TECHNICAL COOPERATION

Transcription

1 TECHNICAL COOPERATION Investments to End Poverty discussion paper Rob Tew Discussion paper 2013 March Development Initiatives exists to end absolute poverty by Contents Executuve summary...2 Section 1: what is technical cooperation and how is it measured?... 3 Section 2: issues with technical cooperation... 5 TC does not focus enough on capacity building... 5 Recipients would prefer national or South/South TC... 6 TC may be bundled with other aid... 7 Recipient country governments want more ownership of TC... 7 TC consultants may be more accountable to donors that to recipients... 8 Section 3: poorly co-ordinated TC and tied TC - quantifying the issues... 8 Alignment of TC with recipient priorities... 8 The tying status of Technical Cooperation... 9 Section 4: concluding points for discussion The measurement of technical cooperation The use of technical cooperation... 11

2 Executive summary Technical Cooperation is defined as: Activities that augment the level of knowledge, skills, technical know-how or productive aptitudes of people in developing countries; and Services such as consultancies, technical support or the provision of know-how that contribute to the execution of a capital project. Technical Cooperation has always been a major feature of the aid landscape and, given the resource constraints facing the institutions within many developing nations, it will continue to be a significant modality for aid in the future. Free-standing Technical Cooperation (FTC) accounts for around one sixth of all ODA reported by donors. However the total amount spent by donors on Technical Cooperation is significantly higher than this. It is unfortunately not possible to tell how much ODA money is spent on Technical Cooperation in total due to the fact that donors do not reliably report on the amount of Investment-related Technical Cooperation (IRTC) which is embedded within their aid projects. Another difficulty in measuring the true value of the Technical Cooperation delivered to recipients arises from the fact that the cost of consultants is not separated from the overhead costs of supplying consultancy, such as travel and accommodation costs. It is also not possible to gain a comprehensive view on how much Technical Cooperation is delivered by expatriate personnel from donor countries and how much uses staff from the recipient countries and regions. The way in which Technical Cooperation is operated by donors has come in for significant criticism from southern actors, including: Technical Cooperation does not focus enough on capacity building Recipients would prefer national or south/south Technical Cooperation to expatriate consultants where practicable Technical Cooperation may be bundled with other aid Recipient country governments feel they have insufficient ownership of Technical Cooperation Technical Cooperation consultants may be more accountable to donors that to recipients In an attempt to quantify the effect of these issues on the perceived value of Technical Cooperation, this paper also reviews the statistics on: The proportion of Technical Cooperation which is aligned with recipient country priorities, and The amount of Technical Cooperation that is tied to the provision of donor-country personnel. This reveals that $8.5bn of Technical Cooperation provided in 2010 may not have been aligned with recipient country priorities and $5bn of Technical Cooperation committed in 2010 was explicitly tied. 2 Development Initiatives //

