Commission staff working document - Aid Effectiveness - Annual Progress Report 2010 accompanying the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - A twelve-point EU action plan in support of the Millennium Development Goals {COM(2010) 159} {SEC(2010) 418} {SEC(2010) 419}{SEC(2010) 420} {SEC(2010) 421}
Date: 2010-04-21
Institutions: European Commission
Subjects: AIDS, development plan, development policy, environmental protection, hunger, infant mortality, international cooperation, poverty, primary education, sexual discrimination

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EUROPEAN COMMISSION 

Brussels, 21.4.2010 
SEC(2010) 422 final 

COMMISSION STAFF WORKING DOCUMENT 

AID EFFECTIVENESS - ANNUAL PROGRESS REPORT 2010 

accompanying the 

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

A twelve-point EU action plan in support of the Millennium Development Goals 

{COM(2010) 159} 
{SEC(2010) 418} 
{SEC(2010) 419} 
{SEC(2010) 420} 
{SEC(2010) 421} 

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COMMISSION STAFF WORKING DOCUMENT 

AID EFFECTIVENESS - ANNUAL PROGRESS REPORT 2010 

TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

2.3. 

3. 

INTRODUCTION........................................................................................................ 3 

THREE LEVELS OF EU ACTION ............................................................................ 4 

Bilateral level ............................................................................................................... 4 

EU level........................................................................................................................ 5 

International level......................................................................................................... 6 

EU ACTION ON OWNERSHIP ................................................................................. 6 

3.1. 

General actions............................................................................................................. 6 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

5. 

5.1. 

5.2. 

5.3. 

5.4. 

6. 

6.1. 

6.2. 

7. 

8. 

EU ACTION ON ALIGNMENT................................................................................. 7 

Increasing the use of country systems.......................................................................... 7 

Changing the nature of conditionality........................................................................ 10 

Making aid more predictable ..................................................................................... 11 

Reducing PIU's........................................................................................................... 11 

EU ACTION ON HARMONISATION..................................................................... 12 

Establishing a better in-country division of labour .................................................... 12 

Improving joint programming.................................................................................... 15 

Cross-country division of labour................................................................................ 15 

Coordinating missions................................................................................................ 17 

EU ACTION ON MUTUAL ACCOUNTABILITY ................................................. 17 

Improving mutual accountability ............................................................................... 17 

Making aid more transparent ..................................................................................... 17 

EU ACTION ON MANAGING FOR DEVELOPMENT RESULTS....................... 18 

CONCLUSIONS........................................................................................................ 19 

ANNEX: proposed EU approach on cross-country division of labour...................... 21 

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1. 

INTRODUCTION 

Every year since 2003, the Commission has been reviewing the EU's efforts to implement the 
commitments established in the Monterrey Consensus, and subsequently on commitments on 
aid  effectiveness  established  by  the  Paris  Declaration  and  the  Accra  Agenda  for  Action.  As 
part of this process, this paper attempts to analyse the information received  from  this  year's 
Monterrey  questionnaire  and  to  draw  some  operational  conclusions  on  how  the  EU  can 
improve its performance.  

Efforts will need to be stepped up dramatically if the aid effectiveness targets embedded in the 
Paris  Declaration  and  the  Accra  Agenda  for  Action  are  to  be  achieved.  In  2011,  the  Fourth 
High Level Forum on Aid Effectiveness will be held in Seoul, and the EU will be expected to 
present results which are in line with the declared EU level of ambition. 

In broad terms, achieving aid effectiveness from an EU perspective is still a work in progress. 
On the positive side, the EU has established clear policy aims and is a leading player on aid 
effectiveness  at  the  global  level.  The  EU  has  worked  steadfastly  towards  finding  practical 
ways of working together to implement aid effectiveness commitments. 

EU donors are gradually, but unmistakably, moving forward in terms of making the necessary 
adjustments  in  their  development  programs.  Furthermore,  the  responses  to  this  year's 
Monterrey questionnaire show that these changes are beginning to have an impact. However, 
the  results  from  this  year's  survey  indicate  that  the  EU  is  still  in  an  early  stage  in 
implementing  the  Paris  and  Accra  commitments,  and  that  continued  focus  and  consistency 
will be required to achieve the desired results. 

It  is  important  to  note  that  the  Treaty  of  Lisbon  marks  a  new  era  in  European  development 
policy. Article 210 of the Treaty states: 

"In order to promote the complementarity and efficiency of their action, the Union and the 
Member States shall coordinate their policies on development cooperation and shall consult 
each  other  on  their  aid  programmes,  including  in  international  organisations  and  during 
international conferences. They may undertake joint action. Member States shall contribute 
if necessary to the implementation of Union aid programmes." 

This  represents  a  brand  new  opportunity  to  make  development  aid  from  EU  donors  more 
effective, efficient, and potent in terms of actual impact on the ground. It should also make a 
real  difference  in  terms  of  EU  political  impact  and  visibility.  This  is  an  opportunity  which 
should be grasped. 

The picture provided in this paper shows what the EU is doing to achieve its commitments in 
terms of the five principles of the Paris Declaration (Ownership, Alignment, Harmonisation, 
Mutual Accountability and Managing for Development Results). It is also an attempt to look 
for  potential  ways  to  enhance  European  cooperation  to  more  effectively  implement  aid 
effectiveness goals1. 

1 

This  EU  progress  report  does  not  intend  to  provide  comprehensive  data  and  analysis  on  the  EU 
performance against all target indicators and commitments  made in Paris and Accra. Such a report is 
being preprared in the context of OECD DAC monitoring and survey process, with a view to provide a 
comprehensive factual basis for the HLF IV in Seoul in 2011.  

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2. 

