eurodad briefingeurodad.org/uploadedfiles/whats_new/reports/eurodad... · eurodad newsletter march...

1

Eurodad Briefing

Contents

March 2007

Putting donors under surveillanceA Eurodad briefing on the aid effectiveness agenda

Development aid is more in the public eye than ever before In recent major international summits world leaders committed to increasing the amount of aid for developing countries Yet aid increases cannot successfully reduce poverty without making sure more gets to those who most need it The multiplication of donor missions and procedures their conflicting plans and objectives at country level as well as the promotion of their own interests to the detriment of recipient countriesrsquo priorities are major obstacles to ensuring that aid benefits enough poor people

Civil Society Organisations have long highlighted the need for ldquobetterrdquo aid This briefing explains the commitments and process in the official ldquoaid effectiveness agendardquo which represents significant pledges to reform how aid money gets spent

Introduction1

Inefficient aid delivery 2

Mutual commitments by donors and recipients 3

Monitoring progress4

Civil Society views7

Controversies 7

What can CSOs do 8

Links8

UN photos

EurodadAvenue Louise 176

8th Floor 1050 Brussels

Belgiumtel +32 2 543 90 64

fax +32 2 544 05 59

Eurodad Newsletter March 2007

2

2

Avenue Louise 176 8th Floor

1050 Brussels Belgium

tel +32 2 543 90 64

fax +32 2 544 05 59

Inefficient aid delivery

The ldquotransaction costsrdquo of aid are very high compared to the amount that actually arrives on the ground In 2003 the total amount of aid provided by bilateral and multilateral donors was US$69 billion Out of this total only US$27 billion was actually used for a poverty reduction goal (ActionAid International 2005) Far too much aid is not as helpful to the populations concerned as it should be

Official donors currently fund more than 80000 development projects around the world And the administrative pressure on recipient countries is overwhelming the typical African country hosts on average 200 official aid missions a year and submits 10 000 quarterly paper reports Vietnam alone receives 400 donor missions per year Donors coordinate with each other for less than one third of their interventions Such ldquoproliferationrdquo places a huge burden on southern governments who spend enormous time and resources organising official visits or submitting reports evaluations and audits

By imposing their own administrative procedures instead of adapting to the recipient countryrsquos institutions and practices donors create heavy obligations for the countriesrsquo civil servants In Ghana the Ministry of Health reports to 17 different donors in 17 different ways wasting a huge amount of time and human capacities

In addition developing countries donrsquot get enough say in how they will use the aid they receive Donors often force them to buy their food or machinery putting their own interests over developing countriesrsquo needs It is estimated that up to 40 of all aid is used to purchase goods and services from the donor country

And donor-driven projects often turn into ldquowhite elephantsrdquo For example in 2002 the World Bank and several other donors approved $500 million in support to a hydroelectric project in Bujagali Uganda which represented the largest single foreign investment in Eastern Africa However due to the bad advices provided by donors to the Ugandan government in its negotiations with the power company and due to donorrsquos inability to assess the project costs the project would create heavy financial obligations over the next 30 years for Uganda a country where 55 of the population lives below the national poverty line Since then the project has been constantly delayed failing to meet the energy needs of the countrys population

The emergence of the aid effectiveness agenda

This wastage has been severely criticized by Civil Society Organisations (CSOs) which have increasingly called on the international community to address the problem of aid ldquoinefficiencyrdquo In order to tackle the fundamental obstacles that prevent aid from going to those people who need it most many CSOs advocated that donor coordination was needed in order to minimize competition and overlap at the country level The international community then started to recognize the need to improve the ldquomanagementrdquo of aid Delivering better aid is as important as increasing aid volumes



UN photos


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tel +32 2 543 90 64

fax +32 2 544 05 59

Mutual commitments by donors and recipients Whatrsquos the ideaThe Paris Declaration on Aid Effectiveness adopted in 2005 is a set of commitments by aid-providing and aid-receiving governments It contains general principles as well as specific pledges and targets to be achieved by 2010 Many Civil Society Organisations welcomed the Declaration while pointing to serious concerns regarding both its content and implementation process

The aid effectiveness agenda as embodied in the Paris Declaration is built around five key principles with corresponding objectives Those are

