Economic and Social Council

 Distr. GENERAL
5 June 1997
ORIGINAL: ENGLISH

Substantive session of 1997
Geneva, 30 June-25 July 1997
Item 3 (b) of the provisional agenda*

     * E/1997/100.


                 OPERATIONAL ACTIVITIES OF THE UNITED NATIONS
                 FOR INTERNATIONAL DEVELOPMENT COOPERATION:  
                 FOLLOW-UP TO POLICY RECOMMENDATIONS OF THE  
                               GENERAL ASSEMBLY

                                   Addendum

                               Capacity-building

                        Report of the Secretary-General


                                   CONTENTS

                                                           Paragraphs  Page

INTRODUCTION ................................................    1       3

 I.   CONTEXT ...............................................  2 - 4     3

II.   EVOLVING CONCEPTS .....................................  5 - 15    4

III.  NEW DIMENSIONS AND EMERGING AREAS ..................... 16 - 39    7

      A. Sustainability ....................................     17      7

      B. Technology ........................................  18 - 19    7

      C. Trade .............................................     20      8

      D. South-South cooperation ...........................     21      8

      E. Human development .................................  22 - 25    8

      F. Peace-building ....................................  26 - 29    9

      G. Aid optimization ..................................  30 - 31   10

      H. Governance ........................................  32 - 38   11

      I. Economic reform ...................................     39     13

IV.   OPERATIONAL ISSUES .................................... 40 - 52   13


                                 INTRODUCTION


1.   The General Assembly decided, in paragraph 22 of its resolution 50/120,
that capacity-building and its sustainability should continue to be essential
to all development activities of the United Nations system at the country
level.  It requested, in paragraph 29, that the United Nations system focus on
enhancing the absorptive capacity in developing countries through
capacity-building efforts.  Capacity-building has been retained by both the
General Assembly and the Economic and Social Council as a focus area for the
Council's review of operational activities in 1997 (resolution 50/120, para.
54).  Moreover, in accordance with paragraph 56 of the resolution, an impact
evaluation will be conducted within the context of the triennial policy review
of 1998, with special attention focused on United Nations system support to
capacity-building.  Extensive consultations have taken place in the
preparation of this report within the United Nations system.  The Consultative
Committee on Programme and Operational Questions, at its session in March
1997, reviewed this subject and provided useful guidelines. 1/


                                  I.  CONTEXT

2.   Building, nurturing and strengthening national capacities in
policy-making, planning, programming and implementation are important elements
of the global consensus on people-centred development.  The emergence of
capacity-building as a major dimension of development effort is partly a
reflection of a broad conclusion that international development cooperation
has not yielded commensurate returns and partly as a response to changing
needs.  Doubts have been expressed over the sustainability of capacities built
through technical cooperation and concerns that some attendant activities have
had even negative effects on long-term capacity-building.

3.   Capacity-building is increasingly seen as the missing link in
development and the key to break the vicious cycle of mass poverty, population
explosion, environmental degradation and political instability.  The need for
concerted capacity-building has become even more - not less - important in the
current understanding of approaches that emphasize globalization,
liberalization, marketization and political pluralism.  Harmonizing them with
national contexts and local cultures requires human and organizational
capacities that many traditional and emerging societies lack.  The growing
country specificity of development needs not only call for a bottom-up
approach to development but also make capacity-building a prerequisite to
sustainable development.

4.   While many countries can identify a development problem - poverty,
illiteracy, ill health, low or negative rates of growth - many are deficient
in capabilities to address a problem with an appropriate policy and then
transform the policy into a practical programme.  Many lack the capacity to
articulate a long-term vision, an integrated policy framework and coherent
programming or lack the capacity for policy reconciliation between sustained
economic growth and sustainable development or between structural adjustment
and social stability.  Many developing societies, particularly the least
developed ones, do not have the capacity to coordinate development aid and
assert national leadership, resulting in donor activism and recipient
passivity.  While most are aware that the roles and rules of state
intervention in a market economy need to be redefined, they do not have the
needed know-how.  Capacity-building is taking place under sub-optimal
scenarios and imperfect conditions.  These are sometimes seen as an absence of
absorptive capacity, which, in turn, is used as a reason for limiting external
or underutilized aid, contributing to the vicious circle of underdevelopment,
weak absorptive capacity and aid fatigue.


