Achieving more with less money?

Wie kann die Entwicklungszusammenarbeit diesen Jungen in Moçambique helfen, den Anschluss ans digitale Zeitalter zu finden?
Article as analysis
The Government hails the long-term strategic benefits of development cooperation, while at the same time it is planning massive cuts precisely in this area.

The Federal Council submitted its Stabilization Programme 2017-2019 for expert consultation in November. The planned cost-cutting measures are massive, but they disproportionately affect international cooperation. This important area of work will therefore bear about a quarter of the spending cuts. Compared to the 2015 budget, absolute cuts are planned only in this area and in agriculture.

The planned cuts are expected to move the share of international cooperation in overall federal spending from 5.5% to 4.9% by 2019. The share of official development assistance (ODA) in gross national income (GNI) should remain consistently at 0.48% until 2020. The Federal Council is therefore no longer abiding by the Parliament's decision to keep this ratio at 0.5%. Instead it is moving ever further away from the goal of raising it to 0.7%. In 2015, it twice reaffirmed this goal in the framework of the UN Agenda 2030 for Sustainable Development. This is all the more unacceptable, considering that already in 2014, the share of developmentally effective ODA amounted to a mere 0.41% of GNI. For ODA computations also include the cost of assisting asylum seekers in Switzerland, assistance for repatriation provided through the State Secretariat for Migration (SEM), spending on international climate financing and peace building activities by the Ministry of Defence.

In presenting the framework credits for international cooperation, the Federal Council takes 2016 as the reference year in all cases. However, the international cooperation budget for that year has already been drastically reduced by over 115 million Swiss francs. Part of the increase portrayed in the Dispatch is therefore no more than replenishment to the status quo ante. The year 2015 is the one that should therefore be used as a meaningful reference year. But the new credits cannot be compared directly with those of 2013-16, as personnel and material costs are now being itemized separately. It is also noteworthy that the framework credit line for peace building and human security is now a new item in the Dispatch on International Cooperation 2017-20.

Besides, the Federal Council has already announced in the Stabilization Programme that a further round of cost-cutting will be necessary in 2018, at any rate. Once again, spending for international cooperation will be affected.
Yet cost-cutting is not the only feature of the new Dispatch on International Cooperation – items have also been rearranged within the framework credits. The Federal Council rightly assumes that there will be a growing need for emergency humanitarian assistance and plans to increase the financial allocation to this framework credit already as of 2017. What this means, however, is that cuts to ODA will necessarily be at the expense of long-term bilateral development cooperation, whose 2020 funding levels will quite likely be still below that of 2015.

However, only long-term development cooperation that is funded through credit for the South can tackle the causes of poverty and destitution and help prevent crises and conflicts. Emergency humanitarian aid, on the other hand, is primarily reactive. This means that the Federal Council is shifting increasingly towards reactive activities in international cooperation instead of taking the forward-looking approach of investing in the prevention of possible future crises.

The budget cuts are complicating the task of the Foreign Ministry in setting strategic priorities. The Swiss Agency for Development and Cooperation (SDC) for its part is endeavouring to implement the cuts in the most linear manner possible – in other words, by simply allocating somewhat less funding to each existing programme country. Alliance Sud believes that the main reason for this fragmentation is that Switzerland is trying to be present with development funds in as many countries as possible also with a view to promoting foreign policy and economic interests. The risk here, however, is that the country could indeed maintain a presence with a minimal budget, but as a small actor, would be unable to play any major role.

In terms of content, the new Dispatch on International Cooperation opts for continuity. Poverty reduction is still the overarching goal. The fact that the regional priority is now on Southern Africa, where 34 of the 48 poorest countries are located, therefore makes sense and shows that Switzerland is willing to tackle the structural causes of poverty through development cooperation. Also to be welcomed is the fact that the dispatch is geared towards the UN Agenda 2030 for Sustainable Development, which was adopted last September. It is to serve as a frame of reference for Switzerland's international cooperation. Indeed, poverty reduction can only succeed if all dimensions of sustainability are taken into account.

At the same time, however, the planned cuts are reinforcing an already existing trend which Alliance Sud views as problematic. The dispatch proposes stepping up cooperation with the private sector and the promotion of so-called Public-Private Partnerships (PPPs). The public contribution is expected to reduce the risks and costs of private investments and thereby make them economically viable and profitable – though at the risk that private investments, which would have taken place in any case, end up being subsidized by the State.

But the poverty-reducing impact of such partnerships is open to question. Numerous studies show that owing to their complexity and high transaction costs, PPPs often turn out more costly to the State than projects carried out directly by it. Moreover, there is hardly any indication that PPPs in fact increase efficiency. The lack of transparency and accountability also undermines democratic control.

International cooperation, and more especially long-term development cooperation with poor countries, is by no means merely an expression of solidarity. It also serves the interest of our small and internationally highly networked country in the existence of a socially, economically and environmentally sustainable world, in security and peace.