THREE LEVELS OF EU ACTION 

For  the  EU,  implementation  of  aid  effectiveness  commitments  requires  action  at  three 
complimentary and frequently overlapping levels. Firstly, at the bilateral level, each Member 
State and the Commission have the obligation to fulfil their aid effectiveness commitments as 
donors in their own right. Secondly, at the EU level, Member States and the Commission use 
established EU coordination mechanisms and channels to move further ahead in areas where 
this  makes  practical  sense.  Thirdly,  the  EU  has  played  a  leading  role  at  the  international 
level in moving the aid effectiveness agenda forward. 

2.1. 

Bilateral level 

With regard to the bilateral level, the May 2009 Council Conclusions call for EU donors (i.e. 
Members States and, in terms of implementing the EU budget and the European Development 
Fund, the Commission) to establish individual plans to remove obstacles to aid effectiveness. 
Sixteen EU donors report in the Monterrey questionnaire that they have a plan or strategy to 
implement  the  Paris  Declaration  and  the  Accra  Agenda  for  Action,  but  11  have  not  yet 
prepared a plan2. 

The  Commission  launched  an  Action  Plan  in  2009  focusing  on  five  priority  areas:  use  of 
country  systems  including  capacity  building;  division  of  labour;  untied  aid;  changed 
conditionality; and predictability and transparency. The action plan also covers three specific 
themes: countries in  fragile  situations, gender and non-state actors. This was further  refined 
by a 10 point action plan early this year. 

As part of the work at the bilateral level, several EU donors are also strengthening incentives 
for implementing international commitments on aid effectiveness, as shown below: 

Actions taken to enhance incentives 

EU Donors 

Assessment  of 
effectiveness 

internal 

incentives 

for  aid 

Denmark,  Italy,  Latvia,  Netherlands,  Spain,  Sweden 
and the UK 

Organisational assessment in 2010, including a look 
at incentives 

Ireland 

Undergoing the WP-EFF assessment exercise. 

UK and the Netherlands have done and Spain3 

Internal reporting exercise 

Sweden 

2 

3 

Austria,  Belgium,  The  Czech  Republic,  Denmark,  France,  Germany,  Ireland,  Italy,  Luxembourg,  the 
Netherlands,  Portugal,  Slovenia,  Spain,  Sweden,  UK  and  the  Commission  had  established  plans. 
Thirteen of these are in the DAC-website: 
http://www.oecd.org/document/6/0,3343,en_2649_3236398_18638150_1_1_1_1,00.html. 
Bulgaria,  Cyprus,  Estonia,  Finland,  Greece,  Hungary,  Latvia,  Lithuania,  Malta,  Poland  and  Romania 
have yet to establish plans, though Finland has a plan for implementing the Paris Declaration. 
For  Netherlands  and  the  UK  the  recommendations  of  the  WP-EFF  assessment  included  the  need  for 
increased  communication  and  personnel  policy,  such  as  review  of  the  posting  system  and  clarifying 
responsibilities in induction and hand over. In the meanwhile Spain is in the process of tackling legal 
and  administrative  obstacles  to  facilitate  delegated  cooperation  and  entering  into  multiannual 
commitments.  

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2.2. 

EU level 

At the EU level, the EU continued to work on the basis of the four priority 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. 

The EU Operational Framework on Aid Effectiveness was established in November 20094. 
The Framework consists of thematic chapters on common, harmonised approaches for the EU 
and the Member States and a set of measures to be implemented individually and jointly by 
EU  donors.  New  thematic  chapters  can  be  added  to  the  Framework  in  the  future.  The 
Operational  Framework  currently  contains  chapters  on  key  Aid  Effectiveness  commitments, 
specifically Division of Labour, Use of Country Systems and Technical Cooperation. 

Main elements of the Operational Framework: 

Division of labour chapter 

Use  of  country 
chapter 

systems 

Technical 
chapter 

cooperation 

Accelerate  the  implementation  of 
Fast Track Initiative on Division of 
Labour  which  aimed  at  supporting 
selected  group  of  partner 
a 
countries 
the  process  of 
achieving  in-country  division  of 
labour 

in 

Use  the  partner  countries'  own 
systems  as  the  first  option,  if  not, 
explain why 

technical  cooperation  on 
leadership  by 

Base 
ownership 
and 
partner countries, 

Pursue 
sector 
through  redeployment  and 
programming 

concentration 
joint 

Joint  assessments  for  the  use  of 
country systems 

Demand-led 
technical 
provided by default 

approach  where 
not 

cooperation 

is 

Monitor progress systematically at 
headquarters and country Level 

Make  assessments  made  by  one 
donor available for the use by other 
EU donors 

Results orientation 

Joint programming by EU donors 
in a number of partner countries 

Work  towards  harmonisation  of 
assessments 

Focus on capacity development. 

Launch  an  EU  process  on  Cross 
Country Division of Labour, with a 
view to preparing a proposal during 
2010. 

Promote  use  of  country  systems 
irrespective  of  the  aid  modality 
used 

Future  chapters  of  the  Framework  could  include  issues  such  as  mutual  accountability, 
predictability of aid, cross-country division of labour, vertical funds and global initiatives and 
incentives for aid effectiveness. 

4 

http://capacity4dev.ec.europa.eu/operational-framework-aid-effectiveness 

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2.3. 

International level 

The EU within an international context continues to promote aid effectiveness within various 
fora,  and  in  particular  within  the  Working  Party  on  Aid  Effectiveness  (WP-EFF)  and  the 
upcoming  High  Level  Event  on  the  Millennium  Development  Goals.  The  EU  agreed  and 
presented  a  common  position  on  the  renewed  mandate  and  structure  of  the  WP-EFF  in  the 
spring  of  2009  and  the  EU  is  recognised  for  its  coordinated  approach.  Like  the  run  up  to 
Accra, when the EU established a common position which had a profound effect on the final 
outcome of the Accra Agenda for Action (AAA), the EU will establish a common position for 
the  Fourth  High  Level  Forum  in  Seoul.  The  international  community  expects  the  EU  to 
maintain its high level of ambition, and deliver on its previous commitments. 

