Donors and the development trap

Donors and the development trap

The reform process initiated by the Burmese government has been met with general acclaim by the international community. The removal of sanctions is under consideration and the willingness of governments and multinational institutions to assist Burma in the transformation to a democratic state and in enhancing its economic development has been proclaimed by a string of visiting dignitaries. This is indeed welcome. However, paradoxical as it may sound, this development is not without problems that need to be recognised.

Historically Burma receives very limited overseas development assistance (ODA). In 2010 the figure was a dismal $US7 per capita compared to, for instance, $US50 per capita to Cambodia and $US33 to Vietnam. Accumulated over several decades the differences in support received are very considerable.

Hopefully this is now about to change. For different reasons governments and multilateral institutions are eager to engage with Burma. In addition the general level of development in the country and the prevalence of undisputable widespread poverty are strong reasons for engagement. This is likely to be reflected in a rapid and steady increase in the allocation of development assistance funds for Burma by governments and boards of multilateral development institutions such as the UNDP and its specialised agencies. New bilateral and multilateral donor agencies such as the World Bank will enter the scene.

This development is indeed welcome. Burma, and particularly the many poor in the country, deserves a significantly higher level of support than in the past. But experiences around the world decidedly suggest that this development will not be without risks and problems that need to be recognised and as far as possible addressed. The responsibility to do so rests as much, and perhaps even more so, with the donors as with the Burmese government.

One profound problem is the difficulty to direct donor interest and funds in a manner that supports a development strategy. This is a problem that most governments in recipient countries face and it has two sides. On the donor side one finds differences in aid policies, including the priorities and preferences. Not only do these preferences diverge and point in a multitude of directions in terms of what should be priority development activities, but they are also found to differ in terms of how different development priorities should be addressed (with subsidies of an activity or without, for instance). While this would probably be denied at policy level, anyone familiar with field operations knows that there are such differences. There are also differences in terms of the importance that should be assigned to crosscutting issues such as gender equity, poverty focus, sustainability, and so on. Despite efforts to the contrary donors do pull in different directions from time to time.

Furthermore, the boards and parliaments allocating funds for Burma will measure the level and success of engagement in the transformation of Burma first and foremost by amounts of funds dispersed. The task to make that happen is passed on to development technocrats and administrators who find themselves under disbursement pressure.

In the best of circumstances the recipient country should have a sufficiently comprehensive and prioritised development strategy to direct government and donor efforts. Too often such strategies are either lacking or formulated in such a general manner that almost any donor preference eventually can be accommodated.

Burma is in a particularly difficult position in this regard. While an impressive process of analysis and discussion has taken place in the recent past resulting in positions on a number of important development issues, it would hardly be true to say that there is a comprehensive, prioritised development strategy. Furthermore, the pace at which this process has been pursued is commendable but it brings the risk of not being thorough enough.

This risk is further enhanced by the isolation of Burma from international experiences in the field of development for decades. Hence, without a clear development strategy and with limited international experience it is often difficult for government representatives at any level to judge the relevance and the potential of different donor proposals that are likely to be forthcoming.

Donors may be genuinely committed to the principle of local ownership, although their often rather specific priorities seem to set limits to local ownership. In the spirit of local ownership proposals for donors to consider should come from the government. In the circumstances suggested above this is not likely to happen at a pace required by donors who are under pressure to disburse. Experience from other countries clearly suggests that donors will take initiatives to identify and formulate proposals for discussion with government agencies. This brings two risks: first, donors come to set the development agenda to an extent that is in contradiction with the letter and spirit of the Paris Declaration which prescribes local ownership; second, the sum of such development efforts becomes ‘the strategy’. When added up in terms of investments, it more often than not is clear that the resulting pattern is questionable and out of balance.

Another concern is that the inflow of considerable funds to be transformed into activities tends to direct focus to funds rather than to policies. There is just that much government capacity, and donor initiatives and donor funds will demand attention. There may well also be an understandable push on the part of the government leadership to make concrete things happen that are made possible by donor funds.  Furthermore, there are likely to be both legitimate and less legitimate incentives to be close to activities where money flows.

Yet, policies are more critical than funds. The effectiveness of investments is generally decisively dependent upon the policy framework. In the best of circumstances policy reform should precede many investments. Often this will not happen but at least policy reform should not be permitted to fall in oblivion.

A rapid and significant increase in funds for development will meet constraints in terms of absorption implementation capacity. While there is an untapped technical and administrative capacity in Burmese government departments due to severe underfunding in the past, there are still likely to be notable capacity constraints. When donors experience these constraints, they will suggest technical assistance. The argument will be that they cannot approve funding if there is insufficient capacity for effective implementation. This argument is likely to come soon and the government needs to revisit its policy position on such assistance.

In doing so it may be worth noting the risk that donors rather prop up their programmes and projects with technical assistance than take a comprehensive look at human resource development needs for the country. As an example at one point in time the donor community spent more than $US300 million on technical assistance in Laos in a year and no more than $US25 million on the education sector.

Obviously none of this is an argument for declining development assistance that may be offered. However, there may be reasons to recognise that issues of this nature will arise and to initiate a dialogue within the government but also a dialogue with donors on how they may be addressed to avoid being overtaken by events.

Lars Birgegard was member and team leader of the UNDP annual independent assessment mission for the Human Development Initiative in Burma from 2006 to 2010, and has more than 40 years professional experience in development and development assistance.

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