Feature story

Aid for development - discussing aid effectiveness in Accra

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Gary Bond, EBRD Director for Monitoring and Impact Assessment

Over 1,000 participants from donor countries, recipient countries, international financial institutions and civil society organisations met in Accra, the capital of Ghana, on 2-4 September for the Accra High Level Forum on Aid Effectiveness. The Forum took stock of progress since the 2005 Paris Declaration on Aid Effectiveness and agreed steps forward.

Gary Bond, EBRD Director for Monitoring and Impact Assessment, participated in the discussions and answers some questions about the Action Agenda approved in Accra.

Q: What was agreed at the Accra High Level Forum?

A: The Forum presented an opportunity for donor governments and donor recipient countries to look at ways of reforming and coordinating aid flows. The Accra Action Agenda was agreed at this meeting and when implemented it will give better value for money to taxpayers in donor countries and more ownership on aid to developing countries.

Four key points were agreed after some considerable arm-wresting by main players in the meeting. Predictability of aid is one of them and it means that donors will provide 3-5 year forward information on their planned aid to partner countries. Second, partner country systems will replace donor systems to deliver aid. The third point, conditionality, means that donors will switch from reliance on prescriptive conditions about how and when aid money is spent to conditions based on the developing country’s own development objectives. Untying of aid is the forth major point agreed. This means that donors will relax restrictions that prevent developing countries from buying goods and services they need from whoever and wherever they can get the best quality at the lowest price.

Q: Are these changes on paper only or is there willingness to make them happen?

A: It remains to be seen how these changes are implemented in practice. This is an ambitious reform agenda that shifts the governance responsibilities for aid towards the recipients. On the one hand the developing countries will be required to strengthen their capabilities for planning, implementing and accounting for how aid monies are spent. On the other hand the donor agencies will be required to not only make forward commitments of aid, but to coordinate their spending plans in advance.

These changes have come about partly due to shifts in the “aid architecture” in recent years. The sources of aid assistance are expanding beyond the traditional western countries. They now include China, India, Russia, new EU members, Brazil, Singapore, Middle Eastern Funds and foundations (such as the Gates Foundation). At the same time, the channels through which aid is provided are also growing, and include global programme funds outside the UN system and activities funded by foundations and by corporations. Civil Society Organisations and other non-official agencies are becoming more prominent as recipients and implementers of aid assistance.

Rather than the “donor fatigue” scenarios of a few years ago, the challenge being addressed by the international community is how to get better coordination into aid programmes that are growing and becoming more diverse. The Forum was notable in that little time was spent discussing the purposes of aid (such as poverty reduction or private sector development), but focussed instead on the governance arrangements of aid delivery. The private sector was notable by its absence. It is likely that these latter issues will come back on the aid effectiveness agenda in the near future.

Q: Will the Accra Action Agenda have any implications for the EBRD?

A: There are no immediate operational implications for EBRD in the Accra Action Agenda (AAA). Like the Paris Declaration which preceded it, the AAA is not intended to cover investment resources of the type provided by the EBRD. Hence the call for doing away with conditionality will not apply to EBRD loans. However, there may be follow-up questions on the grants that the Bank uses either to support its investments or to provide stand-alone technical cooperation. The Bank’s donors, in reviewing their post-Accra positions, may wish to discuss with the Bank the application of the AAA to the use and management of their funds. We will see increased attention given to country-level dialogue. This may provide further scope for EBRD involvement in discussions aimed at agreeing priorities for assistance.

Also the recipient countries will be expected to take on a lot more responsibility for implementing assistance programmes, and it is evident that most of them face a big task in upgrading their skills and systems to meet this challenge. It is possible that EBRD might be asked to provide advisory assistance in selected areas, either as part of individual projects or on a stand-alone basis.

At the Accra meeting, several recipient countries said that they want to graduate from aid as quickly as possible. They see the capital markets and enhanced roles for the private sector as the future, and want to move things in this direction. EBRD’s role and mandate in mobilising at-risk capital may become more widely recognised in those countries that have a strategy of reducing aid-dependency.

By Marjola Xhunga, Communications Adviser
Photos: EBRD
17 September 2008