- Ownership Developing countries are supposed to exercise leadership over their development policies even when those policies rely in part on external aid money The Paris Declaration underlines that donors must respect southern countriesrsquo choices of policies and help them to strengthen their capacity to implement those policies

- Alignment Donors should support and work through existing national processes not impose their own Aid should support national poverty plans and be given as much as possible through the government budgets

- Harmonization Donors should conduct joint research and analysis reduce their missions overall and do more missions jointly with others do more programming jointly and reduce the reporting requirements they impose on recipient countries

- Management for results The Declaration calls both on donors and recipient countries to manage and improve their decision-making in view of concrete results on aid effectiveness Developing countries are asked to put into place ldquoperformance assessmentsrdquo for measuring progress in their development strategies Donors should make their aid more results-focused ensuring that it enhances poverty reduction The aid effectiveness agenda therefore requires setting up monitoring processes and data collection for each stage as outlined in the pyramid below

Those four themes are based on a central principle mutual accountability This means two-way accountability in the aid relationship so that donors can hold developing countries to account but that also developing countries and their citizens can also hold donors responsible

The ldquoaid effectiveness pyramidrdquo

Source OECD-DA


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fax +32 2 544 05 59

Summary of mutual commitments by donors and recipients

The challenge of the Paris declaration for NGOs

The Paris Declaration does not refer directly to NGOs Yet the large number of NGOs active on the ground in a given country can cause coordination problems similar to that posed by multiple donors dealing with a single recipient government For example in 2002 about 350 international NGOs were present in Vietnam

The Paris Declarationrsquos emphasis on aid being guided by recipient priorities and channelled through national systems can apply to the NGO sector (ONTRAC 2006) For instance should organisations working in education align with national strategies and education plans and coordinate with government departments Should Northern NGOs align their priorities and procedures also with those of local NGOs

Alignment of NGOs to the principles of aid effectiveness should be treated very cautiously Many underline that it would jeopardise the diversity of the NGO sector and its ability to play a ldquowatchdogrdquo role not be transformed into ldquoservice providersrdquo

Monitoring progress Whatrsquos the methodMeasuring progress

The authors of the Paris Declaration on aid effectiveness defined 56 specific ldquopartnership commitmentsrdquo and a set of 12 indicators as a way of tracking progress against these

Commitments by the actors involved in the aid effectiveness process

The DAC coordinates the international monitoring of the 12 indicators Targets for the year 2010 have been set for 11 of these indicators Those targets which commit both donors and recipient countries are designed to encourage progress at the global level

Donors Recipient countries Both donors and recipients

Will base their overall support on recipient countries national development strategies institutions and procedures

Will exercise effective leadership over their development policies strategies and coordinate development actions

Will manage resources and improve decision-making for results

Will work so that their actions are more harmonized transparent and collectively effective

Will have reliable country systems for administering the aid flows

Pledge that they will be mutually accountable for development results


5



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fax +32 2 544 05 59

Abridged OECD DAC aid effectiveness targets for 2010

INDICATOR 2010 TARGET

OWNERSHIP- Concerning the recipient country

1 Recipients have operational development strategies with clear national strategic priorities

At least 75 of recipient countries have operational development strategies (measured by World Bank criteria)

ALIGNMENT- Concerning donors and recipient countries

2 Recipients have reliable country systems for administering the aid flows

Half of countries move up one measure on the World Bankrsquos scale for public management systems and one third move up one measure on the WBrsquos procurement scale

3 Aid flows are aligned on national priorities Halve the proportion of aid flows to government sector not reported on recipient governmentrsquos budget(s) (with at least 85 reported on budget)

4 Strengthen capacity by coordinated support (ie technical co-operation)

At least 50 of technical co-operation flows are implemented through coordinated programmes consistent with national development strategies

5

Increase the use by donors of the country public financial management and procurement systems

The vast majority of donors use the country PFM and procurement systems

Reduce the percentage of aid to the public sector which is not using the country PFM and procurement systems

6

Strengthen capacity by avoiding parallel Project Implementation Units in each recipient country

