufficient to finance the country’s development priorities.

In order to increase the quality of support, the political economy of tax reforms (in particular ownership and political will) has to be taken into account. Tax reforms should also be embedded in broader governance reforms. They should involve not only tax administrations, but also Ministries of Finance, sub-national governments (and the relationship between the national and regional levels), Parliaments and civil society, in order to increase accountability. The private sector, including informal businesses, is also an important actor.

Funding these reforms is a complicated affair, involving multiple donors. The UK’s Department for International Development (DfID) was the OBR’s inaugural donor in 2009, encouraged by its successful support of the Rwanda Revenue Authority (RRA). When it closed its office in Burundi in 2011, the administration of DfID’s funds – and the task of acquiring new donor support – was taken over by TradeMark East Africa (TMEA), a regional programme which works closely with East African Community institutions, national governments, the private sector and civil society organisations. It seeks to promote economic growth and poverty reduction through increased trade. The TMEA Burundi programme runs from 2010 until 2016. Belgium has provided funds through delegated co-operation and will also offer direct assistance to the OBR from mid-2015 through the Belgian Development Agency (BTC).

Official Development Aid for building tax systems can yield impressive returns on investment. The case of Burundi clearly demonstrates how effective revenue reforms can transform a developing country’s fiscal position, increasing country ownership.


Moors%20-%20A%20day%20in%20the%20life%20-%2028.03.2008Peter Moors is Director General for Development Cooperation and Humanitarian Aid in Belgium’s MFA since 2007. A career diplomat, he was Ambassador to Athens and Deputy Chief of Staff of the Prime Minister. Prior to that, he served at the Embassies in Prague and Rabat and the Permanent Representation with the European Union.

Reinventing foreign aid: send us your views

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By Pierre Jacquet, President of the Global Development Network

 

Official Development Assistance (ODA) has long been an important resource for development. But despite its long history and the lessons learned, its current definition, measurement and operation hinder donors from building a convincing narrative and seriously limit its effectiveness.

This very timely topic is much in need of fresh thinking.

That is why the Bill & Melinda Gates Foundation and the Global Development Network have partnered to launch the Next Horizons global essay competition designed to generate innovative ideas on the future of development assistance.

In the hope of inspiring reactions and innovative essays, let me provocatively claim that the aid system has remained trapped in a mostly solidarity-driven paradigm, in which spending more taxpayers’ money for development is dictated not by impact but by a sort of beauty contest among donors against a background of political pressure from beneficiaries to get more. The intrinsic tension between a duty of international solidarity and an imperative of effectiveness has of course been recognised, and the past decade has witnessed efforts to build aid and development effectiveness, notably through the Paris, Accra and Busan declarations. However, these policy prescriptions have paid insufficient regard to the framework of incentives directing donors’ and recipients’ behaviours.

Recognising this flaw, some critics have jumped to the conclusion that aid is wasted and that the system should be dismantled. We believe, to the contrary, that the aid system needs to be modernised and strengthened, and that a new narrative and a new measurement system are urgently needed, in line with the evolution of the world economy and of public policies, and with the emerging United Nations post-2015 development agenda.

A few themes may merit special attention. First, the current challenges of the world economy and post-2015 discussions make the dangers of working in silos clearer than ever. Yet we still see uncoordinated approaches from various actors (governments, private sector, NGOs, international organisations, foundations), or action targeted to individual sectors that ignores interaction between sectors. Food, health, infrastructures, water and energy are all deeply connected. More than ever, the role of aid should not be to “do” things through financing them, but to get them done by leveraging and catalysing other resources and energies in innovative ways. This resonates with the work of the Global Partnership for Effective Development Co-operation, which aims to connect the various players and build new forms of development partnership between governments, civil society, private sector, international organisations and foundations.

Second, relevant and contextualised knowledge is needed to identify and understand interactions and synergies, to act effectively and to address specific problems. However, the production and dissemination of knowledge is still concentrated in developed countries’ premier research centres and universities.

GDNquote1More development assistance should go towards helping local researchers, so that they can produce local knowledge with global credibility to inform the development debate and policy. This is the mission of the Global Development Network.

We must dare to leave the illusory comfort of concrete and measurable achievements and enter the murky world of people and processes – with the long term objective of empowerment. This clearly challenges the current approach to aid effectiveness, and inviting new methods of measuring results. The present essay competition is an opportunity for scholars the world over to contribute their suggestions. The debate on aid effectiveness should not be left to donors alone.

Third, notwithstanding provider countries’ repeated promises of meeting the 0.7% target for aid as a percentage of their gross national income, the years and possibly decades ahead will be those of tight budget constraints for public policies in most donor countries. This constraint should be transformed into an opportunity. New and imaginative means must found to leverage taxpayers’ money, echoing the role of aid as a catalyst already mentioned. This requires new competences for donors – understanding market failures and working out how aid can address them; and analysing and understand risk, so as to crowd-in, rather than crowd-out, the private sector, without piling-up bad risks on their balance sheets. None of this means that aid should no longer be an expression of international solidarity. But solidarity must be combined with effectiveness to make things happen that would not otherwise take place and that effectively contribute to development.

