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Africa: Phantom Technical Assistance

AfricaFocus Bulletin
Jul 17, 2006 (060717)
(Reposted from sources cited below)

Editor's Note

"Technical assistance - donor spending on consultants, training and research - is one of the most heavily criticised forms of aid. ... [yet it is] still one of the most heavily used forms of aid, accounting for between a quarter and a half of all ODA [Official Development Assistance]." A significant proportion of this aid, charges ActionAid in a new report, is both over-priced and ineffective.

Technical assistance can be useful, argues the report, but only if it is made more accountable to country needs than to donor interests. This AfricaFocus Bulletin contains excerpts from the ActionAid report citing the problems with current technical assistance and recommending changes. Another AfricaFocus Bulletin also sent out today contains excerpts from another chapter of the same report focused on factors distinguishing "phantom aid" from "real aid."

For the full ActionAid report, see http://www.actionaid.org

For previous AfricaFocus Bulletins on related economic and development issues, visit http://www.africafocus.org/econexp.php

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

Real Aid 2

ActionAid International
http://www.actionaid.org

Chapter 2: Making Technical Assistance Work

Fundamentally, technical assistance often fails because it is:

  • donor-driven: skewing country priorities and accountability relations
  • out-dated: based on a development model that has been shown to fail.

Such failures are particularly concerning given that many southern countries do face capacity shortages in crucial areas. Donors can play a role in supporting country efforts to strengthen capacity. ...

Making technical assistance work will require:

  • southern countries taking more control over capacity building
  • a shift from one-sided conditionality to mutual commitments from donors and southern governments
  • countries being free to determine their own paths to development
  • the recognition that development is an indigenous, locally driven process.

Technical assistance - donor spending on consultants, training and research - is one of the most heavily criticised forms of aid. Damning critiques go as far back as 1969, with the Pearson Commission noting that it was, "little related to development objectives". By 1993 the critiques had hardened, with then World Bank vice president Edward Jaycox describing it as, "a systematic destructive force that is undermining the development of capacity." Bilateral donors have been equally scathing, with Eveline Herfkens, then Dutch Minister for Development Co-operation, noting in 2002 that: "The presence of so many experts in Africa in particular has undermined the confidence of countries in their own abilities. Technical assistance has not done enough to give poor countries the ability to stand on their own two feet." Even the typically understated OECD acknowledged recently that there was little evidence of the effectiveness of technical assistance, and that higher levels have shown no positive impact on economic performance.

Yet despite these critiques, technical assistance is still one of the most heavily used forms of aid, accounting for between a quarter and a half of all ODA [Official Development Assistance]. ... New ActionAid research in five African and Asian countries shows that a significant proportion of current technical assistance is:

  • ineffective: failing to build long term capacity and reduce poverty
  • over-priced: with high salaries being paid to expatriate consultants.

Why has technical assistance failed to build capacity?

... the underlying cause of technical assistance's failure to build capacity is that projects have often been donor-driven and have lacked southern country ownership and leadership. Technical assistance is commonly seen by governments as a 'free good', accepted because it brings other benefits, such as access to other forms of aid, rather than capacity development. It has been heavily over-supplied in relation to demand. Donor dominance has increased failure rates because it has led to the adoption of the wrong model where it is assumed that an expert with generic knowledge can simply pour knowledge onto a needy recipient, whether they want this knowledge or not.

This donor-dominated, international-expert-led model has contributed to a failure to build capacity in seven main ways:

(a) Technical advisers are often under pressure from donors and governments to 'get the job done' rather than take extra expensive time to build capacity. Some advisers are provided specifically in order to fill gaps, with capacity building seen as a side effect at best. Contracts don't usually include performance indicators on capacity building. In Ghana, for example, we found no example of payment on a contract being dependent on the transfer of skills, or of non-payment as a result of technical assistance failing to build capacity. ...

