Aid management in fragile states

CENTRAL AFRICAN REPUBLIC | http://dad.minplan-rca.org

Aid management in a fragile, low capacity context:

the case of CAR

Kersten JAUERUnited Nations Development Programme

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CENTRAL AFRICAN REPUBLIC

Contents

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A. What makes CAR a fragile state

B. How to adapt the aid management system (DAD) to fragility

C. Why fragile can be easy

D. How aid management drives policy (examples)


A. What makes CAR a fragile state

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Situated in the heart of Africa

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CAR

Indicator Value

Size 1.1 x France

Population 4.2m

GDP per head $398

GDP (‘07) $1.7bn

Aid $317m

HDI 178 of 179

Life expect. 43 years

Literacy 47%


Landlocked in the fragile centre

CAR

Rebellion or conflict

ChadSudan

Cameroon

DRCCongo

Darfur

GabonUganda

Nigeria

South Sudan

Bangui

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Political instability since Emperor Bokassa

Jean-Bédel BokassaHead of state 1966-1979

Crowned emperor in 1977

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No development in more than two decades

Slide 7

1990Source: HDR (2007)

1985 1995 2000 2005

Human Development Index (HDI) Growth, Base = 100 (1985)

Burkina Faso, Niger, Guinea-Bissau,Mali, Mozambique, Chad, Ethiopia

CAR

DRC

100

+15%

+30%

+45%

-15%

One of only two LDCs where HDI is lower, not higher, than in 1985


Almost no IT capacity and knowledge

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Internet users per 100 inhabitants – almost nowhere lower than in CAR

United KingdomUnited States

ThailandPakistan

IndiaArmenia

Sri LankaZambia

NamibiaRwanda

AfghanistanYemen

SomaliaIraq

CAR

79.6

Source: ITU (2008)

74.0

18.010.5

7.0

5.76.4

5.65.3

3.11.81.61.1

1.00.4


Slide 10

Foreign assistance fell significantly

Source: OECD (2007), Development Assistance Disbursements (constant USD), All donors

1985 1990 2000 2005

Aid to Sub-Saharan Africa rose 87% since 1985, but fell 49% for CAR

1995

100

-20%

CAR

Sub-Saharan Africa

+40%

+60%

-80%

ODA Growth, Base = 100 (1985)

-60%

-40%

+20%

+80%

+100%


Slide 11

Hardly any international presenceLate 2006, only 4 int. NGOs, UN/EC there, but no World Bank, IMF, AfDB

Paoua

Bangui

Bambari

Birao

Ndélé

SibutBouar

Bossangoa

Bozoum

Kaga-Bandoro

EC France


Government disconnected from aid effort

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Only 25% of development projects were documented in national accounts

500 100 150 200

160 developmentprojects enteredin DAD

40 documented in public expenditure report for 2007


Donor RoundTable in BXL

Int. advocacycampaignstarted

PRSP published

Rapid progress since 2007

Slide 13

2005 2006 2008

From close to zero to DAD + HIPC completion in little more than 2 years

< >

2007 2009

Democratic elections

World Bankclears arrears

• No Poverty Reduction Strategy (PRSP)

• No effective fundraising strategy

• No humanitarian clusters or dev. coordination groups

• No PIP, MTEF, etc.

• Knowledge about aid forms and modalities virtually inexistent in ministry of planning or finance

Paris Declaration signed and HIPC decision point reached

Hum. clustersstarted

Sector andregional dev.committeesstarted

DAD projectstarted

HIPC completionpoint reached


Slide 14

Sharp increase in presence creates volatilityLate 2008, 30 international NGOs, UN, EC, World Bank, IMF, AfDB and more

Paoua

BANGUI

Bambari

Birao

Ndélé

SibutBouar

Sam Ouandja

Bossangoa

Bozoum Mbrés

Kaga-Bandoro

Kabo

Gordil

Obo

Bocaranga

JUPEDEC

EC France


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Annual aid gross disbursements by nature (origin of funds)

