Questioning the Effectiveness of Technical Cooperation in Bangladesh

An Overview of Technical Cooperation

Vision 21 Plan, also known as the Perspective Plan (2010 – 2021), provides a road map for economic growth whereby Bangladesh will become a middle-income country by the year 2021. It was developed with the assumption that foreign aid will continue to play an important role in the country’s development. Although foreign aid contributions have been decreasing, they still figure prominently the country’s Annual Development Plan (ADP) with more than 30% of the ADP being supported by aid in 2015. However, several studies have identified concerns regarding the management and coordination of foreign aid as well as its alignment with national development plans and strategies. In the case of aid delivered through Technical Assistance (TA), country ownership, alignment and effectiveness are largely absent. Lack of enforcement of these aid principles has frequently been noted in TA projects and activities.

Each year Bangladesh receives at least US$100 million in TA projects. Most often this assistance is linked to strengthening the performance and capacity of public institutions that either provides basic services (education, health, administration, planning) or create employment (agricultural extension, vocational training, productivity centers, public works).^[1]

There are two important factors that characterize TA projects in developing countries. Poor countries often do not have the resources to pay for such services, so that “the bulk of the financing has to come from the TA supplier rather than its recipients, and secondly, the provision of TA has to be managed as a public sector activity in accordance with the government regulations and procedures of each supplying country.”^[2]

Unfortunately, in many cases, there is limited information available on the effectiveness and success of TA projects in Bangladesh. As well, it is often unclear as to how or whether these projects align with national development plans. Research findings that are available indicate that TA projects are not sufficiently effective. A number of reasons are cited. The design of TA projects continue to ignore local conditions, are characterized by the poor performance of the executive agency, an inefficient TA preparation process, and an inappropriate implementation planning.[3] In addition, TA projects are often unable to cover long-term priorities. Among the aid channels, TA projects are the third most ineffective category, after tied aid and food aid. Another report published by World Bank indicated the ineffectiveness of TA projects. This report concludes:

“The efforts made by the donors to support institutional reform, principally through technical assistance both as self-standing projects and as components of other projects, have had limited success in strengthening individual institutions. But, in the absence of a strong drive for reform from the government leadership, progress has been slow.”^[4]

A common perception is that aid money for TA projects actually benefits donor countries as it usually involves the hiring of foreign consultants from these countries.^[5] Research shows that the high cost of TA projects is directly related to the involvement of foreign firms/ consultants and the rates that they charge. In these cases, the local market also suffers, since it “distorts the local labour market, and creates incentives for corruption because highly-paid consultants in ministries and projects create demands from the less well-endowed public service officers they work with.”^[6] TA is also heavily criticized for its donor-driven approach.^[7] For example, the World Bank faced strong criticism for its role in the Bangladesh Climate Change Resilience Fund’s (BCCRF) fiduciary management. Civil Society Organizations (CSOs) were deeply troubled by the involvement of World Bank technical assistance in fund management. CSOs were concerned about the implications for country ownership and decision-making authority.[8]

Recognizing this history and current practices in technical assistance, this paper will now focus on a Bangladesh TA project on public procurement reform.

Technical Assistance Project on Public Procurement Reform (PPR I)

Public procurement plays a significant role in a country’s development process and economic growth. However, the procurement sector is globally identified as having a high level of corruption. A recent UN Guidebook on anti-corruption stated that

“An average of 10-25 per cent of a public contract’s value may be lost to corruption. Applying this percentage to the total government spending for public contracts, it is clear that hundreds of billions of dollars are lost to corruption in public procurement every year”^[9]

Public procurement also continues to be a challenge to ensuring good governance.

