How to end foreign aid and avoid a punch-up

An edited version of this piece appeared on the Guardian’s Comment is Free site on Saturday

The spat between South Africa and Britain over ending its (very small) aid programme has sparked another round of debate about whether British aidshould be going to middle income countries (the last round was over aid to India, which seems to particularly rile the Daily Mail).

But whatever the rights and wrongs of ending aid to South Africa (whose economy is growing slowly, but with sky high levels of inequality and 10 per cent of all the world’s people living with HIV and Aids), aid agencies are inevitably going to have to shift money around as the world changes. Countries rise and fall, aid priorities change and new opportunities (like the opening up of Myanmar) will arise, to which aid should of course respond.

That churning process is accelerating as more and more countries reduce their dependence on aid thanks to economic growth, rising revenues from oil and gas and surging remittances from their migrant workers overseas. Those upward curves contrast with falling aid volumes.  Total global aid flows have been falling for the last two years as, with the sole glorious exception of the UK, the ‘Austerians’ in what are sometimes known as ‘the formerly rich countries’ take the axe to aid spending.

What’s more, many developing country governments can’t wait to end aid – it affronts the dignity of the Big Men (as they usually are) in charge to be seen as asking for handouts. As two Ugandan ministers once proudly told me ‘when 60% of our revenues came from aid, we had to go to the World Bank on both knees. Now we’ve got it down to 30%.’ (Unfortunately, I blew it by joking ‘ah, so do you just go on one knee now, then?’ They were not amused.)

So the issue is not whether aid partnerships sometimes have to end, but how. Oxfam has some ideas on that – several pages of guidelines on ‘exit planning’ in fact. They are about ending funding to particular grassroots organisations, but they offer useful lessons for DFID and others contemplating exits from entire countries. Talk to the partner from the outset, help them fill any organisational gaps and weaknesses before you go; agree (don’t impose) a clear timetable for phasing out funding and crucially, agree what kind of relationship you want once the cash tap has been turned off. Because as one Oxfam partner from Pakistan put it, ‘We want to be treated as a “relationship” and not just as a “partner”’. Partnerships are for projects, but relationships go beyond that. We should have a relationship in the future, even if there is no project money.’‘ Sadly, the unpleasantness over DFID’s exit from South Africa means that remaining relationship has got off to a rocky start.

SA Pres demonstrates what he'd like to do to DFID

I imagine DFID has similar guidelines, but those can’t legislate for ministers shooting from the hip (or if conspiracy theorists are to be believed, throwing a bone to the Tory right ahead of local elections last week). Still, if civil servants in the land of ‘Yes Minister’ can’t manage their political masters, what are we coming to?

Joking aside, this matters. Aid agencies need a clear understanding of what constitutes a responsible exit. After all, aid should bequeath a legacy of trust and friendship between the UK and the rising powers of Africa and Asia, (who incidentally, we are going to need in future), but in this case that legacy has been (temporarily, I hope) squandered. Ending the aid relationship should be a moment of mutual celebration, not public mud-slinging.

Update: and here’s a new report on the subject of responsible exit

Whither (wither?) the ANC? Final thoughts on South Africa as a developmental state and the crisis of leadership

Like most of my overseas trips, my recent visit to South Africa resembled an intensive rolling seminar, as debates with brilliant Oxfam staff, partners and academics spilled over from conferences and meetings into cars and bars. Before it all recedes into the mists, I wanted to capture one of the recurring themes. The role of the South African state and the ANC.

Discussions on the developmental state are vibrant in South Africa. They are also very confusing. Often, the term is bandied about to describe anything a state should do to pursue development. But the term’s original meaning is much more specific, rooted in Chalmers Johnson’s attempt to explain the Japanese economic miracle of the 1960s and 70s. That includes a starring (and steering) role for a semi-autonomous technocracy, able to pursue a long term industrial upgrading project without succumbing to the short term demands of interest groups. Would anyone seriously compare that to what is currently happening in South Africa, where every day newspapers splash on the latest stories of chaos, intrigue and incompetence within the state machinery?

