1. Challenges to Aid Effectiveness: Donor Fragmentation
International Development Cooperation:
Theory & Practice
SNU GSIS
Challenges
to Aid Effectiveness:
Donor Fragmentation

2. Complexity in Aid Architecture
Proliferation of donor agencies
56 bilateral donors, over 230 international organizations, funds and programmes, plus private organizations (World Bank 2008)
<New aid architecture (Kharas 2007)>

3. Complexity in Aid Architecture
According to 2011 OECD Reports on Division of Labour: addressing cross-country fragmentation of aid
An average donor present in 71 out of 152 countries
In average, 21 donors (11 bilateral, 10 multilateral) present in recipient country (only DAC members and major MOs considered)

4. Complexity in Aid Architecture
There are more than 3,000 pairs of donor/country aid relations
Fragmentation ratio not much improved
Fragmentation ratio

5. Complexity in Aid Architecture
Aid fragmentation
partly due to lack of concerted and co-ordinated aid allocation practices
more transactions costs for both
Donors: fixed costs maintaining minimum in-country presence and managing programmes/projects
Recipients: burden on administrative capacity, difficulty in coherent policy making
In Accra Agenda for Action (2008) international community committed
to reduce the fragmentation of aid by improving the complementarity of donors’ efforts and the division of labour among countries and the division of labour among donors, including through improved allocation of resources […] across countries.”

6. Proliferation and Fragmentation (Acharya et al 2006)
Extent to which an aid donor disperses its aid budget among a portfolio of potential recipients
independent of the relative size of aid budgets
Fragmentation
Extent of dispersion in the sources of aid received by a recipient
independent from relative sizes of aid receipts
How to improve?
coordination: to maximize cooperation and synergy and minimize competition and overlap
sector-wide approaches (SWAps)
budget support
sector specialisation

7. Proliferation and Fragmentation (Acharya et al 2006)
Index of donor proliferation

8. Proliferation and Fragmentation (Acharya et al 2006)
obstacles and ideas
coordination: to maximize cooperation and synergy and minimize competition and overlap
sector-wide approaches (SWAps)
budget support
sector specialisation
Are there ‘optimal’ concentration or fragmentation levels per donor or recipient?

9. Donor Practices (Easterly and Pfutze 2008)
Many levels of fragmentation
by donor for countries
by donor for sectors
by donor for each aid recipient
International consensus:
transparency is good
too many donors in a single country and sector, too many difference projects for a single donor should be avoided.
excessively high overhead costs relative to the amount of aid dispersed should be avoided
'tied' aid, food aid and technical assistance are thought to be less effective
Five indicators for best practice of aid agency
Transparency
Specialization
Selectivity
Ineffective aid channels
Overhead costs

10. Donor Practices: Transparency

11. Donor Practices: Specialization

12. Donor Practices: Selectivity

13. Donor Practices: Ineffective aid channels

14. Donor Practices: Overhead costs

15. Aid Management System of Donors
International Development Cooperation:
Theory & Practice
SNU GSIS
Aid Management System of Donors

16. Aid Management System
Agenda for international development cooperation at international level
More aid
Better aid
Aid coordination
Aid Management at national level
How they promote coherent development policies
How they organize operations at HQs and in partner countries
How they manage human resources
How they allocate aid between channels, countries, sectors and themes
How they monitor and evaluate aid programs
legal framework and government structure

17. <Peer Review Reference Guide>
DAC Peer Reviews
Objectives
To improve the quality and effectiveness of development cooperation policies and systems
To promote good development partnerships for better impact on poverty reduction and sustainable development
To promote individual and collective behavior change of DAC members to ensure their development cooperation policy framework and systems are fit for purpose
<Peer Review Reference Guide>
holding DAC members accountable for the commitments they have made, and reviewing their performance against key dimensions of development co-operation and other domestic policies with an impact on developing countries
learning and sharing good practice.

18. Peer Review Reference Guide

19. Twelve lessons from DAC Peer Reviews
(from OECD Development Cooperation Report 2007)
Strategy
Finding the appropriate legal and political foundation
Managing competing national interests
Achieving greater policy coherence for development
Public awareness
Organizational management
Identifying a leadership structure that works
Dealing with institutional dispersion
Managing contributions to multilateral institutions
Decentralizing management to the field.
Management of delivery
Managing the scaling-up of development aid
Maintaining a focused approach towards countries and sectors
Performance-based management, evaluation and quality control
Human resource management priorities

20. Lessons from Peer Reviews: Strategy
Find the appropriate legal and political foundation
Have a clear, top-level statement of the purpose of development co-operation, whether in legislation or another form, that has wide ownership and can remain relevant for a sufficient period
Manage competing national interests
Avoid letting short-term pressures jeopardize the long-term common interest in effective development
Achieve greater policy coherence for development
Set a clear mandate and establish mechanisms to ensure that policies are assessed for their impact on poor countries
Public awareness
Invest in delivering, measuring and transmitting results of aid-financed activity
Comprehensive development legislation (DfID & UK’s Int’l Development Act 2002) or policy statement
National priority concerns such as trade, political relationships or security (importance of political vision in US aid: 1961 Foreign Assistance Act)
National decisions have international Impact: national policies may either promote or work against the needs of poor countries (in fields such as trade, migration or environment…)
Strong public support is the best guarantee of political and legislative support… requires pro-active and targeted forms of public education and awareness building

