Effectiveness of Aid: Harmonization, Alignment and Ownership
On the occasion of the Paris Forum on the Effectiveness of Aid (February 28 - March 2), jointly organized by the OECD, the World Bank and the United Nations at the invitation of France, the Notes du Jeudi (Thursday Notes) this week continue to deal with the question of effectiveness. After a general presentation of the principal themes concerned (NdJ nº24) and a particular examination of the macroeconomic approach (NdJ nº25), the principal questions of the Forum itself are dealt with here.
1. Necessary Harmonization 
Some beneficiary countries of international aid receive financing from a large number of bilateral and multilateral aid agencies, without counting large and not-so-large NGOs, decentralized cooperation or others. In high aid countries such as Mozambique or Zambia, where the ODA reaches 20% of the official GDP, the number of public donors, in a sector such as health, education or village water systems, can exceed thirty.
These countries are poor and immense; surely there is a place for everyone. It is not so simple.
Even if the donors are limited to setting up drilled wells in villages, there would need to be coordination so that every area is covered and to avoid 30 wells in the same part of the same village, avoid providing different kinds of pumps, requiring different maintenance methods and avoid modes of payment, access to water and management that are too diverse and competing. If there are national regulations in the matter, then everyone applies them, and if none exist (or if they are unsuitable), the country can be helped to establish such regulations, based on local experiences and by listening to every actor involved.
International aid is not just for village water wells. It covers numerous sectors and in each of them, in addition to activities in the field, the need to turn back towards institutional support, support for reforms, has been felt for a long time. Such support is a sensitive matter and can only be done in a spirit of a mutually respectful partnership. Everyone agrees on that now. But can a less developed country, with a disastrous administration, maintain a demanding and fruitful partnership with 30 international agencies? Too many partners kill the partnership.
In the last few years, Mozambique has received, within the context of its ODA, more than 400 official missions per year, all eager to be taken on as partners at the national level. That is too much for the Mozambican administration.
This is not an isolated example (the number and inconsistency of conditionalities, reporting requirements, administrative staff, provisioning rules...). Criticism aimed at the lack of coordination and “discipline” in relation to international aid, already of long standing, is rightly increasing.
2. A Long History, and a Strong Momentum, for More Coordination
Locally, the need for coordination has been felt for a long time. The PRMC (Programme de reconstruction du marché céréalier - Program to Reconstruct the Grain Market) in Mali, set up in 1981 with most of the donors and the government, was famous, effective and lasted nearly 20 years. Other initiatives existed, without always having the same success, sometimes due to the “leadership” endeavors of some donors. The idea of international action to put an end to this mess, well known to everyone, took on importance in the middle of the 1990s (particularly with Le rôle de la coopération pour le développement à l’aube du 21e siècle, (The Role of Cooperation for Development at the Dawn of the 21st Century), DAC/OECD, May 1996) and was reinforced by the new impetus given to the ODA at the Millennium Summit (September 2000) and the Monterrey conference (March 2002).
At the initiative of the DAC (Development Assistance Committee) and several donors, the Rome conference took place in February 2003. The final declaration, in the name of 40 aid agencies and 28 beneficiary countries, is a mutual commitment to improve the effectiveness of aid, by implementing a certain number of “good practices” for respecting the priorities of the beneficiary countries, simplifying and standardizing procedures and putting a greater emphasis on results.
Within the context of the Rome declaration, the members of the DAC set up a “working group on the effectiveness of aid”, charged with preparing a Rome “stock-taking” conference after two years. An annual system of self-certification of their efforts concerning harmonization was also set up. Moreover, 14 beneficiary countries volunteered for pilot implementations of action plans, which have just been the subject of a “survey” by the DAC.
At the same time, a seminar took place in Marrakech in February 2004 on the theme of management by results, and various regional workshops were organized in the course of 2004 under the aegis, in particular, of the Regional Development Banks.
