Transcript “Are capacities for aid coordination and management in recipient

“Are capacities for aid
coordination and management in
recipient countries fit for upscaling of aid?”
- Perspectives from Rwanda
John RWANGOMBWA
Secretary General and Secretary to the Treasury,
Ministry of Finance and Economic Planning,
Government of Rwanda
Structure of Presentation
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Thinking about “capacities”:
Towards an analytical framework
Overview of Aid Flows to Rwanda
Progress and challenges in the
coordination and management of aid
Government
 Development Partners
 Civil Society
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The need for scaling up
Conclusions
What do we mean by
“capacities” in this context?
Institutional
Capacities
Human Capacities
Policies, strategies and
implementing tools are in
place to ensure efficient
coordination and
management of aid.
Skilled, trained personnel
are in place to implement
policies and strategies,
and to maintain the
government-donor
interface.
“Capacities”
Structural / Economic Capacities
Capacity of the recipient country’s economy
to absorb additional aid with minimal
distortion (“dutch disease”) etc.
Whose capacities in recipient
countries?
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Recipient government
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Donor agencies
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Capacity to own, manage and implement.
Human & institutional capacity to deliver
assistance in an effective manner.
Other key stakeholders (e.g. civil society,
private sector)
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Capacity to complement government;
advocate for effective use of aid, and exert
ownership over development processes.
Aid flows to Rwanda
1,000
Civil war and Genocide
900
800
USD millions
700
Post-war recovery…
…towards longer term growth
and poverty reduction
600
PRSP1
EDPRS
(forthcoming)
500
400
300
Total Net ODA
(2004 prices)
200
…of which
emergency aid and
food aid
100
0
Year
Data source: OECD-DAC
Aid flows to Rwanda
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Composition of aid portfolio (FY2005):
Relatively small number of donors
 40% budget support
 60% projects, making limited use of GoR
systems
 Only 49% of aid reflected in GoR budget
 Sectoral composition of aid:
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Largest sector was health (12% of ODA)
 Strong focus of aid on MDG sectors
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Government capacities to
coordinate and manage aid
Institutional Capacities (I)
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Evaluation of PRSP1 completed; second
generation PRS currently being finalised
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EDPRS will offer clear priorities with which aid
needs to be aligned
Costing of EDPRS will give clear indication of
resource gaps in the medium term
GoR Aid Policy (finalised July 2006) sets out
clearly how aid should be provided and
managed, with a view to ensuring fit with the
EDPRS
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Preferences in terms of aid modalities and use of
GoR systems
Provides a framework for GoR negotiation and
management of aid
Institutional Capacities (II)
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Important PFM reforms ongoing:
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New institutions created and strengthened (Auditor General,
Ombudsman, National Tender Board, Accountant General).
Organic Budget Law provides for improved budgeting and
execution.
Currently in process of preparing GoR consolidated
accounts.
PFM Action Plan in place to strengthen institutions and
systems.
Continued strengthening of sector planning and
MTEFs
SWAp introduced in Education sector and soon to
start in the health sector
Administrative reforms that led to greater
decentralisation – performance contracts (Imihigo)
Institutional Capacities (III)
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New and strengthened GoR-donor structures
in place to manage and coordinate aid:
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A dedicated External Finance Unit within the
Ministry of Finance and Economic Planning.
Development Partners Coordination Group as a
high-level forum for GoR-donor dialogue.
Budget Support Harmonisation Group provides a
single forum for dialogue with Budget Support
donors.
Sector-level working groups gradually assuming a
greater role in the coordination of assistance at
sector level.
Institutional Capacities (IV)
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Some key challenges ahead:
Further improving sector-level planning
and coordination.
 Strengthening of planning and budgeting
at the district level – Linking district
development plans (DDPs) to EDPRS.
 Strengthening monitoring and evaluation
mechanisms.
 Aligning donors to government systems
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Human Capacities
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Ongoing civil service reforms are providing
institutions with stability and the human resources
necessary to manage aid:
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Skills remain in short supply, but capacity building
initiatives are in place (Human Resource and
Institutional Development Agency coordinates it):
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Improved salaries and conditions.
Introduction of performance contracts.
The challenge now is to ensure that all TAs are aligned with
GoR priorities, and executed in a manner that leads to a
sustainable impact on skills within government.
Intensive training of professionals:
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E.g. ongoing training of public accountants, procurement
officers, planners and others
Economic / Structural
Capacities
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To what extent can Rwanda’s economy absorb
additional aid?
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No evidence of “Dutch disease” effects on
exports through real exchange rate appreciation.
Efficient provision of aid plays an important
role
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Disbursements need to be predictable (cash plan).
Aid needs to be channelled in a way that
strengthens absorptive capacity.
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Sectoral allocations (overcrowding in social sectors)
Use national systems (procurement, reporting, etc… )
What about capacities on
the part of donors and other
stakeholders?
In-country Donor Capacities
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Donor cooperation offices in Rwanda are
often small in terms of staffing:
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Unable to engage fully in policy dialogue that
becomes increasingly important with the move
towards partnership-based modalities (e.g. budget
support).
Many donor field offices are overly
constrained by HQ-level regulations, despite
the commitments made at international level
(e.g. Paris Declaration on Aid Effectiveness):
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Cannot always align to the maximum extent, or
enter into partnerships with other donors to
increase aid effectiveness.
Limitations on aid modalities.
Always seeking non objections from hdqtrs
Civil Society Capacity Issues
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Grassroots efforts in the elaboration of the
EDPRS mean that the strategy is “owned” by
its beneficiaries, but:
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Literacy and skills remain a challenge to civil
society in its role in asserting greater ownership
over development activities, and in advocating for
an effective use of aid.
Relatively disorganised NGO sector reduces ability
to implement their interventions effectively,
though new umbrella organisations (e.g. NGO
platform) promise to improve this.
The role of GoR and development partners in
building and facilitating capacity at grassroots
level remains important.
Why is scaling up of aid
necessary in Rwanda?
Importance of Scaling Up (I)
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Meeting the MDGs will require increased investment
in social as well as productive sectors, e.g.; education,
health, water and sanitation, agriculture, infrastructure
etc..
Significant investment in productive sectors needed to
achieve sustainable growth, and reduce aid
dependency in long term, e.g:
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Rural roads are still poor, hindering access to markets.
Electricity is in short supply, and expensive ($0.22 per KwH
– over three times the price of neighbouring countries).
The banking sector remains shallow, and savings rate is low:
access to finance is crucial to private sector development.
Agricultural transformation is another key area that will
ensure quick poverty reduction and sustained development
The EDPRS will address these constraints, but there
Conclusions
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Rwanda has made significant progress in rebuilding its
institutions in a way that prepares it for a much-needed scaling
up and effective use of aid.
Remaining constraints on the GoR side should be
examined alongside bottlenecks and challenges identified
on the side of development partners: they too need to change
the way they do business.
Use of country systems (budget execution, accounting,
procurement) by donors is a pre-requisite to their
continued strengthening.
Aid volume and effectiveness should be seen as interlinked:
as transaction costs are reduced, the ability of a recipient
government to manage a greater volume of resources is
improved.
The capacity of an economy to absorb more aid will also depend
on how aid is allocated to different sectors _ need to change the
narrow definition of pro poor spending
I THANK YOU