On December 18, GMF hosted a roundtable event in Washington, DC, entitled "What are the prospects for the Accra commitments?" to address the future of aid effectiveness in the wake of the global financial crisis and pledges made by donors and developing countries in Accra last September (see Accra Agenda for Action). A new report that provided the basis for discussion was presented by Alex Wilks, the director of the Brussels-based European Network on Debt and Development (Eurodad). This joint GMF-Eurodad report offers a set of recommendations based on case studies and analysis of the operations of the U.K. Department for International Development (DFID), the U.S. Agency for International Development (USAID), and the European Commission (EC) and their efforts to align and coordinate foreign assistance (see Harmonization and Alignment: Challenges and opportunities for U.S. and European Donors post-Accra).
This DC conversation was moderated by GMF Senior Transatlantic Fellow and former congressman Jim Kolbe, and participants included Geraldine Dufort, the first secretary, Political and Development Section, Delegation of the European Commission; Dirk Dijkerman, the chief operating officer, Office of the Director of Foreign Assistance, U.S. Department of State; and Claire Moran, the first secretary international development, British Embassy of the U.S., seconded from DFID. The objective of the report and event was to foster a transatlantic dialogue and facilitate progress on the Accra commitments while linking the effort to geo-political security in fragile states and emphasizing that the reform process should strengthen transatlantic cooperation.
Alex Wilks stressed in his presentation that in a climate of tighter budgets, financial turbulence, and increased fragility in developing countries, foreign assistance will have to become more effective. He made the point that aid can be a stable financial flow to fragile states at a time when other flows are disrupted, and, given the current levels of pressure on public spending, it is important that all aid is spent in a result-oriented fashion. There are some major hurdles in making aid more effective. For instance, based on the OECD's rankings of the health of country procurement and budget systems, there are some developing countries that could benefit from direct support and the use of their country systems for the delivery of aid. However, donors often do not use country systems to disperse aid, even when they are ranked well in terms of quality. The alignment of aid with country systems is important to building local capacity and institutions, especially to ensure that local political representatives have the opportunity to be held accountable for these programs. At the same time, donors and their key stakeholders, like legislatures, have serious concerns about so-called budget support, such as writing checks to governments, and questions about corruption and accountability. He also discussed the significant level of fragmentation in the aid system and the need for cooperation among donors. There needs to be a concerted effort to lower transaction costs for donors and aid recipients through innovative approaches, like delegating sectors/projects to other donors to help rationalized aid at the country level. To work toward greater aid effectiveness, Mr. Wilks elaborated on five key recommendations based on Eurodad's case studies:
1. Donors should work through Joint Assistance Strategies to reduce aid fragmentation and increase alignment with government systems;
2. Where funding comes through projects, aid should be reported in the budget and passed through government financial systems;
3. Donors should ensure greater transparency and predictability of aid;
4. Donor governments and NGOs should educate their publics and legislatures about the importance of aid in supporting effective state building;
5. Donors should provide simpler and clearer aid objectives and delegate authority to staff on the ground to implement these objectives flexibly.
Geraldine Dufort expressed her support for these recommendations, underlining that in the midst of the financial crisis, pressure must be kept on governments and non-governmental donors to uphold their aid commitments. Reflecting on the European Union's journey to prioritizing the international commitments made in Accra in September 2008, she stated that there is a shared competency between the EU and its member states in terms of coordination, coherence and implementation. The May 2007 EU Code of Conduct on aid is one important step in helping build greater aid coordination among EU members. The EU is educating staff in the field on the Paris Declarations and creating incentives to implement them. However, she also pointed out that when it comes to striking an agreement between the European Parliament and the parliaments of the individual member states on matters of foreign assistance, the situation becomes very complicated, as the member states are skeptical of budget support and the current European Commission favors it.
Claire Moran also expressed her support for the recommendations laid out in the report and supported Mr. Wilks' argument that greater accountability and transparency are needed within foreign aid systems. To enhance predictability, she explained, DFID has three-year budget agreements with the U.K. Department of Treasury, which make it easier to plan, budget, and achieve macro-level goals. One important step that DFID took was the delegation of authority to field officers for management decisions. She also mentioned requirements for the field officers to streamline programs, implement joined-up approaches, and conduct performance evaluations. Another important key to DFID's success that may help inform the U.S. aid debate is how it has successfully built up trust with the Public Accounts Committee in Parliament. Speaking of the challenges ahead, she underlined that key stakeholders must ensure that there is strong, continued advocacy for development.
Dirk Dijkerman supported the findings and recommendations in the report, stressing that alignment is what the development community really needs. However, he wanted to put the report's data in its proper context - country procurement and budget systems are among the most challenging areas of the aid effectiveness agenda. Achievements have been made elsewhere, and other data should be examined too. Mr. Dijkerman also reminded the audience that the lead up to the Accra commitments was much more participatory than the Paris Declaration process, noting that this is an indication of progress. In terms of implementing the Paris Declaration and the Accra Action Agenda, he stated that the recommendations in the Eurodad report are spot-on. He mentioned that since Accra, Henrietta Fore has given guidance to field officers with an emphasis on increasing non-project assistance. However he pointed out that accomplishing this requires a bit of a balancing act, with accountability moving in two directions (from donor to recipient and vice versa). We do not need to use local systems to help build them, and accountability to Congress must be considered. But, he also acknowledged that "project aid" can potentially undermine efforts to build nations by breaking the link between society and state, taking away local talent from government and private sector, and negatively impacting the legitimacy of the state.
The questions and subsequent discussion centered on the necessity of aid alignment in fragile states and the need for donors to organize themselves to this end. Mr. Dijkerman stressed that what is key in fragile states is that investments build local capacities, such as local institutions and administrations. Participants shared their views on the specific case of aid reform in the U.S., discussing the challenge of a difficult relationship between Congress and USAID (i.e. a lack of trust). They agreed that current legislation and the appropriations process need to be better aligned and that a clear strategic mission should be established for the American foreign aid system, with clarity of objectives and well-communicated linkages between development and national security. Participants also expressed the need to utilize a multiplicity of tools and work to achieve development goals from the country base with greater flexibility. The Tanzanian Ambassador helped summarize the event with a strong comment on the need for progress among donors to ensure lower costs and reduce duplication in aid. He mentioned that Tanzania holds a "donor holiday," where for three months of the year donors are not to engage government officials so that they can focus on their work of delivering services to their citizens.
In conclusion, the group stressed that all development is local, and even regional programs should ensure that aid efforts are grounded locally. The group also concluded that budget support is not an "all or nothing" proposition and that there is a need for transatlantic dialogue on approaches that address concerns over corruption, build in accountability for donors and aid recipients, and support local systems.