5. Policy Directions in Aid Management

This chapter brings together the main themes identified earlier in the Report so that a series of recommendations – proposed actions for both Government and development partners – can be identified. Noting the findings of the recent Evaluation and its Independent Review this chapter also takes forward this work and prescribes a course of action in the form a new Joint Monitoring Indicator (JMI).

In formulating policy recommendations it is necessary to acknowledge the following contextual factors:

• We are now beyond the mid-way point in NSDP and H-A-R Action Plan implementation. Our challenge is to identify the more acute priorities within the existing aid effectiveness framework and to focus implementation and monitoring effort on a narrower range of priority actions.

• Accra provides a global standard to guide Government and development partners¹². Dialogue is required to build consensus on which of the new recommendations are applicable to the Cambodia context and in which areas a 'de-linking' from the global agenda may be appropriate.

• Most technical criteria – policies, institutional frameworks, dialogue mechanisms, resourcing – are in place. The post-Evaluation prioritisation process must now engage senior management and decision-makers to ensure high-level support for actions that are relevant and achievable.

• Remaining challenges extend beyond the immediate mandate of aid effectiveness initiatives. Strengthening NSDP-budget linkages, public service capacity and incentives, and service delivery require continued implementation of the core reforms but with improved integration of aid effectiveness practices that combine system-wide objectives with sector-specific priorities.

This context informs a number of principles that are based on the five main messages derived from the evidence and analysis presented earlier in this Aid Effectiveness Report:

• Prioritised actions that are based on the existing aid effectiveness framework must be integrated with the core reforms and have the explicit support and commitment of senior officials in Government and development partner agencies.

• Efforts to accelerate implementation of agreed aid effectiveness priorities will require renewed efforts in partnership building, increased mutual trust and understanding, and a set of competencies that are better suited to working in a partnership-based capacity development context.

• Cooperation within, among and between central agencies and line ministries requires improved cooperation and multi-agency networking for Government, development partners and the civil society agencies that engage in these thematic areas.

An understanding of the current context, the analysis of the evidence base, and an assumed consensus on these underlying principles then informs the following policy recommendations:

I.  Policy recommendations for the Royal Government

a) Identifying priority actions for aid effectiveness

• Central agency (MEF, MoP, CRDB/CDC) linkages are to be strengthened through coordination in the Supreme National Economic Council (SNEC) to ensure agreed formats, schedules and cross-agency collaboration on NSDP-budget programming, PIP and MTEF preparation, and links to external resource management.

• Senior management of ministries, agencies and departments will build on recent progress in  articulating clear aid management priorities that are based on their broader sectoral objectives and plans. Specific requirements of development partners, including concerning the use of technical cooperation and using national systems, must be discussed more extensively through the TWGs and GDCC.

• Evidence of the close relationship between leadership and capacity development emphasises the promotion of a managerial model in implementing the Government's reform agenda. A new mindset requires that senior management provide clear direction at a ministry level for future capacity development and an increased responsibility for management of programmes.   In the context of the core reform agenda, cooperation across Government is required to ensure consistency in the interpretation and application of Government policy on capacity development, human resource management, financial incentives and performance management, and the role of development partners in supporting these reform objectives.

• Principles on 'division of labour' (or 'complementarity') have been identified in this Report. Senior management in each Ministry or agency that deals with development partners will, at their discretion and with CRDB support, provide clarification and further guidance through the TWG as regards the specific application of these principles at the sector level.

b) Integrating aid effectiveness priorities with broader reform and sectoral work

• CRDB's national coordination role as a facilitator – through providing training and block grant support – will continue to be based on demand-led principles. Activities of the Government's TWG Network will be extended to chairs and senior Government officials so that peer exchange and mutual support may be provided at a senior management level.

• Most of the specific actions that are required at either central or sector level – plan-budget links, capacity prioritisation, harmonised implementation arrangements, joint monitoring and mutual accountability arrangements - are included in a typical programme-based approach.  Existing PBAs and those being developed are encouraged to focus only on those critical activities that are relevant and appropriate; the agenda should not become overloaded or too ambitious and the level of sophistication should be of secondary importance to the level of political level engagement.

• TWG participation must be at a level that is sufficiently senior and competent in the issues to ensure that dialogue is effective and that Government decision-making can be facilitated. This applies in particular to participation in cross-sectoral TWGs in which effective participation from agencies other than those represented by the chair is required. Where TWG participation is not feasible, routine Government communication channels should be used to address aid management issues.

