traditional and new donors – the need for improved development effectiveness

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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

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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:

1. Advocacy and outreach

2. Knowledge and innovation

3. Aid effectiveness

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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.

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Investment trendsImportant:

– Prime responsibility for agricultural development rests with national governments;

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

Underinvestment in agricultureAgricultural GDP/GDP public spending on agriculture/ agric GDP

Source: C. Delgardo presentation of WDR 2008

Some facts and figures (1)

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16

10

0

5

10

15

20

25

30

35

Agriculture-based Transforming Urbanized

perc

ent

4

11

12

0

2

4

6

8

10

12

14

Agriculture-based Transforming Urbanized

perc

ent

5

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)

0

1

2

3

4

5

6

7

1975-79 1980-84 1985-89 1990-94 1995-99 2000-02

Per

cent

of

Ag.

GD

P

Public goods investment

Subsidies

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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)

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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)

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• 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

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• 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

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• 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

Agriculture

Non-agriculture

-2

-1

0

1

2

3

4

5

6

7

Lowest 2 3 4 5 6 7 8 9 Highest

Expenditure deciles

Exp

endit

ure

gain

s in

duce

d b

y 1

% G

DP

gro

wth

(%

)

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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).

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Financial flows - a summary by the Hudson Institute

Financial flows into developing countries, 2006in billion $

ODA: 95

Remittances: 122

Private investment and philanthropy:

209

Hudson Institute, Center for Global Prosperity, Annual Index of Global Philanthropy, 2008

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• 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

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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

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Operational levelThere 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

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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

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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)

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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

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• 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;

• Increase coherence with and align to national policies and strategies;

• Better and more investments in agriculture;• Further improve global coordination for complex and interrelated

issues between all players.In this, the Platform seeks:• To enhance members’ shared learning and aid effectiveness -

particularly harmonisation & alignment (incl. joint principles etc.);• To advocate for an adequate role of agriculture and rural

development in poverty eradication and sustainable Natural Resource use.

The way ahead

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Thank you very much!

www.donorplatform.org