Guidance Note: UNDP Support To Country-Level Aid Coordination Mechanisms (April 2011)

UNDP Support to Country-Level Aid Coordination Mechanisms
April 2011
Overview
We in the developing countries must own the development agenda, and our partners have to align their support to our agenda, our priorities and the sequencing we have set for ourselves... Development cannot be imposed, it can only be facilitated.
President Benjamin Mkapa, United Republic of Tanzania, November 2004 Across the world, UNDP is working to support programme countries to strengthen their capacities to coordinate and evaluate the impact of external development assistance in line with national development plans and priorities. The United Nations development system is mandated to do so by the United Nations General Assembly and the United Nations Economic and Social Councils triennial comprehensive policy review (ECOSOC/TCPR), as well as the resolutions on the High-level Dialogues on Financing for Development.1 UNDPs work is underpinned by the recognition that capacity development and ownership of national development strategies are essential for the achievement of internationally-agreed development goals, including the Millennium Development Goals (MDGs). UNDP therefore supports efforts and initiatives to enhance the quality of aid and its impact, such as the Paris Declaration (PD) on Aid Effectiveness and the Accra Agenda for Action (AAA).
This guidance note provides a brief overview of the conceptual framework for UNDP support to country-level aid coordination mechanisms, with reference to principles of aid and development effectiveness and UNDPs approach to capacity development, and with a view to supporting national development planning strategies and processes. It provides practical step-by step guidance on how UNDP country offices can support the government in establishing and/or reforming existing aid coordination mechanisms, depending on their particular country context, and how UNDPs support to country-level aid coordination mechanisms links to efficient and effective coordination of the development work of the United Nations Country Team (UNCT).
1
See General Assembly Resolution A/RES/62/208 and related documents on the TCPR of operational activities for development of the United Nations system. For more details on the High-level Dialogues on Financing for Development, see the website of the Financing for Development Office.
Conceptual framework
Over the last decade, international aid architecture has evolved rapidly. The development landscape at country level has changed dramatically with the emergence of new players, new modalities, and additional challenges. Despite this rapidly evolving context, official development assistance (ODA)2 continues its crucial role of empowering programme countries to leverage other sources of development finance such as foreign direct investment, remittances and others and to help manage the various resource flows for better development effectiveness. Based on the conviction that the national government holds primary responsibility for its countrys development and for coordinating all types of external assistance, UNDPs support to programme countries is geared towards strengthening their capacities to do so effectively and efficiently and to assume ownership and leadership over this process. At the same time, UNDPs work aims to enhance efforts and initiatives to improve the quality and impact of external assistance, including the PD on Aid Effectiveness and the AAA. While external assistance can have a catalytic effect on development outcomes, UNDP takes the view that ODA is just one element of national public finance, alongside domestic revenues and loans. For UNDP, aid effectiveness is therefore part of a larger concept of development effectiveness and UNDPs support to aid coordination and management is geared towards supporting national counterparts in effectively integrating external assistance into their national development processes.
Aid effectiveness
At the global level, the drive to improve the effectiveness of external assistance gained momentum with the launch of the MDGs in 2000, the 2002 International Conference on Financing and Development in Monterrey, and the World Summit in 2005. United Nations Member States instituted in 2003 the High-level Dialogues on Financing for Development and called for the establishment of a Development Cooperation Forum (DCF) as an inclusive forum to discuss key policy issues affecting the quality and impact of development cooperation. The Development Assistance Global commitments for aid and development effectiveness Committee of the Organisation for Economic Co-operation and Development (OECD/DAC) also launched a process of high level Millennium Summit, 2000 Millennium Development World Summit, 2005 fora, starting with the Rome High-Level Forum on Harmonisation Goals World Summit, 2010 in 2003. At the 2nd High-Level Forum on Aid Effectiveness in Paris in 2005, over 100 donors and programme countries endorsed the Monterrey Consensus, 2002 Financing for Paris Declaration on Aid Effectiveness. The PD includes five Development Doha Declaration, 2008 principles and 12 progress indicators that are being monitored Development Development Cooperation Forum 2008 until 2011. The 3rd High Level Forum on Aid Effectiveness in Accra Cooperation Development Cooperation Forum 2010 in 2008 resulted in the endorsement of the Accra Agenda for Forum Action. The AAA highlights the need for capacity development, Aid Effectiveness Rome Declaration on Harmonisation, 2003 the use of country systems, aid predictability, and mutual Paris Declaration on Aid Effectiveness, 2005 accountability, among others. At the Accra forum, six countries in Accra Agenda for Action, 2008 situations of fragility also decided to launch the first survey on the Conflict and Principles for Good International Principles for Good International Engagement in Fragile States Fragility Engagement in Fragile States and Situations and Situations, which complement the PD Principles. The PD highlights ownership, alignment, harmonization, management for results and mutual accountability as the key principles to make aid more effective at the country level. Two surveys have already been conducted in 2006 and 2008 to monitor progress on implementing the PD, and a third survey will be conducted in 2011. The surveys indicate that progress has been made but not fast enough to reach all of the targets. In particular, even though programme countries have made progress in improving their national systems, donors need to make more efforts in strengthening and using country systems in a way that reinforces country ownership of aid. Moreover, donors and programme country governments need to improve accountability for the use of external resources. This means not just increased domestic accountability for the use of development resources, including strengthened parliamentary oversight of the use of public resources, but it also obliges donors and programme countries to establish mechanisms to hold each OECD DAC United Nations
The OECD defines ODA as official financing to promote economic development and welfare, with a grant element of at least 25 percent. See OECD Glossary of Statistical Terms.
UNDP Support to Country Level Aid Coordination Mechanisms
other mutually accountable for their commitments. Finally, development resources need to be managed more cost-effectively, which requires more effort by donors to harmonise their support and improvements in government-led aid coordination.3 The 8th MDG, which calls for a global partnership for development, reflects an agreement among world leaders that strong international partnerships are crucial to achieve the MDGs. Such a partnership includes ODA, but MDG 8 indicators go beyond aid to include trade and market access, debt sustainability, access to affordable essential medicines and access to new technologies. While there has been progress, greater efforts are needed for a coherent international enabling environment for development.4 Policy coherence is needed so as not to undermine advances in development through contradictory policies. Nonetheless, ODA can be a catalytic instrument that supports internal resources and other development assistance financing instruments. The effective utilisation of aid is conducive to the effective use of all development resources but needs to be supplemented by an enabling environment in other policy areas.
Strengthening national capacities

Developing countries have varying capacities to harness and use aid effectively for the well-being of their citizens as well as to respond to the changing nature of aid and other development resources. Some have become more judicious in their acquisition of external assistance and in dialogues with donors, while others have been unable to assert their authority over aid strategies due to lack of political will or weak national capacities. Among the traditional donor community, ways of working continue to vary widely from agency to agency. While the PD established the primacy of the principle of respect and support for programme country leadership, the international community has not yet, in all cases, managed to design and deliver aid in line with this principle. Also, the rapid expansion and diversification often referred to as aid fragmentation of development cooperation actors (global and vertical funds, NGOs, foundations, private sector) and increasing South-South cooperation pose both opportunities and challenges to national authorities effective use of development assistance. Capacity development starts from the principle that people are best empowered to realize their full potential when the means of development are sustainable home-grown, long-term, and generated and managed collectively by those who stand to benefit. UNDP recognizes that there is no one-size-fits-all solution to strengthening national capacities. Instead, it approaches effective capacity development responses with three fundamental questions (see table) to shape the design of each capacity response according to the specific priorities and issues at stake. UNDPs capacity development approach Whose capacity?
(entry points) Enabling environment Organisational level Individual level Institutional arrangements Leadership Knowledge Accountability
What kind of capacity?

