Donor Coordination to Support Country-led Development

Many countries that receive foreign assistance face daunting challenges. They often lack the administrative capacity to address multiple and sometimes conflicting demands from various donor agencies. This is where donor coordination matters most. In 1960, the average number of donors working in a country that received aid was three; by 2006, the number had increased to 30.¹ More donors are not a problem in and of themselves—but a lack of coordination is.

One way donors can coordinate is by agreeing to streamline repetitive tasks. A simple first step is to coordinate mission visits. Development case studies are filled with examples of government ministries in developing countries bogged down with so many mission visits that it’s hard to imagine their getting anything else done. Yet only 12 percent of U.S. aid missions are coordinated with other donors.² Vietnam received 787 donor missions in 2007 alone. The average number of missions in recipient countries that year was 282—more than one per workday.³ Rwanda has taken the assertive step of encouraging donors to coordinate more closely by declaring a one-month holiday from mission visits.

Under the Paris Declaration on Aid Effectiveness, donors have committed to doing a better job of coordinating their activities. Coordination is improving overall, according to the most recent evaluation of the Paris commitments, but progress is slow and falls short of the benchmarks donors set for themselves.⁴ A 2009 study by Oxfam-France, Aid for Agriculture: Turning Promises into Reality on the Ground, illustrates the challenges of aligning donor activities with the rhetoric of the Paris principles. The Oxfam study focuses on three countries in West Africa—Ghana, Niger, and Burkina Faso. In Burkina Faso, “While the government had stressed the need to streamline agricultural financing through a few grain, produce, and livestock cooperatives, the four major agriculture donors—the World Bank, Germany, Denmark, and Canada—chose to support 30 different networks among them, without sufficient coordination in [selection criteria],” says Jean-Denis Crola, author of the study.⁴² “[Donors] are supporting different projects that are totally disconnected from one another and from the agriculture policy framework set up by the government.”

In Timor-Leste the Skills Training for Gainful Employment Programme (STAGE) aims to reduce poverty and promote economic growth and build national capacity. Here, men learn blacksmithing skills.

We can’t really draw broad conclusions from one study of three countries in West Africa—yet there is little evidence from anywhere else to suggest that Oxfam’s findings are atypical. The study is important since it focuses on agriculture, where donors have pledged to reexamine “business as usual” work procedures as well as to improve agricultural production in poor countries. It’s important to understand first what “business as usual” looks like.

One of the barriers to better coordination among donors is a bias toward project-driven aid, which mainly reflects donor priorities and may or may not align with partner countries’ priorities. Projects run the gamut—from building a school to running a microenterprise program to assisting in livestock production or seed distribution. In 2006, OECD countries were financing a startling 81,000 active development projects.⁵ While it may sound like a great idea to build a school in a remote area that has never had one before, donors have been known to complete the entire building phase without ever asking whether the national government will be able to staff the school. “Sub-Saharan Africa is littered with decaying unused primary schools and health post buildings,” says Eveline Herfkens, former executive director of the U.N. Millennium Development Goals Campaign, “built by donors, without thinking of who was going to pay the nurses or teachers after they had left.”⁶

Program aid—as opposed to project aid—makes it easier for donors to coordinate based on a partner country’s priorities. The government leads a process that defines a sector-wide strategy, such as for agriculture, and donors provide assistance directly to the partner country government for program activities. Program aid makes it possible for donors to help build institutions; project aid cannot do this because projects are discrete units that may or may not fit into the country’s priorities. The government determines how best to use program aid within the range of activities defined by the sector-wide strategy. Since the country is making more of the decisions, program aid comes much closer to a country-led development model than project aid.

The evaluation of Paris principles implementation showed that in 2007, only 47 percent of all development assistance was program-based. Donors are likely to fall short of the target they set for themselves—66 percent by 2010.⁷ This measure alone tells us a great deal about how committed donors are to their pledge to let recipient countries set their own development priorities. At this point, it would be unrealistic to expect all donor assistance to shift from project to program aid. Program aid requires a high level of trust between donors and a partner country government, and not every government engenders such trust. In development, as in diplomacy, trust is earned. Other political realities, such as legislative earmarks, also drive donor countries’ support for project aid (see the discussion in Chapter 3). While it’s hard to imagine earmarks vanishing any time soon, the principles agreed on in the Paris Declaration are clear that aid should be moving in the direction of program support.

Donor coordination requires a mechanism that aligns all parties’ efforts. Ideally, the coordinating mechanism is the partner country government. In Tanzania, for example, the government leads sector-wide planning and budgeting processes, and more than 70 percent of donor assistance goes directly into the Tanzanian government’s budget.⁸

Issues