Financially Stalled Governments

GovernmentMeetingOptOne of the results of the suppressed economic conditions in developing countries, in which annual income of the host equals the monthly income of the advisor and nearly 80% of income is needed to meet basic necessities, that still may not provide Adequate Caloric Energy for a full day of diligent agriculture field work, there is very little money for paying taxes to support civil services. The tax base can only come from the limited discretionary funding that is virtually invisible on the graph of the Financially Suppressed economy page Attempts to derive taxes from essential spending can only be done at severe hardships to the main populations and can easily lead to civil disruption.

This limited tax base very much restricts the civil services that can be provided with revenue funds. The net impact of this is that most revenue funds, often exceeding 80% or of the budget, are obligated for personnel benefits such as salary, pensions, health care and often housing. This leaves very limited funds to operate programs in terms of supplies, equipment, vehicles, fuel, travel allowances, etc. The ultimate result is that most civil servants, regardless of how well motivated, trained or organized, are confined to their respective offices visiting among themselves and consuming large amounts of coffee, tea, etc. with little opportunity to interact with their clients. In effect, the government programs are financially stalled. When government programs are effectively financially stalled they become more a tax burden to the population than an effective provider of civil services. This would include agriculture research and extension program that are often largely left to the NGOs to facilitate, as noted by virtually all Variety Improvement work of major crops is done by IARCs that are part of the CGIAR system.

It also results in low salaries so that by financial necessity many civil servants seek supplemental income and actively look for opportunities within their job as well as secondary employment. Within jobs, supplemental income can be fully upfront such as shifting around with different development projects for the salary top-ups available from donor projects, participating in training programs for the per diem received by the participants or the honorarium received for instructing. It could also include obtaining project lands for private cultivation as was the case in Madibira. It could also come from less legitimate forms of informal income such as quietly insisting on gratuities for assisting with loan applications, payments to approve certified seed inspections, overlooking informal irrigation schemes such as the 30,000 ha in Southern Tanzania, illegal wells as in Southern Iraq, or accepting money for assisting in getting land allocations even at the expense of designated beneficiaries as appears to be happening in Madibira after donor funding ended. It can become a very gray area in distinguishing between legitimate gratuities freely offered to underpaid civil servants for services rendered and outright graft and corruption.

Lamentable, the prospects of obtaining inform income is often a recruitment incentive for joining the civil services and considerable amount of organizational and managerial skills can be devoted to the pursuit of informal income opportunities. This is usually accompanied by the very autocratic, nearly supervisory, administrative style civil servants adopt in dealing with the populations they are supposed to serve. This can serve as an effective deterrent to anyone questioning the governing authority. This pursuit of informal income and accompanying leadership style may be illustrated by the Seed & Fertilizer Voucher Program in Afghanistan. Regrettable, in the context of developing country governances this is usually accepted as the norm.

All of this has to be examined in terms of the overall economic and administrative environment in which these people are being asked to operate, and recognize that most donor professionals would become just as involved if they were placed in that environment. Perhaps the best analysis would be the old adage “there by the grace of god go I”.

This also results in donor dependency for much of the services, such as agriculture research and extension, intended to benefit smallholder producers. However, donor funding is usually funneled through development projects with some specific objectives or targeting a specific area. These funds are usually available for a limited time period, usually between five and ten years. After that the project is graduated or left to government to continue with its limited revenue funds. Since these funds are rarely there and the economic development effort has not effectively increased the tax base to cover these costs the development effort will be caught up in the limited revenue funds and financially stall.

One of the big challenges for donor projects is to be fully cognizant of the financial limitations and potential for financially stalling once donor assistance has ended. This can be a major problem when donors model their assistance on what is possible in their home country with its enhanced tax base, and try to impose it on a developing country client with much more limited tax base. This would include such programs like soil testing and certified seeds, that are taken for granted in developed countries. Typically the result will be the recruitment of the professional staff and much of the technician staff. The professional staff could then be provide with substantial international post graduate training and facilities provided with all the latest and appropriate field and laboratory equipment. All of this will be much appreciated, if not actually demanded by the host clients, who want a state of the art research and extension program as defined in developed countries. However, once the donor funds end, which will often coincide with the return of the international trainees and arrival of the sophisticated equipment, the program will revert to the limited revenue funds. This can result in the continuation of the development effort stalling and much of the expensive equipment procured being unused and often stored in its original packing crates, never opened. Not a very effective or sustainable return on the development investment effort.

Unfortunately, when this happens, the development effort may be more a disservice to the host government than an effective contribution to their economic development effort.

In the agricultural research and extension effort the most sustainable programs might be simply to concentrate variety improvement by importing and evaluating germ plasma. Normally, this is about the only research activity that is sustained with revenue funds, although a consderable portion is now only done as part of IARCs outreach programs. It also offers the most impact as most other crop management activities have either highly local specificity such as fertilizer rates, or interact strongly with the limited operational resources available to the farmers. This would impact on time of planting and plant density studies. For extension it would mean getting away from the traceable administrative link to all smallholders with all the village extension workers that implies, and concentrate on mass media communications systems. Are revenue funds effectively available for a more concentrated extension effort?

Last Revised: 25 Mar. 2010

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