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Development Assistance Committee (DAC)



03/2003
  

Getting the "development industry" moving

Dutch development cooperation reform

Ronald Meyer

The radical paradigm change for which Eveline Herfkens stood as the development minister of the Netherlands was not so much about redefining objectives; the primary focus continued to be poverty reduction. What was new was the way cooperation was reshaped: more donor coordination, more influencing of multilateral organisations, more self-responsibility of partners, more sectoral programmes rather than stand?alone projects. Now, it remains to be seen whether the new government sticks to the same course.

When Social Democrat Eveline Herfkens took over as the Netherlands' development minister in August 1998, bringing to an end the 16-year era of Jan Pronk, the goal on which her sights were set signalled a radical paradigm change. But the subject of reform was not content; that was defined for all Dutch bilateral and multilateral development cooperation (DC) by the international objective of halving the number of people living in extreme poverty by 2015. What changed was the way the poverty objective was addressed. How could principles like ownership, partnership, demand orientation and support for partners' own poverty reduction strategies (PRSs) be put across in the face of what Herfkens saw as a powerful pro-status-quo lobby presented by the "development industry" itself? PRSs and partners' systems and structures had to be the first determinant of Dutch DC strategy, implementation, monitoring, evaluation and coordination, taking into account the specifically Dutch emphasis on good governance, women and development, institution-building and environment (Dutch acronym: GAVIM). The risk entailed consequently is high if a PRS fails or is slow to meet expectations in practice.


Strengthening multilateral institutions

With official development assistance (ODA) running at 0.8% of gross national income (GNI) – 0.1% earmarked for environmental projects – the Netherlands is a dependable model student of the international community, even though it does not rank among the world's biggest donors in terms of volume because of its size. The 0.8% of GNI, which exceeds the United Nations goal of 0.7%, is set by all-party consent and means that, at times of economic growth, the Netherlands generates an automatically expanding volume of DC funds, which it cannot reasonably spend on bilateral assistance alone. This is one reason for the Netherlands' interest in joint international action (coordination and harmonisation of donor practices) and in influencing other donors, especially bigger ones. Together with her reformist opposite numbers Clare Short (United Kingdom), Heidemarie Wieczorek-Zeul (Germany) and Hilde Frafjord Johnson (Norway), Minister Herfkens helped form the Utstein Group (U4) at Utstein Abbey in Norway in July 1999. The idea was to improve coordination between the U4 members and to create a think tank and pressure group for a common reform agenda for the bilateral and multilateral institutions. That reform agenda includes
  • coherence (e.g. DC/trade policy),
  • coordination (e.g. harmonisation of procedures and indicators),
  • strengthening the multilateral system (through joint action in supervisory bodies, e.g. of the World Bank),
  • partnership (also encouraging partners to take responsibility themselves),
  • untying aid,
  • debt relief for reducing poverty,
  • increasing ODA funding.
In its policy on multilateral institutions, the Netherlands sought to make its contributions more responsive to the results of poverty reduction and institutional efficacy tests. This is why the additional funds that automatically swell the DC budget at times of economic growth flowed largely into the programmes of the World Bank. Its efficiency and role in the implementation of PRSs were rated more highly than those of the UN system. On the other hand, Minister Herfkens – like Jan Pronk before her – was sceptical that the European Commission's DC programmes, which were seen as relatively inefficient, ineffective and not sufficiently geared to reducing poverty, would be reformed and developed into a dynamic European DC effort.


Cutting down the number of partner countries

For bilateral development cooperation, the new policy means greater selectivity for a stronger, more effective Dutch presence. Right at the beginning of her term of office, Minister Herfkens reduced the number of partner countries. 18+4 key countries were defined by selection on grounds of poverty, quality of governance and DC needs:

Europe: Macedonia
Africa: Burkina Faso, Eritrea, Ethiopia, Ghana, Mali, Mozambique, Rwanda, Tanzania, Uganda, Zambia
Asia: Bangladesh, India, Sri Lanka, Vietnam, Yemen
America: Bolivia, Nicaragua
For a transitional period, Egypt, South Africa, Indonesia and the Palestinian Territories were also given key country status.

