This book should be read by all those
involved in supporting or promoting good governance in the Global South. It not only demonstrates that the
current approach by the donor community is failing, but suggests how a very
different approach would lead to much better results.
“The basic story line is that half of
145 countries that have had donor sponsored reforms in place saw declines in
indicators of government effectiveness over a recent ten-year period” (page 15). Why is it that after at least a quarter
of a century of spending of billions of dollars and the participation of tens
of thousands of consultants introducing ‘global best practices’ that so little
has been achieved?
At the macro-level, the problem is
capital flight from the Global South to the industrial centres of the world. In terms of sub-Saharan Africa, a study
by many NGOs last year[1] demonstrated
that whilst sub-Saharan Africa receives less than $140 billion each year, mainly
as loans, foreign investment and aid; nearly $200 billion leaves, mainly as
profits made by foreign companies, tax dodging, and the costs of adapting to
climate change. The result is that sub-Saharan Africa suffers a net loss of
capital of almost $60 billion a year.
So the answer to the question, ‘why has foreign aid not led to economic
development in sub-Saharan Africa?’ is that the continent is suffering a significant
net loss of capital each year.
This book concentrates on the
micro-level and provides extensive evidence that the current approach of using
expatriate consultants to introduce ‘best practices’ does not work; even when
assessed by the donors themselves, in their own terms. So for example, a study
published in 2011 by the World
Bank found that fewer “than 40
percent of the eighty countries receiving World Bank support for public sector
reform between 2007 and 2009 registered improved CPIA governance scores in that
period. A quarter of these countries actually saw such scores decline, whereas
more than a third stayed the same” (page 13).
Development agencies are not facilitating development
In my area, public financial
management, the donors have a standard set of reforms or techniques (accrual
accounting, Medium Term Expenditure Frameworks, Integrated Financial Management
Information Systems, programme budgeting, single treasury accounts and risk-based
auditing) which are introduced and re-introduced (after earlier failures) over
and over again. Whatever the local environment, from Eastern Europe to failed
or post-conflict states in sub-Saharan Africa, the technical answers are almost
always the same. These appear to
be answers in search of a problem and most often are square pegs for round
holes. But they do work in the
interests of both the donors and the consultants involved. The donors are able to disburse funds
against standard outputs and the consultants have an easy life introducing the
same reforms from one government to another.
Due to the capital at their disposal
and their gate-keeper role, in terms of both the tools and techniques to be used
and the consultants employed, the donors are, “increasingly shaping the ideas,
opportunities, demand, and supply of public sector institutional reforms in
developing countries” (page 7).
Not only do, “generic models dominate the reform agenda of development
agencies” but, in addition, these have “a strong neoliberal influence on reform
content” (page 7).
First, the standard institutional
reforms, “aim to foster market-friendly governments through interventions like
privatization, deregulation, trade liberalization, and… [the promotion of]
competitive markets” (page 8).
“Second, reforms aim to create
disciplined governments” (page 9). “Ninety percent of the forty sample
countries took steps to discipline their public finances and civil service
regimes and to streamline debt in the first four years of World Bank–sponsored
institutional reform” (page 9).
Thirdly standard techniques or ‘best
practices’ are common, for example, “fiscal rules, medium-term budgeting
frameworks, and internal audit regimes” (page 10). As a result, “market-friendly, disciplined, and modernized
government… themes dominate more than 70 percent of World Bank-supported
[administrative reform] projects” (page 11).
This approach could be acceptable if it
achieved consistent success, but this appears to be far from the case. Assessments by the World Bank indicate
that, “Public financial management (PFM) scores improved in 62 percent of countries
after such reforms but stagnated or fell in nearly 40 percent. Corruption, transparency,
and accountability scores improved for 53 percent of the nations with public
sector reforms, remaining static or declining in 47 percent” (page 213). Recent
evaluations “reference the way many reforms ignore context, for instance,
promote demanding best practices, and fail to establish broad country-level ownership” (page 213/4). In many cases governments may introduce institutional
reforms in order to impress the donors and so gain further funds in the
short-term, but such reforms are necessarily accepted and so may not result in
improved governance.
