L’objectif de la mission n’’était pas de réaliser une évaluation complète des capacités et besoins du Gouvernement en matière d’efficacité de l’aide. Il serait souhaitable qu’un tel exercice soit conduit en 2009, après les élections législatives et une fois les ministères installés dans leurs nouveaux locaux, pour analyser en profondeur les capacités nationales de coordination de l’aide aux niveaux institutionnel, organisationnel et individuel, et la stratégie complète à mettre en place. Les constats et recommandations suivants ne représentent donc qu’une approche initiale, pour amorcer le travail du Gouvernement sur la coordination de l’aide en tenant compte des contraintes actuelles.

Guinea-Bissau experienced civil strife and political instability in the 1980s and early 1990s, which culminated in a civil war in 1998/99. A peace agreement led to the election of President Yala in 2000. In September 2003, a military coup ousted the government of President Yala, and established a transitional Government to prepare for new elections. In a legislative election held in March 2004, the former political opposition won a majority in the National Assembly and established a new Government headed by Prime Minister Gomes Júnior. A hotly contested presidential election held in June and July 2005 saw the victory of a former military ruler, João Vieira, who took office only in October 2005 because of political unrest following the election. In November 2005, President Vieira appointed a new Government headed by Prime Minister Aristides Gomes. An elected President and the appointment of a new Government have helped restore some political stability. The military background of the President commands respect within the military, which expanded significantly during the civil war. However, transition to peace and democracy remains fragile. In April 2006, the army conducted military operations against one of the Casamance rebel factions at the Northern border with Senegal.

Sierra Leone is a West African country with a population of 6 million. In 2006, the country had a gross national income (GNI) of USD 850 per capita (in purchasing power parity terms). The GNI grew by 7.1% in 2006, a growth rate roughly similar to that of the previous two years. Sierra Leone is a low income country which, since the peace agreement was signed in 1999, has begun to emerge from eleven years of civil war. As a result of the conflict, there is extensive poverty; the most recent poverty survey, carried out in 1989 before the civil war began, estimated that 57% of the population lived below the one-dollar-per-day international poverty line. Diamonds account for 95% of the country’s exports.

Ownership

Although Sierra Leone did not participate in the 2006 Baseline Survey, it received a World Bank rating of D for that year, a rating received by 21% of participating countries. This indicates that some elements of an operational development strategy exist and provide a basis for making progress. For the 2008 Survey, Sierra Leone increased its rating to C indicating that some progress is being made, but more is needed.

Alignment

The data suggest that Sierra Leone has made very good progress, particularly given the relatively low capacity of the government sector in increasing the reliability of country systems, though donors have not made such good progress in using these systems. In addition, the country is making some progress in other dimensions including better integrating project implementation units (PIUs) into government systems, but that there is substantial room for progress as regards co-ordinated capacity development, the use by donors of country systems, and in year predictability. Progressing further will be a challenge and will require the government to exercise stronger leadership.

Harmonisation

Sierra Leone has made reasonable progress on joint missions and joint country analytical work. According to the 2008 Survey, it has already exceeded the 2010 target and is showing signs that further improvement is possible in these two areas. More generally, progress is being made toward strengthening donor partnerships. Increasing government leadership will help donors move toward developing more programme-based approaches (PBAs).

Managing for Results

Sierra Leone received a rating of D on managing for result in 2007, indicating some basis for progress, either through existing mechanisms or through definite plans. However, the rating remains unchanged from 2005. The 2010 target is for countries to move up one grade in the rating; for Sierra Leone, the target is a C grade.

Mutual Accountability

Sierra Leone has not yet put in place a joint framework to assess government and donor performance in strengthening aid effectiveness. In 2005, the consultative group established a taskforce to identify actions to enhance aid effectiveness. However, the country does not have the necessary mechanisms and no assessment has taken place. Considerably more work will need to be carried out on both sides in order to meet this target.

This report presents the findings of a review of Sierra Leone’s aid coordination architecture. It assesses Sierra Leone’s aid environment by analyzing aid patterns, the development partner structure and the quality of aid relationships against the background of the fragile state dimension. Further, the report reviews selected elements of the existing aid coordination architecture and makes concrete recommendations on how these can be further strengthened and improved. Where appropriate, this report presents relevant experiences and lessons learned from other developing countries, for example regarding, budget support, joint assistance strategies, use of project implementation units and independent monitoring groups. This study was commissioned by UNDP Sierra Leone and included a comprehensive desk review, as well as a three-week in-country mission.