Actually, there is one part of the South African state machinery that is renowned for its efficiency and transparency – the South African Revenue Service (SARS, unfortunate acronym). One staffer at an Oxfam partner even said ‘if SARS was a party, I would vote for it’. Not often you hear that level of affection for the taxman.

But there are other points of comparison – Japan was certainly not free of corruption. More importantly, South Africa does have an activist state and that began long before the ANC. A questioner from the floor caused a stir at one seminar when he said ‘the closest South Africa has come to a developmental state was under apartheid’. The state provided for whites, and the non-white labour  it required. I was struck by the amount of state housing for all ethnic groups – rows of identical brick two bed houses are dotted around the chaotic sprawl of self-built ‘informal settlements’.

That tradition of state provision continues under the ANC. Housing, education and health have improved, though there is an awfully long way to go. But this prompts heated debates on whether the South African style of provision encourages passivity and dependence. Anti-state types love the dependence narrative as it provides a perfect excuse for cuts, but not everyone who worries about it can be written off as a bloodthirsty fiscal hawk.

what happens after he's gone?

On housing for example, I was struck by the different approaches in some places in Latin America, where the state supports (rather than replaces) self-build, eg by providing an engineer to advise, or by building only one room and leaving spaces for shanty-town dwellers to add their own (as they inevitably do). Does that approach increase agency as well as produce more housing per dollar?

In the end, all conversations came back to the state and fate of the ANC. The party suffers from Beatles syndrome – applauded outside the country, but much less popular at home. The headlines are all about corruption, which seems widespread, but in many ways patronage is more of a problem than plain theft. Not only does that benefit ‘tenderpreneurs’ who use their connections to win state contracts, however incompetent the execution; it also leads to the wrong people in key jobs – ‘someone who has never been to school becoming a mayor’.

If the ANC is to rekindle its waning legitimacy, it has to tackle some big headaches. How to redistribute land without destroying agroexports? Could it nationalise parts of the mining sector, and if it doesn’t, does it risk a Zimbabwe style split between party and trade unions, as Cosatu loses patience?

Overall the level of political paralysis and growing inequality and unrest means the ‘ANC is tiptoeing on a land mine’. How might it all end? Random speculation over a beer Deep and thoughtful analysis suggested a few possibilities:

• Rising expectations both among the poor (growing protests over poor quality services) and the middle class (‘I’ve got my degree, now where’s my job?’) leads to a broad protest movement and some kind of Arab Spring type meltdown.
• Possibly linked to this, the party splits and South African politics becomes genuinely competitive and multi-party. All parties have to sharpen up, both in terms of corruption and competence, if they are to get elected.
• Alternatively, the lack of opposition removes any incentive for party discipline. Politics becomes a vehicle for grabbing the spoils of power, and leads to increasing infighting within the ANC and a slow slide into chaos and incompetence (call it Nigeria on a bad day).
• The ANC pulls back from the brink, finds new, dynamic leaders, and regains its appeal by attacking South Africa’s malaises of inequality, unemployment and poor administration.

Any other plausible scenarios?

The other posts from South Africa were on Women on Farms and the recent farmworkers’ strike; Brazil v South Africa on inequality; How to build local government accountability and How can South Africa promote citizenship?

Brazil v South Africa: what can the BRICS tell us about overcoming inequality?

The blog’s inequality week here in South Africa continues with some thoughts on inequality and the BRICS. An edited version of this post appeared earlier this week on the FT’s Beyond BRICS blog

The acronym may have been cooked up in far-off New York, but the BRICS grouping of countries is starting to generate some interesting life of its own. Last week, I was in Durban, chairing a discussion between academics and activists from South Africa and Brazil ahead of the BRICS summit later this month. The topic? ‘Tackling inequality across BRICS’.

The starting point was Brazilian exceptionalism. Long held up as exhibit A in Latin America’s gross distortions of wealth, Brazil is now the only BRIC where inequality is falling (and fast – see chart). In the wider G20 group of leading economies, only 4 can boast falling inequality levels; three of them – Brazil, Argentina and Mexico – are Latin American.

