Rethinking Hyden's Development Fund Model: A Critique
and Suggestions for Modification.©
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.
NDFs, THE STATE AND DEVELOPMENT PERFORMANCE
The proposal for national autonomous development funds
(NDFs) is sadly reminiscent of the structural-functional and modernization
paradigms that one thought had become depasse par l'histoire. The
argument advanced or implied is basically that more aid will be forthcoming
if aid can be made more effective for development; one way to do this
is to engineer into existence a new institution which will check both
corruption and lack of accountability while at the same time eliminate
the developmentally dysfunctional consequences of central state control
over development planning and resources. The effective use of aid and,
with it, higher aid inflow, are thus a function of a well-designed institutional
structure combined with decentralized or limited state involvement in
Hyden couches the argument for a well-designed institutional structure
in terms of four principles or assumptions deemed to be conditions of
"publicness" sine qua non to effectiveness of public
institutions in the use of development aid. These assumed conditions are:
(i) the necessity of political autonomy and accountability for institutions
and bodies that dispense and utilize aid; (ii) the necessity of eliminating
or at least reducing corruption and creating trust between donors and
recipients of aid; (iii) the necessity of indigenizing control of aid
machinery in order to reduce suspicions and enhance effectiveness and
efficiency; and (iv) the need to redress imbalance in national and local
bodies' access to aid resources and opportunities. In the abstract, these
principles are unassailable. Applied to concrete African reality, they
can be problematic. Principles (ii) and (iv) for instance form the backdrop
against which Hyden derives the two specific and interrelated ways through
which the proposed NDFs can bring about change in the direction of accountability
and effectiveness in governmental use of aid monies. As will be shown
below, they are not as unassailable as they initially appear to be.
The first and most fundamental way NDFs would meet the stated condition
of corruption reduction for a more trustful donor-recipient relationship
is to make national governments (and state governments in federal set-ups)
compete on equal basis with other institutions--public, private, and voluntary--for
foreign aid monies. Since the main criterion of success in winning an
award is effective performance, the need to succeed is likely to force
government institutions and personnel to be less corrupt. In Hyden's words
(1995:12) "these funds have the potential of encouraging a constructive
competition between government departments, on the one hand, and private
and voluntary organizations, on the other, to demonstrate how development
work can be improved and be made more sustainable." The key, then,
is competition and NDFs offer the forum and structure for this.
The second way NDFs would help promote development is a derivative and
reinforcement of the first. By giving local governments in particular,
and grassroots organizations in general, access to an independent source
of funding, NDFs could help wean these institutions and organizations
from their dependence on the state for resources, and hence from constraints
of central control of development planning. As Hyden (1995:9-10) puts
it, if the whole set-up can be changed so that local institutions, including
local governments, "can compete on equal terms with central governments
for finances available for public use," if they are "able to
enhance their financial autonomy vis-a-vis central government," then
"the central control of decision-making, information flow and resource
allocation can be broken."
My central discomfiture is with these two key elements of the Hyden model.
In the first place, Hyden fails to carry the policy implications of his
competition argument to its logical conclusion when, without articulating
any cogent reasons, he recommends competition in some areas of development
aid activities but not in others. In the second place, I find very dangerous
the end which Hyden expects his policy of local government access to independent
revenue to serve--an end to national or state control of decision-making
and resource allocation, in short state control of decisions over the
economy and the direction it should go. As I will show presently, these
policy failings reveal the Hyden model to be motivated less by concern
for Africa's development and how to get substantial aid toward that end,
than by antipathy to central government involvement in economic activities
that in Western mode of thought ought to be left to the private and voluntary
SHORT-COMINGS IN THE COMPETITION ARGUMENT
The kernel of Hyden's argument is that trustful relationships
no longer exist between African governments and donors. He devotes considerable
space to castigating African states for this development. He points to
their incapability to put external finances to good use, to their turning
of a once "reasonably reliable [aid] implementation machinery ...
into a corrupt, inept, and inefficient 'good-for-nothing' kind of institution"
(Hyden, 1995:3), and to the fact that "(m)any people still perceive
the public realm as a place for making private gains" (Hyden, 1995:7).
The result is donor fatigue and unwillingness "to continue pouring
money into ... a bottomless pit" (Hyden, 1995:3).
