Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Supporting developing countries in coping with the crisis - Aid Effectiveness after Accra : where does the EU stand and what more do we need to do? {COM(2009) 160 final} {SEC(2009) 442} {SEC(2009) 444} {SEC(2009) 445}
Date: 2009-04-08
Institutions: European Commission
Subjects: Doha Round, EU programme, aid system, developing countries, economic cooperation, economic recession, monetary crisis, third country

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 8.4.2009 
SEC(2009) 443 

COMMISSION STAFF WORKING PAPER 

accompanying the 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Supporting developing countries in coping with the crisis 

Aid Effectiveness after Accra 

Where does the EU stand and What more do we need to do? 

{COM(2009) 160 final} 
{SEC(2009) 442} 
{SEC(2009) 444} 
{SEC(2009) 445} 

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TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

2.3. 

3. 

4. 

4.1. 

4.2. 

5. 

6. 

7. 

8. 

9. 

9.1. 

10. 

11. 

12. 

Introduction .................................................................................................................. 3 

Reducing Fragmentation of Aid: Division of Labour .................................................. 6 

In-country Division of Labour ..................................................................................... 6 

Cross-country Division of Labour ............................................................................... 9 

Impediments to Division of Labour ........................................................................... 11 

Strengthening Country Ownership- Use of Country Systems ................................... 12 

Changing the Nature of Conditionality ...................................................................... 14 

Transparency and Conditionality ............................................................................... 16 

Frequency of Conditionality Reviews........................................................................ 16 

Increasing the Predictability of Aid ........................................................................... 16 

More Value for Money- Untying of Aid.................................................................... 18 

Strengthening Country Leadership and Mutual Accountability ................................ 18 

Training and Staff Incentives ..................................................................................... 19 

Managing for Development Results........................................................................... 20 

Measures to Strengthen Partner Countries' Data Gathering and Publishing Capacity
.................................................................................................................................... 20 

Capacity Development ............................................................................................... 21 

Global Initiatives and Vertical Funds ........................................................................ 22 

Conclusions ................................................................................................................ 23 

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1. 

INTRODUCTION 

Today, more than ever, there is a need for effective aid. We have an obligation to the world's 
poor  to  make  the  most  of  every  cent  spent  on  development.  That  obligation  is  particularly 
pressing  in  times  like  these,  when  multiple  crises  are  hitting  the  globe.  We  also  have  an 
obligation  to  our  own  citizens, the  taxpayers,  to  ensure  that  their  money  is  accountable  and 
used transparently. When society demands efficiency and effectiveness in all other matters of 
economy and finance, how could development cooperation remain on the sideline? 

After the Third High Level Forum on Aid Effectiveness, held in Accra, Ghana, in September 
2008, which built on the commitments made at the First and Second High Level Forums in 
Rome  (2003)  and  Paris  (2005)  respectively,  the  international  agenda  for  improving  aid 
effectiveness is in place. What is needed now is determined implementation. 

Implementation  is  a  formidable  task.  Today  the aid  effectiveness  agenda  is  wider  and  more 
challenging than ever before: following the adoption of the Accra Agenda for Action (AAA)1 
there are now, in addition to the 12 indicators agreed to in the Paris Declaration2, 48 new or 
strengthened  commitments  for  the  development  community  as  a  whole  of  which  34  for  the 
donors  to  implement.  The  EU  has  four  additional  targets  from  2005,  confirmed  in  the 
European  Consensus3  and  now  partly  reflected  in  the  AAA.  The  Accra  High  Level  Forum 
deepened  the  international  aid  effectiveness  agenda.  It  brought  together  130  countries,  40 
international  organisations,  over  80  civil  society  organisations  and  representatives  from  the 
private sector and academia. In Accra, the developing countries exerted much more influence 
in  the  process  than  in  the  previous  forums.  A  number  of  new  issues,  such  as  South-South 
cooperation, the role of civil society organisations and situations of fragility now form part of 
the agenda and must be dealt with.  

The 2008 Survey on Monitoring the Paris Declaration4 showed that progress has been made, 
but too little and too slow. Efforts need to be stepped up dramatically if we are to achieve the 
Paris targets, and the four additional EU ones, in 2010, just one year away. Responsibilities, 
however, go beyond meeting the Paris targets. Development cooperation is starting to be in its 
late middle age, in its respectable 50s. It is time to show that the world is learning from past 
experience,  from  successes  and  mistakes.  It  is  high  time  to  prove  that  the  development 
community and the EU can reform. 

This paper cannot and does not aim to cover the whole aid effectiveness agenda. Neither is the 
aim to duplicate the Paris Survey. It focuses on the four key areas to which the EU committed 
itself in the Council conclusions of May 2008 and in the EU Guidelines for Accra: division of 
labour,  use  of  country  systems,  predictability  of  aid  and  mutual  accountability  for  results, 
including less conditionality. 

1 

2 
3 

4 

http://siteresources.worldbank.org/ACCRAEXT/Resources/4700790-1217425866038/AAA-4-
SEPTEMBER-FINAL-16h00.pdf 
http://www.oecd.org/dataoecd/11/41/34428351.pdf 
Joint Statement by the Council and the representatives of the Governments of the Member States meeting 
within  the  Council,  the  European  Parliament  and  the  Commission  on  European  Union  Development 
Policy:  "The European Consensus"; Brussels 22 November 2005; OJ C 46, 24.2.2006); paragraph 32 
http://www.oecd.org/dac/effectiveness/monitoring/survey  (Survey  in  54  developing  countries  covering 
year 2007) 

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The question addressed in this paper is: how well is the EU implementing the Paris and Accra 
commitments? The responses to the Commission's recent questionnaire "From Monterrey to 
Doha-  EU  Progress  on  Financing  for  Development"5,  which  included  a  section  on  aid 
effectiveness,  shed  some  light  on  this  question  and  are  an  opportunity  to  take  stock  and  re-
engage. 

Monitoring the Paris Declaration: EU status on some of the key targets6 

Paris Indicators 

EU (Member 
States and EC) 

EC 

2010 Target 

3. Aid  flows  are  recorded 
budgets 

in  countries' 

44% 

57% 

85% 

4. Technical  assistance 
coordinated 

is  aligned  and 

53% 

43% 

5a. Donors  use  Country  Systems  for  public 
financial management 

47% 

35% 

5b. Donors use country procurement systems 

54% 

34% 

100% (EU target; Paris 
target is 50%)) 

50-80 (EU and now 
Accra global target is 
50%, targets for each 
individual partner 
country depends on 
performance) 

50-80 (EU and now 
Accra global target is 
50%, targets for each 
individual partner 
country depends on 
performance) 

Indicative EU: 118 

6a. Donors reduce stock of parallel PIUs with 
two-third 

7. Aid is more predictable 

8. Aid is untied 

9. Donors  use  coordinated  mechanisms  for 
aid  delivery 
(through  programme-based 
approaches) 

780 

(Per Member 
State: 56) 

43% 

94% 

46% 

203 

Indicative EC: 68 

53% 

N.A. 

44% 

71% 

Indicative: 100% 

66% 

10a. Donors coordinate their missions 

33% 

33% 

66% (EU target; Paris 
target is 40%) 

10b. Donors 
(country)studies and analytical work 

coordinate 

their 

62% 

72% 

66%  

5 

6 

http://ec.europa.eu/development/icenter/repository/EU-progress-on-financing-for-development-and-
MDGsQuestionnaire11-12-2008.pdf 
Aggregate  data  from  the  14  Member  States  (Austria,  Belgium,  Denmark,  Finland,  France,  Germany, 
Ireland,  Italy,  Luxemburg,  The  Netherlands,  Portugal,  Spain,  Sweden,  The  United  Kingdom)  and  the 
Commission,  that  participated  in  the  Paris  survey;  based  on  the  Survey  on  Monitoring  the  Paris 
Declaration 2008  

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Explanatory  note  on  the  table:  It  should  be  noted  that  concerning  indicator  4  and  10a  the  EU  set  itself 
more ambitious targets than the global target. The same applies to the use of country systems, but with the 
Accra Agenda for Action the EU target of 50 % has been adopted internationally. In the table the average 
performance  of  the  EU  (Member  States  and  the  European  Commission  together)  is  compared  to  the 
performance of the European Commission only. On alignment the European Commission is stronger than 
the EU average with regard to aid predictability, while the EU on average shows stronger performance on 
the use of country systems, including alignment of technical assistance and the relatively restricted use of 
parallel Project Implementation Units. On harmonisation the EU average and the European Commission 
are at equal with respect to use of programme based approaches and coordination of in-country missions, 
while the European Commission is more advanced in coordinating studies and analytical work. 

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2. 