In some 30 other countries, cooperation focuses on one or two special themes (environment, human rights, peacemaking, good governance, private sector employment). In three countries (Benin, Bhutan, Costa Rica), long-term sustainable development agreements were signed. Generally speaking, the reforms did not cause rapid shifts in funds to the newly defined partner countries. Sectoral input targets are now set only for environment and gender projects.

For greater effectiveness and better gearing to partners' needs, further de-concentration and delegation is planned, which in practice means transferring staff and decision-making powers to Dutch embassies in the key countries. Even though the DAC Peer Review 2001 still noted substantial communication and monitoring problems between embassies and headquarters, this can make for more effective PRS monitoring, sectoral dialogue, negotiations on programme support and sector programmes as well as coordination of action with other donors.


Sectoral approach, budget support

Selectivity and delegation pave the way for stepped-up programme and budget support, which is designed to make it possible for partners to take maximum ownership themselves on the basis of accepted PRSs. The shift away from stand-alone projects to sectoral programmes started with Minister Pronk's "sectoral approach" in 1995 and continued under Minister Herfkens with greater emphasis on direct budget support wherever this proved possible. This requires a positive track record on the part of partner countries, e.g. in terms of quality and implementation of macroeconomic policy, quality of governance (i.e. transparency, effectiveness, participation, legitimacy of administration and administrative structures), and quality of government social policy (policy on poverty, gender). The Netherlands thus became one of the staunchest advocates of these forms of DC at international level. Despite some negative experiences with programme support in the past, the framework conditions for it in the Netherlands today are good: broad all-party support, adequate funds, a willingness to cooperate among parliamentarians and at the audit office (e.g. on the simplification of procedures for monitoring use of funds in order to permit greater flexibility for accepting the procedures used by partners or other donors). The process of adjustment in many key countries, however, has only just begun, there is still uncertainty about implementability in the context of certain countries, and vital capacities still need to be developed on the Dutch side (cf. DAC Peer Review 2001). To encourage this cultural change in thinking at the ministry, Eveline Herfkens was even prepared to risk the occasional overstatement.


Self-responsibility, rejection of "neocolonial" technical cooperation

The switch to sectoral programmes and budget support stems partly from a profoundly sceptical view of the development policy merit of stand-alone projects and the secondment of foreign long-term experts. Minister Herfkens agreed with Berg and Jaycox's critical assessment of the success of traditional technical cooperation (TC) projects in Africa and criticised antiquated, supply-oriented TC tools which create parallel structures and hinder the development of partners' own capacities: "Vested interests in the development industry are hiding behind do-good intentions that in the end may not be doing so much good at all …: We take over. That is what I call neocolonialism" (speech delivered at the Africa Capacity-Building Forum 2001). Local experts should be given priority and partners should take charge of untied recruitment and management. In future, the Dutch secondment service SNV will operate in the international market as a TC service provider.

What was also clear, however, is that the development of functioning institutions would remain a major prerequisite for the new forms of DC (sectoral programmes, budget support, etc.) Hence the plan to provide TC advice through embassies at sectoral programme level and for discussion of national processes, strategies, budgets, etc. Specialists in relevant fields will act as sectoral counsellors and financial experts will examine partners' budgets as a condition for budget support.


