IATI and South-South cooperation

In the run-up to HLF4 there is debate over whether the principle of aid transparency should apply to South-South cooperation.¹ Against this backdrop, it’s important to be clear what it would mean for South-South cooperation providers like China, Brazil, India and South Africa to join the main initiative for greater transparency in aid information – the International Aid Transparency Initiative (IATI).

There are five main points to be made.

First, IATI sets common aid category codes

IATI is an initiative to coordinate aid data gathering globally so that it can be aggregated and compared. IATI standards are ‘standards for sharing information’. The process of developing its scope and category codes is carried out by a technical advisory group, as is coordination of other global data e.g. UN System of National Accounts.

Second, IATI operates on a voluntary disclosure basis

How much data is disclosed remains the responsibility of individual countries; their only commitment is adherence to the category codes for the data that is provided.

Third, IATI’s scope is limited to country programmable aid

As shown in the table below, the consensus agreed by IATI participants is to capture only that part of development cooperation flows which are country programmable.² Taking the example of China, this would include complete projects (i.e. turnkey projects), goods and materials, technical cooperation, grants to recipient governments, interest free loans and Chinese Exim Bank’s concessional loans. IATI does not require donors to publish those ODA³ flows that are (i) unpredictable by nature i.e. humanitarian aid and debt relief; (ii) entail no cross-border flows i.e. administrative costs, imputed student costs, promotion of development awareness, and research and refugees in donor countries; (iii) do not form part of cooperation agreements between governments (food aid and aid from local governments); and (iv) are not country programmable aid (CPA) by the donor, i.e. core funding of NGOs (IATI, 2010:3).⁴ Therefore, flows for human resource development, overseas volunteers program, debt relief and emergency humanitarian aid need not to be published as forward planning is not required for such flows.

For DAC donors, OECD estimated in 2008 that ‘CPA is roughly a little over a half of their gross bilateral ODA’⁵ and if all the DAC bilateral donors published their ODA as per IATI standards, only 54% of their total ODA would be published. It’s not possible to estimate how much of south-south development cooperation is country programmable aid and would qualify to be published as per IATI requirement, because there are no data.

Fourth, IATI does not include trade related official flows

Trade related official flows fall outside IATI’s reporting scope. Thus the Chinese Development Bank’s lines of credit which are LIBOR based and thus not concessional⁶ fall outside IATI’s scope. They also need not to disclose their EXIM preferential export buyers’ credits and the equity funds under Chinese Africa Development Fund. Since IATI does not capture flows other than ODA, project level details of these flows will need not to be published.

It’s important to note that China now has an explicit foreign aid policy in place⁷ that classifies its Exim Bank concessional loans as an aid instrument, whereas India doesn’t have any foreign aid policy in place. It is worth watching in the future whether India will classify its Exim Bank concessional lines of credits under IDEAS scheme⁸ as foreign aid or as a foreign trade instrument. If it’s termed a foreign trade instrument then it need not be disclosed.

Fifth, adopting IATI codes provides an opportunity for southern donors to improve capture of their development cooperation flows.

Existing capture of development cooperation flows by southern donors is very limited, and uses a diversity of categories. Adopting IATI codes provides an opportunity for southern donors and recipients to improve their own capture of their development cooperation flows.

Furthermore, IATI is compatible with proposed South-South aid reporting standards. Out of 33 IATI categories, 27 categories are fully compatible with the South-South Cooperation definition proposed by the background study commissioned by UNDCF.⁹ Only two categories are not compatible (default flow type and policy/ thematic markers); the remaining four categories i.e. Default Finance Type, Default Aid Type, Default Tied Aid Status and Planned Disbursements (for export credits) can be made compatible with minor amendments.

NOTE: The points above are based on the table below, which compares transparency of official flows of southern donors against IATI and the DAC Creditor Reporting System.

The analysis results from the research project ‘A Future for Aid Data: Research towards a South-South Cooperation data categorisation to complement ongoing IATI categorisations’ funded by DFID through its Future of Aid and Beyond research competition 2010-11.

State of Transparency in Official Public Flows: DAC & Southern Donors

OECD DAC’s Classification	Official Development Assistance (ODA)	Other Official Flows (OOF)
Country Programmable Aid	Humanitarian Aid, debt relief, no cross-border flows i.e. administrative costs, imputed student costs, promotion of development awareness and research and refugees in donor countries, food aid and aid from local governments, core funding of NGOs	OOF except export credit	Official direct export credits
Nature of access when reported to CRS	Public Access	Public Access	Restricted Access
Mandate of IATI for DAC donors	Yes	No	No	No
Availability of aid data of Southern Providers	No central database for S-S cooperation equivalent to CRS. Limited and poorly available data when captured by AidData database.[i]
Compatibility with IATI Standards	Out of 33 IATI categories, 27 categories are fully compatible[ii] with the South-South Cooperation. Only two categories are not compatible and four categories can be easily made compatible with minor modifications.
What we think needs to be published by South-South Cooperation Providers, if they agree to join IATI	Technical cooperation Grants to recipient governments Interest free loans Chinese Exim Bank Concessional loans Completed projects Goods and materials Indian Technical and Economic Cooperation (ITEC) programme Indian Exim bank concessional lines of credits under IDEAS scheme	Human Resource Development Cooperation Oversees volunteers program Debt relief Emergency Humanitarian Aid	Chinese Development Bank lines of credit in assumption that they are LIBOR based and thus are not concessional as ODA Chinese Africa Development Fund	Chinese EXIM preferential export buyers’ credits

Source: Research project ‘A Future for Aid Data: Research towards a South-South Cooperation data categorisation to complement ongoing IATI categorisations’ funded by DFID through its Future of Aid and Beyond research competition 2010-11.

[i] http://www.birmingham.ac.uk/Documents/college-social-sciences/government-society/idd/research/aid-data/chapter1.pdf
[ii] http://www.birmingham.ac.uk/Documents/college-social-sciences/government-society/idd/research/aid-data/chapter2.pdf

Footnotes