Looking beyond the Multi-Donor Trust Fund

October 15, 2007 — As the World Bank’s new Country Director responsible for Sudan, I recently made my first visit to Juba. One cannot possibly understand the many and complex problems that Southern Sudan faces in one short visit. But, first impressions of an outsider can sometimes capture the big picture, simply because his mind is not burdened with many details. So, in the hope that my uninformed eyes may have caught something useful, I share a few broad observations.

Not surprisingly, I heard many complaints about the slow progress of the Multi-Donor Trust Fund (MDTF) from the officials of the Government of Southern Sudan (GoSS), other donors, NGOs, and more. As the administrator of MDTF, there is undoubtedly blame to be laid on the World Bank. What was surprising to me, though, was that not much else regarding the development agenda was being discussed. Slow implementation of MDTF-funded projects cannot be the only, or even the main, problem of Southern Sudan.

The challenges of Southern Sudan seem unparalleled in modern human history. I cannot think of a country that had to build a functioning state and an integrated economic system from such a low base and under such time pressure (before the critical referendum in 2011). When the Comprehensive Peace Agreement (CPA) was signed in early 2005, Juba was not connected to the outside world by road. Even today, in an area equivalent to France, there is only 6 kilometers of paved road. The adult literacy rate is estimated to be about 24%, lower than any country according to UNESCO statistics... Regardless what the people decide about the political future of the South in the referendum, if Southern Sudan is to become a viable political unit (as part of a unified Sudan or as an independent country), I believe that it needs to become an integrated and viable economic unit. This will require massive long-term investment in basic infrastructure (transport, telecommunications, water, and power), human capital, the policy framework to encourage private investment, and the institutional capacity to manage all this.

After 22 years of civil war, however, it is understandable that the people want GoSS to deliver ‘peace dividends’ immediately. This creates a deep tension between the short-term demands and the long-term requirements. If quick delivery of services and investment is the priority, GoSS will have to rely on outside agencies or contractors to do it for GoSS. But, that does not create a sustainable system. Long-term capacity building will require more time, though the work has to start immediately. The same tension also creates a trade-off between recurrent and capital expenditures. For immediate benefits and political stability, there is immense pressure to increase the payroll of GoSS and other recurrent expenditures. This, however, reduces GoSS’s ability to spend for the future.

The MDTF was conceived in this complex context, to respond to the “immediate needs” of Southern Sudan. By choosing the World Bank to administer MDTF and apply its procurement rules (which are basically the rules most industrialized countries use, and are designed for transparency and competitiveness, not exceptional speed), donors and GoSS implicitly opted for an approach that emphasized capacity building; by learning ‘sound’ procurement processes, GoSS would acquire the ability to manage public procurement effectively over time. If the main objective was quickest possible delivery, there were perhaps more suitable approaches. In the euphoria of post-CPA however, not enough thought was put into whether this approach was really what GoSS needed. I suspect the differences in expectations and assumptions, which were never properly resolved, are at the core of the frustrations expressed about the sluggish performance of the MDTF and all the blame placed on the ‘World Bank procurement process.’

I am not trying to shift the blame away from the World Bank. We did underestimate the enormity of the task at hand, which was to help our inexperienced GoSS counterparts learn the basics of project management, including procurement, supervision of engineering work, and so on. But, we have now built up a significant team of experts in Juba that provides much needed hands-on assistance and total disbursement from the MDTF has increased from a mere $14 million about a year ago to nearly $100 million now. Just to take a tangible example, renovation of Juba Hospital is almost complete. The rehabilitation of the road from Juba to Mundri is making steady progress. Nearly one million textbooks have been delivered to 2,600 primary schools. The World Bank will continue to step up its support for faster implementation of many projects funded by MDTF.

What concerns me, however, is that we all seem to be trapped in the ‘MDTF box,’ in two ways. First, we seem unable to look beyond MDTF, at larger issues. Second, we seem to be stuck on the original conception of MDTF, as a project financing tool. Without a credible path toward an integrated and strong economy, Southern Sudan will be unlikely to succeed in mustering enough collective energy to meet its long-term challenge; it is too easy to let short-term needs dictate the critical public choices. Defining such a vision and a plan of absolutely essential investments to make it happen, I think, is the real priority task. Such a plan would give GoSS important advantages. For one, it would help GoSS manage the pressure to spend its limited funds on salaries and other short-term needs, and shift more funds to long-term investments. Second, if a compelling plan is presented to the donors, GoSS would gain significant leverage in seeking additional aid. If donors are serious about helping Southern Sudan achieve sustained peace, they must support creation of a viable and integrated economy in the South. Denying an opportunity for Southern Sudan to do so would be morally indefensible. In the context of such a long-term plan, if we find that MDTF needs to be used more flexibly (for instance providing direct budget support for some critical sector rather than more projects), then by all means those possibilities should be explored.

How we collectively landed in the MDTF box is immaterial now. But, it is important to recognize that the time has come for all of us to get out of it and look far beyond it.

Mr. Ohashi is World Bank Country Director for Ethiopia and Sudan.