1. ENHANCING AID EFFECTIVENESS
Aid Effectiveness, EuropeAid
ENHANCING AID EFFECTIVENESS
European Commission
Fidelma O’ Shaughnessy DG EuropeAid

2. What we are going to talk about
Aid Effectiveness, EuropeAid
What we are going to talk about
The What and Why of Aid Effectiveness?
The Paris Declaration on Aid Effectiveness
The European Commission Response

3. What is aid effectiveness today?
Aid Effectiveness, EuropeAid
What is aid effectiveness today?
The aid effectiveness agenda describes the set of measures being put in place by donors and partner countries to support the achievement of the Millennium Development Goals

4. Aid Effectiveness, EuropeAid
6 key principles
Partner countries are expected to:
Define their own development goals
Implement reforms to strengthen their systems and institutions
Focus on results, transparency and accountability

5. Aid Effectiveness, EuropeAid
6 key principles
Donors are expected to:
Align their support on partner country national development strategies
Use partner country systems and institutions
Harmonise and Co-ordinate their actions - including through division of labour

6. Why is aid-effectiveness an issue?
Aid Effectiveness, EuropeAid
Why is aid-effectiveness an issue?
Common goal – the Millennium Development Goals (MDGs) not on target
Commitments to scaling-up of aid and debt relief - Monterrey, Barcelona, Gleneagles… not being met
High transaction costs: still too many small projects by each donor 6 6

7. If you are not yet convinced:
‘In 2007 donors conducted missions in 54 countries and only coordinated 2750 (18%) of them’.
This means on average 263 missions per country, which equals one mission arriving every working day.

8. The Paris Declaration on aid effectiveness – March 2005
Aid Effectiveness, EuropeAid
The Paris Declaration on aid effectiveness – March 2005
Over 100 partner countries and donors have signed
Paris goes beyond previous agreements –twelve indicators to track progress towards targets for 2010
Stronger mechanisms for mutual accountability

9. The Paris Declaration in a Pyramid
Aid Effectiveness, EuropeAid
The Paris Declaration in a Pyramid
5 Principles:
Ownership: partner countries exercise effective leadership and coordinate development actions
Alignment: donors base support on partner strategies, institutions and procedures
Harmonisation: donors actions are harmonised, transparent, and effective
Managing for results: improved resource management and decision making
Mutual accountability: mutual assessment of progress
Examples of indicators:
Ownership – at least 75% of partner countries have operational development strategies
Alignment – all donors use partner countries procurement systems and PFM systems, reduce by two thirds the stock of parallel PIUS
Harmonisation – 40% of donors missions to the field are joint, 66% of country analytical work is joint

10. Aid Effectiveness, EuropeAid
The EU Response
EU is committed to implementation of the Paris Declaration
Strongly supports greater partner country involvement in the harmonisation process
Has committed to four targets which in addition to the Paris Declaration

11. Aid Effectiveness, EuropeAid
The EU Response
1. Channel 50% of government-to-government assistance through country systems, including by increasing the percentage of our assistance provided through budget support or sector-wide approaches
2. Provide all capacity building assistance through co-ordinated programmes with an increasing use of multi-donor arrangements
3. Avoid the establishment of any new Project Implementation Units (PIUs)
4. Reduce number of un-coordinated
missions by 50%

12. EU Code of Conduct on Division of Labour in Development Policy - Feb 2007
maximum of three sectors in-country
redeploy funds in country based on local negotiations (either use delegated cooperation, or redeploy into GBS, or exit responsibly redeploying funds in 3 priority sectors)
in each sector establish lead donor for all donor coordination
Apply principles to Regional Cooperation
limited number of priority countries
Letter of LM of 21 May 2008 to cooperation / development ministers
Suggests applying two of the guiding principles of the Code of Conduct: delegated cooperation and lead donorship arrangement
Identification of countries / sectors where: EC could delegate to Member States; Commission could be delegated by Member States