The depths of distrust are reflected in the fact that donors have either
taken a more direct control over projects they fund, or they have resorted
to using trustworthy international NGOs with a presence in the recipient
countries to deliver aid directly to African beneficiaries (Hyden, 1995:6).
Hyden correctly gauges this tendency of donors to give priority to private
initiative over public authority as unavailing because "both are
sorely needed" (Hyden, 1995:8). However, rather than attempt to refurbish
and re-establish the earlier machinery which, "in spite of inadequate
staffing" worked in a "reasonably reliable" manner, Hyden
finds it far easier to establish a new machinery outside central government
purview. The new machinery is designed to impact on the old, on extant
governmental institutions, by forcing them, by way of competitive aid
requirements, to be efficient, accountable and less corrupt.
Since competitive bid for aid funds is the heart of the Hyden proposal,
the means by which to make governments less corrupt and more efficient
and effective in handling development projects, one would expect that
all aid funds should be subject to the competitive requirement if we are
to make a dent in breaking the old habit, if we are to show seriousness
about a new dawn "other than business-as-usual," to use Hyden's
phraseology. Alas! That is not what Hyden recommends. Rather, Hyden recommends,
first of all, that central government competition with local governments
and grassroots organizations be limited to aid monies "that are currently
targeted directly on government departments or NGOs involved in social
and economic development. Large scale infrastructural projects ... would
fall outside the purview of these funds." Hyden reiterates that NDFs
"are not expected to absorb all external aid flows to a given country"
(1993:17; 1995:11); that the NDFs are not perceived as pre-empting the
opportunities for government-to-government or government-to-non-governmental
There are several problems with Hyden's specific policy recommendations,
given his initial premise. First, there is no reason why competition should
be limited to social developmental aid and not extended to infrastructural
aid, assuming the two can be conceptually and operationally distinguished
in the first place. It sounds disingenuous to assert that only competition
in respect of social and developmental aid could lead to better development
projects, make central governments less corrupt, and offer an opportunity
for these governments to prove their trustworthiness and thus win NDF
funding. Surely governmental performance in respect of infrastructural
aid equally offers adequate opportunity to prove effectiveness and reliability.
If African governments can be trusted with infrastructural aid, they surely
can be trusted with developmental aid. There is no evidence that these
governments are less corrupt or more competent or more capable with respect
to infrastructural aid than with developmental aid. If anything, the sheer
scale and complexity of infrastructural projects provide greater opportunities
and avenues to engage in corruption and to exhibit ineptitude and inefficiency,
the putative rationale for, and target, of Hyden's reform. Hyden's argument
that due to their scale, infrastructural projects are best handled by
central governments thus rings rather hollow. In any case, if the scale
of projects is a necessary and sufficient condition for exemption from
competition, then central governments should be exempt from competing
for developmental aid as well. After all, central governments handle as
many large scale and complex projects of a developmental kind as they
do infrastructural ones.
Nor is there a valid reason to limit local governments and local civic
organizattions to competition with central governments for developmental
aid while excluding them from competing for infrastructural aid. Local
governments and local civic organizations are deeply involved in both
infrastructural and developmental projects even if their activities in
each category are invariably smaller scale versions of central government
projects. The distinction between infrastructural and developmental undertakings
is not easily made. The borderline is often blurred. For example, Nigeria's
Ajaokuta Iron and Steel Complex and the proposed Liquefied Natural Gas
projects, which seemingly are developmental projects, also fit the definition
of infrastructure. By the same token "an ultramodern market and abattoir
complex" undertaken by a town's Progressive Union is as infrastructural
Thirdly, Hyden's proposal to limit direct government-to-government aid
to infrastructure while requiring central governments to compete with
local governments and grassroots organizations for development aid will,
whether he intends it or not, have the effect of cutting, perhaps by as
much as half, the already inadequate aid that African states now receive
relative to their needs. There will be no rational ground why central
governments, already labelled as irredeemably corrupt and unworthy, would
be preferred for an award in the competition for NDF funding. The known
or presumed corruption and ineptitude of central governments would be
a priori ground for rejecting their applications in favor of those
submitted by their presumably more honest and more competent local competitors.
