Comments

Thanks Terence, Attitudes to corruption in aid range from complacent to alarmist. By gently mocking the latter, your article helps to put some perspective around the issue. I especially liked your comment on disproportionate press coverage being the disincentive for aid transparency and thereby undermining an important initiative to improve aid governance. Yet we can also say more about the specific things that donors can do to manage the risk of corruption <em>and </em>deliver effective aid. Here are a couple of quick thoughts. First, get specific evidence about the risks of corruption to better inform aid policy. This mean going beyond 'media frenzy' and general measures of corruption - such as TI's perception index - to zero in on fiduciary risks around public finances, partners and aid. Secondly, put in place strategies to manage risks. This could include: better ex-ante selectivity of countries and sectors to engage in; making payments for results - such as CDG's 'cash on delivery' proposal; supporting safeguards around public expenditures - and budget support can be a good entry point into discussions with recipient governments on this; and in the worst cases, looking for alternative delivery mechanisms. There is a lot that could be done, without being either complacent or alarmist. (Note - to hear an excellent debate the role and importance of tackling corruption as part of a development strategy, check out Daniel Kaufmann and Mushtaq Khan on development drums http://developmentdrums.org/284)

Here's an interesting piece on budget support and corruption - http://www.owen.org/blog/113

Great article Matt. It also raises the question of the chain itself and the value add that each actor in that chain brings. I think technology will not only improve the feedback loop for the existing chain, but also begin to question the efficiency of the chain itself. This certainly has benefits- ensuring that each stage of the chain is indeed adding value to the desired development outcome, rather than allowing any actor to rest on its laurels. However I suspect there's also some risk involved, as it may lead to a rise in the number of 'quick and dirty' projects (often with the aim of increasing the gratification of the individual donor, rather than increasing the benefit brought to the recipient) at the expense of targeting actual need or neglecting projects that require greater nuance or where the outcomes are more difficult to define. Organisations such as Kiva who are founded on such technologies seem to sit at the crossroads of such arguments. While cutting out some of the traditional actors in the chain and thus bringing donor and recipient much closer together, many seem uncomfortable with new actors such as Kiva who's operational structure bucks the traditional trend. It will be interesting to see if tech based organisations such as Kiva actually change the very nature of the traditional chain, or simply create a new chain that either competes with or works in harmony with the traditional chain.

What a great article! Really comprehensive and nicely put! Kudos! For more information on crowdsourcing, visit our site @ http://www.crowdsourcing.org

I agree that the ability to get more input and feedback from beneficiaries and prospective beneficiaries is an awesome thing. But no, this alone is not going to fundamentally change aid. Unless you want to argue that your ability to choose from a menu and fill out a feedback card at the end of a meal, has revolutionized the restaurant industry. Mobile monitoring and feedback might collapse the informational chain but it will have no impact on the institutional chain. Here's the impact I see: Taxpayers: like the stories, but generally aren't in a position to have more practical effect than nondirectional pressure for better results. Aid Agencies: trying to keep their internal costs down and shovel money out the door, don't want to go anywhere near these b'ficiary feedback mechanisms themselves except on the occasional field visit, just expect to see implementers collecting and using it. Aid Implementers: Well I can't speak for everyone, but being able to give out a hotline phone number to 30,000 people and get a few dozen calls a day to hear about where distros might not be happening or contractors not behaving themselves, is almost unalloyed awesome. Beneficiaries: level of empowerment and ability to hold us to account also = awesome, until and unless we become unanchored from our values and start treating these calls the way typical call centre operators (eg: banks, phone companies) treat us!