                            II.  EVOLVING CONCEPTS

5.    Capacity-building has acquired added legitimacy and enhanced importance
in development theory in the past decade.  The theoretical framework of
capacity-building, long subsumed in technical cooperation, has evolved and
acquired an autonomy and legitimacy of its own.  While there is near unanimity
that capacity-building should be the central mission of development
cooperation, there are widely differing perceptions of what it means and
prescriptions on what needs to be done.  It has become, as it were, an
umbrella concept, encompassing a broad range of concepts, ranging from
synonymity with development itself to training of human resources, from
governance to project execution and from macroeconomic management to conflict
resolution.  By its very nature, capacity-building has to be evolving and
elastic and cannot be encapsulated or strait-jacketed into a stereotype.  It
is, nonetheless, important to reach a common understanding of its essence and
content, if it is to become an effective instrument of development.

6.   Among the questions that may need further clarification are:  What are
the linkages between capacity-building and absorptive capacity?  Is capacity-
building the same as institution-building and human resource development? 
What is capacity-building in relation to capacity?  Can capacity-building be
achieved in a narrow, technical area?  What are the global characteristics of
capacity-building?  Is sustainability of development effort a key standard for
achieving capacity-building?  How critical are science-based technologies to
capacity-building?  Should it be exclusively indigenous and in situ?  What is
the most effective role and relevance of external development partners?  Is
there a division of labour among development partners?  Should the State be
the sole engine of national capacity-building?  How should the civil society
and non-State actors be involved?  How should the right balance be struck
between shareholders (the State and external partners) and stake holders (the
civil society and the public at large)?  Is there any implicit trade-off
between capacity-building and rapid economic growth?  Is there any room for
capacity- building in conflict-prone and war-torn societies?  Is the
restoration of normalcy and establishment of the structures of civil society a
precondition?  Should there be, or can there be, any prerequisites and
preconditions for capacity-building?

7.   Technical cooperation has been an important focus of international
development cooperation, providing the means and resources for developing
countries to achieve self-reliance.  The record of technical cooperation is
both impressive and uneven.  It has helped to lift millions out of poverty
but, at the same time, more people are living in poverty than before - 300
million more between 1990 and 1995.  There is a growing concern that
conventional development processes have created only limited national
expertise and institutional capacity.  Criticism is directed at:

     (a) The excessive emphasis on short-term projects with finite impact
rather than long-term development of human capacity;

     (b) Support to Governments rather than towards civil societies;

     (c) Excessive dependency on foreign experts, resulting in insufficient
local ownership and management of the development process;

     (d) Development of individual capacities with insufficient regard to the
organizational or institutional context.

Technical cooperation is often poorly integrated with national development
programmes and poorly coordinated, as a result of being excessively donor-
driven.  It is often administered as a package, consisting of foreign experts,
external equipment and exogenous technologies with insufficient local
participation.  These negative elements inhibit the capacity of recipient
countries to manage technical cooperation within a coherent national
development framework.

8.   The term "capacity" broadly refers to capability or ability of
individuals and institutions to perform assigned functions efficiently,
effectively and sustainably.  Capacity-building refers to the process of
enhancing individual skills or strengthening the competence of an organization
or set of organizations to undertake specific tasks.  In essence, it is the
nurturing of the abilities needed by a society to take control of its destiny
and direct and manage the development process, to make and carry out informed
choices.  A vision of development and of the kind of society to be nurtured is
a prerequisite.  Just as capacities differ from country to country and from
region to region, they also differ from issue to issue.  As noted above, the
contours of capacity-building include capacity-strengthening, capacity
development, capacity assessment, capacity enrichment and sustenance.  Each of
these elements is linked to the others and yet autonomous, depending on the
context and content of a specific development situation.

9.   While technical cooperation is, at best, enabling in its focus, the
essence of capacity-building is empowerment and liberating people's creative
energies to seize the opportunities open to them.  It is self-liquidating but
in a manner that does not leave behind voids and wastelands.  It is designed
to not only ameliorate individual lives but also enable them fully to
participate in the life of a society.

10.  Capacity-building is also a bridge between potential and performance,
and between domestic processes and development aid.  Capacity-building extends
to new areas, new actors and new dimensions.  Effective capacity-building is
usually based on a human-centred notion of participatory development, where
individuals and organizations whose capacities need to be strengthened are
fully involved in the capacity-building process in all phases. 
Consensus-building should become an integral part of capacity-building.

11.  This participatory approach requires a dialogue with beneficiaries and
target population to ensure awareness of their own responsibility in
identifying problems, finding solutions, establishing goals, learning concepts
and methods, undertaking the necessary transformations to absorb new solutions
and controlling the impact of their actions.  In so doing, special attention
has to be given to empowering the capacities of hitherto neglected sectors and
actors, particularly women, and enhancing their access to productive assets. 
If properly nurtured, their creative energies can make a major development
difference.  It broadens the ambit beyond traditional institution-building to
include sustainable human development; a mutually reinforcing relationship is
required.

