Living up to the Capacity Development Challenge Lessons and Good Practices DACGOVNET draft Good Prac

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Living up to the Capacity Development
ChallengeLessons and Good Practices DAC-GOVNET
draft Good Practice Paper Main Messages
  Mark NelsonSenior Operations Officer,
Regional Knowledge Learning, Europe, Central
Asia and East AsiaWorld Bank Institute The World
BankWashington, USA
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Introduction  During the year 2005, the
international development community will be
undertaking several key events linked to the role
of aid -- volume and effectiveness -- and poverty
reduction. These include the Paris High Level
Forum on Aid Effectiveness the General Assembly
High-Level Dialogue on Financing for Development
the G8 summit and the UN General Assembly
High-Level Plenary Meeting on the Five-Year
Review of the Millennium Declaration. One
conclusion of these processes and reviews already
seems clear capacity development is one of the
most critical issues for both donors and partner
countries. This is apparent, for example, in the
series of papers prepared for the Paris High
Level Forum (February 28th-March 2nd, 2005),
which emphasise the importance of capacity in
areas such as public financialmanagement and
procurement.
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The draft 2005 Paris Declaration on Aid
Effectiveness highlights the centrality of
capacity development and calls for it to be made
an explicit objective of national development
strategies such as Poverty Reduction Strategies
or equivalent frameworks. All of these documents
and declarations acknowledge that without
sufficient local capacity, development is
unlikely to succeed and, more specifically in
relation to aid effectiveness, that efforts by
the international development community to align
assistance with country-driven strategies risk
falling back into unproductive practices that
favor quick delivery over sustainable results.
In recent years, about a quarter of donor aid
has gone into technical co-operation, the
majority of which was aimed at capacity
development. Despite this, evaluation results
confirm that development of sustainable capacity
remains one of the most difficult and most
challenging parts of international development
practice.
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Until fairly recently, donors, and, to a large
extent, partner countries as well, have tended to
look at capacity development as mainly a
technical process, or, worse, as a simple
transfer of knowledge from North to South. Many
of the efforts have been focused on training or
on the provision of technical advisors without
integrating lessons of experience on what has
caused similar projects not to be sustainable and
without a medium-term results framework to
monitor progress or impact. Donors have often
failed to recognize the critical importance of
country ownership and leadership, and the broader
political context within which capacity
development efforts take place. Too often, donors
have imposed monitoring of short-term
project-specific results that have inadvertently
crowded out the indispensable need for
country-led strategies, local monitoring and
accountability processes.
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And in an effort to assure those short-term
project results, donors have imposed
organisational solutions, including parallel
structures that undercut longer term capacity
development. Some countries have made notable
steps forward, however, and donors have played an
important role in supporting them. In many
countries where capacity development has lagged
in general, some highly successful institutions
in sub-sectors have emerged. A major
international effort over the past decade has
helped develop a deeper understanding of the
nature of capacity development and how to support
it and has helped formulate a basis to learn from
past failures and successes. The result is a set
of empirically-based good practices and refocused
approaches aimed at better results. Donors that
have prioritised capacity development have played
an important role in this effort and have been
working increasingly to integrate these findings
into their assistance
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What has been learned is highly consistent with
the key messages on ownership, alignment and
harmonization of this HLF. This learning process
has also involved taking into account past
experience that has not yet been adequately
applied to current practice. Capacitythe
ability of people, organizations and societies to
manage their affairsis at last finding its place
as the primary objective of development
cooperation. It is at the heart of ambitions to
improve aid effectiveness and aspirations to
achieve sustainable results and long-term
development. 
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• The insights contained in this Good Practice
  Paper centre
• around four core topics
• Rethinking capacity development
• Capacity development and implications for
  development cooperation
• Agreeing on and monitoring clear terms of
  engagement
• Defining an approach for fragile states