(core issues)
Capacity to engage stakeholders To what In the context of development effectiveness, capacity development Capacity to assess a situation and define a vision end? Capacity to formulate policies and strategies means that countries work to make their institutions resilient and (functional Capacity to budget, manage and implement capacities) strong and their country systems reliable and sound to improve the Capacity to evaluate services delivered to their citizens. They can do so by building on existing national and local capacities to effectively and transparently manage public resources for human development, including ODA. The AAA highlights that all external support to capacity development needs be demand-driven. Technical cooperation can provide a useful means of knowledge transfer, if based on national policies and priorities and underpinned by the recognition that training efforts must be delivered in an effective and holistic manner to further capacity development. Since development cannot be imposed from outside, technical cooperation by definition is never a means to its own end. It serves its purpose only if it contributes to the empowering and strengthening of endogenous capabilities. In this logic, capacity development and aid effectiveness principles go hand in hand. They are the means that enable developing countries to formulate and implement their own national development strategies for the achievement of sustainable development.
3 4
See Surveys on Monitoring the Paris Declaration. See MDG Gap Task Force Reports.
National development planning and public financial management

The 2007 TCPR highlights the role of national policies and development strategies in the achievement of sustainable development. It emphasizes that external support to national development should be carried out for the benefit and at the request of programme countries in accordance with their own policies and priorities. ODA should complement other sources of national public finance directed towards the achievement of national development priorities. Public financial management is at the very heart of how governments translate public resources into development results. It is used by governments to mobilize, allocate and account for the spending of public resources. While national development priorities are determined by national development plans, it is the institutional framework, organizational capacity and everyday expenditure management practice of government that determine the allocation and management of public expenditures towards the achievement of these development priorities. The effectiveness of external assistance in achieving desirable development outcomes is thus intimately linked to the effective use of all of a countrys public financial resources. This also means that if external sources of finance are managed separately from other elements of national public finance, the effectiveness of overall public financial management is likely to be compromised. Aid modalities and approaches Direct budget support
Resources are transferred directly to the treasury in support of the national budget and are managed in accordance with the recipients budgetary procedures. General budget support is not earmarked. Sector budget support is managed in a national account by a government entity for a specific set of sector or programme results. Development cooperation based on the principle of coordinated support for a locally-owned development programme, such as a national poverty reduction strategy, a sector programme, a thematic programme, or a programme of a specific organisation. A sector-wide approach (SWAP is a PBA operating at the level of an entire sector. The pooling of financial resources by participating partners outside of a national account. A form of aid to finance specific activities with a limited objective, budget and timeframe to achieve specific results. Assistance designed to save lives, alleviate suffering and maintain and protect human dignity during and in the aftermath of emergencies. Assistance is usually shortterm, project-based and delivered outside of national accounts.
Programmebased approaches (PBAs)
Basket / pooled funds Project support Humanitarian assistance
Yet when ODA is not directly channelled through the treasury of the recipient government, the nature and complexity of current modalities of external assistance often delink the management of external assistance from other sources of national public finances. Even though many donors have committed to use country systems to the maximum extent possible, budget support only accounts for a fifth of all development assistance according to the PD Monitoring Survey 2008 and many donors are falling behind in their commitment to increase the use of country systems. UNDP takes a pragmatic view towards support for country-level aid coordination, recognizing that in various circumstances donors might be likely to continue channelling a large proportion of external assistance outside of the recipients national treasury. So long as multiple channels for external resource allocation continue to exist, recipient countries need to be enabled to coordinate all types of support and manage information on external sources of finance for the benefit of coordinated development planning, implementation and monitoring and evaluation (M&E) as well as for a transparent and accountable use of other public financial resources.
The demand for greater transparency in public finance is a worldwide trend. Until the late 1990s, diagnostic work in public expenditure focused largely on only one aspect of public financial management the budget process through public expenditure reviews. The emphasis has now shifted from management to the governance of public resources, which inherently involves issues of internal control, the availability of reliable and timely public accounts, the availability of performance reports and the conduct of professional external audit. Domestic accountability of governments to their citizens also closely relates to mutual accountability between governments and development partners. While governments need to be accountable to parliament and the wider public and engage stakeholders in strategy development and implementation of national development strategies, development partners need to provide transparent and predictable information on external resource flows to enable governments to account for them to their citizens.
Practical guidance
A country-level aid coordination mechanism that fosters development effectiveness should be anchored in the national policy and budget cycle. Yet, all too often, coordination mechanisms are instead established to respond to donor needs and reporting requirements. When advising governments on optimal structures for aid coordination mechanisms, UNDP highlights the following points to ensure that aid coordination mechanisms are government-led and support national development planning processes:
Aid coordination structure: Aid coordination mechanisms should integrate aid into already existing public service structures and improve capacities from within. Aid coordination mechanisms need to be compatible and align with intra-governmental coordination mechanisms (whether or not they correspond to national development strategy priority areas). An effective aid coordination structure should comprise both a political and a technical level of coordination. Results management: Public management for results- Figure 1: Aid Architecture Features based development requires strategic visioning at the low aid dependency institutional level, as well as solid and detailed planning, implementation and M&E at the technical level. Results management of external assistance should rest on the governments development vision or strategy and inform national and government-led results monitoring. At the technical level, it should correspond to the governments expenditure framework to plan and monitor and evaluate the use of public development resources. crisis Policy and budget cycles: Aid coordination mechanisms should correspond to and be aligned with national development results monitoring cycle(s), which ideally stable feeds into the national budget cycle in time to inform annual deliberation/approval of the national budget in parliament. Multi-year planning frameworks need to respect the governments mandate period. Annual benchmarks for M&E should serve to inform deliberation of the national budget in parliament. Transparency and accountability: Transparency in the use of public resources enables the public to measure the high aid dependency governments performance and to hold it accountable for achieving development results. To facilitate domestic accountability on the use of public resources, donors need to be accountable to governments on their assistance in the same way that governments need to render accounts to donors on the utilization of these resources. To improve this mutual accountability, aid coordination should be underpinned by transparent governmental aid information management, which will also enable the governments domestic accountability on development resources to its citizens. This can be facilitated by the use of web-based Aid Information Management System (AIMS). While each country context is unique, some context types can be distinguished that result in common features of the country-level aid architecture. Most notably, aid dependence ratios5 impact the type and structure of the country-level aid architecture, and so do the particularities of post-crisis settings: High aid dependence ratio: Central government expenditure is highly dependent on ODA. As a function of the degree of aid dependence, there is a progressive penetration of the donor community in key areas of public management, both at the macroeconomic level and with regard to core state services. Low aid dependence ratio: Aid received has a low impact on central government expenditure, but is of potentially great importance to capacity development in strategic areas of national development plans. The recipient government is in a position of greater national autonomy, advocating that international cooperation should complement other resources available for development. Post-conflict setting: In the aftermath of violent conflict, development planning is short-term as long as political power brokerage continues and the institutional setting remains volatile. Often, international assistance is framed by the engagement of an international peace-keeping force, peacebuilding dialogue and related funding mechanisms.
Aid dependency ratios can be calculated using ODA as a percentage of gross national income, gross capital formation, imports of goods and services or government expenditure. See World Development Indicators, Open Data Catalogue, World Bank. This guidance note uses ODA as a percentage of government expenditure to emphasize the national public finance aspect. Ratios can be as low as 1% or fewer (e.g. South Africa, Thailand, Uruguay and others) and reach over 100% in the most aid dependent countries (e.g. Afghanistan, Burkina Faso, Cambodia (until 2005) and others).
Post-disaster setting: Development planning for the affected area(s) is mostly short-term to respond to the needs of recovery and reconstruction in the aftermath of crisis. The country receives large volumes of humanitarian assistance, which are usually channelled outside of country systems.
Country context: high aid dependence

Current thinking on aid effectiveness and aid modalities often focuses on contexts where recipient governments are highly dependent on ODA and where national development strategies and aid coordination mechanisms are usually structured accordingly. In countries eligible for the Heavily Indebted Poor Country (HIPC) Initiative, started by the World Bank in 1996, Poverty Reduction Strategy Papers (PRSP) often constituted the first generation of government-led national development strategies. In most aid dependent countries, PRSPs, or follow-up national development strategies, thus constitute the corner-stone of donor-recipient coordination, including budget support coordination mechanisms, when they exist. This has been the case in Burkina Faso, Ghana, Malawi, Mozambique, Nicaragua, Rwanda, Uganda, Tanzania and Vietnam, for example. While UNDP advocates basing government-led aid coordination mechanisms on national development strategies, care has to be taken to ensure that national development strategies are indeed nationally owned. All too often, first generation PRSPs were drawn up in haste to respond to requirements of the HIPC Initiative and later the Multilateral Debt Relief Initiative (MDRI) without sufficient attention to aligning it with the mandate periods and priority areas of action of government (as outlined in government manifestos, for example). As a result, the structure of such national development strategies sometimes diverges from the actual structure of government, which determines public expenditure management.
Aid coordination structure