At the European level, France supported the creation by the Council in April 2004 of a working group on harmonization (AHWPH - Ad Hoc Working Party on Harmonization), whose results were ratified November 23, 2004 by the General Affairs and External Relations Council. Under the title “Advancing Coordination, Harmonisation and Alignment: the Contribution of the EU”, it is presented as a specific contribution to the DAC approach, in which the member States are committed to go “faster, farther and deeper”, particularly by adopting a common program implementation framework in the beneficiary countries and by the implementation of the principle of complementarity between member States.
France participates in this process and in its various working groups. It is hosting in Paris from February 28 to March 2, 2005 the “2nd High Level Forum” on the effectiveness of aid, i.e., Rome +2. This Forum, which assembles most aid agencies and 60 beneficiary countries, must produce a Declaration that includes measurable mutual commitments.
In the field, France has chosen to participate actively, as lead, in processes underway in Mozambique, Burkina Faso and Vietnam, which are some of the 14 countries chosen by the DAC. Evaluations of these three experiences have just been carried out. France is generally active in all local harmonization initiatives.
3. The Concepts Employed
The profusion of initiatives and work underway has recently required a certain “harmonization of the concepts of harmonization”. Today, everyone more or less supports the plan below, presented by the DAC in the form of a pyramid. It allows a normative (from top to bottom) or pragmatic (from bottom to top) description of approaches, depending on the sensibilities of the donors, hence the consensus.
Figure 1: the Pyramid of Harmonization
In a pragmatic and progressive approach, from bottom to top, the following can be singled out:
Harmonization, which is made between donors, does not necessarily involve the government of the beneficiary country. In principle, this approach is possible whatever the local conditions may be. It includes close coordination among those intervening in the same sector, setting up a coordinated sectoral program, sharing analytical work, joint reviews and evaluations, harmonized procedures for awarding contracts and the establishment of performance reports, or common conditionalities in the case of budgetary or program aid. More elaborated forms can be undertaken, such as complementarity between sectors or even between countries (dividing up the countries among the donors so as to reduce the number of donors and limit the fragmentation of aid) and/or delegated cooperation, etc.
“Alignment” goes further, by taking the same subjects, no longer defined as being between donors but under the leadership of the local government. The donors are “aligned” with local procedures as well as, above all, the policies and priorities of the government. The latter must, nevertheless, prove that its systems are capable of channeling the flows of aid and the donors are committed to improving its human and institutional capabilities in the matter. A thorough form of alignment is sectoral or comprehensive budgetary aid, where the donors contribute to financing a development policy established by the country and to which the donors adhere. Another concept, close to that of alignment, is the predictability of aid, particularly for budgetary aid, because it is important for building a policy of knowing what a country can count on as resources, not only over the course of a year but also several years in advance.
Ownership. The country “establishes the agenda,” is installed in the “driver seat”. All of the development policies of the country form its poverty reduction strategy (PRS), which is established, if necessary, with the assistance of donors but above all by the country itself, including, in principle, all of the society’s actors. The donors are aligned with these strategic cadres. In practice, the concept of ownership refers above all, for the donors, to the strengthening of the human and institutional capabilities of the host country and, for the beneficiary country, to the commitment to improve its PRS, prioritize it and budget for it in a realistic fashion.
At the same time, the concept of managing for results is gradually made imperative. To begin with, it concerns reforming budgetary aid (particularly sectoral), by moving from pre-conditionalities to post-conditionalities. With the establishment of normalized PRS “frameworks” (called PRSP “Poverty Reduction Strategy Papers”) and the mid-course review procedures for these strategies, the concept has been considerably expanded. It supports the idea of comprehensive budgetary aid, granted to countries as a direct function of their general results (development indicators) and thus leads to the principle of selectivity of aid: the countries that effectively make the best use of it receive more aid than the others. Managing by results (or for results, by trying to move from a logic of means to a logic of results) assumes that detailed and reliable statistical data are available, which is rarely the case. Thus several donors participate in the PARIS 21 program of strengthening statistical capabilities in partner countries.