Reduce by two-thirds the stock of parallel Project Implementation Units

7 Aid is more predictable Halve the proportion of aid not disbursed within the fiscal year for which it was scheduled

8 Aid is untied Continued progress over time

HARMONIZATION- Concerning donors between them

9

Use of common arrangements or procedures Two thirds of aid flows are provided through programme-based approaches

10

Coordinate missions and analytic work at country level

40 of donor missions to the field and 66 of country analytic work are carried out jointly (by more than one donor)

MANAGING FOR RESULTS- Concerning donors and recipient countries

11

Recipient countries have results-oriented frameworks to assess progress

Reduce by one third the proportion of countries without transparent and monitorable performance assessment framework

12 Mutual accountability All recipient countries have mutual assessments of progress in implementing agreed commitments on aid effectiveness

Source Paris Declaration on Aid Effectiveness ldquoIndicators of progress to be measured nationally and monitored internationallyrdquo


6



tel +32 2 543 90 64

fax +32 2 544 05 59

Whorsquos in charge

The two key official bodies dealing with these issues are the OECD Development Assistance Committee (DAC) and its Working Party on Aid Effectiveness and Donor Practices

The DAC is the forum of the Organisation for Economic Cooperation and Development (OECD) the inter-governmental organisation of the 30 world richest economies dealing with issues related to cooperation with developing countries There is no formal representation of low-income countries within the DAC

The Working Party on Aid Effectiveness and Donor Practices (WP-EFF) is an informal group established within the DAC in May 2003 It aims to facilitate international actions to enhance aid effectiveness in the areas of harmonisation and alignment of donor practices

It brings together 23 bilateral donors and 23 recipient countries as well as the major multilateral donors such as the International Monetary Fund (IMF) the United Nations Development Programme (UNDP) and the World Bank (WB) The World Bank is very involved in all the areas of work of the WP-EFF The WP-EFF is not subordinated to the DAC but conducts its work independently

Monitoring timeline

HLF High Level ForumWP-EFF The OECD DAC Working Party on Aid Effectiveness and Donor Practices

The monitoring rounds

Three series of monitoring take place in 2006 2008 and 2010 through a survey process The objective of those surveys is to measure and encourage progress in implementing the Paris Declaration at country level In 2006 data was collected from both donors and recipient governments via a questionnaire and through qualitative assessments about how much progress has or hasnrsquot been made The process has in most cases been led by representatives of the recipient government although with varying degrees of input from and consultation with donors Only half of the 60 aid recipient countries that have endorsed the Paris Declaration have completed the survey by the end of 2006

A first high-level assessment of progress towards the targets agreed in the Paris Declaration will take place during a third High-Level Forum on Aid Effectiveness scheduled in 2008 in Accra Ghana


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tel +32 2 543 90 64

fax +32 2 544 05 59

Civil society views Most CSOs underline that the official aid effectiveness process is an important initiative And while some of the targets are very technical and are limited in their scope it is important to have specific indicators to hold official institutions to account

However many critics believe that issues have been over-simplified or down-played They include

- Conditionality (policy conditions imposed by donors in exchange of their aid)

Continuing imposition of conditions contradicts the ownership pledges in the Paris Declaration but conditionality is not explicitly mentioned in the Declaration

- Alignment and harmonisation dangers

As donors coordinate and harmonise their policy dialogue and aid delivery there is a risk that they will form a bloc and exert more pressure rather than giving developing countries more space NGOs often emphasize that donors should not harmonize around some specific approaches such as those of the World Bank or IMF An alternative to donor harmonization is more specialisation of donors On average indeed donors spread their aid in around 100 countries Rather than just coordinating more where they are donors should specialise in certain countries or sectors and pull out of others

- Weak targets

While many of the targets are quite vague reflecting the detailed negotiations in Paris two in particular are very weak

Indicator 1 only says ldquoAt least 75 of recipient countries have operational development strategiesrdquo

Indicator 8 on tied aid only says ldquoContinued progress over timerdquo

Controversies regarding the monitoring process

- Lacking independence

As the official surveys will rely on self-assessment by donors on certain indicators (such as the number of donor missions) there is insufficient confidence in the indicators and monitoring system Many critics believe that a more impartial assessment is needed for the survey to be credible and to ensure comparability of data between donors and across countries

And the Paris Declaration says little about strengthening the independent capacities of developing countries to assess progress in achieving the Declarationrsquos goals such as the case of the Tanzania Independent Monitoring Group

