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Aid effectiveness: The case of Mozambique

Abdul Ilal


January 2008

SARPN acknowledges permission from Trуcaire Mozambique for the posting of this report.
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Executive summary

The objective of this document is to present research results on ownership and accountability in the aid system to Mozambique. EURODAD (the European Network on Debt and Development), CAFOD and Trуcaire commissioned the research as one of the case studies to contribute to the High Level Forum on Aid Effectiveness, which will take place in Ghana in 2008.

Mozambique is referred to as being a success story after 17 years of civil war and economic and social decline. The country is highly dependent on external aid. Long before the Paris Declaration on Aid Effectiveness, the Government of Mozambique (GoM) and a group of donors made efforts to coordinate and harmonize external aid. Therefore, it is interesting to study the evolution of external aid mechanisms to the country.

The general objective of the research is to contribute to the agenda, discussion and results of the Ghana High Level Forum on aid effectiveness, reporting on progress and concerns regarding the implementation of the Paris Declaration. In the specific case of Mozambique, the research aims to examine critically the aid system and the implications of the Paris Declaration, especially concerning ownership and accountability in the external aid system. Recommendations will be made to improve the ownership and accountability of the aid system in the country based on the results of the analysis.

Five donors were selected for the research (Germany, Ireland, United Kingdom, United States of America and the World Bank) and the following main questions were addressed and analysed, using the analytical framework prepared by EURODAD:

  1. Has the Paris Declaration strengthened the role of governments in aid negotiations with donors?
  2. Has the Paris Declaration increased the space for governments to determine their own policies?
  3. Key question: Has the implementation of the Paris Declaration made civil society more or less able to hold governments and donors to account and influence policies?
  4. Key question: Who assesses and is able to assess whether aid is effective?
In 2000, a group of donors involved in budget support began a process of promoting government ownership, alignment and harmonization of aid, aiming to establish a sophisticated, and to a certain point, innovative system of dialogue between GoM and the Programme Aid Partners (PAPs) about General Budget Support (GBS) in particular, and aid effectiveness in general. To some degree, this also informed the processes surrounding the Paris Declaration on Aid Effectiveness.

In the development of policies by bilateral and multilateral donors in Mozambique, the Action Plan for the Reduction of Absolute Poverty (PARPA) is considered a fundamental reference document, around which donors orient themselves. The Memorandum of Understanding (MoU) on the provision of Direct Budget Support and Balance of Payment Support, signed by the GoM and the Programme Aid Partners (PAPs) in 2004, expresses donor commitment in terms of improving the quality of development cooperation and provision of programmatic support.

We briefly reflected on issues such as the nature of political economy and power relations, as well as the discrepancy between discourse and reality, in order to situate the question of external aid effectiveness appropriately in the context of Mozambican society, and to be able to assimilate current challenges and tendencies. This reflection permitted a better glimpse of the challenges of the Paris Declaration in the concrete reality of Mozambican society, and to indicate some contradictory situations.

With reference to strengthening the role of the GoM in aid negotiations, it was noted that the GoM and the PAPs had begun a process of harmonization and alignment of external aid long before the Paris Declaration. The Paris Declaration increased opportunities to strengthen the role of the GoM in negotiations on aid with donors. The GoM had influence regarding the structuring of mechanisms and procedures of General Budget Support. However, GoM capacity is still insufficient to assume effective leadership in aid negotiations, and the aid coordination mechanisms are not evidence of increased aid effectiveness. On the other hand, donors still hope that the GoM will assume effective leadership in the negotiations. According to GoM representatives, the process of ownership is underway, nevertheless it still requires time and increased technical capacity. However, it seems highly improbable that recipient countries, with an enormous level of aid dependency, like Mozambique, will really manage to assume ‘de facto’ leadership and effectively have space to determine the type and conditions of aid.

