German aid reform: What’s next?

Germany’s newly merged prime development aid agency, GIZ, is finally getting into gear – and slowly but surely, more details are emerging about the future of the country’s international cooperation. Devex spoke with German officials and aid experts to map out next steps in the country’s biggest aid reform in years. Many of the details have long been kept secret, some plans remain vague. But clear is that this leading implementing agency is eager to cut costs and engage the private sector in the promotion of good governance and sustainable development in Africa and elsewhere around the globe. German development aid is led by the cabinet-level minister, who as the head of the German Federal Ministry for Economic Cooperation and Development, or BMZ, cooperates closely with the country’s foreign minister. GIZ was formed on Jan. 1 after the long-awaited merger of three aid organizations – German Technical Cooperation (GTZ), German Development Service (DED) and InWent – in an effort to streamline operations and increase efficiency. GIZ now boasts 17,300 employees in 130 countries and an estimated turnover of 1.9 billion euros. It has essentially retained GTZ procurement processes for technical assistance. The new organization has not fully taken shape yet, and its agenda is ambitious, as its first six-month review shows. By Sept. 1, GIZ was to eliminate internal parallel structures. By Jan. 1, parallel structures will be reduced in GIZ offices abroad. At the same time, the procurement procedures of ex-DED and InWent will be streamlined into those of the former GTZ. A “technical cooperation steering group” will be formed to better coordinate GIZ activities with BMZ. Altogether, these changes will mark the foundation of an integrated planning, implementation and controlling framework for German technical cooperation, BMZ communications officers note. GIZ’s expanded focus The merged GIZ has turned into a prime and fully government-controlled agency, which freed some space for German development NGOs to win BMZ-commissioned projects, says Ulrich Post, director of public affairs and external relations at the Deutsche Welthungerhilfe, a prominent German NGO. More than its predecessors, GIZ will work not only in the developing countries, but it will also be active – mainly through co-financing arrangements with other donors – in the newly industrialized countries like Brazil and in the developed world, GIZ Management Board Dr. Bernd Eisenblätter announced in July. Apart from that, the merged agency also plans to gradually increase its involvement in local development projects in Germany. In 2010, 68 percent of what is now GIZ’s budget came from BMZ; 10 percent came from other federal ministries, including the Foreign Office and the Education Ministry; and 15 percent came from foreign governments and international organizations like the European Union and the United Nations. New identity and rhetoric After the German Cabinet approved GIZ’s creation in July 2010, fears began to spread among DED and InWent employees that their organizations would be swallowed by the GTZ. Now, despite frequent assurances from BMZ officials, the two smaller agencies were indeed legally embodied into the bigger and internationally more renowned GTZ, several German aid experts tell Devex. The loss of their organizations’ identity has been painful for many DED and InWent staff. GTZ had, over the past few years, positioned itself as a successful capacity-building company, whereas DED had been seen as a crowd of more “idealistic” development folks and InWent as an organization of professional trainers and experts. How – if at all – will these different philosophies and values be harmonized under GIZ’s umbrella? Staff contacted by Devex were unsure. Clear is that GIZ has started using distinctly business-oriented rhetoric. Take Eisenblätter, who boasted in July that the “know-how” of GIZ employees and a “wider spectrum of tasks” would guarantee efficient delivery of “versatile services.” GIZ staff, on their part, have been told in internal meetings about the agency’s mission to become “the world market leader” in technical cooperation. Private sector engagement GIZ’s increasing cooperation with the private sector has stirred some controversy. Dirk Niebel, the current development minister, wants to boost private sector investment in the developing world and stimulate “win-win partnerships” between Germany and its partner countries. It’s a global trend among traditional donors such as the U.S. Agency for International Development and the U.K. Department for International Development. BMZ has started to send development aid consultants or “scouts” to business associations to promote projects and look for potential business partners, BMZ staff tells Devex. Public-private partnerships, where companies and aid organizations finance and implement projects together, have become more frequent. On top of that, a special service center has been set up to advise companies interested in investing in the developing world. All of this has worried some within the German NGO community. BMZ should strive to eliminate poverty in the developing world, they say, instead of boosting private sector profits and subsidizing the German economy, Post told Devex. In any case, whereas countries like Thailand and Vietnam might attract the private sector, this may not be the case for countries like Burkina Faso, Mali or Haiti, he argued. Others, sure enough, take a different view. Take Karl-Martin Lüth, who considers BMZ’s stronger engagement of the private sector a positive development. Countries experiencing a humanitarian emergency should first be served by relief groups and, upon infrastructure reconstruction, businesses should come to play, said the international cooperation chairman of the German Agricultural Society, or DLG. The private sector, Lüth said, is more capable and keener than the government to ensure sustainable knowledge transfer and capacity building. Reform evaluation With Germany’s aid reform still incomplete, only time will tell how successful the merged agency will be. The first official evaluation is expected in 2013, according to the BMZ press office, which worries skeptics who believe the reform was only part of a larger political project of Niebel, the BMZ chief. In 2009, prior to federal elections, voices within Niebel’s party, the pro-business Federal Democratic Party, had suggested tearing down BMZ altogether. Niebel then declared his intention to merge GIZ, DED and InWent soon after his party became the minority partner in a coalition government led by Chancellor Angela Merkel of the Christian Democrats. Designed and carried out in record speed, the reform left many employees dissatisfied with the process. It was not transparent enough, staff were hardly involved and most of the stakeholders, including partner governments, were not consulted properly, sources within GIZ told Devex. Perhaps, given the ambitious reform time line set by BMZ, it was hardly possible to make the process interactive. But, to some skeptics in the German aid community and media, it almost seemed as if the FDP was more eager to snatch a political victory than to find the most practical way to integrate the three merged agencies. The party, which held the foreign aid ministry only once before, from 1961 to ‘66, had been losing public support almost from the minute it signed a coalition agreement with Merkel’s CDU and its sister party CSU, due to several of personnel and policy decisions that were seen as overly partisan. Sure enough, GIZ has already come under fire twice. Right before the merger agreement was signed, the announcement of GIZ’s all-male management board caused a public outcry. Then, in mid-June, German media reported that board staff used luxurious cars and first-class flights – bad publicity for an agency that was formed to improve efficiency and cut costs. While the formation of GIZ has already increased efficiency, according to government officials, more remains to be done to improve accountability, transparency and effectiveness of Germany’s development cooperation.