# re: Globalisation and Global Poverty Policy Group Report @ Wednesday, July 25, 2007 9:51 AM

The Globalisation and Global Poverty Group chaired by the Rt Hon Peter Lilly has produced an impressive report that underwrites the national commitment to increased aid while stressing the importance of 'aid that works'. This is welcome and a victory for the sensible middle ground!

In a report as wide in scope as this it is not always clear what the 'big idea' is but in amongst the many suggestions and recommendations on aid, there is one worth focusing on in particular: the recommendation that Partnership Trusts should be created at country level to 'save recipient governments dealing with multiple donors with conflicting reporting requirements….(involving) local representatives as non-voting trustees in monitoring performance and strategy. Ideally the Funds will handle both budget/programme support and most project finance'.  The report cites a range of experience from the Principals Group in Tajikistan to the Independent Monitoring Group (IMG) in Tanzania as being relevant to the concept of Partnership Trusts. The record of the IMG is cited in particular as helping to rationalise donor action in Tanzania and provide a platform for joined-up working under the aegis of the Joint Assistance Strategy (JAST).  While the IMG experience has been widely noted and documented, including by ODI, it is significant that none of the examples cited by the report are anywhere close to acting as a 'trust' or a 'pooled fund' as the Conservative Party would have it. More curious is that the report appears to leave out those experiences of Multilateral Trust Funds which may offer more directly relevant experience, for example as tried in the early phases of debt relief and, more frequently, in post-conflict settings. What these experiences show is that multilateral funds can play a part but rarely across the whole agenda and generally not on a long term basis. They work best when focused on a limited 'task' and where political consensus is high; be it mobilising resources for debt relief as in Tanzania in the late 1990s or for reconstruction post-conflict as in Afghanistan. While the aim of reducing the number of demands on recipient country decision-makers is the absolutely the right one, the remedy offered is in danger of, at best, compounding the collective action problem by demanding that all aid be directed through one decision-making body and, at worst, being a costly distraction. Why not focus instead on strengthening what is already beginning to pay dividends in countries like Tanzania – including increasing the share of aid being managed directly by recipient governments through General Budget Support and programme aid; strengthening national aid management capacities to direct aid in line with country preferences; committing to mutual accountability and supporting independent monitoring of both the aid partnership and of development results.  

Alison Evans

# re: Globalisation and Global Poverty Policy Group Report @ Wednesday, July 25, 2007 11:47 AM

The report of the Conservative Party's Globalisation and Global Poverty Policy Group is a welcome addition to the debate on international development. It makes a number of sensible proposals in relation to aid, economic development, trade, corruption and governance, and conflict. In some cases these proposals tweak existing initiatives, but perhaps this too should be welcomed; sensible derivative proposals are better than daft innovative proposals!

The Conservatives clearly feel that giving attention to global poverty is a vote winner, and, if we take their words at face value, the right thing to do. This is extremely welcome. The report also acknowledges that if things are left to the market, the global public good of poverty reduction, or mechanisms to tackle poverty, will be under-provided. Again, this is very welcome.

To my mind, two issues stand out.

Firstly, the recognition that tackling global poverty must be about much more than aid. This – the so-called “Beyond Aid” or “policy coherence for development” agenda – is something which DFID is enthusiastic about , and which ODI is working on.

Secondly, the idea that - as David Cameron's speech in Rwanda put it - "there is no 'domestic' and 'foreign' any more". That goes too far - Cameron would be elected by UK voters, not Rwandans, and Rwanda's laws govern Rwanda's territory - but it does emphasise the realities of global interdependence.

For the Conservative Party and others concerned with what David Cameron described as renewing the "attack on the political and economic injustice" that allows global poverty to exist, the key challenges are:

1) working out how to ensure that “beyond aid” policies are supportive of international development; and,

2) working out how to balance the need for a global fight against poverty with the need to ensure that countries have the policy space they need to respond to global issues (challenges and opportunities) in a manner which is appropriate to their local context.

The final recommendation of the Conservative Party’s report proposes an Independent Evaluation Group, which would include representatives from developing countries. Extending the remit of this group to "beyond aid" issues could play an important part in promoting the sustained, accountable and evidence-based dialogue with developing countries which is needed to meet the challenges set out above.

Alan Hudson

# re: Globalisation and Global Poverty Policy Group Report @ Wednesday, July 25, 2007 4:51 PM

A key message I read in the report is a lack of emphasis on economic development in development policy at present. See recommendations 30-36 and 41 in particular. And it is not the only report that has recently come out with such a message. Only last week, UNCTAD’s LDC report argued that there has been too much aid going to social issues away from aid to productive activities such as developing technological capacities.