A new approach is needed
Matt Andrews advocates a new approach that
he terms Problem Driven Iterative
Adaptation (PDIA). This “calls for interventions that address
context-specific problems through stepwise processes of purposive muddling by
broad groups of mostly local agents” (page 228).
Problem Driven Iterative Adaptation -type reforms have “three key dimensions: (i) They
facilitate problem-driven learning; (ii) they involve stepwise interventions
that allow processes of purposive muddling and action-based learning, which
helps change agents see what works, why, and what next steps they should take;
and (iii) they engage broad sets of (mostly local) agents providing different
functional contributions that ensure reforms are viable and relevant” (page
216).
First we need to identify the specific
problems that the institutions face. This needs a detailed understanding of the current
environment and the key challenges, weaknesses and capabilities of the local
institutions. In most cases this
will involve a key role for local civil servants who have the intimate
knowledge of their organisations, systems and processes that can only be gained
by working within the organisations for several years. Consultants may have a role to play,
but the local experts must lead and really own this process. Their views have
to be respected and carefully listened to. But even when using local officials, “it is important to
choose those who have not mastered the art of isomorphic mimicry and reforms as
signals” (page 231). The current
reform approach supports a specific modernisation paradigm which in reality
consists of neoliberal economic policies and New Public Management styles
reforms which have had questionable success even in their home countries. Problem
Driven Iterative Adaptation requires all concerned to concentrate on the
local specific problems and not to have been hood-winked by the questionable
benefits of the standard reform tool-kit.
Second reforms should build, on and not
replace, current techniques, processes and expertise. Major reforms inevitably lead to reduced effectiveness and
control, at least in the short-term.
We need iterative reform addressing key, specific weaknesses in existing
systems. “All manifestations of good, better, or best practice should be
subjected to stringent tests” (page 230). “It is extremely difficult to imagine
change toward a PDIA-type approach in the presence of processes that
incentivize actors to focus on large, pre-programmed, solution-based projects”
(page 230).
Problem Driven Iterative Adaptation is about building adaptive capacities to change in
developing countries. This is an
essential capacity for any institution, but is critical in many of the public
sector institutions of the Global South which are still dominated by
centralised and hierarchical bureaucracies which face fast changing environments
not least because of the demands of climate change.
We need to ask simple questions of
reforms. “Are new problems being
identified and constructed, using data, to provoke action? Are stepwise reforms
being introduced to address problems, or are they building on prior steps? Is
there evidence of short-term lessons about what works and why? Are reform communities
being developed, combining agents providing the functions necessary to achieve
change? The idea is to reward developing country governments for gradually becoming
more functional and adaptive” (page 228/229).
The international financial
institutions and the bilateral donors have a major role in recognising that the
current approaches are not working – they must start to allow and introduce
alternatives. “More flexible,
problem-driven funding streams could be provided to allow problem
identification and stepwise implementation” (page 230). A key step needed to facilitate
significant change involves changing the money rules in development. Certain
reforms are still implemented as a condition or to comply with donor
recommendations.
This book is an important step in
re-thinking the rules for institutional reform across the Global South. Another world is possible, but donors
have to ensure that, based on a recognition that the current approach is not
working, that they change the rules of the game. We need a paradigm shift from the easy introduction of
standard ‘best practices’. We need
to move to an approach that is based on iterative and incremental reforms,
addressing key local challenges which are led by local officials who have not
been seduced by the questionable benefits of the currently fashionable standard
reform agenda and its neoliberal overtones.
[1] Health Poverty Action
et al (2014) Honest Accounts? - The true story of
Africa’s billion dollar losses
http://tinyurl.com/pn33q3e
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