Event summary Doing development when politics matters 12 September 2016 16:00 - 17:30 Overseas Development Institute, London Among donors and large development agencies, the phrase “politics matters” is now well established. There is a recognition that despite the body of research and evidence on the policies and institutions needed to generate growth and reduce poverty, many governments still fail to adopt and implement policies that they know are necessary for sustained economic development. But what should be done differently? On 12 September 2016, the Overseas Development Institute (ODI) hosted a number of speakers from the World Bank, Oxfam and ODI, to discuss development agencies and politically smart solutions. Shanta Devarajan, Chief Economist, Middle East and North Africa at the World Bank, began by summarising his recent paper with Stuti Khemani. Their paper identifies a set of government failures (stemming from market failures and a set of principal-agent problems), their impact on development progress and the fact that historically, aid has struggled to prevent these failures and has sometimes reinforced them. Instead, it proposes two shifts in direction. The first is to provide aid to governments as ‘lump sum’ payments – that is, with few conditions beyond the expectation that it is provided through the budget and in ways which can be scrutinised domestically. Secondly, and most significantly, it stresses the role of citizen engagement as a key step in addressing these government failures, by ultimately holding leaders to account – and selecting better leaders, based on their performance, over time. The paper posits a role for donors like the World Bank in supporting the enabling environment for citizen engagement, for instance through support to media markets, generating independent data and information on performance, and aiming to communicate better to citizens. Duncan Green, Senior Strategic Advisor at Oxfam GB, responded to Shanta’s position with a cautionary reminder that while there is consensus on the problems, there is no consensus on what do to about them – in other words, how to ‘Do Development Differently’ (DDD). Some advocate for a ‘do more’ approach , while others suggest a ‘do less’ approach. He defined ‘do-more’ as advocating for better political analysis, more politically smart working, including through, and led by, local partners, while Shanta’s paper advocates a ‘do less’ approach for donor support. Duncan argued that such a ‘do-less’ approach, however, may come with a problematic assumption: that increased access to information will result in better citizen

action. He argued that access to information as a default position in changing citizen’s behaviour is itself riddled with issues of power and politics, and doesn’t always lead to better outcomes. Leni Wild, Head of the Politics and Governance Programme at ODI, agreed that today’s big development issues reflect a set of policy and institutional constraints or political dilemmas. Rather than a focus on principalagent problems, however, she highlighted the importance of developing shared rules, norms, and actions to address shared problems. She emphasised that historically, evidence shows that these shared rules rise out of long processes of contestation and struggle, and that transparency and citizen engagement are more often an outcome than a driver of these processes, adding further caution to the assumption that citizen engagement can itself overcome these failures. Moreover, the recent Brexit vote highlighted the danger of assuming that impartial experts and evidence will inform citizen engagement, as perception and emotions matter too. She argued that while overseas development assistance has often been poor in engaging in this area, there are a growing number of examples of organisations Doing Development Differently. These reflect working in politically smart, agile ways, often to build reform coalitions within and outside the state, that can figure out solutions to complex problems. She has recently worked closely with donor agencies like DFID that are actively thinking through how to engage more with these approaches – including the implications for procurement, audit functions, results frameworks, senior management cultures and more. While there is progress, gaps still remain, particularly around leadership and the wider authorising or enabling environment within different agencies, however. Katherine Bain, Senior Governance Specialist, Africa, at the World Bank presented the experiences of the World Bank’s Nigeria office, who sought to rethink their country portfolio in line with Doing Development Differently principles, largely in response to poor results, reflecting government failure and ineffective institutions. An approach to better understanding the political economy context, in more dynamic ways, as well as a series of pilots were introduced. She identified a number of lessons learnt, including:

Event summary: Doing development when politics matters  1  

Event summary Doing development when politics matters 12 September 2016 16:00 - 17:30 Overseas Development Institute, London •• Developing spaces within a country portfolio to develop and test small scale pilots; •• Stopping over-designing and over-promising at the start, and shifting incentives towards delivery and implementation – including thinking about metrics used to assess programmes; •• Supporting management to take measured risks, based on experience and strong analysis in-country; and •• Hiring the right people that can leverage technical skills with softer, political skills – and building performance incentives that reinforce this too. Following the presentations, there was a wide ranging discussion, which touched on the following issues:

Information access and transparency •• A variety of reflections from participants problematized assumed links between transparency or access to information and greater citizen engagement and action: •• Citizens need to have access to the wider ‘information chain’, which includes local knowledge that may be closed off by elites; •• Full transparency may not be appropriate in very complex contexts, where there is a need to build trust; and •• Some forms of transparency could force people into protective negotiating positions. •• Some felt that improved awareness and action to information can lead to citizen mobilisation, as demonstrated by the Arab Spring, but what are the further consequences of that mobilisation and what impact does it have on governance reform? •• A broader question was raised on the practicalities of how to change negative norms, such as corruption in Turkey, that are widely accepted by citizens.

The framing of ‘government failures’ •• A number of participants questioned the framing of ‘government failures’ and the underlying assumption that governments are ‘bad’ and citizen engagement ‘good’.

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•• This prompted discussion on the degree to which external actors really understood local contexts, and were informed about realities on the ground.

Budget support and other modalities •• Some argued that budget support can work in certain circumstances. For example, in Ghana and Tunisia, World Bank budget support was also used to advocate for civil society changes. However, some of these reforms failed to materialise post World Bank support. Thus some felt that the space to bring long-term change required a broad array of instruments and the ability to bring the right people together to identify shared solutions. •• Others argued that external actors can be part of the solution by taking an ‘arm’s length approach’ in supporting agile problem solving and reform coalitions around addressing government failures. This can involve some citizens, but offers a different model to that of general ‘citizen engagement’. •• Some felt that proposed lump sum financial transfers may exacerbate and reinforce negative behaviour by political elites.

The incentives of aid •• A number of participants highlighted the need to look at the political economy of aid, not just at government failures. A range of incentives which can hold back politically smart support were highlighted, including pressures to spend, ‘projectised’ approaches, and the pressures of compliance. •• Some advocated that donor agencies provide support in ways that allow for significant research into what works and why on this theme, as part of building up a better set of case studies for how to Do Development Differently in the future.