A new ODA Management Infrastructure?

Development Policy23 Jun 2010Albert Soer

Albert Soer responds to the background article “Building a new structure” in the context of the online debate about Dutch development cooperation triggered by the report Less Pretension, More Ambition by the Dutch Scientific Council for Government Policy (WRR). He proposes to draw lessons from the European Agency for Reconstruction (EAR).

Most of the discussion seems to focus on how the different Dutch interests should be better coordinated. Most of the Developing Countries, however, will not be impressed, nor are they likely to be very interested. What difference would it make for them? One of the core problems many developing countries face is that they have to deal with a large number of different donors, each having its own view on what should be done and how it should be done. As it is impossible to accommodate everybody, nobody is really happy.

The Paris Declaration and Accra Action Agenda push towards a higher level of coordination. Oddly enough, rarely a reference is made to a rather interesting experience in the Balkan. The EU established the European Agency for Reconstruction (EAR) to manage the EU funds meant to assist the reconstruction and later the association with the EU. Below, I give a more detailed description.

In my view, the EAR is a good example of donor coordination and a best practice where medium to long term development action is concerned. The present discussion to establish another country level implementing body – next to the other 20 odd in Europe or even more depending what is counted in – will not make a significant impact to do things better. In order to make a substantial impact, re-organisation needs to be done on a higher level; why not on European level and establish the European Agency for Development Cooperation? The different European Countries could agree to channel their funds – maybe restricted to grants as loans is a somewhat different ballgame – through such an Agency, which in turn could establish functional offices in each receiving country to manage those funds. A Multi-Annual and subsequently Annual Plans would be made to discuss with all the member states – in similar terms as presently is done for the IPA funds – and after approval they are implemented under full responsibility of the Agency.

This is likely to make life for the developing countries significantly easier, it may lead to a more stable policy environment, it almost certainly will reduce the costs and it is also likely that reporting back on achievements will become doable.

Of course, there are some differences between the various EU member states on development cooperation. I do not believe, however, that these differences are so substantial that a joint mechanism would be impossible.

European Agency for Reconstruction – EAR

The European Agency for Reconstruction was established in 2000 as a body under the dual leadership of the European Council (the European “Government”) and the European Commission (its “Administration”) to manage the EU funds for assisting the Balkan after the wars. It managed a total of some EURO 3 Billion which was almost completely contracted to implement specific projects. The Agency was discontinued on 31-12-2008 as it had fulfilled its mandate.

With its Headquarters in Thessaloniki, Greece, the Agency had field offices in Kosovo, Serbia, Macedonia and Montenegro.

The structure of the field offices was as follows:

The flat structure and the specialisation in each of the units allowed the Agency to rapidly prepare annual programmes through the Programming Unit. Individual project (tender) documents were prepared by the Project Management Unit. The Procurement Unit subsequently oversaw the tender process, while once the projects were contracted and in operation they were managed by the Project Management Unit with support from the Finance Unit for invoice payments and invoice control, and the Programming and Quality Assurance Unit for quality control. The headquarters in Thessaloniki provided services (in HRM, training, quality control, audit, financial management, etc.) and overall direction.

Each unit was staffed with high-level international and national expertise. Although international staff does not come cheap, the average of the annual overall operating costs of the EAR did not exceed 5.5% of its annual budget.

The programme development followed a three-step approach. First a multi-annual programme which set-out the main direction for a period of three years was drafted under the leadership of the European Commission, and this was translated into Annual Plans by the EAR. The Annual Plans consisted of individual project fiches that were developed in close coordination between EAR staff and the National Government. The agreed upon Annual Plan subsequently was submitted to the respective Council of the EU Committee where all Member States of the EU are represented for approval. Once approved, the individual projects in the Annual Plan were further developed by the EAR from a fiche basis to full Terms of Reference and other tender documents.

Level of Programme Responsibility Approval
Multi- Annual Programme European Commission in coordination with National Authorities European Commission
Annual Plans EAR in coordination with National Authorities and the EU Commission European Commission after favourable opinion of the Committee of the EU Council
Individual Projects EAR in coordination with National Authorities EAR

All decisions related to contract management of the ongoing projects were delegated to the EAR, which operated within the general financial regulation of the European Commission and other EU rules as e.g. the “Procurement Practical Guide” (PRAG).Project implementation was 100% contracted to private contractors, UN-Agencies, NGOs or Member State Agencies (mainly for the so-called twinning arrangements) and in some case through bodies and institutions of the beneficiary country. The EAR staff itself was not involved in project implementation, only in project development, project supervision and control.

The EAR represents itself a large degree harmonisation of ODA Management but also undertook significant action to ensure a strong coordination with other agencies present in the countries. The EU generally was by large the main donor in the countries (up to some 90% of all aid) and this was managed by a single organisation. The EAR also was entrusted with funds from other donors (Member States, UN and even funds from the state budget of the beneficiary in Kosovo). Through its programming structure, with an approval to be provided by all EU Member States, assurances were built-in that the efforts were developed in a coordinated manner. In addition, the EAR established coordinating mechanisms with the other donors (including the UN-agencies and the IFIs). While the Multi-Annual and Annual plans themselves were developed in close cooperation with the national authorities. This structure had significant advantages for the national governments in having a focussed partner in ODA Management with a single implementing structure.

The EAR with its stable staff composition and medium-term presence in the countries was in the position to focus, in coordination with the national government and the European Commission, on establishing a long term path for development and reform. This long term programming had a very beneficial effect on predictability and consistency in approach.

The EAR was audited annually by the European Court of Auditors and was within the mandate of the European Anti Fraud body (OLAF).

The success of the EAR is due to a number of factors:

  • Its close – and well regulated – working relations with the European Commission, the European Council, the EU Member States and the national authorities;
  • The strong coordination mechanisms with other donor agencies.
  • Its ability to attract highly qualified staff through its own recruitment service;
  • Its well-defined mandate; i.e. reconstruction after the wars and assisting the individual countries on their path to EU membership;
  • Its well-developed decision-making mandate as an Agency, mainly related to procurement, financial management and contract management;
  • Its authority to develop its own organisational structure and internal procedures, albeit in consistency with the European Regulations;
  • Its internal quality control structure with a sound Management Information System and project level Monitoring and Evaluation functions;

Through these elements the EAR developed a very efficient and effective mechanism to manage ODA with low overhead costs and high levels of impact as demonstrated through the different internal and external evaluations.