Administration and Economic Planning in Eastern Africa: A Ford Foundation Program Evaluation   1977                                                                   p. 4 of 8

B. 10.  Program Options

          The true opportunity costs of a large program investment should be considered in the context of the full range of alternative uses of the funds, but that would open the subject too wide to be encompassed in a paper of manageable size. Instead, we focus on a few things we could have done differently in pursuit of the objective of assisting new African governments to gain meaningful control of their public services and economies.  

Within these boundaries, one can consider such questions as whether we should have devoted more attention to research and training in East African universities; whether we should have provided Ph.D. training for some government economists; whether a backstopping organization such as the Harvard DAS should have been employed to manage the economic planning program; and whether we should, recently, have accepted a Kenya Government request to manage a large-scale agricultural planning project funded by other donors. 

1.       University Focus

The Foundation could have opted for the strategy of building departments of economics and/or development research programs in East African universities, at the cost of supplying five or six fewer advisors each year. This course was not followed for a number of reasons: 

a.     It would not have conformed to the priorities of any of the governments we assisted. Although they were interested in university development, their needs for advisory assistance were considered to be much more urgent in the years shortly after independence. Although it is true that the Foundation properly had a somewhat longer time horizon than the governments, and that priorities were therefore not identical, Foundation staff tended to agree with government priorities on the matter of gaining effective control of their civil services and economies. 

b.     The Rockefeller Foundation focused much of its efforts in East Africa on developing research competence in the universities. Their work was adequately financed and ably led by scholars like Philip Bell and James Coleman. There does not seem to have been a shortage of either research funds or scholars in the region. Tony Killick assembled a bibliography of over a thousand listings on development in East Africa. In his opinion, at the present time no good research proposals lack funding. 

c.     The gulf between academia and government, so typical of developing countries, is especially deep in Uganda and Kenya. There was, for example, strong resistance to the B. Phil. Program when it was first established, because of academic disdain for “applied” economics. The Rockefeller Foundation has I believe encountered some difficulty with its own research programs because of its preference for research on the urgent problems confronting government. In Tanzania the University is now apparently working closely with Government, but in the past, those in Government who worked to orient public administration training to conform to Government needs encountered serious problems, as did those in the University seeking to attract Government officials to their course offerings. 

Persuasive as these arguments appeared at the time, some would argue that the advisory programs were only of short-term value; that a more lasting contribution would have required building in the scholarly community the indigenous capacity to adapt the world’s analytical and technical knowledge to meet the needs and opportunities of East African societies; that the institutional capacity must gradually be constructed so that recurrent economic and managerial crises can be solved by the East Africans themselves; and hence, that an early and persistent concentration of the Foundation’s program on university development would have produced better results in the long run. 

This is a serious and complicated issue, one that can’t be definitively resolved through argument. To some extent, it is a question of timing. At independence, the African governments suffered from a shortage of trained people that is difficult now to recall, yet the demands for rapid Africanization were powerful. For the Foundation to draw off many of the academically talented elite for university development might have been a serious disservice to stability in those precarious times. A program that may be quite appropriate now might have been a serious error fifteen years ago. 

One must also question the efficacy of much of western higher education for solving African problems. Highly advanced analytical techniques in economics, linguistics, engineering and other disciplines often require immense imagination and creativity to be made applicable to real problems in non-western cultures. The third world scholar who either migrates to the country where he earned his highest degree or insulates himself from the real world when he returns home is not uncommon. The advisors, too, were called upon to adapt their knowledge to a foreign situation, a task at which some succeeded better than others. 

On balance, I agree with Tony Killick, based at the University of Nairobi, who gave as his opinion that the Foundation’s economic advisors have made a greater contribution in Kenya than could have been accomplished with the expenditure of equivalent funds in the university context. 

