AID MANAGEMENT AND DONOR HARMONIZATION

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AID MANAGEMENT AND DONOR HARMONIZATION

• CASE STUDY OF GHANA

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A. BACKGROUND

• GENESIS OF THE AID MISMANAGEMENT AND
  FRAGMENTATION REGIME IN GHANA (1970-80)
• Economic Crisis
• Political Instability
• Adverse Social Development Consequences

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A.1 EXTERNAL RESPONSE TO CRISIS

• MULTILATERAL AND BILATERAL INSTITUTIONS
• STABILIZATION AND ADJUSTMENT (1980-1990s)
• BRETTON WOODS INSTITUTIONS BILATERAL AGENCIES
• ECONOMIC RECOVERY PROGRAMMES
• STRUCTURAL ADJUSTMENT CONCESSIONAL LENDING

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A.2 INTERNAL RESPONSES

• COLLAPSE OF THE GHANAIAN STATE
• INABILITY TO DETERMINE NATIONAL DEVELOPMENT
  PRIORITIES AND FORMULATE APPROPRIATE POLICIES
  IMPLEMENT THOSE PRIORITIES
• INABILITY TO SECURE BUY-IN FOR ITS PRE-DETERMINED
  PRIORITIES BY EXTERNAL ACTORS OR DONORS
  (MULTILATERAL AND BILATERAL)

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A.3 EFFECTS OF EXT-INT RESPONSES

• AID DEPENDENCY ACCENTUATED, BUILD UP OF BOTH
  FOREIGN AND DOMESTIC DEBT
• COLLAPSE OF AID COORDINATION BY THE RECIPIENT
  GOVERNMENT
• INABILITY TO DIRECT, CONTROL, AND ACCOUNT FOR
  UTILIZATION OF AID
• AID DISHARMONIZATION, PARALLEL MODES OF AID
  MANAGEMENT (BILATERAL, MULTILATERAL, NATIONAL)

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A.4 CONSEQUENCES

• EXTERNAL DOMINATION OFNATIONAL ECONOMIC POLICY
  FORMULATION PROCESS
• HIGH TRANSACTION COST
• CUMBERSOME DISBURSEMENT PROCEDURES
• DELAYS IN DISBURSEMENT
• LOW ABSORPTIVE CAPACITY

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CONSEQUENCIES continued

• POOR IMPLEMENTATION
• POOR POLICY AND PROGRAMME OUTCOMES
• ECONOMIC GROWTH INSUFFICIENT TO MINIMISE EXTERNAL
  DEPENDENCY AND SPUR ACCELERATED POVERTY REDUCTION
• POVERTY BELIEVED TO BE INCREASING, NOT REDUCING
• SUSTAINABLE DEVELOPMENT UNLIKELY
• INEQUALITY AND INEQUITIES ESCALATING

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SECOND EXTERNAL INTERVENTION

• MINIMIZING EXTERNAL DOMINATION AND AID
  DEPENDENCY, INCREASING NATIONAL OWNERSHIP,
  LEADERSHIP, AND RESULTS
• MONTERRAY DECLARATION (2002)
• ROME DECLARATION (2003)
• PARIS DECLARATION (2005)

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B. QUESTIONS

• ALMOST 5 YEARS AFTER MONTERREY (2002), 4 YEARS
  AFTER ROME (2003), AND 2 YEARS AFTER PARIS
  (2005)
• WHAT HAS CHANGED IN THE AID MANAGEMENT SYSTEM,
  INCLUDING HARMONIZATION, IN GHANA?
• TO WHAT EXTENT HAVE THE NEW AID MANAGEMENT REGIME
  BEEN OPERATING IN GHANA?
• HOW DIFFERENT ARE LEADERSHIP, OWNERSHIP AND
  RESULTS UNDER THE NEW REGIME IN GHANA?

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C. ANSWERS

• PARIS DECLARATION AS FRAMEWORK
• SIGNIFICANCE
• INTEGRATIVE FRAMEWORK
• REFORM OF THE AID MANAGEMENT REGIME
• HOLISTIC APPROACH - 5 TENETS
• OWNERSHIP
• ALIGNMENT
• HARMONIZATION
• MANAGING FOR RESULTS
• MUTUAL ACCOUNTABILITY

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C.1 OWNERSHIP

• AID MANAGEMENT AND HARMONIZATION OCCURS UNDER
  LEADERSHIP OF RECIPIENT GOVERNMENT AND STATE
  STRUCTURES

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EVIDENCEOWNERSHIP

• GHANAS PRSPS - THE GHANA POVERTY REDUCTION
  STRATEGY (GPRS I, 2003-2005) AND THE GROWTH AND
  POVERTY REDUCTION STRATEGY (GPRS II, 2006-2009)
  HAVE SERVED AS MAIN MEDIUM TERM POLICY FRAMEWORKS
• GHANA CURRENTLY HAS NEITHER LONG-TERM NOR
  MEDIUM-TERM DEVELOPMENT PLANS WITHIN WHICH THE
  GPRS IS OPERATIONALIZED.

