Speaker:

Dr Ashraf Ghani, Vice -Chancellor, University of Kabul & Former Finance Minister, Afghanistan
Discussant:

Clare Lockhart, ODI Research Fellow
Chair:

Tony Baldry MP, Vice-Chair, APGOOD

Dr. Ghani's made four sets of points:

1. First, globalisation was leading us, not the other way round. There was only a fragile consensus on democracy and markets as the paradigm for the future. Many regions and up to 4 billion individuals were being left behind in a globalising world. Criminal networks were spreading. There were up to 60 fragile states.

2. Second, the key response needed to be building state capacity. He and Clare Lockhart had devised a 10-dimensional functional definition of a capable state, covering obvious features like the legitimate monopoly of violence, but also issues to do with the rule of law and the delivery of public services. New and long-term partnerships were needed to deliver improved performance across this range of functions. There needed to be commitment on both sides. From the external side, in particular, a ten-year perspective was needed, with clear contractual obligations, monitored by an independent ombudsman. One year budgeting would not do.

3. Third, there was clear misalignment between overarching policy statements about the importance of building capable states and the skills of the international bureaucracies. On the one hand, donors were committed to the Paris agenda of harmonisation and alignment. On the other hand, aid was often inappropriate and unsustained. One result was that 50% of peace agreements failed, with countries reverting to violence. The development system was in crisis. Technical cooperation, for example, was a beast out of control.

4. Fourth, then, was the question of what to do. International Financial Institutions and other aid donors needed a strong vision of state development, and a strong focus on process.

Clare Lockhart opened the discussion by emphasising the point Dr. Ghani had made about the gap between theory and practice. She described how the international aid system (including the UN and the NGOs) had effectively undermined state capacity in Afghanistan by creating parallel structures: for example, hiring former civil servants at salaries up to 400 times their previous income, to drive vehicles or administer projects. Donors had been unwilling to finance basic infrastructure for governments, like building offices for district administrations, while encouraging NGOs to build offices for themselves.

In discussion, Dr. Ghani was asked to elaborate on the problem of well- and poorly-delivered aid. He cited different cases, to illustrate the point that some aid was worth more than its face value, some very much less.:

1. In a good example, DFID had provided six experienced negotiators to help set up a private telephone system. The number of mobile phones in Afghanistan had gone from 100 to 1.5m in five years, with the company paying $US 25m in tax in 2005.

2. In a more challenging example, one donor had committed to build 500 schools, but had only delivered eight, at a cost of $US 250k each, compared to $US 40k for local contracts. In this case, there were four layers of external contractor and 80% of the aid funds were effectively wasted.

3. Technical cooperation was often a special problem. Of sixty advisers assigned to the Ministry of Finance, only one had previous experience in such a role.

4. More generally, it was shocking that NGOs did not declare their budgets, compare their cost-effectiveness with alternatives or report properly to the government.

Reinforcing Dr. Ghani's point about long-term state development, there was a brief discussion about short-term donor timetables. The case of the very high demands put on DRC was cited, with an eighteen month timetable for demobilisation, elections and development planning.

Asked to suggest some recommendations for the new DFID White Paper, Dr. Ghani focused particularly on:

1. Dealing with technical assistance, which often generated ill-will not good-will;

2. Strengthening mechanisms of accountability;

3. Using the national budget as the central planning tool; and

4. Developing long-term partnerships.