For a government-led aid coordination mechanism to effectively engage with and support public financial management, it is more important that it links with the governments expenditure framework, than to correspond to virtual sectors defined in a national development strategy. Whenever a sector of a national development strategy is not underpinned by a lead government ministry, department or agency or by a national institution responsible for its implementation, it is unlikely that public resources will be specifically allocated for it. National ownership is also likely to be compromised.6 UNDP can support the government in overhauling its aid coordination structure, so that sector-specific aid coordination is led by the key government ministry/agency or state institution in charge of the issue. Collaboration can take the form of specific programmebased approaches, including sector-wide approaches and basket funds. Donor priority areas of engagement for which no lead counterpart is identifiable would need to be sub-divided according to key counterparts. For instance, security sector reform might be divided among the Ministry of Defence, Ministry of Interior and the Ministry of Justice. Cross-sectoral issue areas such as anticorruption might have to be reorganized depending on the national context and institutions in place. As an example and depending on the context, anti-corruption could be based around support to the National Audit Office or around support for public sector reform led by the Ministry of Public Administration. It might also be feasible to adopt a cluster approach that involves several government entities on cross-cutting issues, so long as the division of responsibilities between national counterparts is clearly established.
Results management
Since PRSPs are a requirement for the HIPC Initiative and the MDRI, multi-year national development strategies remain particularly relevant for countries with high volumes of aid where such strategies form the basis of engagement with external partners.7 Ideally, the governments strategic vision and development strategies translate into detailed expenditure frameworks that are used to manage and allocate public resources by sector. In practice, however, national budgets are often organized and voted upon along the lines of governmental administrative units rather than according to the sectors of the national planning framework particularly in countries with high volumes of ODA and in fragile settings where donor pressure deviates the substance of national planning frameworks away from government priorities for public spending.
6 7
This is often the case for sectors that are priority intervention areas for development partners, such as governance, anti-corruption, security sector reform, early recovery and others. The notion that multi-year development strategies are a precondition to effective development management is also reflected in the ownership indicator of the PD, which measures the percentage of programme countries with operational development strategies.
UNDP can support the government to relate aid coordination mechanisms to national expenditure frameworks and inform national M&E systems that are used to prepare and implement the national budget. While it is important that such frameworks relate to national strategic visioning or planning exercises, aid coordination mechanisms need to more closely relate to the as is situation of public financial management than to the should be framework. Beyond support to aid coordination mechanisms, UNDP can support the government in better linking strategic visioning exercises with actual expenditure frameworks or in defining better sector strategies that are linked to the budget, when such support is requested by government. UNDP should coordinate this support with other development partners that are providing assistance to improving public expenditure frameworks. At the same time, government-led development results management and M&E is more usefully done for specific sectors or reform programmes rather than at the national level. The pressure for aggregate multi-year results monitoring of national development strategies comes from external conditionalities and donor reporting requirements, even though results monitoring in donor countries themselves is usually sector-specific. Aid coordination mechanisms should reinforce donors coordinated support towards national statistical capacities and M&E systems, to which the donor communitys own M&E of external assistance should be progressively aligned.
Policy and budget cycles

When national development strategies conform to donor requirements, they often do not correctly reflect priority areas of government engagement and are usually delinked from the governments expenditure framework. If external partners support the government in elaborating multi-year development strategies, such strategies need to be cognizant of the governments incumbency period and flexible enough, including in resource allocation predictions, to adapt if a change of government takes place. UNDP can support the government to coordinate development assistance so that it effectively links to the national budget cycle and informs the budget deliberation and/or approval in parliament. With aid effectiveness high on the international development agenda, international partners increasingly aim at coordinating and harmonizing their support, for example through the elaboration of joint assistance strategies and through agreements on a division of labour among donors.8 Yet, recipient governments sometimes find that greater donor harmonization can potentially weaken government leadership. In particular, donor-coordinated division of labour can be contradictory to the premises of the PD with regard to ownership and mutual accountability.9 To avoid such contradictions, UNDP can support recipient governments in working with their development partners to elaborate a national aid policy, strategy or action plan that defines the country-specific pathway towards more effective aid by building upon national cycles and processes. An aid policy, strategy or action plan is a useful tool at the hands of governments to adapt the international aid effectiveness agenda to their needs and circumstances and to coordinate external support around national priorities, strategies and processes.
Transparency and accountability

In an aid-dependent environment, recipient governments are often under much more pressure to be accountable to donors than they are to their own constituency, in particular to the relatively small tax base of their citizenry. Yet, without transparency and accountability to the citizens, trust will be lacking between a government and those whom it governs. In most countries, the constitutional framework provides for institutional checks and balances to hold public decision-makers accountable for their actions, such as parliamentary control in the budget process. Government-led aid coordination mechanisms should serve to reinforce such checks and balances. In countries with high volumes of external assistance, transparent and detailed information on external assistance is a necessary precondition for effective parliamentary deliberation and approval of the national budget. Beyond the government's accountability to its citizenry, transparent information on external assistance also serves to improve donor coordination and to align donor assistance with national development strategies, institutions and procedures. In preparation for the ECOSOC Development Cooperation Forum 2010, UNDP and the United Nations Department of Economic and Social Affairs (DESA) conducted a survey that showed that overall progress on mutual accountability is very limited. The survey did however result in an analytical report that outlines key steps to enhance mutual accountability, which include, for example: 1) a
8 9
The European Union (EU) has established a code of conduct for EU donors to that effect: EU Code of Conduct on Complementarity and Division of Labour in Development Policy, see the EU Toolkit for the Implementation of Complementarity and Division of Labour in Development Policy. Even though the AAA highlights that developing countries will lead in determining the optimal roles of donors in supporting their development efforts at national, regional and sectoral levels (AAA, para. 17.a), division of labour exercises at country level are often donor-driven.
national aid policy with specific performance targets for individual donors and recipient agencies; 2) a monitoring process at the highest political level and with strong recipient government leadership; 3) the inclusion of parliaments and civil society and independent analytical inputs; 4) comprehensive databases that cover aid quality issues; and 5) peer pressure among providers.10 Beyond support for the elaboration of a national aid policy and for strengthening national M&E systems, UNDP can support the government in implementing AIMS. Many governments have found AIMS useful to manage their aid flows, improve the overall alignment of assistance with country priorities and facilitate reflecting international aid flows in national budgets. Such software applications enable governments to record and process information about development activities and related aid flows, even when they are channelled outside of the governments treasury. AIMS are usually web-based and rely on the governments development partners to enter data on their assistance. A government-led aid coordination mechanism can serve as the institutional framework to ensure regular and accurate data entry. Information on the use of external development resources should also be made available publicly.11 In countries in which parliamentary oversight of the national budget is generally weak, assistance could be tied in with more general support to government for the production of transparent and detailed information on public resources.
Country context: low aid dependence

In middle income countries where ODA constitutes only a small percentage of public expenditure, governments are in a position of greater autonomy vis--vis external partners. As a result, donors in countries with little dependence on aid are usually much less involved in areas of public management. Governments are better positioned to advocate that international cooperation should complement existing development resources, particularly through the provision of technical assistance in areas of interest to the government. This approach is reflected in China and South Africas policies on development cooperation, for example. In such cases, development cooperation has a potentially great importance to strengthen national capacities in strategic areas of national development plans. In countries with relatively small amounts of ODA, decentralized development cooperation is playing an increasingly important role as an inclusive instrument that can foster good governance and maximize the effectiveness of aid as a catalyst for national and local capacity development. Decentralized development cooperation is considered more flexible, close to the communities and able to facilitate cooperation networks through which expertise, resources, knowledge and technical capacities, particularly for local development planning and management, are shared and adapted to the local context and put into practice. While some countries with little dependence on ODA have chosen not to engage in global and regional dialogue on aid effectiveness issues in order to distance themselves from a perceived donor-recipient dichotomy (for example, Brazil, China, India and Russia), others have signed the PD and do engage with international partners on issues of aid effectiveness (Egypt, Colombia, the Dominican Republic, Indonesia, Peru, the Philippines, Ukraine and others). At the same time, an increasing number of countries in the process of graduating from development assistance are themselves providing development assistance to other countries.12

