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Rural Development and the New Architecture of Aid: Convergence and Constraints
John Farrington and James Lomax
In this article donor practice is examined in relation to a number of major issues current and emerging in rural development. The article focuses first on areas in which there appears to be growing convergence and then on those characterised by differences of approach. Practical problems likely to limit the effectiveness of donor strategy include those of managing sector-wide approaches and of linking rural and urban policy. Constraints on the implementation of pro-poor initiatives are pervasive, but have received little attention in poverty-focused initiatives such as Poverty Reduction Strategy Papers. Finally, chronic political instability continues to limit development support (as distinct from relief) in many of the areas in which concentrations of the poor are greatest.
Introduction
The International Development Targets (IDTs), including the target of reducing poverty by 50% by 2015, have been widely accepted. New mechanisms for converting debt into aid among the Highly Indebted Poor Countries (HIPC), such as Poverty Reduction Strategy Papers (PRSPs), together with programmes of public sector reform and SectorWide Approaches (SWAps), are parts of a new architecture of aid which has grown partly in response to the IDTs. This article examines the question of whether in fact there are signs of donor convergence towards the underlying concepts (such as new interpretations of poverty) and practice (such as the promotion of participatory approaches) inherent in new approaches to poverty reduction. The first two sections of the article examine, respectively, areas in which there appears to be increased donor convergence on a number of themes, and those in which there is less certainty of direction. The third section examines a range of practical problems likely to impact on the effectiveness of donor policy, including the challenges of managing SWAps and of designing and implementing cross-sectoral approaches (especially those linking rural and urban areas). It also examines a range of implementation difficulties, the implications of chronic political instability for donor activity, and the need to manage the interface between centrally designed initiatives and those based on participatory processes, such as PRSPs. Much of the discussion is on the new architecture in the round, rather than specifically on rural development. But, as the article seeks to demonstrate at various points, rural development cannot be considered in isolation from these new developments. The discussion touches at various points on the policies of seven Member States of the European Union (Belgium, Denmark, France, Germany, the
Respectively Research Fellow and Research Assistant, Overseas Development Institute, London.
Overseas Development Institute, 2001. Published by Blackwell Publishers, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA.
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Netherlands, Sweden and the UK), the EU itself, USAID, the World Bank, the Regional Development Banks and the UN agencies.
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agreement: many donors (including the EU and USAID) face pressure from farm and agribusiness lobbies to maintain high levels of food aid, and there are differences in perception between market liberalisers somewhat dismissive views of food selfsufficiency, and those of politicians within developing countries who see it not merely as a rallying cry, but also as a crucial element of national self-determination which transcends market economics. There is growing concern over the non-sustainability or replicability of projectbased approaches, mirrored by increasing commitment to sector-wide approaches, as a means of improving the delivery of services and increasing co-ordination and trust among donors, though what is understood by these varies widely. Many agencies remain influenced by old-style Sector Investment Programmes in which donors remain responsible for individual components of a programme (which bear some continuing resemblance to projects), with strong leadership by the World Bank and, because of pressure to meet expenditure deadlines, frequently inadequate participation by governments. A fully-fledged SWAp, by contrast, is intended to facilitate a more active role for governments in formulating policies, setting out implementation and funding programmes, and co-ordinating donors within these. Part of the attractiveness of SWAps lies in the way they promote government ownership of development processes, and allow mainstreaming of overarching concerns such as gender, and this has led some donors, such as the UK, to commit substantial resources to them. But there is no uniformity of view among donors on how three broad questions should be resolved. One concerns the danger of committing all resources to government, especially to those with a history of weak implementation. The second concerns the potential tensions between narrow focus on individual government ministries, when the poor are well-known to construct their livelihood portfolios from a diverse range of activities, and important elements of these might be missed if coordination between ministries and their related SWAps is inadequate. The third concerns the management of decentralisation within a SWAp context: it has been widely postulated that decentralisation is likely to generate more locally appropriate and locally accountable development initiatives, but SWAps are potentially a highly centralising instrument, and ways of adapting them to ensure local empowerment remain to be defined. Finally, for the present authors, one of the crucial debates, which is only just surfacing among donor agencies, concerns the future role of projects: sectoral reform and the PRSP process emphasise the need for governments to take stronger ownership of development processes. Implicitly, this diminishes the traditional role of projects for rural development projects, commonly that of improving the lot of people within the projects mandated area. But to focus a donors entire effort on sectoral reform may be unrealistic, not merely in terms of the three broad questions above, but also because donor credibility in urging reform will be reduced for as long as the donor has no demonstrable evidence of the impact on the ground that can be achieved through the kinds of revised structures and procedures it is advocating evidence of the kind that can only be generated through projects. For this reason, projects do have a future; but they will need to be designed and managed by criteria which will allow them to illuminate the challenges of wider reform programmes, and not just by criteria relevant to poverty reduction within their mandated areas.