REDUCING FRAGMENTATION OF AID: DIVISION OF LABOUR 

The  EU  Guidelines  for  the  Third  High  Level  Forum  on  Aid  Effectiveness  state  that  donors 
should apply division of labour by "reducing the number of sectors where they are active" and 
by  "reviewing  their  own  aid  procedures  which  hinder  in-country  division  of  labour 
processes"7. In the AAA the development community agreed to a set of measures to reduce 
the  costly  fragmentation  of  aid.  The  EU  has  promoted  division  of  labour  especially  by 
adopting  the  EU  Code  of  Conduct  on  Complementarity  and  Division  of  labour8.  The  Fast 
Track Initiative (FTI, see information box), co-led by Germany and the Commission, was set 
up  to  speed  up  division  of  labour  by  facilitating  the  process  at  the  country  level.  The  FTI 
operates  in  tandem  with  the  Commission's  initiative  on  delegated  cooperation  (see 
information  box).  An  EU  Toolkit  has  also  been  developed  to  support  the  process  on  the 
ground. 

"Ownership of aid and division of labour", Bamako, Mali 20 November 2008 

At the initiative of France, a high-level meeting was organised between donors and the government of 
Mali to discuss how to concretely promote aid effectiveness and division of labour. The government took 
leadership of the event and was represented through several ministries. The government emphasised the 
need for the donors to align themselves to the country's budgetary processes and policies and also to the 
need for donors to have a harmonised approach. The donors agreed to coordinate their approaches within 
a joint assistance strategy (the "Stratégie Commune d'Assistance Pays- SCAP") and assured that division 
of labour will not lead to less funding. 

2.1. 

In-country division of labour 

The  responses  to  the  Monterrey  survey  show  that  EU  donors  are  taking  division  of  labour 
seriously. When it comes to sector concentration, at least five EU donors have translated the 
commitment  of  the  EU  Code  of  Conduct  to  reduce  the  sectors  of  involvement  into  their 
bilateral development policy documents. Almost all use the concept of comparative advantage 
as  a  guiding  criteria,  though  often  linked  to  historical  presence  on  the  ground  and  not 
necessarily to an analysis of current strengths and weaknesses as a donor. One Member State 
indicated  that  sector  concentration  is  difficult  precisely  because  of  historical  ties  and 
expectations for continued multi-sectoral engagement. 

Almost all Member States (20) are interested in engaging in joint donor responses and looking 
for  more  complementarity  and  division  of  labour,  whether  in  the  framework  of  their 
multiannual  programming  by  withdrawing  from  or  entering  into  a  sector  or  entering  into 
delegated  cooperation  arrangements.  For  two  this is  already  standard  policy.  The  interest  in 
joint responses concentrates naturally on existing priority countries. 

Five Member States however are not yet ready for division of labour. The reasons given are 
capacity constraints or prohibitive current policies and/or legislation.  

Most  Member  States  report  that  they  already  concentrate  their  aid  in  three  sectors  or  less, 
although six indicated concentration on more than three sectors in most of the countries they 

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8 

Third High Level Forum on Aid Effectiveness (HLF-III)-Accra, Ghana, 2-4 September 2008. Guidelines 
for the participation of the European Union, 11 July 2008 
Council  Conclusions  on  the  EU  Code  of  Conduct  on  Complementarity  and  Division  of  labour  in 
Development Policy, 15 May 2007 (9558/07);  
http://register.consilium.europa.eu/pdf/en/07/st09/st09558.en07.pdf 

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were involved in. Smaller donors have a natural tendency to focus on fewer sectors than those 
with high aid volumes.  

According  to  the  answers  to  the  questionnaire  there  are  more  than  three  times  as  many 
developing countries where EU-donors practise intensive sector concentration than there are 
with a wide range of sectors. A quick comparison with the EU Donor Atlas 20089 however 
suggests that there may be a positive bias in the questionnaire findings perhaps owing to lack 
of  clarity  on  sector  definition  (OECD/DAC  definition,  the  donors  own  definition  or  partner 
countries' definitions). 

For  the  Commission,  the  Guidelines  for  Country  Programming  call  for  more  concentration, 
division  of  labour  and  complementarity10.  Following  the  sector  definitions  laid  down  in  the 
European  Consensus,  the  current  average  for  country  programmes  stands  at  2.9  sectors  in 
Latin America, 3.3 in Asia, 5.6. in ACP and 6.2 in the Neighbourhood countries. Generally 
speaking,  while  activities  in  Latin  America  and  Asia  fulfil  the  concentration  requirement, 
assistance in ACP countries is less concentrated, in particular in post conflict/fragile situations 
in  order  to  respond  to  the  needs  in  the  context  of  "Linking  Relief  Rehabilitation  and 
Development".  In  the  case  of  the  pre-accession  candidates  and  potential  candidates  and  the 
countries  covered  by  the  European  Neighbourhood  Policy,  assistance  is  often  driven  by 
acquis-related  rather  than  development  considerations.  The  ensuing  broader  political 
framework may call for a more multi-sectoral approach with less sector concentration. 

As  regards  delegated  cooperation,  one  modality  for  division  of  labour,  the  majority  of 
Member  States  (18)  are  managing  or  preparing  to  manage  funds  from  each  other  or  the 
Commission, or vice versa. Findings on the Fast Track Initiative (see also information  box) 
indicated  that  several  donors  still  had  impediments  in  their  rules  and  procedures  to  use  this 
modality.  Seven  Member  States  were  not  involved  in  these  exercises,  but  two  were  in  the 
process of changing their legislation in order to make delegated cooperation possible. 

The Commission's initiative on delegated cooperation 

In  May 2008,  the  Commission  identified  a  number  of  countries  and  sectors  with potential  for delegated 
cooperation. These concerned country programs under the 10th EDF 2008-2013 and the Budget 2007-2013. 
This initiative acts in tandem with other donor processes at the country level for fast tracking division of 
labour. The combined efforts have so far led to a total of around 51 proposals11: (i) 37 for delegation by 
the  Commission  to  a  Member  State  in  a  sector,  for  a  value  of  around  €162  million,  (ii)  14  concrete 
proposals for delegation from a Member State to the Commission for a total value of around €90 million . 

For example: in Bangladesh the Commission is planning to delegate €2.3 million to Germany for a project 
on  labour  law.  In  Sierra  Leone  the  Commission  is  preparing  to  delegate  €6  million  to  the  UK  for  civil 
society capacity building. In Haiti, France is planning to delegate to the Commission the implementation 
of a road project. 

The  current  financial  rules  and  regulations  covering  delegated  cooperation  make  delegation 
possible  from  a  Member  State  to  the  Commission  and  vice  versa12.  Delegation  from  the 
Commission to a Member State requires the Member State financial systems to be audited by 
the Commission to test their capability to manage EC/EDF funds. Six Member States or their 

9 
10 

11 
12 

http://development.donoratlas.eu/ 
Communication  from  the  Commission  to  the  Council  and  the  European  Parliament  -  Increasing  the 
impact  of  EU  aid  :  a  common  framework  for  drafting  country  strategy  papers  and  joint  multiannual 
programming (COM (2006) 88 of 2.3.2006)  
As per 24th March 2009 
Council Regulation (EC) 617/2007 of 14.05.07 on the implementation of the 10th European Fund under 
the ACP-EC Partnership Agreement (OJ L 152, 13.6. 2007) 

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agencies  have  gone  through  this  audit  and  six  more  audits  have  been  or  are  about  to  be 
launched13. One Member State will request the audit as soon as legal obstacles are removed. 

As part of the joint programming process, most Member States (22) plan to participate in joint 
reviews  (annual  and  mid  term  reviews  of  Country  Strategy  Papers)  in  their  priority  partner 
countries. One Member State regarded this as possible and two do not yet participate in joint 
programming. Capacity constraints limit the scope for some EU donors to join on a regular 
basis. Some Member States showed an interest in building on existing joint approaches, such 
as the one in South Africa. 

There is a large interest, as shown above, in the second step of the joint programming process 
–joint  donor  response,  looking  at  opportunities  for  more  complementarity  and  division  of 
labour. It is important to keep in mind that designing and agreeing on the modalities is not an 
end  in  itself.  The  focus  should  remain  on  the  overall  goal  of  increased  aid  effectiveness, 
which calls for simplifying and rationalising the way we work. 

As  part  of  the  Mid  Term  Review  of  country  and  thematical  programmes,  which  started  in 
2009 with the review of the DCI and ENPI and will continue into 2010 with that of the EDF, 
the  Commission  delegations  are  encouraged  to  deepen  the  joint  programming  progress  in 
order  to  achieve  further  division  of  labour  through  full  concentration  and/or  delegated 
cooperation. This opportunity for closer cooperation with the Member States and other donors 
must not be missed. 

