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ICGFM May 2011
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New directions in the quality of aid debate: Implications for support to Public Financial Management
Stephen GroffDeputy DirectorDevelopment Co-operation Directorate
Outline
I. The Aid Quality Agenda and Commitments
II. Assessing Progress
III. Paris Declaration Commitments on PFM
IV. New Actors and New Themes
V. High Level Forum on Aid Effectiveness: Implications for the future Aid Quality Agenda
Change ….? Why Change?
It’s about making aid work better where it is needed
3
A Day in the Life of…
Source; Don De Savigny & COHRED
Contra-
ceptives andRH
equipment
STIDrugs
EssentialDrugs
Vaccinesand
Vitamin ATB/Leprosy
BloodSafety
Reagents(inc. HIV
tests)
DFI
D
KfW
UNICEF
JICA
GOK, WB/IDA
Source offunds for
commodities
CommodityType
(colour coded) MOHEquip-ment
Point of firstwarehousing
KEMSA Central Warehouse
KEMSARegional
Depots
Organizationresponsible
for delivery todistrict levels
KEMSA and KEMSA Regional Depots (essential drugs, malaria drugs,
consumable supplies)
ProcurementAgent/Body
CrownAgents
Governmentof Kenya
GOK
GTZ(procurement
implementationunit)
JSI/DELIVER/KEMSA LogisticsManagement Unit (contraceptives,
condoms, STI kits, HIV test kits, TBdrugs, RH equipment etc)
EU
KfW
UNICEF
KEPI ColdStore
KEPI(vaccines
andvitamin A)
Malaria
USAID
USAID
UNFPA
E
UR
OP
A
Condoms
for STI/HIV/AIDS
prevention
CIDA
UNFPA
USGov
CDC
NPHLS store
MEDS(to Mission
facilities)
PrivateDrug
Source
GDF
Government
NGO/Private
Bilateral Donor
Multilateral Donor
World Bank Loan
Organization Key
JapanesePrivate
Company
WHO
GAVI
SIDA
NLTP(TB/
Leprosydrugs
Commodity Logistics System in Kenya (as of April 2004) Constructed and produced by Steve Kinzett, JSI/Kenya - please communicateany inaccuracies to [email protected] or telephone 2727210
Anti-RetroVirals
(ARVs)
Labor-atorysupp-
lies
GlobalFund forAIDS, TB
and Malaria
The"Consortium"
(Crown Agents,
GTZ, JSI andKEMSA)
BTC
MEDS
DANIDA
Mainly District level staff: DPHO, DPHN, DTLP, DASCO, DPHO, etc or staff from the Health Centres,Dispensaries come up and collect from the District level
MEDS
Provincial andDistrictHospital
LaboratoryStaff
Organizationresponsible fordelivery to sub-district levels
KNCV
MSF
MSF
Ministry of Health: KenyaSo
urce
: S. K
inze
tt (2
004)
The Aid Quality Journey…
Rome Declaration on Harmonisation
Accra Action Agenda
Busan 29 Nov – 1Dec
2011
2002
Monterrey Consensus
2003 2005 2008 2010 2011
HLF-1
HLF-2
Paris Declaration on Aid
Effectiveness
Bogota Declaration on SSC
Dili Declaration on Fragile States
Istanbul principles on CSO effectiveness
HLF-3
HLF-4
The Paris Declaration “pyramid”
Paris Declaration: what makes it different?
Unprecedented consensus;
56 action-oriented commitments for both Donors and Partners countries;
Built-in mechanism for monitoring progress at country and global levels (12 Indicators); and
Targets set for 2010 monitored in 3 separate surveys (2005-2011).