4. Strong Points: Harmonization and Alignment
The process of harmonization, in the broad sense, is manifestly on the move. Much progress has been accomplished since Rome, both among fund donors and in partner countries. Active processes of harmonization are underway in sixty countries in the South, to everyone’s satisfaction.
In fact, no one can claim to be opposed to the principle of harmonization, knowing the practical difficulties encountered in the past. Reservations are not very numerous:
The most successful forms of coordination between donors, such as complementarity (above all between countries), can discourage small donors, and impede the arrival or growth of new donors (for example, Japanese aid in Africa), however desirable, moreover.
Likewise, the struggle against the fragmentation of aid, with the establishment of thresholds, can slow down the development and expansion of relations of cooperation, such as, for example, the desired involvement of local governments in the ODA.
Finally, the objective of reducing the transaction costs of aid, put forward quite strongly at the beginning of the process, is now passed over, because it appears that coordination is expensive, particularly in human resources, for the aid agencies in the field.
Alignment is no longer disputable, on condition that the meaning of this word (with military connotations in French) is made quite clear.
Aid is not only a financial transfer, but also, and above all, support for institutional construction. Aid that respects neither local priorities nor local administrative procedures contributes to weakening already weak local public institutions even more. When the donors are harmonized among themselves, it seems logical to be aligned with local regulations when they exist and are applicable. Likewise, it falls to the country to set its own priorities, whether that be with its own finances or with resources offered by another country. A successful alignment is a real support for institutional stabilization, through the learning effect, above all in situations where most of the public investment comes from aid.
The dangers concern, for the most part, just this concept of construction. Six will be mentioned here:
1. Alignment requires higher security of procedures, because it increases the risks of corruption, embezzlement, and bureaucratic inefficiency. This points to the importance of programs such as PEFA (Public Expenditure and Financial Accountability) for at least strengthening administrations and financial procedures.
2. The cornerstone of alignment, the PRSPs or other equivalent national frameworks, easily tend towards state control and centralization. An “alignment” applied in a rigorous fashion could, by making things worse, lead to forms of centralized planning, the ineffectiveness and danger of which history has demonstrated.
3. Alignment increases the allocation of aid to the State apparatus alone, to the detriment of other components of society. Strengthening the capabilities of this State apparatus can contribute to a strategy of avoiding fundamental reforms and cause the balance to tip towards the social group linked to this State apparatus and the political options that it represents.
4. Even if the Declaration of Rome affirms recognition of “diverse forms of aid (projects, sectoral approaches and budgetary support or support for the balance of payments)”, alignment with the PRSPs and focus on budgetary aid risk inopportunely heaping opprobrium on local and innovative approaches, as well as on sectors poorly covered by aid that require, to begin with, few resources.
5. The institutional progress made possible by alignment rests, in part, on different forms of technical assistance, whose role is enhanced. The legitimate demands of States for control of this tool and its possible sectoral “pooling” between donors, are signs of progress, but must not reduce the importance of the human connection between countries of the North and South that this link of the “aid chain” between North and South represents, nor the important role of that human connection as local mediator between partners nor, finally, its capacities for analysis from outside the situation.
6. A resolute alignment with national policies must not be made to the detriment of wider support from regional or even world rationalities. In a Regional and World Public Goods approach, questions such as the environment or AIDS require concerted approaches at a level other than that of the country.
5. “Ownership” is Certainly the Weak Point of the System
The concept of aligment makes it possible, in principle, to avoid a situation where coordination puts the beneficiary country in the minority on its own territory, faced with united donors. The donors are supposed to follow the policies of the host country, synthesized in various strategic documents, including the PRSP. Nevertheless, two questions remain open: are they really the policies of the country? If so, whose policies are they?