12.  Capacity-building seeks to achieve a permanent transfusion of skills and
know-how.  It recognizes the importance not only of individual or
institutional competence but also of a conducive policy and normative
framework, within which they can contribute to the development process.  This
has major implications on the ways operational activities for development are
conceived, designed, implemented and monitored.  Attention needs to be paid
not only to national capacity-building but also to community
capacity-building.

13.  The specificity of country contexts and varying perceptions on the role
of external aid in the development process call for a flexible and pragmatic
approach.  Externally assisted capacity-building has to be carried out
differently at different levels of development and taking into account the
regional dimension.  It is sensitive to the context, building on national
comparative advantages and helping countries to overcome their areas of
weakness and vulnerability.  Capacity-development often starts with an
assessment of current needs, which attempts to identify current level of
capacity and identify strengths, weaknesses and gaps.  While significant
progress has been made in carrying out systematic capacity inventories in
relation to requirements, much work remains, including the evolution of a
common understanding in the development community based on experience and
lessons learnt.

14.  The scope and nature of external cooperation in capacity-building needs
rethinking.  While the points of entry into traditional technical cooperation
are well delineated, they are less clear in capacity-building.  Almost every
country has internal capacities required to organize their societies and
orchestrate their economic affairs.  Externally aided capacity-development has
to be more selective and calibrated than technical cooperation.  The United
Nations development system is well placed to play a leadership role in
capacity-development, with a targeted and selective approach.

15.  Although capacity-building has to be undertaken primarily in a country
context, there is an emerging regional dimension that requires attention.  For
example, while every African country calls for specificity, there are also
many commonalities among 53 African countries.  Among these are human resource
development, particularly in advanced science and applied technology,
infrastructure development and environmental protection.  A regional and a
sub-regional approach to capacity-building in certain areas and issues may be
more efficient and effective than an exclusive country focus.  These issues
are discussed at greater length in the following sections of the report.

                    III.  NEW DIMENSIONS AND EMERGING AREAS

16.  The changing context and new needs have highlighted new dimensions and
emerging issues that have to be reconciled with, and integrated into, the
concept and contours of capacity-building.  Although many of them have been on
the global agenda for some time, they are often dealt with in relative
isolation from each other and outside the conceptual and operational ambit of
capacity-building.  It is necessary to deal with them in an integral and
holistic manner and establish the interlinkages and priorities.


                              A.  Sustainability

17.  Traditional technical assistance is delivered as packaged projects with
minimal regard to their sustainability after completion.  The unsustainability
of many development efforts is a prime reason for diminished effectiveness and
wasted resources.  An essential feature of capacity-building is sustainability
of development activities, including maintenance and modernization of
institutions and infrastructure.  While the importance of sustainability is
generally accepted in the development community, it is usually pursued outside
the parameters of the project cycle.  It should be built into the mainstream
of programme/project identification, formulation, execution, monitoring and
evaluation.  What happens after a project/programme is terminated and how and
by whom it is continued and in what form should be integral variables even at
the embryonic stages of formulation.  The extent to which local resources and
skills are utilized is another critical criterium of sustainability. 
Capacities created or acquired can atrophy without planned retention and
renewal.  Absorption and diffusion into a national context and culture require
different capacities and skills than those needed for development and
transfer, which are more neutral, replicable and less country specific.


                                B.  Technology

18.  The sweep and velocity of technological change, triggered by
transforming technologies, particularly information and communications, have
altered the dynamics of development.  Many developing countries suffer from
greater technological dependence than ever.  Although some have succeeded in
establishing science and technology infrastructures, few have been able to
acquire the endogenous capacity to choose, adopt, apply, generate, diffuse and

blend technologies.  Many have established science and technology institutions
but only a handful have acquired science and technology capacity; some have
research and development capacity but not science and technology capacity. 
Very few have been successful in injecting a technological dimension into the
mainstream of macroeconomic management.

19.  The capacity to ensure policy coherence between technology and economic
policies and to orchestrate their interplay is an important aspect of
endogenous capacity-building.  It encompasses the ability to infuse modern
science into traditional technologies and to blend traditional techniques of
production with emerging science-based technologies.  Technological
capacity-building includes the skills and capabilities not only to formulate
coherent science and technology policies but also to adapt and integrate them
into the new international environment, along with other policies, such as
trade, education and industrialization.


