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

4.5. Technical and political dimensions of ownership

Recent debates around the Accra HLF3 brought to the fore different perspectives on the aid effectiveness agenda, which have important implications for thinking about new aid modalities and the engagement of NSAs. According to a recent FRIDE report, the Paris agenda is seen as having two broad dimensions – ‘technical aspects’ and ‘political spirit’.³⁵ The technical aspects are often linked to new aid modalities and Programme Based Approaches to aid, measurable in the indicators of the Paris Declaration. Thus new aid modalities such as General Budget Support can be seen as part of strengthening country ownership, by channelling funds through (and not outside of) a government’s budget.

For Meyer and Schulz there is also a ‘spirit of Paris’ which emphasises both greater partnership between donors and recipients and greater ‘democratic ownership’: “In this light, the “spirit of Paris” could be interpreted as a search for deeper accountability relations between donors and governments as well as between governments and citizens”.³⁶ Thus some have advocated the need to redefine country ownership (important for both the Paris agenda and for new aid modalities) as ‘democratic country ownership’ which could imply potentially much greater roles for some NSAs, as intermediaries between citizens and the state. The tensions between these technical and political dimensions of the Paris agenda, which are increasingly relevant for the use of new aid modalities, have not yet been resolved.
It is important to highlight that there is lively debate of these issues in many developing countries. Southern civil society, academia and other commentators have also increasingly questioned whether ‘ownership’ in aid effectiveness refers to government ownership or a broader notion of country or democratic ownership.³⁷ In the context of new aid modalities, fears have been expressed that their introduction could weaken calls for greater accountability. For example, Nkombo argues that new aid modalities such as General Budget Support may have “contributed to a further weakening of CSO influence by creating parallel donor-government dialogue structures where significant decisions are taken to which CSOs have no or limited access”³⁸. In the context of Ghana, Gyimah-Boadi argued that without strong domestic accountability, new aid modalities may still allow state resources to be subject to state capture and will not necessarily benefit those who need them most³⁹. The previous section revealed the need to critically reflect on the role of NSAs. But, as this discussion reveals, donors who invest in new aid modalities will need to be aware of, and will need to respond to, concerns about ownership.

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

The aid effectiveness agenda suggests a role for state actors as well as NSAs to ensure greater national ownership of development policies, although as the section above highlights, the agenda remains mostly donor driven with a state-centric focus. New aid modalities, specifically general and sector budget support, have become closely linked to aid effectiveness as one of the main mechanisms for fulfilling some of the key Paris principles such as national ownership, alignment and mutual accountability. However, to date the role of NSAs and their added value in improving the functioning of new aid modalities has largely been overlooked. Whilst the EC guidelines on GBS and SPSP highlight the role that NSAs can and should play (to varying degrees) this is not done in a strategic fashion. Thus, the guidelines place importance on consulting NSAs in the development of GBS and SPSP but do not demonstrate how this can be done in a systematic way. For example, NSAs have a role to play in strengthening national ownership and domestic accountability of national development plans and sector programmes, with their participation necessary at key stages in the process. However, this is not elaborated in the guidelines of how to plan and execute GBS and SPSP. In this section we aim to contribute to this knowledge gap.

Section 5.1 will first explain the key features of GBS and SBS whilst section 5.2 will then make suggestions on how and when NSAs can be incorporated into the process in a more strategic and systematic manner.

5.1. GBS and SBS: key features and lessons learnt

5.1.1. Key features
General budget support
“Budget support is the transfer of financial resources of an external financing agency to the National Treasury of a partner country, following the respect by the latter of agreed conditions for payment. The financial resources thus received are part of the global resources of the partner country and consequently used in accordance with the public financial management system of the partner country”⁴⁰.
The key feature of general budget support (GBS) is that it is a donor to national government relationship focused on the transfer of funding 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 strategies and/or reforms of national development plans, macro-economic strategies and public financial management- as well as of specific performance indicators, measuring the progress in the implementation of the national development policy
GBS is accompanied by policy and strategy dialogue between donor and recipient governments, based on macro policy objectives such as poverty reduction, macro-economic stability and public financial management reform (i.e. linked to the general conditions set for GBS). By virtue of contributing to a partner government’s resources GBS will involve alignment with the government’s priorities, policies and strategies as well as harmonisation amongst contributing donors.
Sector approaches and sector policy support programme
A sector approach⁴¹ aims to bring together key stakeholders (recipient government, donors and NSAs) to increase national ownership over sector policy and resource allocation, and reduce transaction costs⁴². On the basis of a sector approach a sector programme, the SPSP, can be developed comprising three core elements: sector 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.
Sector approaches from the outset allocate space for the participation and inclusion of other actors beyond the state and donors. This is a key difference to GBS, which emphasises the relationship between donor and recipient governments. However, GBS does not exclude the participation of NSAs, but their inclusion is less explicitly stated in the EC guidelines.
5.1.2 How GBS and SPSP work in practice
The EC’ aid modality for GBS is simply known as budget support and is the only funding modality available to the EC that reflects a macro and global approach to development cooperation. The GBS guidelines highlight that GBS should be built around supporting the development goals of the national development policy, in line with the principle of national ownership. In ACP and DCI countries these goals will most likely be based on poverty reduction (including non-income poverty indicators in health and education), whereas in ENPI countries it will be based on goals of economic convergence. The focus should remain at the level of national and macro level policy and strategy and leave technical and in-depth sector dialogue to SPSP, which is envisaged to include a broader range of stakeholders.
Traditionally sector approaches have been supported by a variety of financing modalities, including grants awards and common pool funds. In line with other donors and with aid effectiveness principles, the EC is however increasingly moving towards budget support as the preferred modality to fund sector approaches to ensure better links between national policy, plans and budgets.
This means that in practice a number of complementary modalities are available to the EC to support sectoral programmes and this creates additional opportunities for engaging NSAs. The figure below highlights the relationship between funding approaches, i.e. projects, sectors/programmes and macro/global, and funding modalities. Increasingly, both macro/global and sectoral approaches are expected to channel funding through budget support.