ARDE 2009 Review - Budget Support The report properly notes that the integration of Australia’s programs into developing country systems through budget support implementation mechanisms avoids duplicating effort and establishing parallel systems. The report also notes that 40% of all Australian aid is being distributed through developing countries’ public financial management systems, but only 23% is subject to developing countries’ procurement systems. Recently, AusAID approved a $500 million Australian aid package, the Basic Education Program, for schooling in Indonesia using a budget support implementation mechanism. What other significant aid packages are being delivered through budget support implementation mechanisms? Budget Support has become an important modality for development cooperation in the last decade and has a different basis for accountability than project support. It requires strong developing partner country financial accountability and public expenditure management, including an ‘open and transparent’ public procurement system. General budget support is budget support that is unearmarked for a specific sector of government spending. Sector budget support is budget support that is earmarked for use in a specific sector or budget line, e.g. health or education. Many factors can affect a donor’s decisions to use developing country’s systems besides expected benefits: the assessed quality of the system; the donor’s legal framework, historic practices, or tolerance for risks; the partner country’s own preferences; and related intangibles such as the perception of corruption or poor governance. Of importance is an understanding how AusAID is assessing its risk in using budget support implementation mechanisms and what are its rules and conditions for approving use of such a mechanism. The rules and conditions of the European Commission (EC), regarding budget support are specific - direct budgetary assistance in support of macroeconomic or sectoral reforms will be granted where: •Public expenditure management is sufficiently transparent, accountable and effective. •Well defined macroeconomic or sectoral policies established by the country itself and agreed by its main donors are in place. •Public procurement is open and transparent. What are AusAID’s rules and conditions for the use of budget support? Assessment of developing country Public Finance Management (PFM) systems is normally through an Integrated Fiduciary Assessment i.e. a Public Expenditure and Financial Accountability (PEFA) assessment which evaluates the strengths and weaknesses of the PFM system and provides a performance benchmark to measure progress with PFM reforms and evaluate if a reorientation of the ongoing PFM effort is needed. The PEFA methodology provides a framework for developing country governments and other stakeholders to assess the PFM system in a country. The assessment is based on a standardized format and indicator set developed by a group, including the World Bank (WB), the International Monetary Fund (IMF), the EC and several bilateral development partners. The PEFA indicators are a set of 28 high level performance indicators that measure strengths and weaknesses of a government’s PFM system. The use of WB Country Procurement Assessments (CPA) and other assessments can be used to examine public procurement system performance. A WB CPA is an intensive, comprehensive assessment and diagnostic tool offering analysis of a particular country’s public procurement regime. Specifically, the CPA identifies existing risks and vulnerabilities of the regime and assists the developing country in ultimately strengthening the institutional, legal, and policy framework underpinning its procurement regime. The CPAR is typically a joint effort between the WB and its client country. These assessments are also conducted as the public procurement system in a particular country changes or undergoes reform. The Organization for Economic Co-operation (OECD) Methodology for Assessment of National Procurement Systems (MAPS) provides a common tool which developing countries and donors can use to assess the quality and effectiveness of national procurement systems. The assessment uses 12 indicators which can become a key element of, and will improve, the existing CPA process. What assessment methodologies does AusAID use for developing country public finance management and public procurement systems? A recent review of the Web Sites of the WB and other Donors suggests that few PEFA, CPA and/or MAPS assessments have been undertaken in East Asian, Papua New Guinea and Pacific Island countries in the past three years, the period during which AusAID’s use of budget support implementation mechanisms has increased. What is AusAID’s program to assess developing country public finance management and public procurement systems to inform their suitability for budget support? Where AusAID is using budget support mechanisms and risk is high, are complementary public finance management and public procurement improvement programs in place? E. John Blunt 15 Parkview Crescent, Hampton East, Victoria, 3188 Telephone: 03 9553 1182 Email: edevsol@bigpond.com Mr. E. John Blunt, is a Public Sector Management and Procurement Expert with extensive experience in leading public procurement reforms in a variety of international development environments including in Indonesia, Nauru, Pakistan, Papua New Guinea and the Solomon Islands with the Asian Development Bank, the Australian Agency for International Development, the European Commission, the United Nations Development Program and with the governments of Australia, Swaziland and Timor-Leste. He also has commercial procurement experience in Australia, China, Hong Kong, Papua New Guinea, the Philippines and Thailand.

Thanks John, fair enough...

As a development practitioner, who has been focussed on implementation for 30 years, I would like to make two observations. Firstly, I think the title of the DAC paper referred to, is a little misleading. The title “12 Lessons on Effective Aid Management” based on lessons from DAC peer reviews, made me interested enough to immediately go to the source paper to see what Richard Manning had learned about poverty reduction between 2003 and 2008. I was a bit disappointed to read an account on how donors could organise themselves domestically and in the field, and relate better to other donors. Does that matter? Probably not to the poor. Does it matter to anyone else? Maybe... but where is the evidence? The focus of Manning’s paper - and if we are honest, Paris and Accra as well - is around ‘aid architecture.’ Development assistance is always a delicate balance among competing priorities – but in recent years, there seems to have been a far greater focus on such policy, strategy and organisational issues on the donor side – at the expense of the evidence around poverty reduction in countries. It is time for the pendulum to swing back. That, notwithstanding, some of the report findings are particularly relevant to the scaling up of the Australian aid program – for example: <strong>Managing competing national interests: </strong>Human resource shortages in many developing countries are acute and impeding the provision of basic services to the poor. The coordination between Australia’s immigration program and its development program is an example where there is an acute need for greater dialogue and policy coherence. <strong>Managing contributions to multilaterals:</strong> With so much money to spend, it will be tempting to give more money to multilaterals. Do we apply the same transparency and contestability criteria to multilaterals as we do to the rest of the aid program? Manning suggests that greater effort will also be required to ensure stronger strategic and operational connections between multilateral and bilateral programs at country level are made. <strong>Decentralisation of management to the field:</strong> Challenges noted include the need to develop high quality lean supporting systems in the field, as well as a reality of higher field operational costs and potential conflicts between headquarters and the field. A comment by Danielle Cave from a recent blog is worth repeating here... <blockquote>‘The greater shortage, however, is effective and expert administration. Effective implementation requires detailed knowledge of the recipient country and a sharply focused experience of what can and can’t be done with foreign aid. (Danille Cave, Interpreting the aid review)..'</blockquote> <strong>Fewer countries, fewer activities and fewer sectors: </strong>How does this reconcile with Australia’s direction of expansion and scaling up of the aid program? <blockquote>‘The case for narrowing the geographic distribution is strong. There are plenty of poor people in the countries closer to us, which (incidentally but additionally), have more strategic importance. Almost half the Indonesian population lives on less than two dollars a day. If we think that AusAID can shore up and reform failing governments, there are enough of those in the Pacific. Thus there is plenty to do close to home (Danille Cave, Interpreting the aid review)’.</blockquote> <strong>Performance-based management, evaluation and quality control:</strong> DAC peer reviews have pointed to the need to maintain independence of evaluation’s functions to ensure the objectivity and reliability of findings. It will be interesting to see if Australia moves closer to the latest DFID measures to improve transparency and value for money. The recent review of TA and the current review of aid effectiveness suggests that it will.