Sierra Leone is a highly aid-dependent country, which shows signs of state fragility. The country’s government institutions have limited capacities to perform key functions, which affects their ability to adequately respond to citizens’ needs and potentially undermines their legitimacy. The staffing structure and skill level of many formal institutions is insufficient. State institutions are not robust and lack a professional civil service culture. This has consequences for the applicability of the aid effectiveness framework outlined in the Paris Declaration, which is premised on a sufficient level of agreement between a national government and its development partners on development goals and priorities, and sufficient capacity of the national government to take forward its programmes and policies effectively. Consequently, a concern with ‘aid effectiveness’ (i.e. the extent to which aid contributes to achieving development goals) needs to be supplemented by a more fundamental concern with the effectiveness, accountability, responsiveness and legitimacy of the institutions of state. This means that engagement by development partners must explicitly address the agenda of state-building, as well as the agenda of increasing aid effectiveness.

Finding the right balance between both objectives is a particular challenge for development partners in Sierra Leone, where informal mechanisms and institutions such as personal patronage networks and social forms of governance are prominent, and where local politics tend to determine policy outcomes. As a result, there are tensions between the need of the state to maintain fragile power balances between competing interests, on the one hand, and the goal of achieving more effective, transparent and accountable use of public resources including aid, on the other. In this regard, it is important that development agencies be much more aware of the influence of local politics on growth and development, as well as of the resulting timescales required for state-building.

This report argues for a wider use of political economy analysis, to identify factors that influence political incentives for ruling elites to support change in direction of propoor economic growth and development, as well as broad-based service delivery. Taking the importance of local politics into account may require a rethinking of common approaches to growth and good governance. Good governance and related approaches to public sector reform, as typically practiced by development agencies, are often based on an unspoken assumption that it is possible and desirable to transplant institutional models from OECD countries to the developing world.

However, experience has shown that OECD-type institutions are often not suited to developing countries, and work differently in different social and political environments. The importance of understanding and adequately addressing local politics may further require development agencies to make organizational changes, for example regarding staffing structures, recruitment procedures and internal incentives. Many development agencies in Sierra Leone experience a high staff turnover and use ad hoc approaches with a focus on short-term results, instead of long-term approaches that are based on a thorough understanding of political realities.

Sierra Leone has a diverse development partner community. Only 5 donors account for the majority of assistance, while a high number of smaller development agencies, a few non-DAC donors and numerous non-governmental organizations are involved in various aid activities. This structure is contributing to aid volatility and fragmentation with some negative consequences.

Foreign assistance provided to Sierra Leone is not coordinated very well. There is a high degree of fragmentation of responsibilities for the mobilization, negotiation and administration of aid across agencies of government, leading to inefficiencies and reduced effectiveness in the overall system. Further, there are limited efforts by the wider development partner community to coordinate activities among themselves. Isolated coordination and harmonization efforts among specific donor groups, such as the Multi-Donor Budget Support Group or European Union member states, have not yet resulted in a significant rationalization of aid activities. Besides, as they are not government-led and pursued almost independently of one another, these isolated initiatives bear the risk of turning donor groups into ‘aid cartels’.

One consequence of this limited coordination is a high degree of fragmentation of foreign assistance at the sector level, which is characterized by a large number of donors that fund a large number of financially small projects. This results in an increased coordination challenge and high transaction costs for the government, as well as in wasteful duplication of efforts and overlaps in the delivery of aid. Aid funding flows are erratic, which affects project implementation and wider economic stability. Besides, volatile aid funding can undermine attempts to build more institutionalized and predictable policy and budget processes, and so reinforce patronage networks.

In general, aid relationships in Sierra Leone are characterized by a significant lack of trust between the government and its development ‘partners’. In light of the weak capacity and concerns regarding fiduciary risks, development agencies tend to establish parallel structures, which create tensions in the civil service and undermine national ownership, domestic accountability and longer-term institution-building. Also, due to the high degree of aid dependency, the power relation between the government and its partners is asymmetrical. Numerous conditionalities imposed by the largest donors result in one-dimensional accountability of the government to the donors and impede domestic accountability of the government to its citizens.