In countries with lower volumes of aid, programme-based approaches are less significant and basket funds are often established to support a specific institution rather than a sector. There are still very few analyses that provide solid ground for the utility of programme-based aid for countries with low volumes of ODA, where the provision of basic services does not depend on international financing. Recipient governments are sometimes weary of programme-based aid coordination mechanisms to avoid more direct influence of the donor community on the design and implementation of public policies and a potential increase in the workload of ministry personnel.13 If there is little desire of government to establish a comprehensive aid coordination mechanism, coordination structures might usefully be limited to sector- and institution-specific coordination in the areas that receive the greatest amount of external support.
10 11 12 13
See www.un.org/en/ecosoc/newfunct/pdf/ma_study-status_and_progress.pdf. See Asia-Pacific Aid Effectiveness Portal (2009), Better Data, Better Aid? Practical Guidance Note on Aid Information Management Systems, UNDP. UNDP country offices that have been solicited to provide capacity development support to emerging assistance providers can consult the draft UNDP Guidance Note on Capacity Development for Southern Providers of Development Cooperation. FRIDE (2009), Implementing Paris and Accra: Towards a Regional Agenda in Latin America and the Caribbean, Development in Context, No. 18, January.
Coordination structures should correspond to already existing intra-governmental or inter-institutional coordination structures, so that they do not represent an additional burden to the personnels workload. Whenever aid coordination structures include state institutions outside of government such as parliament or the supreme court, the coordination structure needs to be in conformity with the mandate of the institution (constitutional provision or by decree). UNDP can support national and local authorities to strengthen the potential for mutual learning and cross-fertilization among multilateral, national and local institutions, and decentralized cooperation networks. This will enable national and local authorities to better address cross-cutting issues and bottlenecks related to development, multiple levels of action, shared programming among different actors, demand-driven cooperation and territorialization of the MDGs. In recent years, UNDP has involved decentralized cooperation territorial stakeholders, both in the North and the South, to cooperate and contribute to the multilateral framework through its ART Initiative. ART programmes in different countries use this multi-level, multilateral approach by including representatives from local governments, decentralized cooperation partners, relevant academic institutions and other territorial stakeholders in the programmes steering committees. By providing this kind of support, UNDP can contribute to enhancing the impact of decentralized cooperation and support better alignment with wider development processes.14
Results management
In middle income countries with low volumes of aid, explicit multi-year development strategies are less common than in aiddependent countries. Overall, strategic visioning is more likely to be expressed in governmental or ruling party manifestos. At the same time, more capacity exists to formulate and monitor sector-specific strategies. Even though the international community is less engaged in public management when aid dependence is low, many middle income countries actively look for support and opportunities for peer learning to modernize state functioning and effectiveness. ODA can have a catalytic effect in this regard, when resources are directed towards strengthening internal capacities for results management. UNDP can support the government and national counterparts to strengthen national capacities for sector- or institution-specific goal and target setting, as well as M&E. At the same time, middle income countries often have substantial existing national statistical capacities and M&E systems, within state institutions and beyond. While national statistics institutions might not necessarily focus on M&E areas considered essential by donors, sound statistical information will help the government and donors to monitor progress towards the targets of sectoral results frameworks. UNDP should support the government in harnessing donor support for national statistical and M&E capacities and encourage South-South partnerships and peer learning in this regard. It should also encourage a pluralistic view on national statistical and M&E capacities, in which institutions of the state build on and complement statistical work of universities, research institutes, think tanks and NGOs.

As within aid dependent contexts, aid coordination structures need to correspond to the mandate period of the government. Institution-specific support needs to conform to the mandate period of the institution (if different from the governments mandate period). For example, if several donors support the National Office of the Ombudsperson, aid coordination should be organized around the mandate period of the incumbent ombudsperson, even when the mandate period differs from the governments term of office. UNDP can support national counterparts in setting up appropriate and desired aid coordination mechanisms and coordinating external partners effectively. Since aid coordination is more likely to take place at the sectoral and/or institutional level, each institution, ministry, department or agency needs to ensure that results-monitoring and benchmarking are timed to be available to inform national deliberations in parliament, when appropriate.

Even when aid ratios represent lower shares of public spending, governments might find it useful to track external assistance in an AIMS. Where public financial management systems are sufficiently advanced, such tracking can be a part of integrated financial information management systems. UNDP can support efforts that have been made in several middle income countries in this regard, including linkages to debt information management. Aid and debt information management systems as well as integrated financial information management systems can also serve as catalysts for promoting increased transparency and mutual accountability across
14
For more information on the UNDP ART Initiative, see www.undp.org/partners/region-local/art.shtml.
the public sector in middle income countries. They serve as showcases to encourage inclusive discussions and stakeholder engagement, including parliamentary oversight, on issues of transparency and domestic accountability.
Country context: post-conflict setting

Different imperatives determine the different types of international engagement in post-conflict settings, which create considerable challenges for assistance providers to coordinate their support. For instance, peacebuilding aims at maintaining peace and security. Humanitarian relief is provided to save lives and alleviate human suffering. Thus, the principle of ownership while necessary for sustainable recovery and statebuilding does not provide a useful starting point for international peacekeeping engagements or humanitarian relief activities, particularly when the government may have been party to the conflict. Even though current approaches highlight gray areas and overlaps among these different types of engagements, there is insufficient clarity as to which principle dominates in which context. It is evident that ownership and alignment take a back seat when the focus is on the urgent requirements of peacekeeping and humanitarian aid. Yet, at what stage do ownership and alignment principles become relevant in the transition from peacekeeping to peacebuilding to statebuilding, or in the transition from humanitarian relief to recovery to development? In the absence of ready-made answers to such questions, aid coordination mechanisms in post-conflict settings need to be flexible and adaptable enough to make room for different priorities, without sacrificing coordination, transparency and accountability for external assistance. International support to countries that experience or have experienced violent conflict usually aims at several parallel (and possibly even competing) objectives at once. Peacebuilding and security issues are always high on the agenda, alongside substantial humanitarian aid to alleviate human suffering. This has been the case in countries like Afghanistan, Burundi, the Central African Republic, Chad, the Democratic Republic of Congo, Haiti, Nepal, Niger, Liberia, Sierra Leone, Papua New Guinea or Timor-Leste. At the same time, most actors agree that strategic recovery activities that provide immediate relief should also aim to lay the foundations for longer-term sustainable development. There is a growing body of literature on international support in contexts of conflict and fragility that reflects this belief. The OECD/DACs International Network on Conflict and Fragility has established the Principles for Good International Engagement in Fragile States and Situations, which complement the PD and AAA commitments in situations of conflict and fragility.15 These principles centre international engagement around the premise of contextualized support, with doing no harm focusing on statebuilding among the central objectives of post-conflict development assistance. For the past ten years, the United Nations has pushed for closer integration of its departments, funds, programmes and agencies at the country level. Today, in most cases, United Nations peacekeeping missions are integrated missions, in which the Deputy Special Representative of the Secretary-General (DSRSG) also holds the functions of Humanitarian Coordinator (HC) and United Nations Resident Coordinator (RC) / UNDP Resident Representative (RR). This enables the United Nations to develop a better integrated approach to the challenges at hand. Yet, it is important for the DSRSG/HC/RC/RR and his/her office to acknowledge the different imperatives of peacekeeping, humanitarian relief and development assistance so that aid coordination mechanisms can be structured accordingly.

