Memorandum submitted by the Department
for International Development
SUMMARY
1. There have been significant improvements
in the policy framework for EC programmes in developing
countries, although these have not yet fully penetrated the multiplicity
of legal, political and policy instruments governing the programmes.
A new structure for implementing external programmes has
been established in Brussels, but its completion overseas will
take several years. Management systems and procedures have
begun to improve; this needs to be seen through. Plans for increasing
the EC's development skills are encouraging.[1]
INTRODUCTION
2. Previous Select Committee reports have
given a comprehensive account of past weaknesses in EC development
programmes. In April 2000 the Commission set out proposals for
the establishment of an overall Development Policy. In May 2000
the Commission set out a programme for reform of the structure
for managing these programmes. And on 1 January 2001 the Commission
established the EuropeAid Cooperation Office as a key part of
its management reforms.
POLICY FRAMEWORK
3. On 10 November 2000, the Council and
Commission agreed a joint Declaration on the EC's overall Development
Policy. This followed discussion in the Council of the proposals
set out in the Commission's Communication of April 2000. The Government
strongly welcomes the Declaration, which:
— Establishes—for the first time—poverty
reduction as the central objective of EC development programmes.
It also clarifies that this policy applies to EC programmes in
all developing countries as defined by the OECD's Development
Assistance Committee.
— Focuses Community activities in a
limited number of areas. Six areas are listed in the policy but
the EC plans to be a leading donor in only one or two areas in
each country.
— Stresses the importance of more effective
coordination with other donors and coherence between the EC's
development policies and its other policies which affect developing
countries.
4. The text of the Declaration complements
a number of other important steps to improve the EC's policy framework.
The Cotonou Agreement[2]
signed in June 2000 establishes poverty reduction and the achievement
of the International Development Targets as the overarching objective
of EC-ACP partnership, the MEDA II Regulation[3]
recognises the importance of the International Development Targets,
and the CARDS Regulation provides for the EC's Balkans programme
to tackle inequality and social development alongside its political
objectives.
5. The Community has also sought to increase
its collaboration with the International Financial Institutions
over the establishment of Poverty Reduction Support Programmes
and the funding associated with them.
6. Considerable work remains to be done
though to operationalise the Development Policy across all the
programmes that it applies to. In some cases the relationship
between the Development Policy and the relevant regional programme's
Regulation is unclear and the implications of the poverty focus
of the Development Policy has not been discussed or explored.
In addition, the Commission is likely to need to clarify its sectoral
policies to take account of the Development Policy Declaration
and other recent changes in the international environment.
RESOURCES
7. A further key issue is the allocation
of resources. The Government believes that the present allocations
of the EC's Official Development Assistance[4]
need to be adjusted significantly in order to secure the achievement
of the EC's objectives. The balance of EC spending is out of line
with international best practice. Extreme poverty is concentrated
in Sub-Saharan Africa and South Asia but the percentage of EC
aid spent in low income countries has fallen dramatically from
70 per cent in 1989 to 51 per cent in 1999. This compares with
the average among EU member states of about 60 per cent—even
higher for some donors (74 per cent and rising for DFID).
8. Research shows that the most effective
use of aid in poverty reduction is when it is focussed on countries
with high poverty levels and good policies. An unpublished World
Bank study[5]
showed that in 1998, while 63 per cent of global aid went to countries
with high poverty levels, only 38 per cent of EC aid did; and
18 per cent of EC aid went to countries which had both low levels
of poverty and poor government policies. 1999 figures show EC
aid per capita in middle income countries was $1.20 but only $0.55
in poor countries. Asia, with two-thirds of the world's poor,
has a smaller share of EC external spending than the Mediterranean
and Middle East (with about 2 per cent of the world's poor)[6].
9. The Government believes that to be effective,
EC development programmes must be focused on reducing poverty.
