Aid effectiveness

More than a passing fad

Dirk Niebel, Germany’s federal minister for economic cooperation and development, welcomes the momentum of the international aid effectiveness debate. He argues that the Busan summit in November should accelerate it even more.

By Dirk Niebel

The conventional understanding of development cooperation (DC) in terms of relationships between donors and recipients of official development assistance (ODA) does not adequately reflect the reality any more. The world of DC is being redefined by new cooperation partners from both the public and the private sector. The Fourth High Level Forum on Aid Effectiveness (HLF4) at the end of November in Busan, South Korea, comes at a time of sweeping change, and I cannot think of a more interesting place to discuss that change. South Korea joined the OECD’s Development Assistance Committee (DAC) in 2009, signalling the intention to be a responsible ODA donor and an active participant in what used to be considered the “club of donors”. In the late 1950s, South Korea still depended heavily on aid. Today, the country is a shining example of how external assistance can make a difference if it is implemented prudently and effectively, guided by intelligent policies and the ownership of the national government.

The international debate on aid effectiveness started among donors, but it soon evolved into a dialogue between industrial and developing countries, engaging civil society and various other development actors. The Accra Agenda for Action, in particular, is an expression of this trend. Busan will add to the dynamism, focussing on what bilateral and multilateral agencies must do to achieve better results.

By merging Germany’s technical co­operation agencies, I took an important step to ensure that our country’s contributions will be delivered much more effectively and efficiently in future. Other steps will follow to gear our bilateral agencies’ operations more closely to results and the requirements for transparency, efficiency and effectiveness. In this context, Germany will also establish an independent evalu­ation institute.

The fundamental consensus of the Paris/Accra effectiveness agenda is that boosting aid effectiveness is a major requirement for achieving the Millennium Development Goals and that donors and partners need to change the way they act individually and together in order to reach development targets. The momentum must not just be maintained. It deserves to be accelerated.

First evaluations of the results of the Paris Declaration and Accra Agenda for Action show that a lot remains to be done to meet the targets that previous HLFs set. But we must not forget what has been achieved. The developing countries now consider the aid effectiveness agenda their own agenda. Certain practices derived from the Paris Principles are now generally accepted in the development community. The outcome in Busan should be leaner and less detailed than in Paris and Accra, and it should emphasise the lasting relevance of setting measurable objectives and maintaining peer pressure.

Results matter

The aid effectiveness debate is not an end in itself; it is meant to lead to better results. Effectiveness does not only depend on measures we take to improve our cooperation in terms of procedures, mechanisms, efficiency, impact and innovation. It also depends on issues on which development policy as such has little or no influence (partner countries’ strategies, their capacities, resources and revenues, political crises, droughts and natural disasters, the global financial and economic crisis, price volatility and so on). No doubt, policy coherence in general is highly pertinent to the aid effectiveness debate. In this context, I would like to mention my joint commitment with Germany’s minister for agriculture to phase out EU subsidies for farm exports. The aid effectiveness principles, moreover, must apply to climate protection financing, an area in which many actors without a DC background are becoming involved. All these issues should be discussed in Busan.

The rapid increase in actors and co­operative relationships presents opportun­ities and challenges for donors and partners. Effective DC requires money, ideas and innovation. Such resources are provided in large quantities by agencies such as the Bill and Melinda Gates Foundation. But we must not ignore the down-sides of growing diversity. The greater number of actors and more fragmentation of donor activities and conditions pose challenges to developing countries’ capacities – which already tend to be overstretched in the case of the poorest nations.

In Busan, we should seek a more reasonable relationship with the “new donors”, emerging market nations like India and Brazil. Their package agreements on bilateral cooperation tend to include aspects of trade, access to resources, investments and technology. They therefore do not fit conventional donor-recipient relationships and bypass the classical delivery channels of ODA. Accordingly, I have not discontinued cooperation with the big emerging market nations; I have adapted it in a new approach to forging global development partnerships.

