Memorandum submitted by ActionAid
INTRODUCTION
1. ActionAid International is an international
NGO working in over 40 countries worldwide, including the UK.
While this submission has been put together by ActionAid UK staff,
our positions and recommendations reflect the experiences of our
staff and partners in Africa, Asia, and Latin America.
2. ActionAid welcomes the decision of the
IDC to conduct an enquiry into co-ordination for aid effectiveness
and the implementation of the Paris Agenda. We have set out a
clear agenda for achieving the necessary reforms at the Accra
High Level Forum on aid effectiveness in September this year in
our report: "Making aid accountable and effective. An
ActionAid Ten Point Plan for real aid reform".[25]
The report argues that great progress is needed if aid is to play
an effective role in reducing poverty. Donors must meet existing
commitments but also go much further; particularly by making aid
accountable to the people it is meant to help.
3. Poor co-ordination—or a lack of
"harmonisation"—is a constraint to improving aid
effectiveness. However, poor co-ordination among donors and with
recipient countries is really the symptom of underlying issues.
ActionAid and other civil society organisations have emphasised
that harmonisation must mean aligning all forms of aid around
country-led strategies and ensuring democratic ownership and accountability
through the participation of other stakeholders such as civil
society and parliaments. Donor harmonisation should not be reduced
to a technocratic agenda—such as counting joint donor missions—since
this has tended to lead to "harmonisation" of donors
around their common interests or around World Bank or IMF frameworks
and conditions, rather than with country priorities.[26]
4. Improving co-ordination will therefore
require fundamental change in the way aid is managed and accounted
for. Our submission stresses three key problems:
— Lack of democratic ownership
— Lack of real accountability and transparency
in the aid system
— Lack of progress through the Paris
Process
LACK OF
DEMOCRATIC OWNERSHIP
5. Ownership is widely accepted as the cornerstone
of development. Although it is one of the main "partnership
commitments" of the Paris Declaration, the only indicator
focuses on southern governments developing national strategies;
ignoring the need for greatly improved donor behaviour to support
national ownership. ActionAid believes this reflects a fundamental
problem of aid effectiveness, and we have pushed for stronger
targets for ownership for donors.
6. Ownership means more than simply government
or executive ownership. ActionAid stresses the need for a wider
participation of citizens through engaging parliaments, civil
society organisation particularly women's organisations and women's
rights groups, in the development process. Women make up 70% of
the poor, yet are systematically excluded or marginalised from
political processes in developing countries—this is why
promoting the participation of women's organisations and women's
rights groups is fundamental to promoting democratic ownership.
Real country ownership can only be assured if national strategies
and policies are developed with the participation of citizens.
Donors need to assist in strengthening the capacities of governments
and citizens to engage in this process.
7. Democratic ownership has been seriously
undermined by donor practises such as the use of tied aid and
economic policy conditions. Even DFID which has untied its aid
in 2001 awards 80% of consulting contracts to UK firms.[27]
Tied aid has been shown to not only increase costs by around 25%[28]
but also severely limits ownership and increases donor incentives
to push their own projects. Donors also use conditions to promote
their own policies rather than aligning and harmonising with government
policies. Conditions mean that large amounts of aid and the donors'
seal of approval are linked to particular policies, and governments
and citizens in developing countries are effectively denied the
right to freely choose the policies best suited to their economic,
political and social situation.
8. Recent ActionAid reports—"What
Progress. A Shadow review of World Bank conditionality"[29]
and "Confronting the Contradictions" on IMF policies[30]—show
that inappropriate economic policy conditions can also have negative
developmental impacts undermining the ability of countries to
hire the number of teachers and health workers needed to ensure
high quality education and health for all. The role and impact
of IMF and World Bank policies, conditions and economic frameworks
on hindering aid effectiveness and damaging ownership, harmonisation
and co-ordination efforts has been largely ignored by the Paris
Declaration, thereby weakening its effectiveness.
9. There are no international targets on
reducing policy conditions. DFID committed to end its use of economic
conditionality in 2005, but there are question marks around its
implementation of this policy, particularly given its tendency
to harmonise around World Bank and IMF programmes. During the
last IDA 15th Replenishment round in December 2007 DFID became
the single largest donor to the World Bank but missed the opportunity
to leverage an agreement by the World Bank to end the use of economic
policy conditions. ActionAid calls on all donors to end economic
policy conditionality and set clear targets for reducing the burden
of other conditionalities. Instead, a dialogue with the partner
country which respects democratic ownership, and focuses on outcomes
and results is essential to ensure that aid is disbursed effectively
and aligned to the partner's needs and national priorities.
Specific Questions:
— How is DFID monitoring and strengthening
its 2005 commitment to end its use of economic policy conditionalities
and challenging other donors to divorce the approval of aid packages
from the IMF's policies?
— What is DFID doing to persuade other
actors, particularly the World Bank and IMF to end their economic
policy conditions and allow countries the space to develop their
own policies which better align development and macroeconomic
goals?