3 Section 1: what is technical cooperation and how is it measured? The OECD-DAC define Technical Cooperation as follows: Technical co-operation (also referred to as technical assistance) is the provision of know-how in the form of personnel, training, research and associated costs. It comprises donor-financed: Activities that augment the level of knowledge, skills, technical know-how or productive aptitudes of people in developing countries; and Services such as consultancies, technical support or the provision of know-how that contribute to the execution of a capital project. Technical Co-operation can be provided to both government and non-government entities, and includes both free standing technical co-operation and technical co-operation that is embedded in investment programmes (or included in programme-based approaches). In order to report against this question, donors are invited to review their portfolio of projects and programmes and estimate the share of technical co-operation. 1 There is, however, a distinction that is relevant to the compilation of statistical data, between free-standing TC (FTC) and investment-related TC (IRTC). Free-standing technical co-operation comprises activities financed by a donor country whose primary purpose is to augment the level of knowledge, skills, technical know-how or productive aptitudes of the population of developing countries, i.e. increasing their stock of human intellectual capital, or their capacity for more effective use of their existing factor endowment. DAC statistical reporting under technical co-operation. items includes only free-standing technical co-operation. This relates essentially to activities involving the supply of human resources (teachers, volunteers and experts: technical cooperation personnel.), or action targeted on human resources (education, training, advice). Associated supplies are also classified as technical co-operation. Investment-related technical co-operation is defined as the financing of services by a donor country with the primary purpose of contributing to the design and/or implementation of a project or programme aiming to increase the physical capital stock of the recipient country. These services include consulting services, technical support, the provision of know-how linked to the execution of an investment project, and the contribution of the donor s own personnel to the actual implementation of the project (managers, technicians, skilled labour, etc.). In DAC statistics, these expenditures are included indistinguishably with project and programme aid. This means that, in practise, only Free-standing Technical Cooperation is represented in the DAC data on this type of aid, investment-related TC which forms part of an overall aid project is effectively hidden in the data on total aid disbursed to that project. It is true that, since 2011, donors have been able to record the amount of IRTC against project records in the CRS database. However, this reporting is optional on the part of donors, and only a tiny fraction of aid projects have any IRTC recorded, so it is assumed that this form of TC goes largely unreported. Since the data on IRTC is largely unavailable, the statistics quoted in the remainder of this documents will related to Free-standing Technical Cooperation only. ODA spending on Technical Cooperation more than doubled between 1966 and the early 1990s, reaching its peak level in 2006, when it accounted for over a quarter of ODA disbursements (excluding debt relief). The level of Technical Cooperation reported by donors fell after 2006, but this form of aid still accounted for approximately one-sixth of ODA (excluding debt relief) in each year from From DAC Statistical Reporting Directives 2010 Development Initiatives // 3

4 $ billion (constant 2010 prices) $ billion (2010 constant prices) 30 Technical Cooperation ODA since The fall in the level of Technical cooperation reported in the ODA data after 2006 is entirely due to one donor, the United States. As can be seen from the chart below, the level of TC reported by the United States fell by over 90% between 2006 and Since there is no evidence that the US undertook a wholesale abandonment of TC as an aid modality, it is assumed that this fall is due to a change in the US s reporting of aid. Specifically, it seems likely that large quantities of US Technical Cooperation were reclassified as IRTC and so disappeared from the data. 12 US Technical Cooperation Development Initiatives //

5 In 2011 the top three donors (Germany, Japan and Australia) between them accounted for nearly half of the ODA reported as Technical Cooperation. Germany Japan Australia EU Institutions France Canada United United States Sweden Belgium Spain Netherlands Finland Norway Korea Austria Top Donors of TC in US$ billion Section 2: issues with technical cooperation TC does not focus enough on capacity building There is a view that capacity building is the most important aim of TC and that all TC should be linked to capacity building (e.g. Godfrey et al, ). However, it seems debateable whether TC has achieved that aim, with many authors seeming to conclude that TC has not generally succeeded in achieving lasting capacity development. These authors include Wangwe and Madete (2002) 3, Culpeper and Morton (2008) 4 and Kelegama and de Mel (2007) 5. Often TC is seen as not designed with capacity building as its primary mandate, leading to a lack of skills transfer and an erosion of ownership by the recipient. Godfrey et al. do comment that TC may have positive capacity building effects at an individual level, where individuals are trained and have their skills enhanced. However, those individuals may then leave the civil service to seek more lucrative employment outside the public sector. 2 Godfrey, M., Sophal, C., Kato, T., Piseth, L. V., Dorina, P., Saravy, T., Savora, T. and Sovannarith, S., Technical Assistance and Capacity Development in an Aid-dependent Economy: The Experience of Cambodia, World Development, Wangwe, S. and Madete, L., Pooling of Technical Assistance in the Context of Sector-Wide Approaches in Tanzania, The Economic and Social Research Foundation, Tanzania, Culpeper, R. and Morton, B., The International Development System: Southern Perspectives of Reform, North- South Institute, Kelegama, S. and de Mel, D., Southern Perspectives on Reform of the International Development Architecture: Sri Lanka Country Study, The North-South Institute, 2007 Development Initiatives // 5

