Transcript More Strategic Use of Education Aid to increase Impact and Mitigate Dependency Presentation made at: The International Working Group on Education (IWGE) (Stockholm, June.

More Strategic Use of Education Aid to increase
Impact and Mitigate Dependency
Presentation made at:
The International Working Group on Education (IWGE)
(Stockholm, June 6-8, 2010)
by
Birger Fredriksen
Outline of presentation
1.
Focuses on “Aid Dependency Risks” (ADR) in Sub-Saharan Africa (SSA)
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Defines ADR in terms of aid volume and impact. Other things equal:
ADR increases by rising aid volume and duration of dependency
For given volume and duration, ADR decline by improved aid effectiveness
Effectiveness depends on extent to which aid is (i) delivered efficiently to countries
and allocated effectively to maximize catalytic impact within a given country, and (ii)
distributed effectively among countries and between country-specific and global
public good purposes to maximize impact on global education goals (EFA/MDGs)
2.
Highlights level of aid dependency in SSA
3.
Discusses three sets of ADR: (i) aid substituting for domestic funding; (ii) aid
volatility; and (iii) negative impact of aid on institutions
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Argues that to mitigate ADR requires holistic approach in terms of:
More strategic allocation of education aid within and between countries and
between country-specific and global public good purposes
Better global aid coordination to assess whether the sum of individual donor’s aid
allocation decisions maximizes aid effectiveness
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High education aid dependency in SSA
Most attention to overall ODA is on volume. Little focus on how aid is allocated and
used by and within sectors to maximize impact and mitigate harmful dependency.
Aid to SSA is at unprecedented high levels and long duration:
Of 38 SSA countries, aid exceeds domestic-funded government budgets in 7
countries. Median ratio between aid and domestic resources: 60% (2008)
Net ODA per capita (2007): $49 in SSA, $14 in LA, $11 in S. Asia and $7 in E. Asia
Of 46 countries (2008), aid exceeded 10% of GDP in 21 and 20% in 7
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Aid for education: Also little attention to impact of allocation. Reflected in lack data
Aid per primary school child (2007): $14 in SSA, $5 in LA, $4 in S. Asia; $3 in E.A.
Share of aid in public education budget 25% in 2006 (median for 40 countries)
Aid for basic education in 2007 in SSA: $1.7 billion. GMR estimates $10.6 billion
needed annually 2008-2015 to reach EFA. What are the dependency implications?
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Implication for donors:
Short term: Donors has shared responsibility in helping SSA during current crisis to
protect last decade’s education gains and thus preserve positive impact of past aid
Medium term: Review allocation of aid to improve allocative efficiency with respect
to catalytic impact on education outcomes and dependency risk mitigation
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2. Leveraging aid to enhance impact and mitigate risk
1. For a given country, catalytic impact of aid in enhancing ed. outcomes depends on:
 Technical Efficiency (TE): Extent to which aid allocated to a given purpose is
delivered efficiently by donors and used efficiently by the country
 Allocative Efficiency (AE): Extent to which aid is allocated to and used for purposes
where it has the greatest catalytic impact on education outcomes
 Aid Dependency Risk (ADR): Extent to which given level of aid helps a country
mitigate harmful dependency effects and grow out of aid dependency
2. Distributional Efficiency (DE): Extent to which aid is distributed among countries and
between country-specific and global public good functions to maximize impact
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Much efforts to enhance TE: 2005 “Paris Declaration” with targets for 2010
But slow progress as noted in 2008 “Accra Agenda for Action” (AAA)
Education aid community should use AAA to advance global education aid
coordination. Some progress under FTI, but must move beyond CF
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Little attention to AE: Improved TE necessary but not sufficient to improve aid
effectiveness if aid not used where it has the highest impact
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Practically no attention to ADR and DE: For any level of aid, should strive to
leverage the catalytic impact (CI) of aid in a way that (i) limits harmful dependency
risks and (ii) maximize progress towards global education development goals
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ADR particularly high during economic slowdown
2010 GMR estimates crisis causes $4.6 billion loss in SSA domestic
education budgets yearly in 2009 and 2010
This exceeds total annual education aid to SSA ($3.6 billion in 2007)
