Negociation with Aid Agencies: A Dwarf against a Giant
Negotiating
with funding agencies represents an immense challenge for governments.
Recipient countries must satisfy multiple, albeit inconsistent conditions
set by donors. Indeed, policies, strategies, agendas and modalities
differ widely according to agencies. The concept of aid itself is
blurred by economic and political considerations. Written with a
pragmatic perspective, the book reviewed below unravels the many
intricacies of negotiating aid for education.
While there is an abundance of literature documenting donors’ perspectives when dealing with aid to education, there are hardly any systematic reviews produced by recipient countries on how—from their perspective—proper policies for dealing with aid can be developed or applied. Negotiating with Aid Agencies gives practical insights on the negotiation of external aid. Important aspects which negotiators should bear in mind when dealing with funding agencies are highlighted. This includes a checklist with suggestions on what, how and when to negotiate with agencies, and specific guidelines for negotiation according to the category of agency. The report ends by a comparison of two different patterns of negotiation—the traditional pattern, and the emerging new, country-led model—and remarks on the increasing importance of NGOs in the negotiation of aid.
Negotiating with aid agencies is not a zero-sum game
The document starts by: (i) defining the scope of the report which is official public loans and grants; and, (ii) outlining the various public and private sources of external aid. A number of built-in drawbacks which complicate the negotiation of aid to education are then highlighted:
Regarding grants, the following comments are made:
--Grants to education may prove to be disguised tools for export of services to education and other sectors. Hence, governments should broaden the scope of negotiation beyond Ministries of Education and Finance and involve cross-sectoral representatives.
-- In order to ensure that grants serve to finance "good projects" (i.e.good policies) but also "good politics" (i.e. good governance), and because governments are rarely assumed "good" by aid agencies, a growing number of donors prefer to deal with NGOs. Hence, the negotiation of grants may de facto escape from government control.
-- The report oulines key parameters in negotiations with United Nations agencies such as the empowerment of government in the decision-making process on aid flows and support for national capacity. The value of UN agencies in facilitating access to international and regional experience and cooperation is stressed.
Regarding loans, the market of aid to education is distorted by a number of factors:
-- Lending is not necessarily determined by the nature of the project, the economic return to the project or the credit-worthiness of the country. Policy and politics play a large role.
-- Borrowers cannot negotiate on the basis of competing criteria and conditions because there is no competition among lender aid agencies.
- In the market of aid to education, the distinction is not so much between good and bad borrowers as between "docile"—defined as having "the tendency to depend on suggestions, recommendations, persuasions and information obtained through social channels (foreign channels) as a major basis for choice"—and "conflictual" borrowers—who may happen to be early believers in local capacity building to master their educational system. If it is assumed that the job of bankers is to provide "good" loans, conflictual borrowers may be the best risk in the long run.
What, how and when to negotiate
A checklist of factors to consider when negociating with agencies is provided. Salient factors are:
Š the need to gather information on the agencies such as their agenda, culture, and modalities of operation;
Š the importance of building a comprehensive knowledge base on the country’s own system. Diagnosis of the education system, sector analysis, policy analysis, financial assessments as well as strategies for funding educational development which include the role of external resources are recommended.
The first factor provides borrowers with information on the lenders, while the latter creates awareness of the scope and purpose of aid support. Both are invaluable in building national capacity for communication with funding agencies.
A good legal document
Regarding the credit agreement—usually called Development Credit Agreement (DCA)—the reader is reminded that the main purpose of negotiation is the signing of a good legal document. Simplicity in the scope and content of the credit agreement is recommended. Indeed, experience shows that complex programs hinder national capacity-building, flexibility for strategic implementation and local sectoral coordination. Complex programs also generate donor-driven bureaucracies which inhibit effective implementation and donor coordination.
An observation is made on the need to develop capacities for negociating a good legal document. Such negociation involves mastery of the legal, financial and institutional knowledge base, notwithstanding the need for professional mastery of the education sector. Capacity is often lacking in these skills.
Patterns of negociation
Two different patterns of negociation are described in the document: the traditional donor-driven pattern, and the emerging new trend towards country-led negociation. For each pattern, emphasis is put on characteristics such as the importance of the agencies’ vs. the countries’ agendas, the importance of substantive vs. financial considerations, the degree of donor coordination, and whether the process is agency or country-led.
The case of Mauritius is illustrated as an attempt at country-driven negotiation. In 1991, Mauritius produced a Master Plan. Subsequently, the government convened a donors’ meeting to obtain agency support. The process culminated in the signing of different agreements, primarily based on the Master Plan.(2)
On the increasing role of NGOs
The report ends with a few comments on NGOs and on capacity building.
Observations are ade on the role of NGOs in educational development, their complexity and the anticipation that they will become increasingly important as vectors of aid. Because of their increasing influence, three recommendations are made: (i) countries should develop an adequate information and monitoring system for NGOs; (ii) countries should involve NGOs in the negociation process; and, (iii) countries will also need to assess the comparative advantage of NGOs when mobilizing funds from external sources.
A review of "Negociation with aid agencies: a dwarf against a giant"
by Jacques Hallak
Director of the International Institute for Educational Planning (IIEP)
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