DAC Guidelines and Reference Series - OECD.org

1 ISBN 92-64-19982-943 2003 02 1 PThe international community is committed to helping partner countries meet the MillenniumDevelopment Goal of halving global poverty by 2015. Effective use of scarce officialdevelopment assistance is one important contribution to this end. This is why thedevelopment community, under the auspices of the OECD Development AssistanceCommittee (DAC), is dedicated to implementing improvements in aid practices that delivermore effective and harmonised support to the efforts of partner countries. The goodpractices presented here have been designed to respond to this concern. They represent aset of practical steps that if applied by development agencies should significantlyimprove the effectiveness of development assistance, while maintaining the samestandards of Guidelines and Reference SeriesHarmonising Donor Practices for Effective Aid delivery -:HSTCQE=V^^]W] s books, periodicals and statistical databases are now available via , our online book is available to subscribers to the following SourceOECD theme:DevelopmentAsk your librarian for more details on how to access OECD books on line, or write to us DAC Guidelines and Reference SeriesHarmonising DonorPractices for EffectiveAid DeliveryDAC Guidelines and Reference SeriesHarmonising Donor Practices for Effective Aid delivery OECD, 2003.

2 Software: 1987-1996, Acrobat is a trademark of rights reserved. OECD grants you the right to use one copy of this Program for your personal use only. Unauthorised reproduction,lending, hiring, transmission or distribution of any data or software is prohibited. You must treat the Program and associated materialsand any elements thereof like any other copyrighted requests should be made to:Head of Publications Service,OECD Publications Service,2, rue Andr -Pascal, 75775 Paris Cedex 16, FOR ECONOMIC CO-OPERATION AND DEVELOPMENTDAC Guidelines and Reference SeriesHarmonisingDonor Practicesfor Effective Aid DeliveryGood Practice PapersA DAC Reference DocumentORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENTP ursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came intoforce on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD)shall promote policies designed.

3 To achieve the highest sustainable economic growth and employment and a rising standard ofliving in member countries, while maintaining financial stability, and thus to contribute to thedevelopment of the world economy; to contribute to sound economic expansion in member as well as non-member countries in theprocess of economic development; and to contribute to the expansion of world trade on a multilateral, non-discriminatory basis inaccordance with international original member countries of the OECD are Austria, Belgium, Canada, Denmark, France,Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain,Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countriesbecame members subsequently through accession at the dates indicated hereafter: Japan(28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973),Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland(22nd November 1996), Korea (12th December 1996) and the Slovak Republic (14th December 2000).

4 TheCommission of the European Communities takes part in the work of the OECD (Article 13 of the OECDC onvention). In order to achieve its aims the OECD has set up a number of specialised committees. One of these is theDevelopment Assistance Committee, whose members have agreed to secure an expansion of aggregate volume ofresources made available to developing countries and to improve their effectiveness. To this end, membersperiodically review together both the amount and the nature of their contributions to aid programmes, bilateral andmultilateral, and consult each other on all other relevant aspects of their development assistance members of the Development Assistance Committee are Australia, Austria, Belgium, Canada, Denmark,Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway,Portugal, Spain, Sweden, Switzerland, the United Kingdom, the United States and the Commission of the en fran ais sous le titre.

5 Harmoniser l aide pour renforcer son efficacit OECD 2003 Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained through the Centre fran ais d exploitationdu droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, tel. (33-1) 44 07 47 70, fax (33-1) 46 34 67 19, for every country except the UnitedStates. In the United States permission should be obtained through the Copyright Clearance Center, Customer Service, (508)750-8400, 222 Rosewood Drive,Danvers, MA 01923 USA, or CCC Online: All other applications for permission to reproduce or translate all or part of this book should bemade to OECD Publications, 2, rue Andr -Pascal, 75775 Paris Cedex 16, DONOR PRACTICES FOR EFFECTIVE AID delivery ISBN 92-64-19982-9 OECD 20033 PREFACEP refaceThe Monterrey conference highlighted the importance of building partnerships among donorsand developing countries as a means of making more effective progress towards the MillenniumDevelopment Goals.

