harmonisation: how is the orchestra conducted?

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Harmonisation: How Is the Orchestra Conducted?Author(s): Rosalind EybenSource: Development in Practice, Vol. 17, No. 4/5 (Aug., 2007), pp. 640-646Published by: Taylor & Francis, Ltd. on behalf of Oxfam GBStable URL: http://www.jstor.org/stable/25548263 .

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Development in Practice, Volume 17, Numbers 4-5, August 2007 |\ ja?"l^$cmuP

Harmonisation: how is the orchestra conducted?

Rosalind Eyben

Harmonisation of donor efforts is one of the current buzzwords in the world of official aid.

However, while it is an attractive idea in theory, as long as donors do not recognise and

address the operations of power in the aid relationship, harmonisation is likely to be counter

productive in promoting locally initiated responses to development challenges.

Key Words: Aid

In response to the Government's well-orchestrated preparation process for a high quality

Poverty Reduction Strategy Paper (PRSP) for Bangladesh - DFID, the World Bank, the

Asian Development Bank (ADB), and the Government of Japan, Bangladesh's major development partners (accounting for over 80% of development assistance) joined the

orchestra to harmonise their support for the PRSP. (DFID 2006)

'Harmonisation' in the language of Aidland means donors trying to have common programmes and procedures, so that the recipient need communicate with only one single set of financing agencies. Harmonisation is judged to be especially important in highly aid-dependent countries

such as Mozambique, where 50 per cent of the public capital-expenditure budget is donor

financed, and there are 49 official donors.1 Aid co-ordination failures have become legendary. According to a Government of Cameroon

representative, in 2004 his government received 400 project missions, and there were 60

co-ordination/management units among the 14 donors.2 Such stories support the case for

empowering recipient governments through better donor co-ordination. The OECD Development Assistance Committee (DAC) was established in 1960 to

co-ordinate the policies and practices of governments' aid programmes. Ever since, donors

have been trying to be part of the same orchestra, if not necessarily playing from the

same score. Harmonisation, co-ordination, and alignment are major pillars in today's aid

effectiveness agenda. Identified as important at the 2002 Monterrey Conference on Financing for Development, in 2003 they became the subject of a High-Level Forum in Rome; two

years later in Paris, along with 'country ownership' and 'managing for results', they became

elements in the 2005 Paris Declaration on Aid Effectiveness.3 The signatories to the Rome

640 ISSN 0961-4524 Print/ISSN 1364-9213 Online 4-50640-7 ? 2007 Oxfam GB

DOI: 10.1080/09614520701469823 Routledge Publishing




Declaration make clear their understanding of how ̂harmony impedes aid effectiveness: it is

through efficiency losses.

The totality and wide variety of donor requirements and processes for preparing, deliver

ing, and monitoring development assistance are generating unproductive transaction costs

for, and drawing down the limited capacity of, partner countries. (Rome Declaration

paragraph 2)4

In what follows, I consider how harmonisation, co-ordination, and alignment - sometimes

known as HAC, but which henceforth I shall refer to simply as harmonisation - are a good idea in principle and sometimes in practice, yet become an additional distraction from the

really serious issues that donors should be tackling.

The virtues of harmonisation

The case for harmonisation is that it reduces transaction costs for the recipient organisation because it has to deal with only a single interlocutor. Instead of having to report separately to many different donors, the recipient need send only one report against an agreed plan and

performance indicators that it has developed previously. I have always been a supporter of harmonisation - or at least co-ordination - when it means

empowering the recipient, reducing donor rivalry, and ensuring that resources are used opti mally. I took a lead in the DAC Women in Development (WID) working group's initiative to co-ordinate donor support of participation by civil-society organisations (CSOs) at the 1995 Fourth World Conference on Women held in Beijing. This was largely successful, despite the enormous challenges posed by each donor's different funding and accountability procedures. It may have worked because it was run by a group of feminists, conscious of issues of power and competition, and more committed to Beijing's objectives than to the

requirements of their respective employers. It was 'us against them'. We bent and sometimes broke the rules. I carried this experience with me when moving to Bolivia in 2000 as head of the country office of DFID (the UK government's Department for International Develop ment), but I failed to reflect sufficiently that what matters is the way in which harmonisation is implemented.