On these and other issues, we want to hear your voices and ideas to submit your 5,000 word entry in the GDN Next Horizons Essay Contest 2014 before the deadline of September 15, 2014.


JacquetbioPierre Jacquet is the President of the Global Development Network (GDN). He was formerly Chief Economist (2002-2012) and Executive Director in charge of strategy (2002-2010) of the French Development Agency (AFD). From 1995 to 2012, he was also Chairman of the Department of Economics and Social Sciences of the French Graduate Engineering School Ecole Nationale des Ponts et Chaussées. Preceding AFD, he was Deputy Director of the French Institute on International Relations (IFRI), where he was responsible for the economic program and was Chief Editor of IFRI’s quarterly review Politique Etrangère.

Time to make sure young people help to rewrite the rules of development

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By Mark Nowottny, Policy and Practice Director, Restless Development

 
It’s not always immediately obvious why young people should care about effective development co-operation. Even for those in development circles, it has been the inclusive and broad-based process of shaping the next Sustainable Development Goals (SDGs) – the “whatof development – that has perhaps most captured the imagination.

But there’s a provocative argument going around. It goes something like this: over past months, the development community has been transfixed with and channelled its energy into shaping the SDGs, with each actor lobbying hard for specific causes like gender, disability, or inequality. But now that the shape of the Goals is starting to emerge in the latest results from the Open Working Group, it’s looking possible that history will judge the biggest changes to have come not in what the world wants by way of development, but on how it delivers it.

There are a number of concurrent processes including the Global Partnership for Effective Development Co-operation (GPEDC), the UN Development Co-operation Forum (UNDCF) and the Intergovernmental Committee of Experts on Sustainable Development Financing (ICESDF). That’s a whole lot of letters – 16 to be precise. Still, things have been moving along swiftly beneath the impenetrable acronyms, albeit without the same visibility afforded to the post-2015 process. Ask most civil society groups about these processes and they might tell you the same thing: the most important, and as yet unanswered, question is how to make sure that development financing from the private sector is underpinned by strong accountability frameworks and human rights principles. Put this together with other radical shifts in the development co-operation landscape – not least the emergence of the BRICS’ New Development Bank last month – and there are plenty of reasons why young people should be focusing their energies as much on effective development co-operation as they are on the new global goals.

And youth are indeed getting vocal. In April this year, Restless Development, the youth-led development agency putting young people at the forefront of development, brought a delegation of seven young global leaders to the Global Partnership High Level Meeting in Mexico. There, they shared key messages and asks with decision-makers around youth participation, summarised in a blog we wrote at the time. When the Global Partnership Steering Committee Co-Chairs rotated in July, our same delegates called on the new Co-Chairs to understand youth as leaders (not just partners or beneficiaries), to give youth a leadership role in the governance of the Global Partnership, and to give them a structured role in monitoring the commitments made by governments through the Global Partnership. Most recently this last August 7 and 8, the CSO Partnership for Development Effectiveness (CPDE, the leading civil society platform) hosted their first ever global youth meeting in Brussels to plot what structured youth engagement might look like.

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The new Global Partnership Co-Chairs, perhaps more than anyone else, have an opportunity to recast the role of youth in writing the new rules of development.

 

So, collectively, what could we now do to make sure that young people become systematically involved in rewriting the rules of development?

First, Those charged with the governance of the GPEDC, UNDCF and ICESDF need to hardwire permanent youth participation into the way they work. This could involve creating a youth sub- or shadow committee, giving young people a central role in organising events and meetings, making funding available for youth delegates to take part in meetings, and communicating with a growing constituency of interested young people all year round and not just when major summits happen.

Second, the GPEDC, UNDCF and ICESDF need to co-ordinate on how they’re going to open up to and actively reach out to youth. Even the most interested young people are at risk of drowning in alphabet soup. They want to get to grips with the issues, the power relationships, and changing the world for the better rather than spending limited time understanding the peculiarities of bureaucracies and getting their foot in the door of three separate and overly complex intergovernmental processes.

Finally, between them, youth and civil society need to build a platform or mechanism fit for purpose and able to navigate and consolidate the diverse views of young people. Young people have multiple identities and ideologies, and they need spaces to work through these if they’re to form powerful shared positions where they do have common cause. In Mexico’s High-Level Meeting, different delegations from youth and civil society rarely strategised enough together. The CSO Partnership for Development Effectiveness remains an option for convening these different actors under one platform, but the successful experience of the Major Group of Children and Youth reminds us that youth are actually often highly efficient at organising themselves when given the tiniest space and support.

The new Global Partnership Co-Chairs, perhaps more than anyone else, have an opportunity to recast the role of youth in writing the new rules of development. But civil society, youth and those running concurrent intergovernmental processes must all play their part.


NowottnyMark Nowottny joined Restless Development, the youth-led development agency putting young people at the heart of development, as their new Policy and Practice Director in April 2014. Previously, Mark was Head of Strategy at CIVICUS: World Alliance for Citizen Participation, the global civil society alliance based in Johannesburg. You can follow him on Twitter: @MarkNowottny @RestlessDev.