• In the absence of effective programme-based support to national priorities and a more efficient division of labour, senior sector officials may identify the main providers of support in order to focus their aid coordination activities. Table Ten shows that, in five of the NSDP's most important sectors, the share of the five largest development partners in total support to that sector in 2007 was at least 50% of all aid. If efforts are focused on ensuring the effectiveness and impact of funds provided by these development partners then the coordination challenge is partially resolved.

Table Twelve. Share of support (%) provided by the five largest partners to selected sectors in 2007

   Note. 'D' denotes some or all funds delegated to other implementing partners. 'L' denotes some or all funds are loans

c) Strengthening partnership-based competencies

• The approach to development partner cooperation outlined in the NSDP represents a shift away from traditional management of individual projects towards support directed at achieving broader sector-level results. Requisite skills therefore need to build on existing technical management capacities towards convening a broader range of partners in implementing coordinated activities that will address sector priorities and objectives. The ability to build trust, establish common understanding, participate in constructive dialogue and negotiation, and to demonstrate leadership and an ability to effectively communicate national policy is therefore essential to managing aid so that it achieves the desired results. Many of these attributes imply engagement at a political level.

• Where language barriers preclude effective and sufficiently broad engagement, increased use of translation and interpreter services is to be provided. The funding of these services is to be negotiated with the TWG's development partner lead facilitator or, as last resort, through access to the TWG block grant that is managed by CRDB/CDC.

II.  Policy recommendations for Cambodia's development partners

a) Identifying priority actions for aid effectiveness

• Gauging the extent of commitment and specific priority of each development partner will inform the identification (and likelihood of actual implementation) of a more narrowly defined set of agreed actions. Based on the response of each development partner's capital/HQ and the formal position taken after the High-Level Forum on Aid Effectiveness and the associated Accra Agenda for Action, each development partner in Cambodia is therefore requested to confirm the commitments made by their capital/HQ and the required actions as they relate to Cambodia.

• Development partners are to make clear the reasons for future non-compliance with the Cambodia Declaration on Aid Effectiveness and their global commitments. Noting the use of national systems as 'first option' in the Accra Agenda for Action, development partners are requested to present a common position on the assessment and use of national systems at central and sectoral level and to support the development and implementation of capacity development programmes where national systems are considered to require further strengthening.

• Principles on 'division of labour' (or 'complementarity') have been identified in this Report. Senior management in each development partner agency is requested to engage positively and apply these principles in the event that Government officials indicate their desire for a more rationalized and less fragmented profile of support.

b) Integrating aid effectiveness priorities with broader reform and sectoral work

• Development partner staff should become better informed of the overall context, the core reform agenda of the Government and the manner in which they should subsequently support programmes at central or sectoral level. This includes approaches to strengthening national systems (financial management, procurement, monitoring etc), capacity development (reference to broader public administration reform) and support to performance incentive schemes.

• Development partner participation in TWGs should be at a sufficiently senior and competent level and should recognise the leadership of Government. Although this recommendation has been made previously, there is still some misunderstanding about the role of TWGs, which is to convene dialogue, exchange information, foster trust and a common understanding, and to provide a forum for making proposals that may then be referred to Government for a decision¹³.

• The context of reform may imply that projects and programmes are increasingly developed in a change management context, rather than as discrete projects with limited reference to the broader national reform and capacity development priorities of Government.

c) Strengthening partnership-based competencies

• Development partner agencies are requested to exchange information and examples of good practice on their own induction procedures with a view to each development partner being better able to brief new staff. This will ensure that they are aware of national aid effectiveness policies and the related practices that this implies.

• Policy changes included in the Accra Agenda for Action, e.g. related to conditionality and use of Government systems, require changes to development partner policy if they are to be implemented in Cambodia. Additional and consequent changes will then be required to ensure that development partners have the requisite skills and associated performance incentives, e.g. for multi-stakeholder negotiation that replaces project conditionality, and for supporting improved capacity development practices as a result of a commitment to using national systems.

• Development partners are encouraged to reflect on the historical legacy and cultural traditions of Cambodia that may require them to tailor their standard corporate approach to interacting with national counterparts.

