APPENDIX 1
Memorandum submitted by ActionAid
INTRODUCTION
1. ActionAid welcomes the International
Development Select Committee's continuing interest in and close
scrutiny of EU aid effectiveness. It is well known that the EC
aid programme is an underperformer amongst donors and the reasons
for this have been extensively analysed, by the European Commission
itself, by outside observers including civil society and by the
Development Assistance Committee of the OECD.
2. This submission addresses directly the
specific questions posed by the Select Committee and draws some
preliminary conclusions where this is possible. However, in the
view of ActionAid the impact of the reforms will not be clear
for another two or three years. Disbursement of funds for ACP
countries under EDF 9 is not due to start for another three years,
deconcentration (see below) is not due to be completed until the
end of 2004, and the new Regulations governing aid to Asia and
Latin America are in the process of being revised. All of these
factors will contribute to a considerable timelag between implementation
of the changes and actual results.
3. The perceived weaknesses of European
development assistance are largely that it is ineffective in reaching
the poorest countries and the poorest people and that it takes
too long to disburse. The adoption of the Development Policy Statement
in November 2000 changed that on paper. However, one of the key
concerns that ActionAid and other development NGOs voiced when
the Development Policy Statement was published initially was that
there was no action plan setting out how the Commission would
meet the aims espoused in the statement. This concern has now
been addressed and the Commission has published a rolling Programme
of Action[1].
It addresses both policy issues and working methods and sets out
how each of the themes addressed in the Development Policy Statement
is being approached by the Commission over what timescale.
4. This has not been the only innovation
under the current Commission. A new set of reforms led to the
setting up of EuropeAid at the beginning of 2001. The aim is to
make the EC programme more efficient and effective, with an increased
focus around areas in which the Community has `comparative advantage',
as defined rather broadly in the Development Policy Statement.
The Commission is also committed to reforming its decisions making
structures and to "deconcentrating" the actions and
decisions of the Commission to its delegations. A process of recruitment
of staff and training is underway to increase the capacity of
delegations. The deadline for this exercise is the end of 2004.
5. According to the Commission the deconcentration
plans are on schedule, with 22 countries being deconcentrated
by 1 January 2002, 30 more in 2002 and the rest in 2003. This
process is in itself extremely positive. By having a greater capacity
to dialogue with government in country as well as with other donors,
Community aid can fit more effectively into national development
plans.
6. EuropeAid is managed by a board comprising
the Commissioners with external responsibilities, with the External
Relations Commissioner as Chair. The Commissioner for Development
is a member of the Board and Chief Executive Officer. It was established
with a view to restoring the project cycle that was broken when
SCR was set up. This has meant that more tasks have been transferred
from the Directorates for Development and External Relations—but
from Development in particular.
7. The reform process is far from complete,
and changes continue to be made. Many of the other changes have
not yet been in place for long enough for their effects to become
apparent. It can be expected that there will be further reforms
in the future. The internal auditors have recently prepared a
report that criticises the Commission's current external relations
structure and suggests that there should be three divisions in
future: foreign policy, trade and development. It is an open question
as to whether it is DG Development that goes or EuropeAid but
it is very likely that one of the two of them will disappear.
HAVE THE
RECENT REFORMS
ADDRESSED THE
PERCEIVED WEAKNESSES
OF EUROPEAN
DEVELOPMENT ASSISTANCE?
8. The current reforms are too recent to
assess the extent to which they have successfully addressed perceived
weaknesses of European Development assistance. Certainly, there
have been problems and these are well known. A constant criticism
of EC aid has been that disbursement rates are low. This applies
both to programme aid disbursed under the European Development
Fund and also to smaller grants made to NGOs. Disbursement does
not appear to have speeded up hugely in 2001, although the Commission
maintains that commitments will increase in 2002 and 2003. For
example, around
20 billion is available for ACP countries over the
next seven years. The Commission must therefore disburse around
3 billion per year yet this year disbursement is
likely to be around half that.
9. One of the major weaknesses as far as
aid to ACP countries is concerned is that the European Development
Funds (EDF) remain outside the EC general budget over which the
European Parliament has authority. In the case of EDF there is
a separate financial regulation governed by different rules. If
the EDF were brought into the EC budget financial oversight over
EDF expenditure would be considerably strengthened and the number
of procedures that apply to EC aid would be reduced. ActionAid
recommends that the Select Committee give careful consideration
to the case for budgetisation of the EDF in its deliberations.