13 

Finalised audits: AFD, GTZ, SONA (Netherlands Antilles), BTC-CTB, ADA, KfW 

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Fast-track initiative on Division of Labour: progress and obstacles 

The Fast Track Initiative seeks to speed up division of labour, with the Commission or a Member State 
playing a facilitating role on the ground in a number of selected countries. On the basis of a brief 
questionnaire sent out in November 2008 fifteen facilitators provided responses that show that 

Some progress has been made on: 

- Donor mapping: carried out in 11 of 15 countries 

- Lead donor arrangements: established in 9 countries covering most sectors 

- Assessments of comparative advantage: carried out in 6 countries 

But there are also some obstacles: 

- in many cases, the rather limited leading or active role of the partner country 

- Reluctance of donors to limit their involvement in certain sectors 

- Unclear definitions of "lead", "active" and "silent" donors 

- Lack of information of the overall picture of aid flows per (sub)sector (who does what and where) 

- Legal and administrative barriers on the donor side 

2.2. 

Cross-country division of labour 

The  EU  Guidelines  for  Accra  sought  to  make  operational  commitments  on  cross-country 
complementarity,  and  as  a  result  of  a  determined  effort  by  the  EU,  the  Third  High  Level 
Forum  decided  to  launch  an  international  dialogue  on  division  of  labour  and  cross  country 
approaches. 

According to the OECD-DAC study on aid fragmentation,14 which looked at the situation in 
153 developing countries, 63 partner countries (41 % of the total) are supported by more than 
20 donors. A further 49 partner countries (33 %) are supported by 11-20 donors. On average 
each partner country has 17 donors with a country program. 

The  responses  to  the  Monterrey  questionnaire  show  that  the  number  of  partner  countries  to 
which a Member State directs government-to-government ODA varies greatly. Four Member 
States provide no government-to-government ODA15, while five Member States provide it to 
70 countries or more16, with the highest figure being 132. Because of its mandate the EC is by 
design present in most (144) developing countries. 

The number of priority countries varied between 2 and 57 per Member State, most often there 
were 8-12 priority countries. The number usually correlates closely with ODA-levels, but on 
the whole low-level ODA-donors also have many priority partner countries. 

14 

15 
16 

www.oecd.org/dac/scalingup;  The  scope  of  donors  in  this  study  encompasses  34 donors,  23 bilateral 
OECD-DAC donors (including 15 Member States), the EC and 10 multilateral donors 
CY, MT, PL, SK 
DE, FI, FR, PT, SE 

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The  most  common  priority  partner  countries  for  Member  States  are  Mozambique,  Vietnam 
(12 Member States named them as priority countries), followed by the Palestinian territories, 
Moldova,  Ethiopia,  Afghanistan  and  Tanzania  (10)  and  Uganda,  Mali,  Zambia,  Yemen  and 
Ukraine,  Angola  Georgia  and  DRC  (7-9).  Nineteen  developing  countries  are  regarded  as 
priority countries by two, 23 by one and 39 countries were prioritised by 3-6 Member States. 
The choice of priority country normally stems from donor government policy, in at least one 
case the priority countries are stipulated by law and in another the parliament establishes the 
criteria. 

Estimation of the share of ODA that goes to priority countries can help to measure the success 
of  concentration,  though  obviously  the  percentage  can  be  high  if  the  number  of  priority 
countries is also high. The responses to the Monterrey questionnaire showed that for Ireland 
and Belgium nearly all their bilateral aid commitments is allocated to their priority countries, 
while six more Member States estimate the share to be around 80 % or more17. Altogether 18 
Member States estimate that more than half of their ODA goes to priority countries, while in 
two cases the percentage was around 45. For many Member States, particularly with small aid 
volumes, the share of bilateral aid was negligible when compared to other means of funding. 
Conscious  efforts  have  been  made  to  concentrate  a  larger  share  of  ODA  to  priority  partner 
countries (Spain has a target of 85%). 

According to the OECD/DAC study, in 2005-2006 38 partner countries had 25 or more DAC 
and multilateral donors. In 24 of these countries 15 or more donors provided less than 10 % of 
that country's total aid. This shows that there clearly is plenty of room for donors to further 
concentrate  their  aid.  Donors  with  higher  volumes  of  ODA  tend  to  spread  it  over  a  higher 
number of partner countries, while donors with smaller volumes seem to add to fragmentation 
disproportionately to their size. While fully respecting the principles of ownership and partner 
country leadership, the EU should exert its influence to reduce aid fragmentation by stepping 
up division of labour. 

Six  Member  States  have  made  an  overall  assessment  of  their  comparative  advantage  as  a 
donor  and  13  have  made  such  assessments  at  country  level,  in  some  cases  linked  to  Joint 
Assistance Strategy exercises. Two Member States will soon make an overall assessment and 
one will update its assessment when it renews its overall development strategy. At least two 
Member  States  regularly  update  country-level  self-assessments.  Donor  self-assessments 
clearly need to be discussed during the dialogue on cross-country division of labour under the 
aegis of the OECD/DAC Working Party on Aid Effectiveness. 

Several EU donors have been working to reduce their number of priority countries: Belgium 
reduced the number of priority countries in 2003 from 25 to 18, the Czech Republic in 2005 
from 40-50 to 8, Germany in 2001 from approximately 118 to 70 and again in 2007 from 70 
to  57,  and  Sweden  decided  in  2007  to  limit  the  number  of  priority  countries  to  33. 
Luxembourg  has  withdrawn  from  two  and  is  planning  to  withdraw  from  a  further  six 
countries  and  The  Netherlands  will  be  phasing  out  from  seven  countries.  At  least  one  more 
Member State is considering further concentration. 

These voluntary and independent processes must include tough prioritisation and courageous 
political  decisions.  Still,  they  are  taking  place  without  an  EU-dialogue.  There  is  a  need  to 
initiate such a dialogue, as called for in the Council Conclusions on the Code of Conduct, in 

17 

EE, LV, LT, NL, PL, UK 

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order to work towards a common EU position for the upcoming discussions on international 
division of labour. 

2.3. 

Impediments to Division of Labour 

In  the  answers  to  the  questionnaire  the  EU  donors  reported  several  impediments  to 
coordinated  programmes  and  multi-donor  arrangements.  Most 
issues  centred  on 
"bureaucracy" and different donor priorities, procedures and programming calendars, as well 
as  limited  delegation  of  powers  to  country-level.  The  report  on  the  Fast  Track  Initiative 
revealed reluctance by donors for sector concentration: headquarters sometimes pushed field 
offices to remain or get engaged in "politically attractive" sectors. On a more  positive note, 
two  Member  States  reported  no  major  impediments  and  three  regard  joint  work  as  standard 
practice. 

Several  responses  to  the  questionnaire  indicated  that  coordination  was  seen  as  time-
consuming and not at all cost-effective for small-scale interventions. This seems to reveal a 
"donor fatigue": the impression that work on division of labour and complementarity creates 
an  additional  burden  whilst  the  dividends  for  partner  countries  and  for  donors  that  should 
logically follow from division of labour are not yet apparent. The multitude of different donor 
coordinating mechanisms at various levels in partner countries, particularly in "donor darling 
countries" show that rationalisation is needed. 

One challenge to division of labour is the lack of overview of what different donors exactly 
are doing in a given country or region. The EU Donor Atlas, launched in 2004, was designed 
and has been further developed to address this issue. Another promising initiative is the EC 
web-based  TR-AID  (Transparent  Aid)  system  which,  with  apt  data  included  from  different 
donors' systems, can help to show which donors are active in which countries, and for which 
sectors. 

On  the  other  hand  some  EU-donors,  particularly  those  with  smaller  aid  volumes,  are 
concerned  about  the  lack  of  visibility  when  entering  into  delegated  cooperation.  This  is 
especially valid when new aid programmes or agencies are being set up and there is a need to 
boost domestic support for increased ODA. 

Division of labour is particularly important in the context of scaling up of aid. Delivering and 
managing aid has to become less labour intensive. Focus needs to be put on where it belongs: 
on  achieving  concrete  development  results.  The  additional  work  load  caused  by  the 
preparation process of division of  labour is only temporary and should start to pay off very 
quickly by a reduced workload for partner countries and donors alike once division of labour 
is  in  place.  Some  specific  arrangements,  such  as  joint  cooperation  including  a  "traditional" 
donor and a donor with possibly less experience can be used to overcome some of the issues 
concerning volume, visibility and capacity. 

A  more  serious  challenge  to  the  division  of  labour  agenda  is  probably  the  perceived 
hesitations of partner countries. In the responses to the questionnaire partner country attitudes 
were  described  sometimes  with  terms  such  as  "weak  ownership",  "suspicion"  and 
"reluctance". Partner countries may be apprehensive for a number of reasons: other priorities, 
such as alignment, fear of donors "ganging up" and thus imposition of donor views leading to 
reduction of flexibility and increased conditionality, perceived advantages or disadvantages at 
central and decentralised government levels, such as loss of interface with individual donors, 
the capacity required to lead a division of labour process, and the risk of loss of aid for the 
country or a particular sector. These perceptions are confirmed by observations on the ground, 
such as in the context of the Fast Track Initiative. 

