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Is aid and trade the answer to "Dead Aid"? Is it just tied aid in disguise? Does it make sense in the water sanitation and hygiene sector? IRC invited a group of stakeholders from the Dutch WASH sector to The Hague on 17 September 2014 to discuss all this and more. Join the discussion!
When Dambisa Moyo released her controversial book “Dead Aid” in 2009 she caused heated debate in the development sector. We were used to northern critics who said aid was a waste of money, but not to critics from the South who said aid was harmful as well. The new Dutch government aid and trade policy aims to replace traditional development assistance with trade relationships. The Netherlands is not the only country reducing its development budget or promoting the market as an alternative to aid.
IRC’s Erma Uytewaal introduced the aid and trade event noting massive efforts are still needed. With 2015, the deadline for the Millennium Development Goals, just around the corner, worldwide 768 million people still don’t have safe water and 2.5 billion lack sanitation. The sector is also grappling with how to reach the poorest and maintain an acceptable level of service over time.
I've collected some provocative statements from the event below. What are your views on aid and trade?
What is the role of development Aid in WASH?
Public investment in WASH will remain necessary
To strengthen and incentivise the private sector? To develop infrastructure? To address blockages of governments investing in WASH? To strengthen governments that create an enabling environment for a strong private sector?
IRC’s CEO Patrick Moriarty stressed that the sector will continue to need some level of public financing. In his view aid must be used to improve the ability of the sector to fulfil its critical functions and deliver services for future generations without on-going external support. Aid should not just be used to develop infrastructure. Sjef Ernes, of Dutch NGO Aqua 4 All added: with a strong private sector there still will be a need for aid for the poorest groups, even in developed countries this is the case.
What is the role of Trade in WASH?
“Aid and trade works, but trade is not the solution to everything” according to Christiaan Rebergen, Director-General for International Cooperation at the Dutch Ministry of Foreign Affairs. Colleague Roel Martens, agreed that a strong private sector is important: The market is not perfect, but it is indispensable in the fight against poverty.
Ernes said “We need to help the private sector to find business opportunities in WASH, including opportunities to reach the poor. With aid you can also train the local private sector, but the current policies don’t suit this!" Ariette Brouwer of Dutch NGO Simavi added: “The Base of the pyramid is the interesting part for private sector, but the ultra poor is where governments and NGOs must come in”. Sascha Gabizon, Director of womens’ network WECF agreed: people in the poorest and remote areas cannot rely on the market for getting access to services.
According to Hielke Wolters, Managing Director of Aquanet BV, the equation comes down to financing: If aid is decreasing, then taxes and tariffs need to increase to cover the costs. In fact, total expenditure needs to increase, because present investments in the sector are not sufficient for sustaining services over time.
Using data from the Global Water Intelligence Report of August 2014 Wolters explained that the opportunities for the private sector are not uniform. The private sector is risk averse. He pointed out that PPPs are mainly for waste water treatment facilities in urban areas.
Where are the opportunities for the market?
The potential for trade in water is different than for different elements of the sanitation cycle. Which led us to the question: Is there money to be made in sanitation? Only in certain parts? Only under certain conditions? Joop Colsen, Founder of Colsen BV, argued that instead of focusing on encouraging household or institutional productive used of waste, the sector should start investing in ensuring that treatment plants use waste as source of energy.
Using trade to promote development and reduce poverty is not a new idea, as summarised in the pre-read to the event (see link below). Does the shift in Dutch policy indicate that the Dutch are going for tied-aid and away from a focus on building the leadership capacity of development countries? No, said Dick van Ginhoven, Sr. Water and Sanitation Advisor at the Dutch Ministry of Foreign Affairs. But who will balance benefits for Dutch businesses and interests of the poor?
What the role of different sector players and of partnerships between them?
Ariette Brouwer worked for the private sector for over 25 years, before becoming Director of Dutch health NGO Simavi and sees an important role for NGOs in their capacity to engage with the communities and facilitate behaviour change. “Partnerships can help us reach our common goals, but we need to also reach the poorest. We need to partner with the local private sector not just the Dutch private sector”. She said that the biggest success factor in partnership between the private sector and NGOs is that they both start speaking the same language.
Private, public and NGOs all have a role to play in sustainable services
Wout Korving, co-founder and senior advisor of RebelGroup called for differentiating different kinds of partnership relations and recommended that the WASH sector should make better use of private sector capacities. Korving reminded the group that the private sector is also passionate about having an impact. "We need to bring back the passion and work creatively in partnership".
The discussion brought out a range of advantages of partnership between the private sector and NGOs: private sector can bring scale, and the professional skills, working more efficiently, while NGOs bring local networks, appropriate approaches to behaviour change and contacts with communities. NGOs also have a focus on the needs of the poorest and on making services equitable for women.
“I believe in PPPs” said Moriarty: “What I have been missing in the discussion is the Public partner. Government is a critical partner in the equation, for its role in setting a vision for development, creating the enabling environment for sustainable services, and in ensuring that the poorest are not left out”.
We need strong institutions across the sector: government, NGOs and the private sector
“In the WASH sector there has been too narrow a focus on expansion of services and not enough on institutional development and capacity building. We need strong institutions across the sector: government, NGOs and the private sector”, according to Wolters. In particular he emphasised the importance of operation and maintenance to make existing services sustainable.
And now...the floor is yours. Can the new trade-based approach help ensure that every person in the world enjoys safe water, sanitation and hygiene, now and forever? Join the discussion!
At IRC we have strong opinions and we value honest and frank discussion, so you won't be surprised to hear that not all the opinions on this site represent our official policy.
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