Changing the Balance of Power

Aid Management Tools

Making Aid work:

The Challenges for Aid Coordination and Management

Aidan Cox, UNDP Regional Centre Bangkok

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Goal

• “Partner countries exercise effective leadership over their development policies, and strategies and coordinate development actions”

– Paris Declaration on Aid Effectiveness

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Time to Go Home?

• Lack of ownership• Donor driven aid• Lack of clear prioritisation

of aid• Top down• Unclear accountability• Poor coordination• Lack of predictability –

can’t plan effectively

• Direct funding by donors parallel to Govt

• National know-how not tapped

• Aid spread thinly across sectors/locations

• High transactions costs• Little alignment with

national systems

Nepal Presentation

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Making Aid Work: Solutions?

• “The size of a country’s fiscal space is the principal measure of ownership – anything else is imbued with well-meaning hypocrisy” – Rathin Roy, Manila

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But:

• Past performance suggests major donors will put only small share through Direct Budget Support

• Even when donors do provide budget support, it may come with a raft of conditionalities – either explicit, or bundled in with technical assistance

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Can Aid Management Tools Help?

•Yes!

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How?

• Philippines: – “Government must know what it wants from

Donors, know its own priorities – otherwise aid will reflect the priorities of the donors” (Jeanne Illo)

See Gabriel Acasina Report on

Aid Management Systems

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It’s our carpet, not yours• Be clear on the design – then it matters less what colour, quantity and

quality of silk donors are offering → You can weave them into your design– If some donor offerings simply don’t fit – you can say so– You can approach some donors to provide specific parts– Your design provides your criteria for deciding what assistance to ask for and on

what terms you are prepared to accept it

• If you don’t have a clear design, the pattern will be driven by what is supplied – and it will end up looking all stripy and blotchy.

• If so, then whole process has to go back a step – donors need to back off and support the design process instead.

• Choosing the right carpet design that is appropriate to the country’s needs is key - and that you then have the skill, time, and capacity to implement it

• Aid management then becomes not just about the supply of threads, where they fit into the design, but also about the ability to build the loom, quality of design, knots, etc. 

Karin Christiansen,Research Fellow, Overseas Development Institute, London

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Turning the Pyramid upside down

• Ownership is the building block– countries in the sub-region have developed

national visions, national development strategies

The Rome Agenda

Partners Agenda

Aligning with Partner’s agenda

Using Partners systems

Sharing information

Simplifying procedures

Establishing common

arrangements

OwnershipPartner countries

AlignmentDonor- Partner

HarmonisationDonor-Donor

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Turning the Pyramid upside down

• Ownership is the building block– countries in the sub-region have developed

national visions, national development strategies

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Too many suppliers of silk?

• Even if have strong national vision & strategy, results will be poor if too much time spent dealing with donors

– India: High transaction costs recognised, and the under $25s asked to work through UN and NGOs

– Cambodia: burden of 400 donor missions

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Reducing Costs of Doing Business

• Request Donor focus in 3 sectors only– Focus improves

quality– Focus means

scarce officials deal with fewer missions, meetings

• Example of Germany – ‘asked’ to shift sectors(Avoid marriage of convenience)

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It’s our carpet, not yours

• “He who has the gold, makes the rules”– Doc Long, Chairperson of Appropriations

Committee

• Using Aid Management Tools to ensure that all resources – whether through Treasury or through UN/NGO/Private sector work to support national strategy

• UN required to prepare Business Plans

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Changing the balance of power?

