The International Aid Effectiveness Agenda – Substance, Trends and Implications for CS

CCIC Workshop

Réal Lavergne – May 27, 2006

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Outline

I. New OpportunitiesII. The Substance / Trends in CIDAIII. Implications for CSIV. An AE agenda for CS?

I. New Opportunities

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Lessons of Experience – Getting the Most from Foreign AidResearch shows that aid matters, but institutions matter moreCross-country work shows a very high return from aid when countries are soundly managedHowever, aid has weak and even negative effects in badly governed countriesDoes not mean abandoning the poorest countries, but must focus on governance and performance issues and seize opportunities

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Working Together to Make a Difference

This challenge requires new approachesProjects work in sound environments because they fill gaps, but cannot secure change where underdevelopment is systemic.Securing systemic governance and institutional change requires a community of effort to do together what we could not do separately.The goal: To make enough of a difference to help stagnating countries with political will to break onto a dynamic development path.

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What is New?

A strong international consensus on a new, joined-up, way of engaging in development cooperationThe ‘International aid effectiveness agenda’ (IAEA) Older models still have a place but not suffice to meet new challenges.

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Why the IAEA?The IAEA is a particular perspective to address three intimately connected objectives:

Improved donor coordination and harmonizationScaling up of activities to meet the MDGsAddressing deep seated and systemic problems of governance and poor performance of country systems

Addresses fundamental causes of underdevelopmentDo together what we could not do separately

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New OpportunitiesShared understanding of key issuesAn unparalleled consensus to work togetherIncreasing aid flowsCommitment by developing countries themselves (as a group and in particular countries)The Promise: To make enough of a difference to help stagnating countries with political will to break onto a dynamic development path.

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General Context: A Changing World – IAEA not a fad – has roots

Improved understanding of complexity of development and increased use of more holistic approaches, culminating in CDF, PRSPs, PBAs. Goes back 20 years. Improved awareness of donor imperatives that impede aid effectiveness Increasing peer pressure – DAC, UN, World Summits (WSSD, Education, Social Policy, Women in Development), Shanghai, Monterrey, G8Increased attention to aid effectiveness – DAC Shaping the 21st Century; WB studies on aid effectiveness; but goes back at least to mid-1980s work of DACIncreased focus on outcomes and impacts (RBM)ICTs / Globalization – make it possible! – Working together, better dialogue, more holistic approaches

II. The Substance / Trends in CIDA

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The IAEA - A Summary Interpretation

Sustainability and effectiveness requires “local ownership.” Leads to a “change and accompaniment” model as opposed to a “resource transfer” model of change.Work at the systems level rather than piecemeal – more holistic, comprehensiveWork together rather than independentlyWork though, not around host-country systemsEmphasis on results and mutual accountability

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Paris DeclarationPreceded by Rome, Monterrey, G8139 parties, incl. all bilateral donors, 26 multilaterals and 57 developing countries56 commitments, 12 indicators, 21 targets for 2010 for both donors and countries. Reiterates past commitments, clarifies and brings together, gives them teethGoes beyond “aid” effectiveness to “Development” effectiveness

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Program-Based Approaches (PBAs)

Largely replace ‘projects’ as an organizing concept for aid investments under the IAEAA model for implementing the international aid effectiveness principles at the operational level Indicator 9 of Paris: 66% of ODA under PBAs by 2010

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OECD/DAC Definition of PBAsA way of engaging in development cooperation based on the principle of coordinated support for a locally owned program of development such as a national development strategy, a sector programme, a thematic programme or a programme of a specific organization. PBAs share the following features:

Leadership by the host country or organizationA single comprehensive program and budget frameworkA formalized process for donor coordination and harmonization of donor procedures for reporting, budgeting, financial management and procurementEfforts to increase the use of local systems for program design and implementation, financial management, monitoring and evaluation.

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Operational FeaturesDifferent levels – macro, sub-systems, sector, organizationsDynamic -

a few donors take the lead, local ownership grows over timeProgramming also becomes more rigorous over time

Growing use of joint funding mechanisms (pooled funding, budget support)Also include TA / parallel financing

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Budget Support as a Modality Under PBAs

One option, may be part of a mixHelps move from aid effectiveness to development effectiveness – whole of resourcesCreates incentives for improved performanceFacilitates improved allocation of resourcePromotes domestic accountability and contestabilityIncreasingly used at different levels, and with different types of safeguards.

