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.

Local aid coordination structure in the oPT
(last updated Jan 2010) 

The currently existing aid coordination structure in the oPT was set up following the decision made at the meeting of the AHLC on 14 December 2005 in London to improve the effectiveness of aid coordination structures in providing coherent technical assistance and financial support based on national priorities to the Palestinian people in line with the OECD-DAC Paris Declaration on Aid Effectiveness.

At the local level, the coordination structure[1] currently comprises:

1. A Local Development Forum (LDF) which is open to PA representatives and all donor and aid agencies as well as to the representative of Association of International Development Agencies (AIDA). The LDF is co-chaired by the Ministry of Planning and Administrative Development (MoPAD), together with Norway, the World Bank and the Office of the United Nations Special Coordinator for the Middle East Peace Process (UNSCO). LDF meetings are planned and prepared through meetings of the LDF co-chairs and Friends of the Co-Chairs. Since October 2007 LDF meetings have been chaired by the Palestinian Prime Minister.

2. Four Strategy Groups (SGs) which deal with the main clusters of economic policy, governance, infrastructure development and social development and humanitarian issues. The SGs focus on policy formulation and programmatic coordination, and pursue better design of donor projects to support the PA’s sector priorities as well as a higher degree of harmonization of donor procedures. Membership is limited and based on clearly added financial or analytical value of the respective agency.

These four SGs are co-chaired as follows:

The Governance Strategy Group is co-chaired by the Ministry of Planning and Administrative Development and the European Commission (EC); the Economic Strategy Group is co-chaired by the Ministry of Finance and the World Bank; the Social Development Strategy Group is co-chaired by the Ministry of Social Affairs and UNSCO. The Infrastructure Strategy Group is co-chaired by the Ministry of Housing and Public Works and USAID.

3. The SGs are supported by the work of thirteen main sub-groups[2] - namely twelve Sector Working Groups (SWGs) and one working group - that report to the SGs. These are functional groups which are the main instrument of coordination between the PA and the donor community at the technical level. The following SWGs currently exist: Agriculture, Fiscal, Private Sector Development and Trade, Water and Sanitation, Environmental, Municipal Development and Local Governance, Environment, Health, Education, Social Protection, Judiciary, Public Administration and Civil Service, and Security. In addition, the Working Group on Elections also reports to the Governance SG.

The Infrastructure SG is supported by two thematic sub-groups on Solide Waste and Affordable Housing.

The Social Development SG is supported by a Humanitarian Task Force.

The Economic SG is supported by a Micro and Small Finance Task Force.

The Education SWG is further supported by a Thematic Group on Higher Education, while the Health SWG is supported by the National Nutrition Steering Committee and the following five Thematic Groups: the Pharmaceutical Thematic Group, the Mental Health Thematic Group, Non-Communicable Diseases Thematic Group and Women’s and Children’s Health Thematic Group. 

The Fiscal SWG is supported by a Fiscal Task Force.

4. A Task Force on Project Implementation (TFPI) which liaises with the GoI on issues of project implementation and comprises USAID, UNSCO, EC, the World Bank. The TFPI has a rotating Chairmanship with each member taking on the position of Chair for a six-month period. The last meeting of the TFPI was held in May 2007.

5. The LDF, SGs, SWGs and TFPI are supported by the Local Aid Coordination Secretariat (LACS). LACS and its seven staff are sponsored/funded by Norway, World Bank, UNSCO, USAID and Germany. The work of these groups is further supported by four Strategy Group Coordinators provided by the World Bank, EC, UNSCO and USAID.

 

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[1] Please refer to graph on local aid coordination structures

[2] Please refer to matrix on membership in aid coordination structures in the oPT (LDF, SGs and SWGs)

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.

In November 2008, the Government of Malawi (GoM) launched sector working groups (SWGs) as the basis for programme planning, implementation, monitoring and evaluation. Clearly defined sector composition and operational boundaries are expected to generate a more efficient development partner (DP) division of labour (DoL) in relation to GoM policies and systems.

The DoL agenda builds on GoM ongoing efforts to institutionalize SWGs, as well as the development of sector wide approaches (SWAps), pooled funding mechanisms, joint missions, joint sector reviews, silent partnerships, joint analytical work and advisory services by development partners. The Malawi Aid Atlas FY 2007/08 presents aid flows to Malawi by economic sector and DP to provide a baseline to reduce fragmentation and improve the efficiency and effectiveness of foreign aid, through the harmonization and alignment of donor practices.

The underlying data come from the Ministry of Finance (MoF). More specifically, on a monthly basis the MoF requires donors to provide actual disbursement figures for the current financial year. These figures are subsequently fed into the Aid Management Platform (AMP). The accuracy of the data is determined by the MoF’s ability to manage the AMP, and the DPs’ ability to provide timely and reliable figures.

To alleviate the burden of data collection on Government and donor officials, the MoF facilitated the establishment of donor Data Focal Agents (DFAs) for each donor organization active in Malawi. DFAs play a key role in submitting timely aid flow data to the Ministry of Finance. In support of this function, the Ministry of Finance scheduled a series of targeted training sessions aimed at familiarizing DFAs and SWG representatives with all aspects of data collection and submission. These efforts have resulted in a marked improvement in the quality of existing data, and the inclusion of partners previously unaccounted for in the GoM’s official statistics.

The analysis that follows focuses on Official Development Assistance (ODA) in its entirety – inclusive of both loans and grants to the Government of Malawi. The sector analysis, however, does not include donor disbursements as budget support.

The Forum on the Future of Aid is hosted by the Overseas Development Institute, and was established to encourage online dialogue and discussion on research and opinions about how the international aid system currently works, and whether and how it could be reformed.  The site presents research and opinions from the South and North on reform of the global aid architecture.  It offers unbiased information and analysis to all the main actors on the international development scene.  Wherever possible, it seeks to ‘level the playing field’, by equipping non-specialists to better predict how changes initiated elsewhere may have an impact on them, and by providing them a timely channel to identify and articulate their interests and concerns.

The World Bank defines global funds as “partnerships and related initiatives whose benefits are intended to cut across more than one region of the world and in which the partners: (a) reach explicit agreement on objectives; (b) agree to establish a new (formal or informal) organization; (c) generate new products or services; and (d) contribute dedicated resources to the program.”  This ‘vertical approach’, focusing on discrete issues, contrasts with the horizontal, country-based approach taken by traditional donors.  It notes that global funds will be effective and sustainable only so far as they complement sector- and country-level policies.

This publication contains a series of papers probing the advantages and disadvantages of global funds. Elizabeth Delph from Eurodad notes that there are now more instruments for channelling development finances than there are developing countries to assist. This multiplies the coordination challenges and transaction costs for recipients. Because global funds general follow the principle of 'additionality' (i.e., they support only activities additional to those already financed), they can distort funding allocations by developing countries - a phenomenon seen in the dominance of HIV-AIDS funding within the health sector. Delph notes the variation among Global Funds, with some now increasingly 'Paris-friendly', but questions whether further proliferation is necessary.

This study notes that the prolific growth of Global Funds "is connected to the widespread political appeal in donor countries of well-focused, single-issue responses to powerful advocacy campaigns, as against more diffuse, less tangible approaches based on recipient ownership."