Coherence at various levels

DC reform also means looking beyond the traditional spectrum of development assistance provision and addressing the issue of coherence at various levels:
  • between the various DC themes and approaches;
  • between the goal of sustainable poverty reduction and foreign policy objectives;
  • between the goal of sustainable poverty reduction and areas of policy addressed by other ministers (e.g. trade, agriculture);
  • between different international institutions.
With development cooperation placed under the wing of the Dutch Ministry of Foreign Affairs (MFA) and the development minister assigned cabinet rank, a basic platform is in place for pursuing issues of coherence with political vigour. Conflicts of interests with the country's own agriculture are less evident than in a number of other European countries. At the same time, the DAC Peer Review 2001 shows that, despite a number of successes, coherence remains an issue (partly owing to lack of analytical capacity and clear mechanisms). Within the MFA, too, the task of bringing foreign policy and development policy requirements into line with one another remains a challenge. The DAC Peer Review therefore stated: "The merging of both foreign affairs and development co-operation into one organisation, topped by two separate ministers, … has produced mixed results and is still seeking its most appropriate expression".


New government, new accents?

After the change of government in July 2002, the post of development minister at the MFA went to Christian Democrat Agnes van Ardenne-van der Hoeven. In the meantime, she has carried forward her predecessor's major reform initiatives and continues to support the 0.8% target, even though she sets different accents. She describes her core objectives as:
  • an integrated policy (poverty reduction and classic foreign policy);
  • a more pronounced regional approach;
  • a sharper focus on Africa;
  • a bigger role for the private sector (companies und civil society);
  • more coherence between fields of policy.
A greater emphasis is placed on the importance of institutions for development and the assessment of governance issues in partner countries (including the central issues of law, democracy and participation).

At instrument level, the effectiveness of development cooperation, including the appraisal of multilateral organisations, will remain a central issue and the results of the bilateral DC restructuring will be studied. The policy of concentrating on a small number of countries is unchanged but the funds budgeted for country-specific sectoral work will be reduced for reassignment to country programmes or programmes run by NGOs or multilateral organisations. The funds budgeted for programme support are also to be partially cut; sectoral programmes will continue but more attention will be paid to verifying institutional "dynamism" in advance. TC is seen as a valuable option for strengthening toolbox capacity.


Conclusion

Since the late 1990s, Dutch development cooperation has been in a phase of radical transformation, embracing changes which reflect the international debate but which also gained momentum as a result of the dynamism and convictions of Minister Herfkens. Beneath the overarching umbrella of poverty reduction and on the basis of a social and political consensus on development cooperation, the principal accent was placed on finding the best ways and means of supporting national PRSs. Through its work in international institutions and in the Utstein Group, the Netherlands has given impetus to the international debate and to partner countries, especially with regard to the poverty orientation of multilateral organisations, coherence issues, the transition from project to programme assistance and untied budget support as well as the redefinition of the role of foreign long-term TC experts. The almost missionary zeal with which issues such as budget support and TC experts are sometimes addressed, however, may not always have been good for the legitimacy and credibility of the cause. Nevertheless, the reform debate in which the Netherlands plays an active part will certainly provide substantial food for thought about the "development industry" and the structural and procedural changes needed in it after more than 40 years of development cooperation.


Berg, E.: Rethinking Technical Cooperation: Reforms for Capacity Building in Africa. UNDP 1993
Herfkens, E.: The Capacity Issue in Africa: Building on Your Own Strengths. Oct. 2001
Herfkens, E.: Working Together, Getting Results: Towards a New International Development Architecture. Policy memorandum, undated
Jaycox, Edward V. K. : "Capacity Building" – Das fehlende Kettenglied der afrikanischen Entwicklung, (Capacity building – The missing link in the chain of African development) in: epd-Entwicklungspolitik, Frankfurt/M., Sept. 1993
(DAC Peer Review): Development Co-operation Review of the Netherlands, in: DAC Journal 2001. Paris, OECD
Van Ardenne, A.: Local Roots,Global Ambitions. The Hague, 14. 11. 2001

Ronald Meyer is a member of the staff of Division 210 (Supraregional coordination and planning; quality assurance) of the German Federal Ministry for Economic Cooperation and Development (BMZ) and was a participant in the DAC Peer Review of the Netherlands in 2001. meyer@bmz.bund.de
The views expressed in the article are the personal views of the author.

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