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Key Text Aid Instruments and Exclusion

Author: D Booth and Z Curran
Date: 2005
Size: 36 pages (390 KB)

Summary

To what extent have Poverty Reduction Strategy Papers (PRSPs) addressed exclusion issues? How can the new aid modalities be used to encourage anti-exclusion policies in the developing world? This paper from the Overseas Development Institute surveys PRSPs worldwide to ascertain the responsiveness of the new aid modalities to excluded groups. It argues that donor countries should promote participatory consultations and national ownership of anti-exclusion policies in PRSPs, while monitoring the use of new funding instruments to encourage action on exclusion.

PRSPs are at the centre of the new aid environment which seeks to build partner countries’ policy ownership and institutional capacity. However, the effectiveness of PRSPs in driving policy is questionable as they can have a tenuous relationship with budgetary allocations and regulation of government performance.

PRSPs’ poverty-reduction priorities may reduce commitment to exclusion issues. The high investment costs of new aid modalities may deter governments from supporting the types of grassroots, anti-exclusion action previously undertaken.

Various findings are made on the responsiveness of PRSPs to exclusion issues:

Economic growth, empowerment and security are the dominant objectives in PRSPs: exclusion is often included in a fragmented way. However, some countries’ PRSPs incorporate anti-exclusion policies as instruments to reduce poverty and promote social cohesion. In some PRSPs, where anti-exclusion policy is discussed strategically, there is insufficient detail on methods of policy implementation.
The failure to emphasise exclusion in PRSPs relates to their increasing focus on national government empowerment, which can restrain donors from commenting on governments’ unwillingness to incorporate excluded groups. Although some marginalised groups were consulted in PRSPs, limits on their participation also reduced the focus on exclusion.
Early “second-generation” PRSPs in Tanzania and Uganda suggest that the quality of policy debate has improved and that the linkage of PRSPs to national budgets has strengthened. However, developing countries’ interest in increasing national identity within PRSPs may reduce the focus on exclusion.

Sector-Wide Approaches (SWAps) and General Budget Support (GBS) are two aid instruments within the new aid modality. With SWAps, donor funding is earmarked to a policy sector, independent of the national budgetary process, whereas GBS directly funds the central budget. Each of these approaches can be used to promote anti-exclusion policy:

Although SWAps seem not to have explicitly addressed exclusion issues, policy work on improving equity often falls within wider SWAp initiatives on health or education. While some SWAps promote limited gender mainstreaming, increased focus on gender issues in education, health and agriculture needs to be endorsed.
Future SWAps should analyse discrimination, implement participatory consultations and increase capacity on anti-exclusion measures through technical assistance. More flexible SWAps which specifically address exclusion problems could be developed.
GBS is often accompanied by assessments which evaluate governments’ progress on national poverty reduction indicators. These indicators usually do not monitor specific progress on exclusion, although they do focus on government reforms which increase government incentives to tackle exclusion.
GBS can be more effective than project funding in supporting anti-exclusion policies due to the high start-up costs of such measures. In GBS partnerships, donors must assess whether partners are directing resources to excluded groups: disbursement conditionality, routed technical support and participatory budgeting can improve national budgets’ focus on these groups.

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Source: Booth, D., and Curran, Z., 2005, ‘Aid Instruments and Exclusion’, Overseas Development Institute, London