ENHANCING AID EFFECTIVENESS Aid Effectiveness, EuropeAid ENHANCING AID EFFECTIVENESS European Commission Fidelma O’ Shaughnessy DG EuropeAid

What we are going to talk about Aid Effectiveness, EuropeAid What we are going to talk about The What and Why of Aid Effectiveness? The Paris Declaration on Aid Effectiveness The European Commission Response

What is aid effectiveness today? Aid Effectiveness, EuropeAid What is aid effectiveness today? The aid effectiveness agenda describes the set of measures being put in place by donors and partner countries to support the achievement of the Millennium Development Goals

Aid Effectiveness, EuropeAid 6 key principles Partner countries are expected to: Define their own development goals Implement reforms to strengthen their systems and institutions Focus on results, transparency and accountability

Aid Effectiveness, EuropeAid 6 key principles Donors are expected to: Align their support on partner country national development strategies Use partner country systems and institutions Harmonise and Co-ordinate their actions - including through division of labour

Why is aid-effectiveness an issue? Aid Effectiveness, EuropeAid Why is aid-effectiveness an issue? Common goal – the Millennium Development Goals (MDGs) not on target Commitments to scaling-up of aid and debt relief - Monterrey, Barcelona, Gleneagles… not being met High transaction costs: still too many small projects by each donor 6 6

If you are not yet convinced: ‘In 2007 donors conducted 14206 missions in 54 countries and only coordinated 2750 (18%) of them’. This means on average 263 missions per country, which equals one mission arriving every working day.

The Paris Declaration on aid effectiveness – March 2005 Aid Effectiveness, EuropeAid The Paris Declaration on aid effectiveness – March 2005 Over 100 partner countries and donors have signed Paris goes beyond previous agreements –twelve indicators to track progress towards targets for 2010 Stronger mechanisms for mutual accountability

The Paris Declaration in a Pyramid Aid Effectiveness, EuropeAid The Paris Declaration in a Pyramid 5 Principles: Ownership: partner countries exercise effective leadership and coordinate development actions Alignment: donors base support on partner strategies, institutions and procedures Harmonisation: donors actions are harmonised, transparent, and effective Managing for results: improved resource management and decision making Mutual accountability: mutual assessment of progress Examples of indicators: Ownership – at least 75% of partner countries have operational development strategies Alignment – all donors use partner countries procurement systems and PFM systems, reduce by two thirds the stock of parallel PIUS Harmonisation – 40% of donors missions to the field are joint, 66% of country analytical work is joint

Aid Effectiveness, EuropeAid The EU Response EU is committed to implementation of the Paris Declaration Strongly supports greater partner country involvement in the harmonisation process Has committed to four targets which in addition to the Paris Declaration

Aid Effectiveness, EuropeAid The EU Response 1. Channel 50% of government-to-government assistance through country systems, including by increasing the percentage of our assistance provided through budget support or sector-wide approaches 2. Provide all capacity building assistance through co-ordinated programmes with an increasing use of multi-donor arrangements 3. Avoid the establishment of any new Project Implementation Units (PIUs) 4. Reduce number of un-coordinated missions by 50%

EU Code of Conduct on Division of Labour in Development Policy - Feb 2007 maximum of three sectors in-country redeploy funds in country based on local negotiations (either use delegated cooperation, or redeploy into GBS, or exit responsibly redeploying funds in 3 priority sectors) in each sector establish lead donor for all donor coordination Apply principles to Regional Cooperation limited number of priority countries Letter of LM of 21 May 2008 to cooperation / development ministers Suggests applying two of the guiding principles of the Code of Conduct: delegated cooperation and lead donorship arrangement Identification of countries / sectors where: EC could delegate to Member States; Commission could be delegated by Member States

