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Some thoughts on Matthew Andrew's 'Limits to PFM Reform in Development'

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Martin Johnson:
First of all, a public apology to Matt who sent me the proofs for his book back in December. I read the book immediately and sent Matt comments within a few days. After promising to post some review-type blogs based on those comments I have already let too much time pass. So, sorry for that Matt and ... for anyone who is interested, here are the first of my thoughts on what I suspect will become an important and (hopefully) paradigm-shifting body of work.

First of all, congratulations are in order for the veritable tour de force that Matt has produced. He has amassed a huge amount of evidence and organised it extremely well to tell a persuasive and important story that has relevance to all members of the development community and to many not in the development community, not the least of which is the international taxpayer who continues to fund those interventions that are making meaningful inroads to stubborn problems and the many more interventions that seem to be having so little impact. If the call to arms at the end of the book is heeded among funding institutions, developed country governments and partners in improving governance, Matt’s book may well have an impact beyond the academic community and in the lives of people who deserve better from the governments that often do not serve them as well as they should. Many of the themes and conclusions in the book chime with my own experience which I hope to convey in the posts that follow.

Martin Johnson:
Matt’s book draws attention, among other things, to the widespread use of governance and related reforms that are ‘best-practice’ in design but are short-term and seem to ignore context and the myriad layers of minor and major context-specific issues that must be negotiated before technical solutions have even a chance of being adapted properly, never mind implemented at the front line by people that matter (however insignificant or distant those people may appear to project designers or project implementers). He is not alone in being frustrated by observing the widespread use of this approach and it is no surprise that he presents so much evidence of success in terms of ‘signals’ and so (relatively) little impact from that apparent success. The time is ripe for a weighty tilt against this paradigm. The evidence that Matt has assembled is certainly weighty. It is also persuasive and does have the potential to begin shifting the paradigm.

A fair amount of my own practical experience chimes with much of the analysis and evidence in Matt’s book. This includes coming into contact with projects that aim to support governance reforms but have unrealistic or inappropriate log-frame design, both in terms of nonsensical periods of time over which fully-formed reforms are expected to be designed and delivered and in terms of the contextual “constraints” that are simply overlooked or assumed away. In one case I had an unusual opportunity to periodically review a major PFM reform over a ten year period. The anticipated achievements in its original design (covering a period of just 2.5 years – a period typical of many development partner-supported governance reforms) were unrealistic to the point of being wholly unachievable. The support would have resulted in abject failure and closure after (or even before) year 2.5 had it not been re-scoped shortly after it started – an interesting story in itself, but one for another time and another place. Even after re-scoping it remained over ambitious and was on the verge of closure on several occasions because of an apparent failure to deliver results (including when very good results were being delivered!). The story of that reform is one where what was delivered after ten years was more or less what was possible within that period in the highly difficult change management environment of the country concerned (where what Matt refers to as ‘cultural cognative influences’ are extremely strongly embedded). Interestingly enough, whilst a number of different development partner staff members came close to closing the project at various points in its lifetime because of ‘lack of results’, it managed to survive (sometimes narrowly) in part because it was subject to a regular and independent review process that explained to the development partner on most of these occasions that ‘context’ was being addressed and that progress was commensurate with context, even if it was not commensurate with the project’s over-ambitious design. From my own experience, therefore, I have come to appreciate one of Matt’s conclusions with regard to ‘best practice’ and the short term nature of many governance reforms - the need for regular reviews to address context.

Martin Johnson:
As noted in my previous post on Matt’s book, inappropriate design of development partner support can substantially undermine the effectiveness of that support (and the likelihood of success in the reform itself), particularly where this involves the heady mix of ‘best practice’ outputs and highly ambitious timeframes. I am sure that many observers and practitioners have seen similar examples of such paradox in design. I have little doubt that an analysis of development partner support portfolios will tend to suggest that the typical menu of best practice reforms have tended not to achieve the desired results, as Matt’s evidence shows only too well. One conclusion is that ‘the menu’ should not necessarily be offered to all. This may very well be true. But it is also likely to be the case in some instances that there is not necessarily anything wrong with ‘the menu’ but that there is something wrong in the order of service and the speed with which the head of house expects her diners to be in and out.

Martin Johnson:
Matt’s analysis of reforms as short-term signals is compelling. But the other side to this story, of course, is that there is a perverse incentive among development partner staff to demonstrate successful engagements with client governments that deliver something that looks like successful reform (and perverse incentives for implementing agents to deliver what terms of reference require of them, irrespective of whether they comprise short-term signals alone or something more than that). Short-term signals, of course, look something like successful reform ... over the short-term at least. Which is often just enough time for an ambitious and apparently successful development official to move on and ascend further up the slippery pole (and more than enough time for consultants to be paid!). By way of contrast, taking time to properly identify problems, underlying causes and the appropriate change agents at each of the relevant locations required and finding contextually appropriate solutions probably takes more time and requires more (apparent) risk than a typical development partner organisation (and individuals therein) is prepared to take. Moreover, the ‘development industry’ thrives on paradigms (structural adjustment, PRSPs, governance, PFM, etc.). Such an approach also requires a deeper skill set within agencies ... as well as among practitioners. Whilst I agree with Matt’s analysis, perhaps the task of reforming ‘ourselves’ to be capable of delivering pegs of the appropriate size and shape for the holes that need filling is as daunting as properly identifying the holes to be filled and crafting the pegs.

Martin Johnson:
The section of Matt’s book that deals with ‘institutional logics’ and the influence of these on reform possibilities and outcomes articulates very nicely what one observes all the time, with or without realising it. A very practical symptom of a ‘dominant institutional logic’ in a country I am familiar with was brought to my attention with a contemporary story of recruitment of (relatively junior) government officers who, it seems, are obliged to make an informal payment equivalent to several times the annual salary they can expect to obtain from the post they are applying for. The existence of this kind of informal payment, of course, goes a very long way to explain persistent and all pervading petty rent seeking within public services where such situations occur. The incumbents expect to pay ‘tax’ (capitalised) for the employment opportunity. It is expected and understood that they will extract rent from their daily duties (a form of tax-farming I suppose). Similarly, I was once at a social occasion when a former Accountant General of the country I was working in was asked out of the blue by a fellow guest what the ‘cost’ of a police station currently was. The answer was $100,000. What I was most surprised at was not the figure (though it did give me food for thought) but the response that came without any hesitation. It was at that point I realised that everyone who has to put up with such situations in their daily lives (i.e. recipients of public services) knows the informal rules of the game in such countries. The difference between formal and informal rules is also well illustrated by my experience of leading fiduciary risk assessments in various countries. When I have asked national colleagues to prepare text on the corruption risk component of such assessments, they have preferred to limit their presentation to an analysis of Transparency International and other perceptions-led assessments, despite a clear knowledge about particular and well-known corrupt practices in those countries.

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