Expertise

$

Knowledge

Expertise

$

Knowledge

Accountability

Partnership is not a meaningful term if one partner has

all the resources, much of the expertise, most of the information

… and takes the decisions

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Knowledge can help shift the balance

• Director of Afghan Assistance Coordination Authority recognised that a world class aid tracking system and team could:

– Help mobilise (and sustain) aid flows• proof of transparency and accountability• hold donors accountable for delivering on their

pledges• ensure donors are funding the sectors which are

agreed

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Going beyond aid coordination

– Promote integration of external resources within a National Development Framework and Budget

• enhance credibility of national institutions and domestic decision-making processes – all assistance (‘off’ as well as ‘on’ budget) goes through budget decision making process

• greater influence on allocative decisions previously taken independently by donors/UN – revitalising cabinet

• ensure external and domestic resources considered together – more rational overall allocation, greater chance of investments being sustained/maintained

• DAD enables outputs to be monitored, blockages to be identified

Credible national institutions & processes – prerequisite for alignment

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UNDP’s package of support

• Merit-based recruitment and training of national team – Aid Coordination Unit → Budget & External Relations Department

• Secondment of international adviser to Government

• Partnership with private sector– Contracted in aid tracking expertise – Synergy

International Systems, Donor Assistance Database (DAD)

• Establishing Government website

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0

1,000

2,000

3,000

4,000

5,000

2002 2003 2004 2005 2006

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From Aid Tracking to Budget Management

• In Afghanistan, adapted aid tracking system into tool to prepare the Development Budget – and tried to estimate future recurrent cost implications of investments

– Public Investment Programme for each sector, backed by data on ongoing and proposed investments

– Common financial summary and project document format for every project (whether designed by Government, donor, UN)

• Foundation for streamlined reporting of progress against outputs

• Promotes Government participation: responsible Ministry for every project. Sign off by Line Ministry and donor/UN; submission to MoF

Better decision-making & resource allocation

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Basic Aid Tracking 3. Progress against 1382 Budget

Commitments and disbursements made in 1382 will be used to fund programmes over several years. A substantial financing gap remains. The Judicial Reform Commission is leading the collection of financial data, including projected and actual

expenditure for 1382, working in partnership with the Aid Coordination Unit. A critical financing gap relates to corrections, where only one quarter of needs have been met.

3.3 Justice

0

5

10

15

20

Corrections Secretariat Survey, Infra,Training

Law Reform Legal Ed &Awareness

Structure ofInsitutions

Other

Required1382

Committed

Disbursed

Required: 24.87Committed: 23.86Disbursed: 17.77

1382 Financial Overview • Simple

analysis of commitments against budget requirements is misleading

• Overstates success in year one, and understates available resources for year 2

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Better decisions based on better information

• Guide to real resource availability against annual budget requirements

• Shows both domestic and external resources

Transport BudgetRequirements, Commitments, and Funding Allocation ($m)

0

200

400

600

800

1000

1200

2003-4 2004-5 2005-6 2006-7 2007+

Requirements

Commitments

Funding Allocation

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National Budget: Livelihood Programme

• Shows actual projected expenditure by province

• Allows Government to promote geographical equity

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Government-led Coordination Mechanism

• National Development Forum– Chaired By Government, prepared by

Government secretariat

• Governent-Donor Monthly Forum– Macro and cross-sectoral issues – chaired by

Government, prepared by Governent

• Sectoral CGs – every two months– Chaired by Line Ministry

Making Budget process work

Promoting Alignment

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Partnership Forum Mechanism

Government Leadership

Avoiding Macro-Micro Paradox (ADB, Bruce Purdue

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Afghan Aid Coordination Unit(Became Development Budget & External Relations Unit)

• Transition from International TA to Afghan Managers

• Recruited and trained 25 nationals– Managers– Donor Desk Officers– Database team– Website team– Translators– Administration

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Aid Coordination Unit:Officer Responsibilities – Donor and Sector

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• End of Main Presentation

• Additional slides – background information

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Overview of Donor Pledges

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Overview by Sector

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DemoThe default chart appears, in which the amount by Donors is presented

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DemoTo change the chart format to 3D, select the option from the drop down list

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DemoTo preview and print the current chart, click on Print Preview.

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Government Website

• Information sharing

• Transparency & Accountability

• Credibility