Given the lack of mutual trust, the high level of aid dependency coupled with weak government structures and capacities, and the resultant assertive donor behavior, which is not always conducive to fostering national ownership and mutual accountability, it is not surprising that Sierra Leone has not moved forward more quickly in improving the aid system and in implementing more effective aid coordination and management mechanisms.

Against this background, it is recommended that government and development agencies jointly formulate and mutually sign an Aid Effectiveness Action Plan that outlines concrete actions by both sides to improve aid effectiveness and aid relationships. This plan would serve as an operational tool to implement the government’s aid policy. In order to increase mutual accountability, it is recommended that an Independent Monitoring Group be established consisting of renowned external experts. This group would periodically carry out independent assessments of the status of aid relationships and the progress made with regard to improving aid effectiveness and implementing the mutual commitments made in the joint aid effectiveness action plan.

Although Sierra Leone has the basic structure of a good formal machinery of dialogue, the overall effectiveness of the collective dialogue and coordination mechanisms is limited. It is crucial to establish better linkages between dialogue mechanisms at different levels, especially between the Consultative Group (CG) and the Development Partnership Committee (DEPAC), as well as between DEPAC and Sector Working Groups (SWGs). Further, the operational effectiveness of many working groups should be enhanced through better advance preparation, action oriented minutes, and wider information sharing, for example through SWG websites. Sector Working Groups should play a key role in reviewing assistance proposals and in monitoring the implementation of related activities, without substituting line ministry functions.

In order to strengthen the government’s aid coordination capacity, it is recommended that the Ministry of Finance and Economic Development (MoFED) be designated the lead coordinating agency for all external assistance. In this regard, a post for a Permanent Secretary, who would head the Development Division of the MoFED and report to the Financial Secretary, should be established. It is further recommended that a Development Cooperation Department be established as part of the Development Division, which should be structured by development agency desks that act as main counterparts for corresponding donor and development agencies and would be responsible for coordination and administration of external assistance along the entire aid business cycle. In addition, an Aid Effectiveness Unit (AEU) should be established, which should perform some of the functions that were previously performed by DACO, such as acting as secretariat for DEPAC. In addition, the AEU should perform knowledge-sharing functions and act as facilitator within the Development Division to ensure policy coherence, in order to avoid gaps and overlaps between development assistance portfolios of individual development agencies. Finally, the AEU should spearhead and monitor the implementation of the national aid effectiveness agenda, including implementation of the Paris Declaration Survey, supporting formulation and monitoring of an Aid Effectiveness Action Plan to support the implementation of the aid policy, etc. Further, it is recommended that a National Appraisal Committee be established under the Office of the President, comprised of representatives from different central and line ministries, as well as from other government agencies and external institutions, such as universities. The main function of the Appraisal Committee would be to review and approve foreign aid and investment proposals.

The Sierra Leone Development Assistance Database (DAD) is a useful and tool for tracking foreign aid provided to the country. However, its effectiveness as a tool to support aid coordination and foster alignment is currently limited due to the fact that many development agencies do not enter data into the system in a timely and sufficiently disaggregated manner. In addition, the MoFED, the institutional host of the system, currently practices insufficient process management. In this regard, the data entry process should be firmly institutionalized, by linking it to the budget cycle and making data provision mandatory. Further, more proactive outreach to development agencies will be required through the proposed development partner desks, as well as proactive and client-oriented preparation of analytical products, such as sector, district and partner profiles by the proposed Research, Planning and M&E Department. The government should further consider implementing a limited number of system enhancements to increase DAD’s analytical capacities. The suggested modifications include the possibility to breakdown multi-year commitments into yearly allocations (potentially combined with a planned disbursement schedule), as well as the possibility to track ‘expenditures’ and Paris Declaration Indicators. The latter would include an electronic calendar where development partners could record their planned missions and analytical works, with the aim to coordinate both better.

Based on a review of other options for regulatory frameworks for foreign assistance, such as a law or a joint assistance strategy, it is recommended that a succinct aid policy document be formulated – one that mainly stays at the level of basic principles and defines the main procedures and corresponding roles and responsibilities for the provision, acceptance, coordination and management of foreign assistance. The policy should be concrete, but at the same time broad enough to encompass the entire development partner community. The current draft provides a good starting point.

