Millenium Campaign

The following paper was written for the Paris High-Level Forum on Harmonization in Paris from 28 February to 2 March 2005. We found it on the website www.milleniumcampaign.org of the Millenium Campaign.The meeting was attended by development officials and ministers from 91 countries, many donor organizations and partner countries, representatives of civil society organizations and the private sector. The participants took stock of progress in the wide range of activities that have taken place since the Rome High-Level Forum of 2003 and identified areas in which further, or more work is needed.

Why Aid Quality is Important

Goal 8 Action Alert!

Much of the aid debate today focuses on increasing volume, and rich countries are being held accountable to deliver on the 0.7% target of their Gross National Income. But achievement of the Millennium Goals requires not only more aid, but also better quality aid – i.e., aid that contributes to the achievement of the Millennium Goals. Increasingly, issues related to aid quality and effectiveness are gaining attention on the agenda of the international development community, and have become part of rich countries’ Goal 8 commitments. Improving aid quality could double its value in terms of advancing progress in achieving the Millennium Goals.

Too often aid has been driven by strategic geo-political objectives, rather than responding to development needs. Considerable aid is diluted to not-so-poor countries – sometimes benefiting the donors’ exporters and visibility rather than contributing to poverty reduction. Obviously, to increase the effectiveness of aid, donors should target poor countries, particularly Sub-Saharan Africa and the least-developed countries that need external concessional resources. Donors also need to untie aid as tied aid reduces its value by 25%, limits options in maximizing use of resources and invites corruption. There has been broad consensus for decades on these two recommendations in the development community – even if they have not been fully implemented by most donor countries.

More recently, donors have acknowledged the tremendous scope for increasing the impact of aid by better aligning it with recipients’ development priorities and by harmonizing donor policies and practices. Donor countries publicly recognized – at the highest political level – the need to change the way they deliver aid. In the 2002 Monterrey Consensus, world leaders committed themselves to reduce the burden of aid management on recipient countries, and to support policy priorities driven by developing countries themselves. In the 2003 Rome Declaration, bilateral donors and multilateral agencies committed to take action to improve the management and effectiveness of aid on the ground by simplifying and harmonizing their complex procedures that overburden poor countries’ institutional capacity.

At the 2004 development committee last fall, the international community

“agreed to harmonize and align their support behind countryowned development strategies, streamline the use of conditionality, increase the focus on results, and use country systems where appropriate. [They] committed to using the Second High-Level Forum on Harmonization in Paris [February 28 to March 2] to translate these agreements into clear and specific commitments and timetables and call for the development of indicators and benchmarks to monitor the participation of all partners in this effort at the country level.”

Why Does Harmonization Matter so Much?

Development aid is flowing through many different channels, each with its own processes and conditionalities. Donors fund more than 60,000 aid projects around the world and demands on recipient countries that have limited institutional capacity are overwhelming. Some recipient countries receive as many as 800 new projects each year, host more than 1,000 donor missions and present 2,400 quarterly reports on progress.

These are the complaints we hear – inflexible procedures, cumbersome decision-making fragmentation, competition, overlap and duplication. We the donors, with our short-sighted funding and flag-waving, are part of the problem – the ‘donor circus’. Too much focus on flags and visibility and too little concern for the end results. This is why we as donors decided to reform the way we work and agreed to a set of principles in Rome. 
Hilde F. Johnson, Minister of International Cooperation, Norway

For example, in 2002, 25 bilateral donors, 19 multilateral agencies and about 350 international NGOs were operating in Vietnam. Collectively, the country accounted for over 8,000 projects. Prior to the major donor reform in Tanzania, the Minister of Finance supplied 10,000 reports to donors every year and received 2,000 delegations, all of whom expected to meet top officials. In Zambia, the Finance Minister handled 1,200 different donor accounts. In Uganda, only about 30 percent of all standalone donor projects in the health sector have been aligned with the country’s own health priorities. The EC Donor Atlas shows that even in Mozambique and Tanzania, where donors are most ‘advanced’ in harmonizing procedures and supporting recipient budgets and priorities, still nearly 1,000 different donor activities are underway, with an average value of less than $2 million.

Recipient countries are overloaded by aid that is delivered by too many high-cost aid boutiques, each requiring separate negotiation and distinct management that consume the attention of government officials who have already very limited institutional capacity. Instead of developing and implementing their own economic or health policies, or being accountable to their own people, government officials in recipient countries are preparing reports for each donor, accommodating the different procedures and reporting requirements, and entertaining hundreds of missions of individual donors each year. This is not an efficient use of time that could be invested instead in implementing their policies and programs.