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The  EU  Code  of  Conduct  is  clear  on  this  issue:  the  first  principle  states  that  primary 
leadership and ownership of in-country division of labour should first and foremost lie with 
the partner country government. There is a need to dispel the fear that division of labour will 
be imposed by donors, regardless of partner country opinion. Guarantees need to be given that 
partner countries' areas of development priority will not become underfunded. If partners are 
concerned  about  "losing"  donors,  delegated  cooperation  and  silent  partnerships  can  be 
considered instead of complete withdrawal. 

3. 

STRENGTHENING COUNTRY OWNERSHIP- USE OF COUNTRY SYSTEMS 

The 2008 Paris Declaration Monitoring Report revealed that, although clear progress had been 
made in the quality of developing countries' public financial management systems, there was 
no corresponding increase in donors' use of those systems. In the EU Guidelines for Accra it 
was recognised that "the use of country systems will lead to strengthening those systems and 
this  progress  should  be  supported  by  donors.  The  choice  of  aid  modalities  should  reduce 
transaction costs and strengthen country ownership." 

Despite the 2005 Paris and EU commitments on the use of country systems and programme-
based approaches, which were renewed and strengthened in Accra, project aid and technical 
assistance remain by far the most widely used method by EU donors to deliver aid. Six EU-
donors deliver practically all their bilateral ODA through project aid and technical assistance. 
Altogether  the  share  of  project  aid  and  technical  assistance  varies  between  16  and  100%  of 
bilateral aid. 

Six EU donors18 provide a quarter or more of their ODA support through programme-based 
approaches. For three this consists mainly of budget-support. Ireland delivered (in 2007) 42% 
of  its  aid  through  programme-based  approaches,  excluding  budget  support,  for  the  UK  the 
combined percentage for budget support and other programme-based approaches was 38. The 
Netherlands provided 25% of its bilateral aid through budget support (general budget support 
15% and sectoral budget support 10%). As far as the EC is concerned, for non-ACP-countries 
28% of total budget funds will be provided as budget support, whilst for the ACP-countries 
46%  indicative  amounts  of  the  National  Indicative  Programmes  of  the  10th  EDF  are 
programmed as budget support (30% general budget support and 16 % sector budget support). 

For  a  number  of  reasons  several  EU-donors  were  unable  to  give  a  breakdown  of  budget 
support  by  general  and  sector  budget  support.  For  those  that  could,  five  donors19  reported 
using  more  general  budget  support  and  five20  more  sector  budget  support.  The  reasons  for 
preferring the sector approach are its professed suitability for smaller donors and comparative 
advantage resulting from sector-expertise. 

The take up of country public financial or procurement systems was obviously low for donors 
that did not use programme based approaches. The percentages reported in the questionnaire 
were quoted from the OECD/DAC Paris Declaration monitoring survey and many EU-donors 
were unable to answer due to lack of data.  

18 
19 
20 

EC, DE, IE, LU, NL,UK 
DE, DK, IT, NL, PT 
AT, BE, ES, FI, IE 

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For  the  eleven  EU-donors  that  answered,  the  take  up  of  PFM  systems  for  the  government 
sector varied between 0 and 79%, with eight EU-donors21 exceeding the 50% EU target and 
AAA benchmark. The use of country procurement systems varied between 0 and 88%, with 
seven EU-donors22 above the Paris Declaration 61% target. 

The reasons given why some Member States' use of country systems remains under the 50 % 
target  corresponded  to  the  reasons  why  programme-based  approaches  were  not  used.  For 
certain  donors  it  is  a  question  of  legislation:  the  arrangements  making  programme-based 
approaches are simply  not  in place. Two countries were reviewing their legislation to make 
new methods of delivering aid possible. 

For most EU donors, the situation at country level, the local context, quite naturally guides the 
choice  of  modalities  being  used.  General  budget  support  is  still  seen  to  have  the  highest 
political risk as a result of potentially poor public financial management, high fiduciary risks 
and  insufficient  leadership.  Few  responses  looked  at  the  risks  under  a  fragmented  project 
approach. 

Technical cooperation because of its very nature is for many donors difficult to reconcile with 
the use of country systems. These issues are however starting to be addressed (see Chapter 10 
on  Capacity  Development).  For  some  donors,  the  preference  of  projects  is  a  question  of 
capacity.  When  a  large  share  of  ODA  is  channelled  through  NGOs  and  multilateral 
organisations the ratio of the use of country systems falls. 

Similarly, in situations of fragility the use of country systems is seen as problematic. At the 
same  time  the  international  community  agrees  that  the  building  of  resilient  and  legitimate 
states  should  be  the  central  objective  of  external  intervention.  The  newly  founded  OECD 
International  Network  on  Conflict  and  Fragility  (INCAF)  is  working  on  this  issue.  The 
European  Commission  is  currently,  following  up  on  the  2007  Commission  Communication 
and Council Conclusion "Towards an EU response to fragile situations", working towards a 
common approach on the use of budget support in situations of fragility with the World Bank, 
the IMF, and the African Development Bank. Efforts to come to a more strategic and coherent 
EU  response  is  also  ongoing  in  six  pilot  countries.  Both  exercises  will,  together  with  other 
elements, feed into the EU Implementation Plan for fragile situations which the Commission 
will  present  in  the  second  half  of  2009  The  Commission  services  also  foresee  this  year  the 
development, in cooperation with the Council Secretariat, of an EU Action Plan on the Nexus 
between  Security  and  Development.  The  aim  of  the  plan  will  be  to  ensure  a  coherent  and 
coordinated  response  when  contributing  to  the  global  efforts  supporting  sustainable 
development and peace. 

More strikingly, however, in certain cases the partner countries themselves were reported to 
favour  the  use  of  donors'  systems  as  national  systems  were  perceived  as  slow  and/or 
inefficient. 

Plans to promote programme-based approaches and use of country systems were put in place 
by five Member States. The Commission is applying a strategy on the use of country systems, 
with  the  aim  of  reaching  the  Paris  Declaration,  Accra  and  EU  commitments.  EU  donors' 
internal  guidance  concentrated  on  training  and  programming  guidelines.  One  Member  State 
has integrated the Paris targets in its own performance frameworks. 

21 
22 

DK, ES, FI, FR, IE, NL, SE, UK 
DE , DK, FI, FR, IE, NL, UK 

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An important issue concerning aid effectiveness in general and the use of country systems in 
particular is the role of the "control institutions", which some respondents regarded as highly 
conservative  when  it  comes  to  applying  aid  effectiveness  principles,  postulating  that  these 
principles will weaken the existing control mechanisms. 

It  is  important  to  have  the  institutions  that  decide,  control  and  audit  the  use  of  finances  on 
board in the aid effectiveness debate, both in donor and partner countries.  The Commission 
and  the  Member  States  need  to  remain  actively  engaged  with  national  parliaments  and  the 
European  Parliament.  At  least  one  Member  State  holds  frequent  discussions  on  aid 
effectiveness  with  its  control  institutions.  The  Commission  does  the  same,  also  at  a  very 
practical  level:  for  example  the  European  Court  of  Auditors  increasingly  participates  in 
Commission-organised training on aid effectiveness. 

It is clear that the use of country systems remains a challenge for EU donors. However, some 
have  been  able  to  reconcile  risk  management  and  control  to  a  much  larger  extent  with  the 
commitments on aid effectiveness. This is yet another clear example where EU donors should 
learn from each others' practices. 

4. 

CHANGING THE NATURE OF CONDITIONALITY 

An  important  international  discussion  on  how  donors  should  apply  conditionality  has  been 
going on for the past decade, especially on conditions linked to macroeconomic governance. 
Significant  steps  to  address  the  proliferation  of  conditions  have  been  taken  by  individual 
institutions, but much remains to be done, as indicated by the EU Guidelines for Accra: "The 
EU  is  convinced  that  conditionality  must  be  reformed  in  order  to  give  partner  countries  the 
necessary  sovereignty  on  their  development  strategies.  Donors  and  partner  countries  should 
work together in a partnership. Imposed conditions should be avoided." 

In  the  answers  to  the  questionnaire  practically  no  EU  donor  reported  having  issues  with 
conditionality,  as  only  two  Member  States  state  that  they  apply  conditions  that  are  not 
mutually  agreed  with  partner  countries  and  based  on  national  development  strategies.  The 
responses  to  the  questionnaire  also  suggest  that  Member  States  are  relatively  split  on  the 
process  to  reduce  the  number  of  conditionalities:  five  Member  States  replied  that  they  are 
actively reducing conditionalities, while thirteen were not. 

