Prioritising national development plans

Development Policy24 Oct 2011Akemi Yonemura

Put national development plans at the center with clear exit strategies for external funding

The principles of the Paris Declaration on Aid Effectiveness (i.e., ownership, alignment, harmonization, results, and mutual accountability) as well as those of the Accra Agenda for Action (i.e., ownership, inclusive partnerships, and delivering results) cannot be realized through current arrangements, because at the country level, those who are supposed to be participating in the process are not included. This non-participation could be a voluntary choice in the case of traditional donors. For new donors, a new mechanism has not been established yet, but such coordination should be sought urgently in order to avoid politically or commercially motivated, fragmented aid programmes. The current process is still donor-driven, and the agenda is set by a selected few.

The common problem of traditional and new donors is that aid is not reaching the most needy and/or the intended population, and their approach is very short-sighted and unsustainable. The deficiency of the aid project modality, with the influx of aid business in developing countries, is not the only problem, some local practices have also changed. Inflated salaries paid to local staff distort the local salary scale and social norms. For example, security guards and drivers for international organizations are paid more than professionals or university professors paid by local governments or organizations, so often people change their professions, motivated mainly by monetary incentive, while those who remain in local posts are demoralized, feeling their good work is not recognized.

Both traditional and new approaches are not necessarily local needs-based. Ideas often come from donors and recipients provide the information that donors want to hear and implement the projects that donors bring in until the donor money is exhausted. When another donor comes in, often recipients are not concerned about the long-term development of the country and dump what they have been working on to switch their job to get another contract. This is because the locals are responding to quick cash not because they are convinced about the idea.

In principle, these activities must be aligned with the national development plan, inviting all concerned donors, government officials and practitioners for regular discussion to decide how donors’ money should be utilized, but on the ground, it is not happening. In order to involve both traditional and new donors in the alignment of their development practices, they have to talk at the same table – the current arrangement is only the OECD-Development Assistance Committee (DAC) country meeting, but a new mechanism must be established to include new donors.

Another challenge in coordinating all donors is that the definition of official development assistance (ODA) is not consistent across countries. According to the OECD-DAC, ODA is not necessarily registered in the public accounts of the recipient country, and it can also include financial support of NGOs. In the case of Ethiopia, for example, DAC donors include CIDA, Finland, Irish Aid, SIDA, GIZ, Norway, Spain, USAID, and the World Bank. Other donors are providing assistance directly to the country, such as JICA in teacher training, but are not counted in the pooled funding of DAC.

Dependency of education financing on external funding in sub-Saharan Africa

For these reasons, to understand external funding, the international community can only estimate the situation using proxy information. I take the example of the education sector in sub-Saharan Africa. According to the UNESCO Institute for Statistics (UIS) based on the estimate that 5 percent of GDP is allocated to the public education sector, the value of total public education expenditure reached US$46 billion in 2008. According to OECD-DAC, the total amount of ODA disbursement for education in sub-Saharan Africa was US$2.6 billion in 2008, indicating that donor resources account for about 5.6 percent of total public education resources. This is an average figure and dependency on external funding varies from country to country. For example, ODA for education as a proportion of total public education expenditure ranged from 72 percent in Liberia to 5 percent or less in relatively high-income countries in 2008.

Should donors increase their aid?

UNICEF advocates in its education strategy (2007) a sharp increase of both national budget and ODA for education. After the 2008 economic crisis, however, the possibility of increasing ODA has declined. Furthermore, the public is now skeptical about the effectiveness of aid. The issue of recipient country’s absorptive capacity is another concern. So it seems that the question is not to increase aid, but how it is utilized.

What should donors invest in? Teacher salary is not sustainable

In terms of amounts, Ethiopia disbursed the largest amount among sub-Saharan African countries – $233.6 million – of ODA for education in 2008 (ratio of external funding was 42 percent). According to the Education Strategy of DFID, it spent around £30 million on education a year since 2005, part of which went to the salaries of an additional 80,000 teachers. DFID is also spending approximately £10 million per year on secondary education, including helping to finance the salaries of 30,000 teachers. It also supports payments to teachers for additional tutoring. But what donors should do is not to give quick cash but build local capacity to sustain programs on their own. To do this, DFID is committed to spend around 50 percent of its education aid in fragile and conflict-affected countries, which aims to rebuild the capacity of ministries of education, enabling them to pay teacher salaries. It also encourages better utilization of existing resources through improved teacher deployment.

Ethiopia, like most developing countries, participates in major international development forums and claims to be committed to the global development goals. Education is a high priority for Ethiopia and the country has made significant progress towards the achievements of these international development and educational goals, but a high level of dependency on external resources to implement education projects, especially to cover teacher salaries is not sustainable and may perpetuate dependency on external resources. Other bilateral efforts targeting practical training at the TVET and higher education, or math and science education is supposed to help the country get out of poverty so it does not have to depend on foreign aid. However, the current trend to increase aid still continues. Both the donor and the recipient countries hope that this donor-dependency should be phased out over years, but once they set up such dependency, donors cannot withdraw easily. Finally the flow and utilization of new donors’ aid which are not currently included in OECD-DAC, must also be incorporated in a single system.