3. 

EU ACTION ON OWNERSHIP 

Ownership  is  the  first  principle  established  in  the  Paris  Declaration.  Donors  committed 
themselves  to  respect  partner  country  leadership  and  help  strengthen  their  capacity  to 
exercise it. 

3.1. 

General actions 

EU donors undertook the following general actions to support ownership in 2009: 

•  Ownership integrated into guidelines, plans and strategies and/or training of staff 
issue:  Austria,  Belgium,  Denmark,  France,  Germany,  Ireland, 

on 
Netherlands, Poland, Spain, Sweden and the United Kingdom 

this 

•  Consultation  and  coordination  with  partner  country  to  ensure  ownership:  Czech 

Republic, Finland, Italy, Latvia, Luxembourg, Netherlands, and Slovenia 

•  Supporting  partner  country  capacity  development:  Estonia,  Germany, 

Netherlands, and Portugal 

•  Requiring a local partner: Poland 

•  Strengthening incentives: Sweden and the United Kingdom 

Eight EU donors did not report any actions to support ownership. 

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4. 

EU ACTION ON ALIGNMENT 

Increasing  alignment  of  aid  with  partner  countries’  priorities,  systems  and  procedures  and 
helping  to  strengthen  their  capacities  is  a  central  principle  of  the  Paris  Declaration.  To 
improve  alignment  donors  agreed  to  use  country  systems  (national  arrangements  and 
procedures  for  public  financial  management,  accounting,  auditing,  procurement,  results 
frameworks  and  monitoring)  to  the  maximum  extent  possible.  Using  a  country’s  own 
institutions  and  systems,  increases  aid  effectiveness  by  strengthening  the  partner  country’s 
sustainable  capacity  to  develop,  implement  and  account  for  its  policies  to  its  citizens  and 
parliament. Donors also committed themselves to draw conditions, whenever possible, from a 
partner’s national development strategy, and make them public. Improving the predictability 
of aid is another aspect of alignment, and donors have committed themselves to disburse aid 
in  a  timely  and  predictable  fashion  according  to  agreed  schedules.  In  terms  of  technical 
cooperation,  donors  have  agreed  to  reduce  the  stock  of  parallel  project  implementation 
units, in order to strengthen the capacities of partner countries. 

4.1. 

Increasing the use of country systems 

4.1.1.  Aid Modalities 

Aid modalities give a picture of how country systems are being used. Budget support finances 
the overall budget, and by definition, uses the country’s public financial management (PFM) 
system. Project aid and technical cooperation, on the other hand, are modalities that often rely 
much  less  on  the  country’s  PFM  system.  It  is  important  to  note,  however,  that  all  aid 
modalities can use country PFM systems (in part or in their entirety).  

The table below shows that nine EU donors (Cyprus, Czech Republic, Estonia, Italy, Latvia, 
Luxembourg, Portugal, Slovakia, and Slovenia) deliver almost all of their bilateral aid (80 - 
100 %) through either project support or technical cooperation5. The situation is reflected in 
the responses on the share of use of programme-based modalities: only Ireland channels more 
than half of its aid through programme based approaches. 

5 

Responses  to  question  "Of  your  country  programmable  aid  (excluding  also  aid  channelled  through 
multilateral organisations or the European Commission) ,please enter an approximate percentage share 
according to modalities used in 2009 in % of country programmable aid"). 

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Aid modality: 

Technical cooperation 

Project support 

Budget support 

Austria (2008)6 

6 % 

52 % 

Belgium 

Cyprus 

Czech Republic 

Denmark 

Estonia 

Finland 

France 

Germany 

Ireland 

Italy 

Latvia 

25 % 

40 % 

7 % 

95 % 

40 % 

27 % 

0 % 

30 % 

90 % 

74 % (incl. TC) 

75 % 

50 % 

54 % 

5 % 

30 % 

43 % 

35 % 

65 % 

10 % 

26 % 

8 % 

30 % 

15 %7 

5.82 % 

55 % 

5 % 

Luxembourg 

100 % (incl. TC) 

("marginal") 

91.5 % (incl. TC) 

8.5 % 

Portugal9 

Slovakia 

Slovenia 

Spain 

20 % 

27.99 % 

100 % (incl. TC) 

60 % 

31.1 % 

United Kingdom10 

15 % 

Commission 

9% 

44 % 

20 % 

18.32 % 

26 % 

36% 

(programmes 

Other 
etc.) 

32 % 

10 % 

31 % 

15 %8 

5 % 

18.6 % 

11 % 

Fifteen EU donors confirmed they were able to use country systems in ways other than budget 
support.  The  way  in  which  country  systems  are  used  varies:  the  most  common  method  is 
through  partial  use  of  country  systems  on  the  basis  of  assessments  of  the  quality  of  public 
financial management in the partner country. In some cases pooled funding also uses country 
systems, either fully or partially. 

6 
7 
8 
9 

10 

Based on ADA’s 2008 operational budget. 
General budget support and structural adjustment loans. 
Programme-based outside GBS and structural adjustment loans. 
Calculated  on  the  basis  of  provided  preliminary  information:  32.790.430€  for  TC  and  projects, 
3.050.000€ for BS (Comment: "At this moment we are beginning the collection of 2009 data. It is not 
possible yet to make a distinction between the amount to technical cooperation from the one to project 
support." 
UK  does  not  differentiate  project  support  versus  other  forms  of  bilateral  aid  so  cannot  provide  this 
information. 

