In the last OECD-DAC Peer Review of the Netherlands (2006), the independence of the Policy and Operations Evaluation Department (IOB), which is responsible for evaluating broad policy and cross-cutting themes, was considered a long-term strength within the Dutch system. This evaluation report is an example of its independent critical and constructive work. It raises a number of issues that are relevant not only to Dutch development cooperation in Africa, but to all OECD-DAC members’ bilateral assistance. Among these issues are: policy coherence, the mode of aid delivery, accountability, prioritization, and ownership.
One fact that is not mentioned in the IOB summary report – but which is important to note and to commend – is that the Netherlands is among the few DAC member countries to exceed the ODA/GNI target of 0.7%. In terms of ODA volume, the Netherlands was the sixth largest DAC donor in 2005 (OECD-DAC Peer Review 2006). The Peer Review also commended the Netherlands government on its efforts to improve policy coherence.
The recent trends (1998–2006) within Dutch development cooperation described in the IOB summary are similar to those observed in many other OECD countries. These include a strong financial commitment to social sectors (health and education) and a neglect of productive sectors, even a virtual drop in rural development and agriculture. OECD-DAC statistics show that education and other social infrastructure made up around 34% of all gross bilateral ODA in 2003–2004, while economic infrastructure and production constituted only around 14%.
It is difficult to explain the general neglect of rural and agricultural development over the last few years. Just a ‘fashion’ trend? General frustration that the green revolution did not take place in Africa? A lot of talk about the urbanization of poverty?
However, Ravallion et al. (2007) found that between 1993 and 2002 the share of the urban poor living on less than US$1 a day rose from 19% to 24%, while the urban share of the population as a whole rose from 38% to 42% over the same period. About three-quarters of the developing world’s poor still live in rural areas. Given the current pace of urbanization, and current forecasts for urban population growth, most of the world’s poor will still live in rural areas in the years to come. In marked contrast with other world regions, Africa’s urbanization process has not been associated with falling overall poverty. So what consequence should development partners draw?
The OECD-DAC Network on Poverty Reduction responded to the neglect of agriculture by taking a fresh look at the important contribution of agriculture to pro-poor growth (OECD-DAC, 2006). Agricultural growth, through its leverage effects on the rest of the economy, typically enables poor countries, regions and people to take the first steps toward economic transformation. Equally, the 2008 World Development Report, Agriculture for Development, re-emphasized the importance of agriculture for poverty reduction.
Support for agriculture has gradually been growing. Will the pendulum swing again? Will in future social sectors be neglected – especially in view of the fact that investments in education have not (yet) yielded the results that donor agencies (and partner countries?) hoped for? The first-generation poverty reduction strategies of many African countries concentrated on social sectors, and to some extent neglected the productive sectors. Will this trend be reversed, or will both donors and partner countries be able to find a constructive dialogue and put harmonization – one of the guiding principles of the Paris Declaration – into practice? Will there be a division of ‘work’ among donors based on their comparative advantages and the needs of the partner countries? Both productive and social sectors are important for pro-poor growth and poverty reduction. Strengthening the private sector is equally important.
When increasing dialogue/harmonization, it will become more important to ensure that China is also included in constructive discussions. China – as a ‘new’ donor – is playing an increasingly important role in Africa.
The report also looks critically at the shift from project support to general budget and sectoral support. How can budget support increase aid effectiveness – what needs to be supported, and in what ways? How can we avoid situations in which the attention given to figures threatens to be at the expense of insight? How can we avoid situations in which donors pay little more than lip service to ownership, as the IOB report points out? And how can we prevent country offices becoming just as far away from reality as headquarters?
This is a necessary and useful discussion. We know that a shift back to project support is not effective, but how can we increase the effectiveness of programme-based approaches? What mix of budget, sector and project support is needed in which context? How can partner countries’ monitoring systems and public finance management be strengthened – in order to achieve mutual accountability – even for general budget support? And how can civil society be supported to be able to play a role? These are questions that are important to raise and discuss among development partners.