(b) Advisers often have real incentives not to pass on knowledge to their counterparts. Their continued employment may hinge on the existence of capacity gaps. In Ghana, some government officials argued that donor-funded advisers perpetuated their stay by failing to transfer skills to counterparts.

(c) Technical advisers are more focused on meeting donor demands than building capacity. Advisers commonly provide outputs, such as reports, in a format which may meet donor demands but which fails to be useful to the government. In Ghana, we found that the German and Japanese official donor agencies, GTZ and JICA, were writing their education project reports only in German and Japanese, not English, leaving little scope for local learning from successes and failures. ...

(d) Advisers have often lacked skills or expertise in building capacity. Recruitment of technical advisers has tended to focus on the selection of international 'experts', rather than those who are able to transfer skills. ...In Ghana, it was found that there had been no transparent assessment of consultants by the government, and that no consultant had ever been denied their salary for failing to perform.

(e) Some governments have not been strategic in their use of technical assistance. Because so many have been donor-driven, southern governments have often lacked the motivation to acquire new skills through technical assistance projects. In Cambodia, one former adviser noted that: "if the Cambodian boss isn't happy with the technical adviser, they will give the signal and all the staff will pretend they don't speak English." In contrast, in Tanzania it was observed that relatively high government ownership of reforms in public financial management had ensured that technical assistance delivered results. ...

(f) Heavy use of expatriate consultants can foster a 'dependency culture'. Government officials can have reduced incentives to develop their skills and abilities because they assume that international experts will always be there to do the job. ...

(g) The common failure of donor co-ordination has fuelled the problem. ... In Ghana, the effectiveness of technical assistance for literacy in Ghanaian languages has been undermined by the fact that GTZ and USAID have run parallel projects in the same districts, aiming to develop teaching/learning materials. The projects not only contradicted each other,61 but in the case of USAID also failed to fit with government policy.

(h) Capacity building initiatives have been undermined by a lack of policy coherence. This has been in evidence on both the government and donor side. Donor efforts to train up doctors and nurses have been undermined by the donor encouraged 'brain drain' of teachers and nurses leaving for more highly paid positions in rich countries: 70,000 African professionals leave the continent each year, according to the OECD. On the government side, low salaries due to a lack of pay reform often provide few incentives for newly trained counterparts to stay in government, particularly when more lucrative opportunities are available elsewhere. This problem is compounded by stringent IMF imposed macroeconomic policies which serve to keep wages low, because of concerns about the inflationary impact of salary increases.

2.2.2 Technical assistance is over-priced

The failure to build long term capacity in southern countries is particularly concerning given the high cost of technical advisers, especially expatriate experts. As with the impact of technical assistance it is very difficult to obtain accurate information about consultants' charges, but indications are that costs are generally very high, particularly in relation to local salaries. In Cambodia, for example, typical adviser costs were found to be in the region of $200,000 per year, with similar costs observed in Tanzania. In Ghana, one UNICEF official said that $10,000 per month was usual for a highly qualified education consultant, which put them at the lower end of the pay scale, with the World Bank and African Development Bank paying as much as double this rate.

High salaries paid to expatriate advisers do not only raise questions in terms of value for money. They can also cause significant resentment among counterparts and the public in the south. ... Salary differentials were raised as key concern by interviewees in Cambodia, Tanzania and Ghana. In the Ghana education service headquarters, government officials receive about $300 a month, what a relatively inexperienced Ghanaian consultant could expect to earn in a day, and a foreign consultant in a few hours. This was particularly galling to many observers who felt that expatriate advisers made heavy use of local expertise imparted by their counterparts in order to understand local culture, traditions and politics. ...

Why are costs so high?