In order to facilitate the actual implementation of the policy, it is recommended that a joint aid effectiveness action plan be formulated, which could combine localized Paris Declaration principles with operational targets regarding the provision, coordination and management of foreign assistance. The action plan would be a ‘living document’ that would be adjusted in line with changing realities on the ground and would progress towards more advanced targets. The action plan would define concrete steps government and development agencies commit to undertake, together with timelines and measurable targets, for example regarding the phasing out of (parallel) project implementation units and full integration of contract staff into the civil service structure.

Finally, this report makes a number of recommendations on the draft aid policy document presented during the DEPAC meeting in May 2009, including that the roles and responsibilities within the aid process should be further clarified; that the government should express its preference for an ‘aid mix’, instead of stating budget support as first priority; and that the government should reserve the right to refuse aid that is not aligned with its priorities.

Sierra Leone receives important aid inflows from the bilateral and multilateral donor community. The Government therefore needs to improve coherence between the different development partners as much as it needs to improve structures for aid coordination, harmonisation and alignment. This requirement stems from both international agreements to which Sierra Leone and many of its partners are a signatory such as the Paris Declaration on Aid Effectiveness, the Accra Agenda for Action, the OECD DAC Principles for Good International Engagement in Fragile States, and the Government’s overarching vision for making aid work efficiently for the people of Sierra Leone. It is also consistent with the internal Memorandum of Understanding between the Government of Sierra Leone and its multi donor budget support partners (MDBS). Accordingly, this document sets out the first ever comprehensive aid policy of the Government of Sierra Leone. It provides guidelines for the mobilisation and implementation of development assistance in Sierra Leone, in order to improve its effectiveness and assert GoSL leadership over its aid inflows. The document is based on previous work and extensive consultations in country with the various stakeholders in development. The consultative process is outlined in Box I below.

It is important to emphasise that although input was sought from all stakeholders in the development process, the final decision on content rested with the Government of Sierra Leone (GoSL), as the leader and driver of the process. In the resulting Aid Policy, all the stakeholders now have a practical blueprint to enhance aid effectiveness and monitor progress. The Aid Policy clearly articulates what the Government will do to make aid more effective, and to ensure that it is directed in a manner that provides maximum impact on economic development and poverty alleviation.

The Government of Malawi (GoM) places a priority on maximising the cost effectiveness of its available aid resources towards achieving the goals laid out in the Malawi Growth and development Strategy (MGDS). As part of this process, in November 2008 GoM launched sector working groups (SWGs) as the basis for programme planning, implementation, monitoring and evaluation across the sixteen sectors of the Malawian economy. By coordinating clearly defined sector composition and operational boundaries SWG are expected to generate a more efficient Division of Labour (DoL) amongst development partners (DP) in relation to GoM policies and systems. SWG thus present Government and its development partners with an unprecedented opportunity to move forward collectively in order to live up to the commitments of the Paris Declaration (2005) and the Accra Agenda for Action (2008).

The Quarterly Aid Disbursement Sector Report is a new addition to the analysis of donor aid flows carried out by the Debt and Aid Management Division of the Ministry of Finance. This Report intends to strengthen the SWG process by providing a more regular tracking tool for the analysis of donor behaviour in each of the economic sector classifications. It is envisioned that improved information on donor behaviour in each sector will inform SWGs, donor partners and other actors to promote i) reduction in the duplication of efforts and rationalisation of donor activities to make them as cost-effective as possible; ii) the reform and simplification of donor policies and procedures to encourage collaborative behaviour and increased alignment with GoM priorities, systems and procedures; iii) improve sector planning efforts by the GoM; and iv) ultimately, enhance donor and GoM respective accountability for their development policies, strategies and performance.

The first section of the Report focuses on a number of aggregate aid disbursement issues including aid modalities, donor and sector composition, alignment with Malawi Growth and Development Strategy priorities, sector and donor fragmentation and aid variability. The second section of this Report, provides a summary of disbursements made during the quarter for each economic sector.

Future versions of this Report will monitor the compliance of donors with their aid reporting commitments. Over time, new measures and indicators will also be added which attempt to provide new insights into how progress is being made towards a more effective distribution of donor resources in Malawi.

Sector budget support is an aid modality which donor agencies are increasingly using to support African countries to achieve their policy objectives.  This literature review sets out to summarise the available published literature on the operation of Sector Budget Support (SBS),. In particular, it aims to develop a typology of SBS characterising different approaches in operation.  It forms part of a broader study commissioned by the Strategic Partnership with Africa Task Team on Sector Budget Support (SBS) which covers ten sector case studies from six different countries.