From aid effectiveness to development effectiveness: Delivering results through transparency and accountability

On November 29, the Fourth High Level Forum on Aid Effectiveness (HLF-IV) will convene in Busan, South Korea with more than 2500 participants, from government ministers in donor and developing countries to civil society and private sector representatives. While participants take stock of progress made on aid effectiveness commitments from Paris and Accra in 2005 and 2008, the true test will come in how countries and partners tackle key challenges to development effectiveness and commit to concrete action moving forward.

What's at stake?

HLF-IV takes place in the context of a rapidly evolving global development landscape. Traditional donors' aid budgets are under pressure. Emerging economies are increasing their investment in developing countries. South-south partnerships are redefining the development agenda. Citizens across the world are demanding more transparent, accountable and responsive governance. And meanwhile, many developing countries are still struggling to meet the Millennium Development Goals (MDGs) by 2015. In this context, issues of efficiency, effectiveness, and accountability for development resources are more important than ever. At the same time, progress on achieving the original Paris Declaration targets set in 2005 has been weak, with only one of thirteen targets met in 2010. While developing countries have made significant progress on their specific indicators, donors have made little progress in meeting their promises.[1] But evidence shows that when aid effectiveness principles are instituted in specific countries, aid money goes further and has a greater impact on development.

If we hope to strengthen accountability to citizens in developing countries and build sustainability to ultimately achieve poverty reduction goals-and reduce long term dependency on aid-it is critical that development partners step up their commitments to effective and accountable financing for development. For donors and developing countries that were present at Paris and Accra, those commitments need to be renewed with even greater urgency, both to make progress on Millennium Development Goal indicators by 2015, and to have sufficient quality data to know where countries stand even if goals are not fully met in each case. Emerging donors and other development partners must also make clear and distinct commitments to increase the accountability and transparency of their development investments, with a focus on results for the citizens of developing countries.

Aid and beyond

For some countries, aid is only a small proportion of the overall resources available for investment in poverty reduction and economic growth. In 2009, official development assistance (ODA) from OECD-DAC countries to developing countries amounted to $120 billion, while private financial flows, including philanthropy and investments equalled $281 billion, and remittances amounted to $174 billion.[2] Furthermore, in 2008, exports of oil, gas and minerals from Africa were worth roughly 9 times the value of international aid to the continent ($393 billion vs. $44 billion). Some countries though still rely on aid for more than 30% of their government expenditures, and in addition to playing a crucial role in the delivery of essential services and the provision of humanitarian relief, aid can play an important catalytic role, helping to leverage other resources for development (including domestic resource mobilization, private investment, private philanthropy, and innovative finance), ensuring that they are spent effectively, and ultimately contributing to countries' making progress on development outcomes. While it is crucial that aid dependency must be reduced over time and replaced with more sustainable financing, it is imperative that current aid levels and aid effectiveness commitments are maintained and better coordinated with other financing and development policies to spur results. HLF-IV should highlight the role of aid effectiveness as part of a broader agenda on transparent, accountable, and effective financing for development.

A policy agenda for development effectiveness

The Paris principles on aid effectiveness are robust and relevant enough to still hold true in guiding good aid practice, but other forms of development finance, including south-south cooperation and private investments, may not conform to the traditional aid effectiveness agenda. In order to go beyond aid effectiveness and to incorporate a broad range of international partners and the spectrum of development resources, key commitments around transparency, accountability, and results are necessary to put developing countries-governments, citizens, civil society and the private sector-in the driving seat.

Transparency and accountability about resources and results are essential elements in the fight against poverty. In their absence, it's impossible to know whether health, education, and other services are being delivered efficiently and effectively; whether development objectives are being met; and civil society will not have the tools necessary to track public spending and hold governments to account.

Transparency

Transparency is a prerequisite for country ownership, aid and development effectiveness-to empower citizens in developing countries with the information on aid and domestic budgets, to monitor and scrutinize development projects, and provide feedback on policies and progress. Transparency about aid is also a prerequisite for accountability to citizens in developed countries, who should be able to track how their tax money is being used, and the results and benefits being achieved. At Busan, participants should:

• Ensure that aid information is published in a timely, comprehensive, and comparable manner, in line with the International Aid Transparency Initiative (IATI). Aid information should include appropriation, obligation and expenditure data, project information and performance data from all agencies receiving or implementing foreign assistance, humanitarian, and/or development funds. This will increase the accountability of foreign assistance, making it possible to compare aid information both within agencies, at country level and globally. Aid information must also be published in a manner that is compatible with developing country budgets to improve coordination and management of resources.
  • Donors that have signed up to IATI should move to full implementation and publish aid data as soon as possible.
  • NGOs, private sector actors, foundations and other development actors should be encouraged to publicly report on their funding, plans, progress, and results in a comparable manner.
• Ensure that developing country budget information, including inflows, outflows, and project level expenditures are published in an available and accessible way. This will enable citizens in both donor countries and developing nations to see how resources are being spent and hold governments to account for promised funds and intended objectives. A set of minimum standards ought to the next step for countries to work towards.
• Commit to introducing legally binding measures for key industries, including extractives, construction, forestry, and fisheries to ensure key financial data on their operations and interactions with governments are made public. This would ensure more oversight and accountability on those forms of income, and it would allow citizens to gauge whether they are getting a fair deal from foreign investors. The private sector is an important partner in the push towards more transparency, especially in the context of development effectiveness beyond aid, as this would allow resource-rich developing countries to mobilise more domestic resources for development. Legally binding transparency measures such as those introduced by the US and proposed by the EU, are an important complement to transparency initiatives such as the Extractive Industry Transparency Initiative, which industry and resource-rich countries should continue to implement.