2.     Ph.D. Training

On this subject I am somewhat more ambivalent. In Kenya, it is doubtful that we would have accomplished more if we had diverted funds from advisors to scholarships. The most able Kenyan economists, such as Ndegwa and Mule, could hardly have been more effective if they had been better credentialed. Also, the cost of their training would have been high in terms of time off the job. Kenya does need well-qualified analysts in government, however, and the need will probably increase in the future. Despite the fact that the prevailing terms of service offer no inducement for an individual to carry on to the Ph.D. level and then enter the Economic Service, Kenya will need to find some way to attract one or two good local economists before long. Harris Mule recognizes the need to offer greater inducements; and the Foundation should consider providing one or two scholarships per year for advanced training if Mule succeeds in changing the terms. Ideally, the training should be provided at a university with continuing links to East Africa through consulting or research programs. 

In Tanzania, the need for highly trained local economists is probably greater than in Kenya. The decentralization of government in Tanzania adds to the difficulty of making sound economic decisions, and the precarious state of the Tanzanian economy accentuates the need. Ten years ago, or perhaps even five, the Foundation would have done well to search intensively for good candidates, and then to sponsor them. It is still a possibility that deserves consideration.

3.     The DAS Team Approach

The Kenya planning program was unusual in the Foundation’s experience, because neither the Development Advisory Service nor some other university-based group was invited to recruit advisors and manage the project. In retrospect, few who are familiar with the project would argue that it should have been otherwise. Costs per man-year were lower, but a more important factor may be the image problem that arises when a backstopping institution enters the arena. The fact that the Foundation’s advisors did not consider themselves to be a team was remarked upon several times during my recent visit to Nairobi. It is clear that the team approach would now be unacceptable, although in 1963 the Kenya Government might not have objected. 

One advantage usually cited for using a backstopper is the greater recruiting resources at its command. Recruitment was often a problem for the Foundation, but Ben Lewis and Ed Edwards shouldered much of the burden and my impression is that we were as successful in fielding well-qualified people as any others in the business. Certainly, Harris Mule contends that the quality of Foundation-supplied advisors has exceeded all others in his experience.  

The Foundation’s office did not provide professional backstopping to the advisors; indeed we generally didn’t even know what subjects were uppermost in their minds. We should have found some means to enhance access by the advisors to the experience gained in economic planning projects elsewhere in the world. Even the availability on a part-time basis of a graduate student at a major university could have been useful to the advisors who needed information on experience elsewhere. 

One drawback that was felt on occasion was the insecurity of a Foundation appointment. DAS advisors are sometimes tenured and have fewer worries as their contract dates roll around. I don’t believe this affected the quality of the program but it may have affected the morale of the advisors. I know of no case where this was a serious problem. 

4.     Technical Assistance Pool for Agricultural Planning in Kenya

In 1975 the Kenya Government approached the Foundation about its willingness to undertake the management of a pool of economic and management advisors to be assigned to the Ministry of Agriculture. The Government wished to strengthen the Ministry’s capacity by consolidating the administration of twelve to thirteen advisors under one agency. Eight other donors were being asked to finance the advisors through cash contributions to the Kenya Government, which would in turn pass on the funds to the administering agency. 

The scheme was not meant to create a planning team under centralized direction. On the contrary, the Government wished to duplicate the style of advisory assistance the Foundation had provided to the Ministry of Economic Planning and Development. There was to be no team leader or team concept involved, but by having a single agency manage the project and recruit the advisors, the technical assistance effort would be assured of continuity, quality, and equity in terms of service offered. The duplication of specialties could be avoided. Closer coordination of technical assistance with the training of local staff would ensue from single agency management. 

The objectives of the project were: assistance in defining and refining the objectives of agricultural development; formulation of a comprehensive development strategy for agriculture; policy analyses concerning costs, prices, production and marketing of commodities; and international liaison. A section of the Ministry would also be devoted to evaluating how effectively the Ministry conducted normal activities such as agricultural extension, research, etc. 

The Foundation, after extensive consideration, declined the request and the Harvard Institute of International Development (HIID, formerly DAS) then agreed to undertake the project. At the time of my visit in December 1976, four advisors were already at work in the Ministry. 

Although there were questions about the legality of the Foundation’s receiving funds from a government for the provision of advisors, it seems to me we should have found some way to respond positively to this request, for the following reasons: 

a.     The Kenya Government asked us to do so, it was within our means, it was a sensible suggestion and the activity was well within the bounds of our program concerns; 

b.       Association with this project would be highly complementary with our future work on rural development and agricultural research; 

c.     By undertaking the project we would remain a visible and significant assistance agency despite our reduced budget; and 

d.     The experienced staff of our Nairobi office would have greatly eased the logistical problems of the advisors. 

