Transcript REINFORCING MUTUALL ACCOUNTABILITY FOR DEVELOPMENT COOPERATION IN LDCs Matthew Martin Director, Development Finance International and Senior Advisor, DCF DCF High-Level Symposium Bamako, 5 May 2012

REINFORCING MUTUALL
ACCOUNTABILITY FOR
DEVELOPMENT COOPERATION
IN LDCs
Matthew Martin
Director, Development Finance International
and Senior Advisor, DCF
DCF High-Level Symposium
Bamako, 5 May 2012
STRUCTURE
Results of the DCF Study on
Development Cooperation in
LDCs
 Recommendations for Reinforcing
Current Mutual Acountability
Frameworks for Development
Cooperation for LDCs
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RESULTS (1): TRENDS
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Since Brussels, aid to LDCs has risen faster than
overall aid,
Therefore has risen from 27% to 33% of total aid
Has risen from 0.06% of GNI to 0.097%, but still
well below the target of 0.15-0.2% adopted in
Brussels
In 2009, only 7 donors (Belgium, Denmark, Ireland,
Luxembourg, Netherlands, Norway, Sweden) met
the Brussels top end target of 0.2%, and only two
others (Finland and UK) reached 0.15%
To reach 0.15% overall DAC bilateral donors would
need to increase flows by 50% (100% for 0.2%)
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RESULTS (2): TRENDS
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Looking at key sectors, since 2002 the share of aid going to
LDCs has risen sharply in agriculture and health, at the
expense of middle-income countries. However, LDC share of
aid to water and sanitation has stagnated, while that to
education has fallen, primarily due to sharp rise in scholarships
for Chinese and Indian students in OECD countries.
Some LDCs receive far more aid (“darlings”) than others
(“orphans”), because other considerations such as militarystrategic links, trade and investment interests, language/culture
and historical factors play a strong part in aid allocations. The
top 5 LDCs receive almost half of total aid to LDCs. This high
concentration in a few countries has been worsening since
2005, as increasing amounts of aid have gone to Afghanistan.
This overconcentration on a few LDCs is also true at sector
level: 54% of aid to agriculture went to only 5 LDCs (35% to
Ethiopia and Afghanistan alone), as well as 45% of aid to
health, 40% of aid to education and 38% of aid to water and
sanitation.
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RESULTS (3): TRENDS
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This concentration does not reflect population size. With the
exception of Afghanistan, the top 10 aid recipients per capita
are countries with small populations.
Is aid targeting the countries in most need ? OECD has
grouped LDCs’ into 6 clusters depending on their MDG status
and progress. During the last five years, aid to the 14 countries
with the lowest status and progress has risen faster than most
other clusters, donors’ forward spending plans indicate that aid
to these countries will rise by only 0.2% over 2010-12, much
less than other clusters.
Indeed, 8 of the countries most in need (Afghanistan, Central
African Republic, Chad, Haiti, Liberia, Sierra Leone, Somalia
and Timor Leste) should expect aid falls. Donors are
increasingly moving to reward countries which have already
made progress, but at the same time risk abandoning many
countries with the highest need and making the greatest efforts.
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RESULTS (3): QUALITY
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Improvements in quality of aid to LDCs – and therefore its costeffectiveness in producing development results – are very slow:
Budget Support: disbursing aid as budget support to LDCs is
the best way to promote LDC leadership in implementing
national development plans, by allowing governments to
allocate aid to their key priorities, and encouraging parliaments
and citizens to hold the governments more accountable. Many
LDCs have made major strides in improving development
programmes. However, though budget support disbursed to
LDCs has doubled since 2001, it has fallen from 12% to 9% of
disbursements to LDCs. In addition, countries in- or postconflict tend to receive virtually no budget support.
Use of Countries’ Own Systems: many LDCs have made
dramatic improvements to PFM and procurement systems. But
donors have not significantly improved use of LDCs’ own
systems, continuing to run their own parallel systems. This is
particularly true in countries which have seen political instability
or conflict.
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RESULTS (3): QUALITY
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Improvements in quality of aid to LDCs – and therefore its costeffectiveness in producing development results – are very slow:
Budget Support: disbursing aid as budget support to LDCs is
the best way to promote LDC leadership in implementing
national development plans, by allowing governments to
allocate aid to their key priorities, and encouraging parliaments
and citizens to hold the governments more accountable. Many
LDCs have made major strides in improving development
programmes. However, though budget support disbursed to
LDCs has doubled since 2001, it has fallen from 12% to 9% of
disbursements to LDCs. In addition, countries in- or postconflict tend to receive virtually no budget support.
Use of Countries’ Own Systems: many LDCs have made
dramatic improvements to PFM and procurement systems. But
donors have not significantly improved use of LDCs’ own
systems, continuing to run their own parallel systems. This is
particularly true in countries which have seen political instability
or conflict.
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RESULTS (3): QUALITY
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Fragmentation or Concentration of Donors ?
There has been focus on countries which have
“too many” donors, and are burdened by
excessive numbers of projects, missions etc. This
has led to efforts to rationalise donors and
projects, and to encourage joint missions and
analysis. However, in many LDCs the problem is
the opposite: too few donors. In a recent study of
“fragile states”, OECD identified four LDCs
(Afghanistan, Liberia, Solomon Islands and Togo),
which are dependent on one donor for at least
50% of aid.
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RESULTS (3): QUALITY
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Predictability/Volatility and Conditionality: predictable aid
is vital to help LDCs plan and implement plans and budgets.
Aid needs to be predictable not just by arriving in the year
when it was promised, but also over the medium-term.
Only two-thirds of aid to LDCs is disbursed in the intended
year. Short-term predictability depends mainly on whether
donors use budget support or other coordinated governmentled programmes. Over the medium-term, unpredictability is
linked to excessive policy and procedural conditionalities,
which delay or disrupt implementation. In a recent analysis,
the OECD estimated that higher volatility in 31 LDCs is
reducing the value of aid by 15%, and the countries worst
affected are those with political instability or conflict.
Overall, aid quality to LDCs is less good than other countries
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ACCOUNTABILITY FRAMEWORK PROPOSALS
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LDC Eminent Persons’ Group stressed need to reinforce
mutual accountability framework on development
cooperation for LDCs
Paper proposes a list of targets for providers and
recipients drawing on existing Brussels targets, other
targets from UN (Monterrey, Doha) and OECD (Paris,
Accra, Fragile States) processes
Stresses need for promoting and accelerating MA at
national levels in LDCs (tomorrow morning session)
Also for regular global reviews of progress on quantity,
allocation and quality of development cooperation to
LDCs
Make sure all future analyses of development cooperation
look closely at these issues for LDCs
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Ensure that all providers are analysed in such analysis