Assizes of the Belgian Development cooperation: Aid concentration Hubert de MILLY OECD – DCD/aid effectiveness

Aid Fragmentation Fragmentation is an issue for both donors and partners –For donors – managing programmes in many countries (Canada, EC, France, Germany, Japan, and US give aid to over 100 countries; Portugal in just 19 and New Zealand in just 21.) –For partners – having to deal with a large number of small donors (37 countries have more than 24 DAC and major multilateral donors; in two thirds of these more than 15 of those donors account for just 10% of their aid.)

Concentration: Partners’ fears Overall volume decrease (donor phasing out without offsetting) Donor quartel Loss of flexibility Increased risk (if donor failure) Internal opposition : minefi vs line- ministries (loss of like-minded donor at sector level)

Concentration: donors’ fears Phasing out (how to announce bad news?) Low control on existing aid Increased responsability, need of greater predictability Loss of flexibility Increased risk for disbursment

Note on measurement: –Fragmentation measured for country programmable aid (CPA) which excludes debt relief, humanitarian aid, imputed student and administrative costs, etc. – CPA is aid that is susceptible to programming at recipient country level –Excludes small bilateral programmes of under $250,000, as not imposing the same coordination burdens as larger projects and programmes.

Fragmentation – Partners’ perspective Quartile distribution of number of DAC and major multilateral donors by country

Number of donors together accounting for less than 10% of aid In 33 partner countries fragmentation is a major issue – each has more than 15 donors providing just 10% of their CPA

Sectoral analysis If donors concentrate their aid at the sectoral level, the effect of fragmentation can be reduced, while still allowing space for smaller donors Analysis of fragmentation in two sectors: Health and Economic Infrastructure

Significant fragmentation in the Health sector In 21 countries, in the health sector, more than 15 donors combined provide just 10% of their health CPA

Less fragmentation in the Economic infrastructures Only 5 countries have 18 to 23 donors active in infrastructure (with more than 15 donors providing just 10% of their infrastructure CPA)

Country case studies Review of Cambodia, Rwanda, Tanzania and Vietnam shows: –On average approx. 1/3 of donors represent 90% of aid (9 to 12 donors) –In health on average ¼ of donors (4 to 8 donors) and in Economic infrastructure sector 17% (1 to 4) Case of Vietnam: Yet two small donors, Austria (with 0.2% of global CPA) and Finland (0.4%) can manage fifth (8.0% share) and sixth (2.8%) position in aid to health in Viet Nam So there is scope for greater concentration at sectoral, country and global level

Vietnam: CPA in total DonorCPA shareCumulative% Japan34.5%34% IDA18.3%53% AsDF10.0%63% France5.8%69% United Kingdom4.2%73% Denmark3.5%76% Germany3.0%79% Netherlands2.9%82% Canada2.6%85% Australia2.4%87% Sweden2.1%89% EC2.1%91% United States1.6%93% Finland0.9%94% Belgium0.9%95% Switzerland0.9%96% ….. Austria0.0%100%

Vietnam: health DonorCPA shareCumulative% Japan22.9%23% United States18.6%41% Austria9.3%51% France6.7%57% EC6.1%64% Germany5.8%69% The Global Fund5.4%75% Luxembourg4.1%79% United Kingdom3.0%82% Finland2.5%84% Belgium2.5%87% UNICEF2.4%89% IDA2.2%91%

Vietnam: economic infrastructures DonorCPA shareCumulative% France22.8%23% Japan21.8%45% Germany15.3%60% Denmark6.4%66% Belgium6.1%72% Netherlands5.4%78% EC4.2%82% Sweden3.9%86% Switzerland3.8%90% Norway2.5%92% Australia1.9%94% Canada1.6%96% United Kingdom1.4%97%

Sub-fragmentation Intra-donor proliferation –Various state agencies –Decentralised coop (cities, regions…) –ODA funded NGOs Budget lines proliferation –With different regulations –Without fungibility

Points for discussion What “concentrated” means ? Donor view vs partner view. LDCs vs MICs. Cost of partnership Partnerships : how many is too many, how many is too little ? Country strategy vs global strategies (sectors or cci) “Niche” vs “full high level partnership”

Donors: a dual strategy ? Countries of « niche » –Localised or sectoral partneship –Great number of countries –Small volumes Countries of concentration –Full partnership, Paris principles –1 or 2% of local GDP (in medium LDCs) –Small number of countries

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