Contributions from
the Column
Tribune

Patronage vs. popularity

“An internationally binding frame of reference”

A decade of private policy making


12/2004
  

[ Poverty reduction ]

“An internationally binding frame of reference”

Experts have divided views on whether the Millennium Development Goals (MDGs) on poverty reduction can be achieved. Some assert that more funding has to be made available fast. Others warn of the predictable disappointment if the ambitious UN targets are not reached. In a discussion with D+C/E+Z, Klemens van de Sand took a stand as the German Development Ministry’s expert on MDGs.


[ Interview with Klemens van de Sand ]

Is it not risky to place the credibility of development policy wholly on the MDGs?
The risk was consciously taken when the Millennium Development Goals were drafted. This was also the case with the precursors, the International Development Goals, as defined by the OECD declaration “Shaping the 21st Century” of 1996. This is an attempt to tackle the growing scepticism in the wider public. That can only be overcome if both industrial and developing countries set themselves quantifiable goals. Looked at globally, in aggregated figures, the risk of the MDGs not being achieved is not great. If you say, however, that all the goals must be achieved in all countries by 2015, that wouldn’t be all that realistic, for instance, in the case of countries stuck in civil strife.

Do you anticipate that even those goals, which require enormous infrastructure improvements, will be achieved on the global scale? Health and education need considerable investments.
Well, one has to be careful with predictions. One must bear in mind that the dynamism that the MDGs have undoubtedly brought to international cooperation is still young. The strategy papers on poverty reduction (PRSPs), which meanwhile are understood as national implementation strategies, have also only been around for four years. Their effects cannot be fully grasped yet. I think that, in two or three years, you will see a great deal of progress achieved in many nations over a relatively short time. The developing countries are dealing with these issues quite differently than before. Previously, such matters were discussed between the donor and the recipient countries and were scarcely given attention in discussions between parliament, civil society and government of the nations concerned.

Recent evaluations by the World Bank and the IMF were very critical of the PRSP process. Their findings coincide, in many ways, with those of civil society organisations. Governments of the poor countries are accused of maintaining the correct rhetoric, while their programmes lack substance. The much-lauded local ownership principle hardly applies.
It is true that many PRSPs do not yet fulfil expectations. But expectations must not be excessive. Considering what strategies comparable to the PRSPs would mean in rich nations, what they require in terms of policy making, administration and financial planning, we become less assuming and more realistic. Of course there is the danger that linking the PRSPs to debt relief and additional resources may have led to mere lip service. But the danger is acknowledged.

Danger acknowledged means danger averted?
We know that it is essential that countries pursue their own consistent poverty reduction policy. That requires a broad basis. We already have a lot of promising indicators, for example the participation of various government departments or of civil society. A broader basis also requires a deeper and clearer analysis of the poverty situation, the economic policy and the institutional landscape. This has been acknowledged and the World Bank has just decided that it would also support ownership by no longer giving the final go-ahead. Instead, they would only draft an advisory note on the strategies of the countries. Initially, you really got the impression that the documents were only concerned with World Bank cheques and were not about the political responsibility in the poor countries themselves.

The Millennium Development Goals are part of the UN agenda and the PRSPs hail from the debt relief initiatives of the Bretton Woods institutions. Is the convergence free of tension?
As long as there are different institutions there will always be tension, and a certain degree of competition is always healthy. The absence of tension is no value in itself. Of course, the UN environment was responsible for developing the MDGs, while the PRSPs originated in the Bretton Woods institutions. However, we have quite clear political statements from the leaders of the organisations, saying they want to bring both together. This has been discussed at length and the World Bank unequivocally supports the MDGs.

Is that also true of the IMF?
Yes, I think so. If you look at the internal PRSP evaluations, the IMF document turns out to be at least as critical as that of the World Bank. Self-criticism indicates an ability to learn.
MDG 8 outlines a whole series of obligations for rich countries – from higher development aid to opening the markets. It seems obvious that a lot more needs to be done.
Not all goals have been adequately dealt with yet. But the MDGs have enhanced development policy by spelling out quite clearly that trade is a part of it, the international finance system is a part of it and, therefore, so too is the debt problem. We are no longer talking about development aid only in the traditional sense. This is a great step forward and is recognised as such internationally. The same applies to the fact that we now have a binding frame of reference for all nations.

But the rich nations have not fulfilled their obligations yet.
The discussion has become much more intense in the industrialised countries, too. Of course, you can see the glass as being half full or half empty. I would see the glass to be half full because there is a serious discussion going on today on eliminating agricultural tariffs and trade barriers. We made initial attempts ten or fifteen years ago, but discussions, for example with the ministers of agriculture, showed that we were worlds apart. There has been clear progress since. The EU has changed its position and we now have a consensus on export subsidies for agricultural products having to be phased out. And, not least spurred on by the German Development Minister, positive decisions have been made, for example relating to cotton.

You emphasise that we now have binding declarations. But the promise of committing 0.7 percent of the gross domestic product to development aid has remained unfulfilled for decades. This does not enhance credibility.
You have to take a much closer look at the promises and the undertakings. We have favoured the 0.7 percent as a target for a long time. However, we now have the clearly stated pledge that 0.33 percent should be reached by 2006. And I think that we will live up to it, even though the general conditions are extremely unfavourable. One must never forget that, in Eastern Germany, we had to play a huge internal development role, which other donors did not and do not have. Furthermore, in recent years, we have become considerably more active in international burden sharing, above and beyond development cooperation. Considering all this, our position does not look quite so bad.

