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Emerging Topics for Development Management: Key Principles Underlying the New Modes of Aid Governance in Asia Caroline Brassard and Teresita Cruz-del Rosario Lee Kuan Yew School of Public Policy National University of Singapore Presentation for the Development Studies Association Annual Conference Ulster, Northern Ireland, 2-4 September,

Key Research Questions 1. How to design disaggregated accountability and transparency mechanisms at the sectoral and sub- country levels? 2. How to ensure that these mechanisms are inclusive of all stakeholders (including private aid)? 3. How to put in place a set of incentive structures for all stakeholders to participate in good aid governance? 3

Defining Aid Governance “The good governance of aid processes by all stakeholders, from the design and implementation to the M&E of aid projects and programs, to achieve national and local development objectives.”

Key Stakeholders Donor Countries (bilateral/multilateral) International and National NGOs Recipient Countries (government officials, ground recipients, …) Civil Society (incl. Volunteer organisations, media, Universities,…) Private Sector (incl. Foundations, Corporations)

Organization of the paper (1) 1. Introduction: from aid effectiveness to aid governance 2. Aid Governance and Donor Institutions Mutual Accountability and Transparency – the Weakest Links Private Aid as an Emerging Player

Organization of the paper (2) 3. Aid Governance Frameworks in Asia Principle 1: Disaggregation: The Case of the Hanoi Core Statements in Vietnam Principle 2: Inclusiveness: The Case of the BRR in Post-Tsunami Aceh and Nias, Indonesia Principle 3: Incentivization: Experiences in Designing Incentives for Good Aid Governance 4. Future Pathways: Some Initial Thoughts

Part 1. Introduction: from aid effectiveness to aid governance 8

From Aid Effectiveness to Aid Governance PDPs led to emphasis on ownership, harmonization and alignment Mutual accountability and transparency are the weakest links Need to shift away from emphasizing on recipient countries’ responsibility to ensure good governance as a pre- requisite to receiving aid to a focus on good governance applied by all stakeholders involved in aid 9

Basic principles of the Paris declaration (OECD, 2005) Developing countries exercise leadership over their development policies and plans [ownership] Donors base their support on countries’ development strategies and systems [alignment] Donors co-ordinate their activities and minimize the cost of delivery of aid [ harmonization]

Developing countries and donors orient their activities to achieve the desired results [management for development results] Donors and developing countries are accountable to each other for progress in managing aid better and in achieving development results [mutual accountability] Basic principles of the Paris declaration (OECD, 2005)

Part 2. Aid Governance and Donor Institutions 12

Mutual Accountability and Transparency – the Weakest Links Five Banks Initiatives to harmonization  M&E framework DFID – civil society engagement Accra Forum (2008) only 17 countries signed up for more transparent aid 13

Selected Asian Countries’ experiences Afghanistan: priorities on military and political goals Nepal / Bhutan: aid dependency and assymmetry of power relations (aid represents respectively 65% and 40% of central gov. expend.) Vietnam / Philippines / Indonesia: large recipients but aid is less than 3% of central gov. expend.) 14

Private Aid as an Emerging Player (1) Ford Foundation Global Health Fund Bill and Melinda Gates Foundations Private Voluntary Organizations Corporations Religious Organizations Private Individuals and Philanthropists 15

Private Aid as an Emerging Player (2) Involvement of Civil Society Organizations though financing mechanisms such as: Civil Society Challenge Fund Partnership Programme Agreements Development Awareness Fund Strategic Grant Agreements But no formal mechanisms to track performance of private aid 16

Part 3. Aid Governance Frameworks in Asia 18

Two case studies: The Hanoi Core Statements in Vietnam and its spin-offs The BRR (Badan Rehabilitasi dan Rekonstruksi) in Post-Tsunami Aceh and Nias in Indonesia 19

20 Figure 1: Key Principles of Aid Governance

Principle 1: Disaggregation: The Case of the Hanoi Core Statements in Vietnam ODA pledges (2007) US$426 Million in grants and US$3139 Million in loans Hanoi Core Statements (2005) identify weaknesses as: Accuracy of aid reporting Capacity of local government for strategic planning and implementation Spin-offs: application of HCS at the sectoral and provincial levels 20 sectoral partnership groups and a Partnership Group on Aid Effectiveness 21

22 26 December 2004 Tsunami…

23 Aceh was the hardest hit province

24 Short-term poverty impact was severe Poverty Headcount in 2005 Poverty Headcount in 2004 Source: World Bank (2006)

Principle 2: Inclusiveness: The Case of the BRR in Post-Tsunami Aceh and Nias, Indonesia Record Private aid flows Centralization of aid governance via the BRR with a four-year mandate until April 2009 Establishment of Multi-Donor Trust Funds Maintaining an emergency mindset to ‘think outside the box’ 25

Principle 3: Incentivization: Experiences in Designing Incentives for Good Aid Governance Direct incentives: Performance-based rewards Information tracking systems (database) Indirect incentives: Access to information Providing increased voice and decisional power Dealing with Dis-Incentives Competition between donors for funds and effectiveness rankings 26

Part 4. Future Pathways: Some Initial Thoughts 27

Approaches to ensure good aid governance (1) 1. Expand the Five Banks Initiative to include CSOs 2. Involve local governments and locally- based NGOs in consultative process 3. Strategic dialogue between public and private donors for greater accountability 4. Decentralised version of the Afghan Compact 28

Approaches to ensure good aid governance (2) 6. BRR-type of coordination mechanism 7. Gradual process for transparency and accountability in these sectors: Health Education Gender Empowerment Microfinance 8. Paris-related performance indicators 9. External and Independent Monitoring and Reporting Mechanisms 29

Thank You! Q&A 30

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