Download PDF version of the workshop report
AID EFFECTIVENESS: Trends and impacts of shifting financial flows to civil society organisations in Southern Africa Report on Donor Roundtable Dialogue 2 MARCH, 2007  GABORONE INTERNATIONAL CONVENTION CENTRE GABORONE, BOTSWANA

Summary

The international donor community has put in place processes with the objective of enhancing aid effectiveness for a number of years now. The Rome High-Level Forum on Harmonisation (2003) and the Marrakech Roundtable on Managing for Results (2004) set precedents for the Paris Declaration on Aid Effectiveness (2005) which remains a landmark document on aid effectiveness. SADC member states and their international cooperation partners adopted a similar declaration in Windhoek in April 2006. Both the Paris and Windhoek Declarations call upon donor institutions, developing and developed countries to increase their efforts to effectively utilise development resources on the basis of the principles of ownership, harmonisation, alignment, managing for results and mutual accountability. The challenge that remains is the implementation of the declarations and addressing some of the emerging issues, such as how they relate to non-state actors.

A key objective of the Dialogue was to establish the extent to which external donor support to southern Africa civil society organisations (CSOs) is being affected by the new emphasis on aid effectiveness. The argument is that there is a significant shift in the way donors are channelling their support to CSOs, including the pooling of donor support through national and regional intermediaries. This in turn has the potential to shift the dynamics in the way CSOs can influence poverty reduction efforts.Some key questions about the nature and extent of coherence between donor country level support and their regional support to CSOs are also emerging. For example, how does donor support to CSOs working on poverty reduction at the national level link to those CSOs working on regional initiatives.

In addition, there are also concerns about the pace and limited impact of improving aid effectiveness through harmonisation (donor cooperation) and alignment (support to partner priorities), especially in relation to addressing issues of the quality of aid, moving from project support to budget support, aid absorption capacity of southern Africa CSOs, and the limited participation of key interest groups in influencing decisions on how aid is given, managed and utilised, among other issues.

It is in this context that the Southern Africa Trust commissioned a research report on the subject of “Aid Effectiveness: Trends and Impacts of Shifting Financial Flows to CSOs in Southern Africa ”. The research findings of this work were presented at a one-day roundtable discussion on 2^nd March, 2007 in Gaborone , Botswana .

The roundtable session objectives were:

·         To share the research findings of the draft Southern Africa Trust commissioned research.

·         To discuss ways of strengthening CSOs so as to ensure they can effectively access and manage aid flows (absorptive capacity) to southern Africa .

·         To discuss effective mechanisms and innovative sources of funding for CSOs in southern Africa .

·         To discuss future opportunities for regional CSO-Donor engagement in southern Africa .

2.1.    Key Emerging Issues

Key emerging issues from the dialogue are outlined as follows:

a)    The relationship between donors and civil society organisations (CSOs) is a strong one. An estimated one-third of official aid goes to CSOs in the South.  However, CSOs have not effectively and directly utilised platforms for discussions about aid effectiveness that have been taking place in recent years.

b)    CSOs play a critical role in the poverty reduction supply chain given that they speak for the voiceless “poor”; they ensure transparency and accountability and contribute to the policy process. Therefore, they are an important player in the process that seeks to make aid more effective and responsive to the needs of its intended constituents.  There is need for greater CSO involvement in the aid effectiveness debate and process.

c)     There is a greater need to use regional and national CSOs as intermediary vehicles for delivery of aid as well as trying to harness the diversity of the sector in ensuring aid benefits its intended constituents and reduces poverty levels in southern Africa while at the same time ensuring that there is sustainability for such efforts. A case study of the Southern Africa Trust was used to illustrate this point.

d)    The research findings from the study on Aid Effectiveness: Trends and Impacts of Shifting Financial Flows to CSOs in Southern Africa illustrate that aid volume to the Southern Africa Development Cooperation (SADC) region is increasing.  Service delivery is noted as one of the key areas where donors are investing.

e)    Donors are supporting CSOs through multiple funding agencies and a variety of support models. There is need for greater CSO and government collaboration and harmonisation.

f)     There is a need for increased dialogue among donors and CSOs given that they have a crucial role to play in the aid supply chain especially given their diversity and specialisation. CSOs need to enhance collaboration amongst each other to have a greater influence on policy dialogue.

g)    There is need to enhance multi donor approaches that support CSOs in Southern Africa to increase their networking and learning capability,  support Community Based Organisations (CBOs), reduce duplication, encourage innovation and enhance the objectives of the Paris and Windhoek declarations.