In Bangladesh, public procurement accounts for a large percentage of the country’s budget. For example, in the fiscal year 2011-2012, it amounted to approximately TK. 287 billion.”^[10] Bangladesh losses due to overall corruption are generally estimated to cost about 2.5% of GDP growth per year[11]. Considering the significance of these losses, many development documents have acknowledged the crisis of governance in the procurement sector. ^[12] The World Bank’s Country Assistance Strategy (2000) noted governance and institutional limitations as major constraints for Bangladesh in achieving economic growth and poverty reduction. In this regard, “the government’s commitment to undertake a broad-based reform agenda on governance is a trigger to Bank’s moving toward high case lending support”[13]

The World Bank introduced the “public procurement reform project” in 2002 with the objective of developing legislation and a regulatory framework for proper procurement rules and systems. The main objective was to “establish a series of mechanisms to improve efficiency, transparency, and accountability in the procurement of goods, works and services by government ministries, departments, statutory corporations and other public bodies”[14]. Through TA, the project was designed to strengthen both the country’s aid management capacity and its aid effectiveness in order “to gain donor group’s confidence to justify continued development assistance to Bangladesh”[15]

An important achievement of this project was the enactment of the Public Procurement Act (PPA 2006) and Public Procurement Rules (PPR 2008). Initially, progress was made in increasing transparency levels through the publishing of procurements opportunities, bidding documents and the awarding of contracts. The legislation included review and appeals mechanisms that considerably improved accountability. Just as significant was the implementation of organizational development initiatives such as an intensive capacity building training program for officials and the start up of a monitoring system.

Table 1: Project Summary

Component	Sector	Indicative Cost (US$M)	% of Total	Bank Financing (US $M)	% of Bank Financing
Establish Central Procurement Technical Unit	Institutional Development	$1.25	25.5%	$0.84	18.9%
Implementation Procurement Reforms and Rules / Procedures	Public Sector Management Adjustment	$1.59	32.4%	$1.59	35.7%
Improving Procurement Management Capacity	System Reform and Capacity building	$2.07	42.2%	$2.02	45.4%
Total Project Cost		$4.91	100.0%	$4.45	100.0%

Source: World Bank, Report No.: 23928-BD

As the project budget (Table 1) indicates the second largest allocation (32.4%) was for the implementation of procurement reforms, rules and procedures, while the biggest percentage (42.2%) was allocated for improving procurement management capacity. This seems to indicate that the World Bank prioritizes the implementation and improvement of procurement capacity.

Despite these improvements and development in the procurement system, the question of country ownership remains a grey area in Bangladesh. The reform agenda was a prerequisite for World Bank funding and was firmly aligned to the country assistance strategy (CAS) for Bangladesh. In other words, the reform project was essentially a policy condition to receive World Bank funding, which led to the creation of the Anti-Corruption Commission in 2004, rather than strengthening an existing Bureau of Anti-Corruption that had existed since 1971.

Bangladesh is not alone. There seems to be a widespread tendency for TA projects to suffer from a lack of country ownership in national law-making.^[16] In the case of this public procurement project the reform process had limited participation of relevant stakeholders. Many pointed to the fact that Government of Bangladesh did not have the power to lead the process fully, nor did if have a recognized role as the concerned actor. In a study, the Economic Relations Division of Bangladesh affirmed that the “procurement regulations came ‘with consent from development partners’, ‘reviewed’ by the World Bank and the ADB.”^[17]

A central question is the future use of the reformed procurement system. A lack of coordination, management and planning are still evident in the implementation of the reformed law. Overall, the Bangladesh government is directed by donors and funding institutions. A study by Riddell revealed, “GOB is in the driver’s seat but we the donors tell them which direction to go. I do not see any projects planned by the government. Plans are drawn by the TA teams.”^[18]

The use of donors’ procurement systems continues to be a problem, particularly in relation to the reformed laws on public procurement. A lack of alignment with the country procurement system is a critical issue for Bangladesh. For example the World Bank insisted that its procurement rules had to be followed in international tenders, rather than the reformed procurement system.^[19]  It seems the World Bank does not feel comfortable using the reformed procurement rules, even though they established the project to enact these laws. It seems that the new law is not compatible with the requirements of international tenders. Perhaps there is still some conflict between donor requirements and Bangladeshi law.^[20]

Most of Bangladesh’s donors in fact do not fully rely on the country’s procurement system. There remains a clear lack of harmonization in procurement practices between donor and government systems. According to the Paris Monitoring Survey, 2008, ODA was disbursed through the country procurement system at a rate of under 50%.^[21]  There is still a lack of trust and political commitment by donors to Bangladesh.

