Special Report No 4/2000 on rehabilitation actions for ACP countries as an instrument to prepare for normal development aid, accompanied by the Commission's replies
Date: 2000-01-27
Institutions: European Court of Auditors
Subjects: ACP countries, EU aid, EU programme, development aid, development plan, humanitarian aid

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Official Journal of the European Communities

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I

(Information)

COURT OF AUDITORS

on rehabilitation actions for ACP countries as an instrument to prepare for normal development
aid, accompanied by the Commission(cid:146)s replies

SPECIAL REPORT No 4/2000

(pursuant to Article 248(4), second subparagraph, EC)

(2000/C 113/01)

CONTENTS

Paragraph

Page

SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Court(cid:146)s audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 to 6

1 to 4

5 to 6

THE FRAMEWORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 to 15

The concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7 to 9

The legal framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10 to 11

Financial resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12 to 15

OVERALL PROGRAMMING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16 to 53

Eligibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16 to 30

Considerations over the programming process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31 to 36

Coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37 to 46

Human resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

47 to 48

Feedback to the budgetary authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

49 to 53

IMPLEMENTATION OF ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

54 to 107

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

54

Planning and budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

55 to 63

Involvement of beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

64 to 67

Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

68 to 73

Execution and results of programmes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

74 to 83

Simplified procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

84 to 86

Separate bank accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

87

Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

88 to 101

Monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

102 to 107

EVALUATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

108 to 114

3

3

3

5

5

5

5

6

7

7

8

9

11

11

11

11

12

12

13

14

14

15

15

17

17

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Paragraph

Page

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

115 to 131

Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

115 to 117

Identification and coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

118 to 120

Planning and monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

121 to 124

Implementation and accountability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

126 to 128

Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

129 to 131

The Commission(cid:146)s replies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18

18

18

18

19

19

20

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SUMMARY

In 1993, a concept was established for the rehabilitation of countries after situations of war or natural disaster.
Rehabilitation should be the bridge between the humanitarian aid and the normal long term development aid.
The facility planned to be temporary became almost permanent with actions taking much more time than
expected. At the end of 1998, decisions under the accumulated programmes, financed by the European Devel-
opment Fund and the budget, amounted to ECU 1 065 million. Payments were only ECU 486 million which
indicates slow implementation.

Although rehabilitation actions have led to certain physical results, neither the overall impact nor the impact
at the level of beneficiary countries is known, either because no comprehensive information was available on
what had been achieved or because the objectives of the actions were in many cases not clearly defined.

In general, the programming and planning was not the result of a thorough examination of the needs and pos-
sibilities of rehabilitation actions. In a number of countries rehabilitation actions were launched when the
condition of relative stability was not yet met. Consequently, the sustainability of actions was not ensured.
Often the actions were the continuation of already existing humanitarian aid actions. Whilst such actions had
their value, it was not always clear to what extent the rehabilitation actions were different from humanitarian
aid.

The coordination of rehabilitation programmes and actions with other donors (Member States, United Nations)
was mainly limited to exchange of information. Whereas the content of such coordination is to an extent
beyond the Commission(cid:146)s control, the Commission should have created firmer coordination between its own
services.

Monitoring and reporting were not adequate. During the implementation of any action, it was almost impos-
sible to follow the progress on the basis of reporting on the activities and the expenditure. It was hence
extremely difficult for the Delegations to intervene actively in the process. This was aggravated by the fact that
the Delegations were not adequately staffed to cope with the additional workload of the rehabilitation actions.

Despite the limited information available, the Commission should carry out an in-depth evaluation on the
experiences with the rehabilitation instrument so far in order to decide whether and in what form rehabilita-
tion programmes should be continued.

INTRODUCTION

Background

long term development aimed at developing countries which are
emerging from a crisis or war or whose economy has been seri-
ously affected by other factors(cid:146) (1).

1.
In 1993, in the aftermath of the conflicts in Ethiopia, Eritrea,
Mozambique, Angola and Somalia, a special instrument was cre-
ated to assist in rehabilitating these countries. At a later stage
other countries were included in the programme (see paragraph
16).

3. Rehabilitation programmes were also executed by the Euro-
pean Union prior to 1993 under the LomØ Convention, but it was
not until 1993 that the concept of rehabilitation was given its
own framework, and in 1994 specific provisions were also made
under the general budget. The new concept was established under
what is known as the (cid:145)Special Initiative for Africa (SIA)(cid:146) (2).

2. Rehabilitation in the context of development aid has been
defined as the intermediary stage between a situation of disaster
or emergency and a stable situation where normally planned
long-term development activities can take place. According to the
Commission, a rehabilitation programme is (cid:145)a link between
humanitarian aid and the resumption of support programmes for

(1) Source: COM (93) 204 final.
(2) SIA was established by the Council in its conclusions of 25 May, 1993
following a proposal made by the Commission in its communication
of 12 May 1993; COM (93) 204.

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4. The programme started on 25 May 1993, the date of the
Council conclusions, and is still continuing. In a resolution of 4
November 1993 (1), the European Parliament globally approved
the Commission(cid:146)s communication. At the end of December 1998,
decisions under the accumulated SIA programmes amounted to

ECU 1 065 million (both European Development Fund (EDF) and
budget). Payments to this date are limited to only ECU 486 mil-
lion, indicating very slow progress compared to the anticipated
quick implementation. The financial situation is summarised in
Tables I and II.

Decisions and payments for EDF and budget by countries

Table I

EDF

Budget

Total

Decisions

Payments

Decisions

Payments

Decisions

Payments

(million ECU)

8,92

6,13

88,20

119,02

94,12

54,69

200,67

18,99

1,00

5,50

133,80

46,00

7,00

22,00

9,20

NIL

8,32

3,65

45,08

66,21

21,96

27,89

44,99

17,20

0,93

1,22

44,86

36,63

6,82

0,50

1,84

NIL

15,86

12,45

6,92

58,66

56,26

6,64

17,30

0,90

NIL

NIL

19,80

19,98

2,52

5,00

NIL

0,42

26,60

15,35

8,31

5,28

41,93

42,71

2,94

8,46

0,64
0,96 (1)

NIL

9,22

13,78

1,74

4,12
0,92 (1)
1,49 (1)

24,78

18,58

95,12

177,68

150,38

61,33

217,97

19,89

1,00

5,50

153,60

65,98

9,52

27,00

9,20

0,42

23,67

11,96

50,36

108,14

64,67

30,83

153,45

17,84

1,89

1,22

54,08

50,41

8,56

4,62

2,76

1,49

Ethiopia

Eritrea

Somalia

Mozambique

Angola

Liberia

Zaire

Madagascar

Uganda

Burundi

Rwanda

Haiti

Malawi

Tanzania

Sierra Leone

Namibia

1998 budget allocation

(1) Payments greater than decisions are most likely due to omission of projects in DG VIII(cid:146)s Financial Summary.
Source: Financial summary dated 30.6.1998 prepared by DG VIII. Updated to 31.12.1998 and corrected from OLAS and Sincom.

Total

815,24

328,10

249,31

157,85

1 064,55

485,95

Decisions and payments for EDF and budget in the period 1993 to 1998

Table II

EDF

Budget

Total

(million ECU)

Year

1993

1994

1995

1996

1997

1998

Total

Decisions

Payments

Decisions

Payments

Decisions

Payments

105,17

211,47

236,10

159,20

61,50

41,80

815,24

0,45

21,50

66,00

84,49

76,32

79,34

31,04

41,36

55,49

56,52

38,30

26,60

328,10

249,31

8,58

29,82

23,70

28,50

36,33

30,92

157,85

136,21

252,83

291,59

215,72

99,80

68,40

1 064,55

9,03

51,32

89,70

112,99

112,65

110,26

485,95

Source: Financial summary dated 30.6.1998 prepared by DG VIII. Updated to 31.12.1998 and corrected from OLAS and Sincom.

(1) PE 205.689 final.

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The Court(cid:146)s audit

5. The audit was carried out with the objective of examining,
verifying and assessing:

(a) that there is a clear policy forming a coherent link between
humanitarian aid and development aid and that the use of dif-
ferent European Union funding instruments is also coherent;

(b) that the identification of eligible countries and of actions is
justified and coordinated with other donors, in particular with
the European Union Member States;

(c) whether the procedures and systems ensuring a systematic
and permanent monitoring put in place by the Commission
are efficient and transparent;

(d) that actions were implemented over a limited time span and

accounted for in a transparent manner;

(e) that the results are lasting, improve the local economy and
institutions and help in establishing political and social stabil-
ity and so provides a basis for normal development aid.

6. The audit was carried out at the level of the central services
in Brussels and in a number of countries (Ethiopia, Eritrea, Mozam-
bique, Madagascar, Zaire and Haiti). Initially the Court concen-
trated on the actions financed by the European Development
Fund. When it became clear for a number of ACP countries that
an important part of the rehabilitation actions was financed
through the budget, these actions were also included to be exam-
ined in the context of this audit.

THE FRAMEWORK

The concept

7. The concept of rehabilitation as laid down in the Commis-
sion(cid:146)s communication was further developed by the European
Parliament in a resolution of 4 November 1993. The Council, in
its conclusions of 2 December 1993, endorsed the continuation
of the rehabilitation programme. However, the Commission had
not made a synthesis with a view to lay down a clear conceptual
framework for rehabilitation.

SIA concept (1). In this document, which was endorsed by the
Council conclusion of 28 May 1996, the Commission set out pro-
posals and recommendations on how the links could be strength-
ened. A pilot exercise was recommended, together with those
Member States interested, to prepare global policy frameworks for
a number of countries and regions prone to political or economic
risks and tensions or natural disasters. Task forces were to be
established both centrally in the services of the Commission and
locally in the relevant countries, for the countries/regions chosen
for the pilot phase. For that purpose Angola, Liberia, Haiti, Soma-
lia and the Great Lakes region were identified.

9. So far, it has been difficult to identify the real outcome of this
effort. In particular the link between emergency actions already
undertaken by the European Community Humanitarian Office
(ECHO) and rehabilitation under SIA should of course have been
established, but the audit only identified three projects in Somalia
and some in Haiti which were started by ECHO and taken over
under SIA. Although it is clear that some task forces have been
working, the Commission has not yet presented any comprehen-
sive description/documentation on the results.

The legal framework

10. As already pointed out in the Court(cid:146)s special report on
humanitarian aid (2) in relation to Council Regulation (EC) No
1257/96 of 20 June 1996 on humanitarian aid (3), no overall
regulation, be it for humanitarian or rehabilitation aid, has yet
been enacted. Decisions and procedures are functions of the ori-
gin of the financial resources and the internal organisation of the
Commission and not of the nature of the actions.

11. On the basis of the two documents prepared by the Com-
mission and the Council in May 1993 (see paragraph 3), actions
managed within the framework of the LomØ Convention were
funded from the EDF, although without any specific guidelines on
rehabilitation. Actions financed through the budget were initially
covered by existing regulations, which did not specifically address
the issue of rehabilitation. Much later the Council Regulation (EC)
No 2258/96 of 22 November 1996 (4) was established for reha-
bilitation and reconstruction operations in developing countries
financed by the general budget. Consequently, this range of sources
of funding, each with its specific rules on management and execu-
tion, meant that no coherent approach within the budget and
between the general budget and the EDF could be achieved (see
paragraphs 42 to 46).

8. After some years of experience with the rehabilitation pro-
gramme the Commission produced a document on linking relief,
rehabilitation and development (LRRD) as the cornerstone of the

(1) COM (96) 153, 30.4.1996.
(2) Special Report No 2/97, paragraph 2.4 (OJ C 143, 12.5.1997).
(3) OJ L 163, 2.7.1996.
(4) OJ L 306, 28.11.1996.

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Financial resources

12. The financial resources determined by the Council in its con-
clusions of 25 May 1993 indicated that a minimum of ECU 100
million should be provided from existing EDF funds immediately.
This amount of ECU 100 million was then announced as avail-
able from within the EDF during an initial planning stage with
non-governmental organisations (NGOs) (see paragraph 31). The
proposals then made by the NGOs far exceeded ECU 100 million.
However, most of the projects which could not be contained in
this first tranche were financed at a later stage from existing
sources of funds (EDF or general budget). The total commitments
(EDF and budget) after five years amounted to just over ECU 1 000
million.

13. Although it was originally intended that Member States
would make specific funds available to the programme, this was
never realised. In certain SIA countries Member States have
executed their own bilateral rehabilitation programmes. This situ-
ation presents further complications in ensuring overall coordina-
tion, planning and execution of programmes in a coherent man-
ner.

In conjunction with its decision of 1993 on the ECU 100
14.
million initially made available, the Council also concluded that
the Commission should urgently evaluate the resources needed.
However, no such evaluation was made. Nevertheless, additional
funds were made available for amounts which could not be rap-
idly absorbed. In particular in Angola and Mozambique many
programmes and projects were decided on and contracted for
with budgets much higher than necessary for the measures
planned, either because of problems in actually implementing
some of the actions or because of poor cost estimates. There was
a strong tendency for the implementing partners to suggest exten-
sions and, in some cases, instead of closing programmes and
projects, new activities were financed from the remaining funds.

15. For most of the countries there was already available a rela-
tive abundance of funds within the EDF to be used for rehabilita-
tion actions under SIA. Nevertheless the Commission has con-
tinuously added funds from the general budget without first
analysing whether the funds under the EDF could be utilised (see
Table III). In the national indicative programme (NIP) for Eritrea
for example, 20 % or ECU 7 million of EDF funding was allocated
to be used for rehabilitation purposes. In practice none of these
funds was used for this purpose but a further ECU 12 million was
allocated from the budget.

Addition of budget funds although NIP funds were still available

Table III

Country

Free NIP funds at the end of 1998

6th EDF

7th EDF

(in million ECU)

Allocation from budget

Ethiopia
Eritrea
Somalia
Angola
Liberia
Zaire
Rwanda
Tanzania

NIL
N/A
17,0
NIL
NIL
26,0
19,0
NIL

12,0
28,0
N/A
18,0
50,0
64,0
3,0
17,0

15,8
12,4
6,9
56,3
6,6
17,3
19,8
5,0

Conclusion: Only for Angola have more funds been added than were was already available under EDF/NIP.

