Capacity development in economic policy agencies

The Australian Treasury has been heavily involved, and accumulated considerable experience, in the provision of ‘capacity development services’ since the early 2000s, deploying over 100 Treasury officials as capacity development advisers to economic policy agencies (treasuries or ministries of finance) to PNG, Solomon Islands, Indonesia, Nauru and several other countries.

‘Capacity development’ is a complex and challenging task that is only likely to be successful over a long time frame, in most cases decades rather than years. In a recent article for the Australian Treasury’s Economic Roundup, we reflected on these challenges, drawing principally on our deployments as capacity development advisers in the PNG Treasury and the Solomon Islands Ministry of Finance and Treasury.

We frequently wrestled with a range of questions about our role as capacity development advisers, and we suspect many others have done the same. These questions included whether we were focusing on the right priorities, how to maintain good working relationships with counterparts, and how to assess whether we were being effective in our work.

Our paper sets out the conclusions we reached (and the questions that we still have) in the hope that they will be useful to future capacity development advisers, their counterparts, designers and evaluators of capacity development programs, and academic researchers interested in capacity development.  (The paper does not address the broader question of the merits of capacity development programs relative to other forms of aid.)

The central theme underpinning our paper is the importance of thinking strategically about capacity development, given the long time frames and complexity involved.  We recommend seven steps for how capacity development advisers can adopt such an approach.

First, take time to establish priorities. The potential scope of capacity development activities can be very broad, so it is important for advisers to assess the options thoroughly. This assessment should include ‘soft capacities’ (leadership, trust, team identity, values, mission, etc.) as well as ‘hard capacities’ (such as recruitment procedures, financial management, or expertise in law or economics).

Second, recognise the importance of management capacity. The capacity of managers within economic policy agencies is a key constraint on, or a key enabler for, the organisation’s capacity development. This means that improving management capacity should be a priority for advisers, where possible. However, there are significant limits on how much can be done to address management weaknesses, so advisers (and external evaluations) need to be realistic about what can be achieved.

Third, effective relationships are critical to the effectiveness of advisers. For team leaders and senior capacity building advisers, relationships depend on maintaining a regular dialogue with the senior management of the host institution. More generally, the foundation of an effective working relationship between advisers and counterparts is to develop clear expectations, starting with the counterpart’s understanding of their responsibilities and the adviser’s role. In addition, there are a number of basic protocols that advisers and counterparts may wish to agree upon early in the relationship.

Fourth, advisers face difficult judgments about when to intervene and when to ‘let things fall over’.  If advisers too frequently intervene and do some of the work themselves, they may crowd out local staff and prevent them from developing or demonstrating their own skills. But deciding not to intervene can be difficult and, at times, counter-productive. We discuss several considerations that may help advisers to decide when to intervene and when to step back and monitor the consequences.

Fifth, measuring progress is important but difficult. There are several reasons why measuring the effectiveness of capacity development is particularly difficult. This does not imply that performance measurement is worthless (on the contrary), but it does mean that more effort may be required in order to produce meaningful insights.

Sixth, advisers should think about the interaction between incentives and capacity development.  Incentives matter for both the development and utilisation of capacity. In addition, economic policy agencies have a role in shaping society-wide incentives that impact on development outcomes generally. For both these reasons, incentives are highly relevant to capacity development.

Finally, recognise that capacity development requires specialised skills and expertise. Some of the expertise required to be a successful capacity development adviser in a developing country context goes beyond the experience gained in the Australian Treasury. Consequently, new advisers may benefit from specific training in capacity development skills either prior to, or shortly after commencing, their deployment.

We hope this paper contributes to further discussions on this topic.

Harry Greenwell and Bede Moore both worked as capacity development advisers with PNG Treasury between 2009 and 2012. Bede was also the manager of Treasury’s International Relations Unit between 2012 and 2014, and Harry was previously deployed to the Solomon Islands Ministry of Finance and Treasury between 2005 and 2007. The views in this article are those of the authors and not necessarily those of the Australian Treasury.

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Harry Greenwell

Harry Greenwell worked as capacity development advisers with PNG Treasury between 2009 and 2012.

Bede Moore

Bede Moore worked as capacity development advisers with PNG Treasury between 2009 and 2012. Bede was also the manager of Treasury’s International Relations Unit between 2012 and 2014.