The ostensible level playing field effectively would be one stacked against
Despite Hyden's demurral that "the funds should not be seen as diverting
finances from the government," the NDFs would have precisely that
effect. There is no reason to suppose that donors will even continue to
give direct government-to-government "infrastructural" aid to
what they and Hyden already brand as "inept, corrupt and good-for-nothing
institutions," when a putatively more efficient, more accountable,
and more developmental alternative exists in the NDFs. Hyden indirectly
admits this much. "While the funds are not perceived as preempting
the opportunities for other institutions, governmental or non-governmental,
to request external assistance directly from donor agencies" (1995,
pp 19-20), while infrastructural aid would continue within the abhorred
aid regime and mechanism, Hyden expressed his honest intentions when he
adds that the objective of his proposal is that "successful funds
would become attractive targets for these agencies to channel sizable
amounts of money ...." (ibid p.20). The contradiction between Hyden's
claim that his model will not replace the existing aid regime and the
reality that it would render that regime redundant cannot be more glaring!
In short there is an inherent bias against governments in the intent and
likely outcome of the Hyden proposal as it now stands.
The bias against governments must be removed. If indeed there is confidence
that Hyden's NDFs have the ability to deliver on the promise then there
is no reason why all aid to a particular country, other than emergency
aid, should not come under the NDF umbrella. All public institutions of
the recipient country should go to the NDF and all donors should go through
the same institution. The only reason a donor would not want to do this
is political. Hyden hints at this in his position that as "investors"
donors "would make contributions to the NDFs in accordance with their
own policy priorities" (Hyden, 1995:20). If the purpose of aid is
truly to assist recipients' development, then donors should have no additional
policy priority; and it is for the recipient country to decide their sectoral
and project priorities within the development priority.
A case can be made that donor priority that is at variance with the recipient's
or the refusal of donor agencies to conform with national priorities or
comply with national regulations would be prima facie evidence that the
donor has other purposes in giving aid than aiding the recipients' development
and priorities as determined by the recipients. Admittedly donors must
operate within their own country's and agency's laws and regulations,
and their task is to try to find the narrow path that satisfies both countries.
However if such "policy dialogues" fail, and change in the recipients'
priority is nevertheless extorted as a conditionality for the desperately
needed aid, then aid becomes an instrument of the donor's self-interest
and political agenda.
Fourthly, it is not clear how and why competition with grassroots institutions
for developmental or any other aid will make central governments less
corrupt, or lead to better development projects. The reasoning that the
threat or actual loss of aid funds for being corrupt and inefficient would
force governments to change their ways mis-reads or trivializes the causes
of the pathological level of bureaucratic and grand corruption in Africa
(e.g., Theobald, 1994:701-706). The reasoning also is a veritable "fallacy
of competitive pressure" similar to, and no doubt deriving from,
the dogma of monetarism which says in effect that "once you set policy
incentives, everybody will do the right thing and the market will be perfect"
(Botchwey, 1989:10). The lessons of contemporary history teach us that
policy incentives do not work that way in Africa. Structural adjustment
programs have exercised equivalent threats of withholding finances as
a way to induce economic reform and good governance, including pluralist
democracy, public accountability, and human rights, but to no avail. These
means of bringing "a concerted attack on corruption from the highest
to the lowest levels" (World Bank, 1989:192) obviously have not made
a difference as corruption has indeed worsened, with many states moving
from prebendalism to what Peter Lewis (1996:100-101) calls "predation."
From the foregoing, it is clear that neither the "scale" yardstick,
nor the efficiency/ effectiveness criterion, adequately explains why competition
is not required in both the infrastructural and developmental aid categories,
which suggests that explanation must be sought elsewhere. That explanation,
I suggest, is rooted in the renewed Western antipathy to central government
involvement in large scale developmental projects and activities. Simply
put, the new Western orthodoxy of state rollback in economic activities,
together with the accompanying "small is beautiful" philosophy,
makes it unacceptable for governments, especially central governments,
to dabble in the sphere of economic activities deemed best left to the
private and voluntary sectors. Two counter arguments by Africans are ignored:
(1) that a willing and capable indigenous private sector entrepreneurial
class does not exist to take the initiative, and (2) that their experience
of privatization (and earlier indigenization efforts) showed the beneficiaries
to be primarily foreigners (e.g., Ake, 1985:188-200). It is no wonder
then that many see the practical expression of the new orthodoxy, the
structural adjustment programs, particularly the privatization elements,
as intended to benefit private foreign investors not the budding and as-yet-inchoate
indigenous entrepreneurs. This is partly the reason structural adjustment
programs have not been taken seriously enough in many countries.