When an international peacekeeping force is present, high-level aid coordination is often superseded by political dialogue on stability and security-related issues. The mandates of international peacekeeping forces often include direct participation in political decisionmaking. Influential countries that have a significant interest in policy developments sometimes establish so-called contact groups which are informal groupings with no secretariat and no recipient government participation. At the technical level, peacekeeping missions usually establish coordination mechanisms with national military and police forces. The coordination of development assistance, on the other hand, follows a different dynamic, similar to aid coordination structures in stable countries with high volumes of external assistance. Challenges arise when comprehensive strategic plans or strategies are elaborated that focus specifically on stability, security and statebuilding without recognizing the different imperatives of peacebuilding, humanitarian relief and sustainable development. In post-conflict settings, aid coordination structures are likely to co-exist with stability and security-related coordination structures throughout a period of transition. UNDP can support and encourage government ownership and alignment with intra-governmental
15
See the OECD DACs Principles for Good International Engagement in Fragile States and Situations.
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coordination mechanisms for all development-related matters beyond humanitarian aid and security-related issues. External support for security sector reform, stability and state-building should be organized along the lines of intra-governmental and territorial (national-provincial-local) divisions of labour, at least at the technical level. If doubts about the legitimacy of government continue to persist, external support and corresponding coordination can be structured around state institutions and non-state actors beyond government. For example, support may be channelled to the Supreme Court, Parliament, an Independent Electoral Commission, a National Ombudsperson or similar institutions. Support to civil society organizations or the media, for example, can be coordinated with national representative bodies, such as a national platform of civil society organizations, a national media council or association.
Results management
In post-conflict settings, international and national actors increasingly use post-conflict needs assessments (PCNAs) as an entry point for conceptualizing, negotiating and financing a common shared strategy for recovery and development. PCNAs are multilateral exercises undertaken by the United Nations, World Bank, regional development banks and international partners, in collaboration with the national government. Based on such assessments, transitional results frameworks or action plans define key milestones in identified areas. Such frameworks and action plans tend to focus on short-term results, although they may be conceptually linked to expected medium- and long-term efforts. These frameworks promote the use of outcome indicators and monitorable targets as management tools for strategic planning and implementation monitoring and as an umbrella for donor coordination.16 PCNAs are useful exercises to coordinate and rally support around a commonly elaborated strategy for recovery and development. Given that many actors with different objectives engage in the elaboration of PCNAs, UNDP can support and advocate for the inclusion of national counterparts, but it should also caution external partners to have realistic expectations with regard to national capacities for planning, implementing and M&E. Whenever planning and M&E serve primarily to respond to donor requirements on the use of funds, external partners should not overburden national counterparts with such tasks. Instead, external partners should explicitly focus on investing in national capacity development for planning and M&E. Such capacity development is likely to be a longer term exercise and donors will need to find intermediate solutions to respond to their reporting and M&E needs.

In post-conflict settings with interim constitutions and/or transition governments, policy cycles are likely to be shorter and more prone to adjustments than in stable contexts. Government mandate periods are usually shorter than regular terms and often politically contested. In many cases, transition governments function with limited sovereignty under transitional constitutional or United Nations Security Council mandates. As a result, transitional policy cycles are usually determined by pre-negotiated short-term objectives with specific priority issue areas, such as creating an autonomous state or negotiating/implementing a ceasefire agreement. UNDP can support national authorities to ensure that the duration of aid coordination mechanisms conforms to such cycles and objectives. It can also provide support to overhaul aid coordination mechanisms as soon as a cycle comes to an end. Aid coordination mechanisms should be flexible and light in structure. Longer-term planning exercises, such as elaborating joint assistance strategies, can be envisaged once the political situation is more stable.

In an environment of conflict and post-conflict response, governments are usually only partly able to fulfil their responsibilities of coordinating and accounting for the use of domestic and external public resources. Under such circumstances, the international community often takes on the challenge of ensuring that external resources are used in the most effective way possible. While international partners might be more efficiently able to provide an overview of available resources, they risk undermining the development of sustainable national capacities for aid information management. The capacity development challenge in a postconflict and humanitarian setting therefore requires an exit strategy on the part of development partners if aid information management is to be used as a means of strengthening national capacities for public financial management in order to facilitate the transition towards sustainable development.
16
See United Nations / World Bank (2007): Joint Guidance Note on Integrated Recover Planning Using Post-Conflict Needs Assessments and Transitional Results Frameworks.
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UNDP can support national authorities to conceptualise AIMS as an instrument that establishes clear linkages to public financial management in order to facilitate the transition from humanitarian to government-led aid information management. Even in a postconflict and fragile setting, the imperatives of humanitarian aid coordination should not determine the conceptualization and establishment of a government-led AIMS. Existing global financial tracking should respond to this demand of providing timely information on humanitarian aid. While it is crucial that humanitarian and peacebuilding actors receive fast and reliable information on resources available, UNDP considers it essential that recipient governments are empowered to manage available aid information and progressively (re-)assume the leadership in planning and implementing programmes that will deliver on national development priorities. Linking PCNA exercises to governmental priority setting and institutional capacity building can serve as a stepping stone in that direction.
Country context: post-disaster setting

The international community often provides emergency relief and disaster recovery support to national partners in the wake of a natural disaster. International support for emergency relief and disaster recovery occurs in countries with both high and low aid dependence. Indonesia and Pakistan are examples of countries with low levels of ODA prior to disaster, while other countries such as Bangladesh, Benin or Haiti, for example have received emergency relief and disaster recovery support in a context of more significant levels of development assistance. Since poverty and political fragility contribute to a lack of disaster preparedness, natural disasters often disproportionally affect human livelihoods and erode development gains in poor and post-conflict countries. As in post-conflict settings, different imperatives drive different types of international support in the aftermath of a natural disaster. While emergency relief aims to save lives and alleviate human suffering, disaster recovery support re-establishes the foundation for development and allows life to return to a sense of normalcy in the wake of a disaster. The different stages in the transition from relief to development are not clear cut and run in parallel, since effective recovery needs to begin early when relief and emergency operations are still ongoing in order to reinforce the resilience of communities at risk, reduce the loss of life and avoid repeated setbacks to the development process. The international community has developed common procedures and mechanisms to support national governments in risk prone countries. Much effort has been made in recent years to improve leadership and the systematic coordination of international humanitarian responses to crises. Humanitarian actors have adopted a cluster leadership approach and the HC system has been strengthened. This has led to a humanitarian aid coordination system at the country level in which cluster leaders are accountable to the HC for the performance of their cluster, and HCs in many countries have additional authority over different sources of pooled humanitarian funding. In some cases, the United Nations Secretary-General appoints a Special Envoy on an ad hoc basis to mobilize resources, build partnerships and promote a strategic, coherent and comprehensive approach to supporting the humanitarian, recovery and reconstruction needs of crisis-affected areas.

To further a smooth transition from humanitarian relief to development assistance, UNDP encourages HCs to invite government counterparts to annual humanitarian assistance planning workshops, so as to engage them in identifying humanitarian programme priorities. It has also proven helpful for transitioning humanitarian relief to development assistance to involve local and provincial government actors in inter-agency provincial and/or territorial coordination mechanisms, so that they can contribute to identifying priority needs in key sectors in cooperation with United Nations agencies, NGOs and donors. Even though emergency assistance can only be provided on the basis of an official request by the affected country, humanitarian relief efforts can be managed and coordinated without major involvement of national counterparts. This is especially true in cases where national capacities are too low to ensure a rapid and comprehensive emergency response. Nonetheless, recovery activities need to be coordinated with these counterparts in order to strengthen national capacities. Such coordination has to increase progressively throughout the transition from humanitarian relief to development assistance. In cases when the government decides to establish an interim reconstruction commission to spearhead and accelerate the recovery process, UNDP can support the government in creating linkages between such a commission and permanent governmental entities to facilitate the phasing over and exit strategy once the mandate period of the interim reconstruction commission comes to a close. While initial aid coordination structures are likely to reflect priority areas of a post-disaster needs assessment (PDNA) and recovery
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frameworks, UNDP should support the government in developing flexible structures that allow for progressive alignment of aid coordination structures to the different stages of the commissions exit strategy. UNDP strives to support the strengthening of the governments institutional, financial and technical capacity to manage the recovery process. As in other contexts, aid coordination structures should be modelled along the lines of intra-governmental coordination and institutional divisions of responsibility. When the international community opts for pooled funding mechanisms to accompany the transition, the governance arrangements of such funds should correspond with the division of competencies within government and within the state. If the governance arrangements of pooled funding mechanisms differ substantially from the national division of competencies, it will be difficult to progressively increase the involvement of national counterparts as capacities improve.
Results management
Similarly to the use of post-conflict needs assessments and transitional results matrixes in post-conflict settings, international and national stakeholders are increasingly relying on post-disaster needs assessments and recovery frameworks to facilitate aid coordination and results management in the wake of disaster. These tools aim to harmonize the assessment, analysis and prioritization of damages, losses and needs by a range of international stakeholders in support of the national government. A PDNA is a government-led exercise, with integrated support from the United Nations, World Bank, European Commission and other national and international actors. It pulls together information in a single, consolidated report - information on the physical impact of a disaster, the economic value of the damages and losses, the human impact as experienced by the affected population and the resulting early and long-term recovery needs and priorities. UNDP can support national ownership of PDNAs and associated recovery frameworks, which serve as a useful planning and coordination framework for a multi-stakeholder recovery strategy, by identifying prioritized benchmarks, outcomes and desired results to repair and restore social, physical, institutional and economic systems. At the same time, UNDP can support national counterparts in cautioning international partners to avoid the use of artificial performance measures that divert attention from real and dynamic strategic imperatives of emergency reconstruction. International donors can rightfully demand reasonable fiduciary oversight, but UNDP should support governments in resisting excessive restrictions on emergency relief fund management. Such overly restrictive relief fund management risks inhibiting effective emergency relief in situations when limited information, emergency demand and the politics of the operating environment require quick and proactive field operations.