                                   C.  Trade

20.  In an increasingly integrated global economy, capacities to seize trade
opportunities and to overcome trade obstacles have become critical economic
issues.  Many developing countries, particularly the low-income and least
developed ones, are weak in designing policy packages that would enable them
to use international trade as an effective tool of sustained economic growth
and sustainable development.  With outward-oriented and liberal trade regimes,
developing countries are struggling to enhance their minuscule share in global
trade.  Multilateral development institutions, such as the United Nations, are
particularly suitable for providing strategic assistance to developing
countries in maximizing their trade opportunities.


                          D.  South/South cooperation

21.  Capacity-building is central to closer South/South cooperation.  No
other area is more suitable, more promising and potentially more beneficial in
economic pay-offs.  As South/South cooperation moves to practical areas, a
litmus test is how developing countries support, share and strengthen each
others' capacities to control their respective development processes.  The
adequacy of existing modalities like economic cooperation among developing
countries, technical cooperation and regional and subregional institutions and
the need for new modalities more suitable for shared capacity-building need to
be further explored.  The extent to which capacity-building and strengthening
can be integrated with regional and subregional approaches has to be more
systematically explored in consultation with regional entities, such as
regional commissions.  The conclusions and recommendations of the High-level
Committee on the Review of Technical Cooperation among Developing Countries 2/
at its tenth session, which have an important bearing on this subject, are
separately brought to the attention of the Council.


                             E.  Human development

22.  The human dimension is at the centre of capacity-building.  A human
being is not only a resource but also the source and the ultimate beneficiary
of development.  The annual Human Development Report of the United Nations
Development Programme has been useful in bringing this point of view to the
forefront of international attention.  For sustained economic growth and
sustainable development, a critical mass is necessary not only in physical
infrastructure but also in an educated and skilled workforce.  The place of
education in development cooperation, long an implicit component, has become
stronger in today's knowledge of intensive global economy.

23.  Although the importance of education, from the primary stage to
university, is widely accepted as critical for sustained development, many
developing societies continue to suffer from a growing mismatch between the
skills generated by the educational system and those that are needed by the
productive system.  The educated workforce and priority needs of development
are rarely congruent, resulting in unemployment, migration, and serious gaps
in fulfilling development demands.  The impact of information technologies on
education needs renewed attention.  New technologies are new tools and, if
properly targeted, can promote effective learning and provide pupils with
access to knowledge and skills not available in their local environment and
habitat.  They can also help in reaching the uneducated and the vast numbers
of excluded people in the world.

24.  A different dimension of human development is human migration.  The
contemporary global scene is characterized by massive human migration from
villages to cities and across countries and continents in quest of peace and
prosperity.  The poor and the rich alike are willing and able to emigrate to
distant lands - albeit for different reasons - straining the already stretched
civic infrastructure.  The new diaspora, overseas nationals, constitute an
immense economic resource.  The exodus of educated and professional classes -
the most critical development resource - from poor to rich countries poses a
particular challenge to policy makers.  A problem confronting some countries
is the exodus of over 75 per cent of their technical personnel, particularly
their engineering graduates.  The combination of poor prospects at home and
the lure of good life abroad becomes irresistible.

25.  The capacity to convert what is now a debilitating drain into an
invigorating inflow and to harness the talents of migrants without stifling
mobility and creativity needs to be furthered.  Policies to reduce the degree
of loss of the highly educated as a result of the international "brain drain"
or to encourage emigrants to return could make a significant contribution to
the development of capacity.  Policies and schemes may need to be initiated at
both the national and global levels to transform a one-way outflow into a two-
way flow.  The cooperation of Governments and also of non-governmental
institutions, such as universities, industries and private enterprises, will
be required.  This can be achieved through greater use of modalities like
twinning, linking institutions in different countries, South/South and
North/South, and the expansion of existing, successful programmes, that
facilitate the return of skilled nationals and their reintegration into their
country.


                              F.  Peace-building

26.  The source and the origin of conflict are now more diffused than in the
past.  They include ethnic, religious and tribal factors, geographical
disputes, control of minerals and water, and search for shared identity. 
Underlying many of these are mass poverty and economic despair.  Peace-
building comprises integrated and coordinated actions to ensure that conflict
is prevented or resolved on a lasting basis and that the process of long-term
development is not interrupted, or is resumed as early as possible.  The
dimension of peace-building has to be integrated into the concept of capacity-
building.

