This report was commissioned by the G15 Programme Aid Partners and was undertaken
with the financial support of the Swiss State Secretariat for Economic Affairs (seco), and the
UK’s Department for International Development (DFID), respectively chair and co-chair of the
G15 in 2004/05.
In Mozambique, donors have been providing co-ordinated and untied support to the
state budget since 2000. The formal basis for budget and balance of payment
(BoP) support operations is the Memorandum of Understanding (MoU), signed on
April 5, 2004, between the Republic of Mozambique, Belgium, Denmark, the
European Commission, Finland, France, Germany, Ireland, Italy, the Netherlands,
Norway, Portugal, Sweden, Switzerland, United Kingdom, and the World Bank (“G-
15”).
Signatories of the MoU declare in its § 3 that they are determined to work in the spirit
of NEPAD, the Monterrey Consensus and the Rome Declaration on Harmonisation.
The MoU was prepared in the spirit of mutual accountability. It systematically
clarifies the performance and reporting commitments of the GoM as well as the
Programme Aid Partners (PAPs). While the GoM is accountable based on the terms
of its performance assessment framework (PAF), the G-15 have also signed up to
specific commitments concerning how they will provide programme aid in future.
These obligations are an effort to effectively implement the concerns of the Rome
Declaration on Harmonisation. Art. 16 MoU obliges the donors to provide an annual
report on their efforts in implementing these obligations. This initial report draws a
baseline on donor performance in 2003, in order to be able to regularly monitor
PAPs progress in future.
It should be noted that the signing of the new MoU in April 2004 was in itself a major
step forward in the process of harmonising and aligning PAP’s support to the
implementation of Mozambique’s poverty reduction strategy. It is a remarkable
innovation that 15 donors agree to (1) have no conditionality outside the common
performance assessment framework; (2) strongly enhance predictability; (3) align on
the GoM cycle and documents. Future updates on this baseline survey will reflect the
impact of this new agreement on donor performance.
Mozambique provides an excellent environment in which to improve aid
effectiveness. The basis of this is the good working relationship between
international funding agencies and the Government of Mozambique (GoM).
Mozambique is also one of the most aid dependent countries in Africa and hence the
potential returns from improving aid effectiveness are high. At present, out of total
Official Development Assistance (ODA) of approximately USD 700 million annually,
the programme aid1 share can be estimated at only 35-40 percent. The joint general
budget support scheme represents the bulk of programme aid.
The findings on alignment and harmonisation, predictability, transparency, the
administrative burden, and capacity building show that, even in the progressive
environment for international cooperation that prevails in Mozambique there is
considerable room for improvement. The untapped areas where further attention is
required if PAP’s are to meet their new commitments under the MoU are specified in
this report whereas the annexes contain detailed information at the agency level.
Readers are referred to the shaded boxes at the end of each section which provide
a summary of the main conclusions in each section of the report.
The portfolio overview demonstrates the considerable scope for rationalisation and
further inter-agency co-operation that exists in many sectors. There is an even
greater potential to improve aid effectiveness if the spirit of the MoU is applied to the
overall portfolio beyond the general budget and BoP support component.
The cornerstone of the implementation of the PAPs’ obligations contained in the MoU
is the development of a PAPs’ PAF. This facilitates the monitoring of PAP’s
behaviour against commitments, exposes non-compliance and weaknesses to peer
pressure, and strengthens PAPs accountability to GoM. The construction of such a
PAF is the responsibility of the PAPs. The start of this process is facilitated by an
initial proposal made in this report (see Section 4). A negotiation among PAPs and
with the GoM should lead to an agreed PAF, linked to an action plan and timeframe
for implementation. In the framework of the annual review cycle, the PAPs’ PAF
becomes the basis for dialogue between the G-15 and GoM to assess collective and
individual donor performance and to adapt the PAF on a continuous and rolling basis.
In order to ensure credibility, monitoring of donor performance should be undertaken
by an independent assessment team, with their annual reports released into the
public domain – as has been agreed with this baseline report.
The G-15 should adopt a pro-active strategy to build mutual accountability to
domestic and external stakeholders. Mozambican voices beyond the central
government and PAPs demonstrate a need to clarify and account for the role of
budget and BoP support. It is recommended that the G-15 disseminate the 2003
PAPPA Baseline widely and hosts a workshop to validate and discuss the baseline
findings in dialogue with Mozambican stakeholders (GoM, parliament, civil society).
The findings of this report should also be disseminated at the Second High-Level
Forum on Harmonization and Alignment for Aid Effectiveness, taking place in
Paris in early 2005, as an example of good practice in achieving greater donor
accountability at the country level.
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