Bolivia was a pilot in the World Bank's Comprehensive Development Framework (CDF) initiative, which included a harmonisation agenda. The eventual aim was to put all donor

money directly into the government's budget in support of a national poverty-reduction strat

egy. As an interim step, the donors learned to work together by constructing 'basket funds' at sector or programme level. A 'basket fund' is when several donors put their money into a

single fund that is managed by the recipient, without each donor's contribution being 'projec tised' or earmarked for specific activities. An easy pilot initiative was carried out with the Office of the Ombudsperson (Defensoria del Pueblo), because of the strong leadership of the person in

charge and the belief that corruption in the Office was minimal. About eight bilateral donors had been supporting the Office previously, with each cherry-picking aspects of its work that reso nated with its own interests - or even offering the Office money for doing something that other wise it would not have done. Getting rid of all these separately funded projects was empowering for the recipient.5

My recommendation to London that we contribute to this basket fund was well received. Senior management already saw DFID as being in the vanguard of harmonisation efforts. However, those responsible for financial procedures thought otherwise. I was told that it was

procedurally not possible. To my humiliation, even 'unlike-minded' donors such as Belgium were finding this easier to do than DFID. Still fired up by the experience from the DAC

Development in Practice, Volume 17, Numbers 4-5, August 2007 641



Rosalind Eyben

WID group, I saw harmonisation as a challenge to the status quo. I engaged in a six-month

battle - with much behind-the-scenes lobbying - to persuade the finance people eventually

to change their procedures. This struggle is reflected in an OECD-commissioned report that studied donor practices in relation to harmonisation and alignment in four countries, including Bolivia:

Donors have their own procedures and policy directions, which are often adapted from their domestic procedures. For example, donors have a mechanism through which the

expenditure of public funds is made accountable to their own taxpayers. This accountabil

ity is often the responsibility of an intermediary audit authority or reporting to a demo cratic assembly. The different traditions, mechanisms and arrangements determine the

way donors operate in practice and constitute a key factor in the harmonisation

process. This is particularly the case with multi-donor initiatives and budget support. (OECD 2003:113)

The resistance to harmonisation by donors' procedural units led to the OECD commissioning another report into how to change incentives in aid agencies. The study concluded:

Organisations with management cultures which promote and reward innovation in all

fields including harmonisation, and welcome challenges to the status quo and suggestions for improvements, are more likely to engage in harmonisation than organisations which

mostly reward compliance with existing rules and procedures, (de Renzio et al. 2005: vi)

Yet, meanwhile, harmonisation has become the new orthodoxy in Aidland, where its practice reveals several vices.

Harmonisation: the new orthodoxy and its vices

The first vice of harmonisation is that of donors ganging together and thus exerting greater power over the recipient (Edgren 2003). Even when Ministries of Finance appear to be conduct

ing the donor orchestra, as was the case when I was in Bolivia, we donors used to meet behind

closed doors to agree what we were going to play before going to the official co-ordination

meeting. It is noteworthy that recipient countries that are not aid-dependent, such as China and India, are not at all interested in donor harmonisation and successfully object to its practice. Harmonisation as it is currently practised in highly aid-dependent countries becomes a problem. It turns donors into a cartel or monopolistic supplier.

Some find it a strange irony that the economists-turned-managers who govern Aidland advo

cate co-operation among themselves on efficiency grounds, while on exactly the same grounds

they impose polices based on principles of competition on their recipients (Severino and

Charnoz 2003). Easterly (2002) argues that aid agencies have always colluded when it was

to their advantage to do so, collectively hiding bad outcomes while advertising good outputs. If a smaller aid agency tried to step out of line, it would be vulnerable to public relations

attacks by the others. At a recent meeting at one of the smaller European aid agencies, staff

told of harassment by a bigger donor for declining to join a programme of harmonised

support for the education sector in a certain African country because of their misgivings about government corruption.

The second vice is that harmonisation reflects an underlying view of the world in which

poverty reduction is achieved through broad-based consensus, whereby everyone in a recipient country can agree to a national poverty strategy behind which donors can line up. This is a

bland, apolitical view of the world and frankly bizarre, given that donors know that back home in their own countries, generally more stable and orderly than those to which they are

642 Development in Practice, Volume 17, Numbers 4-5, August 2007




giving aid, such harmonious political consensus would be rarely achievable. In countries where

strategies are owned by the few, donors are co-ordinating to reinforce the power of a non democratic ruling elite (see Buiter, in this issue).

The Paris Declaration emphasises the importance of a single diagnosis of the problems of

poverty in any aid-recipient country. This tends to mean a diagnosis by the larger donors in consultation with the recipient government's Ministry of Finance. An alternative would be for different donors deliberately to support diagnoses by diverse local actors (in or outside

government) who are likely to have varied understandings of the causes and consequences of

poverty. This would mean donors playing a role in encouraging rather than suppressing differ ent perspectives, helping to provide space for democratic dialogue, and recognising that optimal solutions often emerge through on-going, often confused, and highly politicised debate and

argument (Bond 2006). The third vice relates more specifically to the Paris Declaration's emphasis on providing all

aid through the government, to the detriment of supporting the development of autonomous civil society (INTRAC 2006). Anecdotal information from DFID staff confirms a reduction in the number of projects for civil-society organisations (CSOs).