HIID has recruited a very able group so far, but they still must devote too much of their time worrying about housing, automobiles and project negotiations, all of which are normally not the concern of project specialists. Often it is useful for a project specialist to have matters concerning his working environment raised by the representative with the appropriate person in government rather than having to do so himself. For HIID to manage a project like this from Harvard is, I should think, much more cumbersome and expensive. 

Probably the strongest of the above points is that relating to the Foundation’s maintaining a continuing meaningful contact with the Government. As our budget is devoted more to grants and less to project specialists, the office may be in danger of losing currency in its contacts with government and thus becoming involved in fewer activities of central importance.  

B. 11.  Program Management and Logistics

          The value of having field offices is demonstrated by the programs under review. The Foundation was probably right to decline the Uganda request for advisory assistance in 1960, despite the loss of an opportunity that did not again arise, because of the managerial and logistical problems involved in trying to design and manage an advisory program from a distance. Housing, transport, work permits, customs arrangements and myriad details involved in settling into a new city could keep advisors preoccupied for weeks or months if no experienced local staff were available to assist them. 

More importantly, the Foundation’s field management staff are responsible for negotiating the nature of an assignment, assessing the suitability of candidates before they are recruited, and serving as intermediary with the government concerned if the professional character of the assignment turns out not to be what the advisor anticipated, or the advisor turns out not to be capable of performing at the level the government requires. The program management role thus demands regular contact with both the advisors and government officials, but care must be taken not to become engaged in the content of the advisor’s or the government’s work. It is necessary to be knowledgeable enough to judge the feasibility of requests and proposals, without crossing the line into matters government considers confidential. 

The location of the Foundation’s office in Nairobi doubtless meant that Kenya was better served by the Foundation than the other countries of the region. Where staff development advisors were posted, they carried much of the burden of hosting visitors, helping new people settle in, and maintaining contact with various parts of the government. But they were only able to forward requests for staff, grants or travel awards to Nairobi, a process that took time and probably resulted in less assistance being requested and granted than had the chain been shorter. 

Alan Simmance estimated that a quarter of his time in Lusaka was devoted to Foundation-related administrative work and believed that some recognition of the fact, such as the title of assistant representative, would have been appropriate. David Anderson and his successors in Dar es Salaam performed similar duties. Anderson was named assistant representative while still attached to the Kenya Government, and later became representative. 

The dual posting of assistant representative/project specialist in countries where no regional office is located was a common practice during my tenure in the Middle East. In my opinion, this worked out very well. It gave the specialist an opportunity to broaden his associations in the country of his assignment, and it offered good experience for people who might remain with the Foundation in a management capacity. Other representatives have had less satisfactory experience with this type of arrangement, sometimes arriving on a visit to find themselves committed to entertain the idea of a grant or project proposal in a field they preferred to avoid. There is also the question of professional accountability. It was often inappropriate, also, for someone serving in a sensitive post such as staff development advisor or senior economic advisor to bear the title of assistant representative. It was important that his professional responsibilities be seen to be, as in fact they were, to the government he served. 

The recruitment of mature, well-qualified advisors was perhaps the most difficult aspect of managing these programs. It often took an awkward amount of time to find the right person, but the policy of waiting until a good candidate could be found before filling a post was surely correct. The Foundation’s professional grapevine, in economics and administration, and its reputation as an employer, made the performance creditable despite the delays and frustrations often experienced by field staff.     

C. PROGRAM OUTCOMES 

The long-range outcomes of these programs will depend on future events and need to be considered in the broader context of the national strategies being pursued by Kenya and Tanzania. This section of the paper deals with the way the programs are currently perceived by people in East Africa and outside who have been familiar with their progress. Only the economic planning, administrative and management programs in Kenya and Tanzania are considered henceforth. 

C. 1. Economic Planning in Kenya

          This program can be discussed in terms of four sets of benefits or objectives: a. Plan formulation; b. Economic analysis and policy advice; c. Training; and d. Establishment of a planning system throughout government. 

