Final Draft December 2009 Bhavna Sharma, Marta Foresti and Leni Wild Table of contents

Engaging non state actors in new aid modalities

Final Draft

December 2009

Bhavna Sharma, Marta Foresti and Leni Wild
Table of contents

Acknowledgements 3

The opinions expressed in this document represent the authors' points of view, which are not necessarily shared by the European Commission. 3

List of acronyms 4

Executive Summary 6

Section 1: Background and introduction to the study 11

Section 2: Overview of recent EC engagement and support to Non-State Actors 14

Section 3: Critical reflections on the role of NSA in development 21

Section 4: Aid effectiveness and the role of NSAs 24

Section 5: New Aid Modalities and the EC: what role for NSA engagement? 28

Section 6: EC tools to support NSA engagement in new aid modalities 46

Section 7: Sector support for education: a case study 57

References 61

Acknowledgements

The authors are grateful to Corinne Andre and Dominique Dellicour, who commissioned this report, for their support throughout the project. We are also grateful to all EC staff, in Brussels and in the delegations, who were consulted during the study and who provided invaluable insights and information. In particular, staff from the India EC delegation who hosted a filed visit for the study.

EC standard disclaimer

The opinions expressed in this document represent the authors' points of view, which are not necessarily shared by the European Commission.

List of acronyms

ACP African, Caribbean and Pacific
ALA Asia and Latin America
CSO Civil Society Organisation
CSP Country Strategy Paper
CSPR Civil Society for Poverty Reduction (Zambia)
DAC Development Assistance Committee
DCI Development Co-operation Instrument
EC European Commission
EDF European Development Fund
EIDHR European Instrument for Democracy and Human Rights
ENPI European Neighbourhood and Partnership Instrument
EU European Union
FNDP Fifth National Development Plan (Zambia)
GBS General Budget Support
HLF High Level Forum
INGO International Non-Governmental Organisation
MDG Millennium Development Goals
MDG-C Millennium Development Goals-Contract
NACP National AIDS Control Programme (India)
NDP National Development Plan
NGO Non-Governmental Organisation
NRHM National Rural Health Mission (India)
NSA Non State Actor
OECD Organisation for Economic Co-operation and Development
PAF Performance Assessment Framework
PBS Protection of Basic Services
PEA Political Economy Analysis
PFM Public Financial Management
PPA Participatory Poverty Assessment
PMU Project Management Unit
PRBS Poverty Reduction Budget Support Programme
RCH Reproductive and Child Health Programme (India)
RNTCP Revised National Tuberculosis control Programme (India)
SBS Sector Budget Support
SPSP Sector Policy Support Programme
SWAp Sector Wide Approach
UNDP United Nations Development Programme

Executive Summary

1. 
   Background
   

1. 
   The Paris Agenda on Aid Effectiveness has highlighted the importance of national ownership, alignment and mutual accountability in development cooperation alongside donor harmonisation. Whilst the Paris declaration does not specifically advocate the sole use of new aid modalities such as general budget support (GBS) and sector wide approaches (SWAps or SPSP in EC terminology), they are increasingly seen as the main funding instruments that can deliver on these key principles of aid effectiveness.
   

2. 
   The EC has gained much experience in using thematic programmes, and more recently geographic programmes, to strengthen the capacity of Non-State Actors (NSAs). However, there is a need to operationalise NSA engagement in macroeconomic or sector programmes in order to enable them become effective development partners and improve the effectiveness of development programmes.
   

3. 
   This study is part of the EC’s response to address this gap and builds on a recent study by INTRAC on NSAs and new aid modalities. The study aims to provide EC staff with guidance on how to engage NSAs to enable them to participate in dialogue, implementation and monitoring of global and sector development policies of their countries, using new aid modalities as well as other EC funding mechanisms in a complementary fashion.
   