6 Recipients would prefer national or South/South TC A frequent complaint against TC is the use of international consultants above national or regional counterparts. Southern actors frequently express a preference for national or South/South TC, even to the point of respondents saying they would rather a reduction in TC than have Western consultants (Scott, ). There is a strong belief among Southern actors that regional TC is more culturally appropriate and relevant and that national TC can improve the local labour market, reduce brain drain and improve value for money. Some authors specifically criticise donors for their preference for hiring expatriate consultants in locations where local equivalents could be found. This practice is seen as displacing rather than complementing local resources. There is also a feeling that donors may make a decision to bring in an international consultant without first considering other options. Southern perceptions of why this occurs mainly centre around a belief that donors are primarily interested in protecting their domestic labour markets and that TC is mainly about promoting donors interests abroad. For example see Wangwe and Kasumba (2002) 7 ; Singh (2002) 8 ; Sneyd (2007) 9 and Culpeper and Morton (2008) 10. In writing on Uganda, Wangwe and Kasumba comment that: Some donors have been pushing for consultants / experts from their own countries. One reason that has been put forward is that some donors view the employment of TA from their own countries as one way of providing employment to their nationals. This is viewed as one way of meeting the expectations of the taxpayers at home For these donors the first preference in engaging TA is given to the home labour market and if the appropriate skills cannot be found there, then they look at the global market. Singh comments that: the domination of TCIs [technical cooperation initiatives] by expatriates can significantly compromise the sustainability of TCIs and raise other problems, among them donor credibility. This often happens when donors prescribe cuts in government expenditure and insist upon greater equity in distributing resources, but send in consultants who are paid 20 to 30 times the national salary Expatriate consultants not only seem to take jobs from nationals, but often have their own ideas of how things should be done that clash with the way their hosts would like them done. This creates friction, compromises the initiative and often raises the questions of ownership the more so when payment for expatriates strain other elements of the national budget. and:...what are the key reasons for this intense dislike of the use of international consultants? The main cause appears to be salary differentials international consultants are paid far more than local consultants, and phenomenally more than local government officials with whom they work on a daily basis. ECDPM reports that interviewees complain bitterly about the salary differentials between nationals and expatriates. The bad feeling created by these vastly differing pay scales should not be underestimated criticism of international consultants pay is a repeated complaint across the literature. To make matters worse, international consultants are 6 Scott, Z., Southern Perspectives on Technical Cooperation, Governance and Social Development Resource Centre, Wangwe, S. and Kasumba, G., Study on Pooling of Technical Assistance in the Context of Sector-Wide Approaches: The Case of Uganda, Discussion Paper 31, The Economic and Social Research Foundation, Tanzania, Singh, S., Technical Cooperation and Stakeholder Ownership, Development Policy Journal, Sneyd, A., Southern Perspectives on Reform of the International Development Architecture, Report on Wilton Park Conference WP887, Culpeper, R. and Morton, B., The International Development System: Southern Perspectives of Reform, North-South Institute, Development Initiatives //

7 largely seen as incompetent and are often judged to be too young, inexperienced, culturally insensitive and completely lacking in knowledge of the local context in which they have arrived. However, some authors recognise that there is a role for international consultants due to the constrained capacity of national or regional TC, For example Hauck and Bana (2009) 11. TC may be bundled with other aid Some recipients complain of TC bundling where TC comes as part of a package of foreign aid. Specifically recipients claim there is a lack of transparency in donors practices in relation to TC and the bundling of TC with other aid prevents recipients from being able to make informed choices and identify the different types of cost associated with TC. Several studies show that recipient governments prefer unbundled, un-earmarked TC that can be processed through their own systems, for example: Watson et al. (2007) 12, Wangwe and Madete (2008), Ajayi and Jerome (2002) 13. Recipient country governments want more ownership of TC Recipient governments have expressed a desire to be able to take a lead in TC initiatives, for example, needs assessment, selection of TC options, design of TC projects, management and monitoring and evaluation. The Government of Cambodia have released a policy guideline on TC which articulates this desire for ownership of such initiatives. Similarly, Watson et al report that Vietnamese government officials view ownership as a right and claim that they have been inadequately consulted by donors over the type, role and selection of TC in the past (Amis et al, ). Vietnamese government officials are of the opinion that TC personnel should take more narrowly technical roles, leaving all aspects of project management to Government of Vietnam officials. In other cases, donors are seen to strongly guide the TC process, even if they do not explicitly lead on it. (For example, Kelegama and de Mel, 2007). The lack of alignment of TC with recipient-country government processes is also criticised with Amis et al. (2005) writing that: recipient governments find the lack of fit of donor approaches with their own to be more burdensome than the administrative costs of dealing with multiple donors. Another specific criticism relates to the timing of TC, with one report stating: Developing countries would like to see ODA in general and TA in particular arrive on their timetables not those of donors. This implies using the fiscal year of the partner country and not that of the donor, and designing assistance so that it matches the general financial flows of the partner as opposed to establishing a project-only system (ECDPM, ). Thus there appears to be a common perception that TC is not sufficiently demand-driven and that recipient government leadership of TC needs to be strengthened. 11 Hauck, V., and Bana, B., National Expertise in International Development Cooperation: The Case of Tanzania, Belgian Technical Cooperation, Watson, D. Minh Thong, N. and J. Zinke, Provision of Technical Assistance Personnel in Vietnam: Cooking Pho, Peeling Potatoes and Abandoning Blueprints, EDPCM, Ajayi, A. and Jerome, A., Opportunity Costs and Effective Markets, Development Policy Journal, Amis, P., Green, L. and Hubbard, M., Measuring Aid Costs: What Has Been Learnt and What Still Needs to be Leant?, Public Administration and Development, ECDPM / ACE Europe, Changing Minds and Attitudes: Towards Improved Belgian Technical Assistance, Belgian Technical Cooperation, 2006 Development Initiatives // 7

