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

1. The International Aid Effectiveness Agenda – Substance, Trends and Implications for CS CCIC Workshop Réal Lavergne – May 27, 2006

2. Outline • New Opportunities • The Substance / Trends in CIDA • Implications for CS • An AE agenda for CS?

3. I. New Opportunities

4. Lessons of Experience – Getting the Most from Foreign Aid • Research shows that aid matters, but institutions matter more • Cross-country work shows a very high return from aid when countries are soundly managed • However, aid has weak and even negative effects in badly governed countries • Does not mean abandoning the poorest countries, but must focus on governance and performance issues and seize opportunities

5. Working Together to Make a Difference • This challenge requires new approaches • Projects 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.

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

7. Why the IAEA? • The IAEA is a particular perspective to address three intimately connected objectives: • Improved donor coordination and harmonization • Scaling up of activities to meet the MDGs • Addressing deep seated and systemic problems of governance and poor performance of country systems • Addresses fundamental causes of underdevelopment • Do together what we could not do separately

8. New Opportunities • Shared understanding of key issues • An unparalleled consensus to work together • Increasing aid flows • Commitment 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.

9. 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, G8 • Increased attention to aid effectiveness – DAC Shaping the 21st Century; WB studies on aid effectiveness; but goes back at least to mid-1980s work of DAC • Increased focus on outcomes and impacts (RBM) • ICTs / Globalization – make it possible! – Working together, better dialogue, more holistic approaches

10. II. The Substance / Trends in CIDA

11. 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, comprehensive • Work together rather than independently • Work though, not around host-country systems • Emphasis on results and mutual accountability

12. Paris Declaration • Preceded by Rome, Monterrey, G8 • 139 parties, incl. all bilateral donors, 26 multilaterals and 57 developing countries • 56 commitments, 12 indicators, 21 targets for 2010 for both donors and countries. • Reiterates past commitments, clarifies and brings together, gives them teeth • Goes beyond “aid” effectiveness to “Development” effectiveness

13. Program-Based Approaches (PBAs) • Largely replace ‘projects’ as an organizing concept for aid investments under the IAEA • A model for implementing the international aid effectiveness principles at the operational level • Indicator 9 of Paris: 66% of ODA under PBAs by 2010

14. OECD/DAC Definition of PBAs • A 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 organization • A single comprehensive program and budget framework • A formalized process for donor coordination and harmonization of donor procedures for reporting, budgeting, financial management and procurement • Efforts to increase the use of local systems for program design and implementation, financial management, monitoring and evaluation.

15. Operational Features • Different levels – macro, sub-systems, sector, organizations • Dynamic - • a few donors take the lead, local ownership grows over time • Programming also becomes more rigorous over time • Growing use of joint funding mechanisms (pooled funding, budget support) • Also include TA / parallel financing

16. Budget Support as a Modality Under PBAs • One option, may be part of a mix • Helps move from aid effectiveness to development effectiveness – whole of resources • Creates incentives for improved performance • Facilitates improved allocation of resource • Promotes domestic accountability and contestability • Increasingly used at different levels, and with different types of safeguards.

17. When PBAs? • When conditions are ripe • Does not require high levels of capacity (Mali, Mozambique, Ethiopia…) • Requires willingness to work together for change • What matters is direction of change and evolving character of the relationship

18. Programme Based Approaches in CIDA Summary of New Commitments and Disbursements as % of total bilateral** levels 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% % of Bilateral Disbursements % of New Bilateral Commitments 0.0% 2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006* 2006/2007* * 2005-06 & 2006-07 figures include tentative projects and as such are not final. ** bilateral figures do not include CPB

20. Highlights on the CIDA Portfolio • 62 PBAs: 48 operational; 14 under development • 82% of funding using joint funding modalities • 23 operational SWAps – 12 in education, 8 in health or HIV/AIDS • 7 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)

21. General Implications • More focus on high level results as drivers • Very strong impetus to reinforcement and use of country systems (sustainability) • Use of country systems • More comprehensive approaches under PBAs • More use of joint funding arrangements • Priorities increasingly determined in concerted ways, in country

22. III. Implications for CS

23. Implications for CS • Application • AE principles also apply to CSOs • Threats • Possible loss of independence and independent funding for CSOs • Opportunities • To engage at policy level • To scale up in partnership with governments • For high-level dialogue on CS & development

24. Engaging Canadians • Engaging Canadians still an objective • Identified as a priority in the International Policy Statement through Canada Corps and promoting effective partnerships • CIDA Task Force on Canadian Partnerships • Searching to reconcile aid effectiveness and Canadian engagement – no necessary contradiction, but balance to be found

25. 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 commitment • Promoting innovation • Promote sustainable N-S relationships • Involvement in joined-up approaches to promote change at the systems level

26. IV. An IAEA for CS?

27. Distinguishing AE, SAE principles, and IAEA • Aid Effectiveness: the objective and ultimate accountability – sustainable results in poverty reduction • Aid Effectiveness principles: selective lessons of what works • IAEA: lessons + commitment / consensus • One AE objective, but no single set of principles and agendas

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

29. Gaps In the Prevailing IAEA • Non-consensus politics, Human Rights • Operationalizing good governance and accountability • Dealing with limitations of government • Role of responsive approaches • How and why to support Civil Society

30. An IAEA for CS? Issues: • Careful analysis of role of CS • Sustainability issues • Project vs Program • Value of responsive approaches • Relation to the state • Role of N-S partnerships • How donors can best support

31. Conclusions • The IAEA a powerful international understanding • Could make a major difference in helping to build up sustainable, better performing country systems • Do things together that cannot do alone • Not the whole story on aid effectiveness, but requires serious efforts • Does not mean abandoning traditional approaches, but those too need to be rethought from an effectiveness perspective.