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Michael Wales, Ph.D.
Co-Chair, Global Donor Platform for Rural Development
Principal Adviser, Investment Centre, Food & Agriculture Organisation of the United Nations (FAO)
The downside to budget support can be a sudden end to funding
If donors are offering governments dollars instead of blueprints, what’s happened to justify this kind of trust?
It’s largely due to empowerment and the spread of democracy. The sort of thing with which international financing institutions are now prepared to entrust governments would have been impossible with the old generation of dictatorial and military regimes. Governments today should be more responsive to the real needs of rural people, farmers in particular. They know about governance issues. They know they’re supposed to have better systems of management, cut down on corruption and show they are more accountable. We’re also seeing efforts to decentralise government administration, passing responsibility down to the lowest-possible levels — the principle of subsidiarity. And underpinning all these developments, strong local capacities have emerged. The situation today is not like it was 20 years ago. Governments have recently begun investing in education and that’s been paying off.
“Rather than central government in a remote capital city trying to administer a project, you have local people from the Ministry of Agriculture… face-to-face with the farmers.”
What does that signify for agriculture?
To start with, a big increase in ministerial responsibility and accountability. Rather than central government in a remote capital city trying to administer a project, you have local people from the Ministry of Agriculture delivering services and being accountable, face-to-face with the farmers and the farmers’ organisations who are meant to benefit from the programme. They have to explain and justify why they’ve done — or not done — certain things, and deal with questions like, “Why haven’t the extension people shown up? How come I wasn’t warned about the pest that’s destroying my crop? How can I sell more of my produce?” All of this helps make accountability an effective tool of aid, and also help donors and financing institutions feel more comfortable about devolving responsibility to governments.
How do the governments benefit?
Among other things, budget support is supposed to improve the predictability of development assistance. Before, you had lots of projects starting, some finishing, and uncertainty about when and where the next projects would be approved. With budget support, the pledges are longer-term: for example, you can say, “Over the next five years, we’re going to put $200 million into your budget.” Governments can count on that and plan a solid programme of work on the assumption of a guaranteed budget with a bigger total amount of resources available for public investment. The downside for governments, of course, is that if they prove less accountable, less democratic or slower to make progress than expected, donors can switch the tap off.
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