What is at stake, then, is not simply a matter of trust in African governments.
It is, more fundamentally, a matter of invigorated Western determina-tion
(in the name of liberalization, governance, and a nail in socialism's
coffin) to limit the role of governments in the economy. Pursuant to this,
and to ensure that direct government involvement in productive activities
does not go beyond the provision of basic social and infrastructural services,
macro-management of African economies is fast becoming the order of the
day. The NDF model can be seen as a new element in this macro-management
scheme. Some African leaders even see donor attempts to micro-manage their
economies. Either way, the cause of trust is unlikely to be furthered.
As Ethiopian Prime Minister Meles Zenawi recently remarked apropos of
the micro-management tendency in structural adjustment conditionality:
"Give us the benefit of the doubt. We can't have trust if you try
to micro-manage our economies" (quoted in Africa Recovery, May, 1996:26).
Fifth and finally, it is also not clear how a less corrupt central government
and institutions and the attendant "better use of aid for development"
can lead to "substantial" aid inflow to Africa. Donors give
aid primarily in pursuit of their own national interests and only secondarily
and derivatively in pursuit of development of the recipient country, the
rhetoric about aid for development notwithstanding. Who gets aid, how
much they get, and for what specific activities, are therefore political
decisions that have little or nothing to do with efficiency in the use
of aid or with relative levels of corruption in the recipient countries.
The South Korea case illustrates the point that there is no correlation
between levels of corruption and the amount of aid donors disburse, and
that indeed development is possible despite gross and ubiquitous corruption
if the level of aid is sufficiently high.
From 1946 to 1978, Korea received $6 billion in economic aid from the
United States alone, in addition to $6.6 billion in military aid. Korea
also received an additional $1 billion from Japan and $2 billion from
international financial institutions(Woo, 1991:45). Yet, during that whole
period the verdict most often heard about Korea was almost identical to
the verdict about Africa today. As Jungen Woo (1991:46) points out, the
common view was that "aid did nothing for economic development, or
even worse, doused Koreans with a welfare mentality." United States'
development agencies almost universally "found Korea a nightmare,
an albatross, a rat hole, a bottomless pit; even in the middle of the
1960s some American academics despaired of the 'dawn' of the day when
Korea might become anything more than a permanent ward." Nevertheless,
aid continued to pour into Korea for, as one donor country put it, the
primary politico-strategic purpose of "throw(ing) our full weight
in resources and technical know-how into the scales and make the enemy,
(China), break his back in the effort to stay in the race (for Korea's
allegiance)" (Woo, 1991:70). The result was that Korea attained the
critical mass in aid that enabled development to take off and to grow
at nearly 5 per cent despite corruption and inefficiency. Korea's annual
per capita foreign assistance figure of $600 for three decades (and Taiwan's
$425 per capita) have not been equalled anywhere else in the world except
Oman. By contrast, per capita assistance for sub-Saharan Africa from all
sources was $62 in 1993 and not much different in the years before or
since. Korea's $6 billion in U.S. economic grants and loans during 1946-1978
contrast with the $6.9 billion the U.S. gave for all of Africa during
that period. The Korean experience lends support to the view of the UN
Economic Commission for Africa as expressed in the Lagos Plan of Action
and in the African Alternative Framework to Structural Adjustment Programmes
for Socio-economic Recovery and Transformation
(AAF-SAP) that what Africa needs is substantially increased external resource
flows and debt relief, without unrealistic, red herring pre-conditions
such as stopping corruption first. To Africans the answer to the chicken
or egg question in regard to corruption and development is clear: development
reduces corruption, not the other way around. Put another way, the cure
for corruption is development.
It is clear, then, that the notion that "substantial"
aid would come to Africa (substantial to make a difference in the African
development saga?) if a new aid implementation machinery that reduces
corruption and makes effective use of aid were established, is an act
of faith based on the rhetoric of donors rather than on the realities
of why they really give aid.
NDFs, LOCAL AND GRASSROOTS INSTITUTIONS AND DEVELOPMENT
Perhaps the most innovative aspect of the NDF model
is the principle that development funds must be available not only at
the central level but also at lower levels of the state and governments.
Availability of funds at the lower levels, it is believed, would enable
meaningful development to take place there and, by making these levels
financially autonomous, bring about true decentralization of political
power and authority. Local governments and local civic organizations,
thus, will be economically, and hence politically, empowered.