2.2.    Way Forward

Key aspects of a way forward that emerged as outcomes of the closing discussion were:

a)    The need for increased dialogue, sharing of information, learning, and analysis in the aid effectiveness agenda, and for building relationships amongst CSOs in the region, in a forum such as this. This will enable increased engagement of CSOs in policy dialogue and increased voice and attention by donors and government in areas of mutual interest.

b)    Ensuring declarations such as Paris and Windhoek are conceptualised through a consultative process. This can be done by providing space for full engagement/ involvement of CSOs so as to entrench the principle of ownership and facilitate better implementation of these treaties.

c)     Assessing the role and impact of CSOs in the SADC-Regional Indicative Strategic Development Plan (RISDP) process will provide a good pointer to the alignment of their strategies both at the national and regional level, enabling a better evaluation of their strategies based on their strategic performance.

d)    There is a need for CSOs to take leadership in the aid effectiveness debate by harnessing their diversity, developing their institutional architecture, and actively engaging donors and governments in dialogue on their needs. The Southern Arica Trust is keen to take on a proactive role to help develop learning and analysis and effective practices, so as to ensure greater CSO engagement with the aid effectiveness agenda in southern Africa . Broader participation and voice is needed to address this leadership vacuum because the Trust does not want to necessarily take a leadership role in this area. The Trust will follow up on the outcomes of this meeting with SADC, key CSOs in the region working on aid delivery issues, and donor regional programmes to take forward a process in a programmatic way. This may include structured mechanisms to ensure better knowledge of aid flows and mechanisms, sustained monitoring of trends in aid flows, and regular, structured dialogue between the various interest groups.

e)    The adoption of a strategic approach by CSOs in the region to provide better focus and participation in policy dialogue on aid is required. Conceptualising the strategies from a systems perspective and investigating the impact of processes such as the APRM in the region will be beneficial.

f)     The research report will be finalised after taking account of this dialogue meeting. It will then be issued publicly. Further focus discussions will be convened to concretise recommendations for specific action.

Central to these developments is a need to engage in dialogue at different levels, initially informally as CSOs cultivate trust among each other and invest in collaborative partnerships, thus positioning themselves strategically for Accra 2008.

Overall, CSOs need to proactively engage in a continuous structured policy dialogue and also ensure that community voices are directly heard in this dialogue.

The following record highlights presentations and discussions during the different sessions of the roundtable dialogue.

3.    Making a case for supporting civil society organisations in southern Africa, by Kemi Williams, DFID

The relationship between donors and civil society organisations (CSOs) is a strong one in many respects, with an estimated one-third of official aid now going through or directly to CSOs in the South. CSOs have not however been directly involved in the discussions about aid effectiveness that have been taking place in recent years. The session, thus explored some of the reasons for donors supporting greater involvement by CSOs in this process from the DFID perspective and its intended goal of being a responsible donor within the framework of market forces that allows for an exit strategy (strategic plans shifting from five years to ten years e.g. Ghana and South Africa) by the donor while at the same time ensuring sustainability of aid projects.

3.1.    Role of CSOs in the poverty reduction supply chain

The Paris Declaration (global focus) and Windhoek Declaration (indigenised for the SADC region) developed the principles of harmonisation, alignment, ownership and mutual accountability. These principles are to make aid more effective and responsive to the needs of its intended constituents. The aim was to:

a)    Minimise transaction costs to governments receiving and giving aid.

b)    Promote coherence in the allocation and use of aid to the realities facing its intended beneficiaries.

c)     Minimise duplication of roles among stakeholders in the aid supply chain.

d)    Ensure donors support recipient government priorities (appropriateness enables ownership).

For these to be effective there should be:

·         Good governance.

·         Sound policies e.g. PRSPs.