In post-disaster settings where violent conflict does not affect the stability of national institutions, government mandates and national development planning might be more longer term than the shorter and more targeted response in affected areas. In such cases, UNDP can support the government in relating the PDNA and associated action plans to longer-term frameworks. At the same time, there should be a distinction between the relief effort on the one hand, for which international support should maintain and promote a culture of urgency in its business arrangements, and the recovery and development effort on the other hand, which requires comprehensive stakeholder engagement as well as sound planning and M&E. The coordination of international support to postdisaster recovery should be sufficiently flexible to allow for changes and adjustments in response to newly emerging opportunities, which might not have been foreseen in advance but which enable accelerated progress towards recovery.

The United Nations Office for the Coordination of Humanitarian Affairs (OCHA) mandated to mobilize and coordinate humanitarian assistance delivered by international and national partners has established the Financial Tracking System (FTS) to record all reported international humanitarian aid in a global, real-time database (pledges, commitments and contributions). The FTS is an important tool for the humanitarian appeal process and for supporting country-level coordination and resource mobilization in the wake of a disaster. During the immediate emergency response period, the international community might assume certain responsibilities for aid information management at country level for the sake of providing relief actors, government, parliament and the larger public with much needed information on incoming aid flows. Nonetheless, this should be done with a view to eventually transition to government-led coordination and management, as soon as adequate structures are in place to assume this task. For UNDP, transparent and publicly accessible AIMS provide a means through which governments and external actors can positively contribute to improving domestic and mutual accountability on the use of development resources for the recovery process. At the same time AIMS can improve aid coordination and information-sharing among all stakeholders. UNDP can support and promote a
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balance between a focus on the donor community's coordination and information-sharing needs and a much needed investment to strengthen government capacity for aid information management.
Lessons learnt
Ownership and capacity development are necessary preconditions for sustainable development.
Development cooperation can have a catalytic effect on national development, but it must be careful to avoid replacing national ownership and leadership of a countrys development process. It is critical that development assistance supports governments, societies, organizations and individuals to obtain, strengthen and maintain the capabilities to set and achieve their own development objectives over time. ODA remains an important financial vehicle for development, not as a panacea, but as an important complement to other sources of financing available to developing countries. While remaining crucial in post-crisis countries and least developed countries, ODA has the potential, particularly in lower and mid-level middle income countries, to leverage larger amounts of domestic and foreign capital for development. ODA has the potential to be a catalyst, through strengthened country capacities and responses, to stimulate inclusive growth, productive public and private investments and to tackle persistent and area-based poverty. Ownership over this process hinges heavily on a countrys capacity to drive and negotiate their own development strategies and financing arrangements, including the coordination and management of aid.
External assistance is just one element of the national public resources of a recipient country.
For the sake of development effectiveness, aid coordination mechanisms need to underpin and contribute to the coordination of national public resources. Coordination of external partners around issues for which no national institution, ministry, department or agency can be held accountable runs the risk of being dissociated from national development management. External partners can lobby and encourage the government to focus on particular priority areas that they consider necessary for sustainable development. If advocacy results in the creation or strengthening of a governmental or state entity in charge of (and with a budget for) the sector in question, the aid coordination mechanism can be remodelled to include this entity. In the meantime, aid coordination structures should be government-led and reflect the existing structures of intra-governmental coordination and public expenditure management. This does not pre-empt the donor community to coordinate among each other on issues, independent from public management, such as support to civil society or the media, for example.
Development assistance is just one means of engagement by donor countries.

International partnerships for development go beyond ODA. While delivering on aid quantity and quality commitments remains important, more attention should be given to the need to pursue more coherent development cooperation. This implies ensuring that development cooperation objectives are bolstered by the range of policies in other areas, such as trade, climate change, food security, migration and security. Developing countries need to engage more effectively with issues that are beyond aid by putting in place appropriate, country specific policies and institutions.
Genuine partnerships are a precondition for the effective use of all development resources.
Global partnerships are about promoting effective and equal partnerships between countries, including stakeholders such as parliaments, civil society, local governments and the private sector. As the global development landscape incorporates an evergrowing number of providers of development cooperation, coherence and consistency among the activities of various actors cannot be ensured any longer by means of coordination meetings alone. Measures to improve transparency and accountability of development cooperation providers and recipients for their activities become imperative to enable concrete collaboration and division of responsibilities.
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United Nations Country Team coordination

This guidance note is intended to facilitate the mainstreaming of aid effectiveness issues into UNCT development planning. The note links closely to the revised United Nations Development Assistance Framework (UNDAF) guidelines and its roll-out at country level.17 Yet, improving the efficacy of United Nations assistance to a country is a different objective than improving external aid effectiveness within that country more generally. Both processes are interlinked and build on the same principles but responsibilities differ. Supporting a government to improve the effectiveness of its external assistance is a programme objective, while improving the efficacy of overall United Nations assistance is a management objective. Capacity development for aid effectiveness Type of objective Programming framework Unit in charge
Programme objective Country Programme Action Plan/Annual Work Plan (CPAP/AWP) UNDP programme staff (economists, programme specialists, technical advisors)
Improving the effectiveness of United Nations assistance

Management objective UNDAF
RCs Office
UNDP programme staff (economists, aid effectiveness specialists, technical advisors, programme specialists, etc.) advise and support the government (usually the Ministry of Finance, the Ministry of Planning or similar units) on issues related to aid coordination and effectiveness. The RCs Office, on the other hand, is responsible for improving the performance of United Nations agencies, funds and programmes support to the country. For this purpose, the United Nations Development Group (UNDG) created a toolkit for improved functioning of the United Nations development system at country level. The toolkit provides a comprehensive structure to support countries in planning and implementing the change effort required to improve development impact and increase efficiency of the United Nations development system.18 In some countries, the United Nations RC also takes on the role of chair or co-chair of donor/government aid coordination groups. While this is a crucial function to facilitate harmonization and donor alignment with national development objectives, it should nevertheless be accompanied by targeted support to national capacity development for aid coordination and management. Sound and coherent aid coordination on the part of donors (even if facilitated by the United Nations) cannot substitute national engagement, ownership and leadership of the development process.
17 18
See UNDG Programming Reference Guide. See UNDG Toolkit for Improved Functioning of the United Nations Development System at the Country Level.
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Resources and further reading

