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4. Funding Agencies: Education Policies, Strategies and Approaches


DFID
Evolution of DFID policy/strategy
Implications for design/appraisal processes
Broad DFID strategic directions
Overview of current DFID approaches
Bilateral funding agencies: Issues and strategies
European Union initiatives
Bilateral funding agencies that are uncertain about SWA
The lending banks
The UN agencies: Strengthening their role

DFID

Whereas this chapter reviews the policies and strategies of a broad spectrum of multilateral and bilateral funding agencies, the first few sections are specific to the UK Department for International Development (DFID).

Evolution of DFID policy/strategy

Within DFID/ODA, education policies and strategies have evolved significantly since the eighties and throughout the nineties. In the early eighties, policy and strategy could be characterised as being fairly narrowly focused on educational technical issues with a broadly opportunistic strategy of filling investment gaps. The consequence was a patchwork of projects covering primary, secondary, technical and higher education. Little explicit reference was made to cross-cutting issues or funding agency co-ordination.

Into the Nineties: an Educational Policy for British Aid (ODA, 1990) represented a major shift. The broad policy objective was to contribute to poverty reduction, with a consequent shift in broad strategy towards quality basic education services. The consequence was an increased emphasis on primary/lower secondary education provision and targeted support for instructional materials and teacher development. The need to address institutional, gender and financing issues received prominence, alongside a growing recognition of the importance of effective funding agency co-ordination.

Education Division's next policy paper, Aid to Education in 1993 and Beyond (ODA, 1994) broadened the policy agenda further. The overall policy alleviation goal was reaffirmed, alongside a shift towards broader human development and human capital objectives. The critical importance of strong economic management, good governance and cross-cutting social development and gender issues became more central, alongside a firmer acknowledgement of the need for strong Government/funding agency dialogue and coordination. The need to base assistance programmes on national leadership of agreed policy reforms became more explicit and the scope for sector aid packages (including current budget support) was recognised.

The 1997 White Paper took the agenda significantly further forward. Assurances of strong Government/funding agency partnerships (based largely on policy commitment and institutional criteria) became central to overall policy. The implication was that strong macro economic management and assured national policy leadership was fundamental to achieving jointly shared poverty reduction and specific education sector reforms and targets. A second implication was that education aid had to contribute to achievement of broader DFID policy objectives, including involvement with civil society and health, population and employment generation goals.

A fundamental change was the setting of clear development targets (based on agreed OECD/DAC targets). The most significant implication was that all development partners would share responsibility and be jointly accountable for achieving them, including poverty, sectoral and cross-sectoral targets [Box 9]. This required the development of systems for information dissemination, progress/impact monitoring and evaluation. Sector wide approaches through sector aid packages became more central to overall strategy.

BOX 9

BROAD DIFD EDUCATION STRATEGIES

We also intend to strengthen and extend partnerships to support a range of innovative strategies. These will induce:

· development of policies and practices to improve schools, educational opportunities and achievement within education systems

· involvement of local communities in developing and managing schools to increase local participation and accountability

· creation of new opportunities for the poor to participate in education at all levels

· reconstruction of education systems in poor countries emerging from acute social upheaval

· promotion of scholarship and research to improve our knowledge and understanding of how education can contribute to the elimination of poverty

Source: DFID, 1997

In line with the 7997 White Paper, Education Division's current policy framework, Learning Opportunities for All (DFID, 1999) gives prominence to education for the elimination of poverty, while stressing equitable, high-quality, effective systems that will deliver knowledge and skills development. Key benchmarks against which to assess investments in education will be Universal Primary Education and the removal of gender disparities in primary and secondary schooling. The policy framework notes that the 'scale of the poverty agenda... require[s] new development arrangements' and that 'in education, as well as other sectors, DFID will move towards sector wide support for educational development and in countries where there is a strong commitment to this approach'.

Implications for design/appraisal processes

The implications of the 1997 White Paper for DFID operational strategy are profound. Firstly, the broad strategy implies a long-term systemic view to reform, with policy-led assistance programmes. This highlights the operational importance of a long-term planned transition for reform, including dovetailing existing projects and assistance programmes within a firm policy framework. Secondly, it highlights the need to make economic management, social, gender and institutional considerations central to design and appraisal processes and to involve the poor and local communities in them. Thirdly, it reinforces the pivotal importance of strong monitoring/evaluation components that address policy, technical, financial and institutional building outcomes.

