From Aid Effectiveness to Development Effectiveness

November 30, 2011

By Minh H. Pham

Traditionally, the way in which international organizations deliver development aid has mattered as much as the quantity of aid. If we do it right, we increase the probability of sustainable, high-quality development results that achieve maximum impact: We improve lives, reduce poverty, and benefit all the people, even the poorest and most vulnerable.

This still holds true, but the debate now is shifting from the “how” toward a more nuanced approach focused on better support to national institutions and capacities, so that developing countries can sustain development results.

To achieve this in Lao PDR, we particularly need effective governance at the provincial and district levels, where “development” is no longer theoretical: At these levels, services are actually delivered to the people, and national policies succeed or fall short.

But how can development reach more deeply into Lao provinces and districts?

All this was on the minds of the Government and its development partners during last week’s Round Table Implementation Meeting (RTIM), which focused on ways to accelerate progress toward the goals of the 7th National Socio Economic Development Plan, including the Millennium Development Goals, by 2015, and toward the country’s proposed graduation from Least Developed Country status by 2020.

It also is on the minds today of global leaders as the Fourth High Level Forum on Aid Effectiveness opens in Busan, Republic of Korea, with an agenda that the Government of Lao PDR has actively helped to shape.

Thus, it is opportune to examine key actions that can help strengthen international aid effectiveness in the Lao PDR context.

In this context, I recall my first visit, 20 years ago, to Xayaboury Province, which was largely undeveloped then. When I visited again last month, Xayaboury had changed in many ways: The simple ferryboat across the Mekong River now coexists with the initial structure of what will be a gleaming new bridge. Moreover, a network of new roads and houses, constructed as a result of major investment in the Hongsa power plant, bristles with energy even as farming remains the main source of food and income for local people.

Still, the same sort of investment poses challenges in how to adequately resettle and compensate those farmers, thereby preserving their traditional livelihoods. Issues of equity in development are real, and continue to raise serious concerns.

To help ensure equitable development in places like Xayaboury, it will first be necessary to further invest in capacity development initiatives that give provincial and district officials strengthened skills for planning, implementation and monitoring of service delivery. By encouraging more community-based development interventions as well, overall national ownership of the development process can be strengthened. We commend the Government’s move in this direction.  

The challenges of management and coordination at provincial and district levels represent a related area where all development actors should increase intensity and coverage. I am pleased that the RTIM promoted agreement to strengthen coordination on complex issues such as nutrition, land and climate change, all of which require development efforts across many sectors. Likewise, RTIM participants rightly noted the need for strengthened coordination on such crosscutting development issues as information sharing, which can foster learning on what works to make institutions more effective.

Second, improving partnerships can harness the energy, skills and experience of all stakeholders in the development process. Important new non-governmental players such as civil society and the private sector are seeking more voice in Lao PDR, and urgently accelerating the registration of Non-Profit Associations (NPAs) will enable an active civil society in an area like Xayaboury to contribute fully.

Third, we must examine the results of our efforts, and to do this, we must tackle the question of predictability of aid. For countries that receive a high proportion of their development resources from donors, as Lao PDR does, uncertain aid flows can make it far more difficult to plan and budget effectively. In some countries, shifting priorities of development partners provide unwelcome “surprises” to governments.

To smooth unpredictability, it is vital to ensure that the two main pillars of financing for the 7th National Socio Economic Plan – international aid and Foreign Direct Investment, or FDI – are not in conflict. Lao PDR is highly dependent on foreign investment, much of which focuses on natural resource-based extractive industries. It thus makes sense to include FDI in future discussions of the Round Table Process, for which the RTIM was the centrepiece this year. 

Both the important deliberations at the RTIM and in Busan provide a welcome opportunity to build on current aid effectiveness successes in Lao PDR and forge a new set of joint actions with the Government. If we do so, we can better realize the full potential of our cooperation, turning aid effectiveness into development effectiveness – and tangible development results for all people across Lao PDR.

Minh H. Pham is United Nations Resident Coordinator and Resident Representative of the United Nations Development Programme (UNDP).

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