27.  The relationship between political/ethnic conflict, relief and
reconstruction and development is receiving intense attention (see General
Assembly resolution 50/120, para. 51).  Although it was long considered that a
precondition of development was stability and peace and that external aid
should be confined to humanitarian relief, experience gained in recent years
has shown that development is not only compatible with, but even necessary in,
politically volatile situations.  Preemptive development is an important part
of preventive diplomacy and conflict management.  An emerging challenge is how
to translate these ideas into action and how to put in place a policy package
that operationalizes the concept.  Most countries do not have the integrated
decision-making, design and operational systems that are needed; where they
exist, they are extremely weak.

28.  The increase in humanitarian emergencies has highlighted the need to
extend the frontiers of capacity-building in another direction:  assisting
national Governments to enhance their capacities to deal with natural and
complex emergencies, which include emergency preparedness and the development
of contingency plans through cooperative and coordinated efforts.  In many
disaster-prone countries, the fruits of painstaking economic growth have been
set at nought by a single cataclysmic event.  Modern technologies and acquired
experience make it possible better to prepare for natural disasters and to
mitigate their destructive effects.  Disaster preparedness, relief, prevention
and management capacities are increasingly seen as linked to the mainstream of
development capacities.  Although immediate relief is the focus of meeting
humanitarian emergencies, it is now recognized that relief efforts should also
contribute to long-term development.

29.  The Administrative Committee on Coordination (ACC), at its session in
April 1997, reviewed the concept of peace-building and the work of the United
Nations system in that area.  It stressed the need to strengthen the system's
overall capacity, inter alia, by establishing interlinkages between its
analytical capacities and operational activities in the political, peace-
building, humanitarian and development fields.  To that end, the substantive
capacities for analysing emerging situations and scenario-building should be
mobilized.  ACC agreed that relief and development programmes must overcome
existing divisions and, to that end, a strategic framework should be
developed, in consultation with the concerned countries.  The proposed
framework should be tested in two countries and a working group be established
for each country, to develop appropriate arrangements.


                             G.  Aid optimization

30.  Although official development assistance (ODA), both as a percentage and
in absolute terms, has been stagnant and even regressing in recent years,
there is no reduction in the number of development actors, particularly
external, at the country level.  Despite the emphasis on donor aid
coordination, too often donors concentrate on their own projects and
programmes, making national leadership indispensable.  That need for
leadership has become even more important with the introduction of modalities
by the General Assembly, such as the programme approach, which are predicated
on national ownership and leadership and envisage coalescing of funds from
different sources.  Still, many Governments lack the know-how and skills
required to integrate activities with the same substantive scope but funded
from a variety of sources and to fuse different inputs into a single
programme.  Externally supported aid-coordination mechanisms like the UNDP
round tables and the National Technical Cooperation Assessment and Programmes
(NaTCAP) continue to require strengthened national leadership.

31.  Supporting and stimulating national capacities for aid coordination have
long been on the international agenda.  A major flaw has been to treat
external resources independently of the domestic mainstream on the grounds
that the deployment of the latter is the exclusive prerogative of the
concerned Governments and that aid dollars are accountable to their respective
legislatures.  The recent shift towards national ownership, national
management and national execution, accepted by donor and recipient countries
alike, should assuage some of these concerns and permit an integrated look at
all resources targeted for the same purpose under national oversight. 
Effective aid coordination is best accomplished through a thematic or
programme approach, involving integration of external inputs into a national
programme.  It can achieve not only the donor's objective of cost-
effectiveness but also the overall objective of impact enhancement.  Aid-
coordination capacity includes capacity for aid monitoring and evaluation. 
The monitoring and the evaluation of programmes and projects that are funded
by more than one source call for special skills.  The principles and criteria
for multifunded programmes with several components/projects require new
thinking.


                                H.  Governance

                                   1.  State

32.  Good governance and capable government are essential to stability and
development and to the process of economic reform.  There is a growing
consensus that state intervention in development should be strategic, not
pervasive, and selective, not intrusive.  An effective government is central
to the creation and conduct of even market-oriented economies.  Experience
shows that an enduring public policy cannot be pursued without adequate
governance capacity.  While there is no commonly accepted definition of what
good governance, or "capable" government, means in operational terms, at the
very least it signifies the existence of a stable and relatively open and
transparent political framework that is representative of, and responsive to,
the will of the people.  Capacity-building, in this respect, includes
political institution-building and an infrastructure that enables the voice of
the people to prevail in the choice, conduct and recall of their
representatives and an administrative culture that provides for an apolitical
civil service.  While bureaucracy has often been derided, there is growing
evidence that an efficient civil service is essential and that the nurturing
of management skills is needed at all levels.  International organizations are
attaching growing importance to this realization, and civil service reform is
now high in international development cooperation.  The United Nations, the
World Bank and UNDP, among others, are engaged in this effort.