Figure 3: The European Commission’s approaches to cooperation and aid delivery mechanisms

Source: EC (2007) Aid Delivery Methods: Guidelines on the programming, design and management of general budget support, Brussels: EC.

The main similarity between general and sector budget support is a transfer of resources from the donor government to the recipient government’s treasury. The objectives and level of policy dialogue vary (macro level and sector level), which also implies a difference for the way in which NSAs can engage with GBS and SBS. The table below highlights some of the key differences between GBS and SBS.
Table 1: Key differences between GBS and SBS

Area	General Budget Support	Sector Budget Support
Financing Modality	Budget support: the transfer of resources to the National Treasury, where these financial resources are used in accordance with the public financial management system of the partner country.
Objectives	Support to the national development or reform policy and strategy	Support to a sector programme policy and strategy
Policy Dialogue	Focus on the national development or reform policy and strategy. For example, support to an Association Agreement, or a PRSP	Focus on the sectoral development and reform policy and strategy. For example, support to an education sector programme
Typical features	Focus on: (i) national objectives which can cover key sectoral objectives in so far as they are fundamental to the national development or reform policy and strategy; (ii) improving or maintaining macroeconomic stability; (iii) improving overall public financial management; (iv) improving the budgetary framework to address national policy and strategy objectives (iv) oriented to the use of “results/outcome based” performance indicators	Focus on: (i) improving sector performance; (ii) improving overall public financial management, but paying particular attention to sector specific issues (iii) macroeconomic framework in so far as it is important for the achievement of sectoral objectives; (iv) improving the budgetary framework for the sector (iv) the use of “results/outcome” based performance indicators, but also paying attention to the results chain from “inputs” to “outputs” to “results/outcome”

Source: EC (2007) Aid Delivery Methods: Guidelines on the programming, design and management of general budget support, Brussels: EC.

5.1.3. Implications for NSA engagement
Generally speaking, sector approaches offer more opportunities to the EC for supporting NSAs than GBS. As discussed sector approaches are supported by all three funding modalities which create more flexibility and room for manoeuvre when designing sector programmes. Also, sector approaches offer more opportunities for NSAs to engage in sectors as there are more entry points and ways of engaging with the EC. 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 evolve in close interaction with national stakeholders. That is not to say that NSAs are completely ignored in GBS (or in the EC’s guidance note on GBS) but it is important to recognise that their role might be more limited.
There are several reasons why NSA engagement in GBS might be more limited than in SPSPs. Firstly, GBS focuses on PFM cycles and processes and whilst there are increased opportunities for NSAs to engage in budget processes, these tend to be more limited than in other sectors (e.g. health or education).
Secondly, GBS can involve processes which require negotiation on a whole range of technical issues. This requires technical as well as political/negotiation skills which not all NSAs have, even though in the main civil society organisations are becoming increasingly skilled in macro- economic and budget process. Lack of capacity of all actors involved is a key constraint and challenge for the successful operation of the GBS process, particularly if the actors involved are to be influential in the negotiating and implementation phases.
In SPSP on the other hand, NSAs can be considered to be experts in certain sectors having built up years of experience and knowledge, usually in service delivery but also in advocacy, and more recently as watchdogs. Similarly, NSAs have often developed working relationships with the state through implementation of state programmes in some sectors, particularly health and education, where the state often lacks the resources and reach to deliver services throughout its territory.
As well as having some opportunities for engaging in policy dialogue and implementation, there is scope for NSAs to be meaningfully 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 independent actors in the process. The section below will highlight the various entry points for NSAs in GBS and SPSP cycle from planning to implementation and monitoring. The evidence gathered in this study points to the conclusion that to date the role of NSAs in new aid modalities has been limited and largely overlooked, but that they potentially can have an important role to play and added value to improve the functioning of GBS and SPSP.