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CONT.

• OWNERSHIP OF GPRS IS JOINT OR SHARED BETWEEN
  GOVERNMENT AND DONORS/DPS
• LEADERSHIP OVER THE DEVELOPMENT POLICIES AND
  STRATEGIES SOLELY BY GOVERNMENT PARTIAL OR
  PROBLEMATIC
• COUNTRY OWNERSHIP UNDER STRESS

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C.2 ALIGNMENT

• PRSP/GPRS PURSUED WITHIN AN INTEGRATED AND
  COHERENT POLICY FRAMEWORK IN GHANA

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EVIDENCE ALIGNMENT

• GPRS I AND GPRS II NOT ALIGNED TO ANY LONG-TERM
  OR MEDIUM TERM DEVELOPMENT PLANS BECAUSE
• EARLIER PLANS -VISION 2020 AND 4-YEAR MEDIUM
  TERM PLANS WERE DISCARDED IN 2001 BY THE THEN
  NEWLY INSTALLED GOVERNMENT
• PREPARATION FOR A NEW LONG-TERM VISION NOW IN
  PROGRESS
• GPRS I AND GPRS II SERVE AS COMMON FRAMEWORK FOR
  AID RELATIONS IN GHANA

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HARMONIZATION

• GOVERNMENT AND DONORS COORDINATE RESOURCE FLOWS
  AND RECEIPTS AND THEIR UTILIZATION IN SUPPORT OF
  GROWTH AND POVERTY REDUCTION

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EVIDENCE HARMONIZATION

• MULTI-DONOR BUDGET SUPPORT SYSTEM INTRODUCED IN
  2003
• 10 DONORS/DPS INVOLVED - CANADA, EC, FRANCE,
  GERMANY, NETHERLANDS, SWITZERLAND, UNITED
  KINGDOM, UNICEF, UNITED STATES (OBSERVER), WORLD
  BANK
• PROGRESS IN HARMONIZATION UNDER MDBS LEADING TO
  THE EMERGENCE OF A REGIME OF JOINT AID MANAGEMENT
  RATHER THAN NATIONALLY-LED AID MANAGEMENT

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CONTD

• PARALLEL SYSTEMS OF AID MANAGEMENT PERSIST -
  SECTOR WIDE APPROACH (SOCIAL DEVELOPMENT SECTORS)
  AND INDIVIDUAL PROJECT MANAGEMENT EXIST ALONGSIDE
  MDBS
• NO COHERENT AID/EXTERNAL RESOURCE MOBILIZATION
  POLICY EXISTS TO STEER BOTH MDBS AND PARALLEL AID
  MANAGEMENT MECHANISMS

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MANAGING FOR RESULTS

• GHANA GOVERNMENTS AND DONORS/DPS ORIENT
  ACTIVTITIES TOWARDS ACHIEVING DESIRED RESULTS

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EVIDENCE RESULTS

• MDBS MECHANISMS
• MOU OR COMMON FRAMEWORK MEMORANDUM, A HARMONIZED
  PERFORMANCE ASSESSMENT FRAMEWORK (PAF), A
  DISBURSEMENT SCHEDULE LINKED TO THE BUDGET CYCLE
  HAVE BEEN IMPORTANT INPUTS TO ENSURING
  HARMONIZATION AND ALIGNMENT OF MDBS AND GPRS

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CONTD

• - DIRECT BUDGET SUPPORT OF THE ORDER OF
• US300 MILLION PER YEAR. THIS REPRESENTED IN 2003
  39 OF TOTAL ODA AND 13 OF TOTAL SPENDING,
  DECLINING TO 27 AND 9 RESPECTIVELY BY 2005
• AID COORDINATION IS BY BOTH MINISTRY OF FINANCE
  AND ECONOMIC PLANNING (MOFEP) AND DONORS/DPS
  (MDBS COMMITTEE)
• MOFEPS CONTROL OVER AID COORDINATION IS MORE
  PARTIAL THAN TOTAL, BECAUSE OF EXISTENCE OF
  PARALLEL SYSTEMS