Once again, the donor-dominated, expert led model is the underlying cause of overpriced technical assistance. There are five main reasons why this model leads to inflated costs:

(a) Costs and prices play a very limited role in determining demand and supply. ... Donors gain advantages such as policy influence or information from technical assistance and have little incentive to drive down overall costs as budgets are often determined in advance. Southern countries - the supposed beneficiaries of technical assistance - are rarely given the option of spending the money on something else instead, meaning that prices do not reflect opportunity costs. Some experts consider the lack of consideration of opportunity costs to be the major reason for the ineffectiveness of technical assistance. In Sierra Leone, one UN staff member stated that: "technical assistance is there for the sake of technical assistance, mainly because money follows advice." ...

(b) Much technical assistance is officially tied. Technical assistance, along with food aid, is one of the areas excluded from the 2001 OECD DAC agreement on untying aid to the least developed countries. Yet tying raises costs by an estimated 15%-40%, according to the OECD, with technical assistance likely to be at the higher end of that scale. This is partly because donor country firms generally have higher costs than local suppliers, and partly because restricted competition through tying tends to push up prices. ...

(c) Donors prioritise their own nationals, even when technical assistance is not officially tied. Even donors which have officially untied aid still award the bulk of contracts to their own suppliers ... There are several reasons for this. Firms from the donor country often know better what the donor is looking for, so are best able to design their tenders accordingly. Donors sometimes only advertise for tenders in their own newspapers, or only in their own language, excluding local firms or those from other donor countries. The costs of tendering for large contracts are often high, benefiting large firms and creating barriers to entry for new start-up firms. Procurement rules generally mean that it is important to show a good track record when seeking tenders: consultancy firms from donor countries, particularly when there is a history of aid tying, are often better placed to do this.

(d) Heavy use of expatriate advisers inflates costs because of associated expenses. The OECD, for example, using data supplied by DFID, cited three cases they described as typical in which the total cost of expatriate consultants, as in Cambodia and Tanzania, was in the region of $170,000-$200,000 a year. Of this, salaries were estimated to amount to less than half, with the remainder accounted for by cost of living and hardship allowances, travel, rent, child allowances, school fees and other miscellaneous expenses. All of these costs would presumably be saved if local experts were employed. In their typically understated manner, the OECD themselves have observed that, "such costs seem excessive".

(e) The technical assistance market is highly inflexible, and competition is severely limited. This is particularly true where donors insist upon or encourage the use of their experts, meaning that alternatives cannot be explored, severely reducing competition and therefore increasing prices. Donors often refuse to share information, further increasing transaction costs. ...

2.3 Efforts to Reform Technical Assistance

Faced with a barrage of critiques of the system over the years, there have been some efforts, both internationally and on the part of individual donors, to reform the way they provide technical assistance. Countries such as Botswana have also made efforts to improve the way technical assistance is provided. To various degrees, these efforts have yielded results. But they still fall far short of the fundamental overhaul of the system that is needed.

2.3.1 International reform efforts

The most prominent international effort to reform technical assistance was the National Technical Co-operation Assessment and Programmes (NatCAP), which started in the early 1990s. Led by the UNDP, the programme worked with more than 30 governments in Africa. The aim was to launch national programmes of reflection on technical assistance, which would lead to the adoption of coherent national policies and priorities. At the same time, the OECD in 1991 adopted a set of principles on the issue, emphasising the central role of governments, partnership, participatory development, greater attention to cost and cost effectiveness and a focus on more comprehensive programme approaches. Yet neither of these new initiatives really succeeded in bringing about widespread change on the ground.

More recently, the 2005 Paris Declaration on Aid Effectiveness committed donors to improving the harmonisation of their aid procedures and systems, with southern countries taking the lead within a framework of mutual accountability. Donors committed to using country systems and procedures 'to the maximum extent possible', including for procurement. However, it is on technical assistance that the Paris Declaration is especially weak. The 2010 target committed to in the Paris Declaration is that, "50% of technical co-operation flows are implemented through co-ordinated programmes consistent with national development strategies." Leaving aside the fact that 50% is a low target in itself, the wording gives donors a free rein to interpret as they see fit. ,,,

2.3.3 Reform efforts by individual bilateral donors

Some donors, notably the Netherlands, Sweden and Ireland, have made substantial changes to their technical assistance policies.

