Donors’ three mistakes in fragile states

You’re the Finance Minister in a country just coming out of conflict.  Or maybe you’re disaster-struck like Haiti. Donors line up and make big pledges. UN agencies arrive and occupy whole blocks of office buildings. Each come in with a template. It looks reasonable. It’s certainly well-intentioned.

None of you know it yet, but you’re setting yourself up to fail.

That’s the message one of my favorite academics delivered to a new finance minister last week. I’ll name neither here. But he left the Minister with three mistakes donors will probably make.

1. Let’s set high standards for governing and disbursing public money. Bad idea. Bureaucracies need procedures, norms and experienced personnel. If a Mozambique or Liberia improves its bureaucracy at the fastest rate in human history, it will have the sophistication of an India or Pakistan in 20 years.

2. Invest quickly in education, health and infrastructure. Actually, these aren’t the country’s first priority. Law, order and security come first. Unfortunately, freedom from violence, or access to justice, are not MDGs. Your donors are focused (and evaluated) on human development and poverty alleviation. That’s also what they know how to do best. Security sector reform and justice? Less so.

3. Get NGOs to deliver aid directly. Since the state bureaucracy can’t meet high standards, you can forget direct budget support. But how to build schools and clinics and roads? Enter the NGOs and contractors. Unfortunately, this direct delivery is not going to help you build bureaucratic capability. It might even undermine it.

So what’s the solution?

Set goals for the rate of bureaucratic improvement, not the level of standards. In the meantime, this or that Deputy Minister is going to need to send pork to his constituents. And money is going to get mismanaged or diverted.

Keep education and poverty on the table, but make certain that law and order are first not fourth on the agenda. Push donors to give you country reps with experience in this regard.

Finally, in place of direct aid, there’s a nice new trick: community-driven development. Rich countries give the state a big pot of money, then the state defines simple local procedures for disbursement. The donors love it: it sounds all participatory and pro-poor (and often it is). But most of all, it lets a weak state actually disburse cash without a ridiculous amount of accounting, with lots of room for pork and (diminishing over time) diversion of funds to ruling party coffers.

The short story: shoot for the possible, not the impossible.

23 Responses

  2. Question: you explain what is best for the “new finance minister”, (get more power for his government, money for his friends, and let his minions rob as much as they want, not necessarily in this ordet, though) but it does not seem to me to coincide with that is best for the population.

  3. It’s interesting to look at post-conflict development programs in Africa (Liberia) v. Europe (Kosovo). The donor push for health and education programming in Africa seems to be priority #1, or at least the topic with the most buzz around it (could be measured). In Kosovo the EULEX mission (with US support) committed massive resources and long term technical assistance to building a functioning Ministry of Justice, training and equipping a police force. I haven’t heard nearly the same buzz around health and education programming in Pristina. Maybe it’s not fair to compare the two because Liberia is so far behind on every measure but it makes me wonder about the decision making process for prioritizing for post-conflict recovery assistance. Why Justice/Security in Kosovo and Health and Education in Liberia… ?

  5. If Bill Clinton made a mistake in Haiti, think about the magnitude of the mistake in Egypt (and other places) We are draining the Ogallala aquifer to support population grown twice as large as sustainability. The Egyptians stopped being able to feed themselves from their own water in 1970. The global food crisis in 2008 started bringing this home. That led to a cascading effect of Egypt (and many other countries) leasing land from African nations where farmers have been kicked off their land in favor of lucrative foreign leases.

  6. Of course the finance minister can discover all these things if he left his office and actually talked to the first working class person he meets in the corridor and ask them where they want their “taxes” to be spent.

  7. Chris – how do you feel then about Cash on Delivery Aid – which CGD is thinking about piloting in Liberia in the education sector? Is this equivalent to making mistakes 1 and 2?

  8. I don’t think it is right to say that donors don’t invest in security sector reform. Virtually every country I have worked in has seen huge sums of money spent on these things. It has often been done very badly: the coca cola cops in Kosovo, Italian justice sector reforms in Afghanistan, the building of the new police force in Timor Leste on the old TNI, etc. but the intent is certainly there.

    I think the bigger problem is tackling state corruption, but it sounds like you want to institutionalise this. How do you actually build a functioning police force and judiciary while instructing it to turn a blind eye to these practices? Also what would be the proportion of international aid that you would allow politicians to steal (does it start at 50% in year one then go down to 30%, 20% and 10% in a five year period) and how should donors account for it?

    One of the few projects that I would say has stood the test of time (unless someone is about to horribly disillusion me) is the NSP in Afghanistan, but the money was not given to the state there. The funds were administered by those pesky NGOs.

  9. Hi Chris,

    Fully agree that investing in state capacity should be a priority. And states should be given the chance to establish its authority. However, I have a few questions for conflict-affected countries –
    1. Before deciding to strengthen the hand of the state – how does the international community determine if the current regime adequately represents the local population? Moreover, the international community is not homogeneous – each government/agency will have their own interests to protect/advance. And if the current regime doesn’t represent the majority, isn’t there a risk that strengthening law and order systems or implementing CDD might cause more harm than good?
    2. Countries like India have an entrenched bureaucracy capable of resisting changing political winds to a large extent. In a post-conflict situation, that’s not quite the typical scenario? Of course, to argue either that the bureaucracy has to be strengthened first or the political rulers might be a circular argument
    3. What about core infrastructure? Roads, public transport, banking etc? Are there good strategies to develop these capacities in a post-conflict state?