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Of  the  EU  donors  that  use  budget  support,  Denmark,  France,  Germany,  Netherlands  and 
Portugal  channel  more  than  half  of  their  budget  support  through  general  budget  support, 
whereas  more  than  half  of  the  budget  support  of  Austria,  Belgium,  Greece,  Ireland,  Italy, 
Lithuania,  Spain,  Sweden  and  the  Commission  was  accounted  for  by  sector  support.  For 
Finland the situation was equally balanced. For the Commission figures vary depending on 
the financial instrument used. 

The reasons listed for preferring sector budget support include: 

•  assumed comparative advantage of the donor in a given sector 

•  need for a sector-specific dialogue with the partner country;  

•  facilitating assessment of results; 

•  donor's internal need to earmark funding; 

•  facilitating division of labour through sector concentration; 

•  lack of confidence to enter into general budget support with the partner country 

•  lower threshold to move into sector budget support from other aid modalities 

•  general  budget  support  was  deemed  to  be  more  appropriate  for  larger  operators 

(European Commission, World Bank)  

4.1.2. 

Status, guidance and plans for increasing the use of country systems 

Thirteen EU donors11 have drawn up plans for making greater use of country systems in line 
with the Accra Agenda for Action, while 15 have not. For those who have plans, these often 
are  part  of  a  wider  plan  or  development  programme  focusing  on  implementing  the  Paris 
Declaration and the Accra Agenda for Action. 

The situations of the reporting Member States are as follows: 

•  not  using  public  financial  management  systems:  Estonia,  Latvia,  Luxembourg, 

Poland and Slovakia  

•  not using country procurement systems: Estonia, Latvia and Slovakia  

•  leaving  the  question  unanswered:  Bulgaria,  Hungary,  Lithuania,  Malta  and 

Slovenia 

•  reporting  that  the  question  did  not  apply  to  their  cooperation:  Cyprus  and  the 

Czech Republic 

Reasons reported by Member States for the low level of use of country systems (apart from 
arguments related to aid modalities):  

11 

AT, DK, EE, FR, DE, IT, LU, NL, PT, SI, ES, SE, COM 

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•  the poor quality of partner countries' systems;  

•  the preference on the part of partner countries to use donor procedures to speed up 
processes  (in  view  of  the  slowness  of  domestic  processes  and  the  investment 
needed to start them up); 

•  cooperation with other donors who are not willing to use country systems; 

•  the amount of time required to change the portfolio of aid interventions.  

In  this  context  it  is  important  to  note  that  the  2008  Paris  Declaration  monitoring  report 
showed that the use of country systems did not increase in line with the improved quality of 
those  systems12.  The  EU  has  previously  acknowledged  that  country  systems  will  be 
strengthened by their increased use13. Although no EU donors have a specific mechanism in 
place to fulfil the AAA commitment for transparent explanations when country systems  are 
not used, references were made to consultations with partner countries, joint selection of aid 
modalities as well as internal verification of donors and review processes. 

EU  donors  who  have  conducted  joint  assessments  of  the  quality  of  country  systems  are: 
Austria,  Denmark,  Finland,  France,  Germany,  Ireland,  Netherlands,  Portugal,  Spain, 
Sweden,  and the  UK.  These assessments are available  for other countries to use (except for 
Austria)  and  to  partner  countries,  which  represent  a  positive  basis  for  moving  towards  the 
harmonisation  of  assessments  as  set  out  in  the  Operational  Framework.  In  some  cases  joint 
assessments are supplemented by additional measures, such as private audits. Four EU donors 
reported that they had not been involved in joint assessments at all, which is probably due to 
the use of non-programme-based aid modalities. 

The EU Operational Framework recognizes that, in order to foster the use of country systems, 
common approaches are needed. There is a need to avoid duplication and overlap in assessing 
existing  country  systems.  Instead  donors  should  aim  at  establishing  some  sort  of  mutual 
recognition of assessment methodologies and results. 

4.2. 

Changing the nature of conditionality 

Several  EU  (Finland,  France,  Germany,  Netherlands,  Spain  and  the  United  Kingdom) 
donors  are  attempting  to  reduce  conditionalities,  for  example  by  making  aid  interventions 
more outcome-oriented, enhancing use of performance assessment frameworks and working 
at  within  international  fora.  Several  have  a  very  limited  use,  or  do  not  use  at  all, 
conditionalities (Czech Republic, Estonia, Ireland, Italy, Latvia, Poland, and Slovenia). 

The  justification  for  non-action  by  other  EU  donors  included  the  difficulties  in  changing 
relevant  legislation,  the  need  for  some  conditions  for  anti-corruption  purposes,  that 
conditionality  was  deemed  irrelevant  since  budget  support  was  not  given,  or  because 
conditionalities were already seen as mutually agreed with partner countries or marginal. 

12 

13 

The 2008 Survey on Monitoring the Paris Declaration: Making aid more effective by 2010, p. 41-42; 
http://www.oecd.org/dataoecd/58/41/41202121.pdf 
Third High Level Forum on Aid Effectiveness, Accra, Ghana, 2-4 September 2008. Guidelines for the 
participation of the European Union. 11592/08, paragraph 19. 

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Twelve Member States reported that their conditionalities are made public (Austria, Belgium, 
Estonia, Finland, Germany, Greece, Italy, Latvia, Netherlands, Portugal, Romania and the 
UK). However, there are few indications as to exactly how these conditionalities were made 
public, with some referring to the public availability of country strategies or performance 
assessment frameworks, annual reports and general information on the internet. For the 
Commission, detailed information on interventions is included in the public Annual Action 
Programmes (financing decisions adopted by the European Commission). The European 
Commission continues efforts with other donors to harmonize measures and indicators in 
Performance Assessment Frameworks. Logically, this leads to less conditionalities on behalf 
of the donor community. 