13. Reforming Technical Cooperation & PIUs for External Aid provided by EC
- Backbone Strategy July 2008
Improved effectiveness and sustainability of EC development assistance, based on
Provision of “quality TC” that supports country-led programmes, based on partner demand and focused on sustainable results
Provision of support through partner-owned Project Implementation Arrangements, with a substantial reduction of Parallel PIUs
It’s important to draw attention on the Concept of Project Implementation Arrangement. Projects requires implementation arrangements whatever is the financing sources. The Strategy refer to PIA as the organisation set up established to implement a project in terms of accountability, internal division of labour, internal organisation. This PIA concept allows to go beyond the narrow concept of PIU, focusing on the “unit”, that may be restrictive and leading to a formalistic approach.
DAC definition of coordinated programmes that meet both criteria below:
Partner country’s clear capacity development objectives as part of broader national or sector strategies?
Technical cooperation aligned with the countries’ capacity development objectives?
and at least one of the criteria below:
Country control over the technical cooperation?
More than one donor involved , arrangements involving the country authorities in place for coordinating TC?
A PIU is parallel when it is created and operates outside existing country institutional and administrative structures at the behest of a donor.

14. Need for a Strategy for TC and PIUs ?
OECD/DAC « overview of the results » to monitor the Paris Declaration (2007)
European Court of Auditors’ Special Report No. 6/2007 on the effectiveness of technical assistance in the context of capacity development
EC internal diagnostic
Accra High Level Forum Sept 2008 confirmed need for increased progress in this area
Notwithstanding a number of positive contributions made by TC in many countries and contexts, there has been criticism of TC practices and the use of PIU structures in development cooperation for several decades. TC often appears as supply driven, with low ownership from the partner country, insufficient attention given to capacity development challenges, lack of clarity about roles and results expected from TC, overreliance on northern providers etc…
Renewed calls for reform have been made under the Aid Effectiveness Agenda articulated in the Paris Declaration and confirmed by the OECD/DAC in the "Overview of the results" of the first survey to monitor the Paris Declaration (2007). According to the Survey, ‘business as usual’ is no longer acceptable, TC "is still too much donor driven" and is considered as one of "six major priority areas requiring the attention of policy makers in the development field".
Technical Cooperation provided by the EC has not been immune to these criticisms. This was most recently highlighted in the European Court of Auditors’ Special Report No. 6/2007 on the effectiveness of technical assistance in the context of capacity development, and acknowledged in the Commission’s formal reply.
The findings from the research and consultations carried out as part of the Strategy preparation, confirm most of the criticisms and were built upon in the Backbone Strategy process.
Accra Agenda for Action: Capacity development is the responsibility of developing countries, Donors playing a supportive role. Demand-driven & country owned support, Developing countries & donors will : jointly select and manage technical cooperation,
promote the provision by local / regional resources, South-South Cooperation.