Evaluations show that a clear poverty objective is essential,
though the range of actions (good governance, infrastructure,
health, education etc) can be wide. This does not mean reducing
our engagement in or support for middle-income countries—they
are home to 12 per cent of those living on less than $1 a day—but
the instruments for helping them will differ. They need technical
assistance to reform policies and improve governance, and market
access to help build export-led growth. Loans and technical assistance
should be far more significant than grants. They can raise their
own financial resources (domestically and internationally) far
more readily. Low-income countries cannot. $1 million of aid spent
in Uganda lifts far more people out of poverty than $1 million
of aid spent in Morocco.
STRUCTURE
10. The establishment of EuropeAid marks
a major change in the Commission's structure for managing its
external programmes. The intention has been to bring together
a larger number of the steps from conception of a programme to
its implementation in order to overcome the breakdowns which were
occurring in the previous Commission structure. The two headquarters
Directorates-General—DG Development and DG Relex—are
now therefore principally concerned with policy and strategies,
while EuropeAid is charged with designing and implementing programmes
to meet the objectives in those strategies.
11. There are advantages and disadvantages
to this model. The UK's own programmes are implemented in-house
with no separation between the policy and operational aspects.
Other respected donors, such as Sweden, rely on agencies with
considerable autonomy to implement their programmes. The Government
has supported the establishment of EuropeAid as part of a reform
package which is likely to improve the overall effectiveness of
EC programmes. We believe that the key factors that will affect
EuropeAid's success are:
— Maintaining the closest possible
communications with DG Development and DG Relex at all stages
of project management in order to be able to adapt the programmes
to changing policy and political circumstances.
— Ensuring significant input by EuropeAid
staff into the strategy process to ensure that issues related
to the implementation of programmes are taken into account when
strategies are established.
— Providing longer planning horizons
for the design and implementation of programmes to implement these
strategies.
— Effective deconcentration[7]
which gives Commission delegations overseas greater responsibility
and authority for implementation of EC programmes and greater
capacity to engage in policy dialogue with partner countries and
other donors.
— Incorporation into the Commission
of staff with significant expertise in key development issues,
eg health, education, governance, both in Brussels and in overseas
delegations, on either a permanent or contract basis.
— Simplification of procedures to allow
much faster progress from conception to implementation of programmes
This will require changes both within the Commission and in the
procedures of Management Committees which provide member state
input into the approval process.
12. The Commission are addressing all these
points but it is clear that there will be differences in the degree
of their implementation. The Government is in continuous discussion
with the Commission about ways of supporting them in establishing
the most effective possible structure. In some cases responsibility
lies as much with member states as with the Commission.
The European Agency for Reconstruction (EAR)
The CARDS programme for the Balkans is now
the EC's largest regional programme with an annual budget of about
800 million. In order to improve management of the programme,
the Commission established the European Agency for Reconstruction
(EAR). The EAR began operations in Kosovo in February 2000, replacing
the former EC Task Force, and has extended its activities to Serbia
and Montenegro during 2001. The EAR is responsible for preparing,
implementing and evaluating programmes for reconstruction. It
also monitors changing circumstances on the ground and advises
on ways the EC might respond to them. It has a team of resident
administrators and sectoral advisers. The EAR may implement programmes
on behalf of other agencies or donors. It has its operational
centre in Pristina and offices in Belgrade and Podgorica. There
is a general services office in Thessaloniki.
The EAR has a Governing Board comprising
representatives of Member States and the Commission. The performance
of the EAR to date has been impressive. It has developed annual
programmes in a timely fashion, in close consultation with the
administrations in Kosovo and Serbia and other donors. Its programmes
have been operational within several months (90 per cent contracting
and 60 per cent disbursement rate in 2000), which compare with
the usual EC time delay of around 18 months from project approval
to implementation. We continue to support the activity of the
EAR through direct contacts in country and in the Board and seek
to draw lessons for EC assistance elsewhere.
