FORUM (Spotlight Weekly)

‘Donors Are Moving For More Local Participation’

— IAN McKENDRY

IAN McKENDRY, a senior official of the British governmentís Department for International Development (DFID), is leaving Nepal after completing a two-year tenure. He spoke to KESHAB POUDEL on various issues related to foreign assistance. Excerpts:

You are leaving Nepal soon, after two years here. It seems a good time to ask you about the main memories and lessons of your experience which you will take away with you.

Before mentioning work-related items, I would first say that I would recommend Nepal as a great place to live! I find the climate, ambiance and, most importantly, the people all very pleasant. So I have many positive memories.

And on the work front?

Well, two years is not long, but nevertheless I have learnt much in my time here. Perhaps the most important lessons concern the role of donors in Nepal.

Do you think the role of donors here is different from the role they play in other countries?

Before working here I worked for DFID on other countries in the region -- India and Pakistan. One difference is about the way donors are seen. Because Nepal is a smaller country, because the ratio of aid to the total budget is higher here than elsewhere, and because it is still very centralised administratively on Kathmandu, donors can seem to make their presence felt more strongly here than in those two countries. Whether they are more important or have more influence is another matter. But there are many similarities too. And I think their role is starting to change in all countries, including Nepal.

What sort of changes do you see?

Donors - and this certainly includes DFID - are becoming more concerned about the overall environment in which they are working. The history of aid is mainly about the history of individual projects. A donor would feel they had done a good job if their country project portfolio was performing well. But increasingly they began to question the general policy environment. Just before I came here, I was working on the approach DFID should take to the Sharif government in Pakistan. Many donors had concerns about that government's overall record. Although we felt that many of our projects were doing a lot to help the poor, we were concerned about supporting a government which could have been significantly more pro-poor. And this was only the latest concern donors had had over many years of Pakistan's difficult history. The over-riding question was "Could lots of individual projects really help to transform a country when the government of that country has questionable pro-poor credentials?". Once I got here in April 1999, there seemed an opportunity for a fresh start in Nepal, since elections were just about to be held.

Do you mean a fresh start in terms of pro-poor policies?

Yes. In 1999, the country could easily attribute its policy failures up to that time to the paralysis which years of minority government can cause. Once there was a new government with a clear majority there seemed a chance to follow a clearer pro-poor path. So in Nepal it seems especially relevant for donors not only to ask "how well are our projects doing", but also "how pro-poor is the policy framework in which our projects are operating?".

But should donors be deciding whether Nepal has pro-poor policies? This sounds like conditionality - the donors saying "Nepal must do this or else*.."

I hope - and don't think - that donors are reinforcing or moving back to a conditionality approach. That approach implies a lack of ownership on behalf of the country concerned. Donors are moving to more local participation in the policies which are jointly agreed to be crucial - this is the basis of the Poverty Reduction Strategy Paper process which Nepal is now going through. But in my view the really important shift is the emphasis which is given to the policy level. This has been helped by the World Bank-funded book "Assessing Aid". This was based on a good deal of research, and said many interesting things about development. The best known conclusion was also perhaps the most obvious: that the better the policy environment the greater the effect of aid money. This led to the notion that if a country had a really poor policy environment then perhaps little or no financial aid should be given at all, and that instead there should be so-called "ideas aid" - that is, aid which aims first to improve the policy environment.

Doesn't that mean that if donors don't like a country's policies then the poor will suffer even more, by being denied aid projects?

I was talking about what the book - and others - have argued. In practice, donors - including DFID - do want to help the poor wherever they are. That is what donor agencies were set up to do, and there is much political pressure within donor countries to spend more on poverty eradication.

So aren't donors ignoring the lessons of the research in "Assessing Aid"?

Perhaps they are not taking a very harsh interpretation of the research findings, but they are no ignoring it either. For example, I see Nepal as having a sound starting point for poverty elimination: it is a democracy with a basically good constitution and many very encouraging policy statements. The main difficulty it has is in implementing policy. A policy is simply a course of action. I sometimes see Nepal as having set out its course but then not really wanting to follow it. But no matter what their judgment about the policy environment, donors are unlikely to stop financial aid to Nepal, because there are too many poor people here. But they should also not forget about the importance of "ideas aid", about helping to get the policy framework right. I think we all - donors, HMGN and others - need to work harder on this aspect. This is the main lesson I take from my time here.

You have ruled out conditionality as a way of helping to get pro-poor policies in place - so if a country doesn't like the donors' "ideas" surely donors can't do much?

Well you have brought up a really important point: the "ideas" of "ideas aid" shouldn't be donor ideas! Nepal has probably had too many foreign donors trying to tell it what to do. The ideas should be home-grown. And the role of donors in Nepal should be to help nurture those locally-owned ideas. The ideas themselves must not only start with Nepalis but should preferably be developed by Nepalis. In Nepal I have seen the great difference between an idea which a Nepali has had and an idea which a donor has had. In the first case you can see all the enthusiasm which comes with the idea. In the second case there is much less enthusiasm, since there is always a feeling that the idea is being forced on the country.

Surely a donor will not support ideas it disagrees with?

No, they won't. Donors of course will have their own view of what will help the poor and what will not. And it is reasonable for them to test locally held ideas against that view. For example, if a Nepali came up with an idea which reduced the level of democracy or the poor's involvement in democracy in Nepal, DFID could not support it. But as long as an idea meets the basic underlying concerns of donors then they should be seriously considered. That is very different from a donor itself working out how its basic concerns can be implemented and developed into a project. We have started to back 100% Nepali-owned ideas through funding the "Enabling State Programme". This is very much based on helping to develop Nepali ideas about governance.

Do you think other donors will take this new approach?

I'm not sure I would say it is really all that new. It is more about turning a lot of existing donor rhetoric about "ownership" into reality. Donors have too often in the past interpreted ownership as meaning convincing Nepalis that donor ideas are right. In my view more local ownership means fewer donor prescriptions. And I do think donors are moving in that direction.