Outline
I. The Aid Quality Agenda and Commitments
II. Assessing Progress
III. Paris Declaration Commitments on PFM
IV. New Actors and New Themes
V. High Level Forum on Aid Effectiveness: Implications for the future Aid Quality Agenda
Progress on track 2005-2008
36%
59%
88%
Targets requiring efforts but within reach (2005-2008))
49%
1483
45%
36%
59%
88%
Targets requiring very special efforts (2005-2008))
9%
22% (No progress)
49%
1483
45%
36%
59%
88%
43%
42%
42% (slippage)
20%
44%
22%
Outline
I. The Aid Quality Agenda and Commitments
II. Assessing Progress
III. Paris Declaration Commitments on PFM: Key Messages
IV. New Actors and New Themes
V. High Level Forum on Aid Effectiveness: Implications for the future Aid Quality Agenda
Total donor PFM support, 1995-2008
Evaluation of Donor Support to PFM Reform in Developing Countries, ODI, 2010
Paris Declaration and PFMDONORS committed to: Provide reliable commitments of aid over a multi-year framework Disburse aid in a timely and predictable way
Rely on transparent partner government budget and accounting mechanisms
Adopt harmonised performance assessment frameworks
PARTNER COUNTRIES committed to: Publish timely, transparent and reliable reporting on budget execution Ensure that national systems are effective, accountable, and transparent Take leadership of the public financial management reform process Mobilise domestic resources, strengthen fiscal sustainability Create an enabling environment for public and private investments
Evidence on PFM: Mixed
49%
1483
45%
36%
59%
88%
45%
43%
47%
21%
44%
9%
26%
24%
ACCRA AGENDA FOR ACTION: Commitments on PFM (2008)
DONORS will:
– Use country systems [including PFM systems] as the first option in the public sector.
– Be transparent when they don’t use them.
– Support country-led reform programmes.
– Develop corporate plans for using country systems.
– Channel 50% (or more) of government-to-government aid through country fiduciary systems (i.e. PFM + Procurement)
PARTNERS will:
-lead in defining reform programmes.
-Strengthen their budget planning processes
-Facilitate parliamentary oversight including through more transparency in PFM
PARTNERS & DONORS will jointly assess quality of country systems.
What are the different components of thePFM system that aid can “use”?
Source: Mokoro (2010)
Challenges in Implementation Many factors lead to donors bypassing country PFM
systems Varying perceptions of risk
• Emphasis on fiduciary risk
• Developmental risk of not using country systems
Incentives and capacities in donor organisations Political constraints: visibility, traceability... Quality of partner country systems Shifting transaction costs from partner government to
donor
Some common myths Using country systems means providing budget support
• Not necessarily: all aid modalities can make use of country systems
An “all or nothing” approach?
• Different components of country systems can be used Pooled funds are a move towards use of national systems
• They might be, but this is more about harmonisation Technical co-operation cannot make use of country systems
• Need a flexible approach
Working Party on Aid Effectiveness support to PFM Assessing progress (Quality and Use of PFM Systems)
Global Partnership on Country Systems
• Dedicated Task Forces on PFM and Procurement
• Identifying and disseminating good practice
• Developing and supporting common tools (e.g. procurement assessment)
Country Level Work
• Lending political support, monitoring, sharing experiences
Outline
I. The Aid Quality Agenda and Commitments
II. Assessing Progress
III. Paris Declaration Commitments on PFM
IV. New Actors and New Themes
V. High Level Forum on Aid Effectiveness: Implications for the future Aid Quality Agenda
Broadening the Partnership Shaping the global development architecture – i.e. G20
Development Consensus G20 discourse (June 2010) on the need for greater transparency,
accountability and institutional governance including use of country systems
Development actors beyond the DAC:
• Non-traditional providers of development assistance (i.e. Middle Income Countries, Emerging Economies, Arab donors etc)
• Civil society organisations
• For-profit private sector and foundations Bridging the divide: DAC Statement on “New Partnerships”, Bogota
Statement on South South Cooperation
Objectives of Broadening the Partnership Finding convergence and common ground Share lessons on economic growth, poverty reduction
and development co-operation Mutual interest in achieving results while respecting
diverse ways to reach them Interest in improving all forms of co-operation through
inclusive dialogue, mutual learning and knowledge-sharing
Recall the enduring relevance of the Paris principles for developing countries (fragile states, MICs, LDCs)
New Themes Climate Change Financing
• Avoid pitfalls of complex funding channels
Public Private Partnerships• Strengthening regulatory and financial environments
• Risk Management
Innovative Financing Mechanisms• Additionality
• Predictability
Aid as Catalyst towards more Effective States
Outline
I. The Aid Quality Agenda and Commitments
II. Assessing Progress
III. Paris Declaration Commitments on PFM
IV. New Actors and New Themes
V. High Level Forum on Aid Effectiveness: Implications for the future Aid Quality Agenda
Where are we now?
