Memorandum submitted by the Department
for International Development
I. SUMMARY
The EC has substantial potential for contributing
to the international development targets, but its effectiveness
is well below this potential. Following an evaluation of the EC's
programmes, the Development Council in May 1999 called for a number
of specific improvements, which the Government fully supports.
After some delay there has now been some progress, although much
more is needed. The draft Development Policy Statement focuses
on poverty and improving impact, and recognises that the EC needs
to do fewer things and do them better. However there is as yet
no Action Plan for the implementation of the Policy Statement.
The EC needs to develop the right tools to meet all its objectives,
in both the regions near its borders and in the poorer countries
of Africa and Asia. The Commission is re-organising its management
of EC Development Assistance, which should have positive impacts
on effectiveness.
II. INTRODUCTION
The European Community (EC) is the sixth-largest
provider of official development assistance (oda) and the second
largest multilateral donor. Disbursements in 1997 amounted to
£3,148 million. The UK currently contributes about 18 per
cent of all EC spending.
The EC has substantial potential to contribute
to poverty eradication and the achievement of the international
development targets. But evaluations of EC Development Assistance
have been able to say very little about the impact of EC development
spending, because the EC's monitoring and evaluation systems are
weak. Nevertheless there is no doubt that its effectiveness is
significantly below its potential.
In May 1999 the Development Council adopted
Conclusions based on the key recommendations of the evaluations.
These Conclusions called for:
— an overall policy statement on EC
Aid;
— strategies for the major sectors
in which the Community is active;
— enhanced co-ordination and complementarity
between the Community and the Member States, while confirming
that the prime responsibility for co-ordination lies with partner
countries;
— delegation of responsibility to EC
offices overseas;
— improved staff skills mix;
— streamlined administrative and financial
procedures;
— a rationalisation of the EC budget
for external assistance;
— strengthened monitoring and evaluation;
— an annual report on development aid;
and
— an Action Plan for the implementation
of these recommendations.
The Government strongly supported these Conclusions,
which tie in very closely with proposals made by the Department
for International Development in an eighteen point plan for working
with the European Community, published in December 1998.
We have been pressing the Commission to begin
implementation of the recommendations. After some delay, caused
in part by the resignation of the Commission last year, there
has been some progress. A draft development policy statement has
been produced (Section III), as has a paper on improving the management
of EC Development Assistance (Section IV). We are now pressing
hard for an Action Plan which is required to implement the Policy
Statement. It should be a comprehensive workplan, the end point
of which will be an effective, efficient, high quality EC aid
programme. This would identify the key actions needed to tackle
the outstanding recommendations of the evaluation Conclusions
and implement the new Development Policy Statement and reform
of the management of EC Aid.
III. THE COMMISSION'S
DRAFT STATEMENT
ON THE
EC'S DEVELOPMENT
POLICY
Background
In May 1999, following a critical evaluation
of EC Assistance, the Development Council called for an overall
EC development policy statement. The European Commission has since
produced a Communication on the European Community's Development
Policy. This says that EC development co-operation:
— needs to be coherent and balance
the EU's internal and external objectives;
— should be centred on poverty reduction
and the integration of developing countries into the world economy;
— should be more poverty-focused both
in allocations to low income countries and, for middle-income
countries, in prioritising those with large numbers of poor people;
and
— should be made more effective.
Measures for increasing effectiveness proposed
in the text include streamlining the complex range of EC aid financial
instruments, procedures and institutional mechanisms and increasing
accountability; taking a more consistent approach across EC programmes;
focusing on impact, rather than on disbursing funds rapidly; allocating
resources according to need and performance; increasing decentralisation
from Brussels to the EC delegations; increasing complementarity
with Member States; concentrating on fewer areas where it can
add most value; and producing an Annual Report on EC development
assistance.
The Commission recognises that it needs to do
fewer things and do them better if it is to improve its effectiveness.