  • A lot of the discussion around (and practice of) capacity building is focused on the process, rather than the outcome. This has been touched on by Tony and Deborah. As aid practitioners, we spend a lot of our time within the process of working with our counterparts, and don’t often take the time to step back and examine what it is we are actually aiming for. This is also a difficult issue for our partners, who we tend to keep occupied with a lot of consultations and esoteric project management, most of which seems to involve arranging our capacity building inputs.

    However the question constantly needs to be asked – “building capacity for what?”

    The two most successful programs that I’ve seen, in more than two decades of working in this area, have occurred when the aims of the intervention coincided with a policy imperative or urgent need on the part of the partner government. One case involved a partner agency adopting and implementing a particular community forestry approach because there was no financial alternative, and the other came about in bilingual primary education because the provincial governments were required to meet school enrollment targets set by the national government.

    The interesting thing is, once these organisations had decided upon the course of action, or been forced into it by external circumstances, latent expertise and knowledge was suddenly freed up, staff became highly motivated and domestic resources became available.

    Unfortunately the success of these projects was due almost entirely to good luck, rather than good planning or a coherent system of “policy engagement” or “skills transfer”. The aid provider just happened to be in the right place at the right time with a good model (and the requisite technical advice), and both interventions took off with a minimal amount of persuasion or “incentivising” going on.

    I’m not completely sure what the lessons are from this, other than making sure that we properly understand our partners’ priorities and motivations, and that we are flexible enough to respond to opportunities as they occur. This requires being much more strategic with aid resources, and perhaps being more innovative in how those resources are used. “Capacity building” might not be a standard investment, it might be more akin to venture capital.

  • If developing individuals and teams is the goal within such agencies, I wonder what would happen if support to Treasury, for example, was provided by way of personnel with minimal technical economic/finance skills, but high levels of skills in, well, developing individuals and teams? Executive coaches and suchlike. There are some amazing people out there who are real coaches, mentors, educators, psychologists, anthropologists, sociologists and suchlike. A different skill set to the economists, lawyers, public policy, HR and ICT experts who currently populate the adviser landscape. People, people.

    Absolutely no disrespect to the authors and other technical experts, there is a strong and real need for their input but to my mind not in a capacity development role unless they have some of the qualities above on top of their vast and specific experience.

    Reason being, the problems are accepted as often very human and cultural. The culture of the organisation as well as the national culture. If the aim of support is to assist individuals and teams to become more efficient, effective operators and agents of positive change – then someone constantly in their ear about why they let that person walk all over them … what are they doing about the team leader who never comes to work? How will they get their idea through the various committees? How they can motivate their team? How can they forms their plans then execute them. Are they providing good leadership … how’s the recruitment going, we’re still only at 50% of our staff establishment … the list goes on.

    If specific technical capacity is lacking then the choice is to bring in the technical expert, or to train existing staff – or both.

    A technical expert in a line position with actual management power would have an effect on team capacity, you would think, and put some teeth into their role. Closer examination is needed about why this is rarely an option. Perhaps not sustainable – but that too is a much over used word. What is, in this changing world? We could focus on creating change as quickly as possible and then work on the sustainability. It sometimes seems the other way around and kind of meaningless.

    We really set our advisers up to fail if they are tasked with changing people and teams by building capacity when they have other skills.

    The point about maintaining relationships is an interesting one. As is the long term approach. Both great in an ideal world but the greatest relationship is where it is strong enough to have honest conversations – not when we need to back off for fear of spoiling things. Which so often seems to be the case, especially at the higher levels.

    We’ve seen how changes in government in both donor and recipient countries can have immediate changes in development policy. I’ve been associated with two 10-year programs that changed direction half-way through due to political imperatives more so than development priorities.

    The departments and divisions are often very fluid in terms of personnel and change constantly which also makes it difficult to understand how a long term design can predict the future context without an organic element founded on some strong principles. Trouble is, those principles will also change with governments.

    I also wonder about how far we need to incorporate a national culture into a workplace. The workplace systems of “doing business” are often founded on western values and ways of doing things so really our job is to educate on what these are, if it’s going to work, and how they can be applied in a given context. I’m pretty sure “the people” who want the services that governments in a Westminster system are there to deliver would prefer they play the game according to some long standing ways of doing things. Time being the obvious example. Very difficult to run a department, or any business, on Melanesian time.

    Understanding the national culture is important in understanding what motivates people, what leadership styles work best, how to handle conflict, best ways of communicating etc. but not with the goal of turning the workplace into an example of the national culture.

