Maravi

Donors need a holistic strategy for aid effectiveness

Donors need a holistic strategy for aid effectiveness
Written by Prof Fackson Banda
Thursday, May 28, 2009 3:00:46 PM

Sweden and the Netherlands have suspended their aid to the Ministry of Health, a key ministry in Zambia's strategy to attain the Millennium Development Goals (MDGs). The reason advanced for such a move - a legitimate reason, we might add - is that both countries will not tolerate corruption.

The fact that the Anti-Corruption Commission (ACC) has announced an investigation into the circumstances under which one Ministry of Health official accumulated his ‘wealth’ clearly gave rise to the events that led the two key donors to suspend their aid. There is one comfort in all this: The two donors have merely suspended their aid.

As soon as the Auditor-General has conducted her forensic audit, we hope that the two donors will come back to the aid of the heath sector. At the same time, we hope that the government will have put in place corruption-proof institutional measures that will array the fears of the donor community. The health sector needs donor aid. But such donor aid needs to go to the intended beneficiaries.

Donors cannot go scot-free, however. It is too easy to suspend their aid. I think that there is something that the donor community may have overlooked here. What has happened in Zambia demonstrates three things. First, there is corruption in the country, as is the case in all other countries. Second, there is limited capacity to prevent, and let alone, fight the scourge. Third, there is a vibrant civil society - spurred on by whistleblowers and a robust private media system - which continues to advocate for stronger anti-corruption strategies.

To explain: Although their capacity is limited, and although they may be politically constrained, the Anti-Corruption Commission brought to light the allegation of corruption at the Ministry of Health. The Auditor-General has moved in to establish the veracity of the allegation, while other investigations are underway. The media - especially the private press - have stepped up pressure for the government to institute a more robust anti-corruption strategy. Civil society bodies have also stepped up pressure on the government to take greater responsibility for transparency and accountability in the civil service.

We must not forget: The Auditor-General's annual reports have become a hall-mark of systematic documentation of lapses in the country's public finance management. But rarely have donors suspended their aid in reaction to the Auditor-General's annual reports, which have almost always documented systemic inadequacies in the way our public institutions manage public finance.

Donors, too, have a responsibility for the way our public institutions manage their resources. And that responsibility does not necessarily reside in suspending or withholding aid to such critical sectors of Zambian society as the Ministry of Health.

Such responsibility is acknowledged even by the Paris Declaration on Aid Effectiveness, adopted in 2005 at a High Level Forum in Paris, France. The Declaration is based on “core principles” which both donor and partner countries “believe will increase the impact aid has in reducing poverty and inequality, increasing growth, building capacity and accelerating achievement of the MDGs.”

The basic philosophy underpinning the Paris Declaration is one of mutuality or co-responsibility. In other words, both donors and partner countries are responsible for the effective management of aid. To suspend aid to the Ministry of Health, as Sweden and the Netherlands have done, amounts to a near dereliction of responsibility on the part of the two countries.

While the Paris Declaration recognises that “partner countries” - a euphemism for aid-dependent or poor countries - must exercise their sovereignty in managing aid, it places responsibility for the management of such aid on both donors and partner countries. In this regard, it mentions two things. First, donors are called upon to reform and simplify their “policies and procedures to encourage collaborative behaviour and progressive alignment with partner countries' priorities, systems and procedures.” Second, it calls upon both parties to define “measures and standards of performance and accountability of partner country systems in public financial management, procurement, fiduciary safeguards and environmental assessments, in line with broadly accepted good practices and their quick and widespread application.”

It is clear that “collaborative behaviour” is encouraged. It is also clear that donor countries are encouraged to participate in instituting the kinds of institutional arrangements that can ensure that their money is transparently and accountably used. To put it differently: Donor countries must help build the institutional capacity of partner countries needed for proper public finance management.

There are, of course, donors who attempt to assume such a holistic strategy towards supporting partner countries. Such a holistic strategy includes supporting specific “projects” as well as the totality of the institutional-implementation architecture of government. The reason is simple: project-specific funding cannot be dislocated from the context of institutional capability. This should call into question donors whose insistence is on “project” support.

It is perhaps because of such piece-meal, “projectified” approaches to supporting partner countries that Dr. Dambisa Moyo, in her controversial book, Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa, describes as a myth the notion that billions of dollars in aid sent from wealthy countries to developing African nations has helped to reduce poverty and increase growth. While one can question her radical solutions, one cannot but agree with her - and many other development scholars and activists before her - that donor aid has not been wholly effective.

The principle of co-responsibility - binding donor and partner countries in a pact of mutual support - needs to go beyond just providing the money. It must involve devising, along with that money, systems in which both donor and partner countries can invest confidence. What this does is that it places an equal obligation on donors to ensure that their support is successful. Indeed, such aid must be holistically linked to other institutions that enhance transparency and accountability in society - civil society, the media, political parties, and the like.

The Paris Declaration clearly acknowledges that “corruption and lack of transparency, which erode public support, impede effective resource mobilisation and allocation and divert resources away from activities that are vital for poverty reduction and sustainable economic development. Where corruption exists, it inhibits donors from relying on partner country systems.”

The underlying assumption here is that, when donor countries provide support, they are convinced that partner countries' public management systems are sufficient to guarantee the effectiveness of their aid. However, in situations where problems emerge, such as is the case with the Ministry of Health, there is need to look, not just at the allegation of corruption, but also at the fact that the system has been able to locate that corruption. This is important because it shows that the system is capable of locating and localising the corruption.

In other words, the alleged corruption at the Ministry of Health must send three signals. First, corruption is still endemic in the government system. Second, the system is capable of locating and localising such corruption. Third, there is potential for the system to cleanse itself of corruption. Of course, the third point is related to the amount of political will that can be mounted to support the systemic attempts at ejecting corrupt elements from the system. It is here, perhaps, that we can better appreciate the action by Sweden and the Netherlands to suspend funding to the Ministry of Health.

The action seems to be a political message to our ruling political elite to encourage the system to function more robustly. However, we cannot ignore the fact that the exposure of corruption is, in itself, a celebratory act. Let me put it differently: While donors should lament the fact of corruption, they should also celebrate the fact of exposure. Woe unto those countries whose corruption is so deeply buried within the system that it cannot be located, let alone exposed!

For aid to be effective, then, it must be configured so holistically as to addresses its short-term, project-specific objectives and the institutional context within which such objectives are realised. It is such aid, I would argue, from which it is easy for a partner country to subsequently wean itself.

Labels: DAMBISA MOYO, DONORS, FACKSON BANDA, MINISTRY OF HEALTH

posted by MrK @ 2:03 PM