As a consequence, the strengthening of central/sectoral governance and management systems together with assessment of policy leadership and commitment for education reforms become the overarching design/appraisal consideration. Another consideration is a careful analysis of the extent to which the proposed education reforms can contribute to longer term poverty reduction, improved equity of access to education and broader social services, as well as to DFID's public sector management and governance objectives. This argues for a cross-cutting approach incorporating careful institutional, social and economic appraisal, alongside traditional technical design/appraisal approaches.

Broad DFID strategic directions

The 1998 evaluation by Al-Samarrai, Bennell and Colclough of DFID support for primary education highlights the changes in DFID strategy for education development. Firstly, there has been a marked shift towards support for primary education with declining secondary, higher and technical education aid volumes. Secondly, the early to mid nineties heralded a movement towards higher aid volume and more systemic approaches (e.g. Andhra Pradesh, SPRED II Kenya). Thirdly, design and appraisal processes demonstrated increased concern over issues that address poverty, inequity (including gender), macro-economics, institutional reform and capacity building.

The mid to late nineties has seen a further consolidation of broader sectoral development, system-based approaches. In East Africa, DFID has been at the forefront of sector wide approaches (e.g. ESDP Tanzania, ESIP Uganda), alongside providing support for the ESDP in Ethiopia. In Southern Africa, DFID has been a key participant in sectoral and sub-sectoral development programmes in Malawi, Mozambique and Zambia. In West Africa, DFID became an early supporter of the Ghana ESDP. Similarly, DFID has provided significant support for the multi-sectoral Social Action Programme (SAP) in Pakistan and the implementation of decentralised education support programmes in some Indian states. DFID strategy elsewhere (e.g. SE Asia, Pacific, Caribbean) appears more variable and opportunistic, due in part, perhaps, to lower prioritisation and spending volumes.

The publication in May 1999 of DFID Education Division's policy framework, indicates a clear shift towards adoption of sector wide approaches as a development policy where in-country commitment is likely to be reciprocated. Four interpretations of the current position can be considered:

1) SWA is simply a process for ensuring more rigorous design and appraisal of stand-alone sector support programmes, especially to ensure that support is cost-effective and sustainable within a broader institutional and financial context.

2) SWA is a response to growing dissatisfaction with projects and programme aid approaches, including limited impact on policy reforms.

3) SWA represents a mechanism for better funding agency coordination through formal Government/funding agency agreements (e.g. Partnership Papers, Codes of Conduct). The impetus for this strategic position may be correlated with levels of expertise and in regions where DFID anticipates large spending volumes for education (e.g. Eastern and Southern Africa and the Indian sub-continent).

4) DFID education strategy has hitherto moved towards adoption of a sector wide approach and the current position is a pragmatic, transitional arrangement towards education SWA.

Education Division's policy paper clarifies DFID's approach to education/poverty alleviation links and, implicitly, will help to shape its relationships with other funding agencies. Most importantly, it should provide a coherent framework for Government/DFID arrangements in future education partnerships.

Overview of current DFID approaches

Education SWA remain in their infancy in most countries. Equally, DFID education strategy on the ground appears to be in a state of transition with significant regional/country variations. Current approaches may be characterised in four ways:

· Intrinsic: A sector wide, 'pure' SWA approach (e.g. Uganda, Tanzania, Zambia, Mozambique)

· Supportive: Sub-sectoral SWA approaches, within a broader policy/institutional framework (e.g. Ghana, Malawi, Nepal, Pakistan, Belize)

· Transitional: A transition to a sector wide approach, involving discrete programmes/projects within a broad sector policy framework (e.g. Bangladesh, Kenya, India)

· Traditional: Discrete projects, with a variable degree of broader policy settings (e.g. Caribbean, Pacific, West Africa, SE Asia)

In anticipation of how the recently published education policy (DFID, 1999) will manifest itself in the immediate short term, DFID advisers have already identified a number of issues regarding SWA (Box 10).

BOX 10

DFID ADVISERS: SOME SWA ISSUES

SWA Design Issues

· Need to establish clear links between SWA design and sectoral decentralisation

· Need to incorporate Public Expenditure Review framework as part of SWA design

· The need to establish sound dialogue between Education and Finance ministries

· Underdeveloped involvement of NGO and private sectors, especially at the design stage

Implementation Issues:

· Insufficient attention paid to institutional and management issues

· Lack of agreed (or well chosen) performance indicators - leading to poor monitoring

· Monitoring systems yet to be developed property, especially those that check on poverty alleviation

· A need for strong EMIS to be developed

· Where SWA is devolved provincially (e.g. Ethiopia, Pakistan), there needs to be clarification of roles of the federal and provincial Governments (often a need to develop a shared vision of SWA)

Poverty Issues:

· How can poverty analysis be factored into SWA?

· What can be achieved by the education sector in terms of poverty alleviation?

