Categorized | Features, General

De Ole Dawg – Part 19 2016: Can Montserrat make a good case for “catalytic” investments in development?

Can Montserrat make a good case for “catalytic” investments in development?

BRADES, Montserrat,  DFID is our chief development aid partner, and so it is vital for us – Montserrat’s government and public – to understand the terms on which DFID aid is offered to Montserrat. These are clear and quite reasonable:

  • good value for money (= “cost effectiveness”)
  • proper risk management (we are currently AmberRed, not Green)
  • building up/ supplementing our planning and implementing capacity
  • a sound “joined up” strategy for sustainable development and private sector-led growth
  • convincing analysis, credible plans and good business cases (technical help is available)
  • adequate financial management capability
  • governance reform (including improved transparency and accountability)

And, no, poverty reduction is not a specific goal for aid to OT’s.  In the DFID Overseas Territories Department Operational Plan 2011 – 2016, we may see on p.4:

“The International Development Act 2002 specifically exempts aid to the OTs from the poverty reduction criteria that apply to the rest of the DFID aid budget.”

It continues:

“The standard DFID Bilateral Aid Review pillars do not apply to the OTs. Instead, the priorities are as follows.

Pillar 1: To meet the “reasonable assistance needs” of OT citizens cost effectively . . . .

Pillar 2: To accelerate aid-dependent OTs towards self-sufficiency . . . .

Pillar 3: To contribute to the UK Government’s management of the financial liability for non-aided Caribbean OTs in crisis . . .”

Pillars 1 and 2 are directly relevant to Montserrat. Our main challenge, then, is to make a convincing value for money case that allows us to move from in the main support for basic necessities, to catalytic investments that can trigger self-sustaining private sector-led growth. So, we may now see how value for money “works”:

Pillar 1 clearly supports Case C, DFID investing in fair performance and relatively low cost initiatives and operations. It is the baseline of “reasonable assistance needs” as DFID understands it. From our perspective, it is the “tight” budgetary support that keeps us barely ticking over, year to year.  So,[1] if we cannot make a convincing case for DFID to shift to Case A,value for money

“we will be stuck at ‘business as usual small steps,’ i.e. case C. After all, C is good enough to keep us going, without excessive risk of spectacular corruption scandals. (We have already seen headlines as to what £400 millions have bought over the past twenty years. Those headlines are just as painful for DFID as they are for Montserrat.)”

In short, our challenge is to make a good case for DFID’s aid stance to move on to Pillar 2 and thus to invest in a cluster of Case A growth- catalysing initiatives. Which, for twenty years and seven governments now, we have consistently failed to do.

DFID also quite clearly said that “[w]e will minimise the cost of our OT obligations.” So, it will be even harder to make a good argument for Case B initiatives. For example, in his March 10, 2016 Discover MNI Article, Capt. John Howe wrote[2]:

“If [the] NEW PORT at Carr’s Bay is too expensive, some 150 plus million US dollars. Please let us look more closely at building a Breakwater at Little Bay as soon as possible. The Little Bay Breakwater and Reclaiming of some shore line, would cost about $75 Million USD. Half of the proposed Port at Carr’s Bay . . .”

However, under the UN Charter, Article 73, HMG is duty-bound “to ensure, with due respect for the culture of [Montserrat], [our] political, economic, social, and educational advancement, [our] just treatment, and [our] protection against abuses.”

So – on much the same grounds that there is a child safeguarding initiative sponsored by HMG – a broad case can be made for investment in economy transforming investments. Especially, if such will create momentum towards self-sustaining, private sector led economic growth. As Myrdal’s cumulative, circular causation model points out, investments can indeed kick-start sustained growth in an economy:

cumulative causation

However, we must always bear in mind that we are “tickling a dragon’s tail”[3]: poorly judged big ticket investments often trigger feel-good, loans-fed, consumption- and- construction or speculative “bubble” led “booms” for a time. Booms, that then go very seriously “bust” in ways that are hard to recover from.

So, while tourism is an obvious “quick win,”[4] we have to diversify our economy so that growth will be robust – tourism is a “cash cow” we “milk” to feed other sectors. Digital productivity[5] is a key sector for such diversification. This requires that we build a sustained, strategic education focus[6] on computing and linked technologies, starting with computer programming skills.

Happily, DFID also suggested in its 2011 – 16 OT’s plan, that “[i]n St Helena and Montserrat the upfront [investment] option may make sense,” making it plain that the £ 250 million St Helena airport – never mind current issues on wind shear etc. – is a yardstick: “with airport construction well underway, we aim to move to a longer term partnership with St Helena.”  DFID also anticipates that: “Budget Aid in Montserrat and St Helena is likely to continue into the future but our ambition is that it will reduce over time in tandem with increased economic development and revenue.”  Let us therefore burn the St Helena yardstick into our memories:

Introduction pt1

 

So, as we welcome our new FS as he comes to us from St Helena, let us work together as Team Montserrat, to move on to a Pillar 2, Case A development track.

 END –

[1]              TMR DOD April 2, 2016: http://www.themontserratreporter.com/what-about-value-for-money-and-catalytic-investments-for-economic-transformation/

[2]           http://www.discovermni.com/2016/03/gom-needs-to-fix-sea-access-problem-says-head-of-boat-owners-association/ March 10, 2016.

[3]              TMR DOD January 29, 2016: http://www.themontserratreporter.com/de-ole-dawg-part-3-2016-economic-stimuli-and-jobs/

[4]              TMR DOD December 18, 2015: http://www.themontserratreporter.com/de-ole-dawg-part-9-the-tourism-and-economic-development-issue/

[5]              TMR DOD on ICTs, December 5, 2015: http://www.themontserratreporter.com/de-ole-dawg-part-7-contribution/

[6]           TMR DOD Feb 12, 2016: http://www.themontserratreporter.com/de-ole-dawg-part-4-2016-building-digital-productivity-for-development/

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Can Montserrat make a good case for “catalytic” investments in development?