4.3.  Making aid more predictable 

The  majority  of  the  EU  donors  (19)  are  making  multiannual  commitments,  with  more  than 
one  third  also  now  making  multiannual  commitments  for  a  programme-based  approach  in 
general.  Fixed  duration  commitments  remain  the  rule.  Finland,  France,  Netherlands, 
Portugal, Slovakia and Slovenia have been able to apply a rolling programme for at least part 
of  their  cooperation,  and  France  and  Netherlands  have  a  system  that  allows  them  to  make 
both annual and multiannual commitments. 

Sixteen  donors  have  a  tracking  mechanism  to  monitor  the  differences  between  planned  and 
actual  commitments  and  disbursements,  for  a  large  majority  on  an  annual  basis  (Cyprus, 
Denmark,  Estonia  and  Finland  have  a  multiannual  tracking  system,  the  system  in  Finland 
and Denmark actually allowing for both). Usually, those who do not have such a system are 
not planning to have one in the short-term, either because they report at country level rather 
than  at  central  level,  or  because  their  aid  budget  is  too  small  to  justify  setting  up  such  a 
system. 

4.4. 

Reducing PIU's 

Luxembourg, Sweden and the Commission track the establishment or dismantling of parallel 
project implementation units (PIU)14. Other EU donors do not use aid modalities that might 
involve  PIU's).  In  most  cases,  information  on  expenditure  related  to  providing  technical 
cooperation was reported to be available to the public. 

14 

Sweden  responded  not  to  have  established  any  new  PIUs,  although  figures  indicate  an  increase  from 
2005  to  2008.  The  reason  for  the  increase  was  interpreted  solely  that  countries  have  understood  the 
definitions differently from. Luxembourg explained that arrangements were mostly in place to develop 
capacities and only to a limited extent to administer projects. For the Commission the stock had went 
down from 109 to 93 in 2010, but with 9 new PIU's established. 

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5. 

EU ACTION ON HARMONISATION 

EU donors have committed themselves to establishing a more effective division of in-country 
division  of  labour.  In  terms  of  achieving  this  goal,  joint  programming  represents  a 
fundamental  tool  for  the  EU.  In  Accra,  donors  agreed  to  start  dialogue  on  cross  country 
division  of  labour,  and  this  is  also  a  subject  for  EU  level  action  in  the  Operational 
Framework.  Coordinating  missions  is  also  important  in  terms  of  harmonisation,  since  the 
number  of  donor  missions  often  represents  a  serious  challenge  in  terms  of  the  time  and 
resources that must be devoted to these visits. 

5.1. 

Establishing a better in-country division of labour 

The  EU  has  been  addressing  the  issue  of  aid  fragmentation  first  and  foremost  within  the 
context  of  the  EU  Code  of  Conduct  on  Complementarity  and  Division  of  Labour15  and  an 
initiative to fast track division of labour in a number of countries as listed in the Operational 
Framework.  Actions  being  undertaken  by  EU  donors  both  Headquarters  and  Country  level, 
include: 

•  preparation of specific guidelines and notes for staff, provision of specific training, 

•  dissemination of information,  

•  having a direct dialogue with embassies on this issue,  

•  increasing delegation of authority to embassies to allow Division of labour decisions to be 

taken at partner country level,  

•  carrying  out  comparative  advantage  self-assessments  either  globally  or  in  a  number  of 

countries (all but four EU donors). 

15 

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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Ar e  the principles  of  the  Code  of  Conduct  on  Division
of 
     labour  being  integrated  in  strategies,  staff
guidance and programming?  

PARTI ALLY
10 EU 
donors

YES
14 EU 
Donors

 NO 
3 EU 
donors

These  efforts  are  making  a  difference.  Nearly  all  Member  States  report  that  they  are 
improving complementarity in partner countries where they are involved. Practical results are 
being achieved through cooperation in sector involvement, and by establishing EU thematic 
platforms. In addition, some Member States, such as Austria and Estonia, have changed over 
from project support to budget support or multi-donor funds in certain partner countries. 

In terms of sector concentration, the following picture emerges: 

Sector Concentration

s
e

i
r
t
n
u
o
c

t
n
e

i

i

p
c
e
r

f
o
r
e
b
m
u
N

160

140

120

100

80

60

40

20

0

in more than five sectors

in four to five sectors

in three sectors or less

AT BE DN FI FR DE IE GR IT LU NL PT ES SE UK EC

EU 15 + Commission donors

EN 

13 

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Sector Concentration

in three sectors or less

in four or five sectors

in five sectors or more

s
e
i
r
t
n
u
o
C

t
n
e
i

p
i
c
e
R

f
o
r
e
b
m
u
N

10

9

8

7

6

5

4

3

2

1

0

CY

EE

LV

PL

RO

SK

SL

New EU Donors, according to data availability

This shows that there is still room for improvement. However, Austria, Finland, Germany, 
Ireland  and  the  Netherlands  pointed  out  that  they  are  in  the  process  of  phasing  out  one  or 
more sectors in partner countries, which will have a positive effect on this overview. 

Member  States  have  continued  to  actively  use  delegated  cooperation  as  a  method  for 
reducing fragmentation of aid, as demonstrated below: 

Legal arrangements in place 

Actual delegation of funding 

21  donors  have  such  arrangements.  Bulgaria,  Czech 
Republic, Italy, Malta, Poland, Slovak Republic, and 
Spain do not have them yet (although they are due to 
be introduced in Italy and Spain) 

Range  from  one  other  donor  (several  cases)  to  11 
other  donors  (in  one  case),  the  general  range  is 
between two and five 

Value of EU delegation to other donors 

€ 242.7 million (for 30 countries) 

Value  of  delegation  from  other  donors  to  EU 
delegation 

€123.4 million 

Delegated cooperation tracking systems 

Austria,  Belgium,  Cyprus, Estonia,  France,  Greece, 
Ireland,  Latvia,  Luxembourg,  Netherlands,  Spain, 
Sweden and European Commission 

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14 

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5.2. 

