The perceptions of the development cooperation agencies and the international financial institutions have evolved in recent years. As their poverty reduction goals have become more serious, they have come to recognise that external conditionality is not a very effective tool for persuading governments to adopt policies of which they are unconvinced. The challenge now is to stimulate domestic policy-making towards the emergence of locally generated strategies.

What is at issue is not just the type or quality of policy that a government is willing to ‘sign up’ to but also the quality of its domestic political and bureaucratic processes. The underlying presumption is that an open and accountable process, in which the poor have a voice and on which some sustainable coalition has been built, stands more chance of being sustainable than ‘stroke of the pen’ external conditions prescribing, for example, a certain share of budgetary spending to be in the social sectors. What governance processes are likely to be potentially more pro-poor?