As recognised in the EU Guidelines for Accra, there are some fundamental principles for each 
development agreement, such as human rights, democracy and rule of law, which should not 
be  interpreted  as  conditions.  Environmental  sustainability  and  gender  equality  are  also  key 
objectives.  Mutually  agreed  development  goals  and  performance  targets  are  the  basis  for 
planning, implementation and monitoring of joint efforts as well as for mutual and domestic 
accountability.  There  are  also  measures  that  can  be  necessary  for  good  governance  and 
effective  management,  such  as  the  lapse  of  commitments  if  agreements  are  not  signed,  or 
conformity of agreements to international law. To fulfil the commitments made in Accra, it is 
necessary,  however,  to  have  a  serious  look,  together  with  our  partner  countries,  at  how 
conditionalities  are  applied  and  also  how  EU  donors'  internal  requirements  are  applied  to 
cooperation with developing countries. Where necessary, the donors' own systems should be 
addressed. 

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Some  of  the  EU  donors  that  provide  budget  support23  use  Performance  Assessment 
Frameworks  (PAF)  jointly  agreed  with  partner  governments  as  instruments  for  monitoring 
and for presenting expected results (conditions) and also as the basis for the policy dialogue 
with the partner country government.  

In Mozambique, for example, the government and the donors have agreed on a multi annual 
Performance Assessment Framework that is based on the targets of the PARPA, the Poverty 
Reduction  Strategy  of  Mozambique.  The  PAF  covers  issues  such  as  macro-economics  and 
poverty, governance, economic development, human capital and cross cutting issues like HIV, 
gender, rural development and environment. During joint reviews the Government and the 19 
donors that provide general budget support discuss progress against the jointly agreed targets 
(the conditionalities), update targets and confirm disbursements for the next period. This joint 
review links in with similar, more detailed, joint reviews at the sector level. Thus donors and 
partner countries work in partnership and unilaterally set conditions are avoided. 

The  Public  Expenditure  and  Financial  Accountability  (PEFA)  Performance  Measurement 
Framework, based on a programme jointly financed by the World Bank, the Commission, the 
UK,  Switzerland,  Norway,  France  and  the  IMF  has  established  itself  as  a  successful  tool  to 
provide a common pool of information for donors and partner countries. PEFA helps deliver a 
common  measure  and  shared  understanding  of  the  status  of  public  financial  management 
(PFM),  greatly  facilitating  agreement  on  the  appropriate  responses  thus  reducing  and 
harmonising PFM conditions at the country level. 

The Public Expenditure and Financial Accountability (PEFA) Performance Measurement Framework 

The PEFA Framework is a standardised tool to assess a country's Public Financial Management (PFM) 
performance  with  regard  to  achieving  of  fiscal  discipline,  efficient  delivery  of  services  and  strategic 
allocation of resources. By using a detailed set of high-level performance indicators, the PEFA assessment 
delivers reliable and consistent results giving a systematic method of monitoring progress over time. By 
identifying PFM weaknesses rather than providing concrete reform recommendations it enables countries 
to formulate their own reform strategies, thereby enhancing local ownership and policy alignment. As a 
widely accepted multi-donor approach the PEFA Framework provides for a single diagnostic tool, which 
reduces transaction costs and allows donors' actions being more harmonized. Around 90 countries have 
used the PEFA assessment so far and there have been some repeated assessments. 

The  discussion  around  conditionality,  also  in  responses  to  the  Monterrey  questionnaire, 
revolves almost entirely around budget support. The conditions for budget support are at least 
easily identifiable. The application of conditionality in project-based approaches is probably 
more difficult to detect. In any case, the project-approach limits the room of manoeuvre of the 
partner countries to a much larger extent per intervention than programme based approaches. 
Project  approaches  pose  a  more  serious  challenge  for  harmonisation  and  require  increased 
attention. 

As pointed out by one response to the questionnaire, the application of conditions should be 
clarified  in  the  light  of  the  Paris  Declaration  and  the  Accra  Agenda  for  Action.  EU  donors 
need  to  make  assessments  of  their  own  application  of  conditionalities  and  to  engage 
proactively  in  the  forthcoming  international  dialogue  on  good  practices  in  conditionality 
within the OECD/DAC Working Party on Aid Effectiveness. 

23 

AT, BE , DE, DK, EC, ES, FI, IT, NL, PT, SE, UK 

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4.1.  Making Conditionalities transparent 

The responses to the questionnaire reveal that in several cases conditions are already public, 
and annual reports/reviews and the use of internet are the most common way of informing the 
general  public.  For  some  EU  donors,  the  lack  of  technical  capacity  poses  a  challenge  to 
widespread  publication.  In  many  cases,  reports  are  discussed  by  national  parliaments,  a 
practice very much to be encouraged to boost domestic accountability. 

Many  EU  donors  (14)  do  not  yet  however  make  public  their  conditions,  according  to  the 
replies  given  to  the  Monterrey  questionnaire.  A  major  reason  for  this  is  that  conditions-  in 
their  most  easily  identifiable  sense-  are  often  embedded  in  financing  agreements  or  policy 
matrices  related  to  general  budget  support.  These  agreements  are  not  automatically  made 
public; they might even be a priori confidential. Disclosure of the terms of these agreements 
would require the consent of the partner country or partner in question. 

One  way  of  addressing  this  issue  could  be  to  reach  a  global  consent  to  publicise  these 
agreements.  A  standard  clause  could  be  drafted  to  be  inserted  in  agreements.  This  way 
transparency  would  be  the  norm  and  an  explicit  veto  would  be  needed  to  keep  conditions 
secret. 

4.2. 

Frequency of conditionality reviews 

The survey revealed little overall enthusiasm to move to less frequent reviews of conditions, 
with 13 Member States replying that they do not intend to move in this direction. Most EU 
donors would stick to annual assessments. The main reason given for this is domestic control, 
linked  to  annual  budget  cycles.  Disbursements  are  made  on  an  annual  basis  and  eligibility 
criteria  are  verified  before  disbursements  are  made.  Only  two  Member  States  check 
conditions less often than annually, while two others intend to follow suit. 

Many respondents also referred to the need to have the assessments as an essential part of the 
policy dialogue with partner countries, which also usually follows annual cycles. 

It can be argued that the criteria for disbursements need not themselves be subject to change 
even  if  the  fulfilment  of  criteria  is  checked  annually.  Conditionality  is  closely  linked  to 
predictability:  financing  obviously  cannot  be  predictable  if  the  conditions  are  subject  to 
frequent change. 

5. 

INCREASING THE PREDICTABILITY OF AID 

In  the  EU  Guidelines  for  Accra  it  was  recognised  that  "greater  predictability  in  aid  flow 
programming,  commitment  and  disbursement  is  needed  to  support  the  more  effective 
absorption and expenditure of aid. This is urgently needed to facilitate the short-, medium and 
long term planning, budgeting as well as the execution of expenditure by partner countries." 

The  EU  also  called  for  developing  a  measurable  target  to  enhance  predictability  of 
programmable  aid  flows  for  a  period  of  a  least  three  years  in  advance,  based  on  indicative 
forecasts and on a rolling basis. 

Most EU donors either already make multiannual commitments or intend to do so. For many 
Member  States,  however,  domestic  legislation  or  the  need  to  strictly  respect  annual  budget 
cycles  still  present  constraints.  Some  Member  States  have  either  taken  or  are  about  to  take 

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legislative initiatives in order to allow for multiannual programming. As for the Commission, 
programmable  aid  is  predictable  within  the  timeframe  of  the  Financial  Perspectives  and  the 
European Development Fund. 

Several  Member  States  have  moved  to  multiannual  programming  through  multiannual 
cooperation  partnerships  with  developing  countries24.  Under  these  partnerships  multiannual 
commitments,  or  at  least  indicative  information  on  future  financing,  are  now  possible. 
Although  Member  States  differ  on  whether  and  how  much  these  multiannual  commitments 
are  subject  to  annual  budgetary  processes,  EU  donors  can  clearly  learn  from  each  others' 
experiences here. 

Commitments of fixed duration remain the norm, both for the Commission and the Member 
States.  A  number  of  Member  States  are,  however,  making  an  effort  to  move  to  rolling 
forecasts, for example under their forthcoming plans to implement the AAA. 

The "MDG contract" is a new approach being so far implemented under the 10th EDF which 
aims to improve the effectiveness of budget support in accelerating progress towards MDGs 
by  increasing  its  predictability  and  focusing  on  results.  Perhaps  reflecting  that  the  MDG 
Contract is still early in its implementation, most Member States reported that they were still 
considering whether they wished to co-finance or apply the principles of the MDG Contract to 
their  own  budget  support  programmes.  However,  provided  some  regional  differences  are 
accounted  for,  Member  States  were  supportive  of  an  MDG  Contract  approach  being  used 
beyond  the  ACP  countries  by  the  European  Commission.  The  Commission  continues  to 
explore with Member States options for co-financing MDG- Contracts. 

