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Fragile States: ‘Toughest Development Challenge of Our Era’

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  • Problems of fragile and conflict-affected states sometimes extend beyond borders
  • New State and Peace-Building Fund will give US$100 million in grants in the next three years
  • Effort aims at increasing capacity of governments to provide services and boost economy

September 19, 2008—Several decades of conflict and political turmoil turned Central African Republic into a country that needs “everything,” says World Bank economist Eric Bell.

Across the world in Haiti, a recent wave of kidnappings by organized gangs is a reminder of past tensions. “You get excited that things are getting better, then they deteriorate again,” says Peter Holland, a World Bank staffer in Port-au-Prince.

Spiraling violence in Afghanistan has claimed twice as many civilians this year, including NGO workers trying to provide services and humanitarian assistance, according to the United Nations Assistance Mission in Afghanistan.

One billion people live in countries where the state is breaking down or is overcome by conflict. The countries are often poor or with large pockets of poverty. Their governments are typically unable or unwilling to provide basic services or enough security for people’s lives to improve.

These fragile states are the “toughest development challenge of our era,” World Bank President Robert B. Zoellick observed recently at the International Institute for Strategic Studies in Geneva.

“The diseases, outflows of desperate people, criminality, and terrorism that can spawn in the vacuum of fragile states can quickly become global threats,” Zoellick said in a keynote address at the institute’s 6th Global Strategic Review Conference.

“Moreover, just reflect for a moment about the loss to the world—the waste of human energy, creativity, invention, and possibility—of having 1 billion people in destitute circumstances.”

1 Billion Live in Fragile States

As we mark International Day of Peace on September 21, an estimated 1 billion people live in fragile or conflict-affected countries. That includes 340 million of the world's extreme poor. These countries account for almost two-fifths of all child deaths, and one third of 12-year-olds who did not complete primary school in 2005. Half of all children who do not live to the age of 5 are born in fragile states.

Securing Development

A year ago, Zoellick named fragile states one of the World Bank’s six global challenges. In Geneva, he stressed the need to “secure development” by building security, legitimacy, governance and economy in fragile states to smooth the transition from conflict to peace.

“Only by securing development can we put down roots deep enough to break the cycle of fragility and violence,” Zoellick said.

Zoellick outlined an approach that calls for boosting peace-keeping forces and keeping them in place longer to permit reconstruction, economic recovery, and stability.

Among other priorities, the approach involves channeling aid through local authorities, so weak governments can build expertise, become more able to provide services, and be seen as legitimate by their people.

Institution-Building is Critical

“Institution-building is critical,” says Alastair McKechnie, Director of the Fragile and Conflict-Affected Countries Group at the World Bank.

“Helping to build a Ministry of Finance that works may not be the most glamorous, visible thing we do, but it’s very important to giving the government both capacity and credibility to manage donor resources and deliver services.”

Over the past decade, the World Bank has increasingly focused on building the capacity of fragile governments to provide basic services and begin economic recovery, says McKechnie.

At the same time, it has stepped up grassroots development projects and used NGOs to get aid quickly to local communities, he says.

State and Peace Building

It’s a challenge made greater by the fact that many fragile states have been relatively neglected by the international community. “They don’t receive much aid per capita,” says McKechnie, “partly because they are perceived to lack the institutional capacity, or effective governance, to use aid to produce results.”

To fill the gap, the Bank created the Post Conflict Fund in 1997 and the LICUS Trust Fund in 2004 to deliver grants quickly to post-conflict or fragile countries while strengthening their institutions.

 In April, the Bank merged the two into the State and Peace Building Fund and agreed to allocate US$100 million from the Bank’s administrative budget over the next three years.

About 20 countries will receive grants from a first US$33 million allocation this fiscal year, says McKechnie.

As of fiscal 2007, which ended in June 2007, Post Conflict and LICUS funds had approved 254 grants ranging from US$25,000 to several million totaling about US$154 million to restart health or social services in the aftermath of war, or to pilot programs that can be scaled up later with other funding.

Getting Aid to the People

The grants have provided seed money to train female teachers, deliver health services, and foster microfinance in Afghanistan. They’ve funded small grants for community development in Sudan’s battle-worn Nuba Mountains region and boosted school feeding programs in the poorest parts of Haiti, where the free meal at school may be the only meal of the day for about 60 percent of children.

“It’s a huge pull factor to get kids into school,” says Holland, who leads a new Education for All expanded school-feeding project in Haiti.

Community-driven development, which lets communities decide for themselves how to use the money, not only produces a high rate of return, says McKechnie, but also strengthens the links between community and the legitimate state.

For example, Afghanistan’s National Solidarity Program, launched five years ago, gives modest grants to fund local priorities such as micro-hydroelectric generators, schools, roads and irrigation. The project has reached 17 million Afghans in all 34 provinces, and has an economic return of close to 20 percent. 

“It’s an effective use of money,” says McKechnie, a former World Bank Country Director for Afghanistan. “The money reaches the poor, affects their lives, and gives them a stake in the future. Insurgents have not dared destroy schools that are owned by the community.”

The grants often fund services provided by non-governmental organizations that know the terrain well and can operate in very poor remote or insecure regions, says McKechnie.

But he adds it’s important to build the government’s capacity to govern as quickly as possible, “because what we really want to see is an effective state capable of delivering services, perceived as legitimate by its people, and that’s sustainable for the long term,” he says.

‘Nuts and Bolts of Governance’

“It’s through being able to deliver services that a government gains credibility and legitimacy with its people. These nuts and bolts of governance that we finance are critical not only to state-building but also to stability in these countries,” says McKechnie.

Capacity is built by governments by actually doing things, by taking accountability for delivering services to their citizens, he says. “If the services are being provided in parallel by NGOs, the UN and others, it often sets back that state building and hollows out public administration as civil servants desert for higher paying jobs in organizations that are providing core public services normally the responsibility of the state.”

Ten Priorities for Fragile States

Bank President Zoellick calls fragile states the toughest development challenge of our era. He's named 10 priorities to meet that challenge.

  1. Focus on building legitimacy of the state
  2. Provide security
  3. Build rule of law and legal order
  4. Bolster local and national ownership
  5. Ensure economic stability as a foundation for growth and opportunity
  6. Pay attention to the political economy
  7. Crowd in the private sector
  8. Coordinate across institutions and actors
  9. Consider the regional context
  10. Recognize the long-term commitment

In Central African Republic, where government services eroded over years of upheaval, the Bank brought in procurement and other specialists to train a team of government officials attached to the Prime Minister’s Office to manage grants that have funded much-needed health and social services.

The money has also been used to help the government develop a new economic plan focused on the biggest challenges of the country, namely restoring credible systems of management of public finances and natural resources, as well as broad governance, says Bell, the Lead Economist for CAR.

“Now the government is implementing these reforms with full ownership. They are at an early stage of success but the future holds many promises with this start. Addressing governance concerns is something the country needed very badly after so many years of dilapidation of its institutional structure,” adds Bell.

The goal in CAR and other fragile or conflict-affected countries is to get countries on a path to greater stability and economic growth that creates permanent jobs, adds McKechnie.

“A lot of the problems of violence, whether it’s civil war or criminal violence, is caused by young men without a future. It helps if they can get jobs and see a brighter future.”

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