8 TC consultants may be more accountable to donors that to recipients Recipient governments also express strong desire for TC consultants to be accountable primarily to government rather than to donors. This issue is mentioned in one form or another in Land (2007) 16, Wangwe and Kasumba (2002) and ECDPM (2006). It appears that the threefold nature of the TC relationship (i.e. client / donor / provider) confuses accountability systems and perceptions and leads to consultants showing greater accountability to donors rather than to the ministry in which they are working. This obviously impacts on ownership and may contribute to friction and confusion. Section 3: poorly co-ordinated TC and tied TC - quantifying the issues Alignment of TC with recipient priorities The 2011 Paris Declaration Monitoring Survey 17 includes a donor-by-donor assessment of the percentage of technical cooperation that is coordinated with country programmes. The donor with the highest score on this measure was Denmark which was found to have 88% of its technical cooperation that is coordinated with country programmes, the lowest was Canada with just 27%. The results of this survey are summarised in the chart below: % of Technical Cooperation co-ordinated with country programmes Denmark Spain Japan Ireland Germany World Bank United Nations African Dev. Bank New Zealand Belgium InterAmer.Dev.Bank Australia France Sweden Netherlands Finland EU Institutions United States Luxembourg Switzerland Austria Asian Dev. Bank Korea IFAD United Kingdom Italy Norway Portugal Canada 0% 20% 40% 60% 80% 100% 16 Land, T., Joint Evaluation Study of Provision of Technical Assistance Personnel: What Can We Learn From Promising Experiences?, ECDPM, Aid Effectiveness : Progress in Implementing the Paris Declaration, Organisation for Economic Cooperation and Development, Development Initiatives //

9 This indicator measures the percentage of technical cooperation that: is aligned with capacity development priorities communicated by partner country authorities is controlled by the relevant partner country authorities uses arrangements for co-ordinating the assistance provided by multiple donors The findings of the Paris Declaration monitoring survey imply that, globally, approximately $8.5 billion of Technical Cooperation was not co-ordinated with recipient country programmes and priorities. It seems highly probable that the value placed on technical cooperation by its recipients If would be significantly higher if donors were to increase their level of co-ordination. The chart below shows a donor-by-donor assessment of the amount of TC that was not coordinated with recipient country programmes and priorities in This estimate uses the coordination percentage from the Paris Declaration monitoring survey and the levels of Technical Cooperation reported by each donor to the OECD-DAC in Canada Germany France EU Institutions Australia Japan United Sweden United States Belgium Turkey Netherlands Norway Finland Spain Austria Korea Switzerland Italy Portugal New Zealand Denmark Luxembourg Ireland TC not coordinated with country programmes, by donor, $ million Development Initiatives // 9