Why partnering with the private sector is key to inclusive growth

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By Lakshmi Venkatachalam, Vice-President of Private Sector and Cofinancing Operations, Asian Development Bank

 
Over the past couple of decades, no one can deny that the Asia and the Pacific region has represented a remarkable success story. Absolute poverty levels have fallen significantly and the region is on course to achieve a number of Millennium Development Goals (MDGs).

But more than 1.6 billion people in the region continue to live on less than USD 2 a day and remain vulnerable to shocks — whether economic or environmental. The region is also confronting widening inequalities and the challenge of enabling a decent quality of life.

A strong need remains for both dedicated knowledge support and for financing to address the region’s social and infrastructure gaps, including urgent measures to address climate change.

Over the past few years, policymakers and development finance institutions (DFIs) have increasingly looked to the private sector to help meet these financing needs. In the right investment climate, the private sector can support the inclusive and environmentally sustainable growth that is at the heart of the global development agenda.

A key contribution of the private sector is in promoting economic growth, which it does through investments, knowledge transfer, and enhanced productivity. By creating new markets, fostering competition, and making investments, the private sector helps allocate resources productively and efficiently, improving prospects for economic growth. Economic growth generates resources that can be used for future investment as well as social development.

According to the World Bank, the private sector is the source of nearly 90% of the world’s jobs. So by providing direct employment, as well as finance to the sectors and geographic regions where it is most needed, the private sector promotes not just growth — it promotes inclusive growth.

The private sector also helps to boost living standards. This extends beyond extreme poverty as captured in the MDGs to areas such as the availability and quality of goods and services such as housing, infrastructure, health, and education. In this context, the private sector also plays a critical role in improving service delivery through public-private partnerships. These are particularly relevant in the case of infrastructure, as they allow for risk sharing, and are benefitting from improved institutional capacity and clearer legal and regulatory frameworks.

The private sector can also promote the adoption and/or retrofitting of environment-friendly technologies. This is valuable in the face of climate change, which can adversely impact many critical development goals such as food security, health, and water. The largest mitigation opportunities, especially for energy efficiency, remain in middle income countries.

Lastly, the private sector is a reliable source of revenue for government operations through its contributions to taxes and duties.

Given these advantages, it is not surprising that DFIs have come together relatively quickly to agree on a core set of principles that would guide support for private sector initiatives. These include commercial sustainability, promotion of high standards and additionality – that is, the extent to which a new input or action can add to already existing ones. More importantly, the private sector itself, not least due to the fall-out from the global financial crisis, has begun to reexamine its role in promoting economic growth as well as its responsibility to society. It is therefore increasingly open to engagement on these issues, particularly with DFIs.

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Asia and the Pacific’s financing needs are indeed daunting. We, the multilateral development banks, need to engage the private sector on all fronts to an even greater extent than we currently do, to leverage both finance and knowledge.

The Asian Development Bank (ADB) has long recognised the private sector as a key driver of change in attaining its three long-term strategic agendas of inclusive growth, environmentally sustainable growth, and regional integration. In line with our commitment to transparency, ADB publishes the annual Development Effectiveness Review, with 89 performance indicators to assess progress in implementing these priorities. The dedicated 2013 private sector operations Development Effectiveness Report was published on July 25th.

With $1.8 billion approved in 2013, our Private Sector Operations Department provides comprehensive financial assistance including loans, equity investments, guarantees, cofinancing and technical assistance. Our clients are private companies, banks and financial institutions, investment funds and state-owned enterprises. All our private sector interventions are aimed at maximising development impact. In doing so, our aim is to supplement or complement commercial finance, particularly in areas where perceived or persistent market gaps are inhibiting private investments.

What can ADB contribute to effective development co-operation with the private sector? Firstly, we are an Asian institution with a long and stable relationship with developing countries in the region. Based on the foundation of our strong infrastructure and financial sector exposure, we are increasingly entering sectors where we see promising potential for sustainable inclusive business models, such as agribusiness, education and health. Our strength lies in the synergies we derive from our sovereign operations in the core areas of policy and regulatory support.

Our private sector portfolio has more than doubled since 2006, totaling $6,219 million in 2013, comprising 155 accounts and 140 projects in 20 countries. Aligned with ADB’s core specialisations and sector priorities across individual member countries, 96% of the portfolio supports infrastructure, environment, and finance sector development.

Asia and the Pacific’s financing needs are indeed daunting. We, the multilateral development banks, need to engage the private sector on all fronts to an even greater extent than we currently do, to leverage both finance and knowledge.


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Lakshmi Venkatachalam is the Vice-President (Private Sector and Cofinancing Operations) of Asian Development Bank since June 2010, leading ADB’s private sector initiatives and cofinancing activities. Based on the Midterm Review of its Strategy 2020, ADB’s activities in private sector development and private sector operations are targeted to reach 50% of its annual operations by 2020.

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