Transcript Background on DFID

Session 1
UK Department of
International Development
A brief history
• Established in 1997 following New Labour election
• a Cabinet position (with Clare Short as Minister): i.e.,
made independent of the FCO
• 2 White Papers (1997 and 2000):
– Eliminating world poverty: a challenge for the 21st century
– Eliminating world poverty: making globalisation work for the poor
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IDTs to MDGs
Translating these into operational goals:
MDGs-PSA-SDA-CAP/ISP
Target Strategy Papers: poverty, women, human rights,
health, UPE, water, urban areas, governance, HIV
Three strategic shifts:
• From aid to development
• from agency to department
• from administration to development
Session 2
DFID in operation strategies, approaches and
instruments
At a global level
• attempts to influence other actors (OECD,
UN, World Bank with regard to:
– poverty reduction as focus of development and
aid;
– aid volume;
– debt relief;
– restrictive trade arrangements / market access;
– donor practice (lighter / harmonised procedures,
untying aid, from projects to programmes)
At a country level:
• Country ownership (NB not just Government)
• Moving upstream: from projects to
programmes, sectors, and country strategies
• Focus on policy and public expenditure
management (PEM) for poverty reduction
• Participation: both to inform policy-making,
and for accountability
At country level: why?
• Critiques of aid effectiveness
– failure of SAP and conditionality; critical role for
national ownership, process conditionality
– Limits to a project-based approach to aid
• Changing opportunities: end of Cold War ,
election of new UK government in 1997
At country level: what?
• Depends (or should depend) on country
circumstances - particularly the policy environment
• Since 1999, a broad move among donors to use
PRSPs as overall framework for agreed policies
• Thus a choice of financial aid instruments (from
projects to general budget support), depending on
macroeconomic situation, PEM system, Government
capacity, etc.
• Plus of course TA and commodity aid: not used by
DFID, but by some other donors (e.g. USAID)
Types of financial aid instruments
Aid Form
Conditionality
Earmarking
Accountability
Fungibility
General
Budget
Support
Macro and
budget
None or
nominal
Govt systems
Yes, completely
Macro and
budget
Varies - none
(budget
support) to high
(social funds)
Varies
accordingly
Yes, but varies
Sector Budget
Sectoral
Support
To sector
Govt systems
Yes unless in
conditionality
Sector
earmarked
Within sector
Govt systems
Yes unless in
conditionality
Projects using (Sectoral and)
Govt systems Project
Project within
sector
Govt and donor
systems
Yes, but limited
Projects using
parallel
Limited
systems
Total
Donor systems
Yes, but very
limited
Aid financed
debt relief
Sectoral
Choice of financial aid
instruments
• Depends on:
– level of agreement on priorities and policies
(PRSP and PEM, SWAPs);
– impact / net benefit - donor co-ordination costs,
aid efficiency, policy influence
– capacity of Government (various levels) to plan,
execute and account for public expenditure
• (see decision tree in handout)
The usual starting point:
what donors look for in PEM
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•
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integration of recurrent/development
outcome oriented
prioritisation
integration of planning and finance
fiscal discipline enforced by MoF
strengthening links to policy making process)
…all usually captured in an MTEF
Session 3
Sector approaches
Outline of this session
• What do we mean by a SWAp or sectoral
policy process?
• What is the rationale for such an approach?
• When and where are sectoral approaches
appropriate?
• How do sectoral approaches fit with other
reform processes or instruments?
What do we mean by a
SWAp, or sectoral approach?
“The defining characteristics of a SWAP are that
– all significant public funding for the sector supports a single
sector policy and expenditure programme,
– under Government leadership,
– adopting common approaches across the sector,
– and progressing towards relying on Government procedures
to disburse and account for all public expenditure, however
funded.
The working definition focuses on the intended direction of
change rather than just the current attainment.”
(Foster and Mackinosh-Walker 2001)
The rationale for a sectoral approach
Part of a general trend: donors recognised
drawbacks of project approach, and the importance
of Government policy and financial systems
A SWAp is, in other words, an attempt to link:
– improved Government sector policy and sectoral
PEM, seen as crucial for improved development
outcomes
and
– more intelligent donor support, with more
coordination, under Government leadership, so
less transaction costs - and possibly greater total
donor funding too
When is a sectoral approach
appropriate?
• Public expenditure is a major feature of the sector
• Donor contributions to the sector are large enough to give rise to coordination problems
• Basic agreement exists between Government and donors re: sector
strategy
• There is a supportive macro and budget environment
– i.e. sector decisions can be made with reasonable confidence that
budgeted resources will be available
• Supportive institutional arrangements
– i.e. sector policy falls under the purview of a single line Ministry, and a
manageable number of donors
• Government and donor incentives are compatible with SWAp-type
changes
Basic elements of a sector
approach
• Sectoral situation analysis - incorporating links to poverty
• Agreement on sector priorities, and on role of public policy and
public expenditure in relation to other sector actors
• sector strategy and sectoral expenditure planning - participation;
policy / budget consistency
• building sector management structures: building capacity,
avoiding PMUs
• setting sector targets and agreeing M&E arrangements
• establishing financial accountability, procedures, donor funding
modalities
• agreeing joint annual sector review arrangements: mutual
accountability rather than conditionality
How does a sectoral approach
relate to other reforms /
instruments?
• There are limits to achievements possible with policy
/ PEM improvements within a single sector.
• A SWAp should fit with whole-of-Government
initiatives (a national poverty strategy, public
expenditure reforms, and public administration
reform)
• In practice, these separate initiatives may fail to
mesh, and can work against each other - especially if
different donors involved in each
Summary of lessons of
experience
• Ownership, partnership and conditionality
– SWAps not universally appropriate
– needs broad and high-level Government commitment to a
strategy donors can broadly support. Requires hard choices
(MTEF helps).
– Takes time; incremental rather than revolutionary
improvement.
• Sector management structures
Questions for discussion
• At what scale (Federal or Provincial) should a
sectoral approach be planned in Pakistan? What are
the advantages and drawbacks of each?
• How do sectoral approaches relate to public
administration policies, PRSP, etc.?
• What would be the potential gains from moving
towards a sectoral approach?
• What would be the potential costs?
• What are the obstacles?