A second question is the effectiveness and sustainability of TA projects. There is a problem of credibility regarding the recruitment of foreign consultants by the World Bank in order to take over the drafting of the regulations. Aid principles confirm that donors are expected to strengthen country systems, and development partners should make it a priority to use these systems. However, development partners often fail to fulfill these commitments. In many cases, the Bangladesh government faces many difficulties while trying to follow the various procurement rules of different donors. This is a major challenge for the recipient administration in both Bangladesh and other countries.

Conclusions

There should be strong and respectful coordination between the Government of Bangladesh and its development partners in technical assistance programs. Information on TA projects should be accessible to the public. Both donors and partners need to improve mechanisms to ensure stakeholders’ participation. Many have noted that TA projects have the potential to undermine country priorities and its authority. These issues must be addressed.

TA projects can make a useful contribution in terms of improving capacities, skills and sectoral development. With the Bangladesh Government’s commitment to the eradication of poverty, effective and efficient use of demand-driven TA funds is greatly needed. At the same time, development partners should respect and encourage a country’s system in the planning and implementation of public sector projects.

References

[1]Kilby, P. (1979). Evaluating technical assistance. World Development, 7(3), 309-323. Retrieved from  http://www.sciencedirect.com.ezproxy1.library.usyd.edu.au/science/article/pii/0305750X79900597, p. 309.

[2]Morgan, P. (2002). Technical assistance: correcting the precedents. Development Policy Journal, 2(1), 1-22, p. 2.

[3] Asian Development Bank (2007). Special Evaluation Study on performance of technical assistance, Retrieved from http://www.adb.org/sites/default/files/evaluation-document/35701/files/sst-reg-2007-02.pdf, p. v.

[4]Riddell, A. (2011). Donors and capacity development in Guyana and Bangladesh. International Institute for Education Planning, UNESCO, Paris, page 50, citing the World Bank.

[5]Williamson, C. R. (2010). Exploring the failure of foreign aid: The role of incentives and information. The review of Austrian economics, 23(1), 17-33, page 5.

[6]Ellmers, B. (2011). Helping or hindering? Procurement, tied aid and the use of country systems in Bangladesh [online]. Brussels: European Network on debt & development (Eurodad), p. 3.

[7]Greenhill, R. (2006). Real Aid: Making Technical Assistance Work. ActionAid International, p. 25.

[8] NegAge (2013), End WB role in BCCRF management by 2013, viewed at http://www.newagebd.com/detail.php?date=2012-05-11&nid=9917

 

[9]United Nations (2013). Guidebook on anti-corruption in public procurement and the management of public finances: Good practices in ensuring compliance with article 9 of the United Nations Conventions Against Corruptions, Retrieved from https://www.unodc.org/documents/corruption/Publications/2013/Guidebook_on_anti-corruption_in_public_procurement_and_the_management_of_public_finances.pdf, Page 1.

[10]Islam, M. S. (2012). Improving transparency in public procurement in Bangladesh: interplay between PPA and RTI Act, page 1.

[11] World Bank, Report No: 23928-BD, 2002

[12]This includes poverty reduction strategy documents and Vision 21.

[13] World Bank, Report No: 23928-BD, 2002

[14] World Bank, Report No. 23928-BD, 2002, p. 2

[15] World Bank, Report No.23928-BD, 2002, p. 2

[16]Ellmers, op. cit., page 17.

[17]Ibid, p. 17.

[18]Riddell, op. cit., pp 53 -54.

[19]Ibid, p. 54.

[20]Ellmers, op. cit., p. 18.

[21] Ibid., p. 14.

 

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