The stats, captured in a new Oxfam briefing, published in conjunction with Rio’s BRICS Policy Center, are striking. Over the last decade, the incomes of the poorest Brazilians have risen more than five times faster than those of the richest (but both are rising – no zero sum games here). In the words of Brazilian poverty guru Ricardo Paes de Barros, “the incomes of individuals in the lowest decile of the income distribution is growing at Chinese rates, while the income of the richest decile grows at German rates”.

Even though GDP growth is sluggish, two weeks ago President Dilma Rousseff was able to announce the end of ‘registered extreme poverty’ – note her careful choice of words. Some Brazilian academics put this historic turnaround on a par with the New Deal in the US, or Britain’s post war creation of its welfare state.

The fine grain is just as encouraging: women’s incomes are rising faster than men’s; black people’s faster than whites’; the impoverished North-east faster than the rich South-east. Hunger is ‘largely dealt with’ according to Oxfam’s country director Simon Ticehurst, speaking in Durban, although food insecurity continues to plague communities in the northeast of Brazil. Near full employment is transforming lives, as people move from a day to day scrabble for survival into the better paid, more stable world of the formal economy. Brazil’s middle classes complain bitterly about having to pay more for maids, and even give them days off, as labour markets tighten.

Not that Brazil has become some kind of development nirvana: the quality of state education remains poor, large scale agriculture sucks up state subsidies on a far greater scale than those going to poor farmers; and despite the progress, the country is still in the world’s top 15 most unequal countries, twice as unequal as the OECD average.

Caveats aside, how did Brazil pull this off? Ticehurst and Adriana Erthal Abdenur of the BRICS Policy Center both stressed that such a transformation is complex and multi-tiered, involving all parts of state and society. This is most definitely not a magic bullet story of Brazil’s famous ‘Bolsa Familia’ social protection system, a programme of cash transfers to women in return for getting their kids vaccinated and keeping them in school, which has won admirers and imitators as far afield as New York City. UNDP estimates that such spending programmes account for under a fifth of the fall in inequality. Ticehurst argued that other critical factors include:

-          The transition from military rule to democracy, which bequeathed a constitution and political process attuned to the importance of basic rights, such as the right to food

-          The election of a centre-left government, led by Lula, committed to tackling poverty and inequality

-          Major increases in the minimum wage, the introduction of a universal pension (particularly important in deprived rural households)

-          An integrated and more effective public administration, working tightly across ministries and between the different levels of a federal, decentralized political system.

-          A high level of public participation, for example in holding 19 different ministries to account on Brazil’s ‘zero hunger’ effort to achieve universal access to food, through a virtuous circle of linking poor family farms to government procurement for school feeding programmes that in turn feed poor children.

-          Political and economic stability throughout the period of reforms.

In terms of economy and politics, Brazil is probably closer to South Africa than the other BRICS (commodity producer, democracy, transition from autocracy, centre left government) and the discussion inevitably centred on why South Africa has failed to emulate such successes. While there has been substantial progress since the end of Apartheid on access to health, education and housing, inequality remains obstinately high and rising.

The two elements of Brazil’s success that South Africa seems to be missing (by a mile) are full employment and more competent administration. Patronage and corruption exist in both countries, but their extent in South Africa is undermining the state’s ability to implement policies, however well designed. Brazil, with its more diversified economy and public investments, seems able to generate jobs in a way that remains a distant dream in South Africa, which remains dependent on agribusiness and mining, neither of which generate the employment the country needs. Substantial land redistribution seems essential to tackling the jobs crisis, yet has been systematically postponed by the government in the interests of stability. Even those who manage to navigate the dilapidated education system and emerge with a degree still find it difficult to find jobs. Alarm bells are ringing, with observers warning of anything from a slow meltdown of the ANC government to an Arab Spring style uprising led by educated, jobless youth.

While all sides stressed that merely trying to transfer policies from one country to another seldom works, this kind of South-South exchange holds huge potential for helping the BRICS develop their own solutions to some of the problems such as inequality that continue to plague the old guard of the G8.