Sharp increase in aid creates volatility

2002 2003 2004 2005 2006 2007

$63m

$126m

$81m

$251m $242m

$117m

DevelopmentHumanitarian

Clearing of debt arrears

2008

$317m

33%

67%


B. How to adapt the aid management system to fragility

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Achieve more by doing less

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Adapting aid management to fragility

Key steps(the case of CAR)

1

2

3

4

Have one tool only• Integrate humanitarian and development aid well (OCHA)

• No other PIP or project tracking database at national level (3W)

Improve contract and tool• Design tight technical specifications and create an online bug tracking application

• Reflect pooled fund contributions while avoiding double-counting

• Prepare for the future (1st and 2nd

level implementers, transaction details)

• Simplify Paris Declaration tracking (work with OECD sector codes)

Go international and learn from standards• Do not host locally, and build a website to centralize docs and reports

• Be compliant with DAC reporting directives (definitions, types, markers)

• Use OECD sector codes but remain compatible with PRSP sectors

Stay relevant• Make DAD key tool for PRSP, dev. coordination groups, dec. makers

• Make DAD unit a point of entry• Focus on accessible reporting

5 Design incentives!• No govt. signature under AWP without data in DAD

• No portfolio, UNDAF, CAS review not based on DAD data


* Exceeding OECD DAC coverage

PRSP ‘09review

Implementing an aid management system

Slide 18

Jun Jul Sep

Twelve months to design, install, enter data and report on aid for 3 years

Aug Mar

Core DAD pilotdeployed

Oct Nov Dec Jan Feb Apr May Jun Jul Aug

Contract with Synergysigned

Design of contract and detailed technical specifications

Data entry and training starts

Prelim. data for 2007 published

Prelim. data for2008 and 2007 final published*

Prelim. data for1st sem. 09 and

2008 final publ.*

AWP reviews

PRSP ‘08review

DAD donor profilepilot deployed

DAD finals deployed

Pub. expen-diture review

400

200

300

Pro

ject

s in

DA

D


C. Why fragile can be easy

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The more fragile, the harder

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Fragile environments do have generic disadvantages

Disadvantages(the case of CAR)

1

2

3

4

Limited skills• Limited pool of potential collaborators (national and international)

• High training needs everywhere (starting from zero)

Higher turnover• Organisations arrive and leave more quickly

• Humanitarian projects are 12to 18 months maximum

• International staff stay 3 to 12 months

• National staff move frequently

Poor connectivity• VSAT connection typically 512kbps (shared with 30+ users)

• Working online with DAD directly difficult

Higher political risk• Change of leadership

• Change of staff / product preferences


But also: the more fragile, the less complex

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Fragile environments can offer advantages to aid management

Advantages(the case of CAR)

1

2

3

4

Simpler aid modalities• Only grants, no loans

• Donors or PIUs implement projects (DEX not NEX)

• Aid only through official channels

Smaller group of actors• Fewer (resident) bi- / multilaterals

• Fewer int. and local NGOs

• Easier access to decision makers

Simpler public financial management (realistic approach)

• Internal revenue limited, aid represents very high share of budget

• Public investment plan is function of development projects (DAD)

• Mid-term expenditure plan is function of aid (DAD) plus int. rev.

Clean slate• Few or no legacy systems

• Chance to build back better


Public financial management shortcut

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Internal revenue has little relevance for investment and budget planning

500 150 250 350

$105m

$317mForeign aid in 2008

Internal revenue


Public financial management (PFM) shortcut

• Only $1.5m in public investments financed with internal resources

• 99.9% of public investment is financed through development aid, all of which documented in DAD

• DAD thus simplifies public investment and mid-term expenditure planning

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Govt. expenditure on int. rev. + bud. support

$45m, Debt (28%)

$17m, Interest (10%)$9m, Current costs

(6%)

$81m, Salaries (51%)

$6m, Transfers / subsidies(4%)

$1.5m, Investment (1%)

Budget support

DAD as a tool for PFM

* Intern. resources plus non-specific budget support, but excluding aid financed projects and programmes, Source: Budget execution report 2008