33.  The  international community is being called upon to help countries that
have moved away from repressive regimes towards representative ones to create
and strengthen the policy conditions and institutional context of good
governance.  These include activities such as conducting elections, creating
an independent judiciary, streamlining the civil service and training the
police.  The United Nations has been engaged in these tasks as a part of its
post-conflict peace-building work and renewal and rehabilitation of failed
States.  Regional organizations and non-governmental agencies are also being
asked to assist.  Capacity-building is often construed exclusively in relation
to central or federal governance, yet it has important bearing on community
development and municipal management.  Decentralization and the devolution of
decision-making cannot be effective without commensurate capacity-building at
the local and community levels.

34.  Good governance requires that systemic corruption be eliminated.  The
Organisation for Economic Cooperation and Development (OECD) has urged its
member States to stop allowing bribes to be tax deductible.  The World Trade
Organization (WTO) has begun discussions on making transparency standard in
permanent procurement practices.  The World Bank has recently set up new
procurement guidelines which permit cancellation of part of a loan if it is
determined that corrupt or fraudulent practices were involved and to bar
guilty companies from bidding on future projects.  Transparency International,
an anti-corruption outfit, now has chapters in more than 50 countries.  Good
governance is synonymous with sound development management and how a society's
comparative advantages are harnessed for the public good.  Corruption raises
the cost of development projects.  There is a widespread sense that corruption
is not only more pervasive and intrusive than before, but that, in some
countries, democratization has increased it, along with and, apparently, as a
result of economic reforms.  The focus of corruption is no longer confined to
the State:  it extends to the civil society.  But the integration of
anti-corruption measures into the governance agenda of a development agency
has to be pursued with caution.


                               2.  Civil society

35.  The important contribution of civil society to economic growth and to
social stability is widely acknowledged.  The international development
agencies are involving non-State actors as the conduits and agents of aid. 
Consequently, the principles of good governance become equally applicable to
civil society.

36.  The private sector in many developing societies is in a state of
transformation.  Family-owned businesses are being professionalized, sleeping
shareholders and dormant directors are waking up and asserting their rights. 
Profitability and good governance are distinct and do not necessarily follow
each other.  Demands for greater transparency, accountability and accounting
integrity are being voiced.  International funding agencies, such as the World
Bank, the International Finance Corporation (IFC) and regional development
banks are directly providing funds to the corporate sector and intend to
increase such lending.  It is in this framework that the question of extending
the principles of good governance to the corporate sector need to be
considered.

37.  A relatively neglected part of civil society is the cooperative sector
which offers a middle way between the inefficient public sector and profit-
centred private sector.  It combines public accountability, non-bureaucratic
functioning and self-reliance.  The cooperative movement has grown in
developing societies.  As part of a new development compact, the international
community and multilateral institutions should support and encourage the
movement.  Most cooperatives are not only starved for funds but more
importantly, lack managerial and organizational capacities.  A capable
cooperative sector can complement a capable government and a capable private
sector. 

38.  The number of non-governmental organizations and the range of their
activities have grown rapidly.  The proportion of development aid channelled
through non-governmental organizations increased from 0.7 per cent in 1975 to
3.6 per cent in 1985 and to at least 5 per cent in 1993-1994, excluding
multilateral aid.  The number of non-governmental organizations in developing
countries has also increased exponentially.  If corporations are becoming
socially sensitized, non-governmental organizations, the traditional
non-profit-making units, are being corporatized.  As the State increasingly
divests itself of welfare functions, non-governmental organizations are
engaged in grass-roots work in areas like education and health.  They receive
their funds from external agencies or indirectly from their own Governments. 
In many cases, the funds received and the activities undertaken by them exceed
their capacities and skills.  Funding being scarce, few, if any, can turn down
financial support on the grounds that they have no capacity.  If appropriate
capacities are not built in the non-State constituencies and if more and more
resources are channelled through the non-governmental organizations the result
could be misuse, waste or an aid backlash.  This task has to be undertaken,
bearing in mind the sensitivities of Governments.  International organizations
are paying  particular heed to this aspect in the design of their development
agendas.


                              I.  Economic reform

39.  Almost all developing countries and countries in transition have
introduced reforms in their economies with a two-pronged agenda:  revitalizing
stagnant economies; and joining the global economy.  They are trying to
modernize without losing their moorings and join the global economy without
losing control over their domestic economies.  This is a complex process that
calls for considerable sophistication and skills which many lack, forcing them
to seek external help, particularly from the Bretton Woods institutions.  The
capacity-building dimension of economic reform needs particular attention from
the United Nations.  The mix of economic and egalitarian policies and
capacities which is necessary to induce adjustment with a human face and
social justice with economic growth is weak in many countries.  The United
Nations has a vital catalytic and coordinating role to play, and its own
capacity to play the role needs continuous attention.