The Globalisation and Global Poverty report supports challenge funds (#32) which involve news ways of working with the private sector. Such funds can be made demand-led (e.g. prioritising support for public goods that beneficiaries can use to foster development), thereby avoiding the need for superimposing certain issues in country based programmes, see e.g. http://www.odi.org.uk/IEDG/publications/tnc_sme_linkage.pdf and http://www.odi.org.uk/Africa_Portal/pdf/DevelopedCtrySupptForGrowthandinvestment.pdf  
There is also strong support for more aid to infrastructure (#36) echoing the Commission for Africa, so why has this aid not been forthcoming already despite a long established acknowledgement of the importance of infrastructure for development? Perhaps infrastructure is not the domain of official development assistance (or private sector activities) alone, and development finance institutions also play a role (did you know that in 2005 ODA for infrastructure was around US$9bn while DFI finance to private sector finance was at least US$8bn?). There are several recommendations on DFIs (#30 , #31 and #33). Quite clearly there is a need to bring DFIs back into the development debate and assess how aid and DFIs can work together most effectively, for instance in the infrastructure sector (see current ODI work on this).

The section on Aid for Trade deserves special attention. It asks for an increasing proportion of aid going to trade (#41) trying to rebalance development support towards economic development and the supply side. This has been identified by so many developing countries (at the WTO) as crucial to use trade liberalisation effectively. The real pity is that even though a doubling of aid had been announced at the G8 in 2005, and while there have been so many promises on aid for trade too, there seems so little increased aid for trade actually forthcoming. Thus a strong UK response would be welcome and could activate other donors as well. See ODI work on aid for trade.

The recommendations highlight the plight of the agriculture sector. Having said this, the industry sector isn’t ignored altogether either. There are interesting sections of support for setting up EPZs (which could easily be made WTO compatible for LDCs anyway, and which have worked in the past in countries that now count as developed), suggesting that the report is also more positive about the merits of industrial policy, e.g. clustering and specific support for EPZs, than may have been the case in some development agencies in recent years. There is a public goods case for support for industrial development, but major questions remain about under what circumstances, including requirements on institutions and public capacity, industrial policies actually work. Our research indicates that effective state-business relations are important for investment climate reform in Africa and effective specific interventions.

But why do nearly all general reports on development ignore the services sector so badly? Didn’t the share of the services sector in sub-Saharan Africa’s GDP rise recently, implying that services contribute more to GDP than other sectors? Services are the backbone of the economy, some sectors provide lots of employment opportunities and, faced with competition in the larger countries’ manufacturing base, services are for some (small) states the most likely (and diversified) way out of poverty. Trade in services is increasing and has huge potential: there are already interesting examples in countries such as Mauritius, Rwanda, Caribbean and of course India, for some services work see e.g. http://www.odi.org.uk/iedg/Publications/online_papers.htm#ODIBIDPA and http://www.thecommonwealth.org/news/166526/130707smallstates.htm. Many services can also be energy-efficient (trade can occur on-line!).

Dirk Willem te Velde

# re: Globalisation and Global Poverty Policy Group Report @ Wednesday, July 25, 2007 6:24 PM

First I think everyone should welcome  the Conservative report on Globalisation as a total rejection of Mrs Thatcher's remarks characterising aid as give aways and susequently using the aid budget as a kind of slush fund to sell inadequate helicopters to the Indians. Secondly many of the ideas included in the report herald a real opportunity to help poverty struck countries to help themselves whilst closely monitoring and auditing the results of the injection of aid into these countries. The idea that we could form partnerships of donors to each country to co-ordinate aid investment into that country has the seeds of a good idea if it would relieve the tiny bureaucracies in each of those countries from the heavy burden of examining and authorising individual donors proposals. However there would need to be a mechanism to ensure that the co-ordinating committee was not taking decisions away from the National Government of the country to whom the aid is being directed. Related to this point is the commendable proposal that aid propsals should be communicated to the parliaments of aid recipient countries and approved by those parliaments. However the Parliament of Malawi for example has no clerical staff to service the parliament let alone a specialist committee to examine such proposals. I suspect that many other parliaments of developing countries are similarly iadequately serviced. This argues for funds to be vulunteered to enable such countries to strengthen their parliaments which I fear would not be welcome to those at present in power in those countries.

The current programme of Budget support or programme support has been endorsed by the report with little reference to ensure that money so contributed is not diverted by the executives in those countries to increasing their defence budgets, for example whilst contributing inadequately to their education and health budgets. An adequate system of auditing outcomes, as proposed, might pick up these funging exercises but if it did and we withdrew aid as a result we would soon not be able to distribute aid to that country and many others. I have in mind two countries as examples Ruanda and Uganda. It is for these reasons that multi national organisations are suggested to undertake these tasks being more powerful than individual countries, but there is little evidence that they are any more capable of bringing these countries to account than individual donor countries.Particular attention should be given to recomendation 30 where the report supports some important recomendations on building on the success of micro finance projects and introducing more commercial and therefore lower interest rates to successful borrowers of micro finance who want to expand.Conservative recomendations in  involving the private sector are important and could lead to many innovative methods of expanding the private sector. However many of the developing countries would have to rescind large parts of their statute book to allow the private sector to flourish.There are other mechanisms to achieve the same result for overseas investment companies such as the creation of International companies with special and privelged tax and other treatment which the Conservative party might consider recomending. It still leaves the indigenous private sector in a very constricted position. The direction of the Conservatives to involve the private sector in poverty resolution is to be welcomed

There are many proposals to modify current DFID practices thoughout the report with particular reference to Agriculture and infrastructure development which are to be welcomed and indicate the DFID would be changed radically under Conservative leadership and would become much more transparent and accountable than it is at present, which should be welcomed by the department but I can already hear the dragging of feet of many civil servants in the department.