And here’s a 25m video summary of the Durban event

How to build local government accountability in South Africa? A conversation with partners

This is what a good day visiting an Oxfam programme looks like. I skim the interwebs (and this blog) to put together some thoughts on a given issue from our experience or what others are writing (‘the literature’). Then sit down with local Oxfamistas and partner organizations (who are usually closer to the grassroots than we are) to compare these bullet points with their reality. Last Friday it was ‘how can NGOs build the accountability of local government.’ My ten minutes covered:

• Supply (training officials) v demand (strengthening civil society) v building collective trust in fragmented societies
• The importance of identifying and working with insider champions within the state – no good shouting at the gates if no-one inside is willing to listen and work with you
• It can be risky – make sure staff and partners have support if the state officials lash out
• Often need to pursue deeper culture change on officials’ attitudes to excluded groups
• Need to choose between focussing on the broader ‘enabling environment’ of access to information, respect for the law, exposing corruption etc or more specific campaigns for housing, electricity, schools etc
• Some interesting examples of text-based complaints mechanisms (India) and name-and-shame league tables (Vietnam)

A lot of this resonated with the South African experience. Some thought-provoking additional points included:

The SA implementation gap between ‘first world norms and standards’ and an underfunded and often chaotic/corrupt corrupt administrative reality is so wide it may even be counterproductive (no point in acting because however hard you try, you can never comply). Local government is hobbled by lack of cash, capacity, and officials’ inability to understand ‘perfect’ guidelines and standards drawn up by distant consultants.

The political incentives are all wrong. Patronage is as big a problem as corruption – party hacks get parachuted into senior administrative jobs, lacking the capacity or interest to perform them properly. ‘People in positions feel very powerful’, and their power springs from playing the political game within the ANC, fighting the internal turf wars rather than doing right by the people.

Despite this, there are officials and politicians willing to do the right thing, either because they are politically progressive and committed (this is the ANC, after all), or because more self-interested political incentives are temporarily/accidentally aligned with those of the popular movement. A huge element of civil society advocacy is built around identifying and building relationships with such individuals. Finding backing for local insider champions (eg from higher tiers of government and politics, or international bodies) can make a real difference in strengthening the hand of the good guys within the state.

But that can be very exhausting: ‘you look at the giant that is Government and it’s so difficult to navigate. You never quite know where to push, (and nor do the officials!). You invest hugely in building intimate relationships only to find they’ve moved department and you have to start all over again.’

Civil society (including Oxfam) don’t always do themselves any favours: ‘CSOs go with the attitude ‘you’re paid to do this, and you drive a 4×4. Why should I congratulate you when you actually do your job?’ So they get nowhere.’

More optimistic times

Options include:

• Judicial activism, but there is little cash to support it, and it is very slow.
• Changing norms: At present ‘there’s no corruption, no shame’ among officials. CSOs could go for broad public awareness raising and pressure along the lines of ipaidabribe.com, ‘they work for us’ websites on the performance of politicians or civil servants, ‘slowest response of the year’ competitions etc. But those in the room thought this would be very risky indeed, given the ANC’s hostility to public criticism.
• Broaden alliances beyond networks of CSOs (which seems to be the default model), not least because civil society currently has access to political leaders (they were often in the anti-apartheid movement together), but little real traction. Partners thought the private sector offered more promise than faith-based organizations or traditional leaders.

We finished by asking everyone to suggest something new to try. Here’s what they came up with:

• Invest much more in ‘positive reinforcement’. Find champions, publicly support them. Build relationships.
• Do more long term awareness-raising  with communities about what the government ought to be doing for them
• Think about a South African ipaidabribe.com
• Budget tracking/ ‘follow the money’ watchdogs to ensure that money allocated arrives intact and is then actually spent (a scandalous amount of health and education money has to be returned to central government because local officials fail to spend it on time).

But in the end, several partners thought that only an increase in political competition, with the ANC facing a genuine chance of being voted out of municipal governments, would shift the behaviours of most officials. Given the state of the opposition, that doesn’t look likely, but I’ll speculate on that in a future post.

And if you happen to be in Cape Town today, why not come along to the Sustainability Institute at 12 to discuss ‘Creating a Just Food System through Active Citizenship‘? Some good panelists (and me).

