Timor-Leste First (Timor-Leste Mak Uluk)
Meetings are painful at the best of times, but there was one in Dili last year that was a bit different that the rest.
In April 2010 the G7+ countries* met in Dili, Timor-Leste. Their discussions centred on the issue of Aid Effectiveness and the aligning of donor with national priorities so as to maximise impact of the aid dollar in restoring and rebuilding peace and sustainable economies in some pretty tough places around the world. The G7+ issued a final communique known as the Dili Declaration.
Of particular interest to me was the emphasis on restoring economies as fast as possible and the Dili Declaration’s statement that international and national partners should:
“Initiate in-country joint reviews of the impact of development partners’ … procurement procedures on the local economy and labour market, as well as on local capacity.”
This caught my eye as it is directly relevant to the work that Peace Dividend Marketplace project does in driving international procurement dollars into the domestic private sector generating wealth and creating jobs.
We have long been promoting the idea of in-country first procurement, and to be honest have had less success in Timor-Leste than in Afghanistan, where a wide ranging Afghanistan First Policy has been put into action. NATO are some pretty big hitters.
We think a Timor-Leste First policy should be adopted at the next Timor-Leste Development Partners Meeting (TLPDM) in a couple of months.
“Timor-Leste First”: Spending the Development Dollar Twice
Over the last decade, billions of dollars of international assistance have been spent on reconstruction and development efforts in Timor-Leste. Yet research has shown that very little of that assistance has reached the local economy. In fact it is estimated that poverty rates have increased and unemployment remains a significant concern – particularly among youth – indicating that investments in the local economy including focus on job creation and business development are of utmost importance to long-term peace and sustainability in Timor-Leste.
Adopting a “Timor-Leste First” Approach
Lessons learned: In Afghanistan donors have endorsed an “Afghan First Policy” which was inspired by the Paris Declaration on Aid Effectiveness. This policy helps ensure that aid money spent on Afghanistan is spent in Afghanistan by using capable local suppliers where ever possible to carry out project work;
This precedent can be adopted by donors, implementing agencies and other national and regional businesses operating in Timor-Leste. A Timor-Leste First approach can help fuel a much needed economic recovery by driving new investment into the local economy – particularly in rural areas where it is estimated that 40% of the population lives on less than 55 cents per person per day.
Local Procurement is Key
- It provides the means in which international monies can be channeled into the local economy;
- It contributes to peace and stability by sustaining and inducing jobs, building marketplaces and generating tax revenue;
- Empirical research has shown that private sector development and in particular job creation can reduce the risk of a return to conflict;
- It presents an opportunity to spend the development dollar twice. For example, a donor can spend $1m to build a clinic with imported goods and services and leave a clinic behind. Or they can use local suppliers to build that clinic and simultaneously increase incomes, generate tax revenue and build the local marketplace;
- It is often faster, more efficient, and has greater value than other aid mechanisms for private sector development;
- Research shows that there is a direct link between increased local spending and increased GDP in post-conflict/crisis economies;
- Research has also shown that increased local spending only distorts the local economy in isolated ways, and that the economic benefits far outweigh the pitfalls;
- It is an important and valuable “hearts and minds” approach;
- It increases the capacity of national actors and businesses while contributing to the diversification of supply chains.
Who has endorsed this approach?
- Paris Declaration on Aid Effectiveness
- Senior Advisory Group to the Secretary-General
- United Nations Department of Peacekeeping Operations (UNMIT & UNAMA)
- UK Dept for International Development and Ministry of Defence
- Pentagon and State Department
- President of Timor-Leste, Jose Ramos-Horta
- “Timor-Leste First” policies will help donors and other agencies and organizations spend money “in Timor-Leste” rather than just “on Timor-Leste”;
- It is MORE than private sector development – it is a new way of supporting peace building by creating sustainable employment, developing business and building capacity independent of international donors;
- It fosters stability;
- It is measurable;
- It helps ensure international investments over the long-term;
- It is highly popular with the host nation.
* The g7+ is an open group of countries and regions experiencing conflict and fragility. It was established in 2008 and comprises the following national and regional governments: Afghanistan, Burundi, Central African Republic, Chad, Côte d’Ivoire, the Democratic Republic of Congo, Haiti, Liberia, Nepal, the Solomon Islands, Sierra Leone, Southern Sudan and Timor-Leste.