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Moving Forward - a consultation paper on DFID’s work in Latin America 2008-11

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Introduction

1. DFID’s Regional Assistance Plan (RAP) for Latin America 2004-7(298 kb) laid out an ambitious new agenda for DFID in Latin America. At a time when DFID’s programmes in Latin America were contracting, we embarked on new ways of working through regional relationships with important partners, whilst maintaining our bilateral programme in Nicaragua as the one officially low-income country on the continent, according to OECD figures.

2. Three years on, we have achieved a lot, especially in partnership with the World Bank and Inter-America Development Bank (IADB). Box 1 and Box 2 give some examples. We have also learned some important lessons about how to address poverty and inequality in Middle Income Countries, and about how best to support our partners to deliver on their goals. Latin America has changed in that 3 year period too. Although new governments bring with them great optimism, and new approaches to addressing poverty, there are major challenges ahead.

3. DFID is committed to supporting our partners to bring about sustainable, poverty reduction in Latin America over the next 3 years. How will we do that? This short paper summarises the basic themes and ideas for our next Regional Assistance Plan for Latin America. We want to hear from you- valued partners and members of the public - about how we can best build on the last 3 years to deliver these objectives in Latin America.

Box 1. Working with InterAmerican Development Bank to address the Right to Identity

In 2005 in Latin America, UNICEF estimates that 14% of all babies born (2.5 million in total) were not registered by the authorities. In later life, this means they can’t vote, can’t own land, can’t start a business, and often limits their access to basic services. If you belong to a poor, remote, indigenous group, the chances of your birth being registered are even fewer.

Over the last few years, DFID has been working with the IADB to ensure that their projects address this important issue. We worked, for example, with IADB in the Andes to look at how those with no documents end up in forced labour; in Central America we supported a major information campaign to raise public awareness on the importance of registering births. This, and other work we’ve been doing, has helped ensure that the IADB has prioritised the Right to Identity in their new strategy ‘Opportunities for the Majority’. Our continued collaboration will help them build on good experiences to date, and address birth registration through their projects and policy discussions with partner governments.

Background

4. The 2004-7 RAP aims to enhance the effectiveness of the World Bank and the IADB in reducing poverty, in order to help Latin America achieve the Millennium Development Goals (MDGs). We had two main themes: access to markets for poor people, and transparent and accountable public sectors and political systems. In addition, we have worked on global issues that affect the region such as HIV and Aids, and trade. Social exclusion is addressed as a cross-cutting theme throughout all facets of our work.

5. During the last 3 years, the main tools we have used to achieve our objectives have been:

Trust Funds held by World Bank and IADB,

Decentralised funds held in our offices in the Andes, Brazil and Central America,

DFID Advisors in our offices in the region, in the UK, and in partner institutions in Washington.

Support to a number of UK NGO’s working in Latin America.

A bilateral programme in Nicaragua

Working with the FCO on the Global Conflict Prevention Pool activities in the region

6. In December 2006, DFID’s Latin America Department commissioned an independent evaluation of progress to date in the implementation of the RAP. Some important lessons emerged from the evaluation for the planning of the RAP 2008-11. These included;

The work undertaken in Latin America is highly consistent with the priorities of the 2006 White Paper, ‘Making Governance Work for the Poor’. Overall, our experience in Latin America is very relevant to DFID as a whole.

There is evidence that we have added significant value to the work of the International Financial Institutions in the region in the chosen themes. DFID is seen by others as a good ‘catalyst of change’.

Our main ways of working - staff and flexible funds in country, trust funds and advisory staff - have all delivered good results

The most promising lines of work require a country base- to ‘ground-truth’ what we do.

7. The most important recommendation of the evaluation was that we would be unwise to drastically change course at this stage. We have worked hard to foster relationships based on trust with colleagues in the Banks. This has taken a long time, as have many of the important processes on which we have worked together. To identify a new set of partners, or change the themes we work on at this stage, would essentially be to undo much of the good work we have already done.

Box 2. Working with Cooperatives and Small Companies in Central America

DFID has been working to help improve access to markets of producer cooperatives and small companies in Central America. The free-trade agreement with the US (called CAFTA) and upcoming negotiations for free trade with the EU, means that they have the most to gain- and possibly lose- in the coming years. Making them strong enough to compete is an important priority, because many people rely on them for jobs.

With our support in 2005 a group of plantain producing cooperatives in Nicaragua exported 8,000 tonnes of plantain to the US for the first time, as well as getting credit through an IADB project. What’s more, the experience of the plantain cooperatives has helped the Government of Nicaragua provide better support to other ‘clusters’ of producers, and has helped that region of the country think about improving its attractiveness as a centre of business.

But context matters too- has Latin America changed since 2003?