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CONT

• MOFEPS COORDINATION OF AID MORE PARTIAL THAN
  COMPLETE, BECAUSE OF EXISTENCE OF PARALLEL
  SYSTEMS
• MONITORING AND EVALUATION OF GPRS IMPLEMENTATION
  AND MDBS OPERATIONS IS SHARED RESPONSIBILITY OF
  MOFEP AND NATIONAL DEVELOPMENT PLANNING
  COMMISSION (NDPC)

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MUTUAL ACCOUNTABILITY

• GHANA GOVERNMENT AND DONORS/DPS ACCOUNTABLE TO
  EACH OTHER FOR PROGRESS IN MANAGING AID BETTER
  AND EFFECTIVELY

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EVIDENCE MUTUAL ACCOUNTABILITY

• PRSP/GPRS II FRAMEWORK
• ME INDICATORS AND MATRIC (GOG)
• RESULTS MATRIX/PAF (DONORS)
• DIALOGUES - SECTOR LEVEL WORKING GROUPS CIVIL
  SOCIETY MARGINAL
• DIALOGUES - NATIONAL LEVEL, CONSULTATIVE GROUP
  MEETINGS ANNUALIZED CIVIL SOCIETY PARTICIPATION
  AD HOC
• JAS TO COMPLEMENT MDBS?
• PARLIAMENT - RATIFICATION NOT POLICY DEBATE

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EFFECTS OF MDBS

• SIZE AND SHARE OF EXTERNAL FUNDING OF BUDGET
• PROGRAMME AID FLOWS (INCLUDING HIPC) WERE 12 OF
  TOTAL AID FLOWS IN 1999, REACHED A PEAK OF 58 IN
  2002, DECLINING TO 35 IN 2005
• DURING 2003-2005 UNDER MDBS THERE WAS DECLINE OF
  PTOGRAMME AID FINANCING, BOTH IN REAL TERMS AND
  AS RELATIVE PROPORTION OF TOTAL AID FLOWS

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CONTD

• IN 2006, SUPPLEMENTED BY MULTILATERAL DEBT RELIEF
  INITIATIVE (MDRI) FLOWS, PROGRAMME AID EXPANDED
  AGAIN TO COMPRISE 47 OF TOTAL EXTERNAL
  ASSISTANCE
• MDBS HAS NOT BEEN ABLE TO RESTORE THE PROPORTION
  OF EXTERNAL RESOURCES SUBJECT TO THE GOVERNMENT
  BUDGET BACK TO THE 58 ACHIEVED IN 2002

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CONTD

• POTENTIAL EFFICIENCY GAINS OF MDBS IN TERMS OF
  MORE PREDICTABLE AND MORE COST EFFECTIVE EXTERNAL
  ASSISTANCE HAS BEEN LIMITED B ITS SCALE
• THE MOST SIGNIFICANT IMMEDIATE EFFECTS OF MDBS
  HAVE BEEN IN RELATION TO POLICY DIALOGUE AND
  CONDITIONALITY

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CONCLUSION

• ALMOST 5 YEARS AFTER MONTERREY (2002), 4 YEARS
  AFTER ROME (2003), AND 2 YEARS AFTER PARIS
  (2005)
• WHAT HAS CHANGED IN THE AID MANAGEMENT SYSTEM,
  INCLUDING HARMONIZATION, IN GHANA?
• PARTIAL PROGRESS,TOO EARLY TO TELL IF MDBS WILL
  BECOME THE DOMINANT SYSTEM AND REPLACE PARALLEL
  SYSTEMS
• OVERACHING NATIONAL POLICY FRAMEWORK FOR
  LONG-TERM DEVELOPMENT AND AID OR EXTERNAL
  RESOURCE FLOWS NOT IN PLACE YET

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CONT.

• TO WHAT EXTENT HAVE THE NEW AID MANAGEMENT REGIME
  BEEN OPERATING IN GHANA?
• 2003-2007, MDBS HAVE BEEN OPERATIONAL. FIRST
  EVALUATION COMPLETED AND REPORT BEING DISCUSSED
• HOW DIFFERENT ARE LEADERSHIP, OWNERSHIP AND
  RESULTS UNDER THE NEW REGIME IN GHANA?
• AN INDEPENDENT, NATIONAL LEADERSHIP, OWNERSHIP,
  AND RESULTS-ORIENTED REGIME NOT EMERGED YET,
  UNCLEAR WHEN SUCH A REGIME MAY EMERGE