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OVERALL PROGRAMMING

Eligibility

16.
In an Annex to the Commission(cid:146)s proposal (1) 10 countries,
which were by May 1993 likely to be or to become eligible for the
programme were listed (Somalia, Ethiopia, Eritrea, Mozambique,
Angola, Rwanda, Zaire, Liberia, Haiti and Sudan). The first five of
these countries were included in the first part of the programme,
while the next four were included later. Sudan has so far not yet
been subject of the programme. In addition, Madagascar was
included in 1994 after being severely affected by a tornado, while
Uganda, Burundi, Malawi, Tanzania (refugees in the Great Lakes
region), Sierra Leone and Namibia were added to the programme
successively.

17. For each of the 10 countries included in the Annex, back-
ground information was given, by which the Commission pre-
sented crucial baseline information to be considered in connec-
tion with decisions on the eligibility of the countries.

Criteria

18. The Commission has set the following conditions for a coun-
try to be eligible for assistance under SIA:

(a) a request has to be made by the authorities;

(b) there must be an ongoing state of economic crisis or serious

deterioration of basic infrastructure;

(c) hostilities or upheavals must have ended;

ment rehabilitation programmes in such situations carry with it
the risk of significant delays and even the failure of actions.

Somalia

20. For Somalia, the Addis Ababa agreement of March 1993
between the main factions should have paved the way for a politi-
cal settlement. The rehabilitation initiative was implemented
immediately and has been ongoing since 1993 although the
political settlement is still not in place after six years. The security
situation has however made operations difficult and no activities
(except emergency operations) have been possible in the Moga-
dishu area. The lack of recognised governments in some of the
clan-controlled areas makes transparency and accountability prob-
lematic and there are doubts as to the sustainability of the actions
undertaken. Commitments under SIA for Somalia amounts to
ECU 95 million as at the end of 1998.

21.
In November 1997 a series of incidents in Middle Shebell
region in Somalia led to a decision to make the region no longer
eligible for rehabilitation activities. Expatriates left the area and all
investments in infrastructures and supplies (for which ECU
440 000 had already been paid) stopped. There were temporary
suspensions of five projects in the health sector over the period
of June 1994 to March 1998. One of the projects was terminated
and the NGO withdrew permanently since the regional (cid:145)ministry(cid:146)
was not cooperating as envisaged (ECU 322 000 paid). In the
other four cases the suspension was used (cid:145)as a tactic in negotiat-
ing with Somalia and in strengthening the negotiating power of
the outside agencies(cid:146) (2).

(d) the authorities must be willing to initiate an economic and
social transition process which respects democratic principles,
human rights and takes steps towards a structural reform.

Angola

Moreover, according to the proposal, countries receiving struc-
tural adjustment support would not be eligible since being recipi-
ents of such financial support indicates that they have already
successfully completed the rehabilitation stage.

19. While all countries fulfilled the criterion of (cid:145)economic crisis(cid:146)
many of them failed to meet one or more of the other criteria. A
number of countries were still in a state of emergency. To imple-

22. Although it was hoped in 1993 that new negotiations would
create a peaceful situation, the environment for rehabilitation in
Angola has continuously been problematic since, and is still far
from satisfactory. All the programmes, the old ones as well as the
new ones under SIA (amounting to some ECU 150 million), have
suffered from severe delays and suspensions. Instead of embark-
ing on SIA, humanitarian aid should have been continued.

(1) COM (93) 204.

(2) The Commission(cid:146)s answer (13.5.1998) on the Court(cid:146)s desk review FD

3009 of 16 March 1998.

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Democratic Republic of the Congo (formerly Zaire)

23. For the Democratic Republic of the Congo, the Commission
proposal stated that the administration has been paralysed since
1990 and that the country is totally in decay. The information
note (1) ends:
(cid:145)However, before a rehabilitation operation can
begin several conditions must be satisfied and in particular there
must be a political compromise between the President and the
opposition, so that the process of democratisation can continue
and an emergency programme of economic recovery can be
launched(cid:146).

28. Despite the difficult situation in Liberia, the actions under-
taken by the Commission since 1994 have been rather successful.
This is to a great extent the result of very special organisational
measures taken at the level of the headquarters and in Liberia to
set up and implement actions. By creating one strong focal point
in Brussels and one strong focal point in Liberia, quick reactions
were possible in each of the stages of the peace process. The
Liberia experience is rightly considered by the Commission as a
pilot for rehabilitation programmes.

Ethiopia

24. Despite this the Commission decided to initiate actions for
the Congo, which involve commitments of more than ECU 200
million. The environment as confirmed by the Court during its
audit visit in October 1996 was definitely not conducive to SIA
at that time. All activities in eastern Congo had to be stopped by
the end of 1996 because of security problems. A large programme,
started in 1996, had also to be abandoned by the end of 1996,
when the entire budget of ECU 9 million for technical assistance
had been used without the preparation being completed.

29. For Ethiopia a huge reconstruction programme backed by all
possible donors had been in operation since 1991 under emer-
gency aid. The Commission concluded in its proposal that Ethio-
pia(cid:146)s requirements for rehabilitation and reconstruction were thus
already covered by that programme. Furthermore Ethiopia became
eligible for structural adjustment aid in 1992. Despite the above
factors, Ethiopia received aid under the SIA amounting to some
ECU 25 million.

25. The Commission immediately after the take-over by Presi-
dent Kabila restarted the existing programmes under circum-
stances when it was completely unclear whether criteria such as
sustainability or cost-effectiveness could be met.

Mozambique/Haiti

26. A new programme of ECU 30 million was to support forth-
coming elections in the Congo after the change of power. When
the proposal was brought to the EDF Committee in March 1997,
several Member State representatives expressed doubts and ques-
tioned the situation in respect of democratisation. At the same
time the Commission stated the need to have these funds avail-
able to be used immediately when they were needed. As war is
still going on, elections are unlikely to take place soon. The rel-
evance of the proposed programme and its urgency at the time
of the EDF Committee meeting has to be questioned. This was
later realised by the Commission and the programme was closed
in August 1999.

Rwanda/Liberia

27. For Rwanda, for which an amount of ECU 153 million has
been decided, the conditions for rehabilitation were not met, i.e.
a minimum of security was not assured and no administration
capable of realising the actions was in place.

(1) COM (93) 204.

30. Mozambique should not have qualified for SIA programmes
(over ECU 170 million) as it continued to receive structural adjust-
ment aid. Although Haiti had initially no structural adjustment
support, it started to receive it in 1995. Despite this Haiti has con-
tinued to receive SIA support ever since.

Considerations over the programming process

31. Almost immediately after the Council(cid:146)s approval of the SIA
(mid-June 1993), the Commission held a meeting with represen-
tatives of the European NGOs to inform them about the initiative
and ask them to come up with ideas and inputs on a country
basis. Following that, meetings were held individually for the five
countries chosen initially (Angola, Mozambique, Somalia, Ethio-
pia and Eritrea), during the first half of July. In these meetings a
restricted number of NGOs (chosen by the NGO Liaison Commit-
tee) took part. They had to indicate priority sectors and give a
description of the overall situation in the country as well as stat-
ing a deadline for submitting project proposals. Further, a note
regarding the process was drawn up. This note had the character
of a (cid:145)regulation(cid:146) which gave guidelines for the identification and
initial planning of programmes in the five countries. The note did
not include anything about coordination with the Member States
in spite of the importance of such coordination, as indicated in
the Council conclusions of May 1993.

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32. Once project files had been prepared by the NGOs and
received by the Commission, the NGO community had to desig-
nate one or two NGOs in each country to act as the focal point
for the EC Delegations, the governments and the NGOs. This
coordination never materialised as intended. In Mozambique, the
tasks of the so-called focal NGO were limited to collecting pro-
posals for one programme. Apart from this the NGO did not play
any further role. For the other countries reviewed by the Court
there was no indication of any coordination activities performed
by an NGO or any documents outlining the role of coordinating
NGOs.

33.
In Eritrea NGOs complained that they were not given enough
time to prepare their projects because of disbursement pressure
from the Commission. At the end of 1993 they were requested by
the Delegation to forward project proposals in less than one week.

Coordination

Donor coordination

37. Coordination of donor-funded actions is of vital importance.
The necessity of a strong donor coordination was stressed by
both the initial Commission proposal and the Council Conclu-
sions. It was mentioned that coordination has to involve the local
authorities of the country, all the donors (Member States, UN
bodies and others) as well as the implementing partners (NGOs
are mentioned specifically). Although the Commission(cid:146)s services
stated for all countries covered by the audit that coordination had
been respected systematically and carefully, the Court has found
this difficult to verify. This is due to the lack of documentation
and the non-systematic way of following-up and reporting on
most aspects of the programme (see also paragraphs 102 to 107
on monitoring).

It would have been useful if the Commission had prepared a
34.
document for the EDF Committee outlining the overall rehabilita-
tion programme for each country. Such overall programmes have
never been prepared. Instead programmes or projects have been
presented along the normal lines, i.e. in the form of individual
financing proposals, or information notes for projects costing up
to ECU 2 million.

38. For Somalia, a Somalia aid coordination body (SACB) was
established in Nairobi in 1994. For a long time it was chaired by
the Commission. However, the donor interest has declined since,
the reason being that all donors operate through implementing
agencies that possess their own specific operating methodology.

35. After the initial stage described above, for the original five
countries as well as for the new countries, programmes and
projects were identified in a more ad hoc manner. In some cases
the European Union took a share of a programme prepared by a
United Nations (UN) organisation or the World Bank. In other
cases no such coordinated actions have taken place. In one case
the country itself had presented to the donors a nation-wide pro-
gramme for its rehabilitation (Eritrea). It was initially planned that
the European Union should participate in the programme but this
idea was abandoned. In Haiti the final part of the identification of
actions took place five months after the financial agreement had
been signed.

In Mozambique, two contracts with the United Nations High
36.
Commission for Refugees (UNHCR) were signed at a time when
the SIA programme should actually have been finalised. The
actions were to a significant extent agreed and even started under
contracts between UNHCR and a number of NGOs and local
Mozambican authorities. These subcontracts were not communi-
cated to the Delegation, hence the Commission accepted actions
without any proper appraisal. The actions were all emergency
ones and as such they did not qualify for assistance under SIA.
The same problem with sub-agreements under UNHCR contracts
was also pointed at in the Court(cid:146)s special report on reconstruc-
tion in former Yugoslavia (1).

39. Even for the so-called pilot countries for EU coordination (2),
where the Commission has been given responsibility to coordi-
nate its own and the Member States(cid:146) activities, there is a lack of
documentation. In one of those countries (Mozambique), Mem-
ber States actually complained that the coordination had been far
from effective. The Court also commented earlier on the lack of
coordination with Member States, in its Special Report No 2/97
on humanitarian aid.

40. The coordination efforts were mainly aimed at information
sharing. Genuine coordination, such as joint operations and pro-
cedures, evaluations, controls and monitoring, never takes place.
Under the circumstances it was not possible to assess the impact
of the combined actions supported by the donor community in
any of the SIA countries.

41.
In some of the countries supported by SIA, the UNHCR
played a leading role during the emergency phase and also con-
tinued to play a dominant role for some time thereafter, coordi-
nating and raising funds for rehabilitation activities. Such coordi-
nation included establishing trust funds where other donors had
brought in their contribution, handing over implementation and

(1) Special Report No 5/98, paragraph 3.55 (OJ C 241, 31.7.1998).

(2) Council resolution of 3 December 1993 following which six coun-
tries were selected by the Council in May 1994 (Ivory Coast, Mozam-
bique, Ethiopia, Peru, Costa Rica and Bangladesh).

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reporting to the UNHCR. The policy of the Commission is not to
hand over financial responsibilities to anybody else, for which rea-
son the Community is never part of any trust fund facility. There
is no justification for such an absence of coordinating measures.

44. As mentioned in the Commission(cid:146)s evaluation of Angola (1),
DG VIII and ECHO are acting more as separate donors than as
complementary units within the same organisation.

Coordination within the Commission

In practice, for most of the countries and programmes there
42.
was a separation within the central services of responsibilities for
planning, implementation and monitoring depending on whether
the activities were funded from the budget or from the EDF. For
separate budget lines within the general budget (e.g. co-financing
and rehabilitation) the responsibilities were also split, reflecting
the allocation within the organisation of the responsibility for dif-
ferent budget lines. Although information was exchanged between
the various services, a stronger coordination would have been jus-
tified. Even the Delegations sometimes lacked information on cer-
tain activities funded under, for example, co-financing since the
central services had not delegated any management responsibili-
ties to them.

43.
In Haiti a technical management unit was established for
EDF projects. There were no technical assistants for the budget
line in 1995 and 1996 (commitments for these years amounted
to ECU 12,8 million). As control on the spot of these projects was
weak, the head of the unit also tried as far as possible to follow
some of these projects. In 1997, a technical unit was established,
which also covered the general budget expenditure.

45. The problem of internal coordination or lack of coherence
is described in a Commission-financed evaluation of rehabilita-
tion actions under Article 255 of the LomØ Convention (aid to
refugees) (2). It is stated in this report that: (cid:145)There is no reason for
rehabilitation to be dealt with separately by different services of
the EC. The present situation is due to the overlap of objectives of
the food security strategy, certain ECHO projects, Community
budget lines and Article 255. In part because often the partners
are the same, policy discussions about Article 255 decisions are
similar to those concerning other funding instruments.(cid:146)

46. The table below shows the financial instruments used for
SIA activities over the years since 1993 and indicates the problem
of coordination of responsibilities for the different departments/
services of the Commission.

The lack of coordination within the services of the Commission
was reported earlier in the Court(cid:146)s special report on humanitar-
ian aid in a general sense and more specifically for Angola (3). By
the end of 1998 the responsibilities within the newly created
common service for external relations (SCR) were not yet clear.