Reforming Technical Cooperation & PIUs for External Aid provided by EC - Backbone Strategy July 2008 Improved effectiveness and sustainability of EC development assistance, based on Provision of “quality TC” that supports country-led programmes, based on partner demand and focused on sustainable results Provision of support through partner-owned Project Implementation Arrangements, with a substantial reduction of Parallel PIUs It’s important to draw attention on the Concept of Project Implementation Arrangement. Projects requires implementation arrangements whatever is the financing sources. The Strategy refer to PIA as the organisation set up established to implement a project in terms of accountability, internal division of labour, internal organisation. This PIA concept allows to go beyond the narrow concept of PIU, focusing on the “unit”, that may be restrictive and leading to a formalistic approach. DAC definition of coordinated programmes that meet both criteria below: Partner country’s clear capacity development objectives as part of broader national or sector strategies? Technical cooperation aligned with the countries’ capacity development objectives? and at least one of the criteria below: Country control over the technical cooperation? More than one donor involved , arrangements involving the country authorities in place for coordinating TC? A PIU is parallel when it is created and operates outside existing country institutional and administrative structures at the behest of a donor.

Need for a Strategy for TC and PIUs ? OECD/DAC « overview of the results » to monitor the Paris Declaration (2007) European Court of Auditors’ Special Report No. 6/2007 on the effectiveness of technical assistance in the context of capacity development EC internal diagnostic Accra High Level Forum Sept 2008 confirmed need for increased progress in this area Notwithstanding a number of positive contributions made by TC in many countries and contexts, there has been criticism of TC practices and the use of PIU structures in development cooperation for several decades. TC often appears as supply driven, with low ownership from the partner country, insufficient attention given to capacity development challenges, lack of clarity about roles and results expected from TC, overreliance on northern providers etc… Renewed calls for reform have been made under the Aid Effectiveness Agenda articulated in the Paris Declaration and confirmed by the OECD/DAC in the "Overview of the results" of the first survey to monitor the Paris Declaration (2007). According to the Survey, ‘business as usual’ is no longer acceptable, TC "is still too much donor driven" and is considered as one of "six major priority areas requiring the attention of policy makers in the development field". Technical Cooperation provided by the EC has not been immune to these criticisms. This was most recently highlighted in the European Court of Auditors’ Special Report No. 6/2007 on the effectiveness of technical assistance in the context of capacity development, and acknowledged in the Commission’s formal reply. The findings from the research and consultations carried out as part of the Strategy preparation, confirm most of the criticisms and were built upon in the Backbone Strategy process. Accra Agenda for Action: Capacity development is the responsibility of developing countries, Donors playing a supportive role. Demand-driven & country owned support, Developing countries & donors will : jointly select and manage technical cooperation, promote the provision by local / regional resources, South-South Cooperation.