This rationale is a good argument for setting up aid funds specifically
for local governments and grassroots developmental civil organizations,
separate from, and additional to, the existing government-to-government
aid mechanism, whatever its fault and whatever the modifications or reforms
that are made to it. Since governmental corruption, ineptness, and ineffectiveness
in delivering aid to the grassroots constitute the kernel of the argument
against the existing mechanism, a case can be made for a separate mechanism
that enables local governments and grassroots organizations have access
to "indigenized" external funding. Such a separate mechanism
would likely receive substantial contributions from citizens of donor
countries eager to donate on a continuing basis "if the money actually
goes to those who really need it," that is, if it goes to alleviate
Had Hyden focused his advocacy at this level--analyzing the size of current
aid to local governments and grassroots organizations relative to need,
acertaining what is wrong with the current mechanisms of delivering aid
to these grassroots recipients, what the effects are, and how a new structure
might help overcome the shortcomings, etc.--he would have made an invaluable
contribution to the cause of foreign aid and development in Africa and
to scholarship on the matter. Hyden makes no case for why we should not
continue with, or enlarge, the current mechanisms (and there are many
increasingly innovative mechanisms) of delivering aid to local grassroots
organizations or local governments (see, e.g., Bratton, 1990; Clark, 1990:36;
Fowler, 1988:14; Johnson and Johnson, 1990:7; Ukpong, 1993:13; Ojo and
Koehn 1997; van de Walle, 1990).
Instead, his analysis focuses on what is wrong with the mechanism of aiding
national governments and thus on why we should not continue to give development
aid to such governments. The result is a proposed alternative mechanism
that is a mish-mash of the existing vilified mechanism (an unexplained
contradiction), and suggestions about how local governments and grassroots
organizations (GRO) might access foreign aid in a way differently than
they now do (ways nowhere impugned). The mish-mash clearly does not derive
logically from Hyden's original premise. Of more immediate concern, however,
are two projected or likely outcomes of giving local governments and grassroots
organizations access to NDF monies. The first pertains to local autonomy
and the curtailment of central government control over decision-making
and resource allocation, hence its control of the political economy. The
second pertains to the cost implications of this access both in terms
of the NDF administrative overhead and in terms of the adequacy of "substantial
aid inflow" to make a difference. These deserve further examination
if we are to avoid disappointment.
(i) Local Autonomy and Central Control. Hyden sees
his proposal as making true decentralization possible by local empowerment
that makes it possible to "break central control over decision-making,
information flow, and resource allocation." Decentralization is usually
extolled as the political-administrative approach that holds out the prospect
of advancing democratic governance and promoting socio-economic development
(Rondinelli, 1981:37-39; Osborne and Gaebler, 1992:252-253). For this
reason it attracts considerable attention and is being pursued to varying
degrees in Africa (see, e.g., Koehn and Ojo, 1996; Adamolekun, 1991:285-291;
However, premature and extreme decentralization can be counter-productive
which is one reason the African attempts have been cautious. African states
are weak vis-à-vis their component ethnic societies. Because of this,
these states are not authoritative and make up for that deficiency by
being authoritarian (Jeffries 1993). The little legitimacy the state has
comes from its control over decision-making, information flow, and especially
over resource allocation. The potential threat to state legitimacy, national
unity, and integrity and the danger of naked authoritarianism to deal
with the problem sound a cautionary note to the idea of empowerment of
locals if the purpose is to break central control over what gives it its
In this regard Jjuuko's (1995:20) observation is instructive. Jjuuko has
noted an unsavory if unintended consequence of similar "empowerment"
of villages and other GROs through aiding their "development"
programs outside the purview and control of the state. He describes it
as "nothing less than the negation of the national state; the depoliticization
of the development process; the balkanization, localization, and ethnicization
of peoples and nations ...." Jjuuko warns that "the business
of national development (including the creation and integration of a state)
demands as a basic minimum, the reorientation of resources and processes
to the more complex (if currently inefficient) nation-state. Local and
village self reliance is counter-productive if it keeps people locked
there." In the final analysis, capitalist development in general,
and grassroots development organizations in particular, need a strong
state in control or they will not survive or flourish.