SYSTEMS AND
PROCEDURES
13. There have been some important advances.
One of the objectives of the Commission's reforms of EC external
services was to establish a common framework for the management
of its programmes, regardless of the region. Following a debate
in the Council during 2000, the Commission established guidelines
for the production of Country and Regional Strategy Papers which
it was agreed would be used for all external programmes. These
guidelines mark a significant improvement. They place emphasis
on the policy framework established by partner countries (seeking
to work wherever possible in the context of Poverty Reduction
Strategy Papers). They seek to focus the EC's programme on a smaller
number of key areas, clarifying the objectives of the EC in each
country and promoting greater collaboration with other donors.
An interservice Quality Support Group—the iQSG—chaired
by a DG Development senior official reviews most strategy papers
and promotes best practice across the external services. Country
Strategy Papers are being produced for all African, Caribbean
and Pacific and Mediterranean countries this year and for all
other regions next year.
14. One area where more progress is needed
is in establishing clear objectives, targets and indicators for
EC programmes. At present, the Commission also lack effective
management information systems. The Government has pressed for
the adoption of objectives and indicators at both corporate and
programme level and is discussing with the Commission, the Parliament
and other member states possible collaboration to produce these.
The Commission plan to introduce a new management information
system in 2002.
15. New procedures for financial and staff
management are also being established by the Commission which
should go a long way towards improving performance. The number
of contracting procedures has been reduced from over 46 to 8,
greatly simplifying procurement. There is also a process of delegation
of financial responsibility away from the previous centralised
system to officials within each policy area. Once the Council
has agreed a new Financial Regulation, it should be possible to
delegate responsibility further.
16. The new Financial Regulation should
also allow progress to be made to improve the speed at which commitments
are converted into payments. At present there is a very large
number of commitments which were made over five years ago but
which have never been completed and paid. This delay decreases
the chances of the project having the impact that was originally
intended. The Commission have considerably reduced the level of
such delayed commitments8[8]
but there is still about 2 billion in this category at present.
17. Staff management is being reformed across
the Commission. It is particularly important to introduce greater
flexibility within the Commission's external service in order
to ensure that they are able to attract suitably qualified staff
with development skills that would be able to increase the level
of expertise in the Commission. The Government welcomes proposals
to increase the length of contract which the Commission can offer
such experts from one to six years.
18. Past reports of the Committee have observed
that the Commission has comparatively fewer development staff
than other donors. These measures will rectify this to some extent,
the Commission will not find itself as well-endowed as some major
donors. But nor does it need to be. Today donors should seek increasingly
to share analysis and expertise, operating in joint programmes.
The new Financial Regulation should contain provisions that make
this easier for the Commission.
CONCLUSION
19. The Government strongly welcomes the
efforts that are being made to reform the European Community's
development programmes. These reforms have already delivered a
clear poverty reduction policy, more streamlined structures and
a better set of programme management tools. Significant steps
are also being taken to improve financial and staff management
in the Commission's external services. Implementation of all these
reforms is obviously now the key issue. The Commission have said
that this will take at least several years. The Government agrees
and believes that successful implementation will depend on continued
efforts by member states and the European Parliament to focus
EC programmes on a limited range of issues, increased collaboration
between the Commission and other donors, and adoption of satisfactory
new Financial and Staff Regulations. In addition, the Commission,
Council and Parliament will need to take significant steps to
target resources where they will be most effective in reducing
poverty both by allocating a higher proportion of grant resources
to low income countries and by using a wider range of instruments
to achieve our objectives in middle income countries.
Department for International Development
25 October 2001
1 The Department for International Development published
a revised Institutional Strategy Paper on Working in Partnership
with the European Community in August 2001. Back
2
The EC-ACP Convention which replaced the series of Lome«
Conventions covering trade and political relations and development
assistance. Back
3
Governing the EC's programme of assistance to the countries of
North Africa and the Middle East. Back
4
As defined by the OECD, ie assistance to developing countries. Back
5
David Dollar, 2000. Back
6
EC spending is 0.15 per capita in Asia and 3.31 in the Mediterranean. Back
7
Deconcentration is the term used to describe the process of delegating
authority (and staff) to Commission offices overseas. Back
8
The Commission define commitments which have not yet been paid
as "abnormal" if they were made more than five years
ago or have had no action taken on them in the past three years. Back
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