A premature assessment?

Development Policy12 Feb 2008Ernest Aryeetey

In its evaluation of the Dutch Africa policy the IOB presents some interesting findings, which in turn raise a number of critical questions. 

Over the period 2002–2006 the Dutch government continued its policy of providing budget and sector support linked to national poverty reduction strategies (PRSPs).
• It is important to recognize the extent to which the emerging Dutch policy was influenced by growing trends in the rest of the world. Most donors supported the PRSPs, and this made it difficult for the Dutch to be seen to be different.

General budget support (GBS) was de facto used as a political instrument.
• But is it possible that the evaluation is too cynical about this? In Ghana, the proportion of flows from donors that went into budget support was less than 30% of the total aid flows in the period 2003–2006. I am not sure what the percentage was for Dutch aid, but I imagine it was not any larger than this. If that is the case, it means that direct support to specific projects and programmes continued to be the preferred mode of delivering aid, and not GBS.

GBS did not lead to structural improvements in the partner countries, and this limited the impact of GBS on its stated goals of poverty eradication and economic growth.
• This might be a premature assessment. I agree that there have been no structural improvements in terms of poverty alleviation, but these can take time to happen.

GBS may have helped improve access to social services (especially education and health), but the IOB warns that this may lead to increased dependency on donors.
• I have argued that donors and recipients may agree on periods for receiving aid, and modalities for graduating out of aid use. There should also be an exit strategy that is part of national development plans.

The IOB describes widespread corruption in partner countries as a ‘ticking time bomb’ that threatens GBS as a form of aid.
• But does GBS facilitate more corruption than other forms of aid? If so, how?

The sectoral approach was intended to improve the quality of aid, but in terms of implementation, the IOB concludes, the choice of sectors was too much a Dutch affair.
• Sector-wide approaches (SWAps) are usually the outcome of programmes prepared by the recipient ministries, although it is true that donors often influence the contents of such programmes.

The Dutch followed the international trend in supporting the education sector, and focused on increasing access to primary education, at the expense of similar improvements in the quality of education. Problems include high school drop-out rates, and many school leavers with minimal reading, writing and arithmetic skills.
• These problems are serious indeed, and are now engaging the attention of most African governments.

Also, the Dutch focused on primary education, at the expense of adult education, vocational training, secondary and tertiary education.
• But I think this is beginning to change. I guess the challenge that Dutch aid faces is whether to join the bandwagon, moving from primary to tertiary education, or to identify an area that is lacking in terms of other donor support, such as vocational training. Where can Dutch aid be most effective, based on the strengths of the Dutch educational system?

The IOB concludes that the declining support to productive rural sectors is rather ironic given the Dutch experience and expertise in this area.
• This is indeed one area in which Dutch aid can make itself distinct from other aid programmes. Support for agriculture and rural development can have a much greater beneficial impact on poverty reduction than in other sectors. Supporting rural infrastructure development, agricultural research and extension services will bring huge returns and facilitate structural change. But the recipient countries must first have their own programmes/plans for rural development.

The IOB considers the lack of a coherent Dutch policy for reducing urban poverty ‘remarkable’, partly due to the introduction of the sectoral approach.
• Urban poverty is definitely a growing area of concern, but any approach will require careful structuring in order to be effective. This must be considered as part of wider human settlements and migration programmes.

The IOB report asks whether sector support fits with the theme of good governance. As a result of the decision to provide sector support, which follows government-to-government channels, civil society appears to be increasingly excluded.
• This raises the issue of consistency in the Dutch approach. While this is true, the role of civil society must be properly structured to make it effective.Finally, the IOB concludes that there was ‘too much policy’, with ‘too few priorities’.
• The problem of too many policies is common to many donor governments. There are far too many interest groups that sponsor each policy. Governments are not structured to be immune to these pressures. Even in parliament one will find members who might broaden further the policy.

Ernest Aryeetey, Institute for Social, Statistical and Economic Research (ISSER), Accra, Ghana