THE DEVELOPING WORLD
How Brussels has overhauled its 'dire' aid apparat
Autumn 2005
The aid needs of the ex-communist bloc, the Mediterranean and the Balkans placed huge strains on the EU’s aid-giving mechanisms. Koos Richelle, Director-General of the European Commission’s EuropeAid office, says that now the system has been overhauled the challenge is to ensure impact
When the Commission embarked five years ago on reforming its external aid, there was a dire need for it. After almost 30 years of mainly providing support to member states’ former colonies, the world of assistance had changed. During the early 1990s, EU support had to be given, in quick succession, to the former communist countries, the Mediterranean region and the Balkans. And each aid programme had to be equipped with its own resources and given its own objectives, procedures and ways of working. Yet no new staff were recruited to manage all this, with the result that from the late 1990s the backlog in funds still to be disbursed grew every year by €2bn. As the year 2000 dawned, this backlog was threatening to mushroom out of control and the Commission had become a byword for slowness and unresponsiveness in aid delivery.
The Commission’s reform of external assistance has changed all this. The Directorate-General of the EuropeAid Cooperation Office was set up as the single entity in the Commission to manage aid. Within four years, 80 Commission field offices have been made responsible for managing programmes, with 1,500 new staff posts created, of which 1,000 are locally hired staff in Commission field offices. IT systems have been reviewed and adapted, and procedures harmonised and simplified. A project implementation monitoring system has been set up covering all regions of the world, and the planning cycle of new programmes and projects has been made much more coherent.
The results are there for all to see; EU aid programmes are more focussed, the average project implementation time has gone down, reflecting a more efficient project management style, payment levels have risen every year and the qualitative assessment of the impact and effectiveness of projects has gone steadily up.
Earlier this year, in March, the NGOs ActionAid and Oxfam branded development aid donors “uncoordinated, and focussed on their own interests”. It was hardly a ringing endorsement of good governance of external assistance, and even though the two NGOs didn’t name names they were probably referring to the EU as one of the donors they had in mind. So what happened to the EU’s development assistance while we at the Commission were putting our house in order?
At about the time that the Commission started on its reforms, member countries of the United Nations had agreed in 2000 to a set of objectives to halve extreme poverty in the world by 2015. These so-called Millennium Development Goals (MDGs) are the first attempt to set internationally agreed goals with quantifiable targets. At the same time, beneficiary countries started designing their own development policies (Poverty Reduction Strategies), closely linked to their national budgets, which donor countries committed to using in determining their own strategies. These were the first two steps in focussing development aid on the needs of recipient countries rather than on perceived needs as determined by the donor countries.
Within the international donor community of bilateral and multi-lateral donors, the European Union, meaning both its member states and the Commission, is by far the largest donor. It provides $43bn, or 55% of all assistance in the world, leaving other donors like the United States and Japan far behind. The EU has the potential to play a hugely influential role in combating global poverty. But it is not one donor, but 26: 25 member states and the Commission.
The 15 older member states are together responsible for most of the $43bn in aid, with the Commission responsible for a fifth of that amount. The 10 new member states are emerging donors. Even though the Millennium Development Goals and the Poverty Reduction Strategies often provide for a single framework, the aid strategies of the EU’s 26 players are still uncoordinated, both in terms of activities and implementation mechanisms. The recipient countries, of course, have to deal with all these different players and rules.
Mozambique for example, had to deal during 2002 with 560 separate activities in the area of social infrastructures and services, provided by 25 EU donors and others, each activity being worth an average of $800,000. It is not a very efficient way of working. Who really “owns” all these activities and how do they contribute to reinforcing the social sector in a recipient country? Maybe ActionAid and Oxfam are partly right. Taking its lead from the strong donor alignment imposed by South Africa in its development programmes, India has been the first country to say “no” to individual donors. It preferred to have less hassle, even if that meant less money. And looking around the world, there is a clear need to professionalize the delivery of external assistance, and that means looking at it on a more general level that goes beyond the Commission or individual donor countries.