10. Another area of weakness has been the
complex, bureaucratic and burdensome financial control procedures
governing aid disbursement. To address this issue and to try to
ensure that EC aid expenditure can be compared to that of other
DAC members directly, the European Parliament amended the 2001
budget to require the Commission to produce output targets. The
idea behind these is to measure the impact of spending across
policy areas so that it becomes clearer how much the EC spends
on basic education, primary health or sanitation versus expenditure
on infrastructure projects. The Commission has failed to make
the required internal reforms during this year and the Parliament
has therefore required that this be carried out in 2002. The Commission
is reluctant to comply yet it is crucial information for being
able to ascertain the poverty focus and therefore the effectiveness
of EC aid. ActionAid recommends that the Commission make a
sustained effort to incorporate output targets into its annual
report and that the Committee raise this issue during its inquiry.
11. As far as grants to NGOs are concerned
the situation is bleak although it is not too late for the current
reforms to radically improve the situation. Unacceptable delays
between submission of proposals and receiving a rejection or an
approval continue. For example ActionAid is still waiting to hear
about applications submitted in April 2000, November 2000 and
January 2001. Furthermore, we are concerned that EuropeAid's internal
communications system leaves much to be desired; we also have
experience of submissions being lost and faxes going unacknowledged.
12. We welcome the fact that the Commission
acknowledges the seriousness of the situation but we are concerned
that its response—to delay new calls to try to clear the
backlog—means that the call for proposals for cofinancing
in 2001 will not be issued until November. There is no reliable
information available about when the call will be issued—it
was originally due to be published in June—making it difficult
to plan our own activity. This lack of transparency extends to
information about which projects have been approved; lists of
approved projects are not published until many months after contracts
have been issued. Whilst we are keen not to see further delays
we believe that it would have been helpful for the Commission
to have engaged in consultation with NGOs regarding the priorities
for the 2001 call. We recommend that the Committee examine
how the Commission can improve its consultation procedures in
future years without inviting further delay.
13. Although the EC officially encourages
NGOs to submit high quality proposals that build the capacity
of local partner organizations and respond to local development
needs, the fact that the time between calls being published and
the deadline for submission of proposals is usually a maximum
of three months means that the process of putting a proposal together
is inevitably rushed. This is particularly pertinent to projects
involving partner organizations in remote areas of developing
countries where a lack of infrastructure is a major obstacle to
meeting tight deadlines.
14. In an effort to deal with the backlog,
we understand from informal discussions with EuropeAid officials
that the Commission is now considering putting promising projects
received in 2001 under the human rights and democracy budget line
on a reserve list for 2002 (presumably in order to minimize the
administrative costs involved in processing large numbers of fresh
proposals). This will avoid issuing a call for proposals in 2002
but it denies NGOs the chance to submit new proposals for an entire
year. The lack of transparency in the process means that NGOs
that may have submitted projects in 2001 had they realized that
it was the only opportunity for two years—will not have
the chance to do so. The practice of creating "reserve lists"
of projects for possible funding in the future also undermines
the new Call process which was introduced precisely in order to
do away with backlogs in the project approval process.
15. The Commission gives inconsistent information
to NGOs which can make it difficult for us to work in genuine
partnership with the Commission. For example, on the one hand
it is EuropeAid's official policy to encourage the submission
of consortium proposals from NGOs in order to maximize the impact
of EC cofinancing and also to reduce the EC's own administration/application
processing costs; on the other hand, unofficially EC officials
have recently urged NGOs to keep project budgets under
2 million to enable the Commission to operate under
a less onerous, faster decision making procedure. These are contradictory
messages, given that most of the budgets submitted over
2 million are precisely the consortium proposals
the Commission claims to want to promote.
16. Whilst a complaint mechanism is in place,
it is not at all clear what response and redress NGOs can expect
in answer to these issues nor who will ultimately take political
responsibility for these continuing problems. We are concerned
that the appropriate internal monitoring and evaluation mechanisms
are not in place to assess the impact of budget lines nor to ensure
that lessons learned are systematically fed back in from evaluations.
17. ActionAid's overall conclusion is that
at this stage of the reforms it is clear that the Commission continues
to have difficulty in managing the great volume of proposals received
from NGOs. As more officials are employed this problem should
be reduced. However in the meantime it appears that in order to
cope with this administrative burden, Commission officials are
implementing seemingly ad hoc measures which we believe
threaten to undermine the intentions and objectives of the reform
and restructuring process. We would urge the Committee to take
up the issues in paragraphs 11-16 in its inquiry since now is
the time to address these shortcomings whilst the reforms are
still settling.
IS THERE
A MISMATCH
BETWEEN OBJECTIVES
AND RESOURCES?
18. The Commission itself has argued very
strongly that its effectiveness is reduced by the fact that the
human resources available to it for the administration of aid
have not kept pace with the quantity of aid it is required to
administer. In 2001 a significant number of new posts were allocated
both to DG External Relations and to EuropeAid. Most of these
posts have now been filled taking the current number of officials
in EuropeAid to around 1000. As deconcentration takes effect this
number is expected to be reduced to around 600 by the end of 2004.
