Development Gateway: The Accra Agenda for Action acknowledges insufficient progress towards the Paris Declaration objectives. What do you see as some of the changes in behavioral incentives necessary for donors and partner countries to back up these commitments?   

Petit: If aid effectiveness is to become a genuine priority, all development partners must deliver on their commitments to reform procedures and to strengthen initiatives—including for recruitment, appraisal and training—for management and staff to work towards harmonization and alignment and development results.

It is not good enough that headquarters formulates rhetorical commitments which subsequently have little impact on actual behavior at country level. We must combat some of the perverse incentives often found in development assistance systems where, for example, performance targets and rates of disbursement come before all other considerations.

The European Commission has taken a proactive role in streamlining its processes and encouraging staff to systematically integrate aid effectiveness into their work programs, and reporting mechanisms. We are committed to removing obstacles and staff incentives which work against the Paris Declaration commitments. For example, outstanding legal impediments to co-financing have recently been overcome and we are now free, from the Commission side, to engage in co-financing with member states.

At headquarters level, a number of initiatives have been launched to support desks and delegations, including a tailored training and outreach program on aid effectiveness, specific programming guidance for delegations and preparation of strategies to implement each of the four additional targets of the European Union. At the country level, the Commission has been conducting problem solving workshops aimed at encouraging donor coordination and at supporting governments to work with their development partners on an action plan to accelerate aid effectiveness. These efforts are supported by a delegation level network on aid effectiveness in 46 priority countries.

These types of activity are all key to in order to promote the importance of aid effectiveness as the way of working for development.

DG: The EU’s division of labor initiative to reduce the number of donors in each country while increasing total aid flows is a key ground-breaking initiative. What progress has been made to date and what are the key obstacles to be overcome?  What are the targets for the next two to four years?

Petit: The adoption of the EU code of conduct in 2007 was a landmark achievement. From the outset, it is important to recall that division of labor is a medium- to long-term process. Implementation will be gradual and success will depend on many factors, not least strong political will from donors, and close and effective dialogue with partner countries.

After a first phase of discussion, adoption and information, the EU is now moving on to a second phase of outreach to partner countries and other donors and of implementation in the field. There are some examples of operational cases of implementation of the code and some cases of “changes in behavior” as outlined in question one. The level of coordination differs, however, amongst countries, corresponding more or less to the categories of “orphans” and “darlings.”

With regard to European Commission aid, 10th European Development Funds programming for African, Caribbean, and Pacific countries has, in general, led to a concentration on two or three focal sectors and one non focal sector. Good examples are Burkina Faso, Ghana, Kenya, Mozambique, Senegal, Tanzania, and Ethiopia where 85% or more of planned EC support is concentrated in a maximum of three sectors. There are, however, still opportunities for further concentration. Most countries with lower levels of concentration are those in fragile/post-crisis situations with broad multisector Linking Relief Rehabilitation and Development type of activities such as for example Ivory Coast, East Timor, Angola, Burundi and Somalia.

In terms of EU aid as a whole, aid fragmentation and donor congestion remain problematic and the principles of the code of conduct have yet to be applied rigorously. There are often still too many donors in each sector, more than three sectors of concentration per donor and very limited use of implementation instruments (e.g. delegated cooperation, co-financing, silent partnerships).

In “orphan” countries, the picture is even more uneven. Dialogue among donors is often less coordinated and partner country involvement limited or absent. Incentives for division of labor are also limited as there is often little or no donor congestion yet there are many needs requiring donor support.

Therefore, despite some good practice, progress on division of labor process across the EU has been too slow and fragmented to date and there is a real need to accelerate efforts. This is what Louis Michel had in mind when he took the initiative to inject some dynamism into the process. The Commissioner wrote recently to EU ministers to propose concrete cases where the Commission could delegate its sectors of activity in some countries to a member state. This should work both ways, that is to say, where possible, Member states should also delegate some of their activities to the commission.

In addition, the Commission and member states are currently working on a number of initiatives aimed at speeding up in country division of labor, including in particular an initiative to fast track of division of labor in a number of pilot countries and a division of labor “toolkit” providing practical guidance for implementation at country level.


DG: Given the lagging progress towards the Paris agenda objectives, what are the prospects for achieving the Millennium Development Goals and donor volume commitments?  What are the prospects if any to get these back on track?

Petit: 2008 has been a key year in many ways, not least as it constitutes the midway point towards achieving the MDGs. The world is on track to halve global poverty by 2015, which is the first development goal. From 2000 to 2005, more than 120 million people escaped poverty. Likewise, about two million lives have been saved by reducing child mortality, 30 million additional families have access to water, 30 million additional children are going to school, and boys and girls are in equal numbers in school in many countries where gaps used to be very large.

Nevertheless, all the recent reports and analysis show that progress has been highly uneven. Global income poverty has been reduced, largely due to rapid growth in the larger Asian countries, including China, India, Indonesia, and Vietnam. In many more countries, poverty reduction has been too slow, or poverty has even increased, mostly because of stagnation, slow growth and/or rising inequality. Progress on education and health MDGs has been very slow and consequently there is a risk that most developing countries will not meet most MDGs. Despite a recent up-turn in growth since 2000, sub-Saharan Africa remains the region which is lagging most behind with respect to both income and non-income MDGs.