C. 1. a. Plan formulation 

Four economic plans, including the preliminary document issued just after Independence, have come out in Kenya with Foundation assistance. The plans themselves may have been less important than the process of discussion and negotiation that went into their production. In the early years in particular, the preparation of the plan was a highly instructive process, not only for the ministries, but for the Cabinet as well. 

Plans serve several functions: they are a means of communicating economic accomplishments and intentions to the people; they fulfill the requirements of donors like the World Bank who wish to see projects in a larger economic perspective; and they serve as a guide for government action for the succeeding five years. The second of these purposes was uppermost in mind when the Government first requested assistance, as we have noted, but under Mr. Mboya’s leadership, planning came to have real influence in shaping government policy. 

More recently, doubts have arisen about the seriousness of Government intentions to use the current plan as a guide to action. One of the principal drafters of this plan felt that the document had become more of a political than an economic instrument. He doubted that Government seriously meant to pursue the rural development and income redistribution objectives stated in the plan, and he felt that balance of payments and growth estimates had been adjusted for credibility and political acceptability. 

It is quite possible that the plan does not fully reflect political realities in Kenya. Indeed, it would be surprising if it did, because the major drafting of this and all previous plans was by the hands of foreign advisors. The drafting was, of course, under Kenyan supervision, and both Cabinet and Parliament reviewed and approved the final version, but some departure from reality is inherent to the process. 

Another factor lessening the likelihood that the document as approved will be followed faithfully is the enormous influence of the outside world on an economy the size of Kenya’s. This was dramatically demonstrated by the drastic rise in oil prices, and the subsequent world recession, which occurred immediately after the plan was drafted, throwing its forecasts seriously out of kilter. 

With all its limitations, planning has probably worked better in Kenya than in most African countries, according to Tony Killick who observes the process closely from his position as head of the B. Phil. program at the University. 

C. 1. b. Economic analysis and policy advice 

Immediately after independence, there was a good deal of uncertainty over what economic course Kenya would choose to follow. The early issuance of a number of important policy statements, e.g., the rudimentary six-year plan issued in early 1964 and Sessional Paper No. 10 in 1965, elucidated the objectives and priorities of the Govern­ment. These statements were important to the World Bank and bilateral donors, potential private investors, and the European community still residing in the country, as well as to Kenyans themselves. The economy was able to rebound surprisingly quickly once these uncertainties had been dispelled. 

After economic growth was adopted as the principal economic objective of the Government, the advisors in MEPD had an important restraining role to play in addition to their more positive planning functions. They were able to help Kenya resist showy, plaque-hanging projects and inefficient turn-key operations by employing cost-benefit analyses. They were also helpful in curbing the strong tendency to tailor projects to meet donor requirements, to accept aid for imported goods that could be produced domestically, and to finance imports through aid even though higher costs would result. Equally important was the ability to identify and maintain a high priority for essential plan projects that were not especially attractive to donors. 

Senior Government officials in various ministries were often rather innocent in evaluating the costs and benefits of major investments. Such projects as a major steel-works and a motor car assembly plant were either avoided, delayed until the economy could absorb them, or reduced in scale as a result of economic analysis. In other cases, the economists lost the argument and the Government made large investments in dubious projects such as the fertilizer plant and sugar refineries. It is quite possible, of course, that the economists were wrong in their judgments of these projects. In general, however, it is safe to assert that the use of economic analysis to avoid bad investments saved millions of pounds. 

Another valuable role played by the planning advisors was to identify adverse domestic and foreign economic trends before they resulted in a crisis. There is a natural tendency for policy makers to avoid taking unpalatable economic measures until the situation becomes so bad that it is imperative that something be done; by that time, corrective action is commonly much more painful than it would have been initially. In some cases economic analysis convinced policy makers to take early action. The devaluation of the three East African currencies in October 1975 is one example. Although, in the six months between the recommendation and the decision, the situation changed so that a somewhat greater devaluation would have been more appropriate, the move was made well in advance of the point of dire necessity. 

Kenya’s decision in 1965 to adopt a policy of population growth restraint was also the result of economic analysis rather than consensus. In this case, however, the adoption of a policy did little to curb the fertility rate, and population growth continues at around 3.3%.  

