The process of change: managing transitions
At the same time, donors often cut their budgets in middle-income countries, assuming these economies have enough resources to fund their own development projects and programmes. Transition and graduation from aid are not linear paths and we should not be complacent once a country has achieved middle-income status. For example, after the financial crisis in , Indonesia was made eligible once again for soft loans from World Bank.
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A couple of years ago, we found very little research had been devoted to analysing how both recipient countries and development partners can best plan the transition away from aid. This is also the case for how bilateral donors decide to phase out from a country, beyond political and security reasons. The lack of evidence, lessons and recommendations surprised us.
We decided to start filling these gaps by looking at eight lower middle-income countries, 10 bilateral donors and the European Union. Official development finance rose in several of the countries reviewed following transition to lower-middle income status because of the rise in non-concessional flows and geostrategic relevance.
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However, the terms and conditions worsened for example, as grants gradually shifted to loans, those loans became more expensive. To militate against financial risks and rising costs, governments need to plan for changes in the composition of development finance.http://www.crossbaymedia.com/wp-content/novel/new-wine-a-study-of-transition-in-the-book-of-acts.php
Bridges' Transition Model
In nearly all the countries we reviewed, the sectoral allocation of resources — both external assistance and public finance — tends towards infrastructure development, with falling shares towards health and education. These trends mean gains achieved in the social sectors should be protected by ring-fencing the share of government spending that goes to the education and health sectors.
In this new ODI paper , we found that the missing middle of development finance is even more severe, with both official development finance and tax revenues as a share of GDP falling when we look at specific countries as in the cases of Nigeria, Papua New Guinea and Sri Lanka. Challenges in expanding the tax base and increasing tax rates are the main factors behind these trends.
This evidence suggests that governments and donors should prioritise tax revenue mobilisation as a key element of financing strategies and of donor support.
Usually, countries do not have a strategy to address potential challenges and plan ahead for the transition from aid. Directed at managers on all rungs of the proverbial corporate ladder, this expanded edition of the classic bestseller provides practical, step-by-step strategies for minimizing the disruptions caused by workplace change.
It is an invaluable managerial tool for navigating these tumultuous, uncertain times.
Governments and donors must manage transitions away from aid
Managing Transitions: Making the Most of Change. Author s. Date published.