To sum up, harmonisation becomes a vice when it strengthens long-standing donor habits of

pretending that poverty is not political. It is a new orthodoxy that reinforces, on the grounds of

efficiency, the tendency for donor bureaucracies to talk only with their counterparts in the

recipient government. By largely ignoring civil society and parliaments, they put at risk their stated commitment to broad-based country ownership of aid.

What is happening to the harmonisation effort? As I discovered in Bolivia, negotiating a shared diagnosis, approach, and set of procedures means donors spending a great deal of time talking to each other. One solution is to form an inner cartel of just a few donors who agree what is to be done, and then invite others to join the process. This is what happened in Bangladesh:

Government was initially worried about the four 'big ones ganging up on conditionality', but is now strongly in favour as the partnership is supportive of its harmonisation action

plan. The wider donor community would ideally have liked a more inclusive process but

the four partners were initially concerned to keep the venture manageable ... With

these basic foundations in place for a harmonised support by the four partners for the Gov ernment led PRSP, the outcome matrix was shared with the wider donor community on 22

February 2006, inviting them to join the process. (DFID 2006)

Another solution is to establish a division of labour so that just a few donors work in each sector. This is agreed through a 'Joint Assistance Strategy'. Some sectors are more popular than others and are referred to as 'donor darlings'. Others, such as gender, become 'donor orphans'.6

Some donors would like to avoid supporting sectors completely and provide general budget support. This means they need speak to only a limited number of staff in the Ministry of Finance and leave it to Finance to talk to the line ministries such as Education or Roads. This is appro priate, because country ownership points to this conversation being their job, not the donors'. An evaluation of Burkina Faso's General Framework Agreement for Organizing Budgetary Assistance to Support the PRSP hints, however, that such conversations within the recipient government do not always take place:

Ownership has taken place and is reflected in the leadership role played by the Govern ment, represented by the Minister of Finance and Budget (MFB). This is evidenced by




Rosalind Eyben

the fact that the MFB is assuming all its responsibilities and is effectively co-ordinating discussions related to budgetary assistance and public finance. However, there is some

uncertainty as to whether the other departmental offices have assumed ownership of the

process to the same degree.1

Doubts concerning the increasingly predominant role of ministries of finance within recipient governments emerged in the 2005 Joint Review of aid to Mozambique, with line ministries

expressing disquiet about the higher proportion of aid going to general budget support (Govern ment of Mozambique 2005).

Along with the World Bank under Wolfensohn, DFID has been the most enthusiastic cham

pion of harmonisation. The ideal for DFID is to co-finance the Bank's Poverty Reduction

Support Credit, which is negotiated with the Ministry of Finance. This enthusiasm stems from DFID's wanting to spend more money with fewer people, as the result of a Treasury decision to cut the number of civil servants while increasing the quantity of aid (Gershon 2004). The 2006 DAC peer review of UK aid criticises DFID for pushing too hard its own

interpretation of harmonisation as meaning general budget support:

DFID enthusiasm for certain initiatives is not always shared by other partners and British

advocacy can be perceived as promoting DFID's own model rather than leading and

encouraging complementary donor action. (OECD 2006)

While these murmurs from the bilateral community concerning DFID are becoming stronger, collectively the donors are undermining the principles of harmonisation and country ownership by increasingly putting much of their money through global programme funds that bilaterals have set up with the World Bank and United Nations agencies. A recent evaluation notes

that these programmes are largely donor-driven, with insufficient alignment between global and country objectives and priorities (Lele et al. 2005).

Interestingly, the harmonisation agenda recently seemed to be unravelling for another reason.

Those bilaterals close to the World Bank were worried that its then President, Paul Wolfowitz, was refusing to approve Bank loans in circumstances where there was evidence of major

government corruption. By so doing he was blocking harmonised spending by other donors such as DFID, including its co-financing of a major loan to India. If harmonisation leads to

slower disbursement, donors will become disenchanted.

Meanwhile, the harmonisation agenda has resulted in a very large number of papers, manage

ment tools, consultancies, training workshops, and international conferences, which surpris

ingly no one seems to have identified as transaction costs. At the same time, as noted in the DAC Review of UK aid, 'Country office staff should spend more time out of capital cities.

Greater effort should be made in getting key staff closer to the development realities they

support' (OECD 2006:7). This comment would apply to many other aid agencies. A staff

member of a bilateral agency recently told me: 'Joint Assistance Strategies are the thing ...

Donor country heads now earn their spurs by being seen to deliver the Paris Declaration.

Not quite sure where country ownership appears in all this' (personal communication 2006).