D. How aid management can drive policy

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Track PRSP financing and alignment

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Monitor aid alignment to nationals goals and the poverty reduction strategy

Needs

Development

Humanitarian

(1) Peace and security

(2) Governance andrule of law

(4) Human capital

3) Econ. recovery and reconstruction

Budget supp. / debtwithout HIPC

$71m

$68m

$884m$265m (31%)

$206m (79%)

$55m (81%)

$262m

$82m (115%)

$59m

* Total value of specific projects / agreements signed Oct. 2007, plus commitments made in Mar. and Sep. 2007 for road construction Baoro - Garam Boulaye,including for multi-year projects and activities

Poverty reductionstrategy pillar


Measure alignment of aid and poverty

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> 20.000> 40.000> 80.000> 120.000> 180.000> 320.000

Combine needs indicators and aid data to shape the policy debate

Number of poor

1

3

4

5

6

78 9

10

11

1213

1415

15

16

Prefecture Hum Dev Σ

1 Bam.-Bangoran 5,6 1,6 7,2

2 Bangui 5,8 53,5 59,2

3 Basse-Kotto 0,0 1,7 1,7

4 Haute-Kotto 5,4 1,0 6,4

5 Haut-Mbomou 0,1 1,0 1,1

6 Kémo 0,0 2,5 2,5

7 Lobaye 0,0 3,9 3,9

8 Mambéré Kadéï 0,0 1,5 1,5

9 Mbomou 0,0 1,1 1,1

10 Nana-Gribizi 12,7 2,1 14,8

11 Nana-Mambéré 3,5 4,8 8,3

12 Ombella-M‘Poko 3,1 2,8 5,8

13 Ouaka 0,1 1,9 2,0

14 Ouham 20,6 3,4 24,0

15 Ouham-Péndé 16,3 2,3 18,6

16 Sangha-Mbaéré 0,0 4,8 4,8

17 Vakaga 8,9 1,0 9,9

Non-specified 7,4 79,7 87,1

Humanitarian

Development

Expenditure 2008

2

$19m$24m

$15m

$7m $10m

$6m

$1m$1m$2m$3m$6m$8m

$60m$5m $4m

$2m$2m

Bangui


Identify new challenges to development...

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Analysis of the impact of the global economic crisis on CAR...

01/07 01/08 07/08 12/0807/07

60,000

50,000

40,000

30,000

20,000

10,000

30,000

25,000

20,000

15,000

10,000

5,000

CaratsCubic metres

Wood (cut) Wood (sawn) Diamonds


... and support development partners’ response

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Bangui

< $5m> $5m> $15m> $30m> $60m> $120m

Diamonds

Woods

... showed insufficient aid levels in affected diamond/wood prod. regions

* Projects signed in 2007/08

Commitments*


Push for better project management

• DAD and simple research allows aid management unit to push implementers

• Weak project management capacity in government and multilateral aid agencies

• Often, large parts of the budget are only spent during the 4th quarter

• Severe deficiencies in procurement, recruitment and finance lead to delayed and sub-standard results

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Poor project management quality Budget delivery profiles compared

0 3 6 9 12

100%

75%

50%

25%

Month

Budg

et s

pentBad: 50% of

budget spent in last 2 months

Good: at least 50% of budget spent in first 6 months

5 months lost


Signal danger ahead to decision makers

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2002 2003 2004 2005 2006 2007 2008 2009*

$63m

$126m

$81m

$251m $242m

$117m

$317m

Development aid stabilizes while humanitarian aid is likely to decline

DevelopmentHumanitarian

Clearing of debt arrears

* Based on data available as of July 2009


For more information

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• http://dad.minplan-rca.org

Supported by the ARCAD project – Building capacity for the implementation of CAR’s poverty reduction strategyAid coordination | Public finances | Anti-corruption measures | Administrative reform | Business environment

• Désiré Yassigao | [email protected] coordinator | Ministry of Planning

• Kersten Jauer | [email protected] Information Manager | UNDP

• Tino Kreutzer | [email protected] Manager | UNDP

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