Maximizing the Impact of Aid Instruments in Development Assistance

1. DFID’s aid policy and instruments(the orchestrated version) Nel Druce HLSP/DFID

2. Source: OECD/DAC 2005

3. Population assistance % 2004 Source: UNFPA/UNAIDS 2004

4. 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

5. Conceptual Framework Objectives Promote country ownership Encourage 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 Financial Aid Instruments General Budget Support Sector Budget Support Sub Sector Budget Support Other Programme Based Approaches (debt relief, balance of payments support, food aid) Integrated Project Stand Alone Project Global Funds Challenge Funds Other… Design Features Earmarking Conditionality Disbursement Channel Accountability Time Frame Interdependence with other instruments

6. 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

7. 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)

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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)

15. 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)

16. ADVOCATE ADVOCATE ADVOCATE!!

17. The Kenya $$$ profile