Category Archives: Donor Aid

The world post-Busan: what’s in it for CSOs working on aid, transparency and accountability?

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prepared by Paolo de Renzio, Senior Research Fellow at the International Budget Partnership

After a gruelling 35-hour flight, it took me a few days to recover and digest all that had happened in Busan last week, where more than 2,000 delegates gathered for the 4th High-Level Forum on Aid Effectiveness. Overall, I thought that the outcome was fairly disappointing. The outcome document, called the Busan Partnership for Effective Development Cooperation, is long on principles and short of commitments. It was endorsed by the emerging donors like Brazil, Russia, India, China on condition that it is not binding. Specific and time-bound targets for improving donor performance, such as those agreed in Paris in 2005, are absent. And all details about the new and more inclusive body expected to oversee the implementation of the document’s commitments are lacking, though a deadline of June 2012 for its establishment was set.

But not all is bleak. The document contains strong language on the need to promote democratic ownership of development policies and processes, and recognizes the vital role played by Civil Society Organizations (CSOs) in “enabling people to claim their rights, in promoting rights-based approaches, in shaping development policies and partnerships, and in overseeing their implementation”. It also retained the commitments related to improving aid transparency, including a deadline of December 2015 for implementing a common open standard for the publication of comprehensive information on aid flows. In fact, the International Aid Transparency Initiative, which was undermined by reluctant donors in the run-up to Busan, got a strong boost with the US Government joining it, alongside other large donors such as the Asian and Inter-American Development Banks. This means that more than  75% of information of total aid flows will soon be compliant with strong transparency standards. This will allow CSOs in both donor and recipient countries to track more closely how aid money is spent.

Donors also committed to using country systems as a default approach for development cooperation, something that could strongly enhance the link between aid and budget transparency, and to further untie their aid. Finally, the document talks about the importance of fiscal transparency in combating corruption, and about the need to “establish transparent public financial management and aid information management systems, and strengthen the capacities of all relevant stakeholders to make better use of this information in decision-making and to promote accountability”.

The results of the Busan HLF4 therefore create a reasonable framework to push forward issues that are of core interest to CSOs working on transparency and accountability. Yet, much remains to be done. In order to fully exploit the opportunities opened at Busan, the International Budget Partnership will work with others to:

  1. Monitor and influence negotiations on the establishment of the Global Partnership for Effective Development Cooperation, ensuring that it adequately includes and addresses transparency and accountability issues (focusing particularly on aid and budget transparency, and use of country systems), with monitorable indicators and time-bound commitments.
  2. Work with the IATI Secretariat to ensure that aid information is increasingly compatible with recipient country budget systems and processes.
  3. Continue discussions on enhancing the linkages between aid and fiscal transparency with the smaller set of actors who were part of the Transparency Building Block at Busan, and who are committed to further and faster progress in this area.

If you are interested in joining, let us know!

How we will promote aid and budget transparency in Busan

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prepared by Paolo de Renzio, Senior Research Fellow at the International Budget Partnership

Open Budget Surveys have repeatedly found that countries that are heavily dependent on foreign aid to finance their budgets tend to have less transparent budget processes, . This might be due to various country characteristics, such as low incomes or weak democratic institutions. But donor behaviour also plays a part, as argued in a recent IBP Briefing Note. The brief highlights the importance of the relationship between donors’ provision of information on aid flows and recipient country governments’ disclosure of budget information to their citizens. In fact, aid transparency and budget transparency are inextricably linked. Budgets in partner countries cannot be made fully transparent without improved aid transparency. Only if donors provide partner countries with sufficient information, compatible with partner country budget systems and schedules, can timely, accurate and comprehensive budget information be made available to citizens of countries receiving aid. This point is also highlighted in the the Dar es Salaam Declaration on Budget Transparency, Accountability and Participation, signed last week by nearly 100 civil society groups.

At the Fourth High-Level Forum on Aid Effectiveness, which will take place in a few days in Busan, South Korea, the transparency theme will have a prominent place. The latest draft of the Busan Outcome Document (the declaration that participating governments will sign at the end of the Forum) covers transparency issues in a number of ways. First, transparency and accountability are recognized as ‘shared principles’ that form the foundation of development cooperation, alongside ownership, results and inclusive partnerships. Second, a whole paragraph (para 22) is devoted to aid transparency commitments, in which donor agencies undertake to make publicly available more information on aid flows, and to implement a common standard for its publication, building among other things on the efforts of the International Aid Transparency Initiative. Third, donors and recipient countries commit to building more transparent public financial management systems and to improving fiscal transparency.