2. Because of increased dependency: Donors have increased responsibility
in helping SSA protect last decade’s education gains and thus preserving
past impact of their aid. This means:
 Avoiding aid decline as in past crises: Decline would reinforce negative
impact of crisis on domestic funding and could jeopardize education gains
since 2000
 Use aid counter-cyclical to mitigate impact of crisis on domestic funding
 Because of difficulty of reverting education decline, counter-cyclic funding
is more important for education than for most other sectors
3. Given severe constraints on aid budgets, donors should consult closely to
assess country needs and priorities for counter-cyclic funding
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Key ADR in the education sector
(i) Aid may substitute rather than add to domestic funding
This creates dependency without sustainable increase in resource base. Happens if:
 Availability of aid reduces efforts to mobilize domestic resources
 Aid given as budget support (BS) reduces domestic education funding. Impact may
differ between sector BS targeted on education and general BS
Examples of possible measures to increase additionality:
1. Use funding instruments that enhance additionality through better targeting
2. Prioritize strategic inputs that may not otherwise be funded: Not full fungibility
between aid and domestic funding in context of high aid dependency and severe
budget constrains (see later)
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Prioritize areas and countries now severely underfunded to increase AE and DE:
EFA goals other than primary education (literacy, ECCE, second chance education)
Global and Regional Public Goods (see later)
Donor orphans/Post-conflict countries: 12 SSA countries receive less than $5 per
child of primary school age; 7 countries receive more than $50
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4.
Key ADR in the education sector (cont.)
(ii) Aid volatility creates political risk
Low aid predictability can pose serious political risk in high aid dependency countries
Examples of possible measures to mitigate risks:
1. Increase predictability through:
 Longer-term aid commitments by individual donors
 Bridging gap between commitment and amount of aid actually delivered
 Better coordination among existing donors to avoid abrupt aid interruption
 Developing mechanisms for cooperation with emerging donors (e.g., China)
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Use aid strategically to build capacity and help countries grow out of dependency:
e.g., Botswana; Korea; Taiwan, China
3. Use “volatile aid” for less politically risky purposes: e.g., funding teacher salaries is
often more risky and less sustainable than funding literacy courses or “second
chance” education for youth (success will reduce future funding needs; literacy
instructors not civil servants), or funding high priority one-time capital investments
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4.
Key ADR in the education sector (cont.)
(iii) High aid dependency may weaken national institutions
This may happen when aid:
• Distorts budget processes and causing “soft budget constraint”
• Switches political accountability and legitimacy from citizens to donors
• Turns bureaucrats attention to donors rather than to core development functions
• Causes corruption and helps maintain in power “predatory” regimes
• Lessons Government’s ownership of development agenda
• Aid is not performance-based
Examples of possible mitigating measures. But much tried, no silver bullet:
1. Historically, countries that have grown out of aid dependency have had high quality
political leadership, policies and governance
2. “Paris Declaration measures” to increase ownership and use of national systems
3. Develop capacity. But, despite much aid, little success. Need new approach
focusing on building capable institutions rather than on developing individual skills
4. Set limit on level of aid dependency?
5. BUT: If last decade’s growth continues, this risk may be smaller than in the past
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5. Leveraging aid to mitigate ADR
(i) Need Holistic Approach
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To develop and implement the policies and programs needed to address
emerging education priorities will be more knowledge, capacity and
“ownership-intensive” than those needed to achieve expansion of access
since 2000
To enhance the impact of aid in facilitating development of national
institutions to do this requires much more concerted attention to:
1. Achieving more strategic allocation and use of aid at country level
2. Enhancing the synergy between aid allocated to individual countries and
aid allocated to support regional and global public education good functions
To achieve 1 and 2 requires radically more effective global aid coordination
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5. Leveraging aid to mitigate ADR (cont.)