III.  Joint responsibilities and a focus for mutual accountability

a) Identifying priority actions for aid effectiveness

• Priorities need to be based on a nationally agreed framework but applied according to the conditions at the level of implementation. To promote national ownership, most priorities are expected to manifest themselves in supporting the development of national systems and strengthening the links between planning, financial management, implementation and monitoring.

• When developing a plan or strategy, a basic framework that builds on existing capacities and political level leadership is preferred to pursuing an excessively complicated and poorly-integrated solution that may only be understood by a narrow cadre of technical experts.

• An improved 'division of labour' implies actions for Government and its development partners. Government officials in each sector are invited to indicate their readiness to take this work forward, requesting CRDB to facilitate with analysis and application of the guiding principles if necessary.

b) Integrating aid effectiveness priorities into broader reform and sectoral work

• Aid effectiveness work must become part of the routine work of both Government and development partner staff. It should not be the preserve of a narrow range of specialists. Global and national principles of effective aid should be tested and challenged for relevance and suitability.

• Where programme-based approaches are in place they must evolve beyond common arrangements for planning to reflect all financing – domestic and external – in annual operational plans so that comprehensive programming and capacity development can proceed and provide a foundation for making increased use of Government systems in the future.  

• A number of processes – dialogue mechanisms, incentive systems, capacity and reform issues - on both Government and development partner sides may now need to be addressed at a more senior, rather than technical, level. Continuing to pursue technical fixes to non-technical problems may result in an inefficient use of resources and difficulties in maintaining cooperative partnerships.

c) Strengthening partnership-based competencies

• Trust, common understanding, productive dialogue and effective partnerships are not one-off investments, especially where personnel changes are frequent. Both Government and development partners need to continuously invest in building trust and a common understanding if desired results are to be realised. For this reason the TWG Network will be expanded in 2009 to deliver support to TWG chairs and lead development partner facilitators and efforts to strengthen the GDCC dialogue will be maintained.

• Where there is evidence of a stronger lead by Government (as reported in the Independent Review) and a 'catalytic partnership' (as reported by the technical cooperation study), then this should be used as a basis for developing and consolidating programmatic and capacity development approaches around the Government's position. This common area of cooperation should then provide a foundation for further dialogue and subsequent progress in other areas.

• Further work must be undertaken at TWG and GDCC level to ensure a consistent approach is taken to identifying, agreeing and monitoring the JMIs. Currently the JMIs comprise a mix of outcome, output and process-level indicators that make it difficult to make a clear assessment of the link between intended activity and desired results. 

Joint monitoring of policy implementation

Routine monitoring of the H-A-R Action Plan and JMI implementation has previously been managed through the GDCC mechanism and the recommendations in this Report are therefore also to be incorporated into a JMI. The broad, and unavoidably general nature of the recommendations provided so far can then be understood as an intermediate step towards the identification of more specific and relevant actions for each sector. The proposed JMI is therefore as follows:

Taking note of: a) the Rectangular Strategy (Phase II); b) the NSDP MTR; c) the H-A-R Action Plan and the Cambodia Declaration on Enhanced Aid Effectiveness; d) the Evaluation of Aid Effectiveness (self-assessments and Independent Review); e) the recommendations made in the 2008 Aid Effectiveness Report; f) the dialogue at CDCF; and g) the Accra Agenda for Action, the Royal Government and its development partners agree to:

1. For the Royal Government, to consult internally and at a high level to identify a number of realistic, achievable and verifiable actions at central level and associated with identified sectors to ensure progress in advancing national aid effectiveness priorities and in meeting their international commitments;

2. For development partners, to consult internally and with their capitals/headquarters at a high level (in light of the HLF on Aid Effectiveness), and with one another, to identify a number of realistic, achievable and verifiable actions that will ensure progress in advancing national aid effectiveness priorities and in meeting their international commitments; and

3. For both the Royal Government and development partners, to come together in the first quarter of 2009 to negotiate a limited number of practical and verifiable actions that are based on the H-A-R Action Plan and represent a consensus for joint action.

CRDB/CDC, as the national aid coordination focal point, will facilitate this process in collaboration with the Partnership and Harmonisation TWG. The agreed actions will be presented at a meeting of the GDCC and shall then be incorporated retrospectively into the 2009-2010 JMI matrix as a mutual commitment to the implementation of the H-A-R Action Plan and commitments made in the Cambodia Declaration on Enhanced Aid Effectiveness.
 

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