Instrument

Responsibility

National indicative programmes (EDF)

Geographic units

Article 255 (EDF)

Initially VIII/6, later VIII/G/4

Emergency aid (Article 254/B 7-2 1)

Budget line (cid:151) Rehabilitation (B 7-5 0 7 6/6 4 1 0)

ECHO

VIII/G/4

Budget line (cid:151) Southern Africa (B 7-3 2 1 0)

Initially geographic unit, later VIII/G/4

Co-financing (budget) (B 7-5 0 1 0)

Food aid (budget) B 7-2 0)

VIII/B/2

VIII/B/1

(1) COWI Report, Angola Country Case Study, July 1997.
(2) Council Resolution of 3 December 1993 following which six coun-
tries were selected by the Council in May 1994 (Ivory Coast, Mozam-
bique, Ethiopia, Peru, Costa Rica and Bangladesh).

(3) Special Report No 2/97, paragraphs 3.8 to 3.12 (OJ C 143, 12.5.1997).

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Human resources

sions and payments from the EDF and the specific budget lines for
rehabilitation. However, this list does not cover all rehabilitation
activities of SIA, but does include actions which are purely food
aid. The operational purposes of those lists remain unclear.

47. The European Parliament, in a resolution of 4 November
1993, doubted whether the Commission was able to administer
such extensive programmes in so many countries with no addi-
tional staff and with very tight deadlines. It therefore stressed the
need for extra staff and expertise to be deployed to enable the
policy to be properly coordinated and to guarantee the sustain-
ability of the measures. In reality, no extra permanent staff have
been deployed, or even requested, by the services of the Commis-
sion. The need for extra human resources for SIA has been met
by setting up technical support units (TSU) with technical assis-
tants. They have often done a good job but the expansion of the
programme and its complexity would have justified setting aside
(even if temporarily) specific resources inside the services of the
Commission in order to secure coherence and coordination of
planning, monitoring, evaluation and reporting. The lack of
human resources, especially in the field, was mentioned by the
Court earlier, e.g. in its Annual Report for 1997 (1).

51. The Parliament, in its resolution of November 1993, called
on the Commission to report back to it on implementation with
an assessment of the results for each country receiving rehabilita-
tion aid. This was not done in a systematic manner. Before the
programme was expanded the requested report should have been
presented.

52. The requested assessment of the results could not possibly
be made without information available as a result of careful moni-
toring. However monitoring activities were almost exclusively
carried out by technical assistants or by the implementing agen-
cies themselves.

48.
In the Delegation in Mozambique the situation was particu-
larly bad due to vacancies and a general lack of resources, which
made it impossible to deal with the volume of funds and projects.
Furthermore, the administration of this Delegation was generally
poor. Responsibilities were not clear and were frequently
reshuffled, in a manner detrimental to any order or continuity. It
was therefore virtually impossible to find documents and to
account properly for the actions executed.

Feedback to the budgetary authorities

49.
Information available on the way reporting was done to the
Council on the progress made has been scarce for both actions
financed by the EDF or by the budget. Annual Reports are
requested by Regulation (EC) No 2258/96 for actions financed by
the budget. Only one report was submitted, in 1997.

50. However, this report is not evaluative as stipulated in Article
9 of the Regulation. It merely describes and lists for each country
the actions undertaken the previous year and briefly mentions
proposed actions for the coming year. No mention is made of
experience gained, lessons learned or problems encountered, be
it from the few evaluations made in respect of individual projects
or from the Commission(cid:146)s own monitoring. Apart from this
report, the Commission has prepared a list summarising all deci

(1) OJ C 349, 17.11.1998, paragraphs 5.28 to 5.31.

53. The Commission should control the monitoring process and
document what has been done at Delegation level as well as keep-
ing central services informed. In particular, in the light of the
weaknesses and the often poor quality of the (cid:145)first level monitor-
ing(cid:146) performed by the implementing agents (as documented in
progress and financial reports), the Commission(cid:146)s monitoring is
essential. However, for most countries reviewed there was no
documentation available on the monitoring performed by the
Commission(cid:146)s staff and many projects had not been visited at all
by them. Unfortunately, not even checks or reviews of the moni-
toring reports prepared by them were documented. This means
that there was generally no regular feedback within the services
of the Commission on the ongoing SIA programmes. Admittedly,
in some cases such as Somalia, Angola and the Congo, reports
were often not available as the security situation made visits dif-
ficult and sometimes even impossible.

IMPLEMENTATION OF ACTIONS

Introduction

54. Following the Commission(cid:146)s communication of May 1993,
the programmes should be quick to implement and take a maxi-
mum of two years to complete. They should concentrate on
repairing basic infrastructure quickly without any new invest-
ment. In reality,
implementation within two years has been
achieved only as an exception and has often taken four years or
even more. One reason for the slow rate of implementation is that
the planning of programmes and projects was (at least initially)
not properly done (see paragraphs 55 to 63).

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Planning and budgeting

55. The majority of SIA projects had been prepared and pro-
posed by NGOs which were interested in taking part in the reha-
bilitation programmes in the different countries. The relative
abundance of funds available and the marketing of the new con-
cept resulted in hundreds of proposals right from the beginning
for the then five eligible countries.

56. The project proposals were reviewed by the Commission,
particularly by the Delegations in the countries concerned. The
Delegations discussed the NGOs(cid:146) proposed activities, their loca-
tions and the related budgets with the local authorities. However,
due to insufficient human resources, most of the Delegations and
the governments were not in a position to deal with this huge task
adequately. It also usually took a long time to recruit and install
technical assistance to deal with appraisal and monitoring of pro-
grammes.

In the meantime there was great political pressure to get pro-
57.
grammes started, so many project proposals were accepted more
or less as presented by the NGOs without sufficient critical
appraisal. The technical and financial specifications for such
projects were often not well based on the facts on the ground.
This has frequently necessitated changes in the nature of actions,
their locations, the target groups and the budgets. There were also
instances where projects were interrupted from time to time and
even completely stopped. A few projects did not start at all,
although already contracted.

58. A project in Eritrea on malaria control included a budget for
drugs amounting to ECU 125 000. After the start of the project,
it was discovered that the World Health Organisation (WHO) had
included enough drugs in their separate programme. Although
the files did not contain any request to use the ECU 125 000 for
something else, some ECU 80 000 was in fact used for other pur-
poses. Another project, also in Eritrea, aimed at the resettlement
of refugees. After the contract for ECU 1,7 million had been
signed, it was discovered that the land identified for the resettle-
ment was already occupied by others. By then expatriate staff had
already been recruited and some vehicles and other equipment
purchased. The project had to be terminated after an amount of
ECU 287 000 had been spent. There is still an outstanding claim
from the NGO to be settled. In the Congo, a social infrastructure
project included a significant element for rural actions. As it was
found subsequently that priority should be given to chemicals for
purification of the water supply in Kinshasa, no funds remained
available for rural actions.

In Angola, large sums were allocated to NGO projects which
59.
did not have clear objectives. This gave the NGOs considerable
autonomy and changes were subsequently made without substan-
tive justification by the Delegation, or any changes to the budgets.
One project was reduced from two municipalities to one because
of security problems and the number of beneficiaries was reduced
from 23 000 to 8 000 families. Although this change was reported
to the Delegation, no changes were made to the budget of ECU
810 000.

60.
In Mozambique, an amount of ECU 1,95 million was decided
on for (cid:145)reinsertion of young people in three provinces(cid:146) in August
1994. The financial agreement was signed in June 1995. The
project(cid:146)s target was to find employment for unemployed young-
sters. To date no funds have been committed. The Government no
longer finds the project relevant, but no proposals for reorienting
the project have been made. The commitment should be can-
celled.

61. Although many NGOs performed satisfactorily, a significant
number of them did not have enough resources or experience for
the sectors in which they were to operate to prepare proper project
proposals or to easily recruit the required manpower, be it expa-
triate or local expert. They were also often too much oriented
towards emergency aid with little experience in the field of devel-
opment. As a result low quality projects were undertaken based
on wrong assumptions about grass root involvement and the local
administrations(cid:146) capacities to take over the operations. Such
projects are unlikely to prove sustainable.

In other cases the planning and appraisal were of good qual-
62.
ity. These were often the less sophisticated projects, such as water
points with hand pumps which followed on as continuations or
extensions of projects which had been started/implemented before
SIA under already existing rehabilitation programmes and
co-financing. The mid-term evaluation for Haiti described the
selection of actions as (cid:145)exemplary(cid:146).

63. Due to the use of many NGOs, the existence of several donors
and the lack of proper coordination in all the countries, the sys-
tem of planning and location of projects was rather fragmented
and unintegrated. This led to parallel implementing structures,
procurement systems and reporting systems at national level. Fur-
thermore, projects were often too scattered to allow a country-
wide impact.

Involvement of beneficiaries

64. The local (grass-roots) involvement of the beneficiaries in
decisionmaking and implementation is a precondition for most
aid programmes. Such involvement takes, and should be allowed
to take time to have a chance of success and sustainability. Unfor-

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tunately the pressure to spend money and to produce quick
results, both from the donor, the Member States and the recipi-
ent country, has been so strong that these aspects have often been
overlooked or neglected. In Ethiopia and Eritrea, the governments
and local authorities have been more involved in both the imple-
mentation and the monitoring processes. Government involve-
ment has sometimes been considered too time consuming by the
Delegations.

65. The generally acknowledged role of NGOs working in devel-
oping countries is to act as a facilitator during the implementa-
tion of projects. Implementation itself should be the responsibil-
ity of the beneficiaries themselves, as much as possible, with the
additional input of local experts as required. Instead, many NGOs
assumed the implementing role themselves by extensive use of
expatriate staff. This makes successful transfer of knowledge and
sustainability of the actions less likely. It has also created tensions
with local authorities who normally are in favour of using as few
expatriates as possible. The problem illustrates the tension between
(cid:145)quick implementation(cid:146) and (cid:145)sustainability of actions(cid:146).

66.
In Haiti beneficiaries of some agricultural projects were
asked to participate in projects of which they did not know the
final aim, the expected results, management modalities and finan-
cial arrangements. Involvement of the population in decision-
making and reception/evaluation of the results has not been
established and NGOs(cid:146) project proposals are too often vague on
this subject (1).

67. Whatever the reasons, proper monitoring and understand-
ing followed up by enough support or corrective measures can
normally compensate for shortcomings and should be appreci-
ated as part of the efforts to rehabilitate the country. Almost any
local involvement should therefore be regarded as a positive fac-
tor under the condition that it is transparent and accountable.

Sustainability

stated in two evaluation reports (2) that several clinics and health
posts were closed or, when they continued in existence, they were
operating below standard.

69.
It is particularly difficult to secure sustainability in innova-
tive projects and in areas where NGOs and others have little or no
experience. There has been a trend, for instance, to create credit
schemes and revolving funds under so-called income generating
projects, such as farming, livestock, handicrafts and other manu-
facturing of which the target groups have no previous experience.
Cost-sharing schemes for drugs, school equipment and teachers(cid:146)
salaries as well as water charges to make maintenance possible are
other examples where beneficiaries are often not used to paying
and have very few resources to do so. These projects have often
more or less failed, or their successful implementation must be
doubted. Projects which always involved the beneficiaries them-
selves from the early stages of the project have a greater chance
of being successful, as was the case in a microhydrological project
in Madagascar. In this project, local enterprises were also success-
fully involved.

70. After taking over completed projects, such as schools and
health clinics, the staff will normally be paid salaries according to
the established schemes for public servants in the respective
country. NGOs and other implementing partners always pay sala-
ries to local staff which are higher than those offered by govern-
mental authorities. This makes it difficult to retain the staff after
local take-over. Either the staff manage to find a new job, e.g. with
an international agency or the private sector, or they might stay,
but become demotivated.

71.
In Angola monthly salaries were USD 1 000 for a secretary
working for a NGO and USD 300 for a driver. At the same time
a doctor working for the Ministry of Health earned USD 10 to 20.
The salaries offered under contracts financed under SIA were
completely out of line with local conditions and not sustainable
once Government took over the projects.

68. The involvement of the local authorities should include from
the very beginning of a project an agreement that they will take
over the structures and responsibility to secure operationality of
schools, clinics etc. This responsibility should be stated in all FAs
and contracts where applicable. Too often handing-over certifi-
cates had not been issued and the continued financing of infra-
structures was not clear at the time of finalising projects. In
Mozambique, for example, the Ministry of Health did not accept
the structures and responsibility for their operation since it had
not been involved in the planning. It was found that buildings did
not meet Government standards and/or that they were not located
where the ministry would have liked them to be. As a result, it is

72. Such situations can partly be explained by the lack or scar-
city of human resources. Not only did it make the recruitment of
experts by NGOs a lengthy process but as a result of competition
between NGOs high salaries had to be offered (more or less the
same as those offered to (cid:145)commercial(cid:146) TAs) and even then people
with enough experience and qualifications for the tasks were not
always available. Sometimes people who had been recruited left
the country before the contract had expired or did not extend
their contract due to difficulties in coping with the local working
conditions.

(1) Evaluation report on Ha(cid:239)ti, DRN, September 1997.

(2) Evaluation, Article 255 Mozambique, COWI, July 1997; Phase II
Country Report Mozambique, APT Consult, September 1998.

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In Haiti neither the Government nor the parents have the
73.
funds required for the maintenance of schools. Equally there is no
system which ensures the payment of charges for drinking water (1).
Under such circumstances, the sustainability of the investment
depends entirely on continuous outside funding.

Execution and results of programmes

74. The Court acknowledges achievements under the pro-
grammes in the various countries in the form of provision/
restoring of schools, health facilities, water points,
irrigation
schemes, etc. which were operational and well used by the target
groups. Examples of successful actions are also given in various
evaluation reports.

75. However, because of inadequate reporting (see paragraphs
88 to 99), insufficient information is available on the overall
results of the actions and on the extent to which the objectives
have been met. Nevertheless, it was found in a number of cases
that projects had been poorly executed and that some were not at
all cost-effective.