(ii) More strategic use of aid at country level
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In SSA context of high aid dependency and severe budget constrains, not full
fungibility between aid and domestic funding:
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Aid can replace domestic funding for most purposes, but if no aid, domestic funding
will prioritize short-term urgencies over “soft”, longer-term investments to: (i)
conduct analytical work, peer learning and knowledge exchange; and (ii) develop
national capacities to formulate and implement evidenced-based policies and to
harness, adapt and apply knowledge
Aid has comparative advantage in funding such “soft” investments
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Need particular attention to strengthening institutional capacity: 2008 GMR:
“Extraordinary limited attention paid to strengthen national capacity”
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SSA governments must address institutional constraints on effective mobilization,
utilization and retention of existing capacity by promoting, e.g.:
Merit-based recruitment; more incentives and accountability; more evidence-based
decision-making; better collaboration with ministry of finance, teachers, employers
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Donors must develop more effective strategy to support institution-building through:
More funding for on-demand technical support and policy advice, access to peer
learning and knowledge-exchange, high-quality global and regional public goods
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5. Leveraging aid to mitigate ADR (cont.)
(iii) More support for public good functions
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Importance of “Global Public Good” (GPG) rising due to knowledge and
economic globalization. Need more aid for GPG in education sector to support:
Knowledge-sharing, capacity-building, evidenced-based decision making:
Comparative analytical work; cross-country cooperation; peer learning,
Global and regional GPG institutions and networks; technical aid
Economies of scale through regional cooperation in specialized training, higher
ed. and research. 12 SSA countries have less than 2 million inhabitants
Many reasons why GPG functions severely underfunded:
“Free rider problem”: General problem in financing goods with externalities
Real and perceived inefficiencies of GPG institutions in education sector
Difficult to measure outputs: “We treasure and fund what we can measure”
Declining technical expertise in aid agencies because of move to budget support
Overall effectiveness of country-specific aid may improve if donors:
Give higher priority to funding GPG functions in education sector
Strengthening their own technical capacity
Both actions are called for in the Accra Agenda for Action
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5. Leveraging aid to mitigate ADR (cont.)
(iv) Holistic Approach requires better global aid coordination
1. Existing aid allocation results from complex decision processes in donor
countries and agencies responding to many constituencies in donor
countries and priorities of recipient countries as well as to agreed
international development goals and international NGOs
2. Process give little global attention to whether the aggregated outcomes
of these individual decisions on aid distribution e.g., by country, level of
education and type of aid result in the most effective use of total aid in
terms of catalytic impact and mitigating ADR
3. Donors (rightly) ask countries for more evidenced-based decision making.
4. Donor countries and agencies should also base their aid allocation more
on evidence of CI and ADR
5. This would require more effective global aid coordination
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Summary: Need better modalities for global education aid coordination
1. Modalities are emerging to enhance Technical Efficiency:
 At international level: “Paris Declaration”; FTI largely for Catalytic Fund
 At country level: Collaborative mechanisms established between donors, but some
way to go to ensure that “lead donor” has required technical expertise
2. No effective modalities to enhance Allocative Efficiency and mitigate ADR:
 At international level: Need agreements on global aspects such as:
• Concepts: What type of aid is most effective in given context? How to handle rising
aid dependency, and enhance predictability and additionality?
• Effective aid distribution to achieve global development goals: How best to allocate
given amount of aid among countries; between country-specific and public good
functions; between technical and financial aid
• Also need mechanisms for (i) allocating and monitoring aid allocation to countries
and purposes; and (ii) assessing that the collective outcome of donors individual
decisions on aid allocation make sense in terms of maximizing effectiveness
 At country level: “Lead donors” must strengthen their technical expertise to handle
issues related to allocative efficiency and ADR
3.
Progress will require urgently addressing present vacuum in high-level international
political attention to education. Sadly, no credible champion on the horizon. This is a
paradox, given the high attention to education at national level in most countries
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