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Even where there is strong policy consistency among donors in relation to dimensions of development such as those outlined above, there remain in some instances difficulties in putting these into practice. There can, for instance, be substantial differences between the perceptions of the issues at the headquarters level of development agencies (and their translation into policy documents), on the one hand, and the implementation of such policies, on the other. Many donors have not issued guidelines to country offices on, for instance, the design and implementation of rural poverty-focused projects and programmes. Even where they have, much discretion often remains with individual country programme managers. Above all, programmes to address poverty in its range of financial and non-financial aspects must be flexible, with course-corrections responding to early experience. Yet, pressures towards disbursement targets within donor agencies remain intense, and boundaries between fiscal years virtually watertight, so that both the incentives and capacities among donors to manage aid in a process fashion remain limited.
Emerging challenges
Donors policies in respect of other issues are much more diverse. Attention is focused here on four such issues, the intrinsic features of which are discussed by other authors in this volume: diversification, decentralisation, globalisation and institutional strengthening.
Diversification
Almost all donors recognise that livelihoods are made up of a range of diverse activities, and that the poor switch among these according to circumstances. The difficulty lies in defining responses to this reality. The temptation for donors to remain sectoral remains strong: the prospects of getting something done by attaching themselves to a single ministry such as Agriculture, Livestock or Forestry, appear stronger than by linking with broad portfolio ministries such as Rural Development (these are often poorly funded by comparison with single-mandate ministries). Some agencies have retained area-based approaches such as the Swedish adaptation of Integrated Rural Development and, as is argued below, these may offer multiple benefits including the possibility of supporting diverse livelihood portfolios more adequately. Others (such as Germany) have taken the view that diversification can be supported by spatially focused approaches of a different kind, namely, by strengthening the transport and telecommunications infrastructure linking urban with rural areas. Within the broad principle of addressing the multi-faceted nature of poverty, donor approaches must necessarily be to some degree pragmatic; depending on local contexts, they may link with a single ministry for part of their effort and (if rivalries prevent links with other ministries) with private commercial organisations or NGOs for other components. Where the focus is on improving rural-urban links as one means of addressing rural poverty, it may be possible to identify municipalities as primary partners (these typically have responsibility for service delivery across a range of sectors), with secondary links to other organisations located in the rural areas.
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Decentralisation
Again, there is high donor confidence (perhaps over-confidence) in the potential that decentralisation offers for designing development in response to peoples views and for making implementation processes locally accountable. However, there are differing views on whether the preconditions necessary for administrative decentralisation to work effectively can be put in place, on how political and administrative decentralisation might interact, and on whether donors can support the strengthening of local government without exposing themselves to allegations of interfering in internal affairs. The mandates of some, such as the UN agencies and the Development Banks (including the World Bank itself), make it near-impossible for them to help in strengthening local government. But some (such as the Asian Development Bank) have developed innovative policies of support for indigenous peoples which, whilst superficially apolitical, inevitably have strong political implications.
Globalisation
The UKs December 2000 White Paper on globalisation (DFID, 2000) is one of the few policy documents specifically to address this issue, and, for many, underestimates the potentially negative effects on developing countries. Most donors are still considering how to address the implications for the poor of the accelerating international movement of information, technology and private capital. One difficulty is that responses will have to come from numerous different parts of donors portfolios. Several have focused on the foreign-trade-related aspects. One aspect of the Netherlands approach, for instance, is to support developing countries in attempting to minimise the potentially negative effects of new trade arrangements. An aspect of Germanys approach is to promote the production, processing and certification of organic fruit and vegetables for export to OECD countries. The FAO, among many other things, is supporting seminars for developing country policy-makers on the implications of the World Trade Organization for sanitary and phytosanitary measures. There is no clear view among donors on whether they should support developing countries in restricting the imports of food and other products which directly compete with domestic production. Economics-based arguments of comparative advantage are relevant at the margin, but the pace and dimensions of globalisation may quickly undermine developing countries economies to an extent which is politically destabilising and, as is argued below, in many parts of sub-Saharan Africa the nationstate is already under threat from diverse pressures. To this extent, globalisation has political as well as economic dimensions, and there are clearly roles for donors in supporting developing country governments in formulating and implementing policies to take advantage of international trade opportunities (and, where necessary, protecting themselves from it). Such roles extend to management of the internal economy: urban expansion will imply increased demand for many types of food product, with particularly rapid growth in demand for livestockbased products. If restrictions are placed on the capacity of imports to meet these, then the question of which rural producers will meet the demand becomes important for policy.