76. As stated in the Commission proposal and the Council con-
clusions the immediate goals for the SIA initiative were to reha-
bilitate the social sectors and to (re)activate food and income gen-
erating activities as quickly as possible while at the same time
paving the way for sustainable long-term development.

of the total budget was spent on services or works directly for the
beneficiaries.

80. Administrative costs could be included if justified, but not
on a flat-rate basis that in many cases the Commission actually
accepted. In Mozambique it was a rule rather than an exception
that a 6 % flat rate of administration cost was added to all other
budget items. Although the treatment of administrative costs was
clearly stated in the guidelines (see paragraph 31), this was com-
pletely overlooked by its Delegation.

81.
Initially it was stipulated that only existing structures should
be rehabilitated and no new investments should be made. As it
was felt that the restriction, imposed to promote a speedy imple-
mentation, was counterproductive, nevertheless such investments
were made in the form of new water installations, schools and
health facilities in most of the countries. The stipulation against
new investments was therefore not included (except for the pur-
chase of buildings) in Regulation (EC) No 2258/96.

82. The standard of equipment and constructions should not be
excessive compared to the normal standard of the country to
avoid higher construction and maintenance costs. In Mozam-
bique the government complained of excessively high construc-
tion costs for clinics and water pumps in a project evaluated by
independent consultants. They said they cost so much that they
would be difficult to maintain and replace when worn out. In
Haiti, on the other hand, for all road contracts local firms were
chosen and they performed adequately.

77. The start of many projects was severely delayed as it took a
long time to disburse the initial funds. The lengthy procedures
within the Commission services to transfer the funds to the
implementing agents forced them to delay implementation for
several months after contracts had been signed. Successive pay-
ments were also frequently delayed. In a few cases NGOs advanced
their own funds to start or continue the actions.

83.
In Somalia, support was given to new structures that would
generate revenue (e.g. import duties), the most important being
the port in Berbera. Although the Commission supported the
introduction of financial control systems, there are still doubts
about transparency and accountability. The Commission should
have been more cautious before committing itself to revenue-
generating projects under the present conditions as Somaliland,
where the port is located, has not been internationally recognised
as an autonomous State.

78. There were also long delays because the local authorities had
to approve financial reports from the NGOs and other agents,
which were often unclear and of poor quality.

Simplified procedures

79.
In Somalia, the cost of technical assistance under the first
rehabilitation programme was very high. Around ECU 9 million
of the total amount of ECU 38 million was used for technical
assistance and consultancies (studies). If transport (cost of flights:
ECU 1,1 million), administrative costs and other overheads in all
projects are added to the technical assistance, not more than half

(1) OJ C 349, 17.11.1998, paragraphs 5.28 to 5.31.

84. Simplified procedures for implementing the programmes
were to be used for contracting, similar to those used by the Com-
mission for emergency aid. As a result direct contracting was
often used although this was not enough to ensure the required
rapid execution. Instead, both implementing agencies and local
authorities frequently complained about what they considered
were excessively lengthy and bureaucratic Commission proce-
dures. This related in particular to tender and procurement pro-
cedures, for which it took a long time to obtain the approval of
Brussels.

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85. A project in Mozambique covered the rehabilitation of roads,
for an amount of ECU 30 million, which was part of a larger road
rehabilitation programme funded by several donors. At the time
of the audit visit in October 1996, almost three years had elapsed
since the signing of the Financial Agreement and most other
donor-funded roads were already finalised. At that time the con-
tractors for the project in question had just started work. Several
reasons were mentioned for the severe delay, such as poor quan-
tity surveys, insufficient knowledge of EDF procedures by both
the consultant used and the Ministerial Department responsible.
These problems led to disqualification of tenders for administra-
tive reasons. Eventually tender evaluation took place in Brussels,
which did not help to increase the speed. The project continued
to exhibit problems after it had started and, as at the end of
December 1998, five years after the project had been decided, it
had still not been finalised (only ECU 20,4 million of the con-
tracted ECU 25,7 million had been paid). In the meantime urgent
repairs to the same roads had to be made.

86.
In Angola technical assistance was contracted in March 1995
for the supervision of a health rehabilitation programme of ECU
15 million which had been decided already in 1993. No real
activities started until after June 1995. The programme has been
extremely slow in implementation (50 % of allocation committed
at the end of 1998 and 25 % disbursed after about four years).
The Commission has blamed the national authorising officer
(NAO) as one of the reasons for slow progress, i.e. a long time
taken for processing project proposals and obtaining approval of
reports/payments in respect of the NGOs. At the same time, the
Court observed that about ECU 1 million had been spent under a
separate programme in the form of technical assistance to the
NAO. It seems that the outcome of these efforts was poor and not
based on sound appraisal of the feasibility of the support.

Separate bank accounts

87. The contracts usually required that funds from the Commis-
sion had to be kept in a separate bank account and that interest
should be accounted for separately. The contracts required NGOs
to seek agreement on how the interest should be used: either on
the same project or to pay it back to the Commission. These
stipulations were mostly not respected and it is not known how
much interest has been earned as the Commission has not closely
monitored this aspect although substantial amounts may have
been earned. For example, under a ECU 12 million project in
Mozambique about 20 contracts were signed with NGOs. Inter-
est was not separately accounted for in any of the related financial
reports, which remained unnoticed by the Delegation.

Reporting

Requirements

88.
In general, the reporting requirements for implementing
agents were not specified and laid down before or at the start-up
of the initiative. That was despite the specific requirement for
reporting at all levels, mentioned in the Commission proposals
and Council conclusions of May 1993.

89. This slippage caused many problems during the process. In
the cases where technical support units (TSU) were gradually cre-
ated, procedures for reporting by the implementing partners were
established eventually. But TSUs were not set up in place in all
countries or for all SIA programmes in a specific country. In most
of those cases the Delegations generally had to invent, with or
without assistance from the central services, the format for the
reporting.

90. Reporting requirements for projects financed by the EDF,
food aid, co-financing and other budget lines was the responsibil-
ity of different units in the Commission with, as a consequence,
different formats, both as to content and frequency. This may
explain partly why there has been no overall monitoring report-
ing for SIA until today (cid:151) neither for all SIA actions nor for a
single country.

91. Lacking precise requirements, NGOs either used their own
established format, which might well have been accepted for ear-
lier emergency projects financed under EDF and/or the general
budget, or they tried to follow the format used in the proposal
process. Since there were different reporting requirements for dif-
ferent financing instruments (SIA, food aid, other NGO actions),
some NGOs had more than one format to follow. This also com-
plicated the NAO(cid:146)s task, who had to approve the reports for EDF-
financed projects before any further payments could be made.

In certain cases the Commission required that original
92.
invoices and other supporting documents should be attached to
the reports, sometimes in the original, sometimes in copies. In
other cases the supporting documents did not need to be attached.
And sometimes these requirements changed during the duration
of a contract. Different requirements have created confusion and
unnecessary administrative work, both by the implementing part-
ners and within the Commission.

Conflicting rules

93.
In Mozambique, the UNHCR and certain NGOs argued that
their own internal regulations on auditing and the keeping of
original invoices and other supporting documents prevented them
from following the requirements laid down by the Commission.
Attempts made to solve these problems were not followed through.

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94. For the UNHCR in Mozambique, the same contract format
as the one used for direct contracts with NGOs was used. The
UNHCR did not report back to the Delegation, as required by the
contract, since their own contracts with the subcontractors were
not designed accordingly and the accounting procedures used by
the UNHCR were not compatible with the contract requirements.
The reports from the UNHCR showed great discrepancies between
budgets (in total ECU 3 million) and actions agreed between the
UNHCR and the Commission and what was actually performed,
yet neither the UNHCR nor the implementing agents ever sought
Commission approval. The problem was partly due to the fact
that some NGOs had mixed up funds from the European Union
with funds from the UNHCR and other donors and/or own funds
in the same project. By mid-1998, when the final payment was
made, a number of questions had still not been clarified by them.
Under the circumstances, there is a lack of transparency in both
financial and administrative procedures related to these contracts
such as:

(a) financial and performance monitoring by both the UNHCR

and the Delegation;

(b) reporting to the Delegation and the NAO;

(c) the final approval and payment authorised by the NAO and

the Delegation.

The same problems with UNHCR as to contracting, subcontract-
ing, reporting and monitoring have been mentioned in the Court(cid:146)s
special report on reconstruction in former Yugoslavia (1).

In Angola, an action was to be finalised in March 1996. A
97.
final report was only presented by the NGO in October 1996 but
not accepted. The corrected report was not resubmitted until
March 1997, six months later. Final payment was then made in
the second half of 1997.

98. The Commission decided to finance a water supply project
(ECU 750 000) in July 1994. The first report was submitted in
December 1995 after having already been subject of a time exten-
sion. A further extension was requested and approved for six
months in April 1996. The second report was submitted in July
1996 and the final report in March 1997. The financial report was
not accepted and returned. One year later (i.e. March 1998), the
revised report had still not been submitted.

99.
In certain countries the national or local authorities were
directly involved in the implementation, either on their own or in
cooperation with NGOs. Accordingly, funds were received by or
channelled through them. It is of course equally important that
there should be transparency and accountability in these instances.
In those countries it often took a longer time and needed more
efforts by the Delegations to get the reports, if they got them at
all.

95. Approval procedures for contracts and payments also differ
since funding from both the EDF and the budget was used. This
has negatively affected the transparency for the recipient country,
since the NAO(cid:146)s involvement in those procedures is not obliga-
tory for actions funded from the budget. Sometimes, but not
always, the NAO was given all information anyway.

Audits

Timeliness of reporting

96. The reports were seldom received at the required time and
frequently reminders had to be sent to obtain them. However, in
the case of rehabilitation actions funded under food aid and
co-financing arrangements the reporting was even worse for both
financial and progress reports. The files reviewed by the Court for
these instruments for some of the countries did not contain any
such reports and frequently did not even contain any signs of
reminders having been sent out.

(1) Special Report No 5/98, paragraphs 3.55 and 5.7 (OJ C 241, 31.7.1998).

100.
In a few cases where irregularities were suspected audits
were undertaken by external auditors and the cases were handed
over to UCLAF in 1996. These were still open by the end of 1998.
One case concerned an NGO, which signed a contract with the
Commission in 1994. After the first instalment of ECU 183 000
had been paid, the (cid:145)owner(cid:146) disappeared before any activities had
started. The contract is still open in the accounts, but the Court is
not aware of any recent measures taken to recover the amount
which had been claimed and paid. Otherwise there have been
very few audits, although the regular undertaking of audits was
mentioned from the start of SIA as important and a provision to
this effect was included in Regulation (EC) No 2258/96. No over-
all record or knowledge in the Commission could be found of the
number of its own audits within the SIA programmes. Even less
is known regarding audits of NGOs and other implementing
agents. In one case the implementing NGO mentioned in a report
that it had initiated an audit itself. The Delegation in question had
not asked for the report and could not provide a copy after the
Court(cid:146)s request. It would anyhow have been in line with normal
sound financial procedures to include audits in each or most of
the programmes as a standard procedure.

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101. There were also a few instances in Eritrea and Somalia where
it had been noted by a cooperating NGO or the Delegation that
funds had not been used for the intended purposes. Although it
has to be acknowledged that a follow-up was difficult. Attempts
to clear these cases on the basis of adequate evidence should be
made.

In Eritrea, the Commission(cid:146)s Delegation had documented its
107.
regular and rather frequent monitoring activities, including visits
to most of the project sites. At the same time proper monitoring
reports were regularly received from a TA specifically recruited
for the programme. However, the monitoring reports prepared by
the Delegation were not communicated to central services.

Monitoring

EVALUATIONS

102. The main responsibility for monitoring the programmes
rests with the Commission, i.e. normally the Delegations.

103. The Delegations initially were not well prepared or equipped
to monitor SIA actions. Procedures for monitoring were gradu-
ally developed in the SIA countries only after the programmes
had started. In the absence of sufficient Commission staff, the
monitoring was performed by TAs, mostly in separate TSUs but
sometimes integrated into the Delegation. In Angola, NGOs com-
plained that they had not had visits from the Delegation in the 18
months since the activities had started.

104. The Commission has rarely provided for ex post follow-up
on projects as a standard procedure. The exception is Eritrea, for
which all contracts with NGOs contain a stipulation that the NGO
has to present to the Commission an (cid:145)operational report(cid:146) within
one or two years.

105. For Somalia, the monitoring has been the responsibility of
the technical assistants at the Somalia unit attached to the Delega-
tion in Nairobi. Their reports can hardly be considered proper
monitoring reports. No reference is made to the specific objec-
tives of the projects. Only brief mention of problems discussed or
solved during missions are made in the reports.

108. Evaluation of the impact of any development action is an
essential element in ensuring sound financial management, par-
ticularly in helping define future programmes. If the programmes
undertaken are conceptually new or inventive, as in the case of
SIA, it is even more important that evaluations start as soon as
possible and that decisions are taken to correct any shortcomings
or problems which are observed during the evaluation. This
importance was acknowledged by the Council and the Commis-
sion from the beginning.

109. The lack of measurable objectives in many of the pro-
gramme documents is a factor that makes evaluations difficult. In
the beginning, most project proposals and related financing agree-
ments did not contain a clear logical framework of objectives,
intended results and activities to achieve them. The situation
improved during the later years.

110. A number of evaluations have been prepared but several
evaluations of individual projects were made by the implement-
ing agencies themselves or by local consultants who merely quoted
from the progress reports, adding no further value. Comprehen-
sive, overall evaluations of the rehabilitation actions undertaken
by the Commission have only been prepared for Liberia and
Mozambique. According to the Commission the budget allocated
for evaluations has not been big enough to allow such evalua-
tions. The Commission should give priority to such evaluations
and should seek the funds for it.