21. Lessons from Peer Reviews: Organization
Identify a leadership structure that works
Task a sufficiently senior and publicly accountable figure with clear responsibility at the political level for the delivery of effective development co-operation
Deal with institutional dispersion
Rationalize bilateral aid structures to facilitate coherent action at country level
Manage contributions to multilateral institutions
Promote greater coherence between those responsible for different aspects of multilateral aid
Decentralize management to the field
The decentralization of responsibility to the field level can be beneficial, but it needs high-quality, lean supporting systems
5. Leadership structure… minister or deputy minister with a strong government position
6. Different structures for the management of bilateral aid: policy – delivery, actors (national, regional or municipal level) => clarity of responsibility and accountability, professionalism, effective coordination
7. MOFA & agencies: Bilateral and UN – MOF: major multilateral and debt relief (or loans)
8. Role of field offices?

22. Lessons from Peer Reviews: Delivery
Managing the scaling-up of development aid
Radical reforms in aid delivery will be vital as donors are forced to deliver more aid per head of agency staff, while increasing the effectiveness of this aid
Maintaining a focused approach towards countries and sectors
Most DAC members should focus their assistance on fewer countries, fewer sectors and, in particular, fewer activities
Performance-based management, evaluation and quality control
Develop a stronger culture of managing for results and align incentives accordingly, but in ways that promote, not weaken, local structures of accountability
Human resource management priorities
Securing and developing well-qualified, well-motivated local and expatriate staff is essential for any agency to function effectively. The good news is that quality agencies attract quality staff
Organizational capacity is needed to scale up aid programs: more with less (more aid with downsizing the staff)? Staff numbers is important to cope with the increasing workload that comes with scaling up.
Aid to too many countries with too many activities
Accountability for both aid agencies and local organizations. Lack of understanding of the local context and its reluctances and/or inability to consult with and work through local communities, groups and organizations. Important of evaluation system capacity, lesson feedbacks, information sharing…
Challenges: downsizing of gov’t personnel, inadequate staffing levels, changing skill needs, rapid turnover in staff... Local staffs? Commitment and expertise

23. Aid Management: Organizational Structure
Many actors
Ministries, aid agencies, policy makers
National, regional and municipal level
Universities, NGOs
Who is responsible for what?
Policy-making
Main ministry with overall responsibility for aid policy
Several ministries and inter-ministerial coordination body
Implementation
By ministry(ies) responsible for policy
By separate agency(ies)
Operation
Degree of decentralization: HQs and delegations

24. Who has lead responsibility for bilateral aid

25. Who has lead responsibility for multilateral aid

26. Staff distribution between HQs and field offices

27. Proportion of staff in HQs and field offices

28. Organizational Structure for Managing Aid
Categorizing organizational structure for managing aid
Is there an independent ministry with overall responsibility for aid policy and implementation?
Is aid policy decided by a main ministry or through coordination of several ministries involved?
Is there a separate executing agency responsible for implementation?
(1)
Independent
Ministry
(2)
Decision making
(3)
Separate agency
category No
By main ministry
[Model 1]
Yes
[Model 2]
Inter-ministerial
[Model 3]
[Model 4]

29. Model 1: integrated within responsible ministry
[1] by each department
[2] by development department
Responsible Ministry(ies)
Africa
Department
Asia Department
Latin America Department
Foreign Policy
Trade
Development Co-operation
Responsible Ministry(ies)
Trade
Foreign Affairs
Development Directorate
Development Co-operation
Denmark, Norway, etc.
Greece, Italy, etc.

30. Model 2: policy ministry with separate agency
A ministry of overall responsibility for policy with a separate executing agency responsible for implementation
Main Ministry
Others
Ministry 2
Ministry 3 ….
Main
Agency
Agency 2
US, Japan, Sweden
US: while a number of ministries/agencies manage aid funds, State Department has overall responsibility and USAID is the largest institution administering about 40% of bilateral ODA.
Japan: Since 2008, MOFA take the responsibility for policy and JICA is the main implementing agency. ….

31. Model 3: coordination among ministries
Several main ministries with inter-ministerial coordination body
Inter-ministerial co-ordination committee
Ministry 1
Ministry 2
Ministry 3
Others ….
France: Many ministries (M. of Foreign and European Affairs, M. of Economy, Industry & Employment, M. of Immigration and Development, etc.) are involved in ODA process with AFD as the principal executing agency. CICID decides policy direction and sector/regional priorities.
Development Agency

32. Model 4: integrated independent ministry/agency
An independent ministry or agency has the overall responsibility for ODA management.
Ministry/Agency for Development Cooperation
(Minister for Development Cooperation)
UK: DFID
Other Ministries ….
Policy
Planning
Imple-ment
Canada: M. of International Cooperation and Canadian International Development Agency.
Agency 1
Agency 2
Agency 3
Germany: Federal M. for Economic Cooperation and Development (BMZ), with several implementing agencies such as GTZ, KfW and DED.

33. Korea’s Organizational Structure for ODA
Committee for International Development Cooperation (CIDC)
MEST
MOSF
MOFAT
MAF
Local governments
Committee for International Development Cooperation (CIDC), a coordinating body chaired by the Korean Prime Minister which decides on key policies and plans of Korea's development assistance
EDCF
(in EXIM Bank)
KOICA ….

34. Q & A