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Again, market conditions under current patterns of infrastructure and taxation may well give (already better-off) peri-urban producers the comparative advantage in meeting this demand. An important consideration here is whether peri-urban producers are taxed sufficiently to cover the social and environmental costs of practices such as keeping livestock close to cities. If such taxes were to be introduced and implemented effectively, sourcing from more remote rural areas might become financially advantageous for urban wholesalers. Certainly, to manage sourcing by directive is rarely desirable or practicable. To engage producers from the more remote areas in provisioning metropolitan centres will require coherence between national and provincial policy initiatives, not least in ensuring some reduction in market failures in respect of access to technical information, to storage, processing and marketing facilities, and to market information. Investment in the necessary infrastructure and facilities will be more costly per head than in areas of higher population density already partly integrated into markets, but the cost of this may be very low by comparison with the potentially much greater financial, social and human cost of durable disorder in remote areas disaffected by a national development focus on areas already well integrated into markets. Donors are still at an early stage in thinking through how they might support pro-poor responses to these potential changes in trade patterns driven both by globalisation and by rapidly growing urbanisation. Area-based approaches, combined with appropriate taxation policies, offer some prospect of bringing together national and provincial priorities in a consistent fashion.
Institutional strengthening
Practically all donors accept the principle that there is a need for institutional strengthening and that they have important contributions to make. There is support from many for the post-Washington Consensus view that institutional development is a prerequisite for the improved functioning of markets. However, their practice remains largely under the influence of economic reform programmes originating in the 1980s, and many remain more concerned with rolling back the state than with strengthening it (though there is no inherent inconsistency in strengthening a downsized state). This, combined with self-perceptions of their own comparative advantage, has generated a wide diversity of approach. Among other things, Germany, for instance, promotes links between its own industry associations and their developing country counterparts; France is strongly committed to the strengthening of rural producers organisations and to strengthening the financial and regulatory conditions under which private business can flourish; the Netherlands and the US strongly support business development; the UK sees itself as having some advantage in strengthening governance arrangements. The need for institutional strengthening is all-pervasive, especially for sub-Saharan Africa (SSA). All donors perceive the need for human resource development, as do many for the enhancement of policy analysis capability. But more attention is being given to areas central to the improvement of governance, including the strengthening of police forces and of the judiciary. Institutional and individual capacity limitations have emerged as a major constraint in those countries (such as Uganda) which have made substantive moves towards decentralisation.
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Although many of these issues are of generic relevance to development support, at least two have particular implications for rural areas. To organise support within productive sectors, for instance, is more problematic in rural areas where these have distinct mandates, than in urban areas where municipalities are generally mandated to provide services across several sectors. Further, the threat of chronic political instability, although in some cases country-wide, is in many cases especially strong in the more remote rural areas.
Managing SWAps
SWAps are a means of managing the role of government in a specific sector, taking into account relevant cross-cutting issues (e.g. environmental concerns). For many governments, their overarching goal is to improve livelihoods and reduce poverty. Other objectives include: the re-establishment of domestic ownership of the development process (especially where this has been donor-led in the past); the prioritisation of spending based on agreed opportunities and constraints, clearly defined public and private roles, and co-ordinated donor support within an overall resource envelope and a reduction of transaction costs associated with a disparate array of donor projects. Progress towards these objectives has been slow and uneven. Some evidence suggests that it is easier to design and implement SWAps in the social sectors (including health and education) where government has a clear lead in policy design and in funding, than in the productive sectors such as agriculture, where input supply, production, processing and marketing are dominated by private agents (Foster, 2000). Additional difficulties include those of: organising donor co-ordination, not only over priorities but also over the detail of reporting and accounting requirements; developing sufficient planning and management capacity within some countries; ensuring adequate public financial management, including financial tracking, prioritisation and audit; weaning officials off projects, which have been a source of personal income, whether licit (as project managers or advisers) or illicit. It is clear that a number of preconditions will have to be met if SWAps are to be designed and implemented more successfully in the future. These include: clear definition of the sector, the range of stakeholders involved, how crosscutting issues (e.g. environment) and links with other sectors will be dealt with, and how sector priorities will be defined. For instance, will some facet of
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John Farrington and James Lomax production (e.g. food security, or export market orientation) continue to dominate agriculture, or will increased weight be given to achieving balance among objectives, so leading to the promotion of techniques which, for instance, balance production with employment generation objectives? clear definition of the role of the state. Its role in the provision of public goods is uncontroversial in principle (but will vary from country to country according to needs and resource constraints) but, especially for the productive sectors, its role in addressing market failure is contested, neo-liberal purism dominating some international agencies positions, whilst many governments are concerned over the limited prospects of private sector engagement and of adequate market functioning; pressure on line departments from a central agency (such as a Ministry of Finance) to re-define their roles in ways consistent with overall development objectives, shedding old attitudes and practices (including exclusive reliance on projects) where necessary; the building of policy analysis capacity in government departments; improved public financial management, including the introduction of mediumterm expenditure frameworks to offer a degree of financial continuity across years; clearer agreement among donors on all the above, and on procedures for procurement, reporting, monitoring and evaluation, and care among donors to ensure that any donor alliance does not marginalise the host country; support to civil society organisations to pressure government into delivering against its commitments; in decentralised systems, the inclusion of local government in planning, implementation and monitoring of the SWAp, which given the widespread weakness of local revenue-raising capacity implies adequate financial flows from the centre to local bodies.