106.
In Mozambique the Commission planned to establish a
special unit to coordinate and monitor all of the rehabilitation
operations financed by the Commission. This was mentioned in
the Commission(cid:146)s proposal to the Council and Parliament in May
1993. The unit was never established. Instead several TAs were
contracted to perform monitoring for the huge SIA programme
which amounted to some ECU 180 million as at the end of 1998.
Their monitoring was never documented at all and several projects
had never been visited at the time of the Court(cid:146)s mission in Sep-
tember 1996. The permanent staff of the Delegation were not
involved at all in the monitoring, apart from the local accounting
staff, who checked the financial reports. The Commission com-
mented that there was no need to document the monitoring since
the TAs were stationed within the Delegation itself. For Mozam-
bique, the Commission did not follow the progress of EDF-funded
projects but concentrated on those funded under the general bud-
get.

111. Evaluations or midterm reviews are sometimes, but not
always stipulated in financing agreements. But even when they
are required they are often not carried out. Furthermore, the
evaluations made did not normally cover a programme in total,
but only one or a few of the projects or subcomponents of a
programme, i.e. individual contracts and not the whole pro-
gramme as presented in the financing agreement. In these cases it
is very difficult to draw any conclusions as to whether the objec-
tives have been met since the performance indicators and the
goals are normally set for the overall programme.

112. For example in Angola, for three EDF programmes, evalu-
ations were supposed to be made by early 1998. So far, nothing
has been submitted. Two evaluations stipulated for programmes

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in Ethiopia will not take place, according to the Delegation. In
Mozambique, apart from the overall evaluation (see paragraph
110) no specific evaluation of any project of the ECU 180 million
programme has been executed.

ciaries(cid:146) powers are much more important in the EDF context than
in the general budget. Rules about contracting and other proce-
dures such as reporting vary widely and the organisational struc-
tures within the Commission are different. Under such circum-
stances a mix of financing by the budget and the EDF is not
effective (see paragraphs 10 and 11).

113. A proper evaluation must be made by an independent body
other than the implementing agent or the Commission. When
asking for evaluation reports, the Court(cid:146)s auditors, for some
projects, received reports prepared by the implementing agents
themselves. These were generally of low quality and not problem
oriented.

Identification and coordination

114. Sometimes evaluations were contracted out to local con-
sultants. Ideally, local consultants, provided they have sufficient
capabilities, should be used as much as possible since they are less
expensive and could be expected to have a better knowledge of
the local environment. In Ethiopia, a local consultancy firm was
used to evaluate a number of projects under one programme.
These evaluations, however, merely repeated conclusions drawn
by the implementing agents themselves in their final implementa-
tion reports. Consequently they did not contribute to any future
improvements of the performance of similar projects or the
implementing agent under evaluation.

CONCLUSION

Concept

115. Rehabilitation activities under the SIA concept are first and
foremost intended to be a strong link in the chain between emer-
gency actions and long term development activities. However, no
clear criteria has been established to define what should be con-
sidered (cid:145)rehabilitation aid(cid:146), as distinct from emergency aid and no
management structure appropriate for this type of aid had been
established (see paragraphs 1 to 4).

In practice a great deal of rehabilitation actions did not dis-
116.
tinguish from humanitarian aid and in many cases emergency aid
actions were continued under the name of rehabilitation pro-
grammes. Given the fact that within the Commission other ser-
vices became responsible for the rehabilitation actions, a compre-
hensive documentation on the previous actions would have been
useful. However, for none of the countries could such documen-
tation be provided (see paragraph 9).

118. Countries, which did not meet the criteria of a minimum of
stability, security and the existence of a government with a legiti-
mate power in the country were nevertheless considered eligible
by the Commission for rehabilitation aid (e.g. Angola, the Congo,
Somalia). In such situations there was no basis for rehabilitation
activities (see paragraphs 16 to 30).

119. The political pressure to start projects and disbursements
quickly reduced the effectiveness of the planning stage to such
extent that it became even counterproductive in terms of the goal
of quick implementation. The Commission should have main-
tained emergency-aid actions until the environment was more
favourable (see paragraphs 31 to 36).

120. Coordination between the Commission and other donors
was limited to exchanges of information (see paragraphs 37 to
41). Whereas this problem is, to an extent, beyond the Commis-
sion(cid:146)s control, the Commission should have created firm coordi-
nation between its own services. In practice, each service within
the Commission involved in rehabilitation action concentrated
only on the actions for which it had direct responsibility. (see
paragraphs 42 to 46).

Planning and monitoring

121. The Commission(cid:146)s initial overall planning was not transpar-
ent and not based on a thorough analysis of needs. Contracts with
the existing partners were frequently extended, without a proper
assessment of the financial situation and of the need to extend the
activities (see paragraphs 12 to 15).

117. The financing structure should be adapted to the needs of
the programme. There is no coherence between the different
sources of funding, i.e. the general budget and the EDF. Different
basic legislation and financial regulations apply and the benefi-

In particular for projects adopted at the beginning, it is not
122.
possible to verify that programmes have been based on assess-
ments of the real rehabilitation requirements. Projects were often
based on existing activities, e.g. NGOs already active in a region
in a particular sector. Under the circumstances, the result is likely
to be scattered and incoherent (see paragraphs 55 to 63).

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123. Time pressure to present project proposals virtually pre-
vented the involvement of local authorities and beneficiaries. This
led to investments of which the sustainability was at risk (see
paragraphs 56 to 73).

124. Monitoring and reporting were not adequate. In particular
no regular comprehensive reports, covering both aid channelled
through the budget and EDF, were made to the European Parlia-
ment and the Council by the Commission. In general, on the
execution of the actions there was a lack of information which
made adequate monitoring possible to a limited extent only (see
paragraphs 90 to 95). Moreover, Delegations were not adequately
staffed to monitor the activities (see paragraphs 102 to 107).

125. The lack of instructions on reporting and the lack of moni-
toring by the Commission created room for a number of NGOs
to present actions without clear objectives or clear target groups
(see paragraphs 59 to 61). The reporting by the NGOs was gener-
ally late and often of poor quality to an extent that is was extremely
difficult to find out what had been achieved at what cost (see
paragraphs 96 to 98).

Implementation and accountability

126. The rehabilitation programme was planned to be a tempo-
rary facility and the actions should have been executed rapidly. In
practice the programme has become almost permanent and the
actions took much more time than expected. It was often not pos-
sible to distinguish programmes from traditional development
ones.

127. Some actions were delayed because of difficulties to recruit
adequate local staff (see paragraph 72). The execution of actions
was slow, partly because of long disbursement procedures and

time-consuming decision-making via the Commission in Brussels
(see paragraphs 77 to 78, 84).

128. Financial reporting was poor and there was no permanent
financial monitoring. The Commission could not present a com-
prehensive view of the financial situation of the rehabilitation
actions financed through the EDF and the general budget (see
paragraphs 12 to 15).

Results

129. A number of rehabilitation actions have had results such as
construction/rehabilitation of roads, schools, health centres and
water supply. But no information is available on the overall results
of the rehabilitation activities, be it on the programme or at
national level, and often it was not possible to find out to what
extent the goals of the individual actions had been met (see para-
graphs 74 to 75).

130. For the beneficiaries, the minimum requirement for any
sustainability is the existence of an effective institutional frame-
work. Institution and capacity building should in a rehabilitation
situation have a higher priority than what has been given so far.

131. On the basis of the experiences with the rehabilitation pro-
gramme, the Commission should make an in-depth assessment of
it. Such an assessment should include all phases of the pro-
gramme, i.e. planning, execution, monitoring and evaluation, as
well as the coordination of the actions, taking account of the
positive experiences of the programme in Liberia. It would be
useful to reconsider the concept of rehabilitation as a programme
and to replace it by comprehensive individual country pro-
grammes on the basis of in-depth analyses of the specific situa-
tion of each country after a crisis situation.

This Report was adopted by the Court of Auditors in Luxembourg at its meeting of 26 and 27 January 2000.

For the Court of Auditors

Jan O. KARLSSON

President

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SUMMARY

THE COMMISSION(cid:146)S REPLIES

The Commission interprets the 1993 communication (COM(93) 204 final) as an important point in the evolv-
ing experience of policy and actions in this area, which emphasised flexibility and realism; it did not set up a
(cid:145)facility(cid:146) of a given amount, nor did it fix a list of countries to be covered (it simply gave some examples).

The disbursement rate after five years of activity may at first glance appear relatively low, but it should be
viewed in the context of the unusually difficult operating conditions in countries emerging from prolonged
and profound crises. Account should also be taken of the rate of commitments and their targeting on certain
(cid:145)at-risk(cid:146) countries, the upward trend in disbursement rates and the disbursement rates achieved for develop-
ment instruments as a whole.

Concerning (cid:145)actions were launched when the condition of relative stability was not yet met(cid:146), this is true, but
normal. It has been stated in the 1995 LRRD (linking relief, rehabilitation and development) communication,
and in evaluations by the Commission and other donors, that the continuum is not linear, it is a contiguum;
one country may have different regions in different stages of this contiguum, and the political and military
stability of these regions may change. So the Commission(cid:146)s approach has been to decide to implement a project
if there is (cid:145)relative stability(cid:146) in a region. Rehabilitation funds are there to consolidate peace, but there is no
guarantee that peace, once established, will continue; it might be war which restarts. The Commission is not
of the opinion that emergency aid should have been given, rather than rehabilitation (cid:151) particularly consider-
ing that emergency aid is a relatively expensive form of aid to deliver.

The sums allocated for budget-financed rehabilitation in the ACP countries average EUR 40 million a year,
which was obviously too little to cover all the needs of the communities affected. In line with the Council(cid:146)s
conclusions of 2 December 1993, the programming of budget resources for certain countries at the start of
the year has, since January 1995, sought to respond to needs in priority sectors, taking account of the other
sources of financing available (national indicative programmes, Article 255 of the Fourth LomØ Convention).
The adoption of Council Regulation (EC) No 2258/96 of 22 November 1996 (1) formalised an established
practice. Article 8 requires general guidelines for the operations to be carried out in the year ahead to be
submitted to the Member States at a Joint Committee meeting. The general principles governing rehabilita-
tion, the countries eligible and the priority sectors have all figured on the agenda. Due consideration has been
given to rehabilitation(cid:146)s specific function: operations must increasingly take over from humanitarian action,
taking account wherever possible of the existence of a minimal level of security. There has therefore been
regular programming, coordination and definition of the scope of budget-financed rehabilitation (2).

The implementation of budget-financed rehabilitation has been the subject of close coordination between
headquarters departments. Since October 1995, one unit(cid:146)s activities have included programming and prepar-
ing decisions on the basis of proposals from operational partners forwarded by the desk officers and Delega-
tions. The pivotal role played by the desk officers at headquarters and the Delegations in programming and
forwarding projects and programmes shows the coordination between the various sources of funding avail-
able. There is also very close coordination with ECHO (European Community Humanitarian Office).

Almost all budget-financed rehabilitation operations have been carried out by NGOs, whose projects included
a detailed budget and clear objectives. The contracts for such operations specified the arrangements for report-
ing, especially when requesting payment of further instalments or the balance of funding. Special technical
assistance teams have been employed in several countries receiving rehabilitation funding to monitor the

(1) OJ L 306, 28.11.1996, p. 1.
(2) APT Consult, Phase I, Desk Review Report (cid:151) Final (4 May 1998), page 21.

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implementation of projects and programmes on the ground and provide regular reports. The Commission
nevertheless shares the Court(cid:146)s opinion that staff shortages, especially at the Delegations, have made the moni-
toring of operations more difficult.

The Commission has set up a task force to study the results achieved since 1996 in the matter of the relation-
ship between humanitarian aid, rehabilitation and development. The aim is to work out the details of an
enhanced integrated approach to handling emergencies and post-emergency situations.

INTRODUCTION

Background

4. The developing countries(cid:146) capacity to absorb aid is recognised
to be a general problem. In countries undergoing rehabilitation it
is exacerbated by the destruction and the breakdown of struc-
tures. The operating conditions in such countries are therefore
particularly difficult: not only are the needs very great and some-
times urgent, but the solutions are harder to implement. The real-
ity experienced by the Commission(cid:146)s partners on the ground,
which is often reflected by a longer implementing period, affects
the financial indicators. That being said, compared with overall
disbursement rates for aid, the financial performance of rehabili-
tation operations is not bad. What is more, the period concerned
has seen disbursements steadily pick up speed. The implementa-
tion by NGOs of budget-financed rehabilitation activities address-
ing the priority basic needs of the communities concerned (health,
water, education) has speeded up even more. This attests to a real
and focused effort on the part of those implementing such assis-
tance.

THE FRAMEWORK

The concept

7. The Commission(cid:146)s communication of 12 May 1993 to the
European Parliament and the Council, (1), the Parliament resolu-
tion mentioned by the Court and the Council(cid:146)s conclusions of 2
December 1993 on rehabilitation aid provide a sound conceptual
framework for such assistance.

9. The task forces set up for countries and/or sectors have enabled
joint analysis of the complex and changing situations in the coun-
tries concerned, thereby ensuring closer programming and coord-
ination within a broad approach. The swapping of projects and

programmes between ECHO and the Development Directorate-
General is just one aspect of their work together.

The legal framework

10. The fact that different regulations apply to humanitarian
assistance and rehabilitation does not impede an efficient imple-
mentation of the aid provided there is close coordination. More-
over, under the new Commission, both areas have been brought
under the responsibility of a single Commissioner.

11. The Commission would like to describe in greater detail the
ongoing process which, at its initiative, saw the different Com-
munity institutions flesh out the concept of rehabilitation and
establish procedures for its application in the period May 1993 to
November 1996. This process took account of the various sources
of funding that the Commission was required to implement side
by side.

Article 257 of the Fourth LomØ Convention (1990 to 1995) pro-
vides for ACP countries to be granted rehabilitation aid from a
variety of instruments covered by the First Financial Protocol.
Such projects and programmes are governed by the principles
and rules of the European Development Fund (EDF).

Since there is also a considerable need for rehabilitation aid out-
side the ACP area, the Commission submitted a communication
setting out a coherent approach to the Council and the European
Parliament in May1993.