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When PBAs?

When conditions are ripeDoes not require high levels of capacity (Mali, Mozambique, Ethiopia…)Requires willingness to work together for changeWhat matters is direction of change and evolving character of the relationship

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Programme Based Approaches in CIDA

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006* 2006/2007*

Summary of New Commitments and Disbursements as % of total bilateral** levels

* 2005-06 & 2006-07 figures include tentative projects and as such are not final.

% of Bilateral Disbursements % of New Bilateral Commitments

** bilateral figures do not include CPB

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Program Based Approaches Disbursements*

12.9%

21.2%21.9%

22.6%

20.0%

5.3%

1.3%

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006* 2006/2007*

* N.B.: 2005-06 and 2006-07 figures are not final. They are based on known promises

(in $

mill

ions

)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

(% s

hare

of b

ilate

ral*

* sp

endi

ng)

EMM

Asia

Americas

Africa

% share of bilateral** spending(plotted on 2nd axis)

** bilateral figures do not include CPB

Program Based Approaches Disbursements*

12.9%

21.2%21.9%

22.6%

20.0%

5.3%

1.3%

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006* 2006/2007*

* N.B.: 2005-06 and 2006-07 figures are not final. They are based on known promises

(in $

mill

ions

)

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

(% s

hare

of b

ilate

ral*

* sp

endi

ng)

EMM

Asia

Americas

Africa

% share of bilateral** spending(plotted on 2nd axis)

** bilateral figures do not include CPB

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Highlights on the CIDA Portfolio62 PBAs: 48 operational; 14 under development82% of funding using joint funding modalities23 operational SWAps – 12 in education, 8 in health or HIV/AIDS7 General Budget Support approved so far (Ghana, Tanzania, Ethiopia, Afghanistan, Iraq, Vietnam, Mozambique)Some very large contributions (Ghana – $93M, Ethiopia $105M, planned Senegal education BS - $160M, Tanzania GBS and Governance: $195M)

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General ImplicationsMore focus on high level results as drivers Very strong impetus to reinforcement and use of country systems (sustainability)Use of country systemsMore comprehensive approaches under PBAsMore use of joint funding arrangementsPriorities increasingly determined in concerted ways, in country

III. Implications for CS

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Implications for CSApplication

AE principles also apply to CSOs

ThreatsPossible loss of independence and independent funding for CSOs

OpportunitiesTo engage at policy levelTo scale up in partnership with governmentsFor high-level dialogue on CS & development

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Engaging Canadians

Engaging Canadians still an objectiveIdentified as a priority in the International Policy Statement through Canada Corps and promoting effective partnershipsCIDA Task Force on Canadian PartnershipsSearching to reconcile aid effectiveness and Canadian engagement – no necessary contradiction, but balance to be found

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AE and Engaging Canadians

Understand what sort of engagements provides best “return” to aid dollars

Cost considerations (e.g. volunteering)Leveraging (cost-sharing arrangements)Tapping shared values and commitmentPromoting innovationPromote sustainable N-S relationshipsInvolvement in joined-up approaches to promote change at the systems level

IV. An IAEA for CS?

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Distinguishing AE, SAE principles, and IAEA

Aid Effectiveness: the objective and ultimate accountability – sustainable results in poverty reductionAid Effectiveness principles: selective lessons of what works IAEA: lessons + commitment / consensusOne AE objective, but no single set of principles and agendas

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Where is CS in the IAEA?Part of the dialogue and for promoting accountabilityDrafters careful to not exclude CD and to avoid references to ‘government’ where ‘country’ would do as wellHowever, core of IAEA is focused on the state, on core state functions & improved planning and priority setting at high levels

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Gaps In the Prevailing IAEA

Non-consensus politics, Human RightsOperationalizing good governance and accountabilityDealing with limitations of governmentRole of responsive approachesHow and why to support Civil Society

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An IAEA for CS? Issues:

Careful analysis of role of CSSustainability issuesProject vs ProgramValue of responsive approachesRelation to the stateRole of N-S partnershipsHow donors can best support

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ConclusionsThe IAEA a powerful international understandingCould make a major difference in helping to build up sustainable, better performing country systemsDo things together that cannot do aloneNot the whole story on aid effectiveness, but requires serious effortsDoes not mean abandoning traditional approaches, but those too need to be rethought from an effectiveness perspective.