·         Complementary interaction between CSOs and governments in the service delivery realm.

Guiding the process was that governments needed to formulate appropriate and realistic poverty reduction strategies. Recipient countries were expected to put in place governance systems that were deemed to be “good enough” so as to access donor funds.  Enabling this goal of aid effectiveness provided an opportunity for CSOs to fill gaps in service delivery and project implementation as regards the aid supply chain and the intended goal of providing the optimal benefit to the intended recipients of that aid.

The role of CSOs in this aid supply chain is thus:

·         Speaking for the voiceless (poor).

·         Ensuring transparency and accountability is upheld by aid recipient governments.

·         Contributing towards evidence based policy processes and formulation.

·         Increasing collaboration with government in the process to ensure the aid supply chain is focused, of good quality and responsive to the appropriate needs of its intended recipients.

CSOs should thus be proactive and involved in improving aid effectiveness by:

a)    Engaging in aid projects that truly define the needs of the poor.

b)    Modelling aid effectiveness strategies based on what is appropriate to its intended recipients.

c)     Holding aid delivery stakeholders accountable for “what” (i.e. the goal of the policies/projects to be implemented) and “for whom” (i.e. the intended beneficiaries of the policies and projects).

d)    Engaging in critical thinking on the aid instruments used, and whether they promote harmonisation e.g. PRSPs do they deliver for the poor, how accountable are they?

e)    Collaborating with governments to develop robust (inclusive) PRSPs that set the foundation for true mutual accountability.

f)     Piloting and adopting the Paris principles on aid effectiveness and identifying their appropriateness in a specific country/region.

3.2.    Case: Southern Africa Trust

The decision to form the Trust was based on an observation that CSOs were not working efficiently in the region and had a poor absorptive capacity of resources. The role of the trust was to engage in grant making and capacity building of CSOs in the SADC region. This required indigenisation of strategies for greater effectiveness as well as a vehicle for DFID to outsource the allocation and management of its donor funds. An initial grant of ten million pounds sterling over a five year period was provided to the trust. This was meant to reduce the transaction costs associated with aid.  The goal was to enable increased aid effectiveness and greater impact on its intended recipients. This enabled the aid supply chain to be more responsive as bureaucratic levels were reduced, although still prevalent, which resulted in time lags in the availability of aid. The problem can be solved by the donor being a responsible one as most CSOs operate on a hand to mouth basis; hence any time lag drastically affects the outcome of a project..

Using the Southern Africa Trust as an aid delivery vehicle coincides with aid flows to the SADC region increase annually with the budgetary framework of the United Kingdom providing more allocations to CSOs. This is in line with a goal to increase British foreign aid to 0.7% of gross domestic product by 2013. Redundancies in DFID staff have also called for innovative allocation of funds so as to reduce the transaction cost of providing aid.

3.3.    Plenary Discussions

Discussions on this presentation centred on:-

a)    The need to create the Southern Africa Trust for the region and its sustainability after exit by donors.

b)    CSOs struggle with bureaucracy by donors/ governments and attempts to address this.

c)     The effectiveness of an initiative like the Southern Africa Trust in representing a shift in the type and volume of aid flowing into the region.

d)    Sustainability of this support model to improve aid effectiveness.

e)    CSOs offering one of the key vehicles for delivery of aid.

The meeting concluded that the focus on increasing financial flows to developing countries by donor countries is offering opportunities for the greater participation of CSOs as governments struggle to utilise funds at their disposal.This has further increased the need to use CSOs as vehicles for delivery of aid as well as trying to harness the diversity of the sector in ensuring aid benefits its intended recipients and reduces poverty levels in southern Africa while maintaining a sustainability mindset.

4.    Research findings on aid effectiveness: trends and impacts of shifting financial flows to CSOs in southern Africa, by Elling Tjonneland, Chr. Michelsen Institute (CMI)

The Southern Africa Trust commissioned a report on the impacts of the aid effectiveness debate on CSOs in southern Africa . The report is based on the collection of data from seven SADC countries- Botswana , Lesotho , Malawi , Mozambique , South Africa , Zambia and Zimbabwe . It identifies the main trends in aid flows and support models to civil society while assessing trends in relation to the principles of aid effectiveness. The following are the preliminary findings of the report.