                            IV.  OPERATIONAL ISSUES

40.  While the need to shift or enlarge the substantive scope of development
efforts from economic cooperation to capacity-building is widely accepted,
much of the supporting infrastructure has remained unchanged.  A recent study
noted that bringing the concept to the forefront of aid has proved to be
tougher than expected.  Among the difficulties are:

     (a) Uncertainty about the concept and how to measure it;  

     (b) A confusing array of processes and techniques;

     (c) A wide gap between prescriptions and practice.

Despite daunting odds, many donor agencies and the United Nations system have
taken several steps forward.  The effort is twofold:  to obviate the flaws and
weaknesses of technical cooperation, and to adapt to changing times and new
requirements.  Not all forms of technical cooperation, albeit highly valued by
national authorities, are necessarily conducive to, and compatible with, the
development of national capacity.  While technical cooperation that provides
direct support or fills gaps may be justifiable in certain circumstances, the
kind that inadvertently undermines capacities has to be avoided.  The new
needs are known.  The challenge is how to transform an entrenched system built
over half a century.

Recommendation 1

41.  External assistance for developing national capacity has to be far more
selective, sensitive and has to be better internalized and integrated into
domestic processes and move away from short-term results and narrow
accountability.  A new profile is needed in the presence and representation of
external development partners.  National capacities to monitor and evaluate
development activities have to be strengthened and relevant criteria designed.

42.  International organizations are operationalizing capacity-building in
the design and delivery of their development assistance.  The World Bank
recently issued a new operational directive that classifies technical
cooperation by outcomes, such as policy support, policy preparation and
implementation support and institutional development.  The Bank, with UNDP and
the African Development Bank, has launched an African capacity-building
initiative to assist African countries to build capacities in policy analysis
and development management in sub-Saharan Africa.  It aims to build a critical
mass of African professional policy analysts and economic managers.  The
African Capacity-Building Fund is being supported by donors.  The lessons from
the current pilot phase should provide useful guidance on such issues as: 
Have the capacities of sub-Saharan Africa, the poorest region in the world,
been enhanced in policy analysis and development management, two of the most
sophisticated skills?  Are these the right points of external entry into
capacity-building?  Are they sustained and sustainable?

Recommendation 2

43.  The United Nations development system bears a particular responsibility
as pacesetter and catalyst.  There is need to establish system-wide guidelines
and criteria that could be used as benchmarks and points of reference by the
system (see General Assembly resolution 50/120, para. 26).  In accordance with
resolution 50/120, capacity-building should remain an essential part of
operational activities of the United Nations system at the country level,
focusing on strengthening national capacity in policy and programme
formulation, development management, planning and implementation,
coordination, monitoring and evaluation.

44.  Organizations of the United Nations system are introducing policies and
measures to focus more sharply their country-level presence and programming on
capacity-building and are shifting from direct programme/project support to
fulfilling long-term capacity needs.  Agenda 21 laid particular stress on
this.  Experience gained from Collaborative Research in the Economics of
Environment and Development (CREED), established in 1993, illustrates, among
other things, the complexity of operationalizing capacity-strengthening.  One
important conclusion is that capacity-strengthening is not an automatic
by-product of collaborative research.  Capacity 21, an outgrowth of the United
Nations Conference on Environment and Development, 3/ assists developing
countries build their capacities to integrate the principles of Agenda 21 into
national plans and programmes.  A UNDP trust fund of about $57 million, with a
small but significant cost-sharing with non-governmental organizations,
supports projects that are country-driven and nationally executed.  Its
operational scope covers about 60 countries.  In June 1996, an independent
review of Capacity 21 concluded that it had made significant progress in the
incorporation of sustainable development principles into development planning
processes in most of the 40 countries in which it was operational.  It is
important to note that its all-encompassing scope, focus on environment, and
narrow resource base - a target of $500 million - do not enable Capacity 21 to
cover the gamut of capacity-building needs, nor was it intended to do so.