Catalytic role of ODA Griffith-Jones, Stephany and Jos A. Ocampo, A Counter-Cyclical Framework for a Development-Friendly International Financial Architecture, DESA Working Paper, No. 39, ST/ESA/2007/DWP/39, United Nations Secretariat, New York, 2007. International Poverty Centre, Does Aid Work? - For the MDGs, Poverty in Focus, IPC, Brasilia, October 2007.
Capacity development UNDG, Position Statement on Capacity Development, December 2006. UNDP Presentation, Overview of UNDPs Approach to Supporting Capacity Development, August 2008. UNDP, Frequently Asked Questions: The UNDP Approach to Supporting Capacity Development, June 2009. UNDP, Practice Note on Capacity Assessment, October 2008. Public financial management and accountability Overseas Development Institute (ODI): Centre for Aid & Public Expenditure (CAPE) Oxford Policy Management (OPM): Public Financial Management The World Bank: Public Finance Center on International Cooperation (CIC): Public Finance and Economic Recovery Project The International Consortium on Governmental Financial Management (ICGFM) The OECD DAC processes The Rome Declaration on Harmonisation, February 2003. The Paris Declaration on Aid Effectiveness, 2005. The Accra Agenda for Action, 2008. 2006 Survey on Monitoring the Paris Declaration 2008 Survey on Monitoring the Paris Declaration OECD DAC, Aid Effectiveness: A Progress Report on Implementing the Paris Declaration, Better Aid Series, 2009. OECD DAC, Managing Aid: Practices of DAC Member Countries, Better Aid Series, 2009.
United Nations Financing for Development and Development Cooperation Forum Monterrey Consensus on Financing for Development, 2002. Doha Declaration on Financing for Development, 2008. Report of the First Development Cooperation Forum, 2008. World Summit Outcome, 2005. World Summit Outcome, 2010. ECOSOC, Enhancing Mutual Accountability and Transparency in Development Cooperation, Background Study for the Development Cooperation Forum High-Level Symposium, November 2009. United Nations, Trends and Progress in International Development Cooperation, Report of the Secretary-General, E/2010/93, June 2010.
Role of the United Nations Development Group United Nations, Triennial comprehensive policy review of operational activities for development of the United Nations, 2004/5. United Nations, Triennial comprehensive policy review of operational activities for development of the United Nations, 2007. Report of the Secretary General, Follow-up to and implementation of the outcome of the International Conference on Financing for Development, 10 August 2007.
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Annex 1: Overview of key issues

High aid dependence Aid coordination structure The structure of the aid coordination mechanism should correspond to the structure of the governments expenditure framework. Sector/thematic working groups should be organised according to national institutions in charge of the subject matter. National counterparts should chair (or co-chair) sector/thematic working groups. Low aid dependence Aid coordination structures should correspond to already existing inter-institutional coordination structures and might usefully be limited to sector- and institutionspecific coordination in the areas that receive the greatest amount of external support. Mutual learning and crossfertilization among multilateral, national and local institutions and decentralized cooperation networks can help to better address cross-cutting bottlenecks related to development. Post-conflict setting Aid coordination structures are likely to co-exist with stability and security-related coordination structures throughout the period of transition. Coordination structures should be aligned with intra-governmental coordination mechanisms for all development-related matters beyond humanitarian aid and security-related issues. If doubts about the legitimacy of government continue to persist, external support and corresponding coordination can be structured around state institutions and non-state actors beyond government. PCNAs are useful exercises to coordinate and rally support around a commonly elaborated strategy for recovery and development. External partners should have realistic expectations with regard to national capacities for planning, implementing and M&E, and not overburden national counterparts. Capacity development for planning and M&E is vital but is not a short-term solution to respond to donor reporting and M&E requirements. Post-disaster setting If possible, local and provincial authorities should be involved in inter-agency provincial and/or territorial coordination mechanisms, so that they can contribute to identifying priority needs. Recovery activities aimed at strengthening national capacities need to be coordinated with local/national counterparts. If the government decides to establish an interim reconstruction commission, it should link up with permanent governmental entities to facilitate the phasing over and exit strategy at the end of the commissions mandate period. National counterparts should be engaged in the elaboration of PDNAs and associated recovery frameworks. International partners should take care to avoid the use of artificial performance measures that divert attention from the real and dynamic strategic imperatives of emergency reconstruction.
Results management
Detailed government-led development results management and M&E should be done by sector and/or programme. National expenditure frameworks should be informed by national strategic visions and/or plans. Aid coordination mechanisms should serve to reinforce donors support of national statistical capacities and M&E systems.
ODA can have a catalytic effect for peer learning to modernize state functioning and effectiveness, when resources are directed towards strengthening internal capacities for results management. External partners should encourage South-South partnerships and peer learning to strengthen existing national statistical capacities and M&E systems, both within governmental and state institutions and beyond.
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National multi-year development strategies need to be cognizant of the governments incumbency period and flexible enough, including in resource allocation predictions, to adapt if a change of government takes place. A national aid policy, strategy or action plan can be a useful tool for governments to localize the international aid effectiveness agenda and to coordinate external support around national priorities, strategies, cycles and processes. AIMS are useful to manage aid flows and monitor aid quality, improve the overall alignment of assistance with country priorities and facilitate reflecting international aid flows in national budgets. Governments can enhance mutual accountability through a national aid policy with specific performance targets, a monitoring process with strong government leadership and the inclusion of parliaments and civil society and independent analytical inputs.
Institution-specific support needs to conform to the mandate period of the institution if different from the governments mandate period. Since aid coordination is more likely to take place at the sector and/or institutional level, each institution, ministry, department, or agency needs to ensure that results-monitoring and benchmarking inform national deliberations in parliament, where appropriate. Aid information management can be a part of integrated financial information management systems, which should include (linkages to) debt information management. Aid and debt information management can serve as showcases to encourage inclusive discussions and stakeholder engagement, including parliamentary oversight, on issues of transparency and domestic accountability.
Aid coordination mechanisms should conform to transitional policy cycles, which are usually determined by pre-negotiated short-term objectives with specific priority issue areas. Aid coordination mechanisms during a political transition period should be flexible and light in structure and will need to be overhauled at the end of the transition period.
Coordination of international support to post-disaster recovery should be sufficiently flexible to allow for changes and adjustments in response to newly emerging opportunities, which might not have been foreseen in advance but which enable accelerated progress towards recovery.
AIMS should be conceptualised as an instrument that establishes clear linkages to public financial management in order to strengthen national capacities for public financial management and to facilitate the transition from humanitarian to government-led aid information management. Linking PCNA exercises to governmental priority setting and institutional capacity building can empower governments to manage available aid information and progressively (re-)assume leadership in planning and implementing programmes which will deliver on national development priorities.
During the immediate emergency response period, the international community might assume certain responsibilities for aid information management at country level, for the sake of providing relief actors, government, parliament and the larger public with much needed information on incoming aid flows. Nonetheless, this should be done with a view to eventually transition to government-led coordination and management, as soon as adequate structures are in place to assume this task.
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Annex 2: Checklist of elements to consider when supporting the reform of aid coordination mechanisms
Country: Initiative manager: Government entity: Consultant/reviewer: Review date:
Background [Replace this text with a brief description of how the initiative originated] Objectives Yes 1. Establish a forum for policy discussion on national/sector strategies and priorities No Comments [Replace this text with the objectives of this initiative.] 2. Mobilize additional resources for the national development strategy (and/or selected sector strategies) 3. Create a forum for mutual accountability: progress review and agreement on joint benchmarks/objectives and partnership mechanisms 4. Other (e.g. is it a national or theme/sector-specific initiative?) Development results (apply to national and sector level) Yes 1. Is there a single medium-term development strategy? No Comments [Replace this text with details.] 2. Is it results-based and MDG-based? 3. Does the strategy include a results matrix based on the countrys national development strategy (PRSP, etc.) and that broadly encapsulates measurable growth and poverty reduction outcomes in the country? 4. Does the strategy include a monitoring matrix with a limited number of MDGbased targets, SMART indicators and sources of verification? 5. Does the strategy clarify implementation issues, including resource requirements as well as capacity assessment and capacity development plans with defined indicators or progress benchmarks and are resources allocated for this purpose?
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6. Does the strategy include a mutual accountability framework based on mutually agreed systematic country and donor performance assessments (benchmarks), with periodic assessments by independent observers? 7. Has the strategy been developed in a participatory manner, including inputs from civil society, parliament and the private sector? 8. Other Development resources (apply to national and sector level) Yes 1. Is there a costing of the development strategy, including at least one scenario based on current resources and one scenario based on needs to achieve the MDGs? 2. Is the costing sufficiently detailed (i.e. with concrete priority actions and investments identified and costed)? 3. Is there a mapping of current aid allocations against costed targets (by donor, based on existing donor pledges and engagements)? 4. Is there a resource matrix overlaid on the country results matrix that clearly identifies the activities and financial support that aid partners are committing to and disbursing against, in each of the monitored areas? 5. Is there an in-depth analysis of ways to enlarge fiscal space, by identifying fiscal and macro-economic potential for growth? 6. Is there a Medium Term Expenditure Framework, taking into account both national and existing external resources? 7. Are global funds and programmes, NGOs and private foundations included when discussing external resources? 8. Is there a link to country budgetary cycle and domestic accountability processes to include active participation by representatives of parliament, civil society and media in the coordination mechanism? 9. Other Partnership 1: Regular coordination mechanisms (apply to national and sector level) Yes 1. Is there a functioning coordination mechanism between the government and donors on development results and aid effectiveness issues? (i.e. regular meetings several times a year, with senior representatives of ministries/agencies and heads of donor cooperation agencies in country) 2. Is the coordination mechanism chaired and led by the government? 3. Is there a functioning government mechanism, allowing for inter-ministerial coordination on aid management issues? No Comments No Comments
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4. Does the coordination mechanism include appropriate participation from civil society, private sector, parliamentarians? 5. Is there a clear policy and/or procedures on aid allocation/management, applicable to all donors? 6. Is the coordination structure used for results-based monitoring (based on targets set in the development strategy) and mutual accountability (under national aid management policy/procedures)? 7. Other Partnership 2: Key elements to overhaul traditional Consultative Groups / Roundtables results and create results and resources partnerships Yes 1. Is the mechanism prepared under government leadership and chaired by the government? 2. Does the mechanism include appropriate representation of civil society, private sector and parliamentarians? 3. Is there a specific engagement and communication strategy to ensure that all stakeholders are involved as appropriate, including emerging and non-OECD DAC donors? 4. Does the mechanism build on and improve existing mechanisms and systems in the country? 5. If the mechanism does not build on existing, regular coordination mechanisms, are there plans to discuss a government position paper/policy on the establishment of such aid management and partnership mechanisms? 6. If the mechanism does not build on existing, regular coordination mechanisms, is there a framework for preparatory activities, with appropriate benchmarks and timelines? 7. Does the mechanism focus on resources and managing for results, shifting towards performance and programme budgeting? 8. Is appropriate time allocated (at least 30%) to review aid effectiveness, implementation and partnership issues, based on a mutually-agreed national action plan and benchmarks for aid effectiveness? (implementation of the PD) 9. Is sufficient attention being paid to capacity issues, with costed capacitydevelopment plans, based on capacity assessments and clear benchmarks? 10. Is sufficient attention being paid to cross-cutting issues (gender, environment, human rights, HIV/AIDS)? No Comments
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11. Is there an appropriate monitoring instrument (aid management system) to monitor aid flows, impact and predictability, establish linkages with the national budget process and ensure transparency and accountability of resource management? 12. Are appropriate procedures in place for aid management and informationsharing, with a particular focus on ensuring predictability of aid, with multi-annual commitments? 13. Other
General observations
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Actions for follow up