· Consideration of differential impact monitoring and evaluation in the poorer areas of countries

Funding Agency Issues:

· Lack of discipline from funding agency groups, especially in appreciating the need to work at the client's pace

· Inflexibility of funding agencies can hinder just as much as that of Governments

Source: Discussions with DFID Advisers, October 1998

Bilateral funding agencies: Issues and strategies

Like DFID, other funding agencies are increasingly recognising that education support programmes cannot be developed in isolation. There is a broad shift, both within Governments and funding agencies, away from specialist, often narrow, education programmes towards broader policy and strategic support. This is reflected in the new financing modalities that are emerging (e.g. the previously mentioned SIP, SASP, SBS. SSP, etc.).

Discussions with a number of funding agencies reveal very similar concerns to those expressed within DFID, with the need for the development of sound indicators and follow-up monitoring and evaluation procedures well to the fore. Compare Box 10 with Box 11.

Policies and strategies vary across funding agencies. For example, of the Nordic Group, Denmark, Norway and Sweden have adopted pro-SWA policies. In strategic terms, Finland recognises that SWA represent 'a practical solution to the problem of translating political and economic dialogue into a long-term development programme' (Department of International Development Co-operation, 1998) and provides significant support to sector and sub-sector programmes in Ethiopia, Mozambique, Nepal and Zambia. Despite this, they have yet to adopt SWA as policy. Although Denmark has a pro-SWA policy, in practice DANIDA supports SWA approaches in some countries (Nepal and Mozambique) but not in others (e.g. Uganda).

BOX 11

FUNDING AGENCIES: SOME SWA ISSUES

· Funding agency inflexibility can threaten SWA (e.g. the multilateral lending banks which often appear to keep to their own priorities regardless of specific country problems). Bilaterals can also be inflexible.

· SWA demands effective decentralisation, especially in countries with federal systems.

· Since indicators appear to drive the SWA process, they need to be well chosen and corresponding monitoring systems established.

· Whereas Impact Monitoring is often seen as a justification for SWA, there is little evidence of how effective it is.

· How can parental, private and community involvement be calibrated and counted in?

Source: Discussions with Finnish and Swedish Officials, November 1998

In some ways USA and France play a unique role in development. Both countries have global reach. USAID, for example, has very strong policy leverage, a long history of programme support and is playing a lead role in debt-relief initiatives. Box 12 provides a summary of USAID conditionalities for sector support to education.

BOX 12

USAID PRECONDITIONS FOR EDUCATION SECTOR SUPPORT

· Macro-economic policies and economic performance should be favourable.

· An authentic sector reform should be under way

· The political environment should be moving towards greater civic participation in policy formation.

· A public policy review and analysis process should be in place (or planned) in the education sector

· The MoE should have committed leadership and a reform strategy

· The sector should have feasible plans to develop the necessary institutional capacity

· There should be sufficient information to monitor change at both process and student level

Source: Derived from Al-Samarrai, Bennell and Colclough, 1998

French Aid remains particularly influential in Francophone Africa and Indo China; this includes a number of countries with SDPs/SIPs in preparation (Mali, Cote D'Ivoire, Senegal).

There are indications that both USA and France are increasingly willing to join SWA partnerships, e.g. USAID in Uganda and French Aid in Cambodia. However it should be noted that while USAID per se may be keen to support a SWA approach, Washington's State Department may intervene to prevent it (as in Ethiopia). It is also reported that French Government policy is to strengthen development co-operation mechanisms with other funding agency partners.

On a different strategic plane, there is a tendency for smaller funding agencies to group together for certain purposes (e.g. the Nordic Group with Ireland and Netherlands). This raises the question of whether such groupings may eventually constitute 'mini-multi-nationals' 2 with the subordination of national policies to broad approaches to development of the kind which SWA appear to offer.

2 The authors are grateful to Professor Tuomas Takala, University of Tampere, for this phrase

There may be a pivotal role for 'small' funding agencies in nurturing effective SWA partnerships. It is interesting that in several countries, funding agencies of countries such as Finland, Ireland and Netherlands are perceived by Governments as honest brokers. The reasons for this vary but include perceptions of having no explicit agenda, well-focused country priorities, non-alignment and as a consequence are seen as neutral supporters and partners. For example in Tanzania's and Uganda's education SWA, Finland-Ireland and Ireland-Netherlands respectively were early supporters of common TA funds and common work programmes.