Much more realistic and probable (and therefore likely to cause disappointment
by betraying the hope of breaking central control over the political economy)
is that the availability of an independent source of funds would make
local governments even less politically autonomous of central governments
or of the local and regional elites who shape national politics. The more
money, the greater the elite interest in, and control likely of, local
politics and government will be. For the latter are seen merely as communal
assets in the national political game played, in its turn, to defend the
communal base of their interests. As Vaughan (1995: 502-504) observes
(in respect to Nigeria, but applicable elsewhere): the en-trenched ethno-regional
and class interests which dominate political life at the national level
are unwilling to sustain state structures at the local level as effective
institutions of governance, but rather as means for allocating patronage
and as instruments of political domination in local communities. Thus,
even if local governments were 100 per cent financed with funds from an
NDF, that fact alone is unlikely to break either the hold of the central/state
government, which also has constitutional responsibilities for the lower
tier, or the hold of the local/regional elites.
What has been said of local governance holds with greater force for grassroots
organizations such as hometown associations. No doubt the influence and
importance of communal and grassroots leaders and elites in these associations
derive in part from their ability to raise funds for community development;
it is they who employ "formal and informal networks that penetrate
the policy arena [to] serve... as important conduits between the center
and the periphery" (Woods, 1994:465-83; also Vaughan, 1995:51-6;
Barkan, McNulty, and Ayeni, 1991:464-68). Would making NDF funds available
reduce this power and influence? Most unlikely.
The reason is that these local elites and leaders provide more than sources
of finance. They provide ideas, knowledge, and skills. This is why in
Nigeria, for example, traditional rulers usually confer them with chieftaincy
titles, a popular one translating as "the community's eye."
More importantly, these local elites are the catalyst in the creation
of "social capital", a quality that enables physical capital
and human skills to be converted into concrete development products. In
fact they would be central to the formulation and writing of proposals
for NDF funding. Remote villages, without sufficient numbers of these
elites working in tandem with traditional rulers and elites for the village
improvement or development, would be handicapped in getting their needs
formulated and articulated for NDF consideration.
This fact points to the possibility of urban bias under the NDF operations
unless special steps are taken to prevent it. More significantly, it points
to the real problem of African developmen--the limiting factor of lack
of skills at the local level to implement development ideas and projects.
It delimits the scope of absorptive capacity at the local grassroots level.
Unless the NDFs are going to be involved in micro-management at this level,
aid monies alone will be inadequate to ensure local autonomy from the
processes and socio-economic relationships that facilitate central control.
Whether the NDFs can and should do this is largely a cost question.
(ii) Cost Implications of NDFs: There are two levels
of analysis here. The first is the administrative cost of the proposed
new structures and processes. The other is the scale of aid monies to
make local development sufficiently visible to earn the new approach kudos
instead of name calling.
(a) Administrative costs. Hyden raises the question
of who pays for the costs of running the national funds and makes suggestions
about setting up endowments, but he makes no attempt to even guesstimate
what range of figures may be entailed. If we accept Peter Koehn's (1998)
operationalization of the Hyden model as a pointer, the costs are likely
to be staggering. The NDF bureaucracy will become intimately involved
both in the preparation and execution of projects, especially as its priority
is the poorest of the poor at the grassroots. These are predominantly
illiterate, many without the educated elites that give hometown associations
and similar organizations the visibility that has made them the focus
of attention as grassroots developmental NGOs. Many therefore will need
help to write acceptable proposals as they will need with registration
to become legal persons, a requirement of the NDF model for qualification
to receive aid. The NDF also would need to provide intensive individual
and group technical assistance at various stages of the award process
for small scale proposals that may be strong in ideas, but poor in implementation
design, technical feasibility, and budget planning.
The NDF involvement will indeed be of such a scale and intensity as to
constitute an administrative burden. Koehn (1998) suggests for instance,
that NDF's Monitoring and Evaluation Divisions should have field offices
comprising representatives of the Division's four sections in each of
the component states, regions, or administrative divisions of the country
concerned. For a country like Nigeria, for example, this would amount
to a minimum of 3,096 field officers of the Division in the 774 local
government areas (excluding those in the head-office). There would be
three other Divisions. A Funds Management Division of presumably moderate
size would serve as Treasury, receiving, managing, and accounting for
donations. An Administrative Support Division, also of presumed modest
size would handle personnel, travel, and information-sharing matters.