However it is not just a question of the number of personnel either
in the field or in Brussels but the extent to which they are equipped
and trained to undertake their tasks. The Commission needs
to ensure that personnel working in EuropeAid are trained in,
have experience of, and apply, participatory, people centred development.
19. A concrete example of a potential mismatch
between objectives and resources may be that illustrated by the
Communicable Diseases Programme of Action which was adopted in
February 2001. Implementation of the plan does not entirely depend
on development resources. Some proposals in the Programme relate
to the regulatory environment and the degree to which the EC can
mobilize non development aid resources such as R&D resources.
However, that part of the Programme that is around improving the
impact of existing interventions may be hard to realize within
the current budget allocation. If ACP countries do not prioritise
this area of activity as an area for Community support, the Commission,
with only
25 million in the 2002 PDB as amended following the
European Parliament's first reading, will find that it cannot
make much progress in this area.
20. Likewise the Commission has identified
education as a priority area in 2002 but it is hard to see how
this will be realised since ACP countries have clearly indicated
through their choice of focal sector that they do not regard the
EC as the donor of choice when it comes to education sector support—whatever
the needs. Addressing this mismatch between stated priorities
and partner country strategic choices represents a challenge for
the Commission in the months ahead and it will require active
support and partnership between Southern governments and donors
in country to ensure that a more co-ordinated, poverty focused
approach becomes a reality.
TO WHAT
EXTENT IS
THE POVERTY
ALLEVIATION PROGRAMME
SUSCEPTIBLE TO
THE INFLUENCE
OF SHIFTING
POLITICAL PRIORITIES?
21. The Development Policy Statement identifies
poverty alleviation as the central aim of EC development assistance.
This is expanded in the Commission's rolling Programme of Action.[2]
Page five of this document states that "financial resources
(from the EDF and budget resources under Category four for external
actions) must be allocated so as to maximize their effect on poverty
reduction. Consequently the least developed and other low income
countries should be given particular attention . . . Among the
middle income countries those with a high proportion of poor people
and which are fully committed to implementing coherent poverty
reduction strategies should be given priority." Turning to
the top 10 recipients of EC aid according to the DAC we see that
not one is a least developed country, not one is in sub Saharan
Africa and not one is in Asia. The Commission needs to address
this imbalance urgently if it is to convince observers that its
aid is not subject to shifting political priorities. We recommend
that the Committee explore this apparent mismatch between stated
poverty alleviation priorities and the principle recipient countries.
22. Furthermore in the 2002 preliminary
draft budget the Commission has proposed cuts to a series of poverty
focused budget lines. The cofinancing line, for example, which
is always oversubscribed, is slated for a reduction as far as
the Commission is concerned. It has also proposed to the budgetary
authorities that cuts be made in the food security line, aid to
Asia and Latin America, and the human rights and democracy line.
23. There are also concerns about the EU
using the cofinancing budget line for broader political ends.
It appears that there may be pressure in 2002 to prioritise projects
in Afghanistan and neighbouring countries (even though the EC
has little experience of Afghanistan). This would have the effect
of further reducing funding available to NGOs for projects in
other countries and regions. If there is a political need to increase
funding for Afghanistan, then new funding needs to be approved
by the EU, instead of trying to squeeze already oversubscribed
existing budgets.
HAVE REFORMS
SUCCESSFULLY REDUCED
FRAGMENTATION IN
BOTH STRUCTURES
AND SYSTEMS?
24. The Quality Support Group is a welcome
addition to Commission mechanisms for ensuring internal coherence
and ensuring that the Community's aid policy is focused on achieving
the goals set out in the Development Policy Statement and elaborated
in the Action Plan.
25. It will not be until we have more experience
with deconcentration as well as the current structure in Brussels
before we can say with any certainty whether or not fragmentation
between structures and systems has been reduced. There were certainly
innumerable delays during 2001, owing to the establishment of
EuropeAid, the transfer of staff and the length of time it has
taken to recruit sufficient numbers.
26. As far as the Cotonou programming is
concerned, it is too early to tell whether aid has become more
poverty focused nor whether innovative proposals on participation
of non state actors have become a reality. No Country Support
Strategies in either draft or final form have yet been made public
making it challenging for NGOs interested in monitoring these
processes to assess the results.
27. Although few Country Support Strategies
(CSSs) have been adopted the initial indicators suggest that half
of EC aid appears to be in the transport sector at the expense
of support to education and health. It remains to be seen how
far macro economic support will contribute to social sector budgets.
However, the current breakdown bodes ill for a more poverty focused
aid policy—the clear primary objective for EC aid policy
established in the development policy statement.