The Netherlands have introduced the most far-reaching reforms. Their policy recognises that traditional technical assistance the long term assignment of experts is an anachronism and argues that technical assistance is only useful where it is focused on long term capacity building, that is demanded and controlled by southern countries as part of wider nationally owned strategies for development. The Dutch government has disbanded the department that was responsible for sending Dutch expertise to developing countries and is phasing out subsidies to a placement agency. The Dutch government has stated that in future, Dutch funding of technical assistance will only be provided in the context of programmes initiated and funded by aid recipients.

Sweden has, according to its official statements, almost entirely abandoned all direct contracting of technical assistance by its aid agency SIDA. Sweden is officially committed to ensuring that technical assistance is procured, contracted and managed by recipients. Sweden's official policy states that: "Sweden has in principle decided against a continuation of technical assistance, but it is still provided at a very reduced level. Sweden opposes the sending of bilateral technical assistance professionals for project implementation. Local consultants have been increasingly employed in the last years in Swedish technical assistance." However, Sweden does continue to provide some of its own long term experts. ...

The Irish government has heavily cut down its technical assistance provision, and no longer provides it directly to the countries in which it works, instead offering grants to NGOs. However, Ireland does continue to fund a number of technical assistance trust funds with multilateral agencies, including an European Bank for Reconstruction and Development trust fund, and also holds a number of trust funds at the World Bank.

2.3.4 Country led reform efforts

A number of southern countries, increasingly discontented with donor technical assistance, have initiated their own reform efforts.

In Botswana, all technical assistance is channelled through national planning and budgeting systems. All aid funded projects must be included in the national development plan, which is approved by parliament. All technical assistance is contracted by the government, integrated into the human resource planning of the public service and assigned to established posts. There are no separate project and advisory posts. Crucially, the government is willing to refuse any assistance that does not meet Botswana's needs.

In Tanzania, the government is in the process of developing a new policy on technical assistance, based on its own assessment of its capacity needs. Although this work remains in its early stages, some efforts at reform have already been made and early results are encouraging. Tanzania has encouraged a shift towards more government procurement and use of local consultants. According to interviewees in Tanzania, this has led to a shift to greater Tanzanian government ownership and has helped to ensure that technical assistance is better linked to the government's own plans.

Chapter 3: Recommendations for Making Technical Assistance Work

...

Official aid is at a crossroads. The $50 billion annual increase that was pledged in 2005 at the G8 summit in Gleneagles will test the current system and bring its shortcomings into stark relief. Technical assistance is foremost among the areas that need reform if a dramatically enlarged aid system is going to achieve lasting change in the world's poorest countries. ....

Where technical assistance is led and managed by the recipient country, addresses a specific constraint and is time-bound and outcome-focused, it can help build the capacity of poor countries and help them on the path to poverty reduction. But as this report has shown, it currently sits like a fossilised relic within the aid system, at odds with the principles of country ownership and partnership that donors have espoused over the last decade. Instead of fixing a problem, too much technical assistance is either having no significant impact or a negative impact - a case of phantom aid creating phantom capacity that dissipates as soon as the expatriate consultant returns home and the donor funding dries up.

For technical assistance to be 'real', reform needs to be anchored in four underlying principles - putting recipient countries in the lead; giving them the freedom to choose their own development path; mutual accountability between donors and recipients; and country specificity. This means poor countries must start taking responsibility for defining their own capacity building needs in line with their national development strategies. They must draw up plans for how to meet these needs, identifying what support, if any, they need from donors. It also means donors should provide high quality, flexible and predictable aid to help countries implement their capacity building plans, and should not provide any technical assistance outside of these plans. And both governments and donors should be held to account by parliaments, NGOs, women's groups, the media and other civil society groups for ensuring that funds are used to build effective capacity in a way that respects countries' rights to determine their own development strategies.


AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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