- Participation of the recipient government

Many critics are concerned about the need for recipient countries to have more power in the definition and interpretation of the process at all its stages Since the donor-recipient relationship is by nature asymmetrical due to the financial power that rich countries exercise over developing countries major donors often use their weight to influence where they want the overall aid effectiveness process to go

- Taking account of Civil Society (CS) input in the process

More participation of civil society in the planning implementation and monitoring processes of the Paris agenda at international and at local level is needed

- Problem of definition measuring poverty reduction

For CSOs ldquoeffective aidrdquo measures by how much aid actually reaches the poor and mobilizes them to address their own problems and claim their rights On the contrary the Paris Declaration indicators are often considered to measure the degree of the recipient government compliance with donor ldquonormsrdquo and values Many aid effectiveness indicators rely too heavily on World Bank criteria and analysis This gives power to the Bank to determine whether countriesrsquo strategies and systems are lsquosuitablersquo or not

Finally many critics underlined that the DAC is particularly vague at how the data will be used This raises the question of the political impact of the monitoring Southern countriescannot often openly criticize donors and it will be hardly controversial at the end of the process to call for the respect of donorrsquos commitments in case they didnrsquot do so in the first place


8



tel +32 2 543 90 64

fax +32 2 544 05 59

What can CSOs doTo date Civil Society Organisations (CSOs) have played a critical advocacy role lobbying donor agencies and making proposals on the content and process of the Paris agenda They were a key actor in the emergence of the aid effectiveness agenda by acting as ldquowatchdogsrdquo denouncing donorsrsquo practices and their consequences on the lives of the poorest

In the near future CSOs will be able to play this ldquowatchdogrdquo role regarding issues related to the implementation of the aid effectiveness agenda at two different levels

At the international level by taking part in the aid effectiveness consultation process ahead of the next High Level Meeting in Ghana in 2008 There is indeed some kind of consensus around the need to ensure greater participation of CSOs in the monitoring and implementation of the Paris agenda with a continuous process to clarify and strengthen the role of civil society until the Accra meeting

At the country level CSOs could also play this role by examining the results of the 2006 monitoring survey and challenging their governments (whether donors or recipients) to comply with their aid effectiveness promises

Civil society organisations will carry out case study research to gather evidence from the ground about what impact changes in donor behaviour have had Evidencendashgathering will take place during 2007 and early 2008 in order to influence the discussions and outcome of the Ghana High-level forum on aid effectiveness in September 2008 where CSOs will organise an alternative conference

Get involved Feed in your views to official andor

civil society research

Publicise the official pledges of donor governments and international institutions and challenge them to implement them

Gather information about how well donor governments and international institutions are living up to their commitments on the ground

We would like to hear your views Send us your comments aidwatcheurodadorg

Some key links and useful references

wwweurodadorg

wwwaidharmonizationorg

wwwrealityofaidorg

Action Aid Internacional 2005 Real Aid - An agenda for making aid work

ONTRAC 2006 Aid Harmonisation Challenges for Civil Society INTRAC Newsletter May 2006

A version of this briefing with full references and a series of useful links can be found at wwweurodadorg

The briefing is also available in French and Spanish

European Network on Debt and Development

wwweurodadorg

Eurodad has members in Austria Belgium Bulgaria Czech Republic Denmark Finland France Germany Ireland Italy the Netherlands Norway Spain Sweden Switzerland and the United Kingdom


2

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tel +32 2 543 90 64

fax +32 2 544 05 59

Inefficient aid delivery

The ldquotransaction costsrdquo of aid are very high compared to the amount that actually arrives on the ground In 2003 the total amount of aid provided by bilateral and multilateral donors was US$69 billion Out of this total only US$27 billion was actually used for a poverty reduction goal (ActionAid International 2005) Far too much aid is not as helpful to the populations concerned as it should be

Official donors currently fund more than 80000 development projects around the world And the administrative pressure on recipient countries is overwhelming the typical African country hosts on average 200 official aid missions a year and submits 10 000 quarterly paper reports Vietnam alone receives 400 donor missions per year Donors coordinate with each other for less than one third of their interventions Such ldquoproliferationrdquo places a huge burden on southern governments who spend enormous time and resources organising official visits or submitting reports evaluations and audits