  10. Good points – although I can’t help but make a few points of my own.

    Why the big secrecy, they’re hardly groundbreaking insights?

    With that in mind, what I’m looking forward to, is many more people/academics/researchers/commentators/activists/etc. looking into why so much aid and emergency response still act in oblivion to the obvious i.e. look into the politics of aid/interventions. I’m reminded of a recent seminar I attended, where Ngaire Woods and Robert Wade both gave persuading (although slightly differing) presentations about the situation of the World Bank, future challenges and why there’s an urgent need for reform. (Presentations are available for download
    here    .)

    What was lacking, however, was a convincing analysis of how these circumstances would actually drive change. I’m not so sure the nature of supply and demand in this context gives much hope for any invisible hand. Rather, DAC members and the whole system appear to be locked in a position where change in societies is at the same time idylised, demonised and idealised. E.g. communities are Good, bureaucrats are crooks and we can manage and control it all if we could just only identify and ‘supply’ the right ‘resource allocation mechanisms’.

    It appears to me that if this is to change, if we actually are to “shoot for the possible”, it would more or less have to presuppose a total change in our idea of knowledge, policy and a new social contract between electorate and governments.

    Any thoughts?

  12. Agree with you 100% Chris. And Jen M., I’m afraid you’re well-intentioned on your point on CDD’s in Afghanistan, but it’s inaccurate. Local ‘governance’ structures are often the most corrupt and least interested in the welfare of the people since we empowered the warlords in most of the provinces, which is why the Taliban are winning. Even where traditional shuras exist, they are not the formal government, and they are beset by the usual problems that come with feudal structures: marginalizing minorities and women, and maintaining their own power. CDD works. NSP is Afghanistan’s leading flagship program, the data is out there, check it out.

  13. Don’t you think that providing education and alleviating poverty can contribute to creating a lasting law and order?

  14. I don’t know that law comes first. Security and order, yes, but when 90% of folks in developing countries already don’t have meaningful access to formal legal systems, talk about rule of law misses the point. (Plus, don’t forget there are lots of informal systems–not necessarily “better,” but certainly institutions that can persist even when the state collapses or regime changes.)

    The “law” you speak of is surely some narrower set of concerns, no? Do you mean the institution of courts for criminal law? I’d be curious to hear your elaboration, since “law” captures many things and the priorities post-conflict must be a subset of these.

  15. Professor Blattman,

    Thank you very much for this post. I greatly appreciate the succinctness with which it puts entire aid effectiveness issue into perspective and offers practical solutions towards monitoring, transparency and accountability.

    I’ve been tracking the huge amounts of international aid flowing into Pakistan for both relief and development for many years now. Moreover i’m keenly tracking the implementation of the Kerry-Lugar-Berman bill. Especially the first tranche of $1.5 Billion.

    I love the concept of ‘community-driven development’ but my experience in dealing with small local NGOs, doing great work at the grass roots level that deserves support, is that they lack the ability to access the big donors because they’re so localized and in turn the international aid agencies can’t seem to see beyond their noses.

    Without proper checks and balances aid will disappear and be used for nefarious purposes as it has done in the past.

    Most importantly thank you very much for pointing out: ‘Law, order and security come first. Unfortunately, freedom from violence, or access to justice, are not MDGs.’ Living and working in Pakistan for the last seven years i feel that rule of law or lack thereof is the core problem facing our society.

    I’ll be quoting and referring to this post a lot in my dealings with international aid agencies, local NGOs and implementation.

    Best regards,
    Ayesha Hasan

  16. Chris, have you read Fixing Failed States (by Ghani and Lockhart), or engaged with the authors (http://www.effectivestates.org/)?

    They say a lot of the same things (and more). Especially with minimizing aid organizations setting up alternative bureaucracies, and using some of their resources, as well as whatever can be mustered, to build the state towards ten specific objectives.

    This stuff is new to me, so would love to see what you think of their ideas.

  17. CDD is a great idea in principle, but in many post-conflict state it is actually implemented by the very same NGOs creating the same dynamic CDD is designed to avoid. In Afghanistan, for example, so-called CDD programs have created parallel governance at the local level making the state even more irrelevant. States in many post-conflict environments use INGOs to deliver CDD. So while they are CDD in principle, in practice they just end up being another INGO driven program.

  18. Chris:

    The big obstacle here is developed country politics, particular from within aid’s iron triangle. Right now NGOs get a lot of business in fragile states, you’d be reducing that and telling national aid agencies that they’d get fewer photos of schoolgirls in uniforms in exchange for more photos of cops at roadblocks and stories about the slow reduction of crime.

    Aid is a political outcome. How would one go about trying to satisfy all the special interests … I mean get the support of the various home country stakeholders for such a scheme?

    1. But the NGOs are easy to satisfy. Your average SAVE or IRC or UNICEF program serves 30 people a village in maybe 100 villages. This stuff is minuscule, and pales beside a half-billion-dollar “social action fund” like you see in Uganda or Tanzania or Malawi.

  19. does your point 2 leave you in sharp disagreement with prof. Easterly concerning the militarization of aid, or is there a way reconciling his aversion to security-as-aid with your prioritization of it? (if I read you right)

      1. ah … it seems I’ve misread Easterly then. I’d got the impression his objections to aid getting mixed up with the military were broader than that.