2. 
   EC support to NSAs
   

2.1 The EC defines Non-State Actors (NSAs) as organisations which form outside of government and can include not for profit or profit making entities which are created voluntarily by citizens to promote an issue or interest. NSAs include civil society, the private sector and other economic and social partners, such as trade unions, religious organisations and universities, according to context specific national characteristics, whose functions include service delivery, advocacy and watchdog/monitoring. The EC also emphasises the role of NSAs in making aid more effective in particular the role of NSAs as watchdog, implementer, donor and recipient. NSAs, therefore, have a role as development actors in their own right, distinct from governments and donors. All three groups must individually and collectively examine how their policies and activities complement and/or undermine each other to ensure the optimal impact of aid.

2.2 In the last decade there has been an increasing recognition of the crucial role that NSAs play in development cooperation by the EC in its policies and documents, which define NSAs as active agents in the development process. The Communication on the Participation of Non-State Actors (NSAs) in Development Policy is explicit on the participatory role of NSAs and recommends involving NSAs in the five key stages of the development process: preparation of a national development strategy and of the EC country response strategy, policy dialogue in sectors of intervention, implementation and review. More recently, in the first part of the European Consensus on Development (2005) the EC reiterates its political commitment to NSA participation.
2.3 Recent thinking on NSAs highlights that whilst NSAs are increasingly being perceived as key actors in development processes, the EC falls short of implementing this in its strategy and programming. Key challenges include a lack of strong political leadership from the top to push through reforms in institutional thinking, processes and behaviour; a heavy reliance on the project approach and call for proposals for funding NSAs; and difficulties in engaging NSAs change agents in political, economic and social transformation.

3. 
   Aid effectiveness, new aid modalities and NSAs
   

1. 
   Whilst the aid effectiveness agenda provides some room for the involvement of NSAs, most initiatives are state-centric and, often, donor driven. The NSA role in promoting aid effectiveness remains limited to broadly consultative and some monitoring activities. There is, however, the potential for greater involvement of NSAs to actively strengthen and deepen national ownership and domestic accountability for development policies. This is recognised by the EC guidelines on GBS and SPSP although the mechanisms by which this might happen are not systematic nor clearly demonstrated.
   

2. 
   Some fears have been expressed that the introduction of new aid modalities could weaken the role of NSAs, reduce the space available for them in the decision making process and potentially decrease the funding available to support NSAs. Whilst these are potential risks, more work is needed to better understand how if it is borne out in practice.
   

3. 
   The European Consensus (2006) outlines the EC’s commitments to the aid effectiveness agenda and whilst it recognises that EC aid instruments can be used in a complementary fashion to deliver development assistance, emphasis is placed on new aid modalities as the relevant aid instruments that can strengthen national ownership, support partner's national accountability and procedures and improve transparent management of public finances.
   

4. 
   General Budget Support (GBS) is a donor to government relationship based on supporting the implementation of a national development plan, via a transfer of funds from the donor government(s) to the treasury of the recipient government. The transfer of money is made upon the fulfilment of certain general conditions, usually centred on implementation of national development plans, macro-economic strategies and public financial management reforms.
   

5. 
   A sector approach aims to bring together key stakeholders (recipient government, donors and NSAs) to increase national ownership over sector policy and resource allocation, and reduce transaction costs. On the basis of a sector approach a sector programme, the SPSP, can be developed comprising three core elements of policy and strategy; the budget and medium term perspective; and the sector coordination framework, which includes coordination amongst the government, non-state actors and donors – all under the national government’s leadership.
   

6. 
   Generally speaking, sector approaches offer more opportunities to engage NSAs than GBS. Sector approaches are supported by three funding modalities which create more flexibility when designing sector programmes and also present more entry points for NSAs. Whilst both GBS and SPSP are rooted in the principle that national strategies and policy processes should be owned and led by national governments, sector approaches make explicit reference to the fact that such leadership should be carried out in close interaction with national stakeholders.
   

4. 
   Entry points for NSAs for formulation, implementation and monitoring of SPSP and GBS
   

Formulation

1. 
   The SPSP guidelines highlight the need to specify the role of NSAs as part of the government aims and objectives for the sector policy and strategy. In practice this means that in assessing the sector policy and strategy of the government, the EC should take into account the extent to which NSAs have a clearly defined role, not only in relation to service delivery but also in policy dialogue and priority settings. In some countries and sectors where NSAs play a particularly key role in policy and service delivery and work in partnership with government, their involvement in sector policy and strategy could be regarded as an essential condition for determining if a viable sectoral programme is in place and could be supported by the EC.
   