By imposing their own administrative procedures instead of adapting to the recipient countryrsquos institutions and practices donors create heavy obligations for the countriesrsquo civil servants In Ghana the Ministry of Health reports to 17 different donors in 17 different ways wasting a huge amount of time and human capacities

In addition developing countries donrsquot get enough say in how they will use the aid they receive Donors often force them to buy their food or machinery putting their own interests over developing countriesrsquo needs It is estimated that up to 40 of all aid is used to purchase goods and services from the donor country

And donor-driven projects often turn into ldquowhite elephantsrdquo For example in 2002 the World Bank and several other donors approved $500 million in support to a hydroelectric project in Bujagali Uganda which represented the largest single foreign investment in Eastern Africa However due to the bad advices provided by donors to the Ugandan government in its negotiations with the power company and due to donorrsquos inability to assess the project costs the project would create heavy financial obligations over the next 30 years for Uganda a country where 55 of the population lives below the national poverty line Since then the project has been constantly delayed failing to meet the energy needs of the countrys population





UN photos


3



tel +32 2 543 90 64

fax +32 2 544 05 59









Source OECD-DA


4



tel +32 2 543 90 64

fax +32 2 544 05 59


















5



tel +32 2 543 90 64

fax +32 2 544 05 59












5




6






9


10




11






6



tel +32 2 543 90 64

fax +32 2 544 05 59

Whorsquos in charge





Monitoring timeline






7



tel +32 2 543 90 64

fax +32 2 544 05 59







- Weak targets
















8



tel +32 2 543 90 64

fax +32 2 544 05 59












wwweurodadorg


wwwrealityofaidorg






wwweurodadorg



3



tel +32 2 543 90 64

fax +32 2 544 05 59









Source OECD-DA


4



tel +32 2 543 90 64

fax +32 2 544 05 59


















5



tel +32 2 543 90 64

fax +32 2 544 05 59












5




6






9


10




11






6



tel +32 2 543 90 64

fax +32 2 544 05 59

Whorsquos in charge





Monitoring timeline






7



tel +32 2 543 90 64

fax +32 2 544 05 59







- Weak targets
















8



tel +32 2 543 90 64

fax +32 2 544 05 59












wwweurodadorg


wwwrealityofaidorg






wwweurodadorg



4



tel +32 2 543 90 64

fax +32 2 544 05 59


















5



tel +32 2 543 90 64

fax +32 2 544 05 59












5




6






9


10




11






6



tel +32 2 543 90 64

fax +32 2 544 05 59

Whorsquos in charge





Monitoring timeline






7



tel +32 2 543 90 64

fax +32 2 544 05 59







- Weak targets
















8



tel +32 2 543 90 64

fax +32 2 544 05 59












wwweurodadorg


wwwrealityofaidorg






wwweurodadorg



5



tel +32 2 543 90 64

fax +32 2 544 05 59












5




6






9


10




11






6



tel +32 2 543 90 64

fax +32 2 544 05 59

Whorsquos in charge





Monitoring timeline






7



tel +32 2 543 90 64

fax +32 2 544 05 59







- Weak targets
















8



tel +32 2 543 90 64

fax +32 2 544 05 59












wwweurodadorg


wwwrealityofaidorg






wwweurodadorg



6



tel +32 2 543 90 64

fax +32 2 544 05 59

Whorsquos in charge





Monitoring timeline






7



tel +32 2 543 90 64

fax +32 2 544 05 59







- Weak targets
















8



tel +32 2 543 90 64

fax +32 2 544 05 59












wwweurodadorg


wwwrealityofaidorg






wwweurodadorg



7



tel +32 2 543 90 64

fax +32 2 544 05 59







- Weak targets
















8



tel +32 2 543 90 64

fax +32 2 544 05 59












wwweurodadorg


wwwrealityofaidorg






wwweurodadorg



8



tel +32 2 543 90 64

fax +32 2 544 05 59












wwweurodadorg


wwwrealityofaidorg






wwweurodadorg


eurodad briefingeurodad.org/uploadedfiles/whats_new/reports/eurodad... · eurodad newsletter march...

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