A. Introduction
B. Technical co-operation (TC) and financial co-operation (FC) as complementary approaches of development co-operation (DC)
C. Kenya - The agricultural sector as a test case for viewing TC and FC as one system
D. The post-harvest system and the intervention system two systems views
Dr. Elizabeth von der Ohe
Prof. Dr. Werner von der Ohe
The following analysis is intended to focus upon the development of one system because of the growing awareness of the usefulness of another system. Specifically, it will explore how perspectives and instruments of technical co-operation (TC) and perspectives and instruments of financial co-operation (FC) may be conceptualised as a system, as two sides of the same coin. A system-view of TC/FC is chosen here because of the usefulness of another system-view, that of the post-harvest complex - where all activities and actors, their constraints and opportunities from harvesting to consuming agricultural produce and products, are analysed in terms of their interdependence.
This paper will proceed in three steps. First, some general observations will be made about TC and FC and the advantages of viewing them as part of one intervention system wherever feasible. Second, this overall framework will be supplemented and adapted to the situation in Kenya. Third, the linkage of the TC/FC System to the Post-Harvest System - with special emphasis on sweet potatoes - will be provided.
Development Co-operation (DC) implies the transfer of 'goods' from the economically developed world into the economically less-developed world.1 These 'goods' may take a number of analytically distinct forms, including the
· provision of preferential trade agreements (e.g., the Lomé Convention)
· granting of an IDA status (e.g., the permission to receive subsidised loans)
· supply of financial grants
· deployment of experts to assist in the improvement of human resources and institutions.1 It is beyond the scope of this analysis to review the motives of these transfers. It is assumed here that, regardless of these motives, a positive net-transfer of resources goes from the economically more-developed into the economically less-developed world.
In each of these forms and cases, a subsidised or free transfer of resources (material and/or human) takes place. The actors on the donor side may be categorised as follows:
1. Multilateral (public Sector)· global (e.g., World Bank)
· regional
· regional on the giving side (e.g., EU)
· regional on the receiving side (e.g., ADB)2. Multilateral (Semi-Private/Private Sector) - e.g., International Red Cross, MsF, etc.
3. Bilateral (Public Sector)
4. Bilateral (Private Sector)
These categories of donors evolved in a post-colonial environment that was characterised by one main factor. The Cold War triggered a competition of development-co-operation systems that had an ironic side to it. Whereas the Soviet-led development-co-operation approach favoured the strengthening of the state and other collective forms of economic actors, the Western-led development-co-operation approach had to interact with and help develop the public sector as well - although it believed that the engine of growth was the private sector. In fact, the legal counterparts of most multilateral (public sector) and bilateral (public sector) interactions must be the governments of states, and not the increasingly intended ultimate beneficiary, the private sector. This situation is increasingly becoming a constraint for effective development co-operation. In fact, as liberalisation, rationalisation and privatisation efforts progress, there is the serious consequence of dealing with a counterpart (the public sector in the economically less-developed country) that is redefining and restricting its role in the development process and may subsequently lose its ability to be a conducive counterpart.
Against this background, the bilateral public-sector-sponsored forms of development co-operation need to be re-examined as well. Specifically, the distinction between Financial Co-operation (FC) and Technical Co-operation (TC) should be reviewed in terms of their relative contribution to the objectives of Development Co-operation (DC) in light of the policy-mandate to support the intended beneficiaries in the private sector of a country.
The Federal Republic of Germany is unique in terms of its pluralistic concept of extending donor assistance. An inspection of the annual budget of the Federal Ministry of Development Co-ordination reveals the operationalisation of this pluralistic concept, in that it contains an almost complete list of all multilateral and bilateral recipients of DC assistance - IDA, regional development banks, political foundations, and the two principal bilateral organisations in charge of FC and TC, the KfW and GTZ. Whereas it is the mandate of KfW to supply financial resources to developing countries for the improved use and increase of production potentials including the economic and social infrastructure, it is GTZ's mandate to support the ability of people and organisations to improve their conditions by the transfer and mobilisation of know-how and other technical resources and/or by assisting in the creation of preconditions for their improved application.
Realising the potential synergies that are to be effected by increased cooperation, both KfW and GTZ signed an (albeit non-binding) Agreement on 9th September 1993 that sealed the intended future forms of co-operation. Specifically, this Agreement mentions six domains where co-operation between them should be feasible and undertaken wherever possible:
1. - Country Co-operation and Co-ordinationThis domain has the following objectives for GTZ and KfW co-operation:
· jointly support the BMZ Ministry to conceive country-specific concepts and programs· improve the sectoral 'packaging' of TC and FC to enhance the effectiveness of German DC
· facilitate the design of joint responses to problem fields in a specific sector or with project implementors
· enable the early identification of required co-operation necessities.