How can South Africa promote citizenship and accountability? A conversation with some state planners

How can states best promote active citizenship, in particular to improve the quality and accountability of state services such as education? This was the topic of a great two hour brainstorm with half a dozen very bright sparks from the secretariat of South Africa’s National Planning Commission yesterday. The NPC, chaired by Trevor Manuel (who gave us a great plug for the South African edition of From Poverty to Power) recently brought out the National Development Plan 2030 (right), and the secretariat is involved with trying to turn it into reality.

I kicked off with some thoughts which should be familiar to regular readers of this blog: the importance of implementation gaps, the shift in working on accountability from supply side (seminars for state officials) to demand side (promote citizen watchdogs to hold the state to account) and the challenge from the ODI-led Africa Power and Politics Programme that accountability work needs to break free of such supply/demand thinking and pursue ‘collective problem-solving in fragmented societies hampered by low levels of trust’, which seems a pretty good description of South Africa, according to the NPC. I gave the example of the Tajikistan Water Supply and Sanitation Network as an example of how this can be done through ‘convening and brokering’.

Once I shut up, it got more interesting (funny how often that happens). Some of the most interesting questions (and responses from me and others)

Lots of ‘convening and brokering’ is little more than talking shops – when does it lead to concrete results?

• Depends who’s in the room – do they share a common interest in finding solutions or are they there to fight turf wars, defend ideological positions etc?
• Can you build forward momentum by identifying some quick wins that make people realize what is possible?
• Individuals matter – is there a charismatic leader (as in Tajikistan), who can bind the forum together and keep it moving forward?

How to move from dependency to agency? At least some people see a real problem of acquired dependency. Poor people in South Africa have become dependent on free housing, state welfare etc, and have lost their sense of agency. Instead they oscillate between passivity and protest. The government conducts large scale consultation set pieces to try and encourage participation, but what is lacking is the day to day accountability the allows citizens to get action when public services fail.

The civil servants in the room happily disagreed with each other – fascinating to see an internal debate like this – Oxfam colleagues also contributed, so what follows draws on the points raised by people from both organisations. Some saw this as a supply side problem: the lack of public sanction when teachers don’t show up; officials are corrupt etc undermines citizen action; the teachers’ union resist reforms; moreover, ‘politicians only listen when something burns’, turning violent protest into a sensible change strategy.

Others focussed on the demand side, pointing out the problem of time poverty – women in particular just don’t have time to take part in exhausting exercises in citizenship on top of all their other tasks. One of the effects of the fall of apartheid has been an exodus of aspiring socially-motivated black and coloured people both from the teaching profession, and from poor communities, aggravating the problem of sink schools that the middle class, whether black or white, can ignore (especially if they go private). Others questioned this and pointed out that there is actually a lot of protest on the state of public services, and plenty of accountability structures such as school governing bodies, although coverage is patchy.

Which led us to compare the lack of progress in improving the quality of education with the great strides made on tackling HIV and AIDS. Why have the social movements on HIV had so much more impact than in other areas such as education or landlessness?

Here people pointed to the importance of starting with long term awareness-raising, designed both to inform andempower, but also to shift social norms, in this case from seeing HIV as an individual shame to a collective responsibility. This kind of ‘conscientization’, in the language of Paulo Freire, seems ill-suited to state action, so who might be able to do it in the case of education, for example shifting attitudes to seeing poor school grades as a collective, as well as individual, challenge? Social movements? Faith organizations?

HIV was a cross-class, cross-race issue, touching everyone in South Africa, so the movement found it easier to overcome social divisions. By contrast, poor education is tied closely to class and race, so coalitions are harder to build. And of course HIV was also, literally, a life and death issue – motivation was not a problem. In contrast the ‘slow death’ of bad schooling doesn’t galvanize the citizenry to the same extent. How to change that?

Some final thoughts from me:

-          What about trying to shorten the accountability chain in education to make it possible for citizens to get quick action rather than become bogged down in interminable bureaucratic process? How about an education ombudsman with power to investigate complaints and impose sanctions?

-          One of the weaknesses of the National Development Plan is its approach to gender. The half a page on ‘Women and the Plan’ in the NDP Overview fails to mention two major obstacles to citizenship: women’s time poverty and the lack of support for their role in the care economy; and the need to change the role of men. I’m pretty sure that on average, women are more concerned about the state of education, but as free time remains a male concept, they will struggle to do much about it.

