Rethinking Hyden’s Development Fund Model: A Critique and Suggestions for Modification

by Olatunde J.B. Ojo


Goran Hyden’s proposal (1993; 1995; and reprinted in this issue) for national politically autonomous development funds opens up a much needed debate about the causes of alleged aid decline to Africa and what can be done to increase aid and to make it more effective. At its core, Hyden’s National Development Fund (NDF) Model is a proposal to aggregate resources from donors into four or five national pools (based on sectoral foci, e.g., food security, public health, education, etc.), and to distribute this pool to public, private, and voluntary institutions which compete for it on a level playing field within certain specified guidelines. The goal is two-pronged: (1) to make foreign aid more productive in the current context of sub-Saharan Africa and, through it, (2) to stem aid decline, in fact substantially increase aid inflow, to the continent.

Few who are truly devoted to rapid development of the continent will object to these goals. There also is no doubt that the proposed mechanism for achieving these goals is innovative and does have a great deal of merit.. It is doubtful, however, that the mechanism, in its present form, can achieve its “dual mandate”. This article points out certain major weaknesses and suggests how they can be corrected if the NDFs, like countless past innovative policy measures or “advice” for Africa, is not to lead to disappointment or even disaster.

The analysis is in three parts. First, the rationale and the likely efficacy of the competitive mechanism and processes by which governments are to be made less corrupt, more accountable, and more effective in using aid to bring development to their people is discussed. Contradictions in the rationale and operational application of the mechanism are also discussed, the problem being linked to Western orthodoxy about the role of the state in a developing economy and to a faulty understanding, or even a deliberate misreading, of why decades of aid have not led to the development miracle in Africa. Second, the mechanism and its processes as they apply to local and grassroots institutions are discussed, pointing out the limitations that may affect donor countries’ perceptions and assessments of their efficacy as agents of profound economic transformation. The necessary modifications in the Hyden proposal that all of this suggests are outlined in the third part of the essay. The final section summarizes the arguments and the suggestions for rethinking the NDF model.

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Olatunde J.B. Ojo, Visiting Professor of Political Science at The University of Montana, Missoula, is on the Faculty of the University of Port Harcourt, Nigeria, where he served as Dean of Social Sciences between 1991 and 1993. His research and publications center on Nigerian Politics and Foreign Relations, West African Regionalism, and Development Policy issues. His most recent work is Economic Underpinnings of Security in Africa, forthcoming monograph by Malhouse press, Lagos for Centre for Advanced Social Science, Port Harcourt.