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1. Rethinking capacity development Supporting
capacity development requires context-specific
and in-depth understanding of existing capacities
at the individual, institutional and societal
levels. No one-size-fits-all blueprints exist.
Sustainable capacity development is a complex
change process that affects roles and
responsibilities and can be unsettling to
established power structures. Beyond sound
technical analysis, it needs to be responsive to
the broader social, political and economic
environment. This adds to the reasons stressed
more generally in this HLF on why capacity
development efforts need to be managed, owned and
carried out by developing countries themselves.
External development partners can have a powerful
and positive impact on these effortssupplying
financial support and knowledge, but they must be
carefully integrated into the broader goals and
development objectives of the partner country.
Recent evaluation and comparative analysis of
capacity also suggests
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• Capacity development is most likely to succeed
  when associated with strong political ownership
  and leadership at the highest levels, with wide
  participation, transparency and clear
  accountability. The 2005 Paris Declaration on Aid
  Effectiveness sets out ambitious commitments that
  will help to strengthen partner countries
  ownership.
• Incentives and motivation are key. They are
  essential to developing capacity, to unleashing
  and retaining existing capacity, and to
  translating it into development outcomes.

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• Capacity flourishes in context of good governance
  and effective leadership it languishes where
  security is poor or government is unaccountable.
  It takes much less time for bad governance to
  destroy capacity than for good governance to
  develop it.
• The challenge of capacity development is
  intensified by the increased international
  mobility of skilled labour, which has important
  implications for policies in such areas as pay
  reform and attracting back the capital and skills
  of diasporas. HIV/AIDS, a global problem, has
  seriously depleted capacity in many African
  countries.

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2. Capacity development and the implications for
development cooperation Some important
capacities are technical or sector-specific.
Others, which are more cross-cutting, include
capacities to plan, manage, implement, account
for results and are critical to overall
development objectives. Donors have been more
successful in supporting the development of
technical capacities than cross-cutting ones.
Increased attention must be paid to the latter,
which are at the heart of a countrys ability to
manage its own affairs. Donors have become
increasingly conscious of the need to focus on
country-led strategies and to align their support
with partners capacity development objectives,
strategies, systems, and their existing
capacities. This has led donors to shift their
attention on aid effectiveness from
micro-management to support of country or local
action plans and mutual accountability.
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Donors have also recognised the high costs to
partners of multiple, incoherent projects and
missions and appreciated the need to harmonise
support for capacity development accordingly.
Among the implications are the following

• Mainstreaming capacity in both policy and
  practice throughout the development process
  requires reforms in development agencies
  internal incentives, skill profiles and
  operational procedures.
• Give more emphasis to unleashing, preserving and
  systematically favouring existing capacity rather
  than trying to create or import it is vital. This
  approach can create strong incentives for local
  organizations, or diasporas, to participate in
  developing local capacities.

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• Entry points for supporting capacity development
  should flow from comprehensive country-led
  strategies.
• Compensation schemes and incentive structures
  conducive to achieving and sustaining capacities
  are powerful instruments of change. Parallel
  implementation structureswhere donors compete to
  hire away the best government officialsdrain the
  capacity of responsible line units and over time
  often undermine capacity rather than develop it.
• Long-term commitments, harmonized among donors,
  prevent fragmentation and create incentives for
  longer-term capacity development. Among good
  practice approaches in this area are (1)
  focusing overall support on partners national
  development strategies (2) periodic reviews of
  progress, based on an agreed medium-term results
  framework (3) implementing common arrangements
  at country level for the range of donor-supported
  activities, including planning, funding,
  monitoring, and evaluating and reporting, (4)
  increased focus on the support of aggregate
  partner-led programmes through fungible
  assistance (sector wide approaches and budget
  support.)