    When Dame Carol Kidu was tackling this question in her department in PNG, she symbolised this by asking her officers to “leave their bilum at the door” which was an attempt to explain to staff that a different mindset was required to make the department a success.

    I agree that “the capacity might already be there” in many cases. The secret to success for a donor program is how to unlock it – if it is in fact their role to build capacity. And we could probably do this a lot more creatively.

  • Deborah has put her finger on the problem. Far too often, when donors talk about capacity development, it turns out we are obsessing about ourselves – our culture, our expectations, and our vision of development. We are not really listening to the clients, and not clearly seeing or understanding what is actually going on in the organisations we are typically trying to transform. Many donor interventions end up being as irrelevant as ‘dancing about architecture” (to quote Frank Zappa). We are offering apples, our partner agencies ask for oranges – and everyone generally ends up with coleslaw.

    This trend does not let our partner agencies off the hook, however. Partner agencies are just as responsible for this outcome as donors. Just because donors tend to display disturbing levels of cultural tunnel vision and often work off the wrong hymn book, does not imply that partner agencies are entitled to sit around disconsolately waiting for someone else to “understand them” better.

    When capacity development works (and surprisingly often it does) it is usually because there is proactivity on the part of the recipient partner (at a number of levels) in terms of translating what is on offer into what is needed for reform. In other words, the focus of capacity development needs to be on effective communication, by all parties, and at all levels – and not just by leaders. Like most forms of aid, capacity development functions best when the people most affected feel empowered to take charge and successfully articulate what will work best for them.

    Regrettably, real communication around capacity building does tend to become truncated by excessive bureaucracy (long and arcane reports that nobody reads or sees, pointless and ineffective workshops that the wrong people go to, monitoring and evaluation frameworks that nobody understands or implements, and travel arrangements that mean senior personnel absent themselves far too often from what is really going on). In many cases, partner organisations would seriously benefit from rejecting some of the routine approaches donors tend to favour.

    And if the issue is how to build capacity building approaches in (and by) economic agencies, a greater degree of humility might not go amiss. The bottom line is it is very difficult to get this right. And sometimes good capacity (or the lack of it) in economic agencies is simply not a critical determinant in the outcome. Improving organisational capacity is one thing, but developing capacity across a decision making framework often transcends the specific organisational context.

  • It is interesting to see yet another list of lessons learned from an Australian perspective about the experience of trying to contribute to the capacity of people or organisations in Pacific countries. Any consideration of ‘capacity development’ (which I agree is largely unhelpful as a concept given how it is now used to mean anything) requires a much deeper understanding about the perspectives of those whose ‘capacity’ is being developed and about the concept of ‘capacity’ itself than is evident from most of these types of analysis. In my 30 years of experience, it is very clear that capacity looks different in different contexts: many context-specific factors, particularly cultural values, have a major influence on the nature and extent of capacity and on changes in capacity over time. Even though there is a perception that all public services around the world share common values, in fact, the socio-cultural values in which they operate have enormous influence in practice.

    Capacity in Pacific institutions is not the same as capacity in Australian or any western institutions. Even though you may hear the same words in many Pacific institutions, such as ministry, secretary, administration, workforce, strategic plans, transparency, human resource systems and financial management, their meanings and the values accorded to them can be completely different in different cultural contexts. For cultures which are largely future-oriented, such as Australia, then a sophisticated strategic plan and an innovative leader can be highly relevant to an organisation’s capacity. In cultures which prioritise the maintenance of certainty and stability, a strategic plan can simply be a nicely presented document to satisfy a donor and an innovative leader could be quickly sidelined. Deeply held values relating to hierarchy and leadership in each cultural context have significant influence on the way that decisions are made and who makes them both within and outside the public service. While in Australia, an ideal leader may be a resourceful democrat, in many Pacific contexts, an ideal leader could be a benevolent autocrat (Hofstede 1980). Australian aid workers rarely understand the implications of these kinds of differences for their own agendas or try to test out the particular values that influence capacity in each context. They usually can’t see the signs of capacity they are familiar with in their own contexts so start from a perception that the Pacific institution ‘lacks capacity’ when in fact, it may have a wide range of other capacities. Values relating to individualism/collectivism also influence the likelihood of changes occurring: in collectivist societies, there is little prospective of sustainable change if only one person is interested or even highly committed. But in individualist societies (Australia is one of the highest ranking), we each believe that we can ‘make a difference’ and change the world. Perhaps most importantly, in cultures where relationships are more important than ‘task’, any changes that have perceived negative effects on the maintenance of harmonious relationships are going to be resisted.

