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In Zambia, a serious and as yet unresolved problem affecting the policy
dialogue on governance has been the absence of a lead donor on governance,
which forced its government to discuss governance issues individually
with several donors. This became virtually unworkable as each donor attached
importance to different aspects of governance. This problem was not
fully addressed by the involvement of IDEA of Stockholm in the middle of
the 1990s, and the leadership question remained a major problem for the
dialogue, as was frequently mentioned by the government. For the future, a
case can be made for NORAD and Sida to develop a sector leadership role
in governance. This may be all the more useful and important now that four
Scandinavian countries have jointly established a Trust Fund for Strengthening
Governance with the African Development Bank. In the Zambian
case, the confusion over with whom and how to dialogue on governance
issues was only resolved when the government itself developed a National
Programme for the Strengthening of Governance in Zambia. This, of course,
is the ultimate model for the policy dialogue: a recipient government that
leads the process.
Experiences with the conduct of the policy dialogue
Over the years, donors have endeavoured to influence recipient governments
in the design and implementation of their macro-economic programmes
and policies in a variety of ways: through discussion and persuasion,
the provision of information on policy effectiveness elsewhere (the
World Bank now calls itself a ‘knowledge bank’), by providing financial and
technical assistance support for policy reform, and through the application
of leverage (‘conditionality’). Increasingly, the aim of donors has been to
foster strong domestic ownership of policy reform through capacity building.
This lesson could have been learned much earlier. A Summary of the Study
carried out by the Task Force on Concessional Flows stated in 1985: “The
case of India showed another important feature: that policy dialogue is one
thing, leverage another. The attempt of the donors to force a devaluation in
India proved to be a turning point in aid relationships which lasted for
many years. The devaluation was needed; but its timing was poor and the
aid package which was promised to support it disintegrated within a year.
The consequence was a growth of nationalistic and independent-minded
sentiment in the government.”
Source: World Bank, “Does Aid Work?”, Summary of Draft Report, January 1985.