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3. 1.Agreeing on and monitoring clear terms of
engagement   Successful development cooperation
is based on an understanding of roles and
responsibilities underpinned by a framework for
engagement agreed at the country level. In
practice, however, relationships between donors
and developing countries are subject to pressures
and interests that can derail these agreements
and, in turn, undermine capacity development.
More objective methods of monitoring would help
over time to build trust and a more dynamic
partnership, creating a solid basis for building
achievements on the ground. Among the elements of
a clearer framework for engagement are the
following
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• Moving toward alignment with country-led
  programmes, and getting away from the past cycle
  of, one-sided conditionalities, parallel
  implementation structures or onerous reporting.
• Mechanisms for dialogue that set rules of
  engagement and identify needs and commitments on
  both sides.
• Surveys, scorecards or other mechanisms that
  measure client satisfaction or that obtain
  feedback from beneficiaries to gauge how far
  investments in capacity development, whether
  financed externally or internally, have
  translated into more effective use of capacity
  for service delivery.
• Strengthening national reporting and
  accountability systems, based on medium-term
  results frameworks, provides a basis for aligning
  donor reporting requirements with national
  systems. These can be used to strengthen
  accountability to parliament as well as directly
  to beneficiary groups.

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4. Fragile states require even more attention and
coordination Partnerships with fragile states
pose serious challenges that require significant
adaptations of the DAC partnership model of
development co-operation. Yet capacity
development is critical to the central task of
building viable states. And as an objective of
donor assistance to fragile states, it remains a
priority, both in terms of achieving short-term
service delivery and of supporting longer-term
state building. Key findings include

• Capacity development in fragile states requires
  reconciling short-term needs with a clear vision
  to achieve long-term goals. Urgent services
  linked to progress towards the Millennium
  Development Goals are an example of the former
  building peace and security, a national dialogue,
  country ownership and leadership are examples of
  the latter.

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• Approaches need to be adapted to the country
  situation and incorporate learning and
  flexibility. They might include urgent but
  development-linked interventions in post-conflict
  countries to selective support in chronically
  weak or politically isolated regimes. Key entry
  points also vary, whether by sub-sector or
  relative emphasis on non-governmental actors.
• Donor approaches should be based on realism,
  selectivity and long-term vision. This includes
  (i) avoiding overly-ambitious capacity programmes
  that exceed political or institutional
  foundations (ii) ensuring that capacity
  development support does not erode existing
  capacity
• Where poor commitment or capacity mean that there
  is little accountability to government, there is
  a greater need for mechanisms to ensure
  accountability to ultimate beneficiaries at the
  national and local level.

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• Approaches need to be adapted to the country
  situation and incorporate learning and
  flexibility. They might include urgent but
  development-linked interventions in post-conflict
  countries to selective support in chronically
  weak or politically isolated regimes. Key entry
  points also vary, whether by sub-sector or
  relative emphasis on non-governmental actors.
• Donor approaches should be based on realism,
  selectivity and long-term vision. This includes
  (i) avoiding overly-ambitious capacity programmes
  that exceed political or institutional
  foundations (ii) ensuring that capacity
  development support does not erode existing
  capacity
• Where poor commitment or capacity mean that there
  is little accountability to government, there is
  a greater need for mechanisms to ensure
  accountability to ultimate beneficiaries at the
  national and local level.

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Conclusion The experiences of the past decades
have shown the need to align behind and support
country-driven approaches and systems for
development. This development framework provides
new opportunities to improve on the mixed results
of past capacity development efforts. Making
capacity development a central objective of
partnership and an explicit objective of national
development strategies such as the PRS or
equivalent frameworks, as called for in the draft
2005 Paris Declaration on Aid Effectiveness.
Capacity is in itself an essential development
result. Development partnershipsthrough policy
dialogue, strategic planning, implementation
arrangements, monitoring and joint or independent
evaluationoffer ample opportunities to ensure
that the focus is kept on capacity development
and that specific, monitorable results are the
main focus of development cooperation.
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Agreeing on a country-specific framework for
capacity development that starts with
partner-country objectives and strategies and
then considers the role of external assistance.
Whether a formal document or a more informal set
of engagement rules for mutual accountability,
such frameworks should be adapted to each country
situation and form the basis for ongoing dialogue
on capacity issues. Many of the lessons here are
well known and oft repeated but much less well
practised. What is needed now is a determined
common effort, by all donors aligned behind
partner-country leadership, to implement what has
been learned and to make good practice common
practice.