The draft development policy statement advocates a move from numerous
projects to providing support to sector programmes. It identifies
six priority areas for EC assistance: trade and development; regional
co-operation; macro-economic support, including sector programmes
in health and education; transport; food security and sustainable
rural development; and institutional capacity-building, good governance
and the rule of law.
On 18 May this year the Development Council
said that the Communication should be the start of the process
to produce the EC development policy statement, called for consultations
including with civil society, and for a forward-looking and operational
Action Plan.
The Government strongly agrees with the need
for a coherent statement of overall EC development policy. We
welcome the focus in the Communication on poverty and on improving
the impact and effectiveness of EC aid, but also have several
outstanding concerns about the Communication:
— insufficient attention is paid to
the International Development Targets and Comprehensive Development
Framework principles;
— we agree with the principle of greater
selectivity, and are considering further with partners the validity
of the suggested areas of EC comparative advantage;
— there needs to be clearer language
on the need for coherence between EC policies that affect developing
countries; and
— above all, the statement is not operational.
There needs to be a comprehensive action plan setting out clearly
how the new policy (and other reforms addressing the effectiveness
of EC aid) will be implemented.
The Government believes that European Community
programmes can become more effective if they are more focused
and collaborative. The EC's main strengths are, first, its ability
to integrate trade and development objectives, and second, the
large amount of resources at its disposal. Although it has vast
amounts of resources, it lacks expertise to effectively engage
in policy dialogue in every sector. The EC therefore needs to
allow other donors, including Member States, to take the lead
for policy dialogue on a particular sector-wide programme, and
then provide financial resources for its implementation. The Commission
have said this is their intention and we will support them in
putting it into practice. This will require not only the right
policy, but improvements to systems and a change in the culture
in the Commission. These difficulties in harmonising policies,
procedures and practices, and in the move to strategic selectivity
based on comparative advantage, are faced by many donors, bilateral
and multilateral.
We are encouraging the EC to adhere fully to
the Comprehensive Development Framework (CDF) principles: country
ownership, participation by all donors and other stakeholders;
a long-term and holistic approach to development, and greater
focus on development outcomes. The starting point for EC development
strategies should therefore be the country's own plans, particularly
Poverty Reduction Strategies where they exist.
The Select Committee's report on "The Future
of the EC Development Budget", published on 21 January 1999,
examined in detail the issue of the poor allocation of EC development
funds. The proportion of EC oda going to low income countries
has fallen from 75 per cent in 1987 to 51 per cent in 1997. A
decade ago poor countries in Africa and Asia were the major recipients
of EC aid. Now an increasing share is going to better off countries,
eg in the southern Mediterranean. The EC's poverty focus compares
unfavourably with the bilateral programmes of EU member states
(DFID 75 per cent in 1997; EC + Member States average 59 per cent).
This is at odds with the EC's own stated objectives and stated
support for the internationally agreed DAC poverty reduction targets.
Recently there have emerged encouraging signs of a changing approach.
Poverty has been secured as a central objective of the much improved
successor to the Lome« Convention, the Cotonou Convention,
signed 23 June. Development Commissioner Poul Nielson has poverty
elimination as one of his stated priorities. Poverty elimination
is included in the EC's recent development policy statement as
an overarching goal.
But the pressure to maintain or increase high
levels of spending in the regions closest to the EU remains strong.
There has still not been a coherent Council discussion of the
allocation of EC development funds, though a discussion on the
EU's external priorities is being planned for later this year.
We believe that the EU's external priorities are complementary,
not conflicting. Development programmes are an investment in prosperity
and political stability, but political priorities are not the
same as spending priorities. The EC needs to develop the right
tools to meet all its objectives. Poor countries need major resource
transfers to provide the investments they cannot afford in health,
education and other basic services. Middle-income countries need
support in policy development and reform, market access and investment
which bolsters the private sector. The EIB has a major role to
play and EC trade policy is crucial. Unrealistic spending plans
which are made as a gesture are not evidence that an issue is
being taken seriously, they are evidence that it is not being
handled effectively.