8. 2006 was the Year of the Elections, with Presidential elections taking place in 12 countries between December 2005 and December 2006. That helped to put poverty- and politics- firmly in the headlines. But long term challenges persist which elections cannot by themselves address.

9. Democracy, although welcomed and supported by the Latin American societies, did little to eradicate the region's persistent problems: corruption, a weak or nonexistent rule of law, ineffective governance, and the concentration of power in the hands of a few.

10. The region has just enjoyed its best two years of economic growth in a long time. Average growth in 2006 reached around 5.3%. Latin America is still the world’s most unequal region, with 200 million people still living in poverty, and a further 80 million living under $1 a day – but inequality is beginning to fall in many countries. The region will need to build on such growth performance and in particular ensure that the poor are able to participate in and benefit from growth if poverty is to be reduced significantly.

11. The last 3 years have also illustrated the growing role of emerging economies such as Brazil on international political dialogue, be it on matters of global governance (e.g. UN Reform), trade negotiations or the environment. Brazil therefore plays a decisive role in both political and economic terms. Brazil and the UK have significant shared interests, such as climate change, action against HIV and Aids, and biofuels. Brazil has the potential to play an increasingly important role as an aid partner in pursuing the MDGs globally especially through its bilateral relations with African partners.

12. Many small countries in the region are still struggling to achieve the MDG’s. Facing challenges of globalisation, vulnerability to natural disasters, political instability, increasing violence, and HIV and Aids- many of them require continued, effective, donor support to reverse the cycle of poverty and inequality.

13. Citizens in Latin America want more from their governments. There is considerable mistrust of institutions to deliver. A recent Latinobarometro survey indicated that the majority of Latin Americans have greater faith in the Media, the Church, and Banks, than they do in state institutions. With many newly-elected governments, this challenge of reinstating public accountability and effectiveness of and belief in institutions is a critical one.

14. Increasingly globalised markets, including increased volumes of trade with China and India, represent both challenges and opportunities for poor people. Public policies that ensure opportunities for the poor are grasped will be important, as will moves towards greater regional integration of markets within Latin America.

Main elements of the proposed LA RAP 2008-11

15. The next RAP will seek to address some of the challenges and capitalise on positive trends in the region. One key challenge we face is how to meet our objectives with fewer staff. Reducing our overall numbers is something DFID, as well as other government departments, has committed to do. While challenging, this also presents an opportunity for us to find more efficient and effective ways of working. We will, in particular, be looking at the most efficient way to foster partnerships, working more effectively with other UK Government departments, and networks of local actors in the region.

Specifically, we will retain our presence in the 3 locations in the region (Brasilia, La Paz, and Managua) and retain our regional focus. We will also keep advisory staff in Washington, but have very few staff in the UK.

16. We have proposed themes and ways of working, based on the good experiences we have had, and on the lessons from the evaluation. The main proposed elements of the next RAP, are:

In collaboration with the World Bank and Inter-American Development Bank- a continued focus on access of poor people to local and international markets, with an emphasis on small and medium enterprises as vehicles for poverty reduction .

In collaboration with World Bank and IADB- a continued emphasis on governance, specifically on improving political analysis including around corruption, and supporting greater understanding of the governance issues around sub-national lending.

'Prevention and treatment of HIV and AIDS' in partnership with a third-party agency, but with a clear link back to DFID’s central policy work on HIV and Aids, to capitalise on innovation in the region in this theme

a proactive approach to addressing gender and social exclusion, throughout all our work

a new emphasis on climate change and how it relates to poverty. This will be led from our office in Brazil. We will work closely with partners in Other Government Departments, as well as DFID’s own research department, linking our work to contributions from the World Bank and IADB;

A continuing country programme in Nicaragua, as the only low income country on the continent, according to the OECD

Within these themes what do YOU think are the key priorities? Where should DFID concentrate its efforts?

17. Our main ways of working will be;

A continued emphasis on partnership with the World Bank and Inter-American Development Bank

A continued ‘catalyst of change’ function. In our experience this can be done with a range of actors- sub-national government, local civil society, UK and other International NGO’s.

A relationship with Brazil based on Brazil’s role as a global catalyst of change for international development. This will include strengthening Brazil’s capacity to be a policy leader in areas of mutual development importance and working with Brazil in key international negotiations such as trade and climate change.

A commitment to harmonisation of aid with other donors, and continuing to play a role in encouraging and supporting best practice in others, especially the International Financial Institutions.

Partnership with other HMG government departments

A continued emphasis on lesson-sharing within DFID, ensuring DFID colleagues in other parts of the world can benefit from the wealth of experiences in Latin America

We would like to hear from you what has worked- and not worked- in DFID’s ways of working.

Your feedback

We would like to know whether you think this makes sense, and any proposals you might make. Please forward all comments to DFID at RAP-LatinAmerica@dfid.gov.uk before Monday 11 June 2007.

Last updated: 11 May 2007