DFID’s aid policy and

instruments(the orchestrated version)

Nel Druce

HLSP/DFID

Average Per Capita Donor Support selected countries in South Asia and Sub Saharan Africa

-

2

4

6

8

10

12

$ pe

r hea

d av

erag

e 20

02-5

UNFPA

UNAIDS

UNICEF

IDA

EC

AfDF

United States

United Kingdom

Switzerland

Sweden

Spain

Portugal

Norway

New Zealand

Netherlands

Luxembourg

Japan

Italy

Ireland

Greece

Germany

France

Finland

Denmark

Canada

Belgium

Austria

Australia

Source: OECD/DAC 2005

Population assistance % 2004

Donor Bilateral Multilateral NGO

US 20 13 67

UK 66 24 10

Netherlands 25 50 25

Japan 8 83 9

France 10 90 0

Source: UNFPA/UNAIDS 2004

The orchestra…

“Aid instruments are like musical instruments. To say that one instrument is better than another is like saying that an oboe is better than a banjo. It depends on the context (are you an orchestra or a folk band?), the purpose (what music are you playing?), and the way it is played (is it better to play a ‘bad’ instrument well than a ‘good’ instrument badly?)”

DFID financial instruments guidance, 2005

Conceptual Framework

Objectives Promote country ownershipEncourage adoption of appropriate (pro poor) policies/addressing issues of exclusion Stronger incentives and capacity to implement (both Govt/non Govt)Greater predictability (for Government)Acceptable risk (for donors)Improved accountability (to the population Minimise transactions costs

Design FeaturesEarmarking ConditionalityDisbursement Channel AccountabilityTime Frame Interdependence with other instruments

Financial Aid InstrumentsGeneral Budget SupportSector Budget Support Sub Sector Budget SupportOther Programme Based Approaches (debt relief, balance of payments support, food aid)Integrated Project Stand Alone ProjectGlobal FundsChallenge Funds Other…

Policy choices: trade-offs • balance short term improvements in

service delivery and longer term improvements in sustainable capacity

• make effective transition between instruments; conditionalities?

• balance support to government systems with support to non state actors

• balance equity with efficiency• manage country wishes and broader

organisational policy objectives

Leading ‘budget supporter’

• DFID accounts for 25% of all PRBS (04/05)• Poverty reduction budget support (PRBS)- General budget support (GBS)- Sector budget support (SBS)• Key features: supports government policy and

plans, and uses government finance systems• Continuum between GBS and SBS (degrees of

‘earmarking’ and conditionalities)

Facts and figures

• PRBS – £401m in 16 countries in 2004/05• PRBS accounts for 60% of DFID’s bilateral

support in Africa; 23% in Asia• Most GBS is in Africa, most SBS in Asia• SBS tends to be used in less aid dependent

countries, where fiduciary risk lower at sector level, often coupled with TA

• Most SBS is for health and education – includes earmarked poverty funds, sub sector and sub national support

The health orchestra…

• Bilateral assistance on health = £415m (17% of UK ODA)

• Sector support – £54m (only 13%)• Health programmes - £65m• Technical co-operation - £107• Grants (NGOs etc) - £157m

• PLUS estimated £50m from PRBS

A place for projects…• Clear role for stand alone and integrated projects with

government/non government providers- where government unwilling or unable…fragile states- where UK does not support government policy eg Zimbabwe,

Burma- tackling bottlenecks and introducing new approaches- advocacy, TA, support to service delivery for marginalised

groups and issues eg safe abortion in Cambodia- demonstration projects; sustainability and scale up considered

from start (eg IDUs, sex workers in China)- advocacy/policy dialogue for pro-poor policy and reform;

support to civil society for improving accountability etc- non state sector (especially commercial providers) eg social

marketing

Mix of AIs in Nepal

• Health Sector budget support – DFID, World Bank (includes TA, 16%)

• DFID support to safe motherhood programme (earmarked funds on budget, TA 40%)

• Funding to UN to provide TA for safe motherhood

• Funding to NGOs for advocacy etc

And in Ethiopia…• PRBS suspended 2005

• New Protection of Basic Services Grant, managed with World Bank trust fund, earmarked funds using existing finance systems

• Includes commodities window

• MOUs with UNFPA and UNICEF

• Other funding includes Population Council/young women

Other key instruments…• Multilaterals and trust funds (central and

bilateral contributions)

• Global partnerships – GFATM and GAVI

• Challenge funds

- Regional/international Africa Enterprise Challenge Fund, Governance and Transparency Fund, Safe Abortion Action Fund

- National eg India, Tanzania, Zambia

Implications for SRH and supplies• Role for conditionalities/earmarks in PRBS eg

commodity budget lines?• Continued support to SRH programmes (incl. TA

and commodities) likely in fragile states eg Sierra Leone, Burundi, Ethiopia

• UN (UNFPA, UNICEF, WB) roles in channelling support/ ‘shadow alignment’ strategies

• SBS in less aid dependent states includes sub sector and project support to RH (Pakistan, India, Nepal, B’desh)

Key challenges• Stable low income states with PRBS, but

where government failing to prioritise SRH • Mainstreaming support to non state providers

into sector plan • Financing scale up of commercial sector

activities • Financing for activities that are ‘non-state’ eg

advocacy, marginalised issues• Multilateral capacity to provide appropriate

inputs ie advocacy, policy dialogue, support to scale up

• GFATM and GAVI advocacy (national and global levels)

ADVOCATE

ADVOCATE

ADVOCATE!!

The Kenya $$$ profileGrowth in Off Budget Funding

0

5,000

10,000

15,000

20,000

25,000

2000/2001 2001/2002 2002/2003 2003/2004 2004/2005

K S

hs

mill

ion

Total GoK Health Budget

Non Budgetary Donor Support forHIV/AIDS