At the end of the 1990s, the PRSPs appeared as conditionalities for the World Bank, in order to have access to the primary mechanisms for reducing multilateral debt (“Heavily Indebted Poor Countries” or HIPC). They were often judged to be of poor quality, partial and, above all, artificial, controlled by the international financial institutions (IFIs), which, in fact, are able to align them with their own recommendations. Is this always the case? The process has undoubtedly improved, but the evaluations that are made of them remain quite critical (see particularly the report from the World Bank’s Operations Evaluation Department itself in 2004 ).
This deficit of “ownership” can then only be aggravated by the standardization of donors. Facing the risk of “alignment” only with the policies of the IFIs, the need for diversity in perspectives, experiences and proposals is reinforced. The multiplicity of donors and their approaches, within the rules of harmonization, proves more than ever to be an opportunity for the beneficiary countries, at the local and sectoral level as much as on the level of working out national strategies.
The PRSPs owned by whom? Despite the recent efforts by which parliaments and other actors are involved in drawing up PRSPs, “ownership”, when it exists, essentially resides in finance administrations. Support for ownership results from the new capabilities accorded by aid to these administrations, which intensifies imbalances with other public services and, above all, with other groups in the society. However, an important issue for institutional construction is to encourage participation by civil society organizations in the management of public finances, as emphasized by the DAC. 
Diversifying the beneficiaries of aid to include local governments, private organizations and associations is an imperative for the modernization of aid, which is not part of the current effort to improve the effectiveness of aid. The weakness of the ownership of aid, or its limitation to a restricted circle of the beneficiary country’s society, is undoubtedly the greatest weakness of international aid. It is a hindrance to institutional construction.
In order to put an end to the chaos resulting from the long-standing lack of coordination among donors, the initiative launched by the DAC in 1996 has proven to be a useful and long-awaited success. As with any attempt to improve aid, this initiative is confronted with simultaneously resolving issues concerned with the logic of means and those concerned with the logic of results (cf. Note du jeudi (Thursday Note) nº24). An apparent coherence between the two is observed in the final proposal, which rests mainly on the PRSPs (results) and budgetary aid (means). From this perspective, PRSPs and budgetary aid mutually justify one another.
Nevertheless, they also represent two facets of an inherent problem with aid since its origin, i.e., its absorption capacity. It has been pointed out (NdJ nº24) that budgetary aid aims, among other things, at increasing the disbursement capacities of donors, but this disbursement is limited endogenously by the absorption capacity of the country. The PRSPs appear, therefore, to be completely indispensable to budgetary aid in order to break down the disbursement barriers.
Hence, there is a risk that the objective of institutional construction, in principle a priority of the DAC, will be relegated to second place behind the emphasis on the process of means (disbursement). The risks from the pernicious effects highlighted in this note would thus be reinforced.
The emergence of the PRSP/budgetary aid duo must then be subject to a very responsible approach. The objective of institutional construction should lead to the establishment of a clear distinction between:
large flows of development aid, which have to correspond to ordinary priorities of governments and to methods of intervention adjusted to these flows, particularly budgetary aid when conditions allow it (education and health for everyone, infrastructures).
targeted and/or innovative interventions, often in reduced amounts, of a more institutional nature, directed at diverse actors (particularly, local governments, private organizations, associations) that play an essential role in the renewal and adaptation of the tools and concepts of development.
The transaction cost of small interventions can appear to be high, but it is justified by their high return, their role as laboratories of development, and the “scaling up” prospects that they contain. The successful budgetary aid projects of today rest on numerous efforts from yesterday. Today’s projects are the SWAps (Sector Wide Approaches) and budgetary aid efforts of tomorrow.
 J.-D. Naudet, in 30 ans d’aide au Sahel, trouver des problèmes aux solutions (30 Years of Aid to the Sahel: Finding Problems in the Solutions), OECD, 1998, expressed this imperative in the following manner: “One donor, that’s fine, 30 donors, what a mess!”
 The Poverty Reduction Strategy Initiative: An Independent Evaluation of the World Bank’s Support Through 2003, OED/WB, 2004
 J. Heimans, “Strengthening Participation in Public Expenditure Management”, OECD Policy Briefing No. 22, 2002.