According to Jeffrey Sachs, professor at Columbia University and UN consultant, the annual amount of official development assistance (ODA) has to be increased rapidly. He speaks of doubling the worldwide figure from 50 to 100 billion dollars within ten years. The threshold of 60 billion has only just been crossed...
Of course, these figures are controversial. His approach is somewhat problematic in the sense of focussing too much on external resources while shedding too little light on internal preconditions, in particular political responsibility. But what Sachs actually wants to say with the figure is as follows: if we want to help the countries which have reasonably solid foundations and consistent strategies for achieving maximum gain, then the financial inputs are manageable and would even remain under the 0.7 percent ceiling.

Sachs is always good for provocation – do you consider his role to be valuable?
One interesting issue he raises is taking on running costs. For us, this topic had been tabooed for a long time. One has to take a critical, discriminating stand. The accountability of partner governments and sustainability remain the most important measures, and Professor Sachs completely neglects that aspect. We have to face the fact that education and health require more than expensive investments if we want to tackle these core MDG areas adequately. Running schools and hospitals implies spending money for teachers’ wages and paying doctors and nursing staff. Providing financial assistance, for a limited initial period, could also slow down or even reverse the brain drain. On the other hand, we must not invest money in corrupt systems.

If Germany spends money on teachers, we want to be sure that they really teach and do not pursue some other interests.
Exactly, but you cannot simply make this a general provision, you have to investigate the matters carefully on the spot. We have not finished discussing this issue, so I cannot make a binding statement for the Ministry. But, personally, I think that stimuli for thought – even breaking taboos – are quite important.

So what has to be done to better align German development cooperation with the MDG agenda?
We have to structure our development cooperation in a way that is geared much more towards partnership and that must affect our own concepts.

Do you think of partnership in the sense of donor harmonisation?
Yes, very much so. We know that the MDGs are ambitious goals and that they are only achievable if the impact of all contributions increases considerably. This is not only a question of money but is also a question of quality. With each commitment, we have to ask ourselves what the others are doing. What is our strength? What are the strengths of others? How can we improve efficiency through division of labour? And how does this fit in with the strategy of the developing country concerned? This is already happening in many cases but it is yet to be mainstreamed. We used to raise our flag on each and every issue – but now we must, above all, strengthen the national government.

So the German contribution will become invisible?
No, all this doesn’t mean that we will no longer have our own profile. On the contrary: we have to develop our strengths and introduce them internationally. Through programme-based community financing, we could also take on leadership roles – and we are already doing so.

There is a certain feeling of unease in the implementing institutions – KfW development bank, German Technical Cooperation (GTZ), Capacity Building International (InWEnt), the German Development Service (DED). The impression is widespread that internationally coordinated donor strategies question and even replace the project work of the implementing organisations. Is this a legitimate concern?
Firstly, we have to set one thing straight: these are all implementing organisations of the Development Ministry. We determine what should be done. We are currently reviewing our country concepts, emphasising harmonisation, focussing on the local PRSPs and stressing the relevance of MDGs. But of course, the implementing agencies are our partners, indispensable and involved in the debate. German development cooperation has specific, comparative advantages. Capacity building is one of our strengths, combining, for instance, the establishment of, and advisory service to, organisations and agencies with investments in the infrastructure. Accordingly, there will still be tasks for the KfW, the GTZ, InWEnt, the DED and others, even if the budget of a developing country is supported by joint lump-sum budget support.

Institution building is an enormous task. Recently, World Bank experts told me that research was still in its infancy. We only really know that it takes a long time but we really don’t have any clear prescriptions.
We have in fact found that institution building takes a very long time in countries where there are few administrative structures and where civil society is not yet organised. However, we started supporting participation processes, self-help organisations such as savings and credit associations and connecting this to structural changes at the macro level earlier than others. When farmers organise themselves into cooperatives, when water users bundle their interests, this benefits their economic interests. The result is political power and that is a crucial precondition for a country to rise out of the poverty trap once and for all. Ten, twelve or even more years can go by before such systems become self-supporting. But we have an extensive set of instruments and diverse experiences, for example in the areas of decentralisation, microfinance, water management or renewable energies. The political foundations have been active in institution building for a long time – with tangible results. The KfW, the GTZ and the others need not fear international competition. Their expertise will be needed even more in the future.

Institution building is particularly difficult in places where it is most urgently needed: in failed and failing states. Even if one says that the MDGs have to be achieved on a global scale and not in every single country, poverty reduction remains particularly important in countries traumatised by civil wars. But if we take the principle of ownership to heart, we stay powerless because we can hardly expect responsible ownership of warlords.
In many crisis regions, there are still areas without bloodshed. I think this is where we have to strengthen the local potential for self-organisation. We have to realise that this is where young, tender plants sprout and that they might be destroyed again. But this is a risk we have to take. I think it is good that this issue is being discussed today. The approach of only supporting good performers had a certain legitimacy, but it really was not sufficient. We cannot spend money only on cases where the results are guaranteed.

Questions by Hans Dembowski.


Dr. Klemens van de Sand
is the German Development Ministry officer for the Millennium Development Goals.
Klemens.van-de-Sand@bmz.bund.de