I understand what you are talking about but the HDR involves all 192 UN Member States and rounding up better data from the 30 smallest ones is more a question of quality control and informed peer review.

I am pleased that the issue of budget support and the related assessment of procurement risk has been raised in the context of the recent Articles “That’s No Way to Aid Indonesia” and “$500m at risk in Jakata aid plan” in The Australian of Monday 10th January 2011. In 2007 the World Bank (WB) completed a PEFA Report. The Report estimated that just over 60% of aid disbursements from major donors relied upon Indonesia’s fiduciary systems (budget support) including a substantial % of WB expenditure, but in 2007 none by AusAID. Some specific comments from the Report were: •“Key weaknesses were identified across various dimensions of the budget execution such as financial reporting and internal controls. •Internal controls in the execution of the budget by spending agencies have not scored well overall. •Controls in budget execution processes were generally rated low. •In practice budget implementation may be significantly delayed because of the lengthy procurement process. •The budget execution processes within line ministries appears to be a significant barrier to efficient service delivery. •Procurement processes lead to significant delays in the acquisition of goods and services and the implementation of capital projects. •Capital expenditure appropriations are frequently under-spent. •Much service delivery, for example in education and health is primarily the responsibility of SNG rather than central government.” •With regards procurement (PI-19) the ‘use of open competition for award of contracts’ (which is a critical EC budget support criteria) was scored D and “there is insufficient data available to assess on an aggregate basis the extent to which competitive methods were used to award public contracts”. While there was in 2007 a focus on public finance management reforms, including ‘a plan for establishing a national Public Procurement Organization as a policy formulation and oversight agency’ and developing an ‘omnibus procurement law is envisaged for consolidating, clarifying and simplifying the numerous procurement rules and regulations’, the Report suggested that ‘institutional arrangements for public finance management reform need to be strengthened by a clearer reform strategy or roadmap, there appears to be limited engagement with line ministries at this stage, and overall a lack of ‘socialization’ of the reforms throughout the government’. The Report also noted that a ‘Financial Management Reform Committee established in November 2001 to oversee and coordinate PFM reforms was no longer operational’. A 'Snapshot Assessment of Indonesia’s Public Procurement System – OECD/DAC Baseline Indicator Benchmarking Methodology' was also undertaken in 2007 and made similar observations. What has changed since 2007 for AusAID to now want to allocate $500m to GoI through a budget support spending mechanism? <em>Note: The full text of John Blunt's submission to the Aid Review can be found at http://www.aidreview.gov.au/publications/johnblunt.doc</em>

I think I'll have to agree with Laurence here, UNDP has to bear some of the blame for inaccurate statistics. I run a multimedia company in PNG and we have been invovled with SMS marketing campaigns for the last 6 years, even before Digicel came into the market. Last year we recently approached UNDP here in Port Moresby about using SMS for awareness and statistics for health data. Specifically in relation to health statistics we proposed a wheel chart that could show a specific code in relation to a health statistic being reported which could be sent as a text to a specific given short code. You can have a look at the proposal here at page 4: http://www.masalai.com.pg/projects/pdfs/sms_health_communications_undp_10061.pdf However after sending in the proposal last year we never got a response about it from the person responsible. We found out just last week that she has now left for further studies so I am trying to work out again who to speak to at UNDP since her position now needs to be readvertised. To be honest its not totally UNDP's fault if an employee decides to resign, I guess my point is more that we have the technology to make data more accurate and I would like to know if anyone readung this could maybe point us in the right direction to see if we can make this work. On a technical level we work with www.mobimedia.com.au who are the SMS platform suppliers to Digicel for all their countries in the South Pacific. So we have the presence and technology to implement this SMS Data Collection System in nearly every network in the South Pacific. John Burton, could you please have a read of my document and advise on your thoughts. Regards, Emmanuel Narokobi Masalai Communications

Recent reports of a massive shortfall in teachers in PNG. <blockquote>There are vacancies for 11,000 teachers nationwide and, with only 1,200 leaving teachers colleges to join the service, there would be a massive shortage of teaching staff, the PNG Teachers Association said yesterday. Association general secretary Ugwalubu Mowana said that there had also been a huge flight of teachers from the service, with 1,700 teachers resigning last year. He said rural-based schools would be the hardest hit as teachers preferred to teach in urban schools.</blockquote> http://pidp.eastwestcenter.org/pireport/2011/January/01-20-10.htm