A Projects Awards Division, which would be the largest because of the
enormity of its responsibilities, would engage in program formulation,
offer training workshops and free consultancy services for prospective
aid applicants, assess and recommend thousands of applications for funding
No estimates of personnel requirements in these Divisions are made, but
it is clear from the functions just outlined that the number would be
colossal to be effective. This will be particularly so in the case of
the Projects Awards Division which will have to cope with the fact that
the applicants it will serve at the grassroots level may be predominantly
illiterates, unable to elaborate their ideas into formal project proposals.
Scores of examiners external to the NDF bureaucracy will also be recruited
on an ad hoc basis to help assess applications. At the minimum this will
cost the NDF money for hotel accommodation, feeding, and some honoraria.
Considering that there are some 52 countries in Africa and each is to
have four or five NDFs (each with a specific sectoral focus), and bearing
in mind that we are talking of wage scales and conditions of service that
would attract the best and at the same time dampen temptations to engage
in corrupt activities, there can be little doubt that the overhead in
salaries and other emoluments would be very large.
(b) Cost of visible grassroots development. No doubt
part of the dissatisfaction with the outcome of past aid-giving is the
fact that grassroots people in the recipient countries appear not to benefit
from it; there is no visible grassroots development, no visible alleviation
of poverty. This accounts in part for the trend in donors' diversion of
aid to Northern NGOs which work directly with recipient grassroots people,
a trend Hyden has noted. This raises expectations that the proposed model
will make a difference, resulting in visible grassroots development. The
hype about what the model can do, given in the context of sharp contrasting
vilification of existing aid machinery, creates unduly high expectations
for the model. Failure to meet that expectation may thus once again lead
to frustration and, hence, to accusations of grassroots ineptitude, inefficiency,
perhaps even corruption.
In this regard, Hyden's assertion that substantial aid would come with
the implementation of his model is important but, as we have seen, unrealistic.
Experience with another reform package with a promise--structural adjustment
programs--shows the promise failed of fulfillment. Ravenhill (1993:19)
notes for instance that "Few countries have made a sustained effort
at implementing structural adjustment programs while receiving external
financial support in the volumes required for the programs to be successful."
Would the case of NDFs be different?
It is doubtful that Hyden's model or any other one can result in visible
grassroots development in a long while. The amount needed to make that
kind of transformation is unrealizable, given the political determinants
of aid-giving and the size of the need. A case can be made that for purposes
of visible grassroots development, aid must reach a minimum critical mass
before it can propel development forward. It may well be in recognition
of this necessity that the UN and the OECD agreed on an aid target of
0.7 per cent of a developed country's GNP, a target that is far from being
met. Sayre Schatz (1988:139-150) calculated the minimum aid needed for
sub-Saharan Africa's economic recovery to be $121.5 billion for the five
year period 1986-90, an amount that works out to almost 150 per cent of
what sub-Saharan Africa currently receives. The Council on Foreign Relations
and the Overseas Development Council back in 1986 estimated the need at
some $20 billion annually through the rest of this century (Schatz, 1988:147).
The UN Secretary-General has estimated that a minimum of $30 billion in
net overseas development assistance (ODA) was required in 1992, with real
net ODA subsequently growing at 4% each year throughout the 1990s just
to raise Africa's per capita income by 1% (Africa Recovery, October, 1996:14),
but as Ravenhill (1993:42-43) has commented: "this appears to require
levels of financing substantially beyond those that can be expected from
Western donors!" It should come as no surprise, then, that with this
economic recovery aid requirement not being met, while SSA has become
a net exporter of resources to the World Bank/IMF duo (amounting to over
$1 billion annually) since 1988 (Cornia, 1991:29-30), there is now little
or no development taking place.
The point then is not merely that the hype and vilification be toned down
and balanced, but that a structure or structures and processes that are
less likely to be administratively expensive and less exclusive of state
and/or national governments should be established.
REFORMING THE REFORM PROPOSAL
One way of doing this is to combine features of the
NDF with the operational features of the Groupement des Aides Privées
(GAP) that currently functions in Niger (see Johnson and Johnson, 1990:25-37).
