Memorandum submitted by PricewaterhouseCoopers
BUILDING CAPACITY
FOR NATIONAL
OWNERSHIP OF
AID PROGRAMMES—THE
ROLE OF
GLOBAL SERVICE
PROVIDERS.
For the last 50 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,
the 2003 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 trans-national 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 trans-national 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% 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% 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
Trans-national 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
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