The Nettle of Civil Service Reform - and 'Topping-up'
Sierra Leone has come a long way since the brutal civil war ended in 1999, and donors have played a vital role in this progress. But donor approaches to technical assistance, implementation units and topping-up schemes could end up doing some harm, writes Nils Boesen after a Technical Cooperation learning event in the capital, Freetown.
Sierra Leone has been relatively peaceful over the last decade, and the economy has grown respectively – albeit from a very low base. However, capacity remains severely limited, corruption levels are high and political tensions are becoming more visible in the run-up to the 2012 elections. Donors have been extremely important for Sierra Leone’s effort to get out of fragility. This has included peacekeeping support, but also generous aid that still stands at around 20% of Gross Domestic Product, according to Organisation for Economic Cooperation and Development (OECD).
So much aid in a situation with limited human, institutional, political and technical capacity inevitably exacerbates associated risks. A recent report from the OECD found that harm is indeed inflicted when it comes to the use of topping-up schemes, and parallel implementation units – both issues that are at the centre of the Paris Declaration, the Accra Agenda for Action and the European Commission’s reform of technical assistance. These issues – and the related issue of a civil service reform that could address such problems – were therefore intensely debated during the TC learning event in Sierra Leone, held from 14-18 of June 2010.
Distorting incentives, risks fuelling mistrust
As nearly inevitable in post-conflict situations, donors started to recruit nationals for running projects and programmes in special units. They paid premium salary levels especially when compared to those received by the civil service, which had been further eroded by inflation and devaluations.
To encourage key civil servants to stay in-post, individual donors have introduced a variety of topping-up schemes, currently estimated to cover some 400 positions. This is roughly half of the middle and upper level staff in central level ministries and agencies. Obviously, it negatively impacts the motivation of those who do not get a top-up, and provides incentives for civil servant staff to seek position linked to a donor-funded project, rather than a government-funded priority.
But this is not the only negative effect: The system sustains a nucleus of a Freetown-based elite made of specially favoured civil servants and risks creating mistrust amongst the wider population.
The practice has other unintended effects: Nationals managing donor-funded projects may, because of the comparatively attractive salary packages they receive, have a strong interest in not completing the projects they work on as this would lead them to lose their benefits. International TA may have the same incentives, of course, but would often have a wider set of alternative market opportunities.
During the learning event, both donor and government representatives were keenly aware of the drawbacks of topping-up, and also about the fact that it has now become entrenched in a manner that makes it hard to change. The question seems no longer to be whether the system actually ensures performance, but rather, what are the negative effects of abandoning it, both for the stability of the governmental services and for the effectiveness of the aid provided by donors?
The nettle of civil service reform
Key stakeholders agree that a comprehensive civil service reform is the right response, not only to mitigate the effects of topping-up practices, but also to get incentives right across staff groups in the entire public sector and enable the public sector to recruit its share of the sparse educated manpower available. But that is far easier said than done, because it may require a combination of retrenchments, further salary decompression (e.g. bigger differences between those earning most and those earning least), and due respect for the fiscal implications in a country where domestic revenues are covering only around half the public budget, with donors adding the rest.
There have been various proposals for civil service reform over the last decade, including combinations of pay and grade reform, new human resource management procedures, cleaning up payrolls for ghost workers, etc. The latest, from March 2008, is yet to make decisive progress, confirming that civil service reform is as difficult politically, as it is technically complicated.
The key donors to Sierra Leone are currently stepping up the attention they pay to this area, and the learning event on TC provided a welcome opportunity for them to take stock of present efforts and discuss the next steps ahead. The European Commission may well play a strong role in this crucial area.
The learning event in Sierra Leone confirmed that TC reform is not a separate entity, but part of aid reform in general. And in a country slowly working itself out of fragility, there are particularly sensitive, interlinked issues at play, including:
• The overall ambition and external funding level, compared to the available capacity. The bigger the difference, the more – by default – parallel structures will be required.
• The distortive implications of topping-up arrangements and parallel implementation units.
• The general incentives in the civil service (which are not shaped by remuneration alone).
• The impact of using TA on the labour market.
• The subsequent need for a complex, comprehensive civil service reform that may well require a time span of 10-15 years to be implemented.
The lesson is that donors have to pay attention to these issues in a transparent, incremental and co-ordinated way, at an early stage in their interventions in post-conflict or fragile situations. The later the problems are recognised and addressed, the harder it will be!