EC TECHNICAL ASSISTANCE
28. This is an area of EC aid that appears
to have escaped the reform process to date. However, for the reasons
outlined in paragraphs 29-32, ActionAid believes that the EC must
undertake a comprehensive revision of its technical assistance
and recommends that the Committee pay particular attention
to how the Commission is following up on recommendations made
by previous evaluations on its use of technical assistance.
29. In recent years, the European Commission
has increased its efforts to assist developing countries to put
in place transparent, accountable and effective public administrations.
In the new EC development policy, institution building is a priority
area. This may explain why technical assistance, which provides
advice, training and technical expertise on different aspects
of public administration is taking a higher proportion of the
EC aid budget. The proportion is particularly high in ACP countries.
Under Lome IV, technical assistance (service) contracts accounted
for 46 per cent of total contracts.
30. However, technical assistance has not
proven to be an efficient aid instrument.[3]
An evaluation[4]
of the Technical Assistance Framework contract under 7th EDF concluded
that most funded actions were of a short-term nature and linked
to project preparation or supervision. This casts doubts on whether
technical assistance is effectively providing capacity building
to ACP administrations or whether it is really just a substitute
for the lack of resources from both EC and recipients to manage
EDF funds.
31. The fact is that a very tiny proportion
of the technical assistance budget is devoted to advisory services
and training. These types of actions, which are essential to providing
much needed transfers of skills and human resources development,
tend to have limited impact. Last but not least, the main beneficiaries
of EDF technical assistance contracts are consultancy companies
based in the EU.[5]
32. The reform could start a better integration
technical assistance in EC country support strategies and to adequate
its provision to recipients' actual needs and absorption capacities.
Operational procedures should also be improved, including a wider
and more transparent selection of consultants, encouragement of
North-South and South/South partnerships and measures to promote
the ability of ACP firms to tender.
CONCLUSION
33. In conclusion, ActionAid believes that
the current state of EU reform presents a rather mixed picture.
On the practical side there are still a clear number of deficiencies
in EuropeAid's management of aid. However, in terms of structural
change and its impact on policy and practice it is not possible
to state categorically at this stage whether or not the reforms
will succeed in their objective.
34. From our experience of dealing with
EuropeAid at this stage of the reforms it is clear that the Commission
continues to have difficulty in managing the great volume of proposals
received from NGOs. As more officials are employed this problem
should be reduced. However in the meantime it appears that in
order to cope with this administrative burden, Commission officials
are implementing seemingly ad hoc measures which we believe
threaten to undermine the intentions and objectives of the reform
and restructuring process. We would urge the Committee to take
this issue up in its inquiry since now is the time to address
these shortcomings whilst the reforms are still settling.
SUMMARY LIST
OF RECOMMENDATIONS
ActionAid recommends that the Select Committee:
1. Gives careful consideration to the case
for budgetisation of the EDF in its deliberations.
2. Recommends that the Commission make a
sustained effort to incorporate output targets into its annual
report and that the Committee raise this issue during its inquiry.
3. Encourages the Commission to speed up
its consideration of NGO proposals, including by improving its
consultation procedures with NGOs on priorities so that submissions
can be made that meet the EC's expectations, thus enabling them
to take decisions more rapidly.
4. Encourages the Commission to develop appropriate
internal monitoring and evaluation mechanisms to assess the impact
of budget lines and to ensure that lessons learned are systematically
fed back in from evaluations.
5. Explores the extent to which personnel
working in EuropeAid are trained in, have experience of, and apply
participatory, people centred development.
6. Explores the reasons for the difference
between the Development Policy Statement's poverty alleviation
priorities and the EC's partner country strategic choices so that
it can ensure that a more coordinated, poverty focused approach
becomes a reality.
7. Investigates the apparent mismatch between
stated poverty alleviation priorities and the main recipients
of EC aid.
8. Study and make recommendations on the
reform of EC technical assistance.
ActionAid
8 November 2001
1 Commission Staff Working Paper, The European Community's
development policy: Programme of Action SEC(2001) 808, Brussels
21.5.2001. Back
2
Commission Staff Working Paper, The European Community's development
policy: Programme of Action SEC(2001) 808, Brussels 21.5.2001. Back
3
The Report on the implementation of EC external assistance ranks
technical assistance programmes as "very poor". Back
4
"Evaluation des autorisations globales pour l'assistance
technique sous le 7eme FED", by Cota, February 2000 at http://europa.eu.int/comm/europeaid/tender/cadre01/index_en.htm Back
5
Although in Lome IV (art 275-280) provision is made to encourage
the use of ACP experts, in practice participation for ACP firms
in EDF contracts is relatively small. The Cotonou agreement (art
70-80), acknowledges this deficiency by making reference to the
need to strengthen ACP consulting firms. Back
| 