— How is DFID planning to push on the
World Bank and the IMF to end their harmful conditionality policies?
LACK OF
REAL ACCOUNTABILITY
AND TRANSPARENCY
IN THE
AID SYSTEM
10. Improving the accountability of aid
is fundamental to improving its effectiveness. As we have argued
in our Real Aid[31]
reports, the deep-seated problems in the aid system stem from
an imbalance of accountability, with "upwards" accountability
to donors prioritised over "downwards" accountability
to the poor countries and people aid is supposed to help. Many
of the problems classified as "co-ordination" issues
are in fact symptoms of this imbalance in accountability. For
example, the huge transaction costs imposed on recipient governments
through multiple donor missions and reporting requirements are
caused by donors feeling they have a right to place their demands
for accountability from recipients above all other considerations.
Conversely the huge volatility and unpredictability of aid flows—which
play havoc with country planning systems and can contribute to
economic instability—are caused by there being no mechanism
for recipients to demand accountability from donors in terms of
delivering the aid they have promised on time.
11. To overcome these issues, ActionAid
has called for the introduction of agreed, transparent and binding
contracts to govern aid relationships. DFID has begun a practise
of signing Memoranda of Understanding with southern governments
such as Rwanda. However, these do not include measurable target
or binding commitments by DFID to release money on schedule unless
agreed conditions are broken. To improve ownership and predictability
of aid, DFID and its partners need to agree on transparent and
binding contracts. These agreements should be reached after widespread
consultation with parliaments and civil society, including women's
rights organisations, and should include clear donor commitments
on aid volume and quality, with sanctions against donors who fail
to live up to promises. The agreements should be agreed on a multi-year
basis and be transparently and independently monitored including
by parliaments.
12. Critical to improving accountability
is improving transparency—donors must adhere to the highest
standards of transparency and openness. These should include:
timely dissemination of information, particularly during aid negotiations,
and about disbursements; and the adoption of a policy of automatic
disclosure of all documents, with a strictly limited regime of
exceptions. The Paris Declaration ignores this issue and does
not include any concrete or monitorable targets. Aid negotiations
usually take place behind closed doors, donors usually provide
little information on disbursement timetables and amounts of aid
provided which does not allow southern government to properly
plan national budgets nor parliaments, civil society organisation
or other independent institutions to monitor aid money.
13. Parliaments, civil society actors and
other stakeholders in developing countries must play a critical
role in holding governments (of north and south) to account if
aid is to be used effectively. Yet mechanisms to allow this to
happen are largely absent in most southern countries. First steps
have been made in countries such as Ghana, Cambodia and Kenya
where civil society organisations, including ActionAid, have set
up forums to discuss aid issues and hold donors and government
to account. DFID has been supportive of this agenda in countries
such as Tanzania and Rwanda but could do much more. ActionAid
and others have been calling for the establishment of such regular
multi-stakeholder accountability forums. One effective way of
making progress on this critical issue would be to broaden the
definition of Paris Declaration indicator 12—mutual accountability—
so that "country-level mechanisms" for assessing progress
become multi-stakeholder—including parliaments and civil
society.
14. There is also a need for monitoring
and evaluation within the aid system—which is currently
largely done by donors about themselves or each other—to
become more independent and southern-led, for example via a jointly-funded
international evaluation body or recipient-led in-country bodies.
For instance, the 2006 OECD DAC survey of implementation of the
Paris Declaration was fatally undermined by donors insisting on
"negotiating" on the figures, so that the figures in
the final document were in many cases significantly different
from earlier drafts.
15. At the international level, ActionAid
has called for the aid system to be overseen by a UN aid commissioner
and ombudsman. This would allow, for example, a formal complaints
procedure so that recipient governments, civil society, and affected
citizens could submit complaints about donor behaviour—anonymously
if necessary. It would also allow the aid reform process to be
moved to a more representative institution than the OECD. One
promising step has been the establishment of the UN's Development
Cooperation Forum (DCF) which aims at providing an international
and transparent platform for all UN member states to promote coherence
and effectiveness of international development cooperation and
ensure the implementation of international development targets.
However, DFID has not so far become actively engaged in this relevant
Forum.
Specific Questions:
— What are DFID's plans in progressing
its current policy of using Memoranda of Understanding towards
agreeing transparent and binding contracts with southern partners?
— What are DFID's plans in promoting
multi-stakeholder accountability mechanisms at the country level?
— How does DFID report to developing
country parliaments for the aid it spends in their countries?
— What measures have been taken to
include civil society and other stakeholders in monitoring and
evaluation processes?
— How does DFID plan to ensure that
the Development Cooperation Forum in July 2008 will be a success?
— How will DFID ensure the independence
and transparency of the work of the newly established DFID Independent
Advisory Committee on Development Impact and how will southern
stakeholders be involved in this process?
