Focus on African Infrastructure

In a recent analysis for Devex, Louie-An Pilapil provided a concise overview of the African Development Bank's funding priorities. Since 2010, the African Development Bank became the leading source of multilateral funding for new African infrastructure, beating out the World Bank for the first time. See article here.

The majority of the Bank’s approved projects for 2010 were focused in the infrastructure sector, specifically transportation and power, totaling $3.9 billion (see chart).

While AfDB’s internal 2011 Annual Development Effectiveness Review stresses sector diversification in areas such as private sector development, regional integration, higher education, and science and technology, there is little doubt that infrastructure will remain the Bank’s core sector for years to come. In this sense, the AfDB is following the path of the Asian Development Bank which was primarily an infrastructure-focused institution in its early years, but has persistently ventured into other key development areas.

AfDB’s infrastructure concentration has played out nicely for the Chinese who have already proven masterful dealing with African countries on a bilateral basis by negotiating through innovative project financing and implementation packages. It now appears that AfDB is harnessing China’s commitment to Africa and using it as a tool to promote regional integration. Indeed, China has been able to penetrate the AfDB and secure an astounding number of high-value contracts largely on the basis of cost. 

The United States ranked 16th in terms of total AfDB funds awarded in 2010 highlighting the fact that U.S. construction and infrastructure firms remain somewhat on the AfDB sidelines and have not yet committed themselves to working with the Bank. Despite comparatively little activity from American firms, AfDB is scheduled to open a Washington D.C. office in 2012 in an effort to facilitate and accelerate American engagement with the Bank.   Read full article here.

The Millennium Development Goals 2011 Report for Africa is linked here.  An extract of the conclusions (p 124) is below:

Overall, the pace of Africa’s progress toward the
MDGs has been slow and generally insufficient to
meet the target date. Performance has also been
mixed and characterized by substantial variations
in access to basic social services across subregions
and countries, as well as within countries. Intracountry
variations in performance are typified by
rural–urban splits and disparities across income
groups. Where spatial differences in access to basic
social services coincide with ethnic boundaries,
horizontal inequalities (i.e., inequalities across different
ethnic groups) are exacerbated. This could
heighten tensions and become a source of social
unrest.

High Impact Development: Effects of Austerity

In another excellent analysis, Connie Veillette of the Center for Global Development lays out some thoughts on providing more focus and selectivity for USAID efforts. 

She focuses on 3 indicators:

1) a reduction in the number of countries receiving aid, a reduction in aid as countries move into higher income categories, or a recognition that some countries are not in a position to benefit from assistance;

2) resources focused in a smaller number of sectors identified as crucial for economic growth; and

3) selectivity around high-impact initiatives.

After some analysis of the current situation, she provides 4 recommendations for moving forward in today's environment of austerity and lower funding:

• Re-evaluate and eliminate small programs. 

•  Create a State Department aid account for strategic/political purposes.  

• Focus on a smaller number of objectives that have big impacts and get out of unrelated programs. 

• Identify comparative advantage. 

Read the full elaboration here.

USAID Agenda for Private Sector Engagement

USAID Administrator Rajiv Shah presented at the USAID Public-Private Partnership Forum held Oct. 20 in Washington. D.C. , where he outlined a new direction for the agency’s work and encouraged the development community to “embrace a new wave of creative, enlightened capitalism” that connects profit, wealth and development. Full remarks are linked here.

In the coming years, the U.S. Agency for International Development is expected to pursue more partnerships with local and foreign private corporations and to boost investments in business-related reforms in partner countries as the agency moves to make private sector development a key part of its mission.

As noted in a recent Devex article by Ivy Mungcal, "This push to elevate partnerships and support for private sector-led development as a key part of USAID’s mission is in line with U.S. President Barack Obama’s development policy, which includes promoting broad-based economic growth as one of its pillars. It is also in line with an emerging trend among donors to engage in development efforts that would help recipient countries graduate eventually from aid dependence.

USAID, according to Shah, would tap partnerships with foreign and local private corporations, including multinationals such as Coca-Cola and Pepsi Co., to leverage U.S. investments in the developing world. “I’m not talking about partnership for partnerships sake,” Shah stressed. “I’m talking about helping support the work of markets that can deliver profits and create opportunities for women, minorities and the poor. We must partner with the private sector much more deeply from the start, instead of treating companies as just another funding source for our development work.”

USAID aims to create and maintain these partnerships through its recently launched Office of Innovation and Development Alliances supervised by Maura O’Neill, USAID’s senior counselor and chief innovation officer (recent remarks here). 

Read Shah's full remarks here.

Catalytic Foreign Aid Coming?