45.   United Nations funds and programmes are at the vanguard of the effort
to shift from traditional technical assistance to a new  mode of capacity-
building.  Thus, the Executive Board of UNDP, through its decision 94/14,
decided that the overall mission of UNDP was to assist programme countries to
realize sustainable human development in line with their national development
programmes and priorities.  A recent review of the approach and operations of
the United Nations Children's Fund (UNICEF) noted, among other things, that
the integration of domestic systems and policies with UNICEF-supported
programmes might lead to the distortion of the policy and programme priorities
of national institutions and siphon off the most qualified and experienced
staff from other important activities.  Its capacity-building intervention
strategy should, inter alia, make more conscious decisions in the trade-offs
between long-term capacity-building and the achievement of operational
targets.  Programming decentralization should be enhanced at the field level,
since capacity-building requires a country-based choice of partners.  The
United Nations Population Fund (UNFPA) is putting particular stress on
sustainability of family planning programmes which, among other things,
require increased understanding of the role of both public and private
sectors, in formulating policies and designing family planning services
jointly with donors and Governments.

46.  The specialized agencies of the United Nations system continue to focus
their country-level activities, particularly technical cooperation, on
development of national expertise and capability.  For example, the work of
the World Health Organization (WHO) towards capacity-building at the country
level covers four strategic areas, including policy formulation and
implementation and health system management, and takes account of national
needs and expertise.  Another agency whose work has important bearing on
capacity-building in education is the United Nations Educational, Scientific
and Cultural Organization.  The United Nations Industrial Development
Organization (UNIDO) clearly differentiates between capacity-building and
direct support projects.

Recommendation 3

47.  An enduring transition from traditional technical assistance to
capacity-building may require more fundamental changes in the way operational
activities are conceived and carried out.

48.  The General Assembly, as part of the overall reform process, has taken
important decisions in the past six years on operational activities in the
United Nations system, where the principal aim is to enhance the relevance and
responsiveness of those activities to national needs and to integrate them
into national development.  It introduced innovative mechanisms, such as the
country strategy note, enhanced policy dialogue, the programme approach and
national execution.  While all these mechanisms are intended to support
national ownership and integration into the development process, their
effective implementation requires commensurate capacity-building, involving
areas such as planning, prioritization, programming and management system. 
Has the United Nations system, in the past, introduced changes at the country
level without necessary policy changes at Headquarters, casting an unfair
burden on the field level?  Inadequacies of policy development support at the
global level may be an important reason for tardy or flawed progress in
reform.  Further changes may be needed in planning and programming approaches
at the country level by placing emphasis on helping countries to formulate
coherent national programmes.

Recommendation 4

49.  In order for capacity-building to become a more focused mission of the
United Nations development system, existing policies and procedures have to be
critically reviewed.  The consistency and compatibility of extant policies
with capacity-building objectives have to be addressed.  Changing the
contribution of the United Nations system from self-driven programmes and
projects to calibrated inputs into national programmes will require a review
of the entire project cycle and programming culture.

50.  The capacity-building effort of the United Nations system can only be
sustained through an interactive in situ process, requiring deep familiarity
with local customs and culture and the ability to draw on local skills,
technologies and strengths.  A country-specific process requires country-level
focus and control in the United Nations system.  While decentralization and
delegation are important to the entire work of the system, they are critical
to capacity-building.  While empowerment is crucial to any people-centred
process, it is the life-blood of the capacity-building work of the United
Nations system.

51.  This will not be an easy task.  The policies and procedures of the
United Nations development system in the design and delivery of its
operational activities have evolved over the past 50 years.  In recent years,
the system in the field, under the leadership of the resident coordinator
system, has been moving towards redefining much of its cooperation and nearly
all of its technical cooperation in terms of national capacity-building, in
such areas as governance, human resources development, institution-building
and bringing women into the mainstream of socio-economic life.  As an offshoot
of its basic construct and culture, much of the capacity-building work of
United Nations system is United Nations-centred, mandate-driven, event-tenured
and tailored to conform to the procedures and requirements of the concerned
organizations.

Recommendation 5

52.  The wide range of activities now coming under the rubric of capacity-
building at the field level highlights the need for greater clarity and common
understanding on this subject.  Field staff should be supported with the
required resources and empowered to do the job.  The efforts of the United
Nations system in capacity-building are largely uncoordinated and mainly
focused on their counterparts.  What is needed is a more system-wide and
systemic approach.  A political push and impulse from the intergovernmental
level, especially in the framework of the 1998 triennial comprehensive policy
review of operational activities, will be indispensable for leading this
effort.


                                     Notes

     1/  See ACC/1997/7.

     2/  See A/52/39.

     3/  Report of the United Nations Conference on Environment and
Development, Rio de Janeiro, 3-14 June 1992 (United Nations publication, Sales
No. E.93.I.8 and Corrigendum).


         

Date last posted: 29 November 1999 12:16:05
Comments and suggestions: esa@un.org