LACK OF
PROGRESS THROUGH
THE PARIS
PROCESS
16. ActionAid believes that the Paris Declaration
represents a useful but limited attempt to deal with persistent
problems of aid delivery. However, many commitments have not been
met by donor countries, and many critical issues are left out
of the Paris Declaration, as we have detailed above and in our
Ten Point Plan.
17. The Paris process has suffered from
being based in a donor institution and being donor driven. The
Paris Declaration has a strong focus on governments widely ignoring
the role parliaments and civil society should play in any discussion
on aid. Real and substantive, not token, consultation processes
need to be organised in the run up to the Accra High Level Forum.
Southern governments, parliaments and civil society organisations
including women's rights groups need to be included in the consultation
process towards Accra.
18. In many cases, the Paris Declaration
identifies important issues, but the commitments or targets are
weak. One critical area where poor coordination and alignment
undermines aid quality is technical assistance (TA). Numerous
studies—cited in our report "Real Aid 2. Making
technical assistance work"[32]—show
that the effectiveness of this type of aid has been very low,
yet, according to the OCED DAC it accounts for 25-50% of all aid.[33]
Developing country governments have consistently raised this issue
throughout the Paris process. We argue that the Paris indicator
on coordinating TA should be strengthened, with only partner countries
deciding the extent to which it is met, and the target increased
from 50% to 100%. ActionAid has laid out a Five Point Agenda
for Action emphasising that a reform of DFID's technical assistance
programme is essential.[34]
DFID has promised to review its TA programme this year but the
process appears to be stalled. We are also concerned at the lack
of independent engagement or clear objectives for a planned procurement
review examining why the vast majority of consultancy contracts
still go to UK firms.
Specific Questions:
— How does DFID ensure that the implementation
of its technical assistance programme follows the principles laid
out in the 2006 White Paper, ensuring that it is in line with
country priorities?
— What is the timeframe for DFID's
review of its technical assistance programme?
— What is DFID doing to increase competition
in procurement and tackle the underlying issues which cause 80%
of contracts to go to UK firms?
SUMMARY OF
RECOMMENDATIONS
19. We stressed in this submission that
poor co-ordination—or the lack "harmonisation"—is
really the symptom of underlying issues, principally a lack of
accountability and democratic ownership. The forthcoming High
Level Forum on Aid Effectiveness in Accra must therefore focus
on critical underlying problems. Throughout this submission, ActionAid
has highlighted some of the key changes that will be necessary
if aid is to become more accountable and effective at contributing
to poverty reduction:
(a) Take democratic ownership seriously by
developing indicators to monitor donor performance, including
measurements to assess the impact of aid on development and gender
equality goals by engaging all stakeholders in the aid process,
ending the tying of aid and economic policy conditionality, and
making aid more predictable.
(b) Improve accountability and transparency
by setting up joint monitoring mechanisms enagaging donors, southern
governments, parliaments, and civil society actors including women's
right groups; meeting high standards of openness and transparency
and supporting independent monitoring.
(c) Expand the impact of the Paris Process
by moving it to a more representative institution as well as engaging
more stakeholders such as civil society organisations in the consultations
for Accra.
(d) Reform technical assistance by aligning
it to country needs and priorities and by really untying aid from
UK contractors.
February 2008
25 See ActionAid, "Making aid accountable and
effective. An ActionAid Ten Point Plan for real aid reform",
2007 available at:
http://www.eurodad.org/uploadedFiles/Whats_New/News/ActionAid%2010%20point%20Plan%20for%20Real%20Aid%20Reform.pdf Back
26
As contained in lending instruments such as the IMF's Poverty
Reduction Growth Facility (PRGF) and the World Bank's Poverty
Reduction Support Credit (PRSC). On World Bank frameworks see
the 2006 ActionAid report "What progress? A shadow review
of World Bank conditionality". Available at:
www.actionaid.org.uk/doc_lib/what_progress.pdf. For IMF frameworks
see the 2007 ActionAid report "Confronting the Contradictions",
available at:
www.actionaid,org/assets/pdf%5CAAConf_Contradictions_Final2.pdf Back
27
See ActionAid, "Reform of DFID's Technical Assistance
Programme: Five Point Agenda for Action", July 2007,
see Annex 2. Back
28
See ActionAid "Real Aid, An Agenda for Making aid work",
p. 26, available at:
http://www.actionaid.org.uk/_content/documents/real_aid_192005_153541.pdf Back
29
Available at:
http://www.actionaid.org.uk/doc_lib/what_progress.pdf Back
30
Available at:
http://www.actionaid.org/assets/pdf%5CAAConf_Contradictions_Final2.pdf Back
31
A available at:
http://www.actionaid.org.uk/_content/documents/real_aid_192005_153541.pdf Back
32
http://www.actionaid.org.uk/doc_lib/real_aid2.pdf Back
33
OECD DAC, 2005: Development Cooperation Report 2005 (Paris) p113,
footnote 3. Back
34
ActionAid, "Reform of DFID's Technical Assistance Programme:
Five Point Agenda for Action", July 2007. Back
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