Fig 4.1 EDUCATION SECTOR CO-ORDINATING COMMITTEE

The concern of both the DFID and Nordic Group officers regarding funding agency inflexibility [Boxes 10 and 11] clearly reflects past negative experiences. This may be linked to frequently received reports that the success or otherwise of introducing SWA can hinge on the personalities of regional representatives of funding agencies. Where relationships are healthy, the introduction of a SWA is likely to be a productive exercise. Fig 4.1 shows the organisation of a typical Education Sector Co-ordinating Committee and the active part that can be played by funding agencies on that committee and on the working groups that inform it. Such an approach, however, will not work without partnerships between funding agencies (as well as with Governments).

European Union initiatives

The European Union has played a constructive role in terms of both co-ordination of European funding agency SWA policy and strategy and in-country operations. The EU Horizon 2000 initiative has effectively acted as a discussion forum and clearing house for learning lessons and forward planning of ESDP/ESIP initiatives. EU technical advisers gave an early lead in the development of operational instruments (e.g. Code of Conduct, see Box 27). The annual Horizon 2000 meetings have also provided a forum for face-to-face discussions between partner Governments and funding agencies. For example, the draft education SWA Code of Conduct was tabled at the annual ADEA meeting of Ministers of Education (Entebbe, April 1998) resulting in positive feedback and an emerging consensus.

As with the UN and Regional Banks, the EU has a comparative advantage, appearing as a neutral but influential broker that is not involved with narrow issues and perceived national agendas. Despite this, however, there remains a need to build up a critical mass of educational expertise within the EU. DFID provides some direct support to EU by financing both Brussels-based and in-country education advisers. There is a strong argument for other European funding agencies providing similar support, possibly linked to strengthening of the EU role as an education SWA clearing house.

Bilateral funding agencies that are uncertain about SWA

While many funding agencies are increasingly embracing the SWA as a broad strategy, a number of agencies remain unconvinced (e.g. CIDA, GTZ, JICA). Their main reasons are possibly an adherence to familiar processes, lack of attribution, the need for policy control, a lack of understanding of (or belief in) financial safeguard systems and issues of fungibility. These agencies appear to prefer to support education sector reform through projects. A typical question raised as an argument against giving budget support to a SDP is 'How do we know the money will not go towards the purchase of weapons?' (discussion with CIDA official, 1999); a question that was widely aired in connection with SWA support when Pakistan recently tested its nuclear weapon capability. There is no reason, nevertheless, to suppose that this position will remain static [Box 13].

The lending banks

The World Bank occupies a special position in any discussion on sector wide support. Already, through structural adjustment programmes, the World Bank is providing de facto support to sector development in many countries. In addition, Harrold's (1995) paper on SIPs may justifiably be considered as an important contribution to the current debate. The position outlined by Harrold has been revisited subsequently by a number of World Bank officials (Noman, 1996, Pena 1996, Cleaver, 1996, Adalbert and Okidegbe, 1997, Demery and Walton, 1997, Orbach, 1997, Bhatia and Okidegbe, 1997).

BOX 13

FUNDING AGENCY PRACTICES IN TRANSITION: JICA

JICA appear to be considering transition towards SWA. To date, the JICA stance has been cautious for reasons of attribution, uncertainties over fungibility of funds and in particular their own internal technical capacity to participate in strategic dialogue at the field level. The strong tendency to rely on Japanese contractors and rigid procurement policies create additional difficulties.

Nonetheless a recent JICA study (US Office, 1998) charts a possible strategy for increased participation in SWA partnerships, including new collaboration mechanisms, strengthening local JICA field expertise and a proposed SWA programme grant mechanism.

This kind of transparency in acknowledging real difficulties and constraints should be welcomed. In reality, especially at the country/field office level, other funding agencies express the same concerns. As Noonan (1997) points out, there remains a significant reality gap between HQ policy and field operations.

In many instances, the World Bank treats a SIP as a project, requiring a detailed 'blueprint' of proposed actions over a given time span, e.g. over five years, but often much longer (10 - 20 years). In the views of many officers from funding agencies, the World Bank frequently appears inflexible, maintaining its own priorities and not taking the particular circumstances of client countries into enough consideration [Box 14]. Nevertheless the World Bank co-operates with funding agencies in a number of education SWA programmes (Ethiopia, Ghana, Uganda).

BOX 14

WORLD BANK AND SWA: THEORY AND PRACTICE

World Bank have been at the forefront of SWA. Harrold (1995) identified key features of SWA as comprising: sector wide, policy based, locally owned and led, funding agencies signing up to common processes and little foreign TA.

Some funding agency perceptions are that World Bank theory and practice are not always fully consistent with these principles. WB-financed TA frequently appears to marginalise other funding agencies: 'harmonisation of processes' often means that other funding agencies have to follow bank procedures rather than negotiated country-specific solutions. Others observe that few SIPs appear to include scope for performance-led budget tranching due to uncertainties over appropriate bank lending modalities. WB-led SIPs tend to view capacity building in terms of adequate arrangements for project management rather than taking a broader view.