The MDG Contract 

Predictability  of  aid  helps  a  country  more  effectively  plan  and  manage  its  development.  This  is 
particularly  important  with  respect  to  the  social  sectors  which  are  characterised  by  the  high  level  long 
term  recurrent  costs.  In  2008,  recognising  the  benefits  of  greater  aid  predictability,  the  Commission 
launched  a  new  form  of  budget  support  for  ACP  countries  -  the  MDG  Contract.  It  features  a  six  year 
timeframe and a strong focus on results related to the MDGs. The Commission has finalised proposals for 
MDG-Contracts in 7 countries (Burkina Faso, Ghana, Mali, Mozambique, Rwanda, Uganda, and Zambia) 
and is considering Tanzania. Collectively these account for about €1.8bn, represen ting 50% of all General 
Budget support. The first MDG Contract was signed with the Government of the Republic of Zambia in 
early  March  2009.  The  UK  and  Belgium  have  already  indicated  an  interest  in  co-financing  the  MDG 
Contracts. 

24 

In one way or another this is practised at least by FI, FR, IE and UK, but the list is not exclusive 

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6. 

MORE VALUE FOR MONEY- UNTYING OF AID 

In  general,  EU  donors  are  well  beyond  the  DAC-recommendations  on  untying25  aid.  Seven 
Member States were able to report that their aid was fully untied, while six have untied their 
ODA to all developing countries. Most EU-donors have no problems with implementing the 
DAC recommendations. Five would be ready to expand the recommendation to other groups 
of  developing  countries  and  four  to  types  of  development  aid  not  yet  covered  by  the  DAC-
recommendations.  There  is  the  political  will  to  further  untie  food  aid,  but  untying  technical 
assistance was seen to cause legal and administrative problems. 

Seven Member States have instruments that are voluntarily tied in one way or another. These 
include technical assistance and scholarships as well as concessional loans, mixed grants, debt 
swaps and support to national NGOs. Two Member States are in the progress of untying aid 
further  through  legislative  reforms,  either  by  making  new  aid  modalities  possible  or  by 
renewing laws on concessional loans. 

Almost  all  Member  States  procurement  rules  on  bilateral  ODA  guarantee  access  to  other 
Member  States.  The  few  exceptions  to  this  rule  include  aid  tied  to  developing  countries  in 
specific  programmes.  Three  Member  States'  national  legislation  do  not,  however,  provide 
access and the impact of EC Directives on this was being studied. 

The  level  of  untying  of  Community  aid  is  based  on  the  regulations  of  the  financing 
instruments. A decision was taken on 24 March to grant access to Australia to EC external aid 
contracts  in  Asia  (except,  as  yet,  in  Indonesia).  This  follows  a  request  by  Australia  and  a 
decision by the Australian government to untie their aid in this region. Untying will therefore 
take place on a reciprocal basis - as foreseen in the Development Cooperation Instrument. 

As concerns the rules on public procurement in the Cotonou Agreement which apply to the 
10th EDF, the European Commission will propose to the ACP-countries the alignment of EDF 
rules to those of the DCI in the context of the revision of the Cotonou Agreement. This would 
be a major step forward in untying aid administered by the Commission. 

The EU remains in the forefront in the debate on untying. It must continue to lead by example 
to get both traditional and emerging donors on board and get the best value out of aid money. 

7. 

STRENGTHENING COUNTRY LEADERSHIP AND MUTUAL ACCOUNTABILITY 

Partner  country  leadership  has  been  a  clearly  stated  guiding  principle  for  the  EU.  It  is 
reflected  in  EU  donor  policies  and  at  least  two  Member  States  have  introduced  a  reporting 
requirement  on  how  this  principle  of  leadership  has  been  taken  into  account  in  their 
cooperation.  As  a  major  obstacle,  many  respondents  cited  the  lack  of  capacity  of  partner 
countries to exert  leadership. The development policies  of  partner  countries were also  often 
regarded as too general to provide guidance and not focused on achieving the MDG's. 

Many  EU-donors  referred  to  regular  consultative  processes  and  dialogue  with  partner 
countries,  resulting  in  jointly  agreed  memoranda,  as  mechanisms  for  mutual  accountability. 
However,  the  Paris  Declaration  Monitoring  Survey  revealed  that  only  13  out  of  the  53 

25 

DCD/DAC(2007)41/REV1 & DCD/DAC/M(2008)5 www.oecd.org/dac/untiedaid 

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surveyed  partner  countries  had  functioning  mutual  accountability  mechanisms  between 
partner governments and donors. 

There were a few concrete cases of mutual accountability reviews, such as in Mozambique, in 
which  many  EU-donors  participated.  PEFA-assessments,  which  also  include  indicators  on 
donor-behaviour,  were  also  quoted  as  examples.  Germany  has  set  itself  a  target  of  being 
involved in at least five country-level mutual accountability assessments by 2011. 

The EU needs to continue to promote mutual accountability both at international and country 
level.  One  important  forum  for  this  is  the  Working  Party  on  Aid  Effectiveness  (see 
information  box).  In  its  joint  comments  on  the  new  mandate  and  structure  of  the  Working 
Party,  the  EU  emphasised  the  need  to  safeguard  the  role  of  the  partner  countries,  including 
through guaranteeing co-chairmanship positions to partner countries. 

The Working Party on Aid effectiveness 

The Working Party on Aid Effectiveness (WP-EFF), supported by the OECD/DAC secretariat, is the main 
body for international dialogue on Aid Effectiveness. The WP-EFF and its sub-bodies are responsible for 
monitoring the implementation of aid effectiveness and also for preparing the High Level Forums. 

The Working Party is currently being restructured and its mandate is being renewed. The plan is to base 
further  work  on  4  to  5  thematic  clusters.  Germany  and  South  Africa  have  been  leading  the  work  on 
forming the cluster "Transparent and Responsible Aid", while The Netherlands and Ghana have had the 
lead  on  the  cluster  "Country  systems".  WP-EFF  has  included  DAC-donors,  multilateral  donors  and 
partner countries. The aim of the restructuring is also to ensure that the WP-EFF will be a representative 
body for the whole donor community. This will mean stepping up participation by the partner countries 
and including other actors, such as emerging donors and the civil society. 

8. 

TRAINING AND STAFF INCENTIVES 

In the Guidelines for Accra, the EU-donors committed themselves to "streamlining processes 
and  to  encouraging  staff  to  systematically  integrate  aid  effectiveness  into  their  work 
programmes, structures and reporting mechanisms in order to promote the importance of aid 
effectiveness as the way of working for development." 

EU  donors  provide  staff  guidance  and  organise  training  on  aid  effectiveness,  for  example 
training  on  multiannual  programming.  There  are  as  of  yet  few  concrete  examples  on  staff 
incentives  to  promote  aid  effectiveness.  The  good  practice  guidance  on  incentives  for  aid 
effectiveness and self-assessment tool presented by the UK and the World Bank to the OECD 
Joint Venture on Managing for Development Results remains the most promising initiative on 
incentives.  The  UK,  The  Netherlands  and  IFAD  are  piloting  the  self  assessment  tool  to 
identify existing barriers to aid effectiveness. 

Donor  behaviour  is  apparently  to  a  large  extent  guided  by  traditional,  rather  input-oriented 
incentives, like those related to disbursement levels. There is a need to balance that approach 
with more focus on aid effectiveness and development results. Training and staff incentives 
are  clearly  areas  where  the  EU  could  benefit  from  a  closer  cooperation  and  "cross-
fertilisation". 

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9. 

MANAGING FOR DEVELOPMENT RESULTS 

Before  Accra,  in  the  Guidelines,  the  EU  called  for  "a  stronger  culture  and  incentives  for 
Managing for Development Results (MfDR)". The answers in the Monterrey questionnaire on 
this subject centred on training and providing staff guidance. In addition, four EU donors have 
recently  embarked  on  strengthening  their  country  offices,  four  more  on  reviewing  their 
administrative  processes  and  one  has  gone  through  an  organisational  change  to  increase 
coherence in development cooperation.  

At least five EU-donors26 have renewed the methodology or indicators used to monitor aid to 
apply  more  successfully  a  results-based  approach.  In  one  case  this  was  expected  to  lead  to 
organisational changes. 

The Commission is increasingly putting more focus on development results in its monitoring 
of  projects,  programmes  and  overall  country  programmes,  amongst  others  through  the  mid-
term review. 