2. Technical Co-operation that reaches beyond projects
In this domain, KfW and GTZ co-operation is aimed to
· jointly support the BMZ Ministry to develop and/or redesign sectoral and transsectoral concepts of assistance· strengthen the reciprocal use of sectoral and methodological experiences and know-how
· harmonise the technical principles, criteria and methods in sectors and in cross-sectoral areas that belong to the focal spectrum of expertise of each
· mutually assist each other in the acquisition of external know-how.
3. Co-operation at the level of projects (in general)
Whenever TC projects and FC projects in a partner-country are implemented at the same time in the same sector or region, KfW and GTZ will co-operate as closely as possible.
4. Co-operation at fee level of projects (specific)
If projects and/or programmes of FC and TC are complementary in terms of content and approach, a joint implementation and agreed-upon co-operation agenda will be followed, such that the overall effectiveness will be enhanced.
5. Mutual Assistance in fee partner countries
GTZ and KfW support each other. This includes mutual assistance in terms of the use of infrastructure and supply of information.
6. GTZ as an FC-Consultant
GTZ may be considered as a consultant within the implementation agenda of FC.
This Agreement of 9th September 1993 sets the stage for realising the co-operation potentials between FC and TC. Setting the stage, however, is not yet synonymous with enactment on the stage. To date, the concrete forms of co-operation have not reached their full potential. The examples to be cited are scattered and sporadic. Among the more frequently cited reasons for the rather lacklustre implementation success so far are that both GTZ and KfW seem to perceive themselves to be in competition with each other - in a "zero-sum game" (win-lose) - with respect to BMZ. Also, the Project Cycle Management approaches of GTZ and KfW are not fully harmonised, thus creating co-ordination hurdles. Finally, in the absence of specific BMZ pressure, no incentives seem to exist to arrive at a "positive non-zero-sum game" (win-win) in which both could gain. What is required, then, is the conceptual development of TC and FC as part of one win-win system, where TC and FC are co-operating because the design of DC considers them to be "natural partners" whenever this is feasible. In the next part of this analysis, Kenya will be used as a case study to provide evidence for the possibility of such a joint system-perspective for TC and FC.
Today and for some time to come, the agricultural sector is the backbone of the Kenyan economy. Its combined direct and indirect contribution to GDP exceeds 50 %. Its population - 28.2 Mill. in 1996 with a current annual growth rate of 2.7 % - relies heavily on agriculture, which provides a livelihood for almost 80 % of Kenyans. About two-thirds of agricultural production is in the hands of smallholder farmers. Among these, 80 % own and operate less than 2 hectares of land each. The major food crop is white maize. Other important crops grown are sorghum, millet, wheat, barley, rice, banana, Irish potato, sweet potato, cassava and beans. Coffee, tea, horticultural crops and pyrethrum are the primary cash crops. Livestock production is both intensive in the higher-potential agricultural production areas and extensive in the vast arid and semi-arid lands which constitute about three-fourths of the country.
In addition to the constraints and challenges already referred to (population growth, arid and semi-arid land), there are eight more to be mentioned explicitly:
1. Agriculture is predominantly rain-fed and output is therefore heavily influenced by the amount, distribution and variability of rain which causes considerable risk and uncertainty in production.2. The country depends upon a narrow range of primary agricultural products for exports, which face a fairly volatile and stringent world market.
3. Sectoral productivity is dominated by small-scale production where productivity is low and has been declining in recent years.
4. Rural infrastructure is inadequate and in a poor state, especially with respect to rural access roads, energy supply, water and marketing facilities.
5. The supply of quality material and service inputs (e.g., seeds, fertiliser, research, extension, market information) is insufficient or lacking.
6. The legal and policy frameworks (and especially the implementation thereof) are not sufficiently conducive. Neither are there sufficiently effective regulatory and quality-control mechanisms in place.
7. There is a lack of adequate and suitable credit and credit arrangements for the production and marketing of agricultural produce and products, especially for women who are the majority of farmers and who also provide the bulk of labour inputs and the day-to-day management of the smallholder subsector.
8. The integration and co-ordination of activities by major stakeholders within the sector - Government ministries, farmers, farmers' organisations the private sector, NGOs and donors - is inadequate.