Improving joint programming 

Joint  programming  is  by  far,  the  best  way  to  achieve  coordination  of  aid  and  division  of 
labour. Nine Member States (Belgium, Denmark, Finland, Germany, Greece, Ireland, Italy, 
Netherlands, and Sweden) indicated that they had taken part in a joint programming exercise 
during  the  mid-term  review  of  the  European  Commission’s  development  cooperation 
instruments.  In  some  countries  joint  programming  has  been  applied  to  Joint  Assistance 
Strategies  (Ghana,  Tanzania,  Uganda,  Zambia),  to  sector  programmes  and  to  mid  term 
reviews of PRSP16. In eleven partner countries, this process led to the drafting of a complete 
country  strategy,  including  a  shared  donor  response17.  Within  this  group  the  EU  Common 
Framework for Country Strategy Papers was used to draft the joint document in three specific 
cases,  i.e.  Sierra  Leone,  Somalia  and  South  Africa.  Under  the  terms  of  the  Operational 
framework, a number of countries where the EU will work to implement joint programming 
will be identified by July 2010 with the aim of being fully operational by 2014. In order to 
meet  this  deadline,  EU  donors  should  start  taking  the  necessary  steps  to  synchronise 
programming cycles. 

Example of EU concerted action – Division of Labour in Ethiopia and Bolivia 

In  Ethiopia,  there  are  13  EU  donors  active  in  12  sectors18.  In  September  2009,  an  EU  process  was  initiated  to 
examine  the  cases  of  specific  countries  in order  to  support  the  implementation of division of  labour at  country 
level. There had been broad support for organising a practical country discussion by bringing together decision 
makers from headquarters and field level. A consensus had emerged to look first at the situation in Ethiopia and 
Bolivia.  

The methodology of this country discussion was the following: 

•  Presentation from the field , by the facilitating donor (here the EU Delegation) on the analytical work carried out 
at field level on how to improve division of labour in Ethiopia - in terms of a Donor Matrix and a Donor Self-
Assessment on perceived comparative advantages (carried out in 2008). 

•  Presentation  by  the  European  Commission  headquarters  of  newly  developed  analytical  work  from  the 

OECD/DAC on aid fragmentation. 

•  Exchange of views between Directors General of Development of European Commission and the Member State. 

•  Decision on follow up actions: EU Director General's agreed that the EU provides the right framework to initiate 
and develop a collective division of labour process in order to the reduce aid fragmentation in Ethiopia. One of 
the main follow up actions will be the development of an EU Joint Response Strategy, which will include an 
'EU Aid reallocation' exercise.  

5.3. 

Cross-country division of labour 

Fragmentation of aid across countries continues to be a problem for EU donors. There are 10 
EU donors present in Tanzania, 13 in Nicaragua, and 14 in Mozambique. On the other hand, 
there are only five in the Central African Republic and in Papua New Guinea. 

16
17 
18 

Main structured source if information about joint programming is in Monterrey Reports 2007-09. 
According to Commission programming documents. 
2009  OECD  Report  on  Division  of  Labour  –  Addressing  Fragmentation  and  Concentration  of  Aid 
across Countries. 

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15 

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However, the responses to the Monterrey questionnaire show that there has been progress, as 
seen in the table below: 

Number  of  countries  in  which 
Country  Programmable  Aid19  is 
provided 

From 3 to 113 

Number of priority countries 

From 3 to 57 

Proportion  of  aid  delivered  to 
priority countries out of total aid 
delivered 

Around 100% for BE, CY, IE, HU 

70% or more for AT, CZ, EE, IT, LV, SE, UK 

Redeployment processes 

BE,  DE,  UK  and  SE  indicate  that  such  redeployment 
decisions have already been implemented.  

AT,  IT,  NL,  ES,  SE,  UK  are  currently  carrying  out  other 
redeployments processes, with results due by 2011-2012. 

CZ,  EE,  GR,  HU  and  LT  are  ready  to  look  at  potential 
redeployment plans in 2010.  

The  Monterrey  survey  clearly  illustrates  many  of  the  specific  difficulties  which  Member 
States have encountered in moving the division of labour agenda forward. Those difficulties 
are summarised as follows: 

of 

Lack 
information 
Political 
dimension 

Administrative 
impediments 

Lack  of  donor 
resources 

some  developing 

Difficult  to  elaborate  meaningful  plans  when  donors 
do not know about the activities and plans of others 
Long-standing 
relations  with 
countries 
Political dimension of potential redeployment/ or exit 
decisions. 
Different  procedures  and  regulations  of  the  different 
donors 
Complexity and lack of flexibility of procedures 
Time needed to adapt national regulations 
Need  to  share  and  harmonise  delegated  cooperation 
contracts 

When donors decide  to  pull  out,  it  is  a  challenge  for 
other donors to allocate enough resources keep the aid 
volume stable. 

19 

Country Programmable Aid (CPA) reflects the amount of aid that can be programmed by the donor at 
partner  country  level. CPA  is  defined  through  exclusions,  by  subtracting  from  gross  ODA  aid  that  is 
unpredictable  by  nature  (humanitarian  aid  and  debt  forgiveness  and  reorganisation),  entails  no  cross-
border flows  (development  research  in donor  country,  promotion  of  development  awareness,  imputed 
student costs, refugees in donor country and administrative costs), does not form part of co-operation 
agreements between governments (food aid and aid extended by local governments in donor countries), 
is not country programmable by the donor (core funding to national NGOs and International NGOs), or 
is  not  susceptible  for  programming  at  country  level  (e.g.  contributions to  Public  Private  Partnerships, 
for some donors aid extended by other agencies than the main aid agency). 