Backbone Strategy - Guiding Principles 1. Primary aim is Capacity Development 8. Consider innovative options for TC provision 2.Demand led approach where TC is not provided by default EC Technical Cooperation 7. Avoid use of Parallel PIU & promote effective Project Implementation Arrangements 3.Strong result orientation A set of principles will guide the future provision of EC-funded Technical Cooperation, and the design of Project Implementation Arrangements. These principles will apply to all TC operations (notwithstanding the management mode, including decentralized and centralized management). 1.Focus on capacity development – TC is provided with the primary aim of supporting internal country processes to promote capacity development at individual, organisational and country-wide levels. Where relevant, TC can be called upon to play other roles[1], such as offering advice, providing support for the implementation and facilitation/preparation of EC cooperation. 2.Demand-led approach where TC is not provided by default – The provision of TC must be based on the demand and requirements of the partner country. Costs and available options should be transparent. Appropriate dialogue and support may be needed in order to enable clear formulation of the demand for TC. 3.Adopting a results-orientation – TC design will ensure that TC inputs/activities are linked to targeted outputs which in turn lead to sustainable development outcomes. Appropriate indicators will be agreed on in advance to monitor the implementation of TC. 4.Country-owned and managed TC process – Country partner ownership is the key underlying principle for the organisation of EC-funded TC. From the identification to the implementation phase, partner countries will be actively involved in the design of PIAs and TC-supported programmes, including the procurement of TC services and the management, review and accounting of TC results. 5.Taking account of country and sector-specific requirements – TC support will build on a thorough understanding of the political, socio-cultural, sectoral and institutional context. Blueprint approaches should be avoided. 6. Working through harmonised and aligned action – TC support will be closely coordinated with other donors and aligned to country strategies and programmes through the increased use of pooling arrangements or other harmonised approaches, such as delegated cooperation. 7. Avoiding the use of parallel PIUs and promoting effective Project Implementation Arrangements – The use of parallel PIUs will be avoided as far as possible in favour of effective implementation arrangements that are fully integrated and accountable to national structures[1]. 8. Considering different and innovative options for the provision of Technical Cooperation – The design of TC support will consider alternatives to the use of international long- and short-term consultants. These alternatives include the use of national and regional resources, twinning arrangements and knowledge transfer beyond standard training approaches. [1] Parallel structures may be justified and/or ‘unavoidable’ in exceptional cases only, such as emergency situations (post conflict), support to Non-State Actors or regional programmes. The use of ‘parallel PIUs’ should always be a last resort, and clearly justified. 6. Work through harmonized and aligned actions 4.Country owned & managed TC processes 5. Take account of country/sector requirements

The delivery of SPS assistance EU Strategy on Aid for Trade – Oct. 2007 Support DC integration in world trading system as part of poverty reduction efforts in context of globalisation Operationalisation required of EU commitments to increase TRA (In 2002: FfD/ Monterrey; 2005: G8/Gleneagles and WTO/Hong Kong) Follow-up required to the recommendations of the WTO AfT Task Force of summer 2006 To be delivered in accordance with the principles of Aid effectiveness and in compliance with Paris Declaration Support to Integrated Framework, ACP increased intevention at regional level etc. 0.56% 2010; 0.7% 2015 1. Quantitative ambitions - TRA; - Wider AfT 2. Pro-poor focus and quality 3. Aid Effectiveness 4. ACP specific angles (EPA and regional integration context) 5. Monitoring and reporting EU collectively to reach € 2 billion in annual TRA in 2010 (€ 1 bn from the EC, € 1 billion from the EU MS) EC average 2001 – 2004: € 890 million); EU MS collectively to do the same (average 2001 - 2004: € 360 million) Commitment refers to Trade Related Assistance: 1) Trade policy and regulation; 2) Trade development (Categories in WTO/OECD Doha Database) EU (EC and MS) TRA in 2006 (Doha Database): EC: € 940 million EU MS: € 640 million EU total: € 1.580 billion EU (EC and MS) total AfT in 2006 (OECD CRS selection – proxy) EC: € 2.564 billion EU MS: € 4.715 billion EU total: € 7.279 billion 16

Thank you for your attention ! For further information: Internet: http://ec.europa.eu/europeaid/what/delivering-aid/aid-effectiveness/index_en.htm Conclusions Implementing the Backbone Strategy will be a great challenge in both the short and the medium/long term for all of us. We have made explicit commitments to other donors, EU institutions, Member States and Partner Countries to reform our approach to technical assistance. We have identified the main difficulties and constrains following broad consultations. It is now time to drive the reform and better meet the needs of our Partner Countries. This will not only require the implementation of specific actions, as presented in the attached Work Plan, but a real change in our way of working on these issues, on an every-day basis. Better TC and better PIA are feasible. Within the Aid Effectiveness Agenda this is maybe THE area of work where donors have a special responsability. Implementing the Strategy will be demanding in the coming months but will improve sgnificantly the effectiveness of our cooperation. Extract for Accra Agenda for Action: “ Yet the pace of progress is too slow. Without further reform and faster action we will not meet our 2010 commitments and targets for improving the quality of aid”