BRADES, Montserrat,  DFID is our chief development aid partner, and so it is vital for us – Montserrat’s government and public – to understand the terms on which DFID aid is offered to Montserrat. These are clear and quite reasonable:

And, no, poverty reduction is not a specific goal for aid to OT’s.  In the DFID Overseas Territories Department Operational Plan 2011 – 2016, we may see on p.4:

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“The International Development Act 2002 specifically exempts aid to the OTs from the poverty reduction criteria that apply to the rest of the DFID aid budget.”

It continues:

“The standard DFID Bilateral Aid Review pillars do not apply to the OTs. Instead, the priorities are as follows.

Pillar 1: To meet the “reasonable assistance needs” of OT citizens cost effectively . . . .

Pillar 2: To accelerate aid-dependent OTs towards self-sufficiency . . . .

Pillar 3: To contribute to the UK Government’s management of the financial liability for non-aided Caribbean OTs in crisis . . .”

Pillars 1 and 2 are directly relevant to Montserrat. Our main challenge, then, is to make a convincing value for money case that allows us to move from in the main support for basic necessities, to catalytic investments that can trigger self-sustaining private sector-led growth. So, we may now see how value for money “works”:

Pillar 1 clearly supports Case C, DFID investing in fair performance and relatively low cost initiatives and operations. It is the baseline of “reasonable assistance needs” as DFID understands it. From our perspective, it is the “tight” budgetary support that keeps us barely ticking over, year to year.  So,[1] if we cannot make a convincing case for DFID to shift to Case A,value for money

“we will be stuck at ‘business as usual small steps,’ i.e. case C. After all, C is good enough to keep us going, without excessive risk of spectacular corruption scandals. (We have already seen headlines as to what £400 millions have bought over the past twenty years. Those headlines are just as painful for DFID as they are for Montserrat.)”

In short, our challenge is to make a good case for DFID’s aid stance to move on to Pillar 2 and thus to invest in a cluster of Case A growth- catalysing initiatives. Which, for twenty years and seven governments now, we have consistently failed to do.

DFID also quite clearly said that “[w]e will minimise the cost of our OT obligations.” So, it will be even harder to make a good argument for Case B initiatives. For example, in his March 10, 2016 Discover MNI Article, Capt. John Howe wrote[2]:

“If [the] NEW PORT at Carr’s Bay is too expensive, some 150 plus million US dollars. Please let us look more closely at building a Breakwater at Little Bay as soon as possible. The Little Bay Breakwater and Reclaiming of some shore line, would cost about $75 Million USD. Half of the proposed Port at Carr’s Bay . . .”

However, under the UN Charter, Article 73, HMG is duty-bound “to ensure, with due respect for the culture of [Montserrat], [our] political, economic, social, and educational advancement, [our] just treatment, and [our] protection against abuses.”

So – on much the same grounds that there is a child safeguarding initiative sponsored by HMG – a broad case can be made for investment in economy transforming investments. Especially, if such will create momentum towards self-sustaining, private sector led economic growth. As Myrdal’s cumulative, circular causation model points out, investments can indeed kick-start sustained growth in an economy:

cumulative causation

However, we must always bear in mind that we are “tickling a dragon’s tail”[3]: poorly judged big ticket investments often trigger feel-good, loans-fed, consumption- and- construction or speculative “bubble” led “booms” for a time. Booms, that then go very seriously “bust” in ways that are hard to recover from.

So, while tourism is an obvious “quick win,”[4] we have to diversify our economy so that growth will be robust – tourism is a “cash cow” we “milk” to feed other sectors. Digital productivity[5] is a key sector for such diversification. This requires that we build a sustained, strategic education focus[6] on computing and linked technologies, starting with computer programming skills.

Happily, DFID also suggested in its 2011 – 16 OT’s plan, that “[i]n St Helena and Montserrat the upfront [investment] option may make sense,” making it plain that the £ 250 million St Helena airport – never mind current issues on wind shear etc. – is a yardstick: “with airport construction well underway, we aim to move to a longer term partnership with St Helena.”  DFID also anticipates that: “Budget Aid in Montserrat and St Helena is likely to continue into the future but our ambition is that it will reduce over time in tandem with increased economic development and revenue.”  Let us therefore burn the St Helena yardstick into our memories:

Introduction pt1

 

So, as we welcome our new FS as he comes to us from St Helena, let us work together as Team Montserrat, to move on to a Pillar 2, Case A development track.

 END –

[1]              TMR DOD April 2, 2016: http://www.themontserratreporter.com/what-about-value-for-money-and-catalytic-investments-for-economic-transformation/

[2]           http://www.discovermni.com/2016/03/gom-needs-to-fix-sea-access-problem-says-head-of-boat-owners-association/ March 10, 2016.

[3]              TMR DOD January 29, 2016: http://www.themontserratreporter.com/de-ole-dawg-part-3-2016-economic-stimuli-and-jobs/

[4]              TMR DOD December 18, 2015: http://www.themontserratreporter.com/de-ole-dawg-part-9-the-tourism-and-economic-development-issue/

[5]              TMR DOD on ICTs, December 5, 2015: http://www.themontserratreporter.com/de-ole-dawg-part-7-contribution/

[6]           TMR DOD Feb 12, 2016: http://www.themontserratreporter.com/de-ole-dawg-part-4-2016-building-digital-productivity-for-development/