ID Action item Assigned to Due By [mm/dd/yyyy] [mm/dd/yyyy] [mm/dd/yyyy]
Comments
[Replace this text with comments.]
Approvals
Initiating entity: Initiative manager: Technical manager: Consultant: Reviewer: ___________________________ ___________________________ ___________________________ ___________________________ ___________________________ Date: ___/___/____ Date: ___/___/____ Date: ___/___/____ Date: ___/___/____
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Acronyms and abbreviation

AAA AIMS AWP CPAP DAC DCF DESA DSRSG ECOSOC EU FTS HC HIPC M&E MDG MDRI OCHA ODA OECD PCNA PD PDNA PRSP RC/RR SWAP TCPR UNCT UNDAF UNDG
Accra Agenda for Action Aid Information Management Systems Annual Work Plan Country Programme Action Plan Development Assistance Committee Development Cooperation Forum United Nations Department of Economic and Social Affairs Deputy Special Representative of the Secretary-General United Nations Economic and Social Council European Union Financial Tracking System Humanitarian Coordinator Heavily Indebted Poor Country Monitoring and Evaluation Millennium Development Goal Multilateral Debt Relief Initiative United Nations Office for the Coordination of Humanitarian Affairs Official Development Assistance Organisation for Economic Co-operation and Development Post-Conflict Needs Assessments Paris Declaration on Aid Effectiveness Post-Disaster Needs Assessments Poverty Reduction Strategy Papers Resident Coordinator / Resident Representative Sector-Wide Approach Triennial Comprehensive Policy Review United Nations Country Team United Nations Development Assistance Framework United Nations Development Group
Acknowledgements: This guidance note is a technical document of UNDP staff and does not represent an official position of UNDP or its Executive Board. The note builds on the draft Compendium of Needs Identified, Lessons Learnt and Good Practices on Capacity Development and Aid Effectiveness (April 2008) and on the draft Technical Note on Consultative Groups and Roundtables (March 2007). It complements the existing Checklist of Elements to be Considered when Reforming Aid Coordination Mechanisms and has been shared with practitioners and colleagues for review. A discussion draft of this note was widely shared amongst practitioners for review in November/December 2010. We wish to thank the following colleagues for their comments and feedback: Gert Danielsen, Artemy Izmestiev, Jennifer Moreau, Astrid Schnitzer, Daa ilovi, Tuija Rytkonen and Mark van den Boogaard. We would also like to thank Julia Steward for her thorough and conscientious copy-editing of the manuscript. Contact information: Bettina Woll, Aid Modalities Specialist, Capacity Development Group, Bureau for Development Policy, UNDP, bettina.woll@undp.org. For more information: www.undp.org/capacity/aid.shtml and www.aideffectiveness.org United Nations Development Programme One United Nations Plaza New York, NY 10017 USA Aid Coordination Mechanisms 23 UNDP Support to Country Level

Guidance Note: UNDP Support To Country-Level Aid Coordination Mechanisms (April 2011)

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Guidance Note: UNDP Support To Country-Level Aid Coordination Mechanisms (April 2011)

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UNDP Support to Country-Level Aid Coordination Mechanisms

UNDP Support to Country Level Aid Coordination Mechanisms

Strengthening national capacities

What kind of capacity?

UNDP Support to Country Level Aid Coordination Mechanisms

National development planning and public financial management

Programmebased approaches (PBAs)

Basket / pooled funds Project support Humanitarian assistance

UNDP Support to Country Level Aid Coordination Mechanisms

UNDP Support to Country Level Aid Coordination Mechanisms

Country context: high aid dependence

Aid coordination structure

UNDP Support to Country Level Aid Coordination Mechanisms

Policy and budget cycles

Transparency and accountability

UNDP Support to Country Level Aid Coordination Mechanisms

Country context: low aid dependence

Aid coordination structure

UNDP Support to Country Level Aid Coordination Mechanisms

Policy and budget cycles

Transparency and accountability

For more information on the UNDP ART Initiative, see www.undp.org/partners/region-local/art.shtml.

UNDP Support to Country Level Aid Coordination Mechanisms

Country context: post-conflict setting

Aid coordination structure

UNDP Support to Country Level Aid Coordination Mechanisms

Policy and budget cycles

Transparency and accountability

UNDP Support to Country Level Aid Coordination Mechanisms

Country context: post-disaster setting

Aid coordination structure

UNDP Support to Country Level Aid Coordination Mechanisms

Policy and budget cycles

Transparency and accountability

UNDP Support to Country Level Aid Coordination Mechanisms

Development assistance is just one means of engagement by donor countries.

UNDP Support to Country Level Aid Coordination Mechanisms

United Nations Country Team coordination

Improving the effectiveness of United Nations assistance

UNDP Support to Country Level Aid Coordination Mechanisms

Resources and further reading

UNDP Support to Country Level Aid Coordination Mechanisms

Annex 1: Overview of key issues

UNDP Support to Country Level Aid Coordination Mechanisms

Policy and budget cycles

Transparency and accountability

UNDP Support to Country Level Aid Coordination Mechanisms

UNDP Support to Country Level Aid Coordination Mechanisms

UNDP Support to Country Level Aid Coordination Mechanisms

UNDP Support to Country Level Aid Coordination Mechanisms

Actions for follow up

UNDP Support to Country Level Aid Coordination Mechanisms

Acronyms and abbreviation

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