Memorandum submitted by PriceWaterhouseCoopers
Building capacity for national ownership of aid
programmes - The role of global service providers.
For the last fifty years, in which input-based international
development aid has failed to lift the poorest countries out of
poverty, private sector firms have worked consistently alongside
the donor community as implementing agents. As service providers
to donor institutions, engineering, accounting and business advisory
firms headquartered in developed countries, have helped to complete
thousands of projects and programmes in developing countries,
with mixed results.
In the last ten years, the relationship between multinational
service providers and their donor clients has changed dramatically.
While the transfer of skills and technology from North to South
countries is recognised by all parties as important
to sustainable development, the costs (and
fees) of the multinationals have risen sharply and donors and
recipient governments have become increasingly reluctant to contract
teams entirely constituted from developed country consultants.
At the same time, the perceived low level of fees offered by the
donors and the high transaction costs of engaging in development
work, has caused the exodus of some multinationals from the aid
market.
These inhibitors of the "export" mode of
development have been compounded as recipient governments have
sought more control over their own development programmes, supported
by anti-globalisation campaigns and the donor agencies themselves.
Underpinned by a series of international agreements,
a new model of international development started to take shape.
The 2000 Millennium Declaration and the Millennium Development
Goals, the 2002 Monterrey Consensus on Financing for Development,
the2003 Rome Convention on Harmonisation and the 2005 Paris Declaration
on Aid Effectiveness, provided the momentum to improve the effectiveness
of aid through national ownership, harmonisation, results orientation
and mutual accountability. In the new paradigm, governments, bilateral
and multilateral agencies, civil society organisations and the
private sector will work in partnership to attain development
goals that directly impact poverty in a sustainable and quantifiable
manner.
Some of the features of the new framework are routine
for the private sector. Managing for results and accountability,
are the stock in trade of accounting and business advisory firms.
The presence of the transnational firms, deeply embedded in recipient
countries, is a massive opportunity for a nationally led public-private
development compact.
The problem with the existing new partnership model
is that the private sector is hardly to be seen
in the grand design. Traces of a private sector role in development
can be found in the Millennium Development Goals, but they are
very much a reflection of the constituency of development economists
that put them together. In Goal Eight: "Develop a Global
Partnership for Development", the role of the private sector
in the development enterprise, is to donate products and technology.
If you are a pharmaceutical company you should:
"…provide access to affordable drugs
in developing countries" (Target 17)
Generally, global business should:
"…make available the benefits of new
technologies, especially information and communications
technologies." (Target 18).
The private sector is thus characterised as a conglomeration
of multinational corporations with a circumscribed role in the
global development enterprise. In our own experience, some donor
and UN agencies see us more as a source of philanthropic support
than as true partners in development
Missing in all this, is the recognition that the
same communication technology that is driving globalisation, is
transforming the way some transnational enterprises organise themselves
and that new-style companies, firmly rooted in programme countries,
can become strong drivers of development in emerging markets countries
by just doing what they do best: good business.
Our own company can serve as an illustration. In
all, PricewaterhouseCoopers employs three hundred and fifty international
development specialists in 55 developing and 20 developed countries,
who contract with most of the development banks and donor agencies
and their government partners. Our work is in assurance and fund
management, financial services, public sector management and private
sector investment in infrastructure.
We are a global organisation, but we have no outside
shareholders to whom we have to repatriate profits. Almost all
our country firms are locally owned which
guarantees our commitment to the development of the people and
economies of the emerging market countries in which we operate.
Consistency and high quality of work in the developing world derives
from a common global strategy, brand values, ethical and policy
framework and globally monitored quality assurance and risk management
standards and procedures.
Apart from the project and programme work we undertake
on behalf of the donor agencies and governments, our contribution
to poverty reduction takes the following forms:
Enriching national talent pools
Every year PricewaterhouseCoopers takes on and trains
thousands of the best young accountants and business advisors
in emerging markets countries. Some stay in the firm while others
leave and are absorbed into the local economy, enriching the national
talent pool and pulling up the private sector at all levels, an
alumni list to be proud of.
Recycling development funds
Over 80 percent of our international donor-funded
work is contracted by our emerging markets country offices and
performed by nationals of those countries. This means that 80
percent of our IDA fees are earned and redistributed in developing
economies, creating opportunities and markets for the lower income
echelons of society.
Sharing global technology
A powerful intranet development portal links all
our developed and developing country practices and technology
platforms and is regularly used as a shared resource for writing
International Development Assistance proposals from Washington
to Ouagadougou and from Cairo to Caracas.
Leveraging good practice and knowledge transfer
Specialist teams bringing together developing and
developed country members, create toolkits for forensic investigations,
cross-regional surveys, models for privatising infrastructure
and tax and budget administration systems, that are used all over
the world.
Crowding in the Private Sector
In the last year, Input from our developing country
practices has informed our discussions on the role of the private
sector in development with the business outreach unit of UNDP,
NEPAD, the Commission for Africa (later Business Action in Africa)
and Jeffrey Sachs at the Earth Institute at Columbia University.
Apart from this wider debate, we catalyse private
sector development and activity in specific regions and countries
in the course of our daily activities. The East Africa "Most
Respected Company" awards that we co-sponsor, is an eagerly
awaited, annual event. Our in-house HIV/AIDS prevention programme
in Uganda has been adopted by several other companies in the country.
Objectively appraising privatisation options
Transnational business advisors are sometimes criticised
for enriching themselves through brokering privatisation projects
of dubious value to the local community, with foreign investors.
Where the companies are truly embedded in the country, their advisors
can work with local investors, community workers and environment
specialists to present a full range of options to the Government,
that will make a positive contribution to the public good.
Earning the trust of governments and donors as fund
monitors
One of the most telling roles in the new development
paradigm for multi-competency "local transnational"
business advisors, is monitoring large, multi-donor, special purpose
funds. The Global Fund to fight HIV/AIDS Malaria and Tuberculosis
was the first cross-regional fund to appoint Local Fund Agents
(LFA) to assess recipients at all levels including their financial
management systems, programmatic arrangements, procurement and
supply systems and monitoring and evaluation regimes. Many of
the recipients are government agencies who might find it difficult
to tolerate such intrusive monitoring from a totally foreign entity.
The success of the Global Fund, which has made disbursements of
$4 billion in 131 countries in the five years since its foundation,
is largely based on the LFA model. PricewaterhouseCoopers is LFA
in 67 of the Global Fund countries.
In a more local context, this principle of globally
regulated local monitoring, resurfaced in the case of the basket
fund for health in Tanzania, in which a number of bilateral and
multilateral funding agencies pooled their funds in order to channel
them directly to the Ministry of Health. The mode of auditing
the funds was a central issue for a few months before all parties
selected PricewaterhouseCoopers as the fund auditor, a worldwide
brand with a local face.
Conclusion
Pools of skilled, national accounting and monitoring
specialists employed in the programme countries, bound by global
quality assurance and risk management regimes, could well be the
missing link in the shift from project lending to sectoral and
general budget support. What better way to promote mutual accountability
than to have a firm with a worldwide reputation and local knowledge
and expertise, monitoring fund flows and aid effectiveness across
the entire development partnership? How better to promote country
ownership of programmes than by introducing monitoring teams that
will work strictly to international standards but speak the language
and share the culture of the government with which they are working?
February 2006
| 