Poverty reduction strategy papers (PRSPs) have been introduced by the Washington-based institutions as a means of arriving at aid priorities, and (for the highly-indebted poor countries to which they primarily apply) for identifying how debt can be converted into aid. These transcend sectors and are intended to be driven by participatory processes, but it is becoming clear that they need also to be guided by the types of wider opportunities and constraints that may not be generated by purely participatory approaches. They generate challenges for centrally designed sector-based initiatives, including the need to: ensure that a SWAp for any one sector is consistent with the vision of PRSPs, and vice-versa; ensure that monitoring criteria are mutually consistent; ensure that projects, whether established under the SWAp or under the PRSP, serve as a basis for learning: to do so they must be designed so that the norms, rules and guidelines of government can feasibly be adapted to allow wide scaling-up of their lessons.
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Of particular interest here are the strong arguments for integrating not just across sectors relevant to rural areas (for instance, policies on agriculture will have implications for water resources) but also between rural and urban. In particular, there are strong arguments for pulling government support to extension back to district-town level, where more specialist advisers can be located in one-stop shops, supported by (publicly available) internet access and other information communication technologies, linking with private sector agents (input supply, marketing and processing), and adequately backed up by agricultural research (Christoplos et al., 2001). To achieve this, urban policies will have to focus more on small town development, including the supply of utilities such as electricity, and investment in transport and telecommunications infrastructure such as fibre-optic cables. In parallel, improvements on the supply side need to be accompanied by new community development-type efforts involving community groups and NGOs to identify para-extensionists who will travel to district towns to articulate local requirements, bringing back advice but also possibly acting as commission agents for input supply and output sales. These will need support, at least initially, for travel, accommodation and possibly for purchase of advice.
Implementation constraints
PRSPs are currently characterised by an almost complete absence of any discussion of implementation constraints. These may be caused by financial, infrastructural or skills constraints, which aid programmes can address to some degree. They may also be caused by many other deeply rooted difficulties, such as corruption and political interference, which are extremely difficult to eradicate. Experience in India of attempting to implement poverty-focused rural development initiatives and safety nets over several decades indicates the high overall level of
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implementation difficulty (generally more attributable to deeply rooted types of constraint), but also the uneven incidence of these across different types of programme (Saxena, 2001). For instance, housing subsidy schemes involving individual allocations of some Rs20,000 attract the attention of both corrupt bureaucrats and politicians wishing to direct them towards their own constituencies. By contrast, old-age pensions, at around Rs100/month, are too small to attract such attention, are paid through established channels (i.e. rural post offices) and to those able to demonstrate their eligibility (though there are inclusion/exclusion problems in assigning eligibility). The important point is that an a priori ranking of rural development priorities (e.g. by economic appraisal) according to their expected level of benefit to the rural poor may turn out to be sub-optimal once the susceptibility of these to implementation constraints has been taken into account. A ranking according to degree of robustness to such constraints may prove very different, and needs to be attempted, even where approximations have to be used.
Conclusion
Shared objectives in the form of the International Development Targets, and a new architecture of aid lending itself to some level of achievement of these targets, have been among the factors generating what is probably an unprecedented degree of agreement among donors over priorities and approaches. Unsurprisingly, many issues of
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strategy and practice remain to be resolved. But perhaps the most important factors thwarting development initiatives are twofold: deep-rooted implementation constraints which will require persistent government attention over long periods, and chronic political instability, to which the appropriate response is relief more often than development assistance. These arguments serve as a useful reminder of what donors still have to do to get it right, but also of the limits to development assistance, which are all too often assumed away by rhetoric.
References
Christoplos, Ian, Farrington, John and Kidd, Andrew (2001) Extension, Poverty and Vulnerability: Inception Report of a Study for the Neuchatel Initiative. Working Paper 144. London: Overseas Development Institute. DFID (2000) Eliminating World Poverty: Making Globalisation Work for the Poor. White Paper on International Development, Cm 5006. Norwich: Stationary Office. Foster, M. (2000) New Approaches to Development Cooperation: What Can We Learn From Implementing Sector-Wide Approaches? Working Paper 140. London: Overseas Development Institute. Saxena, N.C. (2001) How Have the Poor Done? Mid-term Review of Indias Ninth Five-Year Plan. Natural Resource Perspectives Paper 66. London: Overseas Development Institute.