Select Committee on International Development Appendices to the Minutes of Evidence


Memorandum submitted by ActionAid


  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.


  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.


  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.


  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.


  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.


  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.


  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.


  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.


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 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

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