    Changes in capacity in Pacific organisations and communities will more likely occur when leaders (traditional, community, church as well as formal leaders) and whole groups (collectively) commit to changes and determine their own pathways, consistent with their own values. When this is the case, then externally-funded contributions might be useful, if respectfully offered and undertaken in trust-based collaborative partnerships. But in my experience, sustainable changes in capacity in other cultures are rarely achieved when driven by the agendas and timeframes of people or organisations who hold divergent cultural values. My book ‘Capacity Across Cultures: Global Lessons from Pacific Experiences’ provides detailed analysis and case studies about these issues and would be helpful to all those thinking that they are involved in contributing to capacity in a context other than their own.

  • Thanks for addressing this important topic Harry and Bede. I think that an important area to support each of your seven steps is to understand that capacity already exists. Quite often it has built up over a long time and it has deep social and cultural roots. A bit like Tess’s comments above, the best results come from such a strengths-based approach. This takes time and a lot of inquiry and listening.

  • Yep, 20+ years of capacity development and the basic problem remains the same – a lack of political will to actually implement evidence-based policies. This, as in developed countries, comes back to a lack of scrutiny surrounding resources, be they sea, land or air (aid) based.

    Donor countries have spent millions attempting to build internal governance capacity while neglecting external governance capacity, beginning with news media, which has been systematically stripped of resources over this timeframe.

    Without a well-informed citizenry, there will never be any political pressure to adhere to policy that builds good governance. Australia and others are still trying to build capacity for development while denying the informational tools to enable this to happen. In the light of the recent attacks on the ABC, this is as true at ‘home’ as it is ‘abroad.’

    Given that most economies are led by provincial politicians, who are in turn answerable to party donors, mostly big business, do treasury officials need to focus more attention on dealing with political realities and less on process and procedures?

    • Couldn’t agree more Jason. When I hear donors and advisers moaning about ‘lack of political buy-in’ my standard response is ‘what are you giving them to buy into’ – makes for some very short conversations!! And the ability of ‘capacity development’ to build the skills that officials need to navigate the political realities in which they work is as yet untested.

  • Thanks for this post which I think will be of interest to a number of people.

    I have been thinking about it for most of the day. It raises some important issues. I find some of the material presented quite problematic which is, I think, a reflection of the problematic nature of capacity development as envisioned and delivered via the aid programme.

    First of all, I think the term ‘capacity development’ can and probably should be largely done away with. When staff members from the Australian Treasury or DFAT or anywhere else are given an opportunity to learn something new so that they can do their jobs better, we call it ‘professional development’ so there is no reason to have a different term for doing it in Solomon Islands or Timor-Leste.

    Secondly, the material here is informed by a supply side approach to this type of activity, which is probably because that is how it is designed and delivered via the aid programme. For example ‘The potential scope of capacity development activities can be very broad, so it is important for advisers to assess the options thoroughly’. I would suggest that it is for the personnel within a given agency to assess options and determine which are most appropriate for them as individuals, units and organisations – they are the ones who know the context in which they are working, where their existing strengths lie and what they need in order to do things better. There may be scope for facilitating the articulation of these things internally and externally.

    Thirdly, there is a presumption that this form of activity can and should be delivered by an individual who has a counterpart. However, what is often more likely is that the ‘counterpart’ is an entire organisation and that what would be more useful (to the organisation) would be access to a suite of services and inputs tailored to priorities (some of which may change over time) and cognisant of competing calls on resources (sometimes money but mainly time). If and when donors recognise the value of this approach it will open up opportunities to provide support of this type using innovative methods which are likely to provide better value for money, including utilising local resources rather than importing them from elsewhere.

    This post makes reference to the importance of ‘soft’ capacities and to that list I would add items such as analysis, influencing, negotiation, coaching and mentoring. I have had a number of discussions about innovative ways in which the aid programme can assist in responding to these needs and value add to investments that are already in place. There is more to say and do in this space.

  • Great blog and very clear lessons. I thought one missing piece is how advisers are managed, A dual and mixed reporting line to civil service line manangers and funding agency heads can be a part of the problem,

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