In light of this overall characterisation of the status quo in the agricultural sector in Kenya, it would be short-sighted if not outright irresponsible to ignore the benefits that TC together with FC could offer to ameliorate and/or improve the performance of the sector wherever this is indicated.
The following five objectives of a sector strategy have been proposed:
1. Increasing the Agricultural Growth Rate
2. Increasing the Productivity of Land and Labour in the sector
3. Ensuring that Agricultural Growth is Environmentally Sustainable
4. Improving Household Food Security
5. Improving the Position of Women in the sector.
These five objectives, coupled with improved management strategies and capabilities, are intended to tackle the above-mentioned challenges and constraints faced by Kenyan agriculture.
If DC, therefore, is striving to ensure the achievement of effectiveness as far as these objectives are concerned, then TC and FC have to be conceived as complementary parts of one system.
Before operational proposals for the implementation of such a system can be made, however, it is perhaps useful to first consider the factors that speak against such a system-view. The most important seem to be the following:
1. Kenyan Members of Parliament (MPs) are judged, among other things, by how many development projects they bring to their constituencies. Any reduction in the total number of projects (which would follow if each project had a TC- and an FC-component) would create more «losers» and fewer "winners" among MPs.2. Kenyan Ministries (there are about 14 that work within the agricultural sector) are judged by the number of projects that are in their portfolio. Also, any merger of TC and FC into a joint project would most likely overstep the portfolio-boundaries of any one ministry, thus producing interministerial co-ordination problems.
3. The selection of project sites is not always done along strictly socio-economic and socio-economic criteria. Because of the improved impact of a joint TC-FC project, the competition for such projects would exacerbate the prominence of such other criteria.
4. In a specific sense, FC is more "politically correct." It seems to imply more "local ownership," less interference and more self-determination.
5. In the same sense, TC acquires a potentially bad image, because it claims to know more about what is going on "on the ground." Hence it claims to be better able to detect non-transparency and could possibly become a "whistle blower."
6. Last, but by no means least, is an ironic consequence of an improved TC-FC system in terms of its sustainability after the closure of such a project or programme. Because of the potentially endless list of new development sites and projects, any large TC-FC project would reduce the probability of its sustainability in the future. Other regions and other ministries will want their turn to reap development funds, so the focus will shift elsewhere. The advantages of such a system approach would therefore create later unintended disadvantages.
Given the challenges and constraints in the Kenyan agricultural sector, the objectives aimed at overcoming them and - the just-mentioned realities, it is useful to remember the dilemma that the counterparts for public sector multilateral - and bilateral assistance - are not the "increasingly intended ultimate beneficiary, the private sector" (p. 2), but rather the public sector itself. It was claimed that the policy-mandate to support the intended beneficiaries in the private sector calls for a review of DC in general and the relative contributions of FC and TC in it.
The Ministry of Agriculture, Livestock Development & Marketing of the Government of Kenya has reviewed and revised its vision, mission, role, core functions and performance objectives in the agricultural sector.
Its vision (for the Ministry and for the sector) is to commit the Ministry and to enable/empower the private sector to provide everyone everywhere in Kenya at all times with sufficient and healthy food in an ecologically sustainable way. This vision includes the specific goal of poverty alleviation through employment creation in rural areas.
The Ministry's mission is to effectively and sustainably facilitate private-sector initiatives, with emphasis on providing strengthened adaptive research, relevant extension, regulatory, quality-control and other essential services to the entire farming community. Effectiveness achievement will be monitored on the basis of identifying and structurally operationalising a set of core functions. Sustainability refers to self-propelling sector initiatives, cost-efficiency and environmental safety and soundness. To ensure a proper safety net for achieving the vision, the Ministry's mission also includes being the trustee of food security for all Kenyans as a supplement to private-sector activities.
Its core functions are
· Monitoring and Management of Food Security· Formulation and Monitoring of Policy and Appropriate Legislation
· Information Management for the Agricultural Sector
· Regulatory Management of Agricultural Inputs, Produce and Products
· Facilitation and Supply of Appropriate Agricultural Extension Services and Extension-Research Liaison
· Sector Development Co-ordination
· Development and Protection of the Natural Resource Base for Agriculture
· Disease and Pest Control
· Contribution to Agricultural Research Priorities Setting
· Promotion of Private Sector Development.