The Government has devised several ways of informing ministries and private decision-makers of economic trends and potential problems. The Central Bureau of Statistics publishes a comprehensive economic survey each year, and collects quarterly a business expectations survey, the utilization of which is spotty. It gathers information for the latter from firms employing 20 or more people, relating their estimates of their employment levels, sales, and inventories for the next three quarters as well as their experience from the past quarter. In addition, the Ministry of Finance and Planning puts out a monthly circular to identify international and domestic problems and opportunities people should be thinking about. Circulars have been issued on food and famine, balance of payments, employment, and quarterly economic fluctuations, among other topics. These surveys and circulars were not Foundation-financed, but their content was much affected by the work of Foundation-supplied advisers. 

The growth of the Kenya economy in the first decade of independence was most impressive. In real terms the rate of economic growth was estimated to have averaged 6-1/2% from 1964 to 1970; overall income per capita increased by an estimated 3-1/2% per year. There are, however, aspects of the pattern of growth that have disturbing long-term implications. In Kenya the disparity between rich and poor contrasts sharply with the egalitarian development of neighboring Tanzania, a distinction that has attracted the analytical attentions of many students of development, as development economists around the world exhibit a new sensitivity to income distribution patterns. 

In 1972, an extensive study of the problems of employment and income distribution was made by a team from the International Labor Organization, jointly headed by Professors Hans Singer and Richard Jolly of the Institute of Development Studies at Sussex. The 600-page report sharply criticized many economic policies in Kenya, and made a series of recommendations designed to broaden income distribution while maintaining a relatively high rate of economic growth. This report and Redistribution with Growth, a book by Dr. Hollis Chenery and others, published in 1974, have come to symbolize a strategy for development that was incorporated into Kenya’s 1974-79 Economic Plan. As a strategy, it can be contrasted with the “Redistribution and Self-Reliance” strategy of Tanzania, as well as with the earlier growth-oriented strategy of Kenya itself. 

The report’s main criticism of the Kenya economy was that the country inherited, and through its chosen pattern of growth perpetuates, a sharply distinguished dual economy. The dual economy comprises a small modern sector and a traditional sector composed of the bulk of the people, who remain very poor. The modern sector employs unnecessarily capital-intensive technology offering few jobs, is excessively protected from foreign competition, and is costly to consumers because of inefficiency. Workers fortunate enough to obtain jobs in the modern sector organize to maintain their privileged position, forcing up wages to the international level but opening a gulf between themselves and the unemployed and traditional laborers. The mission generally found a pattern of regulations and policies tending to favor large-scale farmers and to over-protect local industries, often owned and sometimes managed by foreign companies and individuals. 

Many of the policies of which the ILO Mission was critical were also opposed by the Foundation’s economic advisors. Charles Slater, David Davies, and John Powelson, all of whom left Kenya in the early 1970s, expressed great frustration in their attempts to change policies that in their view favored the modern sector and retarded rural development. Their terminal reports (the only such statements requested, though not required, by the Foundation), submitted jointly to the Foundation and the MEPD, were quite explicit. Powelson’s specific complaint was that Kenya’s development policy was founded on import substitution and capital intensity. He cited the following policies as the basis on which this strategy was constructed: 

“ 1.   Low interest rates, which encourage capital-intensive production rather than employment of labor;

2.     Tax incentives for investment, which do the same;

3.     Low import duties on capital goods, which do the same;

4.     An over-valued exchange rate which encourages imports (including labor-saving machinery) and discourages exports (which consists largely of labor-intensive goods such as agricultural produce).” 

With respect to these policies, it is interesting to note that interest rates were raised in 1973 and 1974, investment incentives were cancelled for Nairobi and Mombasa, import duties on capital goods were raised in 1976, the currency was devalued in October 1975, and an export subsidy was introduced in November 1974. It would not be wise to conclude from all this that the Kenya Government is completely responsive to those who favor broader income distribution and greater concentration of resources on rural development; it will be some time before one can assess the political will and determination of the Government in implementing the “Redistribution with Growth” policy embodied in its Five-Year Plan. But I think one can say that the Foundation’s advisors have consistently urged attention to the problems featured in the ILO Report and that their efforts have not been without effect. It may also be remarked that advisors, particularly on two-year assignments, tend to be unduly impatient in expecting changes as a result of their recommendations. 