EN 

16 

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5.4. 

Coordinating missions 

While  some  Member  States  have  been  very  successful  in  coordinating  missions  with  other 
donors (Denmark reported that 100% of missions were coordinated), the overall picture tends 
to  show  that  there  is  a  lot  to  be  done  in  this  area.  Information  about  the  coordination  of 
missions  with  other  donors  is  not  very  detailed  and  varies  greatly.  Some  countries  do  not 
provide information because information is not monitored centrally. 

6. 

EU ACTION ON MUTUAL ACCOUNTABILITY 

Mutual  accountability  lies  at  the  heart  of  the  Paris  Declaration,  and  is  a  process  by  which 
two  (or  multiple)  partners  agree  to  be  held  responsible  for  the  commitments  that  they  have 
voluntarily made to each other. It helps build trust and partnership around shared agendas 
and  provides  incentives  for  behaviour  change  needed  to  achieve  better  results.  A  central 
element in this regard, is making aid flows more transparent. 

6.1. 

Improving mutual accountability 

The  2008  Paris  Declaration  Monitoring  Survey  report  showed  that  only  14  out  of  the  53 
partner  countries  surveyed  had  functioning  mutual  accountability  mechanisms  between 
partner governments and donors20. This is an area of concern as mutual accountability at both 
country  and  international  levels  is  vital  because  of  the  inherently  unequal  relationship 
between donors and recipients. While recipients are required to explain their performance to 
donors in return for funds received, there often are no systems that require donors to explain 
their  performance  to  partner  governments  and  their  citizens.  Among  EU  donors,  Austria, 
Finland, Ireland, Italy, Netherlands, Portugal, Spain, Sweden and the UK reported to have 
taken part in joint review mechanisms and Germany and France indicated their readiness to 
do so. Apart from these exercises, there does not seem to be very many practical initiatives on 
mutual accountability. In order to make further progress, the Commission and Member States 
could  work  together  to  establish  common  EU  approaches,  for  example,  by  developing  a 
country level performance assessment framework that includes all EU donors’ commitments 
on aid effectiveness. EU donors are pursuing a specific initiative by Ireland, Spain, UK and 
the European Commission. 

6.2.  Making aid more transparent 

In  general,  EU  donors  make  aid  information  available  consist  in  publishing  the  reports  of 
development cooperation on national websites on an annual basis. Finland has systematised 
its procedures of reporting on ex ante notifications and contract awards, and has considerably 
increased  the  number  of  notifications  published  on  the  DAC  Procurement  Opportunities 
website. In general, it is worth noting that the International Aid Transparency Initiative which 
aims  to  improve  public  availability  and  accessibility  of  information  on  aid  flows,  could 
provide a useful vehicle for EU action. On the basis of EU team work, we should be able to 
make  significant  progress  on  publishing  regular,  accurate,  detailed,  timely,  comprehensive 

20 

Afghanistan,  Burundi,  Cambodia,  Colombia,  Ethiopia,  Ghana,  Malawi,  Moldova,  Mozambique, 
Nicaragua, Papua New Guinea, Senegal, Tanzania and Vietnam. The 2008 Survey on Monitoring the 
Paris Declaration: Making aid more effective by 2010, p. 90. 

EN 

17 

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and  comparable  information  on  volume,  allocation,  conditions  and,  where  available,  the 
results of development expenditure. 

As for the EU budget and the European Development Fund, the European Commission, it 

•  publishes  on  the  internet  the  annual  programmes  providing  information  about 

forthcoming activities which will receive financial support; 

•  has  set  up  a  specific  search  engine  for  beneficiaries  of  grants  and  contracts 
administered by the headquarters which allows for different search criteria21; 

•  is rolling out a new template for projects managed by delegations for Delegations’ 

websites, incorporating the basic data for EU funded projects22; 

•  has so far coordinated the publication of more than 300 case studies and has set 

itself the target of producing 100 more every year23; 

•  is also developing the TR-AID24 information tool further, to facilitate the sharing 
of  aid  funding  data.  So  far,  TR-AID  has  relied  on  information  from  the 
Commission and available open sources, but it has the potential to become an up-
to-date  source  of  information  on  EU  actions,  provided  that  Member  States  are 
willing to share their data with TR-AID. 

7. 

EU ACTION ON MANAGING FOR DEVELOPMENT RESULTS 

The focus on results makes the promotion of management for development results (MfDR). 
central to the entire aid effectiveness agenda. It means that stakeholders push partner country 
governments  and  donor  agencies  to  show  results,  i.e.  to  demonstrate  the  effectiveness  and 
actual  impact  of  aid.  It  means  that  donors  and  recipients  oblige  each  other  to  demonstrate 
that they are honouring their commitments and promises. 

Some EU donors are still in the initial phases of moving forward in terms of MfDR. Slovakia 
and Poland referred to the fact that their aid management system, including monitoring and 
evaluation, was still under construction, and there were internal capacity constraints to come 
up with a more fully developed model for MfDR at this stage. Greece and the Czech Republic 
will  take  the  issue  into  account  when  their  development  strategy  or  organisation  is  to  be 
renewed.  Italy  was  in  the  process  of  reviewing  programme  design  and  implementation 
guidelines to this end, while Finland and Sweden were reviewing their mechanisms for the 
quality and control of aid intervention in the interest of MfDR.  