It is obvious that these ministerial core functions are closely linked to the five sectoral strategy objectives. For the FC-TC systems view, however, it is important to single out three particular core functions that may provide a platform from which a TC-FC system can be judged. They are:
1. Information Management for the Agricultural Sector
2. Sector Development Co-ordination
3. Promotion of Private Sector Development.
Given the importance extended to the private sector as the expected engine of growth in agriculture, both in the ministerial mission and in these core functions, one may claim that DC - with its complementary instruments of FC and TC - can increasingly obtain a counterpart that is the intended beneficiary as well. By explicitly recognising this policy-led scenario, DC will operate as a system within a system. It will operate as a system by pooling FC and TC, and it will operate in a system where the relationship between the private and the public sector becomes clarified in terms of subsidiarity, i.e., the public sector will no longer do what the private sector can do as well or better. It is thereby assumed - and needs to be shown empirically - that the sustainability of TC-projects and programmes will be substantially enhanced.
Table 1 provides a complete overview of all development projects (TC) that Germany is currently or will soon be supporting, as bilateral assistance projects from and to the public sector, within the portfolio of the Ministry of Agriculture, Livestock Development & Marketing in Kenya. (Not included are other projects and programmes that are executed wholly or in part as transnational sectoral projects or via multilateral programmes such as IDA, KU, ADB, etc.) Of special significance for the analytical purpose at hand is that none of these TC-projects is categorised by the partner country as a Core Project with the priority code "C" (the highest of the three possible codes). German TC projects carry either priority code "H" (High) or "M", (Medium). It is suggested, therefore, that a prudent combination of TC with FC would have catapulted some of these German projects and programmes into the priority category "C". Also of interest here is the percentage of costs that the Government of Kenya (GOK) commits itself to contribute to the successful completion of "H" and "M" projects. Save for the unusual case of the construction of offices to appear in a Development Vote - and where, incidentally, no feasibility study has been done - there is only one case (No. 070/Marsabit) where GOK intends to provide almost one-third of the total project costs (30.7 %). The lacking system-focus downgrades these TC-projects into lower priority categories from the point of view of the partner country.
At a time when the allocation of increasingly scarce resources calls for precise indicators for efficiency and effectiveness enhancement that can be monitored, German DC needs to identify projects and programmes that maximise impact. It is suggested, therefore, that proactive ways need to be explored that consider the combination of TC and FC as a serious option already at a very early stage in the planning cycle of DC.
Table 1. Vote D10: Agriculture, Livestock Development & Marketing Projects Supported by Germany
Project No. |
Project Name |
Priority |
Total Estimated Costs (in thousand K£) |
Year Started |
Year of Completion |
Proposed Expend. Schedule |
GOK %-age share |
||||
GOK |
Ext. Grant |
Total |
1997/98 |
1998/99 |
1999/2000 |
||||||
(1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
(9) |
(10) |
(11) |
(12) |
039 |
Range Management Handbook |
H |
1,470 |
4,900 |
6,370 |
1986 |
1998 |
1,021 |
- |
- |
23.1 % |
045 |
ASAOII (Farm Equipment) |
H |
- |
48,000 |
48,000 |
1993 |
2000 |
3,000 |
3,000 |
4,000 |
0.0 |
070 |
Marsabit Int. Dev. Project (SDD) |
H |
5,066 |
11,450 |
16,516 |
1995 |
2000 |
3,843 |
3,392 |
2,745 |
30.7 |
076 |
Construction of Offices |
H |
2,891 |
190 |
3,081 |
1995 |
2000 |
910 |
790 |
471 |
93.8 |
201 |
Transmara int. Dep. Project (SDD) |
H |
1,968 |
7,874 |
9,842 |
1991 |
1998 |
2,241 |
- |
- |
20.0 |
345 |
Integration of Tree Crops into Farming Systems |
H |
- |
4,000 |
4,000 |
1996 |
2000 |
1,000 |
500 |
500 |
0.0 |
346 |
Fertiliser Extension Project |
H |
- |
2,268 |
2,268 |
1993 |
1999 |
757 |
759 |
- |
0.0 |
058 |
Samburu Int. Dev. Project(New Phase) |
M |
1,531 |
6,125 |
7,656 |
1996 |
2000 |
2,226 |
2,226 |
2,237 |
20.0 |
077 |
Integr. Small Animals Project (New Phase) |
M |
2,097 |
13,985 |
16,082 |
1995 |
2000 |
3,346 |
3,348 |
3,349 |
13.0 |
302 |
Private Sector & Infrastructure Promotion in Agriculture |
H |
1,225 |
3,500 |
4,725 |
1997 |
2001 |
575 |
1,575 |
1,575 |
25.9 |
303 |
Management Information System |
H |
3,675 |
10,500 |
14,175 |
1998 |
2001 |
- |
4,725 |
4,725 |
25.9 |
304 |
Agriculture & Livestock Extension |
H |
5,250 |
15,000 |
20,250 |
1998 |
2001 |
- |
6,750 |
6,750 |
25.9 |
In the following section, one specific system that has grown within TC and that is demonstrating its usefulness, namely the post-harvest system, is taken as a conceptual case study to demonstrate that a content-based system may lead the way towards justifying the employment of a systems-view of DC options.