15. Backbone Strategy - Guiding Principles
1. Primary aim is
Capacity Development
8. Consider innovative options for TC provision
2.Demand led approach where TC is not provided by default EC
Technical
Cooperation
7. Avoid use of Parallel PIU & promote effective Project Implementation
Arrangements
3.Strong result orientation
A set of principles will guide the future provision of EC-funded Technical Cooperation, and the design of Project Implementation Arrangements. These principles will apply to all TC operations (notwithstanding the management mode, including decentralized and centralized management).
1.Focus on capacity development – TC is provided with the primary aim of supporting internal country processes to promote capacity development at individual, organisational and country-wide levels. Where relevant, TC can be called upon to play other roles[1], such as offering advice, providing support for the implementation and facilitation/preparation of EC cooperation.
2.Demand-led approach where TC is not provided by default – The provision of TC must be based on the demand and requirements of the partner country. Costs and available options should be transparent. Appropriate dialogue and support may be needed in order to enable clear formulation of the demand for TC.
3.Adopting a results-orientation – TC design will ensure that TC inputs/activities are linked to targeted outputs which in turn lead to sustainable development outcomes. Appropriate indicators will be agreed on in advance to monitor the implementation of TC.
4.Country-owned and managed TC process – Country partner ownership is the key underlying principle for the organisation of EC-funded TC. From the identification to the implementation phase, partner countries will be actively involved in the design of PIAs and TC-supported programmes, including the procurement of TC services and the management, review and accounting of TC results.
5.Taking account of country and sector-specific requirements – TC support will build on a thorough understanding of the political, socio-cultural, sectoral and institutional context. Blueprint approaches should be avoided.
6. Working through harmonised and aligned action – TC support will be closely coordinated with other donors and aligned to country strategies and programmes through the increased use of pooling arrangements or other harmonised approaches, such as delegated cooperation.
7. Avoiding the use of parallel PIUs and promoting effective Project Implementation Arrangements – The use of parallel PIUs will be avoided as far as possible in favour of effective implementation arrangements that are fully integrated and accountable to national structures[1].
8. Considering different and innovative options for the provision of Technical Cooperation – The design of TC support will consider alternatives to the use of international long- and short-term consultants. These alternatives include the use of national and regional resources, twinning arrangements and knowledge transfer beyond standard training approaches.
[1] Parallel structures may be justified and/or ‘unavoidable’ in exceptional cases only, such as emergency situations (post conflict), support to Non-State Actors or regional programmes. The use of ‘parallel PIUs’ should always be a last resort, and clearly justified.
6. Work through harmonized and aligned actions
4.Country owned & managed TC processes
5. Take account of country/sector requirements

16. The delivery of SPS assistance
EU Strategy on Aid for Trade – Oct. 2007
Support DC integration in world trading system as part of poverty reduction efforts in context of globalisation
Operationalisation required of EU commitments to increase TRA (In 2002: FfD/ Monterrey; 2005: G8/Gleneagles and WTO/Hong Kong)
Follow-up required to the recommendations of the WTO AfT Task Force of summer 2006
To be delivered in accordance with the principles of Aid effectiveness and in compliance with Paris Declaration
Support to Integrated Framework, ACP increased intevention at regional level etc.
0.56% 2010; 0.7% 2015
1. Quantitative ambitions - TRA; - Wider AfT
2. Pro-poor focus and quality
3. Aid Effectiveness
4. ACP specific angles (EPA and regional integration context)
5. Monitoring and reporting
EU collectively to reach € 2 billion in annual TRA in 2010 (€ 1 bn from the EC, € 1 billion from the EU MS)
EC average 2001 – 2004: € 890 million); EU MS collectively to do the same (average : € 360 million)
Commitment refers to Trade Related Assistance: 1) Trade policy and regulation; 2) Trade development
(Categories in WTO/OECD Doha Database)
EU (EC and MS) TRA in 2006 (Doha Database):
EC: € 940 million
EU MS: € 640 million
EU total: € billion
EU (EC and MS) total AfT in 2006 (OECD CRS selection – proxy)
EC: € billion
EU MS: € billion
EU total: € billion 16

17. Thank you for your attention !
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Conclusions
Implementing the Backbone Strategy will be a great challenge in both the short and the medium/long term for all of us. We have made explicit commitments to other donors, EU institutions, Member States and Partner Countries to reform our approach to technical assistance. We have identified the main difficulties and constrains following broad consultations. It is now time to drive the reform and better meet the needs of our Partner Countries. This will not only require the implementation of specific actions, as presented in the attached Work Plan, but a real change in our way of working on these issues, on an every-day basis.
Better TC and better PIA are feasible. Within the Aid Effectiveness Agenda this is maybe THE area of work where donors have a special responsability. Implementing the Strategy will be demanding in the coming months but will improve sgnificantly the effectiveness of our cooperation.
Extract for Accra Agenda for Action: “ Yet the pace of progress is too slow. Without further reform and faster action we will not meet our 2010 commitments and targets for improving the quality of aid”