2. 
   A national development or reform policy and strategy in place or under implementation is one of the key eligibility criteria for GBS. Although these cannot be expected to define NSAs’ role to the same level of detail in strategy definition and delivery as sectoral policies, in many countries NSAs are actively engaged in policy dialogue and are consulted during the development of these national strategies and plans.
   

3. 
   New aid modalities should ideally be built around support to a country-owned national policy and strategy. The GBS Guidelines recognise that domestic political considerations drive reform processes and that “ownership” of these reforms is critical for their successful implementation. NSAs can play a vital role in ensuring that ownership is not by governments only but extends to citizens and service users. This includes ensuring that that they are informed about policy processes and, when possible, that their views and priorities are taken into account.
   

Implementation

4. 
   Depending on the sector and on the context, there is scope for some NSAs to be directly involved in the implementation of new aid modalities, particularly in SPSPs. This is likely to be highly dependent on the context in which the programme takes place, on existing arrangements between state and non state actors within a particular sector and on the knowledge and specific added value that NSAs can bring to the implementation of a programme. It is important to acknowledge that there could be tensions between ensuring that government ownership and, crucially, capacity to develop and implement sectoral programmes aimed at ensuring sustainable outcomes in the medium and long term, and engaging NSAs in the implementation and delivery. In some countries, this might undermine the long term objective of enabling governments to become more responsible for the delivery of public services. However, in the short term, active engagement of NSAs could help to address specific gaps within a particular sector, for example by improving the level of quality and equity of a given service or outcome.
   

5. 
   NSAs could be involved in the implementation of GBS, if they are active participants in the national development plan or reforms that will be undertaken as part of GBS. NSA engagement will vary according to context and be based on the individual country needs and opportunities. Many national development plans, or poverty reduction strategies, will include efforts to improve services and focus on particular sectors, which may require NSA engagement in service delivery.
   

6. 
   The focus of NSA engagement in policy dialogue and formulation can be to provide the government with specialist knowledge or outreach capability to reach those not included through mainstream policy. [For example, in education, this knowledge can be used to implement non-formal education programmes or adult literacy which complement the overall policy towards the sector more generally. Complementary measures are useful to target particular groups of beneficiaries and niche areas of the sector.
   

7. 
   The implementation and success of new aid modalities can be severely undermined by limited government capacity and the wider institutional challenges that affect such capacity. There is often an assumption that by using government systems they can be reinforced and the capacity improved. However, this does not always reflect reality, and supporting and reinforcing the capacity of NSA is also central to ensure more effective implementation. The focus of capacity development is an integral part of GBS and SPSP and should not be seen as an ‘add on’ to the programme.
   

Monitoring and review of SPSP and GBS

8. 
   As well as having some opportunities for engaging in policy dialogue and implementation, there is particular scope for NSAs to be engaged in the monitoring and review of the general and specific conditions, including associated performance indicators, for GBS and SPSP. To date, NSA involvement in Joint Review Missions has been limited and weak, but it is an area where NSAs have a role to play as an independent actor in the process.
   

9. 
   There is potential to include NSAs more proactively in monitoring the performance of GBS and SPSPs and in evaluating its results. The SPSP guidelines suggest that a sectoral performance assessment framework (PAF) should be developed consisting of a set of inputs, outputs, outcomes and possibly impact indicators. The evolution of the PAF is periodically monitored to assess progress towards the achievement of the sector’s policy and strategic objectives. NSAs could be usefully involved in the development and implementation of the PAF, with the specific aim to shift the focus towards the service delivery and local level and not just focus at the national and policy level. NSAs can play a role in monitoring the performance of GBS, by contributing to setting up and running data collection and monitoring systems at local level, as channels for collecting and analysing the feedback from service users etc. and more generally for monitoring the non financial aspects of GBS, especially at the output/service level.
   