The emerging giants are valuable partners for effective development programmes because they have easy access to other developing countries and understand the challenges there. By teaming up with countries like Mexico or Brazil, Germany can build on years of DC experience and, for example, promote trilateral co­operation in third countries. Cooperation that combines German DC expertise with an emerging market’s experience in HIV/Aids control, for instance, is a comparatively economical and effective option.

Priorities for Busan

Busan will not be the end of the process that started in Rome, Paris and Accra; on the contrary, it will harness and further develop the core principles of effective aid delivery established at the pervious HLFs: ownership, alignment, harmonisation, man­aging for results and mutual accountability. It matters a lot to reach clearer accentuation, especially in areas like managing for results, division of labour and private sector involvement.

Busan should set a sharper focus on managing for results. German taxpayers and the citizens of our partner countries want to see real outcomes; they are not interested in grand announcements, and even less in the vehicle fleets of international aid agencies. DC is not just a numbers game. In education, for example, it is not enough to raise school enrolment, if drop-out rates rise at the same time or ­educational standards fall.

We need to strengthen our partners’ capacities, otherwise they cannot assume responsible ownership. We need to focus more on results-based financing, as we are currently doing in a number of African countries.

Politically, I consider managing for ­results a tool for strengthening governments’ democratic accountability towards parliaments, people, civil society, the media, political parties and the private sector. This is an important issue for value-based DC, geared to long-term success. In this context, I appreciate the strong engagement of civil society organisations very much, both in Germany and abroad.

If we are serious about aid effectiveness – especially in the poorer developing countries – we must move on from the state-centred DC monoculture that has evolved over decades. One shortcoming of the aid effectiveness debate so far was that it underestimated the relevance of the private sector and cooperation with private sector companies to achieve development results. I want to change matters in Busan.

DC and private-sector endeavours have a lot to learn from one another. DC can serve as a catalyst, a mobiliser of private sector investment at national and international levels for development in partner countries. We have developed a wide range of instruments for that purpose – from public-private partnerships to development financing. They enable us to leverage large sums of private money with limited public funds. At the same time, private-sector initiative and innovation can serve as catalysts for DC.

The international community would neglect its duty if it did not grasp the opportunity that Busan offers to address growing aid fragmentation. All the figures at our disposal indicate that fragmentation is a growing burden on our partners. There is, however, evidence that countries like Rwanda are rising to the political challenge of managing and even enforcing a division of labour among aid agencies. Reducing aid fragmentation must be on the Busan Agenda. As Europeans, I feel, we are under a particular obligation to make sure the issue is tackled. Personally, I am in favour of a better division of labour and more joint programming at the EU level, for instance in regard to lending support to recently independent South Sudan.

Busan is also the last chance to persuade “new donors” to embrace the core principles of good international development cooperation. Germany has done a great deal of groundwork in this area, contributing significantly to the development debate at the G20 level. In Busan, I hope we will provide even more inspiration to make the operations of multilateral agencies and the EU more effective. My ministry is hosting the secretariat of the Multilateral Organisation Performance Assessment Network (MOPAN) – a group of 16 bilateral donors. This is a sign of our commitment to improving the effectiveness of multilateral bodies. Through the Mutual Reliance Ini­tia­tive, we seek to harmonise procedures that obviously can and should be streamlined.

I also see Busan as a chance to call for a more differentiated approach to DC, with an emphasis on analysis and implementation at the country level. Both will facilitate cooperation with new donors. A more differentiated approach will also cater better to the special needs of fragile states. I welcome the valuable initiative of fragile states to start an international dialogue on peace building and state building.

Busan should modify the DC landscape in two ways: the scenario should become broader based and more geared to results. South Korea is the perfect place to achieve that. Today more than ever, DC needs to mobilise new actors for the development process. Therefore, we need an international agreement that appreciates new donors without compromising the fundamental principles of effective DC.

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