Andy Sumner writing on Global Dashboard questions "Is ‘aid exit’ or ‘catalytic aid’ a new development strategy for poor countries? 

An extract below... Full post here. 

You might think so judging by comments buzzing around about ‘catalytic aid’ or ‘aid to end aid’ from leaders of some of the world’s poorest countries – for example, the President of Rwanda in the FT a while ago and more recently President Sirleaf of Liberia. 



As well, not a low-income country (yet), the UK Prime Minister, David Cameron visiting Nigeria recently (see here) said: …we can spend aid in a catalytic way to unleash the dynamism of African economies… …kickstarting growth and development… …and ultimately helping Africa move off aid altogether. 

Added to this are the recent related report from international NGO, ActionAid on ending aid dependency which notes: …the proportion of government spending that comes from aid and over the last decade it has fallen on average by a third in the poorest countries. In Ghana aid dependency fell from 47% to 27%, in Mozambique from 74% to 58% and in Vietnam from 22% to 13%. 

Although aid levels increased, economic growth and the countries’ ability to mobilise their own resources increased faster… Reading all this you might say hey, what happened to the 0.7 thing? So, what does it all mean for foreign aid and poor countries development strategies? 

The ultimate sign a country is no longer poor is surely it has no longer a need for foreign assistance in the form of aid flows (or even better is a foreign aid donor itself such as South Korea). A new and evolving concept that seems to be buzzing around is ‘catalytic aid’ – meaning foreign aid aimed at ending the need for foreign aid I think. 

Read further here.

EC - Agenda for Change

On 13th October 2011 the Commission presented its 'Agenda for Change ' and reform proposals for EU budget support, setting out a more strategic EU approach to reducing poverty, including a more targeted allocation of funding. Document linked here.

The European Union as a whole (Member States plus Commission-managed funds) is the most generous donor of official development aid worldwide. In 2010, it provided €53.8 billion - more than 50% of global aid. The European Commission is responsible for the management of €11 billion of aid per year, putting it in second place among donors globally. Future EU development aid spending should target countries that are in the greatest need of external support and where it can really make a difference, including fragile states.

Cooperation should take different forms for countries which are already experiencing sustained growth or which have sufficient resources of their own.  EU assistance should focus on two priority areas: 

• Human rights, democracy and other key elements of good governance, and 

• Inclusive and sustainable growth for human development. 

EU Commissioner for Development Andris Piebalgs.  Photo:EU

The EU aims to help create growth in developing countries so they have the means to lift themselves out of poverty. Aid will therefore target particular areas: social protection, health, education and jobs the business environment, regional integration and world markets, and Sustainable agriculture and energy. The EU should also try to further improve the effectiveness of the aid it delivers. This can be done by making sure that Member States and EU Commission jointly prepare their strategies and programmes and divide labour better amongst themselves.

Furthermore, the EU will explore innovative ways of financing development, like the blending of grants and loans. It should also improve the coherence of its internal and external policies: European action in many areas like environment, trade, climate action, etc affects development countries. Here, the overall impact of EU development policy can still be improved. 

A significant share of EU aid is delivered in the form of budget support: financial transfers to government budgets in developing countries, coupled with policy dialogue, performance assessment and capacity building. The Commission proposes to make it more effective and efficient in delivering development results by strengthening the contractual partnerships with developing countries.

Save $2 Billion on U.S. Aid?

Connie Veillette of the Center for Global Development and John Norris at the Center for American Progress have outlined 5 specific recommendations on savings that could be achieved through simple reforms of some U.S. aid policies and procedures. They call them Five Steps to Make Our Aid More Effective and Save More Than $2 Billion. 

A short paper with a discussion of these 5 options is linked here.

With the new U.S. Budget Control Act, Ms Veillete has since informally redubbed it: Five Super Ideas for the Super Committee. Under the Budget Control Act, a Joint Deficit Reduction Committee is tasked with finding up to $1.5 trillion in savings over ten years. The Committee is free to look at revenues, entitlements, and discretionary spending. This “Super Committee” began its work in earnest this month and is required to have some kind of plan by November 23rd. The deadline for House and Senate votes on the Super Committee’s recommendation is December 23rd. 

That means there’s a lot in play during a short period of time. Yes, there’s a long way to go to reach $1.5 trillion, but as they say…a billion here, a billion there, and pretty soon you’re talking real money.

BRIC Impact on Donor Aid Growing

Devex featured a story recently by Christine Dugay on the increasing role of emerging country donors. Among the new players are Brazil, Russia, India, and China, also known as the BRICs, whose global economic influence continues to grow. In addition to the BRICs, the United Nations Office for the Coordination of Humanitarian Affairs (UNOCHA) lists Saudi Arabia, Turkey, United Arab Emirates, Thailand, Mexico, and Kuwait to round out the top 10 emerging humanitarian aid donors in 2010. 