In global terms of Official Development Assistance, the EU has consistently maintained its status as the world’s biggest donor. In 2007, 60% of ODA came from Europe. The EU’s aid has increased by 30% since 2002, and 12 new EU member states have become “emerged donors” since 2005, their aid having more than doubled in this short time period. The drop in collective EU ODA in 2007 can therefore be taken as a singular and transitory event and is by no means indicative of a trend. According to the 2008 Monterrey Survey prepared by the European Commission, member states are expected to significantly scale up in 2008.

In June 2008, EU heads of state and government set out their vision on the prospects for achieving the MDGs and for fulfilling donor ODA commitments. The European Council took the view that all MDGs can still be attained in all regions of the world provided concerted action is taken immediately and in a sustained manner up until 2015. An EU Agenda for Action on MDGs was adopted which constitutes the European collective offer to developing countries and the international community to accelerate progress towards the MDGs. Moreover, the Council strongly reaffirmed the EU commitment to achieve a collective ODA target of 0.56% GNI by 2010 and 0.7% GNI by 2015 and strongly encouraged member states to establish rolling multi-annual indicative timetables, showing how each country intends to scale up on a year-by-year basis in order to deliver on ODA commitments. The European Commission will be monitoring the establishment and implementation of these timetables in the annual Monterrey reporting.

The current global financial crisis shall not detract donors from their ODA commitments: it is not acceptable that 700 billion dollars can be mobilized overnight to stabilize financial markets while at the same time donors drag their feet on ODA commitments. Development aid is not charity but a powerful means to tackle global challenges and unbalances. In this regard, it is important also to call on other donors for a fairer international burden-sharing since, according to the OECD, the EU will contribute more than 90% of global scaling up from 2006 to 2010 and will provide some $23 billion of the additional $25 billion pledged to Africa by 2010.

DG: In several countries, the EU Blue Book is now available online. What do you see as the role of an online EU Blue Book in improving harmonization within EC member countries—and among other donors as well?

Petit: The EU Blue Book provides a wealth of information on the value and composition of EU development cooperation in a given country. It is a valuable analytical instrument for mapping donor programs in partner countries and forms part of a broader EU package aimed at enhancing donor coordination, improving complementarity and ultimately achieving the MDGs.

The Blue Book can serve as a useful tool to establish baselines with a view to operationalizing implementation of the EU code of conduct for division of labor. Ethiopia and Vietnam are cases in point where the European Commission will be leading the fast tracking division of labor process with support from headquarters in Brussels. In December 2008, the Commission will organize an aid effectiveness and division of labor mission to Ethiopia where the Blue Book will be used to as a basis to improve the organization of aid flows to the country.

It is also interesting to note that, in some countries (for example, Mozambique), the Blue Books are being replaced by electronic information systems. These systems are sometimes “managed” by government funding with contributions from donors, which bodes well for ensuring ownership of such mapping exercises.

DG: What is the EU doing to improve the predictability of aid in ACP countries?

Petit: Greater predictability in aid flows is urgently needed to facilitate short -, medium- and long-term planning, budgeting and expenditure by partner countries. In turn, improving planning and budgeting by partner countries allows for more predictability of funding by donors.

While recognizing that constitutional requirements and general budget systems may currently limit the room for maneuver of individual donors, the EU as a whole has persistently underlined its firm commitment to improving predictability, urging all donors to address these limitations and their consequences.

Together with ACP partners, the European Commission develops multi-year country strategy papers, which include multi-annual financial commitments. A further innovative effort by the Commission to improve the predictability of aid in ACP countries is to provide MDG-Contracts to selected countries. The MDG-Contract has been designed as a longer term, more predictable form of general budget support. This responds both to evidence regarding the high scale and costs of unpredictable aid, notably of budget support, and to political commitments made by all EU states to improve on the predictability and effectiveness of aid.

The MDG Contract is available to those countries which have a demonstrated track record of good performance in implementing and remaining eligible for budget support. In order to enhance predictability compared to standard general budget support, the MDG-Contract a) provides a longer commitment horizon (six years instead of three); b) entails larger fixed (predictable) share (at least 70%), and greater predictability regarding the timing of each disbursement within each year; and c) financial adjustments to performance against MDG-related result indicators are deferred to a mid-contract review.

Subject to final endorsement by member states, MDG-Contracts will be agreed in eight countries (Burkina Faso, Ghana, Mali, Mozambique, Rwanda, Tanzania, Uganda, and Zambia) for commencement in 2009. Collectively these account for 50% of all global budget support programmed in the 10th European Development Fund.

DG: The International Aid Transparency Initiative was also launched in Accra and with particular reference to the need for common standards for information sharing. In your view, will the establishment of common standards help to streamline and improve information sharing on the “who, what, where and how much” of development assistance?
Petit: Transparency and accountability of aid are essential to increase democratic control over finances and to guarantee that aid reaches its intended beneficiaries. Both donors and partner countries must be accountable for how aid is oriented towards the achievement of development results. Accountability is essential between donors and recipients, but also towards citizens within partner countries and donors alike. It is clear that increased accountability leads to increased trust and more equal partnerships.

The European Commission joined the International Aid Transparency Initiative with increasing transparency and accountability in the sphere of development. The establishment of common standards will not be an easy task as donors often face difficult administrative and legal requirements and constraints regarding the kind of information which needs to be recorded and what can or must be published.

Nevertheless, we must strive to establish common standards, and, at the very least, to have comparable information that is also digestible to the general public. This needs to be done to promote both domestic (towards our taxpayers) as well as mutual (towards our developing country partners) accountability. It would certainly improve information on the “who, what, where and how much,” an issue the Commission already addresses, for its own part, in its annual report on aid and in the various donor atlases on EU aid as a whole.