There is a great deal more that can be said but as I said at the beginning the change of attitude combined with a wealth of constructive suggestions as to how the problem of world poverty is to be tackled is much to be welcomed and the party should now be engaged by practitioners in discussing the detail of the policy proposals and their implications. This report demostrates that the party is now open to constructive discussion which could lead to some concensus between the parties at Westminster.

Bowen Wells

# re: Globalisation and Global Poverty Policy Group Report @ Friday, July 27, 2007 10:20 AM

This is a quick comment, before I go on holiday.

In my earlier blog on the political divides in international development, I said that there were several issues that might divide the parties. Two of these were the commitment to multilateralism and the role of the state. The Global Poverty policy paper might be said to make specific proposals which illustrate both of these.

On multilateralism, there is an intriguing suggestion for Partnership Trusts, essentially a mechanism for pooling donor funds at country level. I was going to comment on these in more detail, but see that Alison Evans has got there before me. The new point I would make, however, is that another way to simplify aid delivery is to deliver it through multilateral agencies – an attractive solution if the basic principles of multilateralism are accepted. In other words, rather than set up a Partnership Trust, with its own administration, and rather uncertain governance (the paper recommends having recipient country representation on the Board, but in a non-voting capacity), it would equally be possible to channel extra money through the World Bank, the regional development banks, the UN, or the EU. To a greater or lesser extent, all these offer pooling, economies of scale, more efficient procurement, less risk of political bias, and a governance structure which allows some voice for developing countries. Plus, they have the advantage of already existing. There may be some benefits to a separate Trust arrangement, but it would be interesting to analyse the merits in relation to other options for multilateral aid. Perhaps this isn’t about ideology, but simply about finding pragmatic solutions. It would be interesting to know.

On the role of the state, there is another intriguing suggestion in the paper, for demand-led approaches. The idea is to set up a fund to which private and voluntary as well as public bodies can bid for projects. In the words of the paper:

‘DFID should establish a new fund to award development assistance based on a bottom-up, or demand-led, model. It would invite submissions for projects and programmes from any group with an interest in developing propoor projects in developing countries. This would include national or local governments, civil society organisations (CSOs), local and international NGOs and the private sector. We envisage that the Fund would be managed by a dedicated team of fund managers drawn from the private sector, DFID and NGOs. It would have a very different ethos from the rest of DFID, so fund staff would operate at arms-length from the rest of DFID. (Culturally, the difference would be similar to that between USAID and the Millennium Challenge Corporation). It should be introduced on a modest scale initially and expanded as it proves its worth and learns from experience.’

This idea is in a tradition of thinking about how to use aid money in ways which do not necessarily require it to be spent by the Government.  There is a debate in all parties in the UK, for example, about the role of social enterprise in managing health or education services. In 2004, we ran a series of meetings at ODI on public service delivery in both developed and developing countries, with contestability in public services as one theme. The title of the series was ‘Targets, Voice or Choice: options for improving public service delivery’. In the aid field, the Global Fund for HIV/AIDS, TB and Malaria is an example of a fund which is open to different kinds of applicants. It has spent 20% of its money through the private sector or NGOs (including church groups) to reach target populations.

There is a link between this debate abut by-passing Government and the debate on vouchers. For example, David Cameron gave a speech for Oxfam in June 2006, in which he said that

‘One idea we will investigate, based on our belief in trusting people – and our instinctive dislike of top-down solutions – is aid vouchers. Aid vouchers, put directly in the hands of poor communities, would be redeemable for development services of any kind with an aid agency or supplier of their choice.’

Many others have developed ideas of a similar kind. Bill Easterly’s recent book, The White Man’s Burden (my review can be found here), has a great deal to say about the value of markets over states, and he makes a proposal which somewhat resembles the Conservative proposal. He writes:

‘Suppose we issue development vouchers to target groups of the extreme poor, which the poor could redeem at any NGO or aid agency for any development good they waned – for example, vaccinations, life-saving drugs, a health worker’s visit, an improved cookstove, textbooks, seeds, fertiliser, or food supplements. The official aid agencies would set aside some of their money for an independent ‘voucher fund’ separate from the agencies.’ (Pgs 330-1)

Of course, vouchers are a step further than a window which disburses money to NGOs as well as to Governments. But the principles are not dissimilar.

So is the demand-led fund a good idea? On the right scale, it is certainly wroth thinking further about. But the role of the state as the ultimate guarantor of social provision should not be forgotten. As Gareth Thomas said in our series of political speeches on next steps in development:

‘On working with Governments, Gareth Thomas argued that if donors were to help achieve goals for large-scale reduction in poverty, there was no alternative to working with Governments. Many NGOs did excellent work, for example on HIV/AIDS. They were able to innovate and set Government a good example. But there were risks that they would undermine Government, for example by paying higher wages. Only Governments could deliver to all those in need.’

Actually, I would be surprised if the Conservatives did not agree with this.

Simon Maxwell