All of these commitments were the outcome of some difficult negotiations, facing resistance from a number of donor governments, including China, Japan and France. Provided they make it through the final discussions, they are very welcome, and represent a significant step forward in recognizing the importance of transparency and accountability as key ingredients of both aid and development effectiveness. The explicit link between aid transparency and budget transparency, however, is not recognized. Luckily, this link will be the focus of a plenary session, which IBP has helped organize and which is supported by a smaller number of like-minded actors, including the governments of Sweden, the US, Rwanda and South Africa, the Collaborative Africa Budget Reform Initiative (CABRI), the World Bank and CSOs like Transparency International and Publish What You Fund. In this session, more ambitious targets and commitments around aid and budget transparency will be discussed, and hopefully agreed.

One of the most important aspects of the discussions at Busan will be to agree on the future international architecture for development cooperation, with a view to overcome the limitations of the OECD/DAC Working Party on Aid Effectiveness, which for too long has been seen as too exclusive a body that does not reflect the role of emerging donors and the need for a more equal partnership between donor and recipient governments. The current draft of the Busan Outcome Document talks about the establishment of a Global Partnership for Effective Development Cooperation. Ideally, this body should include a specific mechanism for ensuring the transparency-related commitments are monitored and enforced. Such mechanism would also gain from a multi-stakeholder nature, following the example of the Global Initiative for Fiscal Transparency (GIFT), which brings together governments, international organizations and civil society groups in a joint effort to promote fiscal transparency across the world.

The International Budget Partnership will be represented at the Busan Forum, and will report back on what happened.

Watch this space!

How to cut expenditure strategically: Swaziland and the United States

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Last week the World Bank told Swaziland to cut its spending in order to curtail its sprawling deficit. And how should this be done? Well, by simply administering an across the board pay cut to civil servants. Not too sophisticated. Expect trouble.

When the USA had its own fiscal crisis earlier this year, David Brooks of the New York times suggested a much more rational approach to reducing expenditure. In a nutshell, this is what he said:

“Trim from the old to invest in the young. We should adjust pension promises and reduce the amount of money spent on health care during the last months of life so we can preserve programs for those who are growing and learning the most.”

If  spending cuts are unavoidable, surely it would be more prudent to cut strategically? The World Bank’s advisors tell poor countries to allocate funding on the basis of policy priorities. Surely cuts in spending should be made on the basis of policy priorities as well? And not through indiscriminate measures like across the board cuts in civil servants salaries?

A new Education MDG? Lets have quality AND access

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In the CGD’s Views from the Center Blog, Nancy Birdsall comments on the World Bank’s new education policy that targets learning rather than access education. This may sound like semantics, but it is a shift in emphasis that makes all the difference. Have a look at this IBP Brief to see what happened when the Tanzanian government focused on enrollment rather than quality of education. And of course the current formulation of the education MDG still encourages access to education, rather than learning.

Birdsall makes some fascinating points that education and aid policy experts should debate in detail. Most of them are tinged by the New Public Management approach that performance should be managed and innovation encouraged in how such performance is achieved.

If we accept the validity of these suggestions for the moment (I hope education and aid policy experts don’t), they still leave a number of questions about whether most poor countries would be capable of responding to the challenges that such a funding model would pose:

  • Most poor countries don’t have sufficient performance management systems. True, some countries do report matriculation results, but reporting on performance at the end of a 11 or 12 years schooling cycle is hardly useful for management purposes. Will this inability to report not punish the most needy countries?
  • Recipient countries will be encouraged to manage their schools in the same way. This funding model will create the incentive to move government funding from non-performing to performing schools. This often means that poor and marginalized learners face even greater barriers to learning.
  • Is the root of this problem not the idea that there is a trade-off between access to and quality of education? Should we really choose one over the other? Should the right to education not embrace both access and quality? Yes, all budgets are a zero sum game that enforce hard trade-offs. But any good budget is based on a balancing of these priorities, not a stark choice between them.

Can we Deep Throat our way to governance accountability?

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The once encouraging ‘governance turn‘ in development thinking emphasized the need for building formal and informal democratic institutions to supplement and consolidate more technocratic reforms such as strengthening treasuries or training auditors. As it turns out, the manufacturing of governance accountability is harder than most people thought.

Reporting on the findings of their impressive 10 year, 150 case study Citizenship DRC project, the IDS distinguishes three models for encouraging citizen-led accountability. We discuss these three models below.

The huge contribution of the IDS project is to give us more and more detailed descriptions of how citizens sometimes succeed in holding governments to account. However, the analysis and interpretation of these descriptions still have a long way to go.

There are few hard and fast rules for sparking and supporting the sort of democratic eruptions seen in the MENA region recently. In any given country, knowledge  of context still plays a more important role than any recipe for producing accountability. And anyone wishing to support the emergence of greater accountability will more than likely end up with some mixture of all three the models that the IDS discusses.

Considering the tiny portion of development aid that is spent on building governance and accountability, it can also be argued that the development community is yet to make a serious effort at testing any of the models for igniting and sustaining governance accountability. Continue reading →