9.1.  Measures  to  strengthen  partner  countries'  data  gathering  and  publishing 

capacity 

In  2004  the  second  roundtable  on  Measuring  for  Development  Results  agreed  on  the 
Marrakech Action Plan to improve the availability and quality of statistics to support the goals 
and  measure  the  results  of  aid.  Amongst  other  tasks  this  is  done  by  mainstreaming  the 
strategic  planning  of  statistical  systems  and  the  preparation  of  national  strategies  to 
development  of  statistics  (NSDS)  for  all  low-income  countries,  increasing  financing  for 
statistical capacity building and urgent improvement in monitoring Millennium Development 
Goals. 

According to  the responses  to the Monterrey questionnaire, the Paris 21  Consortium, which 
aims  to  build  the  systems  and  capacity  of  the  partner  countries  to  measure  their  own 
development,  remains  a  main  vehicle  for  EU  donors  to  support  the  development  and 
implementation  of  statistical  strategies  in  developing  countries.  The  Paris  21  secretariat  has 
developed  a  Partner  Report  on  Support  to  Statistics,  which  aims  to  increase  knowledge  on 
what development partners are doing to support statistical development; make available this 
information  to  improve  donor  harmonisation  and  collaboration  on  statistics  with  the  aim  of 
ensuring  greater  coherence  at  country  level  and  minimising  duplication  of  efforts  and  to 
increase  visibility  of  statistical  support  and  identify  countries  or  statistical  areas  where 
additional support is needed. 

One  Member  State  was  no  longer  financing  Paris 21  in  view  of  other  donors'  active 
involvement  and  is  refocusing  on  bilateral  support.  A  new  Statistics  for  Results  Facility, 
housed by the World Bank and working through country partnerships, is supported by the UK 
and the Netherlands. 

One  EU  donor  channels  support  through  a  national  statistical  office,  four  have  projects  at 
country  level  and  two  integrate  statistical  capacity  building  as  part  of  other  support 
programmes. For the European Community, Eurostat provides important technical support for 
capacity building. Eurostat's primary focus is on ACP regional organisations, with support at 
national level provided on a case by case basis. Eurostat has prepared a Guide to Statistics in 

26 

DE, FR, NL, SE, UK 

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20 

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EC  Development  Co-operation  in  conjunction  with  other  Commission  services  in  order  to 
provide support to delegations and to the EC's external service generally about using statistics 
and  identifying  and  preparing  statistics  actions.  Eurostat  is  also  developing  the  DISC 
(Database for International Statistical Cooperation) which aims to collect and publish "under 
one  roof"  summarised  details  on  the  statistical  projects  undertaken  by  the  European 
Commission and ideally also its partners, on the one hand, and, on the other, redistribute and 
publish  material  on  which  the  statistical  capacity  of  potential  partner  countries  can  be 
measured to judge more clearly the potential areas of need and benefits of statistical aid. 

10. 

CAPACITY DEVELOPMENT 

A  few  EU  donors  regard  most  of  their  support,  excluding  debt-relief,  as  capacity  building. 
Many  EU-donors  provide  this  support  through  joint  work,  such  as  through  UNDP,  while 
some run only bilateral projects. 

The  respondents  to  the  questionnaire  recognised  non-existing  or  non-prioritised  national 
strategies  by  partner  countries  as  major  obstacles  to  capacity  building.  It  was  also  observed 
that there were not enough incentives on the ground to change the behaviour of development 
actors,  including  the  donors  and  their  consultants  and  advisors,  to  focus  more  on  capacity 
building. 

The rules applicable to technical cooperation vary from donor to donor much more than the 
rules on programme-based approaches. This works against effective coordination, which leads 
to  a  fragmented  approach,  particularly  when  the  donors  are  under  time  pressure  to  deliver 
results. 

The  EU  Guidelines  for  Accra  stressed  that  "the  donors  should  assure  that  their  support  to 
capacity  development  of  partner  countries,  including  technical  cooperation,  is  needs  based 
and/or  demand  driven  and  integrated  in  the  national  strategies  and  programs".  In  July  2008 
the  Commission  adopted  a  Backbone  Strategy  for  Reforming  Technical  Cooperation  and 
Project Implementation Units for External Aid"27 to provide guidance for a more needs-based, 
harmonised and aligned approach. Member States were involved in preparing the strategy and 
a  dialogue  on  guidelines  on  technical  cooperation  ensued.  At  least  one  Member  State, 
according to the survey, uses the strategy as guidance. The strategy and the continued work on 
the follow-up, including training sessions, could provide a basis for a joint European approach 
on capacity building and technical cooperation. 

27 

http://ec.europa.eu/europeaid/what/delivering-aid/aid-effectiveness/documents/backbone_strategy_on_tc-
pius_final_en.pdf 

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11. 

GLOBAL INITIATIVES AND VERTICAL FUNDS 

Global Vertical Programmes (GVP)28 are issue based, multi-country programmes allowing a 
group  of  development  partners  to  address  specific  urgent  issues  of  relevance  to  a  wide 
public29, representing around 6% of total ODA30. While there is no consolidated recording of 
EU funds spent on GVP – as these register as multilateral aid in line with DAC requirements 
–  anecdotal  information  available  at  EU  level  shows  that  some  Member  States  spend  up  to 
10%  of  their  aid  on  GVP  and  the  amounts  allocated  have  steadily  risen  over  the  last  years. 
The increasing importance is shown by the fact that in some countries the Global Fund, for 
example, has become one of the four largest donors, ahead of many bilateral donors. 

Despite  the  increasing  support,  the  multiplication  of  GVP  schemes  in  the  recent  past  has 
raised  criticism.  The  European  Consensus  on  Development  in  2005  recognised  the  positive 
aspects of GVP but indicated that "the added value of global initiatives and funds will have to 
be  assessed  on  a  case  by  case  basis".  More  recently,  the  May  2008  GAERC  Council 
Conclusions "call on  the  Commission  and the Member States to consider financing through 
existing  financing  mechanisms  before  creating  new  vertical  funds".  The  Community  is 
therefore  encouraged  to  engage  in  Global  Programmes  only  when  GVPs  are  seen  as  an 
adequate  response  to  the  issue  considered,  and  with  due  respect  for  the  overarching 
"subsidiarity" principle and the preference given to geographic approaches which facilitate the 
implementation  of  the  aid  effectiveness  agenda.  Finally,  in  the  conclusions  of  November 
2008, the EU "agreed to work on guidelines on global initiatives and vertical funds to assess 
their  added  value,  and  to  avoid  their  proliferation  and  the  increasing  transaction  costs 
associated."  This  work  must  be  taken  forward  in  order  to  tackle  the  fragmentation  of  the 
global aid architecture while taking advantage on the emerging good practice in some of the 
vertical funds. 

The Monterrey questionnaire did not produce comprehensive information on the situation at 
EU level, with only four Member States providing analysable information on past trends and 
forecasts.  Responding  to  the  European  Consensus  for  Development  proposal  to  "draw  up 
criteria  for  Community  participation  in  global  funds  and  contributions  to  them"  would 
therefore require an active involvement of both the European Commission and Member States 
to  gather  relevant  data  and  analysis.  Figuring  out  the  EU  engagement  in  details  and  its 
perspective would be a first step toward a harmonised and coordinated approach to supporting 
key global public goods in the future. 

28 

29 

30 

"Global  Vertical  Programs  are  multi-country  programs  that  contain  a  significant  element  of  earmarked 
funding for specific objectives with thematic, sectoral or sub-sectoral breadth. The global nature refers to 
the  multi-country  and  multi-regional  level  of  the  program.  These  programs  are  generally  structured  as 
“partnerships”  involving  shared  decision-making  by  several  different  organizations  or  partners.  The 
vertical  nature  refers  to  the  significant  level  of  earmarking  of  the  program;  funds  are  earmarked  to  a 
specific  issue  (with  thematic,  sector,  or  sub-sector  breadth)".  Source:  "Global  Vertical  Programs  at 
Country  Level:  What  have  we  learned?",  The  Global  Programs  and  Partnership  Group,  Concessional 
Finance and Global Partnerships Vice presidency, WB, July 2008. 
Education  For  All  –  Fast  Track  Initiative,  Global  Fund  for  AIDS,  Tuberculosis  and  Malaria,  Cities 
Alliance, Business Link Challenge Fund, Public Private Infrastructure Advisory Facility, Global Alliance 
for  Vaccines  and  Immunisation,  Consultative  Group  on  International  Agricultural  Research,  Special 
Climate Change Fund… 
Source  WB,  May  2008.  Estimates  varying  from  3%  of  ODA  in  2005  (source  IDA  2007)  to  10%  of 
Country Programmable Aid between 2003-2006 (Source OECD-World Bank 2008). 