Accountability

Development relies on a broad range of stakeholders, including (but not limited to) donor governments, recipient governments, multilaterals, NGOs, civil society and the private sector. All relevant actors should be involved in any efforts to meet development outcomes and to ensure the effectiveness and accountability of resource flows. Too often, precious development dollars (either aid or domestic resources) are lost due to corruption, inefficiency, and mismanagement. Donor countries must not only provide mechanisms for accountability to their own taxpayers, but must also work with partner governments to provide better accountability to citizens in developing countries who are recipients of aid and the true drivers of development. To drive accountability, commitments must be made at Busan to:

• Enable country ownership by citizens in developing countries through transparent and open decision-making processes for development strategies. This would include donor aid missions and developing country governments both carrying out regular, broad, multi-stakeholder country-level policy dialogues and consultations on national development strategies, policies and programs.
• Encourage and support developing countries (parliaments, audit institutions, CSOs and others) to make their budget and management systems more transparent and efficient. Through demand-driven technical assistance and clear expectations for reform, donors can build capacity in and strengthen national and local procurement and audit systems for the effective and transparent management of aid and domestic resources. And developing countries should prioritize public financial management reform to better manage public resources and reduce corruption. Once strengthened, channelling aid and other resources through these country systems will increase country ownership of development projects and improve sustainability of those programs in the future.
• Build capacity for civil society in developing countries to be able to use information about resource flows and development results to demand accountability. Transparent reporting by donors and partner governments is a necessary step in accountability, but not all citizens in developing countries have the ability to decipher that information or use to it to demand results. To ensure that these efforts promote development effectiveness, local civil society needs to increase the capacity, resources and political space to do effective monitoring, evaluation, and advocacy of budgets and programs. This could be facilitated by advances in technology that provide feedback mechanisms for citizens to hold governments accountable.

Results

To be accountable for development resources and projects, all development partners must be able to demonstrate impact and measure development results, leading to sustained development over time and decreased dependence on aid. An emphasis on results is about moving from measuring inputs and outputs to focusing on long-term development outcomes. However, recognizing that some results take years to become evident, it is necessary to integrate benchmarks and methods for measuring progress over time. The Paris principle of mutual accountability indicates that both donors and developing countries are accountable for development results and should coordinate efforts to achieve results. A results focus should also be properly managed to ensure that those who benefit from the projects and programs (citizens in developing countries) are prioritized in determining appropriate results and indicators for measuring progress towards them. A results-focus at Busan would entail that partners:

• Recommit to a common results-oriented framework. Managing for results is a collaborative process whereby donors, developing countries, and other partners work closely together to set clear, measurable targets and coordinate development assistance and domestic resources within countries to meet those goals. Broad based, inclusive country ownership principles applied to developing project and program objectives should also be used to determine mutual results targets. It is also important to link results objectives at the local and national level with broader international commitments, such as the MDGs.
• Ensure that monitoring and evaluations of development projects are joint with partner countries, including civil society, and urgently invest resources in results measurement systems for improved data and tracking in time to understand real progress by 2015. Data on development outcomes remains weak, and often various stakeholders have multiple methods for measuring different results. Donors should commit to increased technical assistance to strengthen data collection and statistical capacity in relevant ministries in partner countries and to support the adoption of universal standards so that data is comparable across countries to improve feedback, learning, and accountability. In the run-up to the goal-line for the MDGs, developing countries, and especially the citizens of these countries, should be empowered to monitor and evaluate their country's progress, and to use this information to better feed into discussions on future frameworks post 2015 and decide benchmarks for future national and global development goals. More and improved data will help development efforts to be better targeted and will enable a better understanding of what is working and where resources are needed.
• Publish and report results from project evaluations, resource monitoring, and development outcomes in a transparent and accessible manner. Transparency and accountability for results is a driving factor in aid and development effectiveness. Partners should not only include results of impact evaluations in their regular reporting of development resources, but should devise a formal system of learning, whereby development results feed into strategic planning and budgeting decisions.

A post-Busan framework for development effectiveness

A renewed and comprehensive focus on transparency, accountability, and results is gaining momentum in the lead up to HLF-IV, and these themes are emerging as key drivers in linking the aid effectiveness agenda with better development effectiveness. However, any outcome agreements reached must include clear and monitorable commitments at the international level that result in action and reform, while ensuring effective implementation and monitoring at the national and local level in developing countries. Where agreement cannot be reached, principles should be common but differentiated so as not to dilute existing standards, but enough to move new players towards greater accountability.

Success cannot be realized however without first enabling civil society to flourish and ensuring proper country ownership of development objectives, strategies, and monitoring results to make certain that developing countries and citizens are the true drivers of development and are empowered to achieve development outcomes.

While the Fourth High Level Forum at Busan provides a distinct moment for bringing countries and civil society together, along with other development partners, the greater aim of development effectiveness driven by transparent and accountable development financing and a focus on results is of larger import and will require vast amounts of political will and citizen engagement to realize. Commitments made at Busan should be carried through and cut across other international forums and initiatives as best practices to guide development activities, improve results in meeting development outcomes in health, education, and agriculture, and speed progress in reducing poverty. 

[1] Aid Effectiveness 2005-2010: Progress in Implementing the Paris Declaration

[2] The Index of Global Philanthropy and Remittances, 2011