We have to put an end to delivering aid in uncoordinated ways that generate a crippling burden of transaction costs for recipient countries, undermining their local institutional capacity and the value and impact of aid. Donors must move away from their ‘own’ projects and focus on supporting locally driven and country-owned priorities and strategies. They must simplify and harmonize procedures and practices, by streamlining and coordinating them with those of recipient countries. Donors must implement common arrangements for planning, managing and delivering aid, while reducing their own mission’s reviews and reports.

While we were supposed to implement, we are producing papers.
 Ministry of Education official, Tanzania, 2004

What Progress Had Been Made on the Harmonization Agenda Since the Rome Declaration Was Signed?

Instead of working to establish comprehensive and consistent national development objectives and policies, government officials are forced to focus on pleasing donors by approving projects that mirror the current development ‘enthusiasm’ of each donor. Efforts to implement a large number of discrete donor-financed projects, each with its own specific objectives and reporting requirements, use up far more time and effort than is appropriate. Project consolidation is needed, but this is unlikely to occur on a significant scale because of the competitive nature of donor actions. 
Institutional destruction resulting from donor and project proliferation in Sub-Saharan Africa (1984)

As far back as the 1980s, there was already awareness that aid flowing through too many channels dilutes its impact. Since then, the number of donor countries has increased, but the number of entities that channel aid from some donor countries has also grown. According to the OECD, there are as many as 50 different entities delivering U.S. aid, all which have their own procedures and objectives. Despite commitments made in Monterrey and Rome, little progress has been made.

Oxfam undertook a survey of donor practices in 2004 based on interviews with recipient- government officials carried out anonymously in 11 countries across Africa, Asia and the Middle East and Eastern Europe The survey found that in 52% of reported cases, governments spend ‘too much’ or ‘excessive’ time reporting to donors; and in 50% of reported cases, none or only some donor activities fitted with the government’s financial planning.

According to the OECD-DAC 2004 Development Cooperation Report,

 “Good practice has not yet become general practice. When measured against the commitment to make significant changes to the ways donors manage and deliver aid in our partner countries, the progress made does not yet have sufficient momentum in applying good practice deeply and systematically”

and

“[There is] scant evidence of steps by donors to harmonize easily harmonizable activities, e.g. undertaking joint analytical/diagnostic work, rationalizing missions, minimizing transaction costs for partner countries through delegated co-operation, and aligning their planning with countries’ own budget cycles. With few exceptions, there is a large gap between international commitments made by headquarters and how these are being translated into action at the country level.”

 

What are some government officials saying about aid delivery? (From Oxfam’s 2004 survey of donor practice)
The complexity of procedure may extend the length of the programme by one or two years.
Government official in West Africa

Due to the time dedicated to meetings and missions, central and regional directors are often absent from their posts, and this disrupts the flow of activities.
Government official in West Africa

In Georgia it takes 43 full-time government staff to manage the process of reporting to donors. 

What Next?

The Second High-level Forum on Harmonization for Aid Effectiveness in Paris in February-March 2005 is a very important step in implementing the Goal 8 agenda, in order to effectively help developing countries to achieve the Millennium Goals.

Members of Parliament and civil society organizations must scrutinize progress on harmonization and demand that their Development Ministries or agencies scale up implementation of the Rome Declaration and live up to the promise to use the Second High-level Forum on Harmonization in Paris

 “to translate these agreements into clear and specific commitments and timetables and call for the development of indicators and benchmarks to monitor the participation of all partners in this effort at the country level.” 

Not only bilaterals, but also the international financial institutions and the UN system should comply to agreed steps in Rome and Paris. Members of Parliament and civil society organizations in rich countries should ensure that their governments as shareholders, members and most important donors of these multilateral organizations demand their compliance to harmonize.

By way of summing up this global partnership, compare the division of tasks between recipient and donor countries with the division of labor between a driver and passengers in a car. The recipient should be in the driver’s seat (ownership). Of course the driver’s license has to be checked (good policies, good governance). The passengers (donors) should help by filling the tank and paying for gas (0.7) and also care for the car’s suspension system (by relieving it from the debt burden). But passengers must keep their hands off the wheel; and they (donors) must not distract the driver (recipient) with a cacophony of conflicting advice (no more donor-driven hobbies and micromanagement). Paying for gas should not be conditioned on which brand of gas to use (untie aid). And passengers should not read out different maps – one that shows distances in miles and the other in kilometers (coordinate and harmonize procedures).
Eveline Herfkens, UN Secretary-General’s Executive Coordinator of the Millennium Goals Campaign

The OECD-DAC 2004 Development Cooperation Report states that the Paris meeting

 “will be the time for the international donor community to build on the good progress being made and push ahead, not to let the inertia of ‘business as usual’ erode the credibility of the commitments that have been made collectively.” 

Members of Parliaments and civil society organizations should demand governments take concrete steps now.