With the European Parliament resolution, the Council(cid:146)s conclu-
sions of December 1993 provided a framework for the implemen-
tation of the first rehabilitation operations financed under Item
B7-5 0 7 6 of the general budget of the European Communities
for 1994, supplementing the existing framework for operations
financed by the EDF.

(1) COM(93) 204 final of 12 May 1993.

In mid-1995, the Commission submitted a proposal for a Council
regulation on rehabilitation and reconstruction operations in

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developing countries (1). The European Parliament delivered its
first opinion on 15 December 1995 and a common position was
adopted on 29 January 1996. The European Parliament delivered
a second opinion on 21 May 1996 and the Regulation was finally
adopted on 22 November 1996.

Meanwhile, to foster a comprehensive approach, the Commission
submitted a communication to the Council and the European Par-
liament on linking relief,
rehabilitation and development
(LRRD) (2), which led, inter alia, to the Council(cid:146)s conclusions of 28
May 1996 and the Parliament(cid:146)s opinion of 21 February 1997. One
significant result was the setting-up of the task forces.

Against this background, it is difficult to see how anyone could
say that there was no basis for a coherent approach to rehabilita-
tion embracing both EDF and budget resources, whose comple-
mentary nature has been mentioned several times. What is, how-
ever, true since the special initiative for Africa was launched is
that rehabilitation has not been viewed as a self-contained new
instrument but as the flexible and coordinated use of a series of
existing instruments, with the development over time of a con-
sistent approach in the manner described above.

Financial resources

14. The need for very rapid action was specifically recognised in
point 7 of the Council(cid:146)s conclusions of 2 December 1993. Quite
apart from the scale of the needs, the sheer difficulty of imple-
mentation on the ground can cause delays and unforeseen
expenses, just as sudden changes in the course of events can make
it necessary to adapt operations.

15. ACP countries in the process of rehabilitation have had access
to special sources of funding. The source used depends on the
needs of the target populations, for instance, Article 255 of LomØ
IV covers refugees, displaced persons or returnees. The budgetary
authority has also made available additional funding from the
general budget, in line with the terms of the European Parlia-
ment(cid:146)s resolution of 16 November 1993 (3), which stressed the
scale of the need for rehabilitation and called for a special frame-
work invested with substantial financial resources to address such
needs.

standpoint of programming resources, the nature of the planned
operations has played a key role. Budget resources have chiefly
been channelled through NGOs and used for rapid response
operations in priority sectors for the target groups. This has
allowed any NIP funds still available to be used where possible,
especially from the political standpoint, for other types of projects
and programmes, and in particular projects and programmes
aimed at getting development back under way.

OVERALL PROGRAMMING

Criteria

19. The Commission believes that the criteria governing a coun-
try(cid:146)s eligibility for rehabilitation funding are set out in two main
documents: point 6 of the Council(cid:146)s conclusions of 2 December
1993 and Council Regulation (EC) No 2258/96 of 22 November
1996. Both cite (cid:145)a minimum level of security(cid:146) as a criterion, but
qualify it with (cid:145)all the necessary flexibility(cid:146) and (cid:145)wherever possible(cid:146).
They thereby strike a balance between the need for rapid oper-
ations to take over from humanitarian operations and the recog-
nition that the complex process of emerging from crisis, rehabili-
tation and the resumption of development moves at different
speeds in different places. Some periods or regions are stable
while others are turbulent, hence the call in the texts for flexibility
to meet the priority needs of the target communities.

Moreover, the eligibility of countries for rehabilitation and the
operations to be financed have been established in close liaison
with the Council via the Joint Committee, the EDF Committee
and the prior information process.

Lastly (cid:151) and this applies particularly to budget-financed rehabili-
tation (cid:151) implementation by NGOs in extremely difficult and
sometime dangerous conditions has served to maintain support
for devastated communities. While some projects, albeit relatively
few, have indeed been suspended or interrupted, to stand by and
do nothing would have been morally indefensible.

The resources of the national indicative programmes are subject
to different criteria and implementing procedures from budget
resources, which are administered more autonomously. From the

Somalia

(1) COM(95) 291 final of 26 June 1995.
(2) COM(96) 153 final of 30 April 1996.
(3) OJ C 329, 6.12.1993, p. 77.

20. The Addis Ababa Agreement of March 1993 between the
Somali faction leaders was followed by the Addis Ababa Declara-
tion of 1 December 1993 to which the whole international aid
community (governments, UN agencies and international non-
governmental organisations) as well as representatives from the

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different regions of Somalia subscribed. This Declaration mapped
out a strategy for reconstruction and rehabilitation activities for
Somalia, based on the existing situation, i.e. absence of a central
government, later on, this strategy became known as the peace
dividend approach. The Community has been following this
approach since mid-1994 when the first rehabilitation programme
started. The international aid community clearly feels that there
is presently no alternative to this strategy if Somalia is not to be
abandoned.

21. Community-funded activities in Middle Shebell had consid-
erably increased when the Somalia Aid Coordination Body (SACB)
declared the region eligible for rehabilitation. The degradation of
the situation in the region due to intra-clan conflicts that took
place later on was not foreseeable. Independently of the problems
that led to the stop of infrastructure projects, the investments
already made can be considered as basically useful. If in the health
sector five projects had to be suspended during the period 1994
to 1998, this happened in reaction to the changing security situ-
ation. In fact, as mentioned, only one project was prematurely
closed whereas in the other cases the suspension was lifted after
improvements had been introduced.

Angola

22. Notwithstanding the difficulties of implementing November
1994(cid:146)s Lusaka Protocol, Angola went through a period of phoney
war until 1998, during which the international community sup-
ported the country with a view to peace and national reconcilia-
tion. The Commission continued granting the country emergency
aid. At the same time the international community, at 1995(cid:146)s
Brussels Round Table, pledged its backing for the country(cid:146)s recon-
struction in support of the reconciliation process. The Commis-
sion(cid:146)s rehabilitation aid is part of this support.

Democratic Republic of the Congo (formerly Zaire)

23 to 24. The Commission cannot agree with the Court(cid:146)s obser-
vations concerning the advisability of launching rehabilitation
programmes in the Democratic Republic of the Congo. The truth
is that the Commission, in COM(93) 204, advocated a political
settlement and the relaunch of the transition process. This docu-
ment bears out the analysis that led the Community and its Mem-
ber States to suspend all but humanitarian aid in January 1992.
In its statement of 27 July 1994 the European Union took note of
the turning point represented by the inauguration of Mr Kengo
Wa Dondo(cid:146)s Government and the new assembly (High Council of
the Republic (cid:151) transitional parliament).

cess, which faithfully reflects the (cid:145)humanitarian aid (cid:151) rehabilita-
tion (cid:151) development cooperation(cid:146) sequence, has been partly inter-
rupted by the conflict that flared up in the east of the country in
late 1996 and spread in 1997. The conflict which brought Presi-
dent Laurent Kabila to power was unforeseen because it was
unforeseeable.

25. The decision taken was to complete and launch those pro-
grammes already decided. With the arrival of a new government,
the possibility of a transition could not be dismissed from the
outset, nor had there been any change in the needs of the people
or the conditions for the implementation of rehabilitation projects.
To have abandoned the projects would have been far more rep-
rehensible.

26. The election support programme (PAPE) to which the Court
refers occasioned no expenditure and the commitment was closed
in full.

The programme would have involved contributing to a census, a
prerequisite for preparing not only the elections planned by the
Kengo Government but larger-scale rehabilitation and develop-
ment programmes reflecting the priority needs of a population
whose present numbers and location can only be estimated.

When it became clear that elections were becoming a distant
prospect under the new authorities the commitment was closed
without a single euro being spent, as was the commitment in the
CFSP budget heading providing for the establishment of a Euro-
pean team to monitor and observe the preparation and conduct
of the elections. The Commission would point out that the elec-
tions were not specially planned to take place after the handover
but to assist a change of government according to the rules of
democracy: the programme was decided at the time of the Kengo
Government, which had itself budgeted about USD 150 million
for the purpose and was expecting the United Nations to contrib-
ute. The Commission programme supplemented these commit-
ments and was kept open because the new President had prom-
ised elections within two years of coming to power.

The Commission feels that complementarity between the differ-
ent sources of funding available (EDF and budget) and close coord-
ination with other donors is more necessary than ever for opera-
tions of this kind.

Rwanda/Liberia

27. The Commission takes the view that rehabilitation aid was
wholly appropriate in Rwanda(cid:146)s case.

Pending the restoration of the conditions for conventional devel-
opment cooperation, the Commission financed programmes
aimed at improving the population(cid:146)s living conditions. This pro-

While maintaining humanitarian aid, the Commission felt that
more was needed to meet the needs of a people traumatised by

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the genocide. The Commission considered it necessary to get
operations to rebuild infrastructure and relaunch economic activ-
ity under way as quickly as possible in the interests of national
reconciliation.

to finance projects in the context of the social rehabilitation pro-
gramme for Ethiopia. This amount is composed as follows: EDF:
EUR 2,7 million, Article 255: EUR 4,1 million and from B7-6 4 1
0/5 0 7 6 EUR 8,0 million.

Operations of this kind cannot be carried out with humanitarian
aid, which cannot, for example, finance major infrastructure.

The reasoning behind the necessary link between the emergency,
rehabilitation and development phases does not preclude the
coexistence of all three types of operation in a given country.

28. The success of the operations in Liberia has also been recently
confirmed by two independent evaluation reports, which came,
inter alia, to the following conclusions:

(cid:151) the objectives, results and impact of the rehabilitation activi-
ties have been highly coherent with EU goals, and improved
the complementarity of all EU and Commission initiatives (1),

(cid:151) the European Commission has proved that it is much more

operationally responsive than generally believed (2),

(cid:151) the Community has had significant influence both in the
peace process and in the early stages of recovery from the civil
war (3),

(cid:151) since this evaluation was carried out the Commission has
continued to play the key donor role in Liberia, through the
implementation of the second rehabilitation programme. This
role is widely recognised by the donor community (4).

Ethiopia

29 to 30. The Commission proposed this limit in its communi-
cation, but the Council chose not to take it on board in its conclu-
sions of 2 December 1993. Nor does the limit figure in the regula-
tion on budget-financed rehabilitation. The remark made on the
Commission support towards the SIA has to be seen in its proper
context. Already as from 1991 onwards the Commission financed
a large number of (cid:145)emergency actions(cid:146) in favour of victims of war,
drought and famine. The (cid:145)social rehabilitation project(cid:146) which
started in 1994, following the emergency assistance previously
given was part of the (cid:145)continuum(cid:146). One also has to remember that
after the coming into statehood of Eritrea, EUR 20 million of
Ethiopian EDF funds were transferred to Eritrea to finance similar
activities in regions which previously belonged to Ethiopia. Avail-
able data show that an amount of EUR 14 834 739 has been used

In the period 1994 to 1999, Haiti was a country in political and
institutional crisis. In such a situation it was just as important to
support post-embargo rehabilitation efforts as to keep a firm grip
on the economy to prevent the political and social crisis from
being compounded by an unstable and worsening economic and
financial climate. Financing adjustment programmes alongside
rehabilitation projects and programmes was part of this strategy.

Emergency, rehabilitation and development aid are not so much
successive as complementary instruments. In Haiti(cid:146)s case in par-
ticular, the development strategy necessarily included must con-
tinue to include emergency and rehabilitation operations. The
objective is to achieve consistency between the strengthening and
decentralisation of government through budget aid and rehabili-
tation schemes and measures to organise civil society.

Considerations over the programming process

33.
It can happen that the budgetary planning of the Commis-
sion which has to apply the existing regulation does not coincide
with the rhythm of project preparation by NGOs. As a rule NGOs
are made aware of deadlines well in time, but do not always respect
these. Wherever possible, a last chance is given to them to meet a
given deadline they are about to miss, but this can sometimes just
be a matter of days.

34. The Commission would stress that Regulation (EC) No
2258/96 provides for the Member States to discuss general guide-
lines for operations in the year ahead in a special joint commit-
tee. It would also point out that any rehabilitation operation over
EUR 2 million entails the submission of a detailed financing pro-
posal to the EDF Committee, which reviews the project in terms
of the rehabilitation programme.

(1) Evaluation of the implementation of the budget lines (...) B7-6 4 1 0
(cid:145)Rehabilitation in all developing countries, ACP section (cid:151) Financial
years 1994, 1995, 1996, 1997 (cid:151) Country Report Liberia(cid:146); APT Con-
sult, UK, p. 5.
Ibid., p. 6.

(2)
(3) Evaluation of EU aid, field phase; case study 5: Liberia; Investment

Development Consultancy, France; August 1998, p. 1.
Ibid.

(4)

36. UNHCR was well established in Mozambique with a large
team, good logistics and a presence in the districts. There were far
better placed than the Delegation to select and monitor sub-
projects. UNHCR ran their operation through autonomous pro-
vincial suboffices. These were allocated funds according to the
availability and the need, and contracted NGO partners accord-
ingly. Their administrative systems were far more flexible than
those of the Community, allowing for the rapid disbursement of
funds and modifications to project outputs.

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Given those comparative advantages, it was worth participating
in the funding of UNHCR(cid:146)s global programme, without any pre-
cise earmarking of the Community funds on individual projects.
Other Member States had a similar relationship with UNHCR.
This had also the advantage of freeing up the Delegation(cid:146)s man-
agement for other tasks.

long been a matter of debate, especially with regard to the audit-
ing of funds by independent bodies. During the period in ques-
tion the Commission used the budget heading for rehabilitation
and above all Article 255 of LomØ IV to help the UNHCR finance
a number of projects or programmes with specific objectives and
established budgets, sometimes taking over operations when the
UNHCR(cid:146)s involvement reached its scheduled end.

In this framework, UNHCR used the Community(cid:146)s funds as a con-
tribution to their global workplan.

From October 1995 onwards UNHCR identified projects for spe-
cific Community funding under the Article 255 programme (7
ACP 080). However the programme was only approved in March
1996, with the result that these projects were either cancelled or
other donors found.