Though by no means atone in this, one tendency of the WB is for it to negotiate its own agreements with Governments in isolate This can create a climate of mistrust and suspicion. In Ethiopia, the Government, which very much in charge of the SWA, forced the pace which suited the WB who were keen to disburse quickly. This was interpreted by other funding agencies as not providing 'enough space' for thorough consultation (Linda, 1998), though it should be noted that repeated offers by WB to step aside as lead agency were never taken up.

Despite funding agency concerns, the challenge will be to forge effective working relations with World Bank and other agencies. A clear message is that such relations are facilitated by strong Government leadership.

The Asian Development Bank's (ADB) position towards SDPs is spelled out in its 1996 Review of Program-Lending Policies. In broad terms ADB, like the World Bank, supports the use of 'pure program loans' especially where 'a sector requires both large-scale investment lending and substantive policy reform' (op. cit.). Increasingly ADB is examining the scope for using SDP loans that are a hybrid of programme support, discrete investments and capacity-building TA as a means of increasing the policy focus [Box 15].

BOX 15

ASIA AND THE PACIFIC: CHANGING PERSPECTIVES

Asian Development Bank (ADB) has become a major lender in the education sector in the past ten years. The ADB target is to reach 50% of lending for social infrastructure. Bank portfolio reviews, the 1997/98 economic crisis in South and East Asia and the withdrawal of Eastern bloc aid to Central Asia have created impetus for new education assistance approaches, especially tranched sector budget support.

In Thailand, the ADB provided a US$500 million social sector loan, managed by the Fiscal Policy Office (Ministry of Finance), aimed at fundamental, institutional and financing reforms in health and education. The Indonesia ESDP aims to protect primary school enrolment through a assistance to poor families channelled directly to community groups. In both cases support will be tranched against agreed performance targets alongside TA for strengthening monitoring operations.

In several Central Asian republics the aim is to put education on a sustainable financial footing. ESDPs are under way in Mongolia and Kurgistan (planned in Uzbekistan) with tranched support against an agreed policy menu and targets. In the small South Pacific countries ADB is examining the efficacy of small-scale innovation loans focused on key institutional and capacity building reforms.

Source: Selected ADB loan documentation, 1997-1999

Much of the debate over funding agency partnerships has paid insufficient attention to a potentially important role for the regional development banks, e.g. African Development Bank (AfDB), Caribbean Development Bank (CDB) and Inter-American Development Bank (IADB). The partnership arrangements appear mixed. For example it is reported that CDB and IADB are increasingly active in sector policy development in the Caribbean (Guyana, Jamaica). In contrast, the ESDPs in many African countries appear to enjoy only marginal AfDB support.

The regional banks have strong political/professional networks amongst regional members, are seen as 'one of us', are not perceived as having external agendas and, as a consequence, have significant credibility. Channelled and nurtured effectively, they represent a potentially strong, professional and financial partner for SWA. The challenge to funding agencies will be to nurture effective partnerships and strengthen their capacity, possibly through out-posted advisers, similar to current practice with the EU and, less formally, to provide support for regional working groups (ADEA, 1998).

BOX 16

UNDP: AID ACCOUNTABILITY INITIATIVE

In 1997 UNDP established an international working group on aid accountability, to address concerns over probity and transparency in accounting of aid finance. Ten guiding principles and protocols have been formulated, representing a virtual Code of Conduct for financial management. There may be scope for incorporating these principles into SWA education guidelines. At present it remains unclear what process will be adopted to translate principles into country-specific practices.

Source: Sector Programming and Accountability Initiative, UNDP, 1997

The UN agencies: Strengthening their role

Unlike the various working groups on health SWA, the UN agencies have not played a central role in education SWA policy/strategy deliberations, either at HQ or at in-country levels. This appears to be a missed opportunity. Like many of the regional development banks, the UN agencies could play a very powerful role in consolidating international and regional professional networks and SWA information exchange. In health, through the World Health Organisation, a number of funding agencies have been supporting regional and country advisers whose role is to stimulate debate on SWA. There may be scope for similar out-posted advisory arrangements in education through UNESCO, UNICEF and UNDP. Indeed, at a time when, for example, UNESCO is judged to lack vision and moral authority (Watson, 1999), to need restructuring and reform (Jones, 1999, Mundy, 1999) and to be unable even to guarantee the quality of its statistical data (Heyneman, 1999), there appears to be a very strong case for formal support of the kind outlined above.


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