India's Manmohan Singh, Russia's Dmitry Medvedev, China's Hu Jintao, Brazil's Dilma Rousseff and South Africa's Jacob Zuma attend the BRICS leaders' meeting in Sanya, China. Photo by: Roberto Stuckert Filho / CC BY-NC-SA

These countries’ support of multilateral aid initiatives, overall efficacy of their assistance programs, and size of their aid budget and spending (in some cases greater than certain DAC donors) have generated significant interest across the international development community. Excerpts below: 

Benefitting from their own experiences with poverty and humanitarian crises, emerging donors have paid special attention to the basics of development and relief including food provisioning and large-scale disaster response. In 2010, emerging donors contributed $87.1 million to the U.N. World Food Programme (WFP) and $90.6 million to UN Emergency Response Funds (ERFs). To place that contribution in proper perspective, the United States, the largest donor of humanitarian aid in 2010 at about $4.9 billion, gave only $10 million through the U.N. Central Emergency Response Fund or CERF. Furthermore, India gave $500,000 to the CERF and $20 million to the Pakistan ERF while Saudi Arabia gave $50 million to the Haiti ERF. 

Much of the emerging donor activity is being carried out under the banner of South-South Cooperation or SSC – a term first used in the 1970s to describe developing countries supporting other developing countries. The movement spawned the U.N. Special Unit for South-South Cooperation (SU/SSC), which aims to promote South-South trade and investment. Ultimately, however, it was China’s potent regional response to the 2004 tsunami that brought the SSC concept back into the consciousness of the international development community. The benefits of horizontality, mutuality, and partnership among likened countries have since been re-promoted and the trend continues to spread. 

Moreover, triangular developmental cooperation initiatives or developmental activities involving an emerging donor, a traditional/DAC donor, and a recipient country are gaining attention and some momentum such as the informal plans between the European Union, China, and African states. Read the full article here.

Aid Transparency Initiative

The International Aid Transparency Initiative (IATI) aims to make information about aid spending easier to find, use and compare. 

Those involved in aid programmes will be able to better track what aid is being used for and what it is achieving. This stretches from taxpayers in donor countries, to those in developing countries who benefit from aid. Improving transparency also helps governments in developing countries manage aid more effectively. 

This means that each dollar will go as far as possible towards fighting poverty. IATI was launched in September 2008 in Accra, Ghana. It is a voluntary, multi-stakeholder initiative that has brought together: donor countries developing country governments non-governmental organisations experts in aid information These participants agree on a common, open, international standard for publishing more, and better, information about aid. 

 
The International Aid Transparency Initiative (IATI) from Development Initiatives on Vimeo.

New Aid Model Should Focus on South-South Cooperation

Jonathan Glennie writing in The Guardian reports that South-South Co-operation is making a comeback, but it's time for an aid model that does away with such outmoded categories. 

Some extracts are below. The full article is linked here. 

One of the many revolutions taking place in the world of international aid and co-operation is the rebirth of a movement that challenges what is now generally described as the "traditional" aid model. Instead of a vertical donor-recipient approach to aid giving, south-south cooperation (SSC) emphasises horizontality and mutuality.   It is one of the big ideas on the development landscape and the Organisation for Economic Co-operation and Development (OECD), to its credit, is fully supporting it – despite the challenging critique of OECD donor practices at its heart. 

SSC has been revitalised recently as the hegemony of the west has faltered, allowing other powers and theories to enter the fray. SSC is much more than just another aid modality. As well as financing, SSC consists of exchange of experts, technical assistance, goods and services (in kind), information on best practices, and initiatives to increase joint-negotiation capacities. But its political significance may be as important as its anticipated concrete impacts. 

At its most radical, SSC challenges a form of development that has served northern interests more than those of the "recipients" of aid.   While northern development models favour words like growth and poverty reduction, SSC emphasises jobs and institution building. While aid givers in the north are infatuated with "results" (short-term targets being reached), SSC sees the importance of processes and longer-term capacity development.   Read more here.

Increasing Private Sources of Aid

In a recent feature, Devex published an OECD chart depicting levels of aid sources from both public and private sources from the larger countries. The chart suggests that there is evidence that prominent private foundations are expanding their global development role. 

The chart shows the extent of this giving in the context of the yearly foreign aid contributions of the top 10 OECD-DAC countries from 2003-2009.