Specifically, the NDF Board could be retained but rechristened National
Autonomous Local Development Fund (NLDF) to which donors contribute funds
earmarked specifically for local government and local grassroots associations,
particularly those of the Hometown Association genre. NLDF would have
the same functions and procedures as the NDF Board but without its huge
field operations and bureaucracies. To ensure responsiveness to the felt
needs of the people and to meet the priorities set by the local and central
governments, the NLDF would only gather those projects which have been
proposed by the local popula-tion, approved by local government authorities,
and reviewed by the relevant central government ministries. The NLDF members
also are completely free to make project proposals working directly with
local groups; but, these must then fit into local and higher planning
frameworks. To facilitate the process, a Central Government office would
maintain a project bank of ideas and proposals that have come up through
the system from local communities (Johnson and Johnson, 1990:25-37).
One valid objection might be that the necessity of securing appropriate
governmental approval to ensure that projects fit into national priorities
may constitute a bottleneck. The World Bank at first raised such an objection
in respect to the GAP system, finding it "too confining" and
unlikely to attract into certain countries the full potential of aid flow
(see Johnson and Johnson, 1990:27). However, there is no reason why those
genuinely interested in assisting development should not want to do so
within nationally set priorities. It must not be forgotten that an ostensibly
harmless "developmental project" which satisfies some private
wants can create secondary and tertiary public needs and obligations for
governments. This is why no responsible government anywhere allows untrammeled
freedom in economic development activities without regulations and priority-setting.
Fortunately, the GAP experience has proved the bottleneck and below-full-potential
argument to be groundless. In fact, the Bank reports that "(o)n the
whole, the [GAP] system is smooth," and that it is a "realistic
compromise between socio-political realities and the need for economic
allocation of resources" (Johnson and Johnson, 1990:27).
As for a government-to-government aid regime, there are two options. The
first is to follow the logic of Hyden's premise and argument to their
logical conclusion. That would mean expanding the scope of the NLDF to
include aid to central/state governments as well so that all aid ? developmental
or infrastructural ? comes under the aegis of the NLDF (to be renamed
NDF in that eventuality). This option is impractical for political and
other reasons, among them the fact that donors give aid to pursue their
own national interests first and foremost. Hence, who gets it, how much
they get, and for what specific activities are politically determined.
The alternative therefore is to leave the government-to-government aid
machinery alone, warts and all. The very political reasons advanced for
the impracticability of putting all aid monies (except emergencies) into
NDFs militate against any other meaningful reform. Donors simply cannot
be "less selfish or nationalist in their approach to foreign aid"
as Hyden would wish. Half measures to make them change this is likely
to be counter-productive.
Hyden has made a valid case for why we need to aid
not just central/state governments, but local governments and grassroots
organizations as well. However, instead of discussing what is wrong, if
anything, in the current mechanism of delivering aid to local governments
and grassroots organizations and suggesting how they might be improved,
Hyden focuses on what is wrong with the mechanism of aiding national governments
and, thus, on why we should not continue to give development aid to such
governments. Paradoxically, however, the new structure he recommends.
which should take away all aid from that mechanism, in fact leaves the
bulk of it, so-called infrastructural aid, to the much maligned mechanism
to administer. No valid explanations are given for this anomaly, thus
leaving one wondering what the vilification of African states and their
aid implementation machinery was all about.
An equally intriguing paradox is what to do with that portion of aid that
comes under the purview of NDFs, the so-called social and developmental
aid. For a share in this portion, the central government is to compete
with local governments and grassroots organizations on a theoretically
level playing field, but in reality under prejudicial rationale, clouds
of suspicion, and humiliating processes that effectively stack the deck
against central governments. More intriguing, this is justified in the
name of bringing efficiency, accountability, and reduced corruption into
central government's handling of developmental aid that will somehow permeate
into the infrastructural portion where no such competition obtains!
These contradictions and paradoxes can only be explained in terms of a
broader agenda, an end to which the ostensible claim of aid reform is
actually directed. That end is the new Western orthodoxy of rolling back
the state from directly productive economic activities and control of
decision-making, of keeping the state out of direct development activities
and confining it to the realm of infrastructures. It would seem that it
was to paper over these contradictions and paradoxes that Hyden reverts
to the inflation of derogating epithets and catch phrases that have now
become the stock in trade of contemporary western Africanist scholarship
All of this means that meaningful reform in state-to-state aid delivery
machinery is most unlikely in the foreseeable future. What is feasible
is a machinery for delivering aid to local governments and grassroots
organizations. A modification of NDF to combine the Board structure and
functions with the operational structure and processes of the Groupement
des Aides Privées of Niger would be a giant step forward.
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