10. 
    The issue of quality of performance is as central to GBS as it is to SPSPs and the EC GBS guidelines acknowledge that a dedicated programme to ensure the quality of the performance indicators used to measure objectives should be in place. The guidelines also mention the challenges posed by collecting the relevant information needed to monitor these indicators and therefore the need to invest in capacity development in this area.
    

11. 
    In practice, joint diagnostics and reviews offer an opportunity to directly involve NSAs in GBS and SPSP monitoring and evaluation. At present, the guidelines focus on the collaborative nature of these initiatives between donors and partners governments. However, in some cases and at specific times of the GBS and SPSP cycle, there is scope to directly involve some NSAs in these processes, particularly those with expertise and knowledge of budget monitoring (e.g. budget watchdogs organisations, media), research and data collection and analysis (e.g. independent think tanks and research institutions) and organisations specialised in participatory and consultative processes, including facilitators and mediators.
    

Complementarity of EC aid instruments

12. 
    In its overall cooperation, the EC increasingly relies on GBS and sector approaches as well as on budget support as a preferred modality. This, in turn, is fuelling the search to find new ways and means to support NSA’s potential in the formulation, implementation, monitoring and evaluation of the implementation of such processes, including by channelling aid to them for performing a variety of roles (e.g. service providers; advocacy activities; watchdog agencies).
    

13. 
    In some cases, the focus on new aid modalities can lead to NSAs being effectively excluded from receiving funds (e.g. Cambodia, Georgia). This has much to do with the ability of the EC to safeguard space for NSAs to participate and to stimulate consensus between government and civil society in the use of budget support. It is therefore important to consider how in practice complementary measures to GBS and SPSPs such as geographic programmes specifically strengthening NSA capacity building or projects funded under thematic instruments or programmes can support NSA engagement.
    

14. 
    Emerging good practices show the benefits of designing complementary programmes to support NSAs as part of reform and monitoring processes (as indicated in the general budget support guidelines). In some cases, complementary programmes can be used to pave the way to sector or budget approaches (e.g. non formal education in Bangladesh), in other can be designed to specifically address the gaps of a SPSP in particular areas, for example by using the ‘NSA and local authorities’ thematic programme (e.g. education and health in India).
    

5. EC tools to support NSA engagement in new aid modalities

1. 
   The EC has a range of tools at its disposal which it can use to help prepare the ground and support better NSA engagement in new aid modalities. NSA mapping is an example of one of these tools which helps to understand who the key actors are, their role and their relationship to one another and the state. Recent EC documents highlight the importance of a dynamic and context sensitive approach to mappings.
   

2. 
   EC guidelines are increasingly recommending a “political economy approach” to mappings, which is dynamic and reflects power and other relationships between actors whilst not static and descriptive. This provides a more holistic perspective of the whole political and economic context where NSAs operate and should allow the EC to identify the key NSAs to engage with (or not) to help support the design, implementation and/or monitoring of EC programmes.
   

3. 
   NSA mappings at the sectoral level could be an effective tool, particularly if they were built upon general mappings utilising the political economy approach. This new and more targeted approach provides added value by guiding the implementation of a local or sub-sector strategy based on sector priorities.
   

4. 
   NSA consultation is the process by which the EC sollicits NSA views and inputs on development processes, these consultations aim to keep NSAs engaged with and actively participate in development processes. The EC’s role is to facilitate and improve this dialogue between NSAs and the state.
   

5. 
   Consultation processes are key to delivering NSA engagement in new aid modalities. To conduct an effective consultation process it is recommended that consultations are clearly and predictably timetabled with the necessary documentation provided in sufficient time for NSAs to prepare before each consultation. Feedback after consultations is also recommended.
   

6. Conclusion

1. 
   The EC has made explicit commitments to supporting and strengthening the role of NSAs in development processes as active agents and equal partners, rather than as simply beneficiaries or implementers of development projects. This needs to extend to EC approaches to new aid modalities. As new aid modalities are becoming increasingly dominant in many developing countries there is a need for the EC to use its other aid instruments in a complementary fashion to assist the inclusion of NSAs in new aid modalities’ processes – from programme design to implementation to monitoring. In order for the EC to be able to deliver on its commitments it needs to develop a coherent strategy utilising the range of approaches and funding modalities it has at its disposal.