Coordination

Donor coordination

37. The Commission has, for budget-financed rehabilitation in
particular, employed a variety of means to coordinate its activi-
ties at headquarters and in the Delegations with its partners in the
rehabilitation process, especially NGOs. The same goes for ECHO,
which has received official notification of all planned operations
since 1994, and for the Member States, which are consulted via
the Joint Committee set up by Regulation (EC) No 2258/96 on
the general guidelines and receive reports before and after all
projects. Task forces have also been set up for certain countries
and/or sectors of activity.

The Commission feels that there has been sufficient coordination
and that this has helped prevent duplication in the use of funds.

38. There are no indications of declining interest of donors in
the Somalia Aid Coordination Body (SACB), whose particular task
it is to assure a maximum of harmonisation of operating systems
and methodologies used by implementation agencies which are
themselves virtually all SACB members, together with donors and
UN agencies. On the other hand, there has been a certain decline
of donor interest in Somalia as a reaction to the lack of progress
in the re-establishment of peace and order in the country.

39 to 40. The Commission takes note of the Court(cid:146)s remarks,
but would qualify them with the introductory observation:
(cid:145)Whereas the content of such coordination is to an extent beyond
the Commission(cid:146)s control ...(cid:146).

41. The arrangements for financing the UN organisations have

Coordination within the Commission

42. Coordination at the level of the Delegations during the pro-
gramming of budget-financed rehabilitation has involved taking
account of other rehabilitation and humanitarian aid operations
planned.

There is also coordination at headquarters via the desk officers
responsible for the overall implementation of development policy.

This coordination comes into play when priority sectors are being
chosen and projects appraised.

As for coordination with ECHO, all budget-financed rehabilita-
tion projects require the Office(cid:146)s endorsement.

Since 1996, the task forces have put such coordination on a sys-
tematic footing.

43. From the outset and in agreement with the EU Delegation,
technical monitoring has been carried out by the EDF rehabilita-
tion unit and financial monitoring by headquarters and the Del-
egation. The recruitment of a special technical assistant was first
mentioned in the 1995 to 1996 Annual Report, but the recruit-
ment procedures have taken longer than expected.

44. The evaluation report in question concerns Article 255 of
the LomØ Convention in general, with Angola as a case study.
Coordination and complementarity between DG VIII and ECHO
has mainly taken the form of joint programming of funding for
NGO projects in the health sector (a field primarily supported by
ECHO). A study was carried out for this purpose towards the end
of 1996. Coordination and complementarity are also guaranteed
by the Luanda-based LRRD task force and by coordination meet-
ings at headquarters.

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45. Since 1999, an interdepartmental task force drawn from the
various External Relations DGs has sought to rationalise the bud-
get headings and simplify practices.

Human resources

48. Human resources and volume of projects and funding are
only two of the elements of the equation. Other crucial variables
are degree of experience and familiarisation with the concept and
financial
instrument, capacity and level of ownership of the
national administration, organisation of the civil society.

In the situation prevailing during the rehabilitation period in
Mozambique, the instrument and concept were new, local admin-
istration and civil society non-existent, and available resources
abundant. In this context, the Delegation has consistently acknowl-
edged that the effectiveness of the Commission(cid:146)s rehabilitation
programme was in large part compromised by the lack of human
resources with which to manage a complex and diffuse pro-
gramme.

One adviser managed this programme, with the assistance of,
variously, either one or two expatriate TAs. And given that the
concept of rehabilitation was new, few staff could draw on prior
experience, or be expected to have such a wide range of profes-
sional knowledge. In the prevailing situation, this imbalance
between the magnitude of the financial resources and the staff to
manage was a contributing factor in the programme becoming
demand-driven, with no clearly articulated strategy.

Under these circumstances, it was not easy for the Delegation to
undertake a more rigorous institutional and situational analysis
for the whole intervention and for every project and every part-
ner. As a result it took longer for (cid:145)lessons learned(cid:146) to be incorpo-
rated into the Delegation(cid:146)s strategy.

However, based on internal and external evaluations, the Delega-
tion has been able to incorporate lessons learned into decision-
making.

(cid:151) There is now a far better understanding of the capacity of
partners, and what activities are likely to take root. Using
guidelines developed in Brussels, it has been possible to fol-
low the best practices for interventions such as microfinance.

gramme, there is provision for experts in monitoring and
evaluation, poverty and gender and economic analysis.

(cid:151) The financial administration has two specialised local staff.
The Court of Auditor(cid:146)s recommendations have been institu-
tionalised.

(cid:151) The decrease in the amount of funds has allowed a more con-
sidered approach to rural development. New initiatives planned
under the eighth EDF are sectorally and geographically con-
centrated. Institutional absorptive capacity and financial analy-
sis are routinely considered.

(cid:151) The process of project selection is now systematic and trans-
parent. The Delegation has pioneered the use of the call for
proposals in order
to better programme Commission
resources.

(cid:151) The Delegations rural development strategy places an empha-
sis on synergies within the Community, Member States and
other donors(cid:146) programmes.

Feedback to the budgetary authorities

49. Since the special initiative for Africa got under way the
Council has received progress reports at least once every six
months on the overall rehabilitation effort in terms of decisions
and disbursements. It appears to be satisfied with the informa-
tion received.

50.
In line with Article 9 of Regulation (EC) No 2258/96 of 22
November 1996, the Commission drew up a report on the Regu-
lation(cid:146)s implementation in the 1997 financial year, the first fol-
lowing the Regulation(cid:146)s adoption. With regard to the ACP coun-
tries,
it contained all the information required by Article 9
concerning the implementation of the rehabilitation budget head-
ings. The format of the report complies with the requirements of
the Regulation.

51. The Commission would stress that the ongoing discussion of
rehabilitation documents (the draft Council Regulation, the com-
munication on the links between emergency aid, rehabilitation
and development (LRRD)) permitted the various Community
institutions to be kept abreast of the progress of the overall reha-
bilitation effort. Furthermore, the budgetary authority has each
year approved appropriations for the rehabilitation budget head-
ings on the basis of the report on the previous budget year(cid:146)s
activities.

(cid:151) The rural development adviser is now supported by two TAs
and a field officer based in Maputo. A TA will soon be based
in the northern province of Zambezia. This contrasts with the
single TA who was managing a portfolio of projects between
1994 to 1996. In the forthcoming rural development pro-

52 to 53. The Court has already remarked on the impact of the
lack of human resources, especially in the Delegations, on the
evaluation of operations. The arrangements for having operations
monitored by technical assistance staff as well as by the opera-
tional partners themselves, usually highly experienced NGOs in

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the case of budget-financed rehabilitation operations, have enabled
a number of individual projects to be evaluated. Two major over-
all evaluations have also been carried out by the independent con-
sultants COWI and APT Consult. Note that these evaluations were
carried out in 1996/1997 and 1997/1998 as part of the Commis-
sion(cid:146)s evaluation policy and that they are available to the public.

is generally not known how long the insecurity will last. This dif-
ficulty is not unique to Angola.

IMPLEMENTATION OF ACTIONS

Introduction

54. The Council(cid:146)s conclusions of 2 December 1993 mention
neither of the restrictions cited by the Court, namely a two-year
time limit and no new investment. Nor do they figure in the
Regulation on budget-financed rehabilitation. The acts in ques-
tion refer simply to the limited duration of operations.

These restrictions did, however, figure in the Commission com-
munication. The Commission concurs with the Court(cid:146)s finding
that the implementation of rehabilitation projects and pro-
grammes has often taken longer, sometimes much longer, than
initially planned. While not dismissing the explanation put for-
ward by the Court, it must emphasise that rehabilitation opera-
tions far more often fall behind schedule as a result of the very dif-
ficult context, circumstances and conditions in which they are
carried out, and even then they are usually completed within an
acceptable period.

Planning and budgeting

56. The difficult conditions in which rehabilitation activities are
carried out, and in particular a shortage of human resources in
the Delegations, are recognised.

57. The fact that a relatively limited number of operations have
had to be changed, interrupted or stopped cannot be attributed to
inadequate preparation in every single case. It is primarily a result
of the complex and sometimes uncertain situation reigning in the
countries emerging from serious crises that are eligible for reha-
bilitation aid.

58. The outstanding claim of the consulting firm, relating to a
cancelled project on resettlement, is currently under investigation
by the Commission.

59. The fluctuating security situation has often led to the need
to suspend actions in certain areas. At the time of suspension, it

60. During the discussions held in March 1999 with the NAO
and during the country review of Mozambique, it was decided
that this project was not a priority for Mozambique and that it
was not going to be implemented. On 28 September 1999 and
based on the lack of consensus between the Parties involved con-
cerning the redefinition and formulation of the primary objec-
tives, the Delegation requested its cancellation. A recent reaction
of the NAO to this issue (15 October 1999) was that the project
should be implemented as it is, as the Financing Agreement was
already signed and for this particular reason was not included in
the list of projects (priorities) agreed between the NAO and the
Delegation in March 1999. The Commission will propose that the
project be closed and funds decommitted.

61. The Commission took account of the NGOs(cid:146) experience, par-
ticularly in crises, with a view to ensuring the continuity of activi-
ties in priority sectors for the groups concerned. The scale of the
needs, the diversity of the situations and the size of the countries
concerned has sometimes led to the diversification and multipli-
cation of operations through a number of different partners. This
is consistent with point 5 of the Council(cid:146)s conclusions of 2
December 1993: it is to be hoped that the NGOs will play an
active role in the implementation and, where appropriate, the
drawing-up of Community rehabilitation aid programmes. How-
ever, in the interests of consistency, priority sectors and areas for
budget-financed rehabilitation have been identified in the light of
such factors as operations financed by other instruments or donors
ever since the 1995 programming exercise. This approach has
been continued and indeed stepped up as budget-financed reha-
bilitation has been implemented.

Involvement of beneficiaries

66. Projects have been chosen on the basis of the knowledge,
experience and reputation of NGOs working on the spot, often
on projects financed by the EU. Putting relations with NGOs on a
contractual basis has improved the transparency and monitoring
of activities. The difficult political situation following the embargo
and the dictatorship has to be borne in mind, as must the urgency
of the moment. While involving the beneficiaries at every level is
desirable, it is undoubtedly less important in a rehabilitation
operation aimed at restoring basic services than it is in a longer-
term development project. Moreover, some NGOs continued to
operate as they had during the embargo, with an emphasis on
urgency and meeting the most pressing needs.

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Sustainability

68. As for the Commission, firm declarations from the counter-
parts agreeing to the infrastructure investment have always been
requested, even if this can not be considered sufficient to justify
the sustainability of the action.

On the other hand, in the absence of a longer-term planning by
the Mozambican administration, there was often no choice but to
invest in rehabilitating the infrastructure network with little or no
sustainability guarantee or to abandon the population. At present,
almost no infrastructure is still abandoned.

lost time. In many cases it is the NGOs which breach their con-
tractual obligations by delaying the execution of payments (and
in particular, failing to declare interest, failing to submit reports
in good time, failing to report in sufficient detail, altering the ini-
tial budget, etc.).

78. The Commission accepts that reports from NGOs may not
have been sufficiently clear, but has taken the appropriate mea-
sures to improve the financial reporting.

79. The difficulties of recruiting TAs to serve in unstable or crisis
countries are evident and have already been explained in para-
graph 72 of the report.

69. The Commission will make sure that NGOs operating on the
ground have the technical capacities and human resources needed
to work in specific fields, avoiding subcontracting wherever pos-
sible. Note that a project(cid:146)s sustainability also requires that the rel-
evant ministries be involved from the outset so that the national
budget can cover spending when Community support ends.

Simplified procedures

70 to 72. The problems of low government salaries, and demo-
tivation of staff, are of course a common feature of operating in
developing countries. The Commission(cid:146)s general approach is two-
fold:

(i)

to seek to address human resource issues in social sector
reform programmes; and

(ii) to provide fringe benefits in ways which maximise social gains

such as financing for schools, improved housing etc.

In certain cases, the criterion of sustainability can have a

73.
lower priority than the immediate needs of the population.

Execution and results of programmes

In the cases referred to by the Court, the Commission
75 to 76.
wishes to emphasise that the continuous supply of basic services
to the affected populations in a post-crisis context was a particu-
larly difficult task to implement.

(cid:145)The projects have in many cases contributed towards the resump-
tion of minimal services in the social sector and the restoration
of infrastructure in priority areas. Project impact has significantly
contributed to peace building in Mozambique in early years and
more specifically prevented the continuation of violence in
Liberia. (1)(cid:146)

77. The Commission has pledged to clear the backlog and has
embarked on a campaign to speed up payments and make up for

It should be noted that the LomØ Convention provides the
84.
necessary simplified procedures, resulting in shortened tender
and procurement procedures, and rapid execution. As the report
explains, other reasons for delay, such as inadequate project prepa-
ration by local authorities, have played a role.

85. Project 7. ACP. MOZ.47 funded the emergency opening of
roads (EOR) in two provinces of the centre-north of Mozambique:
Zambezia and Sofala.

Preparation of the tender documents for works and supervision
in both provinces took place in 1993 and the respective tenders
were launched in the third quarter of 1994. Beside the reasons
pointed out, the mine-clearance component of the project, an
area in which there was no previous experience in relation to road
construction in Mozambique, caused additional delays.

Supervision contracts for both provinces were signed at the end
of 1995 while the two works contracts were signed in July 1996.
However, given the time elapsed since the Financing Agreement
was signed, there was a need to improve the technical standard
initially adopted, so that increased durability of project roads
could be achieved. The new technical standard led to the concept
of improved EOR, applied during project execution.

The initial date of completion of the EOR project in the province
of Sofala was 25 March 1998. Due to the changes approved by
the department of roads and the Community, to the need for
assistance in the repairs of the sections washed out following
exceptional rains, and to delays by the contractor, the project fin-
ished on 2 March 1999.

(1) APT Consult, Synthesis Report (cid:151) Final(23 September 1998), p. 13.

Overall, and despite the fact that two road sections could not
be finished within the first contract, the differences between the
road conditions now observed and those existing before the

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rehabilitation are substantial. The time needed to travel from Save
to Inchope has now been halved.

should no longer arise since the procedures for reporting and for
payment have been harmonised and simplified.