The UK therefore welcomes recognition by the
Commission in its draft Development Policy Statement and its working
paper on the poverty focus of external programmes the percentage
of EC assistance spent in low income and least developed countries
needs to increase. To achieve this we will need to work for more
effective targeting of all EC external spending.
IV. THE COMMISSION'S
PROPOSALS FOR
THE REFORM
OF THE
MANAGEMENT OF
EC EXTERNAL ASSISTANCE
(INCLUDING PROPOSALS
FOR THE
REFORM OF
THE COMMON
SERVICE FOR
EXTERNAL RELATIONS)
Background
The Commission have published a Communication
which proposes a re-organisation of how it manages European Community
External Assistance Programmes. This responds in part to the series
of assessments and evaluations of EC programmes which flagged
up their significant inefficiency and lack of impact.
Under the new arrangements a geographical split
in the responsibilities of the Directorates General responsible
for development will remain. DG Development (Commissioner Nielson)
will continue to be responsible for strategy and country programming
for the African, Caribbean and Pacific countries and for humanitarian
aid. DG External Relations (Commissioner Patten) will be responsible
for the EC programmes covering the Mediterranean, Asia, Latin
America, the Balkans and the former Soviet Union. DG Enlargement
(Commissioner Verheugen) will cover the pre-Accession countries.
However, strategy and programming documents will in future need
to be approved by the whole Group of Relex Commissioners, ie the
three above plus Trade (Lamy) and Economic and Monetary Affairs
(Solbes), rather than just the lead Commissioner as in the past.
There will be a new Office, building on the
Common Service for External Relations (SCR), and with expanded
responsibilities. While Headquarters directorates will be responsible
for strategy and programming (allocation of resources and setting
criteria for programmes), the new Office will be responsible for
project and programme identification, appraisal and implementation.
Its board will have Patten (Chairman), Nielson (Chief Executive)
and other Relex Commissioners as members. Initially this Office
will be within the Commission, but the Communication suggests
that it might eventually become a separate agency.
The new Office will be responsible for implementing
80 per cent of EC aid. However, ECHO (reporting to Nielson) will
still administer humanitarian aid; implementation of the Phare
Programme will move from the SCR to DG Enlargement from June 2000;
and implementation of NGO programmes (Development) and CFSP programmes
(External Relations) will probably stay with their DGs.
A new Quality Support Group will be responsible
for quality control and bench-marking across all EC development
programmes. It will have a secretariat in DG Development and report
to the Relex Group of Commissioners. An evaluation service will
be independent of any one DG, and will also report to the RELEX
Group.
The Commission are proposing extensive devolution
of management and decision making to the EC's network of Delegations.
The Commission want to disband their eighty costly and poorly
accountable Technical Assistance Offices and instead use programme
funds to contract additional staff for headquarters and delegations.
Additional staff for delegations will be found by redeployment
from Brussels. There is also an intention that partner countries
themselves should "where possible" manage programmes.
The Government has welcomed these reform proposals.
Present arrangements are wasteful, poorly managed and ineffective.
It is essential for the credibility of EC external programmes
that their management should improve radically. Many of the measures
set out by the Commission have the potential to increase efficiency,
simplify procedures and increase impact. But the extent of reform
needed means that success will inevitably be difficult to achieve.
The re-organisation of EC aid management discussed
in this Communication is complemented by wider Commission reforms
being overseen by Commissioner Kinnock. These, together, should
lead to higher standards. But it is likely that they will take
several years to implement and it will be sometime before there
is evidence of progress on the ground. There are policy as well
as management issues which affect the quality and impact of EC
Aid. These include the need to convince the Commission and some
other Member States that tackling poverty is essential to achieving
better stability in the world; to end gesture commitments; and
to get the Commission to focus on impact and quality, not just
speed of implementation.
Department for International Development
30 June 2000
| 
