Traditional and new donors – The need for improved development effectiveness

Brussels Rural Development Briefings:

Session no 6: New Drivers, New Players in ACP Rural Development

--

Traditional and new donors – The need for improved development effectiveness

Christoph LANGENKAMP

- Task Leader Agricultural and Rural Policies -

Global Donor Platform for Rural Development

2 July 2008, Brussels

www.donorplatform.org

What is the Global Donor Platform for Rural Development?

A strategic alliance of 30 donors, international finance institutions and development agencies, created in 2004 to address aid effectiveness challenges in agricultural and rural development;

The Platform is committed to contribute to better and more investments in agriculture and rural development;

Platform outcomes:

Advocacy and outreach

Knowledge and innovation

Aid effectiveness

Highlights of Platform activities

Networking of ARD sector managers;

Joint preparation of studies, donor concepts and elaboration of policy recommendations on ARD issues;

In-country facilitation for donor harmonisation and alignment on pilot basis and elaboration of principles for effective ARD programmes;

Supporting CAADP, e.g. through enhanced CAADP-Donor communication;

Contribution to WDR 2008 ‘Agriculture for Development’;

Inclusion of agriculture sector aid effectiveness experiences into the Paris Declaration process.

Investment trends

Important:

Prime responsibility for agricultural development rests with national governments;

Keeping in mind that agriculture is primarily a private sector activity.

Underinvestment in agriculture

Agricultural GDP/GDP public spending on agriculture/ agric GDP

Source: C. Delgardo presentation of WDR 2008

Some facts and figures (1)

Misinvestment in agriculture Better use of public budgets needed — subsidies crowd out investments; the example of India Source: Chand and Kumar 2004 Some facts and figures (2) Public goods investment Subsidies

ODA to agriculture ODA commitments declined from about 18 % in 1979 to 3.5 % in 2005. The ODA trends are mirrored by national budget allocations for agriculture dropping from 11% in 1980 to 7% in 2002 in Africa. Some facts and figures (4)

Funding gap estimates:

Incremental funding needs to achieve MDG 1 (IFPRI June 2008) :

US $ 14 billion per year for all developing countries;

US $ 3.8 to 4.8 billion for SSA, plus US $ 2.3 billion for subsidised input (fertilizer and seed) scheme ( in addition to 10% national budget ).

But: Immediate absorptive capacity can be a challenge in some areas!

Some facts and figures (5)

Stand-alone projects

Integrated rural development projects (since 1970s)

Sector-Wide Approaches (SWAps) (since 1990s)

Integration of ARD in PRSPs (since 1990s)

Poverty Reduction Budget Support (PRBS) (starting 2000s)

Evolving paradigms in ARD

Soaring food-prices are symptomatic and catalytic;

Decades of real prices decline expected to be over;

Agricultural growth accelerates;

Agriculture remains taxed, but at a lower rate;

Increasing demand for agricultural commodities:

Population growth;

Changing diets;

Biofuels.

Emerging markets for environmental services;

Technical and institutional innovations.

Agriculture is back on the agenda

Agriculture based GDP growth benefits the income of the poor 2 to 4 times more than GDP growth from non-agriculture.

World Bank: World Development Report 2008

But, smallholder agricultural development is critical.

Agriculture critical to address poverty

New architecture-Emergence of non-traditional and new donors

New important players

CSOs managed $40 billion in 2005 ( estimate: AG CSO AE, 2008 );

Grants from CSOs and foundations: $14.6 billion in 2006 (from 8.8 billion 2002, [ OECD 2008] );

Non-DAC OECD countries (like South Korea, Turkey, Mexico): $1.9 billion in 2006;

Non-OECD countries, e.g. China and India;

Corporations, Private and voluntary organisations, religious organisations, universities and colleges, volunteer time;

Recorded remittances flow to developing countries (2006): 177 bn $ (221 bn $ inflow, 44 bn $ outflow, World Bank Migration and Remittances Factbook 2008) ;

DAC countries ODA 2007: $104 billion ;

FDI to Africa (2006) : $36 billion (23 bn$ to North Africa, 12 bn$ to SSA).

Financial flows - a summary by the Hudson Institute Hudson Institute, Center for Global Prosperity, Annual Index of Global Philanthropy, 2008

There is a political consensus – the MDGs;

New players and donors;

Development agenda: WDR 2008 Agriculture for Development ;

Food price situation is symptomatic and catalytic;

Evolving aid effectiveness (increasing country ownership, alignment and harmonisation):

Regional: CAADP (as an African initiative), RECs;

National: improving policy coherence - PRSs, JASs, etc.

High Level Forum on Aid Effectiveness, Accra

Commitments to increased public investment:

AU Maputo declaration (10% of budget for ARD and 6% ag growth) ;

G8, Financing for Development etc. (and as demonstrated by 8.5 billion US$ in pledges at the FAO/IFAD/WFP HLF on Food Security in June 2008 – additionality!).

Issues and opportunities

At international level:

Increased and deepening engagement:

International agreements (i.e. UN, MEA, Paris Declaration);

Political fora (i.e. UN, World Economic Forum);

Issues based discussions/conferences (i.e. FAO, OECD, Global Donor Platform).

At national level:

Active participation at policy formulation;

Participation in sector dialogue / round tables.

Better dialogue among development actors

Operational level

There is increased collaboration of different actors:

Alignment to policy frameworks;

Implementation (public-CSO, PPP, non state –non state …);

Monitoring and evaluation.

Examples:

Tanzania Agricultural Rural Sector Development Programme;

Public funds for CSO implemented agricultural advisory services;

African Enterprise Challenge Fund;

Agriculture Development Grants from the Gates Foundation.

Challenges include:

Increasingly complex aid architecture;

Roles, mandates, capacities, resources, processes;

Role of the state / managing the political economy;

Coherence (within and between actors and sectors).

Expanding collaboration

The current aid effectiveness debate offers opportunities for improved collaboration and coherence while empowering national processes.

Paris Declaration on Aid Effectiveness (2005):

ownership, alignment, harmonisation, results and mutual accountability;

Partner country priorities:

conditionality, untying, incentives, division of labour, predictability and capacity development

CSO aid effectiveness process

Up-coming Joint Principles for ARD (Platform process)

More effective development assistance

Paris Declaration: Preliminary lessons learned and recommendations from the agricultural sector

Progress in aid effectiveness (Sector-Wide Approaches, Joint Assistance Strategies etc.) but major challenges remain;

Strengthened public investment, alignment and harmonisation;

More emphasis on ownership issues / stakeholder participation;

Strengthened capacity of all stakeholders (to fulfil their respective role and be [technically] competent);

Need for increased coherence;

Need for context specific policies and strategies.

More effective development assistance(2)

Global initiatives for more funds in general and more investment in ARD include:

MDG process, Financing for Development (Doha), and Ban Ki-moon’s High-Level Task Force on the Global Food Security Crisis and MDG Africa Task Force;

G8 Summit (Gleneagles and follow-up);

FAO Initiative on Soaring Food Prices / Hunger Initiative;

World Bank’s Global Food Crisis Response Program (GFRP);

Global Partnership for Food and Agriculture .

Policy debate concerning Governance for Agriculture, Food, and Nutrition.

More development assistance / current debates

Countries, taking the lead, need to continue policy reform, creating strong policy frameworks and enabling environments, involving key stakeholders like the private sector and CSOs;