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Contributions from
the Column
Tribune
Failed poverty reduction: making poor users pay can result in their becoming even poorer
Guatemalan health promoters, Hurricane Stan and day-to-day life
Puzzling trade issues for Brazil’s government after the failure of import substitution
Why cultural industries matter for the development of poor countries
12/2005
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[ Undesired results ]
When poverty reduction causes yet more poverty
Development projects are often unsustainable because local communities do not identify with them. The problem cannot be solved, however, by simply obliging the poor – of all people – to shoulder the costs of water provision or health services. Doing so will only make them poorer. For projects to become sustainable, target groups need to be involved at the planning stage.
[ By Frank Bliss ]
The policy of “gifting” development, which many donors pursued up to the 1980s, largely failed. As recipients often did not identify with such aid, even generous projects disintegrated in a very short time. Consequently, to ensure sustainability, infrastructure projects were made conditional upon local community contributions to both the investment costs and the operating expenses of the new facilities. This policy has been adopted by all development organisations and private sponsors. Today, international development projects at and below government level normally require a local financial input of up to 10 % of investment costs for facilities such as schools, health centres and water supply systems. In many cases, subsequent operating and repair costs are to be borne by the recipients alone.
Such contributions can become a considerable burden for target groups. In a village in western Chad, for example, a school is to be built for ¤ 22,000 and a hand pump well dug for ¤ 9,000. The sums required from the villagers amount to ¤ 2,200 and ¤ 300 respectively. Accordingly, the village has to come up with ¤ 2,500 in total. That means an expense of ¤16 per household, which amounts to at least 8 -10 % of the annual average income of the poorer half of the community. Another ¤ 10 (or up to six percent of income) will then need to be found to meet maintenance and operating costs.
As many such projects are implemented in poor areas for disadvantaged groups, contributions are mostly demanded from the poor, from the very people who hardly have enough food. The practice of local financial participation takes too little account of the fact that its effect differs widely according to whether projects are designed to improve social infrastructures or directly boost incomes (for instance, by providing facilities for storing agricultural produce until higher prices can be achieved). In the latter case, beneficiaries can easily be helped to contribute financially, for instance by providing micro-credit.
In the case of social infrastructure, however, local financial contributions become an additional expense that is hard to afford because the project does not provide the necessary income. Charge-based health services, for example, can certainly not result in lower medical expenses and, accordingly, higher purchasing power, even though that claim is wide-spread. Anyone without money for subsidised, rarely available medicine will not be able to buy drugs that are readily available from a donor-supported health service but cost more. Only where health care services actually do reach poor families is an effect of boosting purchasing power to be expected. In short: grass-roots contributions to social infrastructure can only be demanded from a local community if they are offset by extra income.
The principle of local financial participation causes a second problem, which conflicts with poverty reduction. Even in poor areas, some communities are more affluent than others. And in many cases, it is these communities, not the poorer ones, that can afford to contribute and are awarded the subsidised new facility, the revamped school or health centre. Poorer communities will hesitate before applying – and rightly so. They either enter the race too late (it is often first come first served in such cases) or not at all, if they have realistically assessed their financial capacity. For most development projects, specific criteria are set out for the selection of recipient localities. In practice, however, implementing agencies working against the clock are glad when villagers come forward themselves.
Meaningful sustainability
Because of these problems, it is time for a radical re-think by project planners. They should not focus on the abstract financial sustainability achieved through local co-funding but on the sustainability of poverty reduction, which is the paramount goal of German development cooperation. Indeed, that goal prohibits burdening the poor with additional expenses for which they will literally have to scrimp and save. In the case of a project in Tajikistan, some villagers could only make their required contribution for a new small-scale power station by handing over the very sack of flour they had just received as humanitarian aid.
Sustainability has not only an economic but also a developmental dimension. For project purposes, the economic dimension matters only indirectly. Drinking water provision that is economically viable because affluent households cover the operating costs of the services they enjoy has no developmental impact whatsoever if the poor do not benefit.
Of course, sustainability in business terms is a requirement for a functioning water supply system, where water really does come out of the pipe for the poor to use. But why should the poor themselves have to pay for that sustainability? It is rare for road or port projects to ask for financial contributions from haulage companies or exporters. Nor is anyone asked to pay up when power stations are rehabilitated or millions of Euros are ploughed into legal reform – programmes that benefit foreign investors and domestic industries.
Even the requirement that consumer charges cover the full cost of “at least the operation” of a water supply system is a fairly arbitrary political decision. There is no empirical evidence that doing so ensures sustainability. Why should a high charge for water make a system work better than a low charge? What is crucial is to organise and fund operation and maintenance adequately. Where the money comes from, is pretty irrelevant. Why shouldn’t governments of countries without social welfare systems, which would meet minimal European standards, at least contribute to the operating costs of vital infrastructures? In many places, of course, there are problems of governments failing to pay subsidies regularly or of fund abuse. That, however, is a matter of bad governance. It shouldn’t be the poor who have to bare the costs.
Another way to get drinking water to the poorer strata of society is to establish cross-subsidies. For instance, water charges can be higher for urban consumers than for rural users. Similarly, charges for domestic connections can exceed those of standpipes, and businesses can pay higher fees than private households. Where poverty is widespread, however, the surpluses needed for cross-subsidisation are hard to generate and external funding needs to be found.
Real participation depends on having choices
Demanding financial contributions from poor target groups is not the only way to promote sustainability. There is also the option of letting local communities participate in decisions, for instance. Participation as defined in the German development ministry concept of 1999 means more than just having a say in where a health centre should be sited or being required to keep a hand pump clean. The economic and developmental sustainability of investments or consultancy services hinges on whether they meet the priorities of the community. So real target group participation should address matters such as whether – and, if so, what – action should be taken and allow the group or its legitimate representatives to take part in decision-making on what kind of support is required.
What should not count as participation, however, is presenting communities with foreign-defined projects for roads, schools, water supply facilities, agricultural advice or resource management plans without offering any alternative options. That practice, sadly, is still all too common. Such projects have little chance of becoming sustainable – whether the local community helps to foot the bill or not.
Another argument against considering local funding a primary source of sustainability is that the recipient country’s government should not be entirely released from its developmental responsibilities. There is no good reason why developing countries should not use resources – which they certainly have – for reducing poverty within their borders. Many donors echo this argument in policy papers.
In German development cooperation, for example, the development orientation of a partner is a criterion for granting assistance. In practice, however, government contributions are often not requested – either for political reasons or to avoid jeopardising the outflow of funds. The dominance of fundamentalist market ideology is so strong that development experts discussing Egypt and Ethiopia with the author even considered it a success in its own right when projects released governments from responsibility to contribute to project implementation (and thus development). And those experts were not talking about the privatisation of state enterprises but about government withdrawal from education and health – from poverty reduction in general, in other words.
Instead of placing financial obligations on local communities and halting projects where those obligations cannot be met, development cooperation should focus on matters of governance in matters of social infrastructure. Instead of requiring the community to meet five, 10 or even 20 % of investment costs, investment should be made conditional upon a financial contribution by the government. Development cooperation funds should be invested only where governments are explicitly prepared to fulfil minimal requirements.
Prof. Dr. Frank Bliss
teaches social anthropology (development anthropology) at the University of Hamburg and is co-owner of the developmental consultancy Bliss & Gaesing.
bliss.gaesing@t-online.de
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