The Kenya Government has already begun preparing for the next plan, to cover calendar years 1979-83. The main thrust is to be the alleviation of poverty, and Kenyans will to a much greater extent than heretofore be the principal draftsmen. 

C. 1. c. Training 

During the first five years of the economic planning program, very little formal training was possible. The advisors in effect did the planning themselves under the policy guidance of the Minister, the Permanent Secretary and the Chief Planning Officer, who were Kenyans. Other staff in the Ministry were seldom equipped to play the role of counterpart. Nor was it possible to secure the release of good prospects for further training from government ministries; the people with adequate potential could not be spared for the necessary length of time. 

Paradoxically, two of the senior African officials then engaged in planning now point to training as one of the principal benefits of the initial program effort. The leaders of the newly independent government generally had little economic training and virtually no experience in development or international finance. The interaction of the first advisors with the people in the Ministry and in the Development Committee of the Cabinet was very important in fostering the growth of economic sensitivity at the highest levels. Sessional Paper No. 10 was important as a framework for the detailed discussion of many policy issues. In addition, policy papers were drafted on a wide range of subjects as the revised plan was being prepared. 

The supply of manpower with economics training has greatly increased since the establishment of the Economic Service and the B. Phil. program at the University. Harris Mule, the current Deputy Permanent Secretary for Planning, is particularly pleased with the B. Phil. program, not just for the quality of training it provides but because of the attitudes it engenders. The rate of departure from Government of Economic Service staff has dropped to zero, and this in itself is extraordinary. Mule believes that by 1979 he will have a solid core of 40-50 members of the Economic Service who have completed not only the B. Phil. program but also an M.A. at York University. 

The limitations to this training process should be kept in mind, however. For economists, Government tends to be the employer of last resort because of its relatively low salary structure. In addition, economics is not the first choice of subject for many students at the University: medicine, engineering, and even business studies tend to get better students. At the graduate level, most B. Phil. candidates are roughly on a par with the M.A. students in economics, according to Killick, but the brightest one or two are in the academic program. 

There are no Ph.D. economists in the Economic Service nor, given the present salary structures, is this likely to change. A person entering Government with a B.A. in economics and progressing through the available training programs in the usual time will be ahead of any in his age group who go directly through a Ph.D. program. 

In Killick’s view it is extremely unrealistic to expect to train local people in five or even ten years to replace advisors such as the Foundation has provided. In general, the people who have so far gone through the B. Phil. program could not be expected to attain the quality of the foreign advisors, even with extensive further training. This is not meant to be critical of the B. Phil. program or the Economic Service: for most positions in government a Ph.D. would be superfluous even if the salary level became attractive. 

Although gratified by the results of the B. Phil. program, Harris Mule is not satisfied with the training system, partly because it does produce only middle-level economists. He has been impressed with the comprehensive training strategy employed in Malaysia and hopes to get assistance to work out a similar plan for Kenya. 

The experience of advisors in providing on-the-job-training for the staff in the Ministry is somewhat mixed. One advisor, who served in the Ministry for eight years, worked in that period with seven counterparts. He notes that two are now bankers in high positions, two are managing directors of important parastatal organizations, one is a senior economist in the Ministry, and two others have left Government. Other advisors have had the feeling that the counterparts have not really had the opportunity to develop because responsibility for writing papers and drafting plans has remained with the advisors themselves. In many cases, senior officials of the Ministry want quick action and themselves discourage participation of more junior Kenyans, in the interest of getting the job done. 

The creation of the Economic Service was a device to ensure the proper use of scarce skills and to provide a career path for trained economists. It is my impression that the full potential of this device has not been realized. Some members of the Service are in posts where their skills are not in great demand. Apart from the formal training programs, little is done to increase the sense of professionalism of its members. More attention might well be paid to finding means of offering professional enrichment and recognition to members of the Service. Their sense of professional standards can have an important impact on the quality of government.