It is in the interest of the GoM that the volume of General Budget Support (GBS) increases. The increase in volume of General Budget Support is not only related to the leadership capacity of GoM, but above all the interest of donors in this aid modality in the general context of external aid paradigm change. While there has been some progress, the administrative burden of coordination mechanisms between the GoM and donors still remains heavy.

The general research conclusion is that Mozambique was a pioneer in the establishment of coordination mechanisms between government and donors. It achieved impressive advances regarding the implementation of the Paris Declaration on Aid Effectiveness in a relatively short time, above all in aspects of harmonization, alignment and predictability of aid. Nevertheless, the internal accountability of the GoM to Parliament and Civil Society Organisations, as well as the sustainability of results and impacts on the poorest levels of society, are still cause for concern. The Paris Declaration offers a platform for coordination, as well as some space for ownership by the GoM. However it is still insufficient as internal accountability to Parliament, citizens and civil society is not placed at the top of the agenda. It also does not take the political economy and power relations into consideration, which places the improvement of aid effectiveness at risk in terms of positively impacting on national development and poverty reduction.

With reference to the power of the GoM to make decisions on its policies, we concluded that the Paris Declaration contributed to a certain degree to increasing space for the determination of its own policies. However, a qualified analysis needs to be carried out regarding the political economy, questioning if it is reasonable in the current context to assume that GoM has the capacity to determine and defend broad development policies and strategies with donors, as some fundamental principles of the Paris Declaration are still not entirely observed.

We also noted that scrutiny of development policies and relevant programming instruments by Parliament could increase the level of ownership. However, Parliament currently has limited capacity to influence decisions on aid allocation given that it does not have access to detailed information, nor sufficient technical capacity. In addition, donors are not paying attention to the need to strengthen the role of Parliament regarding decisions on external aid, which could put aid effectiveness at risk.

The implementation of the Paris Declaration opened space for parliament and civil society to be more involved in the process of GoM and donor accountability and to influence public policies, yet this space is still not fully capitalised upon. This is a result of various factors, namely the weak technical capacity of Parliament and CSOs, lack of CSO interest, conflict of interest for CSO service providers to GoM, cooperation agencies and international NGOs, and the co-opting and instrumentalisation of CSOs by the party in power.

A few interested and engaged CSOs and academic institutions are involved in the debate, formulation, monitoring and evaluation of macro-economic policies, such as GMD, G20, Cruzeiro do Sul, UNAC and CIP. Nevertheless, these institutions still need substantial support in terms of financial and technical resources, organisational development, as well as greater rootedness of their structures at a decentralised level, and establishment of collaboration networks to strengthen their capacity for analysis, research, advocacy and lobbying.

With reference to information, monitoring and evaluation, one notes a significant effort by GoM and donors to increase access to and quality of information on donor commitments and disbursements, and to improve the GoM monitoring and evaluation systems. However, gaps remain, above all with regard to data collection and analysis on poverty at the local level. There is also a deficit in the dissemination of information through adequate channels which can reach citizens and CSOs. The independent performance assessment of the PAPs is a valuable instrument, the conclusions and lessons of which are contributing to improving the coordination mechanisms between GoM and donors. The Performance Assessment Framework of the PAPs (PAPs’ PAF) is a valid experience in the context of strengthening mutual responsibility between GoM and donors.

Significant advances exist, such as achieving some of the goals of the Paris Declaration, active relationships between the GoM and donors, willingness to improve aid modalities, alignment of aid, increase in financial predictability, improvement in public finance management (PFM), improvement in planning and budgeting, as well as independent information and evaluation, and inclusion of the Performance Assessment of the Partners (PAPs’ PAF).

Nevertheless, serious concerns continue to exist which could jeopardise the effectiveness of external aid to the country, such as the increased level of aid dependence and the risks of deterioration of the processes of internal accountability, the narrow focus on systems and procedures instead of strong concentration on the observance of basic principles of the MoU and of the Paris Declaration, weak articulation of preferences regarding aid modalities, weak participation of other actors (Parliament, local municipalities, civil society) and the role of technical assistance.

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