6 It specifically called on development co-operation agencies to intensify theirefforts to:Harmonise their operational procedures at the highest standard so as to reduce transactioncosts and make ODA disbursement and delivery more flexible, taking into account nationaldevelopment needs and objectives under the ownership of the recipient management of different donor procedures bears a high cost for developing countries especially the poorest and most aid-dependent. For example, meeting multiple donor requirementsemploys a significant proportion of developing countries administrative capacity; it impairsownership over partners own development plans and weakens capacity for effective publicmanagement. This is why the Development Assistance Committee (DAC) of the OECD set up aspecial task force to look at how aid can be delivered more effectively through simplifying andharmonising donor main purpose of the DAC Task Force on Donor Practices, established for a two-year period,was to elaborate a set of good practice papers on how donors can enhance their operationalprocedures with a view to strengthening partner country ownership.

7 In pursuing this goal it alsosought to improve the overall effectiveness of aid and reduce the cost for donors and recipients of managing development assistance. The Task Force has associated, in a spirit of mutualaccountability, a broad range of developing partner countries representing various geographicregions and different levels of development. This consultation has been carried out at different Task Force invited sixteen developing countries,1 representing different geographical areasand at different levels of development, to participate in the meetings that led to the elaboration ofGood Practice Papers presented in this developing country level, the Task Force commissioned an extensive consultative survey seekingto identify the priorities and perspectives of developing countries on the harmonisation of donor were undertaken with government officials and practitioners within line ministries, projectimplementation units and relevant civil society organisations in eleven countries.

8 The survey resultsinformed the work programme of the Task Force and are presented in the appendix of this good practicesThe good practices pose significant operational challenges to donors seeking to implement them. What do good practices cover? In this document, good practices cover three broad functionalareas where donors can enhance their These are: Good practices between donors and partner governments This might include greaterreliance on partner government systems for administering aid or timing missions, in agreementPREFACE4 HARMONISING DONOR PRACTICES FOR EFFECTIVE AID delivery ISBN 92-64-19982-9 OECD 2003with the partner government s agenda. These good practices need to be agreed and appliedbetween stakeholders in each partner country and interested donors of each country. Good practices between donor agencies Aimed mainly at preventing unnecessaryduplication of work both for partner governments and development agencies: one donortrusting another donor to execute aid-related tasks such as audit reports and diagnostic of these may be country or activity-specific, others might be the subject of wideragreements between two or more donors.

9 Good practices within individual donor systems Changes donors can make to their ownsystems and culture in order to strengthen the ownership of partners and reduce the cost ofmanaging aid. This may require enhancing the capacity of development agency staff to work onthis elaborating these good practices, careful consideration was given to the potential risks arisingfrom harmonised donor procedures. A study, commissioned to address this concern, found that thesewere limited. The Good Practice Papers provide guidance to address these risks. How are good practices to be applied to local circumstances? Good practices are a point ofreference rather than a matter of prescription for all development agencies, in all countries, at alltimes. Adapting good practices to the different circumstances of different countries requiresgreater flexibility in donor policies and procedures to accommodate varying institutionalcapacities, traditions and partnership histories.

10 Why capacity building plays a critical role? All of the Good Practice Papers presented in thisvolume promote greater reliance on partner country systems for managing developmentassistance. It is recognised that donors need to give priority to supporting efforts to enhance theircapacity to make this possible. One of the key principles occurring throughout the Papers istherefore the importance of simplifying and harmonising procedures in ways that promote partnercountry capacity development. How do good practices fit with various aid delivery mechanisms? Development assistance canbe provided in many forms, with different management structures, accounting arrangements andfunding mechanisms. Broadly speaking there are three ways in which aid is delivered: project aid,sector programmes and budget support. Donors will typically rely on a variety of these modalitieseven within a single country.