The initial date of completion of the EOR project in Zambezia
was 25 February 1998. Due to the extensions approved by the
department of roads and the Commission, the project finished on
31 December 1998. Despite initial delays, the quality of the roads
rehabilitated was good and, in fact, they were considered to be the
best of all roads under EOR projects in Mozambique.

Despite the delays in project commencement, there is no infor-
mation on repairs carried out by NGOs in any of the project
roads in the province of Sofala.

In the province of Zambezia, due to project delays and the very
critical conditions of the roads, localised emergency repairs were
carried out before commencement of the works by NGOs on any
of the project roads in the province of Sofala.

86. The Financing Agreement for the ECU 15 million post-
emergency health programme was signed in early 1994. The
project was indeed very slow to get under way (in terms of dis-
bursements). Though expenditure was way behind schedule, much
support and training was provided in the field. The project was
evaluated and reinforced in 1997/1998. Since then the main
expenditure has been committed.

Separate bank accounts

87. When a project is closed the Commission sees that NGOs
declare the interest received on advances paid by the Commission
and detail the expenses covered by such interest.

Reporting

Requirements

The Commission sees that payments are made on presentation of
intermediate and/or final reports and after obtaining the opinion
of the Delegation concerned.

Audits

100. Since July 1999, all financing agreements for EUR 100 000
or more have provided for an audit of the operation or the NGO.
Furthermore, a guarantee now has to be lodged for the payment
of advances of EUR 1 million or more. This guarantee require-
ment does not apply to internationally recognised NGOs rou-
tinely supported by other donors.

All the cases pointed out by the Court will be followed up.

101. The Commission is aware of the risks inherent in the use
of aid to organisations and entities in the context of conflict and
rehabilitation situations. It is standard practice that the Commis-
sion investigates all allegations brought to its attention, although
many of these allegations inevitably turn out to be unfounded.

Monitoring

103. For a while the scope for on-the-spot monitoring of NGO
projects was indeed limited by a shortage of human resources at
the Delegation and logistical problems.

104 to 107. As explained in the reply to paragraphs 88 to 99, the
reporting system has now been changed and this should make
projects easier to monitor. In addition, the Commission is intro-
ducing more systematic and comprehensive monitoring proce-
dures for all its programmes which will ensure a more uniform
approach and more intensive coverage.

88 to 99. The Commission is introducing (from 1 January 2000)
simplified contract procedures for grants. In the standard con-
tract, reporting requirements are clearly set out, both in relation
to technical and to the financial aspects of the contract. The report
must be laid out in such a way as to allow comparison of the
objectives, the means envisaged or employed, the results expected
and obtained, and the budget details for the operation.

In order to standardise procedures invoices remain in the hands
of the NGOs for the period laid down by law. They are examined
on the basis of sampling or in the course of official audits.

As indicated, many of the problems highlighted by the Court

EVALUATIONS

108. The Commission fully agrees with the importance of evalu-
ation. This is why independent experts have already evaluated
most of the country programmes covered by the report from
1997 onwards, as soon as the programme was sufficiently
advanced.

109. The Commission accepts that, particularly in the early
period of the programme, project preparation was not satisfac-
tory, mainly for the following reasons:

(i) current project-cycle management systems are not always
appropriate to rehabilitation actions, given the different types

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of risk which rehabilitation assistance can address (see APT
evaluation report, p. 13);

CONCLUSION

(ii) social and economic structures have been drastically changed
by instability which means that existing data and assumptions
may be unreliable.

Concept

The Commission is currently considering defining more specific
guidelines for rehabilitation projects.

110. Besides the two overall evaluations mentioned by the Court,
the Commission has in fact made independent evaluations cover-
ing all essential aspects of the programmes in other countries, and
considers the evaluation coverage of its rehabilitation actions to
be outstanding, particularly in view of the extremely difficult
operating conditions which still obtain in most of these countries.
All final evaluation reports are available to the public. For NGO
projects, because it would not be feasible or indeed cost-effective
to evaluate a large number of small projects, samples are evalu-
ated.

112.
In the case of Angola, an initial overall evaluation of the
budget headings was carried out in 1994 (along with an in-depth
study of projects in Angola). Angola was also visited in the course
of a second overall evaluation, this time in 1998, which took in
all the projects financed from the budget headings. Two evalua-
tions of EDF projects initially scheduled for 1998 were carried out
in 1999.

As to Ethiopia, evaluations of completed social rehabilitation pro-
gramme (SRP) projects by local consultants had been initiated by
the technical support unit of the SRP using its own SRP funds.
After the closure of the unit the local food security unit (LFSU)
took over the remaining projects. Due to the closure of the techni-
cal support unit, SRP funds for evaluations of SRP projects were
no longer available. However, stocktaking of achievements of
completed projects has been carried out by LFSU. (See also the
reply on paragraph 114).

115 to 117. The option of creating a single rehabilitation instru-
ment has been rejected. There is no contradiction between the dif-
ferent acts (LomØ IV and the Regulation) governing rehabilitation,
and complementarity between operations is possible. The period
covered has seen the flexible and appropriate use of the various
instruments available (EDF and the general budget in the case of
the ACP countries). The criteria for their use, notably in terms of
the concept, have gradually been developed by the Community(cid:146)s
institutions. The Council(cid:146)s conclusions of 2 December 1993 and
Regulation (EC) No 2258/96 of 22 November 1996 contain spe-
cific rules and clauses permitting the requisite flexibility. This
flexible approach is amply justified by the key principles that have
emerged from a series of discussions on rehabilitation: the pro-
cess is complex, gradual and non-linear, may give rise to grey
areas when a break with the past is needed, cannot simply be
reduced to going back to the pre-crisis situation and must there-
fore be adapted to each situation and potential developments in
that situation. In short it requires the flexible and coordinated use
of the means available.

There has been a harmonisation in practice: budget funds for
rehabilitation have chiefly been used to fund rehabilitation opera-
tions proposed and implemented by NGOs. Furthermore, under
the new Commission a single Commissioner is responsible for
both areas.

Lastly, the creation of the SCR has brought further harmonisation
of practices. The introduction of a new standard grant agreement
should result in a marked improvement. Disparities in payment
methods should also disappear.

Finally, rehabilitation actions in Mozambique have been evaluated
as follows: Article 255 (1997), budget lines (1998), overall (1999).
A specific evaluation of projects implemented by Handicap Inter-
national was published in January 1999.

Identification and coordination

114. The local consultant, to which the Court refers, has done
exactly what was expected according to the terms of reference.
With 25 to 30 projects under implementation at a given time, an
evaluation in the full sense of the term would only make sense if
a large number of projects were covered in order to draw lessons
for the future. As this was not possible yet at that time it was
decided to limit the assessment to a stocktaking of achievements,
including recommendations for future actions. Under these cir-
cumstances, the term (cid:145)evaluation(cid:146) is perhaps somewhat mislead-
ing.

118. The Commission would point out that the rules call for a
flexible approach to examining the eligibility of countries for
rehabilitation, and that the Member States should be involved in
this process. It emphasises the danger to people and the overall
stabilisation process of too hesitant an approach.

Angola has a legitimate government recognised by the interna-
tional community. The remarks in paragraph 22 should dispel
any doubt about the relevance of rehabilitation operations.

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C 113/31

119. The need for operations (cid:145)to be launched as quickly as pos-
sible without compromising the quality of assessment(cid:146) (Article 1
of Regulation (EC) No 2258/96) is a real constraint. Reconciling
these conflicting requirements can be difficult in practice. The
solution of simply continuing emergency operations would have
posed just as many problems from the standpoint of administra-
tive and financial resources and the risk of aid dependency at the
expense of stabilisation.

Having the annual budget allocation for rehabilitation imple-
mented mainly by dozens of experienced NGOs from Member
States or beneficiary countries, sometimes working in partner-
ship, is an appropriate response to the priority needs of the target
populations. Involving local people and their representatives lim-
its the risk that projects will prove unviable.

120. Various means of coordination with the Member States, the
various donors and other players have been introduced and used
at headquarters and Delegation levels. Programming and decision-
making on budget-financed rehabilitation operations involve the
Member States, various departments at Commission headquarters
and, via the Delegations, operational partners in the field. The
sequence of events is pre-programming, programming (by coun-
try and sector) in the Joint Committee with the Member States
and prior and subsequent reporting of decisions taken. The chief
instruments are the annual preparation of general guidelines, the
regular and systematic exchange of information, the constitution
of task forces for countries or sectors. Coordination with ECHO
takes the form of prior notification of all budget-financed reha-
bilitation decisions. EDF and budget resources are coordinated by
the Delegations and desk officers, who are involved in program-
ming budget spending and implementing EDF resources.

Planning and monitoring

121. The Commission believes that its programming is transpar-
ent and justified by the needs. The funds available each year for
budget-financed rehabilitation are approved by the budgetary
authority and implemented by the Commission. They are pro-
grammed for the countries eligible in accordance with Regulation
(EC) No 2258/96. They are implemented on the basis of con-
tracts, which have sometimes required riders to deal with imple-
menting problems. A rider must normally be accompanied by
statements of the grounds and the project(cid:146)s financial situation and
prospects.

122. The Commission confirms that all rehabilitation opera-
tions were programmed with the relevant partners (Member States,
specialised agencies and NGOs). Programming took place in the
field and at headquarters and involved a variety of coordination
methods to achieve the most relevant response to the needs of the
target groups.

123. Given that there is often no national or even local admin-
istration, the best way to involve the beneficiaries has been to
cooperate with operational partners and specialised agencies.

124. The Council in particular has received regularly reports on
the implementation of the rehabilitation effort. See also para-
graphs 88 to 99 on reporting within the framework of contracts.

125. Budget-financed projects have normally had quantified
objectives (e.g. number of beneficiaries), a detailed budget and a
planned implementing period. Reporting, especially on a project(cid:146)s
financial implementation, involves both discursive and financial
reports. Difficult implementing conditions have appreciably
increased the time taken to implement projects. The Commission
has introduced changes to improve reporting.

Implementation and accountability

126. According to the acts governing it, rehabilitation opera-
tions must be carried out quickly and be of limited duration.
Owing to its complexity, the rehabilitation phase may be extended,
as indeed may the implementation of projects, and that for the
very same reasons. Several countries nevertheless ceased to be eli-
gible for rehabilitation aid during the period in question. Gener-
ally speaking, the rehabilitation and development phases can be
quite clearly discerned. The transition is nevertheless gradual, and
programmes may be called for to smooth the passage from one
phase to the next.

127. The difficulties of recruiting staff, whether local or expatri-
ate, in situations of recent or nearby conflict and acute lack of
basic facilities are clear, and cannot be attributed to procedural
problems in the Commission.

On 10 November 1999, the Commission approved a manual for
its departments to simplify, harmonise and render more transpar-
ent procedures for awarding contracts across the world. The deci-
sion will eventually reduce the number of procedures used for the
purposes of different external aid programmes and the EDF from
40 to 8. From 1 January 2000, these new procedures will be
phased in for all programmes (MEDA, ALA, Phare, Tacis, Obnova,
etc.) and the EDF as the requisite training courses are carried out
and the provisions specifically applying to current contracts under
the regulations and legal acts governing the various programmes
are revised.

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These new measures will be a great step forward for European
economic operators and the contracting authorities in the partner
countries. The most obvious result will be to speed up and
improve implementation of external aid programmes and projects
while enhancing the security and transparency of contracts and
tendering procedures.

130. Though restoring the institutional fabric has a major influ-
ence on the viability of operations, it depends on a number of fac-
tors that are far beyond the scope of rehabilitation and require a
comprehensive approach. Rehabilitation activities meeting peo-
ple(cid:146)s basic needs may be part of what is a complex, repetitive and
gradual process.

In this context, model contracts will also ensure that reporting
requirements are standardised and payment procedures are faster.

128. The impact of EU-funded rehabilitation actions has been
examined by independent experts who have noted the contribu-
tion they have made to the peace-building process and the way in
which they can prevent the continuation of violence.

Results

129. Budget-financed rehabilitation has been subject to annual
programming, with due regard for the intrinsically transitional
nature of rehabilitation aid. In this context, given that the resources
fall far short of the needs, establishing priority sectors, including
the continuation of activities already under way to prevent sud-
den breaks, does not seem unreasonable.

All rehabilitation operations, the great majority of which are
financed by the EDF, are preceded by an in-depth analysis of the
needs and the most suitable means of meeting them. Operations
carried out in the field by NGOs have permitted a continuous
response to priority needs.

The many evaluations carried out provide an overview of reha-
bilitation activities. They do not suggest that the Commission(cid:146)s
activities in the field, which complement other operations, are
inconsistent.

In this context, as far as the institution-building is concerned, the
very fluid and unpredictable political and/or military situation has
a direct impact on the scope for institution and capacity building.

131. The introduction of rehabilitation aid in 1993 and 1994 dif-
fers from the implementation of rehabilitation operations in 1997
and 1998. As part of its ongoing review of the links between
humanitarian aid, rehabilitation and development, the Commis-
sion will see that account is taken of the Court(cid:146)s pertinent remarks.

The Commission has already embarked on an overall review of
rehabilitation activities aimed at drawing practical lessons from
experience on the ground and converting these lessons into clear
guidelines to harmonise the way different departments approach
such situations. The process involves several stages:

(i) On the basis of a methodological study commissioned from
a consultant, a task force set up in 1999 is studying rehabilita-
tion operations in the light of the Commission(cid:146)s 1996 com-
munication on the links between emergency aid, rehabilita-
tion and development paper;

(ii) 2000 should see the drafting of a coherent set of operational
guidelines. These guidelines will provide a framework for
analysing crises and ensure that Community aid before, dur-
ing and after a crisis is implemented efficiently and coherently
under a broad-based and long-term approach. The arrange-
ments for the use of these ground rules by the different
departments concerned will also be examined;

(iii) These ground rules must then be formalised in an appropri-

ate manner and supplement the 1996 guidelines.