As Devex notes, "In 2007, 2008, and 2009 (the last three years that the OECD tracked net private grants to the developing world), private grants increased considerably, amounting to about one fifth of total ODA from the top 10 OECD-DAC countries. 

In the face of U.S. government aid spending reductions and European aid austerity measures, it will be interesting to see if the balance continues to shift and how organizations such as the Bill and Melinda Gates Foundation influence the global development agenda."

Bringing Light to the Poor, One Liter at a Time

Isang Litrong Liwanag (A Liter of Light), is a sustainable lighting project which aims to bring the eco-friendly Solar Bottle Bulb to disprivileged communities nationwide. 

Designed and developed by students from the Massachusetts Institute of Technology (MIT), the Solar Bottle Bulb is based on the principles of Appropriate Technologies – a concept that provides simple and easily replicable technologies that address basic needs in developing communities.  

MCC Fine Tunes Indicators and Selection Criteria

In a recent commentary, Casey Dunning of the Center for Global Development reports on decisions from the recent Millennium Challenge Corps Board Meeting.

Extracts are below.  Full post linked here.

The Millennium Challenge Corporation (MCC) board of directors made three big decisions at its recent quarterly meeting. Most importantly, the Board endorsed a number of changes to the MCC’s selection system and criteria. The new system incorporates improved data and learning from the MCC over the past nine years but also calls into question the MCC’s historic commitment to clarity and an equal emphasis on a country’s commitment to rule justly, invest in its people, and encourage economic freedom. 

The MCC’s new system takes into account a number of CGD’s recommendations but falls short on maintaining clarity. The revised selection process (link here) incorporates the following changes to the indicators and the rules that govern them.

Innovation in Government: Republic of Georgia

A McKinsey report issued in September discusses innovations in government services in transitioning countries.  Focused on Kenya and Georgia, the analysts detail some of the changes in government services in the past few years.  The short report is linked here.

New Batumi Service Hall

Much of the Georgia story discusses the improved services of the National Agency of Public Registry (NAPR), although it is not identified as such in the article.  The agency works under the Ministry of Justice and handles much of the paperwork registration and certification detailed in the story.  What makes this story so remarkable is that this progress did not happen by magic.  The Public Registry was one of a small group of government institutions selected for American donor support in 2006 as an element of the USAID funded Public Administration Reform program.  

M. Mari Novak

The implementing contractor was the consortium team MSI and AED. KNO consultant M. Mari Novak was hired to do the initial performance assessment of the NAPR, define priorities for action, indicators of success, and to design initial interventions to move the agency forward.  At the time, the CRA offices were trading floppy discs with data across the country, and struggling with a tiny budget.

Meanwhile, KNO consultant Steven Kelly was working in Batumi doing a similar assessment with the Autonomous Republic on the Black Sea.  It was winter, and the worn government concrete building was so cold that meetings were held in coats and gloves.  Both Mari and Steven as certified Performance Experts, applied the methods of Human Performance Technology (HPT) to addressing the capacity building challenge.

From these early beginnings, discrete intervals of consultancy and technical assistance were provided during the following years, from both American and other funding sources. The NAPR was fortunate to have a very progressive manager (since promoted within the Ministry of Justice).  

He was able to manage the support made available in the upcoming months - help with strategic planning, capacity development, etc - to build on his agencies strengths toward the "everything in one place" and the "customer is king" vision.  

Meanwhile, other parallel advisory efforts in support of improving business registration, customs processes, and overall administration where underway funded by USAID. Substantial additional funding was made available by the EU and other international donors to support the progress being made.   It was a true example of capacity development - momentum building year-by-year in a sustainable fashion, supported by multiple donors.

Of course, the true credit for the superb results fully rests with the NAPR managers and staff, supported by the Ministry of Justice.  They were able to discern what support they truly needed, not let the donors dictate emphasis based on their own agendas, and engage the staff to upgrade service levels.

It is a great case study of capacity development really working.

The Future of U.S. Aid Reform

Recently Connie Veillette of the Center for Global Development released The Future of U.S. Aid Reform: Rhetoric, Reality, and Recommendations.   This new report examines the success in pursuit of principles in the Presidential Policy Directive on Global Development and the Quadrennial Diplomacy and Development Review (as reflected in President Obama's FY2012 budget request).  

The analysis gauges the administration’s progress on seven elements of reform using traffic signal graphics.
 

Download the full report here.

U. S. Foreign Aid Since 1977

The New York Times has published an interactive chart showing levels of showing gross amounts as well as percent of the federal budget. It is worth noting that the highest percentage of foreign aid during this time was 2% in 1985. Recently, it is hovering around 1%.

A couple of snapshots are below, click here for the interactive graph.