Figure 1 illustrates the 'life-cycle' of the post-harvest system. It identifies major activity areas that a crop, for example sweet potato, has to go through from the day it is harvested to the day it is consumed.
It attempts to do justice to the systems view of the post-harvest complex of issues. Specifically, it distinguishes among three permanent actor-groups that are involved in this transaction system. These are:
· the farmers themselves (individually and via co-operatives)
· the non-farming private sector
· the public sector (providing increasingly only "public goods").
Figure 1. The Post-Harvest System: Opportunities for Benevolent Intervention
Interventions in square brackets denote activity areas that may be performed by either the public or the private sectors or that start out in the public sector to be fumed over to the private sector at some later stage.
Given the post-harvest system with these three actor-groups, conventional (e.g., win-lose) approaches by either TC or FC would analyse the situation - already at the pre-appraisal stage - wearing their respective "blinders." In other words, the TC experts would identify the TC-relevant instruments and would relegate FC-relevant intervention instruments into the log-frame (ZOPP) column of "Assumptions." The FC experts, on the other hand, would highlight the usefulness of the FC "toolbox" containing mostly FC-biased instruments.
What is needed, however, is to begin with the post-harvest system with its three actor-groups and to design benevolent interventions with the complete DC "toolbox" of available instruments at hand. Figure 2 displays this scenario by cross-tabulating the three actor-groups with examples from the complete DC "toolbox" - consisting of FC/TC co-operative measures, FC-only measures and TC-only measures - with the choice of measures or tools depending upon the requirements of the situation.
Figure 2. Post-Harvest Examples of FC/TC Approaches
FC and TC Co-operate?
|
Yes |
No |
Public Sector |
Support warehouse-storage facilities to be privatised later (provide entry and transition assistance) |
FC only (e.g., for access roads)TC only (e.g., advise on introducing competition policy) |
Farming Private Sector |
Explore, train, install small value-adding factories for producing sweet potato chips/flour |
TC only (e.g., provide training on proper grading and bulk coop-packing) |
Non-farming Private Sector |
Support rural small-credit schemes |
TC only (e.g., introduce and train on the provision of private-sector market info system) |
Figure 2 is an heuristic scheme only. The "cells" are filled with potential and exemplary intervention options on the part of:
· FC alone
· TC alone, or
· FC and TC together as an intervention system.
What needs to be emphasised is that - by employing the post-harvest systems view - it is possible to make better proposals and decisions about the appropriate assistance strategy (and packages) that will:
· reduce the transaction costs of the middle stream of activities (in the stages between harvest and reaching the consumer)· improve the probability of a "positive non-zero-sum game" (win-win) where both the farming community and the consumers gain
· demonstrate the win-win possibilities (synergies) between FC and TC.
It is in this sense that the benevolent intervention systems view benefits from a thorough analysis of the post-harvest system. A "real-life" system with its principal actor-groups provides the scenario and the vantage point from which the decision-makers can judge the appropriateness of choosing an FC intervention, a TC intervention or a co-ordinated FC-TC combination.
The purpose of this exercise, then, is to stress that the usefulness and synergy of FC-TC are not derived merely from co-operation agreements between KfW and GTZ, but rather from content-based technical life-cycle systems that enable the decision-makers to identify - already at the conceptual pre-appraisal step - where and why such synergies can be achieved. To achieve such a solution would require a three-step action plan:
1. Establish a working group (task force) in Kenya that assembles the experiences and interests of all relevant stakeholders from the public as well as from the private sector, including participants from ministries, research institutions, parastatals, farmers' organisations NGOs, etc.2. Once this group has worked out appropriate TORs, for example along the lines of Figure 1 and Figure 2, and after it has reached some interim results, invite representatives from GTZ and KfW and discuss with them the intervention system scenarios.
3. Jointly agree on a model project where the working group would act as an implementation committee that monitors the benefits expected from the synergies or FC and TC.