10 The tying status of Technical Cooperation Tied aid means that the aid is given on condition it is spent on goods or services from the donor country. In the case of Technical Cooperation the tying of aid makes if certain that the TC will be delivered by personnel from the donor country. The 2011 Paris Declaration monitoring survey noted that: Technical co-operation is more tied than aid in general. A review of the 2010 CRS data shows that $5bn of ODA commitments 18, 27% of the total, were explicitly classified as partially or fully tied. The chart below shows those donors who reported tying their Technical Cooperation in Donors Reporting Tied TC in 2010 Switzerland Korea EU Institutions United States Austria Germany Spain Sweden Italy France Finland New Zealand Canada Greece Belgium Denmark 0.00% 20.00% 40.00% 60.00% 80.00% % % of reported Technical Cooperation Partially tied Fully tied Untied It is a generally-held view that tying aid raises the costs of aid interventions and thus the figures reported for tied aid will tend to overstate the real value of that aid to the recipient. The 2012 Commitment to Development Index 19 states that tied aid: prevents recipients from shopping around and raises project costs by percent. This suggests that, if donors were to untie all Technical Cooperation, this would potentially release almost an additional $1 billion 20 of value to the recipients of Technical Cooperation worldwide. 18 Tied aid data in the CRS relate to commitments rather than disbursements 19 Commitment to Development Index, Center for Global Development, Assuming that partially tied aid raises costs by 15% and fully tied aid raises costs by 30% 10 Development Initiatives //

11 Section 4: concluding points for discussion It is recognised that Technical Cooperation has an important role to play in developing capacity and filling gaps in the expertise of aid recipient nations. However there are significant concerns relating to both the measurement and use of this particular aid modality. The measurement of technical cooperation In the OECD data free-standing technical cooperation (FTC) is differentiated from investmentrelated technical cooperation (IRTC). Of these, only data on FTC being reliably captured with spending on IRTC being effectively hidden in overall project disbursements. From our review of studies relating to technical cooperation it does not seem that this distinction has any relevance to recipients, with both FTC and IRTC being discussed under the catch all title of Technical Cooperation. Should the distinction between FTC and IRTC be maintained in the OECD-DAC aid data? If the distinction is maintained should it not be possible to identify spending on IRTC as well as FTC? Where spending of Technical Cooperation is recorded in the data, it is recorded as one lump sum. This means that there is no visibility of the value of the consultancy or training that is delivered compared with transaction cost items such as travel and accommodation costs of personnel. Should the data record the cost of paying for the consultant or trainer separately from overhead items such as travel and accommodation? One significant area of concern amongst recipient governments and other southern actors is whether the personnel engaged in Technical Cooperation are from donor countries or from the countries or regions receiving such assistance. However, the data do not make it easy to distinguish technical cooperation activities where locally-sourced personnel are used. Should the data distinguish between TC (both FTC and IRTC) provided by donor country staff and TC provided by local personnel? The use of technical cooperation Our review of the literature on TC has identified several areas of concern to Southern governments and other actors. These include: Technical Cooperation does not focus enough on capacity building Recipients would prefer national or south/south Technical Cooperation to expatriate consultants where practicable Technical Cooperation may be bundled with other aid Recipient country governments feel they have insufficient ownership of Technical Cooperation Technical Cooperation consultants may be more accountable to donors that to recipients Development Initiatives // 11

12 Given these concerns, it seems pertinent to ask the following questions regarding the way in which donors provide Technical Cooperation: Should donors make greater efforts to prioritise the use of national or regional consultants wherever such local resources are available? Should donors end the practise of explicitly tying Technical Cooperation to expatriate personnel from donor countries? Should TC aid be unbundled from other types of aid, and be accounted for and presented to country governments in a transparent format? In situations where donors have to use international consultants, what should they do to prioritise cultural awareness, collaborative approaches to working alongside technical skills and qualifications? For example, should TC consultants from donor countries be required to undertake training in cultural sensitivity and capacity building techniques and approaches? Could recipient country governments follow the example of Cambodia in developing public policy papers detailing how they want TC to be conducted in their country? What can be done to ensure donors respond positively to such policy statements? What can be done to avoid the situation where successful capacity building projects result in a brain drain of personnel, whereby recipient-country staff who have improved their skillset subsequently leave for better-paid jobs elsewhere (including with donor agencies)? 12 Development Initiatives //

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