Recipient countries stand to gain if the EU, as a major community of donors, can succeed in pushing through its “three c’s” reforms: coherence, coordination and complementarity. Coherence means greater consistency between the internal and external policies of the EU, e.g. no “dumping” of agricultural produce in countries where at the same time the local economy is being assisted through development projects. Another example is migration. A brain-drain of higher educated people, such as nurses and doctors from poor countries, does not contribute to the development of those countries. More coherence would lead to more clarity and to more effective aid.
Coordination and complementarity relate to examples like that of Mozambique, but should also be seen in the context of international donor developments. From country strategies down to local implementation, the EU must coordinate better the activities of its 26 donors. If their policies and strategies are already comparable, because they are closely linked to the MDGs and Poverty Reduction Strategies, why do we need 26 of them? The identification of aid activities should also be better coordinated, and this type of coordination is best done in the field. Finally, when it comes to complementarity, the discussion should be about who does what. If, as in the case of Mozambique, 14 of the 26 EU players are responsible for more than 5/8ths of aid spent, do the other 12 need to be there as well? In the field of education, for instance, five EU donors are responsible for 80% of all EU assistance. What is the added value of all the other donors coming in with their own policies and isolated small activities?
The EU is only at the start of a complex agenda of reforming its external assistance. It will require less flag-raising per donor, and more focus on the job to be done. But the first steps were taken late last year, when the member states decided in November 2004 that the three c’s should be pushed forward by setting a clear agenda and defining a timetable.
On the international scene, this resulted in March this year in clear EU commitments at a donors’ meeting in Paris to prepare for the UN review later this year of the Millennium Development Goals in the run up to the 2015 deadline. This resulted in clear EU commitments, both to the 12 targets agreed by the international donor community in relation to the MDGs and to four additional EU ones. The four additional ones range from increasing budget support (the most advanced form of providing support), to the very practical commitment of halving the number of uncoordinated field trips. The EU has also decided to jointly set targets for assistance levels in 2010 and 2015, rising from 0.56% of GNI to 0.7%. These EU commitments were only made possible because of the earlier EU decision to push forward on the three c’s, and also because of the sense of urgency that something has to happen if we want to attain the MDGs.
Within the EU, the country strategies for each recipient country are (slowly) becoming a joint exercise in which the 26 donors can eventually move forward together by the end of this year a common EU format for these strategies should have been agreed. But as these strategies are the basis for budgetary approval and parliamentary procedures in each of the member states, a degree of flexibility will still be needed.
After the strategies have been established, programme and project preparation should become a joint exercise in each recipient country, involving Commission field offices, embassies of member states and other donors, all the while respecting the ownership of the recipient country. This process should also involve non-state actors such as NGOs which in the end implement a large part of all assistance. Progress also needs to be made on dividing work between donors. Four countries have been made test cases for joint programming that also involves non-EU donors: Mozambique, Morocco, Nicaragua and Vietnam. This has begun to yield good results and also reflects a general move by donors towards some form of devolved management of aid, such as that carried through by the Commission. This would result in better equipped field offices to carry out coordination and implementation tasks. The EU could also pool resources in sectors of particular importance that need a lot of money, such as transport, telecoms and energy infrastructures in Africa. Innovative ways of financing that also involve private capital flows will therefore have to be set up.
A third challenging task is to agree indicators that can accurately measure the impact of aid activities. Many donors struggle with this, because traditionally the donor business has been focussed on input, rather than output and impact. EuropeAid has put a monitoring system in place that rates the performance of projects in terms of impact, efficiency, effectiveness, relevance and sustainability. Yet this still only gives us part of the picture, as it tells us very little about the continuing impact once a project has been completed.
The Commission has now partly put its house in order with its reform of external assistance, but challenges remain. EuropeAid and the field offices need to become a learning organisation that can adapt easily and quickly to changing circumstances. Another big challenge is to move away from processes and procedures, and to focus much more on the impact we want. It is perhaps our most difficult task.