Conclusion

Harmonising donor expenditures to achieve greater efficiency is an attractive idea in theory. In

practice, however, as long as donors do not recognise and address the operations of power in the

aid relationship, it is likely to be subject to the following problems:

Harmonisation enables the major donors to exert undue influence on the recipient and on

minor donors to accept a development agenda pre-determined by the major donors.





The agenda determined by the major donors prioritises budget support, which has lower administrative costs, over civil-society projects which are more expensive to administer but likely to achieve greater and longer-term progressive social change. Curiously, while the major donors prescribe competition to recipient countries as the way to achieve efficiency, they prescribe to themselves co-operation (read: cartelisation) to achieve this same result.

Harmonisation tends to suppress trying out different approaches to local problems. The harmonisation agenda is politically naive in assuming that there is a national development strategy that all can agree to - disregarding the internal (including gender-related) power relations in the recipient country.

While trumpeting harmonisation, the major donors are undermining country ownership by increasingly spending aid monies through 'global programme funds', whose agenda is

largely donor-driven.

Notes 1. I am grateful to Sarah Ladbury for these figures, as well as for her overall feedback on an earlier draft of

this article.

2. Report of workshop on the Paris Declaration: implications and implementation, Bamako, 27-29 March

2006, page 5. The document was retrieved on 24 June 2006 at www.aidharmonization.org/, but Google

provides a clue, revealing that the website's former address was www.worldbank.org/harmonization/.

3. The High-Level Forum took place in Paris, 28 February-2 March 2005. The Paris Declaration on Aid Effectiveness is available at www.worldbank.org/harmonization/Paris/FINALPARISDECLARA TION.pdf (retrieved 12 October 2006).

4. The High-Level Forum took place in Rome, 24-25 February 2003. The Rome Declaration on Harmo

nization is available at www.aidharmonization.org/ah-wh/secondary-pages/why-RomeDeclaration (retrieved 12 October 2006).

5. The same applies to funding local NGOs. Harmonised support from international NGOs can give

recipients space to become learning organisations when they no longer have to spend so much time

learning the various procedures of the organisations funding them (Shutt 2006). 6. From a discussion at the DAC GenderNet meeting in July 2006 on the implications of the Paris

Declaration for gender equality. 7. 'Burkina Faso: General Framework Agreement for Organizing Budgetary Assistance to Support the

PRSP', independent evaluation mission April 2006, page 3, available at www.aidharmonization.org/ retrieved 30 June 2006.

References

Bond, P. (2006) 'A review of progression and regression in debt, aid, trade, relations, global governance and the MDGs', AFRODAD Occasional Papers No. 3, Harare: AFRODAD.

de Renzio, P., with David Booth, Andrew Rogerson, and Zaza Curran (2005) Incentives for Harmo nisation and Alignment in Aid Agencies, ODI Working Paper No. 248 London: Overseas Development Institute.

Department for International Development (DFID) (2006) 'Aid Effectiveness Network News', www.dfid.gov.uk/mdg/aid-effectiveness/newsletters/joint-strategy-bangladesh.asp (retrieved 30 June

2006). Easterly, W. (2002) 'The cartel of good intentions: the problem of bureaucracy in foreign aid', The Journal of Policy Reform 5(4): 223-50. Edgren, G. (2003) 'Donorship, ownership and partnership: issues arising from four Sida studies of donor

recipient relationships', Sida Studies in Evaluation No. 3, Stockholm: Sida.

Gershon, P. (2004) Releasing Funds to the Front Line, Independent Review of Public Sector Efficiency, London: HMSO.




Rosalind Eyben

Government of Mozambique (2005) 'Joint Review - 2005 Aide-Memoire (Final version)', 12 May 2005, www.dfid.gov.uk/pubs/files/mozambique-aide-memoire.pdf (retrieved 12 October 2006). INTRAC (2006) 'Aid harmonisation: challenges for civil society' Ontrac 33, May.

Lele, U., N. Sadik, and L. Simmons (2005) 'The changing aid architecture: can global initiatives

eradicate poverty?', DAC News, www.oecd.org/dataoecd/48/6/37046754.htm. OECD (2003) 'Harmonising Donor Practices for Effective Aid Delivery', Development Assistance

Committee, Paris: OECD.

OECD (2006) 'Summary of DAC Peer Review of UK Aid', Paris: OECD, www.oecd.org

Severino, J.-M. and O. Charnoz (2003) 'A paradox of development', Revue d'Economie du Developpe ment 17(4): 77-97.

Shutt, C. (2006) 'Money matters in aid relationships', in R. Eyben (ed.) Relationships for Aid, London:

Earthscan.

The author Rosalind Eyben is a Fellow at the Institute of Development Studies in Sussex, following a long career in the world of aid policy and practice. Contact details: Institute of Development Studies, Brighton, BN1 9RE, UK <[email protected]>




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