21 
22 
23 
24 

http://ec.europa.eu/beneficiaries/fts/index_en.htm 
http://ec.europa.eu/delegations/ukraine/projects/list_of_projects/projects_en.htm 
http://ec.europa.eu/europeaid/what/rural-development/index_en.htm 
TR-AID is an information gathering system that has been developed to support sharing of information 
across major international donors with the aim to using aid funds most effectively. 

EN 

18 

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Other EU donors are pursuing a number of interesting approaches, as illustrated below: 

Actions taken to enhance MfDR 

EU Donors 

MfDR part of the agency's management plan 

Denmark,  Netherlands,  UK,  Ireland  Spain,  Sweden 
and France 

Performance management framework or log frame 
in place 

Denmark, Ireland and UK 

Indicators for MfDR used 

Netherlands and France 

Programme management is based on MfDR. 

Finland  

Recommendations  in  annual  reports  to  be  taken 
cycle  of 
into 
implementation 

consideration 

the  next 

for 

Latvia 

MfDR 
partner countries. 

introduced  as  basis  for  dialogue  with 

France and Germany 

MfDR training, strengthening of country offices 

Estonia, Austria  

New IT system for project management 

Strengthened  MfDR  on  the  basis  of  an  increased 
number of evaluations. 

Finland 

Portugal 

8. 

CONCLUSIONS 

The responses to the Monterrey questionnaire present a mixed picture of what is happening 
within the EU on aid effectiveness. While EU working methods and processes could at times 
be better coordinated, there clearly is a genuine willingness to pursue this issue and some real 
movement is taking place. 

In  terms  of  alignment,  undertaking  joint  assessments  and  continuing  to  work  towards 
establishing a harmonised approach for assessments on country systems represents a good 
first  step  towards  reducing  duplication  and  unnecessary  demands  on  partner  countries.  The 
EU  should  go  further  in  this  direction,  because  harmonisation  between  donors  is  a  key 
commitment  embedded  in  the  Paris  Declaration.  Furthermore,  Article  210  of  the  Lisbon 
Treaty imposes an obligation on the Union and the Member States to coordinate development 
actions and to act jointly at EU level. This could be achieved through mutual recognition of 
a number of tools and processes. Ultimately, this type of work could play an important role in 
terms of increasing partner country ownership and alignment. 

In  terms  of  harmonisation,  much  progress  can  still  be  made  by  effectively  tackling  the 
fragmentation  of  in-country  aid  by  actions  associated  with  the  Division  of  Labour  Fast 
Track  Initiative.  Joint  EU  programming  provides  a  strong  opening  for  achieving  sector 
concentration.  In  the  context  of  in-country  division  of  labour,  the  issue  of  vertical  funds 
should also be considered. 

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19 

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A  common  European  approach  for  making  headway  on  cross-country  aid  fragmentation 
should be included in the Operational Framework. As the EU provides nearly 60 per cent of 
global ODA, it could be regarded as 60 per cent of the problem or 60 per cent of the solution. 
By  establishing  principles  in  terms  of  the  neutral  impact  of  aid  volumes  and  addressing  the 
orphan's  gap  issue,  and  by  agreeing  on  measures  such  as  a  systematic  process  for  sharing 
information, the EU can potentially have a powerful impact on making aid more effective. A 
more detailed proposal for an EU approach on Cross-Country Division of Labour is presented 
in Annex. 

Mutual accountability, including transparency, are crucial as they define the aid-relationship 
between donors and partners. This is also an issue which deserves to be addressed at EU level 
in a separate chapter in the Operational Framework, building on the ongoing work carried out 
at technical level. 

The  EU  has  a  real  opportunity  to  boldly  move  the  aid  effectiveness  agenda  forward.  The 
Operational Framework in particular offers a way forward. Working together on these issues 
within the EU is not simply a matter of doing something at the EU level for the sake of it. Not 
all aid effectiveness issues are appropriate for action at the EU level. However, for many of 
these  issues,  there  is  a  clear  added-value  of  an  EU  approach  which  makes  practical  sense. 
Also these issues often represent a way to open up avenues to move forward on the wider aid 
effectiveness agenda on the road to the Fourth High Level Meeting on Aid Effectiveness in 
Seoul. 

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ANNEX: proposed EU approach on cross-country division of labour 

The Commission and Member States agree that: 

•  National  sovereign  decisions  concerning  country  level  reallocations  of  aid  will  be 
coordinated  at  the  EU  level  in  order  to  provide  a  better  response  in  dealing  with  cross 
country aid fragmentation. Joint EU programming and delegated cooperation opportunities 
will be used as instruments for achieving this goal. 

•  A  systematic  process  of  information  collection  will  be  initiated  through  the  annual 
Monterrey  questionnaire  (i.e.  self-assessments),  with  a  view  to  drawing  up  a  map  of 
opportunities for reducing cross country aid fragmentation. 

•  Each  year  a  technical  seminar  will  be  held  to  analyse  and  discuss  the  results,  and  the 
information  will  be  disseminated  as  part  of  the  annual  Commission  Communication 
containing the Monterrey Report. 

•  National decisions on cross country reallocations will then be recognised by the Council. 

•  The following principles will be borne in mind during this process: 

–  ensuring a neutral or beneficial impact on overall aid volumes 

–  reducing  the  orphans’  gap  and  improving  situations  where  partner  countries  are 
lagging in their ability to achieve the Millennium Development Goals, including 
by  providing  additional  resources  and/or  delegating  cooperation 
the 
Commission's  in  order  to  take  advantage  of  the  Commission's  global  presence 
established in the European Consensus. 

to 

–  giving special consideration to new Member States who are approaching the issue 
of cross country division of labour from an entry, rather than an exit perspective. 

–  communicating  immediately  with  relevant  partners  when  the  EU  has  a 
preliminary view of how to implement cross country Division of labour, in order 
to enrich donors’ decision-making processes by integrating the view's of partner. 

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