Monterrey Consensus
(2002)
Rome HLF on Harmonisation
(2003)
Accra Agenda for Action
(2008)
Bogota Statement
on SSC (2010)
Paris Declaration on
Aid Effectiveness
(2005)
Dili Declarationon fragile states
(2010) Korea HLF (29 Nov. –
1 Dec. 2011)
27
4th High Level Forum on Aid Effectiveness: A Unique Opportunity
Forging a new consensus on aid and development? • Chance to reinvigorate the global commitment towards
the MDGs;
• Refresh and reaffirm Paris / Accra principles;
• Recognise the role of aid as contributor and catalyst for development results and effectiveness;
• Improve the quality of partnerships through embracing partner country leadership, diversity and mutual respect;
• Seek convergence based on complementary strengths and differentiated responsibilities.
Who? Where? When? A political event that attracts ministerial
attendance, with decisive outcomes Busan, Korea. Host: Government of Korea 29 November to 1 December 2011.
HLF-4- Main Objectives Stocktaking from the Paris / Accra process
Agreeing on features of high quality aid and its monitoring framework towards 2015
Situating aid in its broader development context:• More actors, development finance effectiveness
• Diversified approach: MICs, LICs, FS, regions
• Catalyst dimension: trade, security, climate…
• Results and right-based approaches
Emerging Areas for Political Outcomes Results and transparency for better
accountability Ownership and Leadership Effective States and Alignment (Country Systems) Diversity at country level – fragile states, middle
income countries, LDCs Climate Change Financing Recognise all forms of partnerships (SSC, PPPs…) Role of CSOs, Parliaments and local government
Key milestones in 2011Working Party on Aid Effectiveness
Meetings and Key Events HLF4 Evidence Country Systems
Q1
Q2
Q3
Q4
4th High Level Forum on Aid Effectiveness 29 November – 1st December, Busan, Korea
1st draft outcome document
Monitoring Survey:country level data collection Evidence for “Progress Since Paris”Deadlines: 31 March
Evaluation: Synthesis report (April 2011)Monitoring Survey: preliminary results 1st draft Progress since Paris (July 2011)
Report finalisation (September 2011)
Themes for Busan Deadline: January
Preliminary Menu of Options
WP-EFF EXCOM (9-10 March)
WP-EFF + ExCOM (7-9 July)
WP-EFF + ExCOM (5-7 Oct)
2nd draft outcome document
DAC SLM (6-7 April) WB/IMF Spring Meeting (16-17 April)
WP-EFF co-chairs First Narrative Outline for Outcome Document (comments by 3 April)
Global Partnership on Country Systems (9-10 June)
Task Force on Procurement (May)
Task Force on PFM (6-7 June)
TBC: Meeting on Effective States (Paris, October)
www.oecd.org/dac/effectiveness/pfmWWW.BUSANHLF4.ORG
Do donors use your country systems?
1 2 3
31%
44%
25%
1. Yes2. No3. Sometimes
Does your country refuse aid because of complex donor requirements?
1 2 3
4%
47%49%1. Yes2. No3. Sometimes
Is aid effective in your country?
1 2 3
19%
48%
33%
1. Yes2. No3. Sometimes