Should I stay or should I go?

Published on: 09/06/2017

In the development sector, donors are phasing out aid to middle-income countries and replacing it with trade. Different perspectives on how this transition should take place was the subject of a joint Max Foundation-IRC Event: Phase out strategies in the WASH sector. On May 31st, over 100 participants came to The Hague to discuss the topic with three different stakeholders - a donor, an NGO and a think-and-do tank.

The donor

The Ministry of Foreign Affairs has taken on board the recommendations of a recent critical evaluation of the phasing out of Dutch development aid. So what will the Ministry do differently in the transition from aid to trade? Senior Policy Officer Water Management Pim van der Male told the audience that a longer, more flexible transition period is needed than was applied in the first countries where Dutch aid was phased out. This allows countries to focus on increased domestic resource mobilisation and sustainability, especially environmental sustainability (think climate change). The Ministry can tap its global development funds to finance the transition period.

Mr. Van der Male stressed that the shift from aid to trade encompassed more than Dutch trade promotion. For recipient countries, strengthening local and regional economic (trade) systems is what counts.

The NGO

The Max Foundation has developed the Healthy Village concept based on market-based interventions that help reduce child mortality. To create maximum impact, Director of Business Development and Partnerships, Kate Pearson explained that Max already plans its exit strategy at the start of interventions. Once sustainability has been achieved, ownership can be transferred to the local community and local government.

The think-and-do tank

IRC is an international think-and-do tank and change agent. Similar to multinational corporations and large international NGOs, we don't have an "exit strategy", said CEO Patrick Moriarty. IRC promotes systems building and that takes a long time. Systems building is best served by a network organisation consisting of strong (semi-)autonomous national hubs. 

Transformation strategies

At the end of the event there were no hard "WASHexiteers" left, but there was a general consensus that organisations need to undergo a transformation. The figure below summarises the transformation that the Ministry, Max and IRC are undergoing.

Implications for the WASH sector

In practice, what needs to happen when there is less aid money and countries achieve middle-income status, according to IRC’s Stef Smits:

• Increase domestic resource mobilisation. Recipient countries need to source their own funds from taxes or investors (pension funds, Water Financing Facilities) to keep investment levels in the sector equal, or even increase them.
• Pay more attention to sustainability of services. Assuming that middle-income countries have relatively high levels of coverage, the focus needs to expand beyond investing in new WASH services to sustaining the existing high-value services. The sustainability checks, clauses and compacts are tools that DGIS uses to promote this.
• Focus on environmental sustainability, by linking WASH to integrated water resources management (IWRM). Water use and pollution increase in middle-income countries, making it even more important to safeguard the water resources that feed the WASH services.
• Introduce government incentives to attract private funders, taking into account that for the poorest or most remote segments of the population, public investments are likely to remain the main source of financing.
• Strengthen knowledge organisations/think tanks. They are essential drivers of innovation and improvements in support of a thriving WASH sector in any country.

In the next few years, the Netherlands will end its bilateral aid relation with Indonesia, Kenya and Ghana. “I hope to see these elements back in the multi-annual strategies that the Dutch Embassies will be developing over the next year or so”, says Stef. “In that way, the Netherlands can adapt its relationship with those countries and transform their WASH sectors”.

For a review of the discussions at the Max Foundation-IRC Event event, read the excellent blogs by Reinier Hoon on "Exit, transition or phasing out? Perspectives from the WASH sector" and (in Dutch only) "Eind goed, al goed" by Stef Smits and Kate Pearson.

In the event video below you can watch short interviews with the speakers and a number of participants.

Note from the author: The title of my blog is inspired by the 1981 hit song by English punk rock band the Clash: "Should I Stay or Should I Go". The title personifies the general dilemma we face, while certain lines fit well with the views of the speakers.