Conditionality VS Ownership: A resolvable paradox

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Conditionality VS OwnershipA resolvable paradox?

• Cairo, 19 January 2008

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President Amadou Toumani Toure of Mali,
Development Cooperation Forum 2005

• True partnership supposes autonomy of
  beneficiary countries in requesting aid and in
  determining its objectives Often programs are
  imposed on us, and we are told it is our
  programPeople who have never seen cotton come to
  give us lessons on cotton No one can respect the
  conditionalities of certain donors. They are so
  complicated that they themselves have difficulty
  getting us to understand them. This is not a
  partnership. This is a master relating to his
  student.

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World Bank Conditionality Review, 2005

• Traditional conditionality has often been judged
  as overly and increasingly intrusive, infringing
  national sovereignty (Drazen 2002), undermining
  domestic democratic process and institutions
  (Stiglitz 1999), and ineffective in bringing
  about the desired outcomes (Easterly 2005)

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Policy conditionalityis both an infringement on
sovereignty and ineffective Africa Commission,
2005

• World Bank and IMF Conditionality reviews
• In 2002, IMF Conditionality Guidelines
• In 2005, WB Good Practice Principles for the
  application of conditionality
• Main objectives
• Streamline conditionality
• Apply the principles of ownership,
  harmonisation, criticality, customisation, and
  transparency.

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World Bank KEY FACTS

• Eurodads research published in November 2007
• On average, each WB operation still contains 37
  conditions
• 71 of the WB operations still attach conditions
  containing sensitive policy reforms, such as
  privatisation and liberalisation

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IMF KEY FACTS

• IMF Independent Evaluation Office 2007 reports
• Number of structural conditions per operation
  unchanged
• IMF conditions are not critical
• Sectors
• privatisation and liberalisation of the financial
  and banking sector
• reforms of the fiscal systems
• Almost one fifth of the conditions are
  privatisation and liberalisation conditions.
• Quantitative conditionality still overly
  stringent and undermining economic growth.

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Mapping out the brave ones

• Conditionality-friendless donors
• Norway, 2006 Soria Moria Declaration on
  International Policy
• UK, 2006 White Paper Eliminating World
  Poverty
• Germany, the Netherlands, Italy not quite there
  yet, but on their way
• European Commission

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The ECs shift to outcome-based conditionality

• Drawing on lessons from previous structural
  adjustment programmes and the recognition of the
  central importance of ownership, the European
  Commission has moved to an approach based on
  linking their aid to poverty reduction results,
  EC Budget Support An Innovative Approach to
  Conditionality.

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EC expectations for outcome-based conditionality

• - Encourage a focus on results by using
  indicators of
• service delivery / poverty reduction
• Protect the political space for governments to
  determine
• policy
• Streamline conditionality
• Promote domestic accountability
• - Stimulate demand for quality data on poverty.

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Policy and results logics compared
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What has been the impact of outcome-based
conditionality?

• Positive effects
• Outcome-based conditionality has pushed a
  results based approach
• It has managed to streamline conditions
• But real concerns remain on attribution,
  predictability, etc.
• Can further potential be unleashed?
• Improve process (including CSO participation)
• Improve indicators (including choice of)
• Improve collection and disclosure of data
• Revise technical complexities and mechanistic
  approach

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How to put governments in the drivers seat and
yet feel safe

• Guiding principles to resolve the conditionality
  ownership paradox
• Conditionality should be only applied in cases
  where none of key stakeholders could reasonably
  object to
• Agreed standards and obligations should aim at
  increasing national leadership and policy space
• Mutual accountability has the potential of
  framing donor-recipient relationships in ways
  that could yield much better results.

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Recommendations for donors to Accra and Doha

• Agree on policies to eliminate economic policy
  conditions
• Put pressure on the Bank and the Fund to
  streamline their conditionality and phase out
  economic policy conditions
• Set a target in the Paris Declaration on Aid
  Effectiveness and the IMF and WB conditionality
  reviews
• Set up an independent monitoring system to
  objectively assess progress made by the World
  Bank in the application of the GPPs
• De-link their allocation and disbursement
  decisions from the IMF macro-economic assessments
• Limit their conditions strictly to due process
  obligations and respect for internationally
  recognised standards and development goals.

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• By Nuria Molina-Gallart
• EURODAD
• nmolina_at_eurodad.org
• www.eurodad.org