Great discussion. This is what makes trips such fun.

Can South Africa build a developmental state?

Ha-Joon Chang recently sent me an interesting paper of his on ‘How to ‘do’ a developmental state’, his contribution to a book on the prospects for building a democratic developmental state in South Africa. In it, he does one of his typically fascinating comparisons of the ways various other countries have build ‘developmental states’ (which he defines as ‘a state that intervenes to promote economic development by explicitly favouring certain sectors over others’) and draws out some possible lessons for South Africa.

Some highlights:
‘While it practices free trade and welcomes foreign direct investment (although selectively), the Singaporean government owns almost all the land in the country, supplies 85% of housing, produces 22% of GDP, and runs one of the most draconian forced saving schemes in the world (the Central Provident Fund). Unless you actually know these things about Singapore, it is difficult to break out of the conventional wisdom that free trade, private ownership of enterprises, and freedom of individual choice are all necessary for any economic success.’

Within East Asia, he holds up Korea as the most extreme exponent of selective industrial policies, followed by Japan. Taiwan compensated for its lack of large private companies by using state-owned enterprises and state-financed R&D to pursue upgrading. Singapore also used its massive SOE sector.

Outside East Asia, France used sectoral industrial policy along similar lines to Japan and Korea, whereas Scandinavia practised ‘developmentalist welfarism’ with some selective industrial policies, but not on the scale of Korea or Japan.

So what does this mean for ‘doing’ a developmental state in South Africa or other emerging economies? In terms of the politics, the case of Scandinavia shows that the state doesn’t have to be right wing or coercive, (ditto the importance of radical post-World War Two land reform in the take-offs in Korea and Taiwan).

The organizational methods of building a developmental state are diverse. Korea and France (and to a lesser extent Japan) used all-powerful pilot agencies to drive forward their industrial policies. Ha-Joon reckons South Africa’s Department of Trade and Industry might be a candidate for such a role. But coordinating committees in Taiwan or SOEs (everywhere except the US) offer other options.
He identifies the South African government’s lack of control over the banking sector as a serious weakness, as is the lack of support for R&D, but thinks both could be corrected.

Finally, he warns against employing too many economists – the Japanese and Korean miracles were led by lawyers, Taiwan by engineers. He actually thinks the return of battalions of Korean PhDs from US economics faculties is a disaster for his country.

The book looks great, with chapters from Omano Edigheji, Peter Evans and Thandika Mkandawire, among others. And it’s freely downloadable. Looks like another bad day for the Oxfam Printer…….

How is Climate Change affecting South Africa?

Here’s my ’summary of the summary’ of a report published today by Earthlife Africa and Oxfam International.

‘In climate terms, South Africa is already living on the edge. Much of it is arid or semi-arid and the whole country is subject to droughts and floods. Even small variations in rainfall or temperatures would exacerbate this already stressed environment. Most South African crops are grown in areas that are only just climatically suitable and with limited water supplies.

But that climate is set to change for the worse because of rising global emissions of greenhouse gases. Indeed, there are already ominous signs of change – dry seasons are becoming longer and wet seasons starting later. Rainfall is reported to be becoming even more variable, with rain coming in more concentrated, violent bursts. Read More …

From Poverty to Power in South Africa

Just spent a week promoting the South African edition of From Poverty to Power, published by Jacana Media with a nice foreword from Francis Wilson, an authority on poverty and labour markets in SA who also chaired the launch event at the Book Lounge in Cape Town. Jacana put on a great programme of public events, university lectures and got some good radio and TV coverage.

The highlight was probably the launch in East London, a recession hit town in the Eastern Cape whose economy depends heavily on the local Mercedez Benz factory (which like auto firms everywhere is seeing its sales slump and is laying off workers). The launch was organized by the Daily Dispatch, the East London newspaper formerly edited by Donald Woods of Cry Freedom fame, and it pulled 250-300 people into the Guild Theatre – everyone from high school classes to grizzled survivors of the armed struggle against apartheid. It felt fitting that East London should overtake the launches in Washington or London as the biggest launch event thus far – here people weren’t talking about ‘development’, but about their own lives and futures. Read More …