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Education FTI as a "good practice example" of global initiatives promoting country leadership 

The Education for All (EFA) Fast Track Initiative (FTI) is a global partnership to help ensure accelerated 
progress towards the Millennium Development Goal of universal primary education by 2015. The FTI is 
founded on the  principle  of  collective  support  for  a  single  country-led  process  towards  the development 
and implementation of an Education Sector Plan (ESP). Partner Countries take the lead in designing and 
implementing  ESPs  through  broad-based  consultation.  The  Local  Donor  Group  and  Civil  Society 
Organisations  work  together  with  government  to  support  the  development,  implementation,  monitoring 
and evaluation of the ESP. Donors commit to align and harmonise additional support around the ESP. At 
the same time partner governments are expected to increase domestic expenditure on education. The FTI 
explicitly links increased donor support for primary education to partner countries' policy performance 
and accountability for results. The FTI has recently issued guidelines- FTI Country Level Process Guide- 
to  further  strengthen  the  country-led  and  –based  process  (available  at:  http://www.education-fast-
track.org/). 

12. 

CONCLUSIONS 

The  EU  has  a  collective  obligation  to  meet  the  aid  effectiveness  commitments  and  targets. 
The overall view emerging from the Monterrey questionnaire exercise is mixed. On the whole 
the  responses  to  the  questionnaire  are  encouraging  and  show  a  genuine  willingness  of  EU-
donors to move towards further aid effectiveness. On the other hand, several other monitoring 
exercises  have  shown  that  the  international  and  EU  commitments  will  not  be  met  without 
stepping  up  investments  in  the  aid  effectiveness  agenda.  At  present  there  are  too  many 
contradictions between aid effectiveness and other priorities. Aid effectiveness should not be 
seen as a residual task but as the core agenda. The EU needs to put aid effectiveness on top of 
its priority list and ensure that all its institutions, political processes, and policies, instruments 
and  procedures  support  aid  effectiveness.  Work  is  also  needed  on  the  "soft  side"  of  the 
equation to ascertain that the mind sets and behaviour of staff working in headquarters and in 
the  field  offices  are  oriented  towards  aid  effectiveness.  To  address  these  issues  the 
Commission adopted an operational action plan in January 2009 including strategies for use 
of  country  systems,  technical  cooperation  and  implementation  arrangements,  division  of 
labour and outreach to staff in headquarters and delegations. 

Some EU donors are more advanced on aid effectiveness than others. Experience and capacity 
seem  to  be  some  of  the  contributing  factors,  but  each  donor  has  its  own  strengths  and 
weaknesses.  Some  small  volume  donors  for  example  coordinate  all  their  donor  missions, 
simply  because  they  never  initiate  missions  alone.  On  the  other  hand  a  high  volume  donor 
acknowledged  that  its  system  of  cooperation  is  complex  and  results  in  significant  internal 
transaction  costs.  Whilst  certain  EU  donors  will  more  likely  face  bigger  challenges  than 
others,  it  is  clear  that  all  EU  donors  have  considerable  work  to  do  to  achieve  the  agreed 
international and EU commitments on aid effectiveness. 

Experience  or  capacity  cannot  replace  the  will  to  act.  Neither  are  lack  of  experience  or 
capacity excuses to renege on our commitments. There is an urgent need to move forward. In 
order  to  learn,  we  have  to  do.  Determination  is  the  prerequisite  for  implementing  what  is 
already feasible and for addressing impediments to process. 

Some EU donors have sophisticated policies and good practices on aid effectiveness, gathered 
through years of experience. Not all need to go through the same learning cycle, but all need 
to exchange information and learn from each other: take advantage of the successes and avoid 
the mistakes and so leap frog ahead in making EU aid more effective. More joint European 

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efforts are needed to make the fulfilling of individual commitments easier. The responses to 
the questionnaire show several cases where EU donors could learn from each other, such as 
aligning  and  harmonising  technical  assistance,  promoting  programme  based  approaches  and 
use of country systems or moving to multiannual programming and commitments to increase 
predictability. 

The issues touched upon in this report merit further discussion with EU Member States. There 
is  a  growing  need  to  further  identify  specific  issues  which  would  merit  being  worked  upon 
together, to formulate joint approaches and to promote honest, self-critical donor action plans 
to implement the aid effectiveness commitments. 

There is forward momentum but more speed is needed. The right issues are being addressed, 
but  more  effort  is  needed,  with  just  one  year  left  to  reach  the  targets  before  the  upcoming 
evaluation  cycle  of  the  Paris  Declaration  in  2010  and  after  that  the  moment  of  truth  at  the 
Fourth High Level Forum on Aid Effectiveness in 2011. 

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EE 

DE  GR 

LV 

HU 

PT 

ES 

SE 

SE 

FR 

LT 

LT 

PL 

PL 

PL 

IT 

IT 

GR 

LV 

HU 

NL 

UK 

FR 

CY 

Annex I: Member State Priority Countries (for four or more Member States) 31 

Mozambique 

BE 

DK 

Vietnam 

BE 

CZ 

DK 

Palestine T 

BE 

FI 

FI 

DE 

DE 

IT 

NL 

PT 

ES 

UK 

SE 

FR 

LU 

HU 

NL 

DE  GR 

IT 

HU 

NL 

ES 

UK 

ES 

FR 

FR 

GR 

LV 

HU 

NL 

RO 

SE 

EE 

EE 

IE 

IE 

IE 

IE 

IE 

IE 

FI 

FI 

DE  GR 

DE  GR 

DE 

DE 

FI 

DE 

DE 

DE 

EE 

FI 

FI 

DK 

DK 

DK 

DK 

DK 

DK 

DK 

DK 

DE 

DE 

DE 

DE 

DE 

DE 

DE 

DE  GR 

IT 

DE 

DE 

DE 

DE 

DE 

DE 

DE 

DE 

DE 

DE 

DE 

DE 

DE 

DE 

DE 

DE 

DE 

GR 

GR 

IT 

IT 

IT 

IT 

IT 

CZ 

CZ 

BE 

BE 

DK 

DK 

CZ 

DK 

BE 

DK 

CZ 

CZ 

BE 

BE 

BE 

Moldova 

Afghanistan 

Ethiopia 

Tanzania 

Mali 

Zambia 

Uganda 

Yemen 

Ukraine 

Angola 

Georgia 

DRC 

Senegal 

Bangladesh 

Bolivia 

Burkina Faso 

Cambodia 

Egypt 

Nicaragua 

Kenya 

Sudan 

Rwanda 

BE 

Iraq 

Bosnia-H 

Benin 

Burundi 

Cap Vert 

Ghana 

Kosovo 

Niger 

Serbia 

Lebanon 

Morocco 

Algeria 

Colombia 

FYROM 

Guatemala 

Laos 

Mauritania 

Mongolia 

Nepal 

BE 

BE 

BE 

BE 

BE 

CZ 

CZ 

CZ 

CZ 

Belarus 

Ecuador 

31 

NL 

HU 

NL 

NL 

NL 

NL 

NL 

LU 

LU 

LU 

LU 

HU 

NL 

NL 

NL 

NL 

NL 

NL 

NL 

NL 

NL 

NL 

NL 

HU 

NL 

NL 

NL 

12 

12 

CY 

PL 

10 

PL 

10 

PL 

10 

10 

PL 

10 

LT 

LT 

ES 

UK 

SE 

ES 

UK 

SE 

FR 

UK 

SE 

FR 

ES 

SE 

FR 

CY 

UK 

SE 

UK 

SE 

FR 

ES 

UK 

SE 

FR 

ES 

FR 

ES 

UK 

SE 

ES 

SE 

SE 

FR 

ES 

UK 

SE 

FR 

ES 

UK 

SE 

FR 

ES 

UK 

UK 

ES 

FR 

FR 

SE 

SE 

FR 

SE 

FR 

LT 

CY 

CY 

9 

8 

8 

8 

8 

7 

7 

7 

6 

6 

6 

6 

6 

6 

6 

6 

5 

5 

5 

5 

5 

5 

5 

5 

5 

5 

5 

5 

5 

4 

4 

4 

4 

4 

4 

4 

4 

4 

4 

4 

LU 

NL 

PT 

ES 

NL 

NL 

LU 

HU 

RO 

NL 

HU 

NL 

SI 

NL 

LU 

HU 

HU 

NL 

SE 

SE 

SE 

SE 

SE 

UK 

UK 

FR 

FR 

FR 

FR 

FR 

FR 

FR 

FR 

FR 

ES 

ES 

ES 

ES 

ES 

ES 

ES 

ES 

South-Africa 

BE 

DE 

NL 

DK 

FI 

DE 

BE 

DE 

IT 

LV 

SE 

LT 

PL 

Based on the responses by Member States to the Monterrey Questionnaire: « How many countries would 
you  classify  as  priority  countries  (of  countries  where  you provided bilateral  government-to-government 
ODA in 2007)? Cyprus, Poland, Malta and Slovakia reported however not to have a provided government 
to government ODA. For Ireland and Poland situation as in 2008. 

EN 

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