4.1. Research Findings

The research findings focus on four main areas:

·         Substantial but difficult in quantifying due to the classification of aid by donors as regards the definition of CSOs.

·         Channelled through northern NGO’s that act as an intermediary between donor governments and CSOs.

·         New donors from foundations via ACBF to the EU through the formation of special purpose vehicles and philanthropic endeavours to disburse aid.

·         Small but significant direct support to advocacy and policy engagement due to a perceived need to enable stakeholder reconciliation.

b)    Aid effectiveness processes are advancing at the official level in southern Africa :

·         The Windhoek declaration adopts a home-grown adaptation of the Paris declaration for the SADC region, thereby enabling the appropriateness of the Paris Declaration to the SADC region.

c)     The role of CSOs in improving aid effectiveness is not guided by a coherent strategic approach:

·         There is a limited focus on civil society as CSOs are mostly seen as a last resort for aid disbursement where governments have failed, coupled with weak absorptive capacity of donor aid.

·         There is poor but growing donor cooperation in line with the principle of harmonisation, through greater collaboration on points of interest in policy debate and poverty reduction strategies.

·         CSOs are not guided by a strategic approach as regards the donors/government perceptions of CSOs. This makes areas of engagement between the two adversarial and not collaborative. There is also a competitiveness mindset amongst CSOs working addressing aid issues and between CSOs and governments.

·         There is a diversity of funding agencies and variety of support models. This is evident in professional CSOs that have proven effective in delivering projects that have an impact on the poor. It is based on donor agencies identifying their strengths and weaknesses, thus allowing for specialisation.

d)    New trends are emerging out of the aid effectiveness initiatives:

·         New entry points for policy engagement are emerging as donors/governments see an increased need to adopt a multi-stakeholder approach in policy engagement. However, this should be done between CSOs and SADC at the regional, thematic and national levels.

·         Some agencies are increasing direct support to CSOs especially in countries where donors perceive that governance is not good enough.

·         There is more focus on capacity building of CSOs so as to increase their absorptive capacity and functionality in this dynamic environment.

·         International NGOs from donor countries are accessing more funds as donor governments outsource aid disbursements to their local NGO’s that are increasingly taking space in the southern Africa region.

4.2. Moving forward

a)    The paradox of harmonisation and diversity is that too much harmonisation will negatively affect CSO diversity which emanate from the diverse purposes, organisational structures and constituencies of CSOs. The extent of harmonisation is also constrained due to the inherent diversity of interests and priority areas amongst donors. This being so, attempts at enabling effective CSO support through collaborative frameworks among donors can be accelerated by:

·         Increased dialogue among donors on their CSOs support experience.

·         Increased collaboration by donor agencies that engage in similar policy and project areas.

·         Ensuring a higher probability of collaboration by starting dialogue at the outset of programmes.

·         Establishment of local funding facilities in close proximity to CSOs.

·         Regional CSO support facilities such as the Southern Africa Trust should collaborate with other equivalent initiatives in areas of mutual interest for greater impact through expertise and reduced transaction costs.

b)    Challenges and opportunities at the regional level should be identified and addressed. The challenges presenting themselves are:

·         Mechanisms formulated in the restructuring of SADC as regards it Secretariat and officially-recognised apex organisations is not yet functional resulting in minimal dialogue with CSOs.

·         Weak absorptive capacity of CSOs in the region to engage in regional policy issues.

·         The thematic groups and the draft Windhoek Declaration Implementation Plan does not provide CSOs an adequate framework with which to monitor donors and harness opportunities availing themselves for regional development.

·         The need to engage CSOs in the thematic groups so as to build networks and collaborative partnerships.

·         The extent of engagement between SADC and CSOs will determine the bias to accountability between the donors and the populace of the SADC region.

·         Ensuring alignment between SADC’s regional development strategy (RISDP and SIPO) and national development strategies.

c)     The opportunities presenting themselves are:

·         Restructuring of SADC has factored in avenues that offer CSOs greater involvement and mutual accountability.

·         Formation of thematic groups for donor coherence in SADC offers opportunities for mobilising development finance for the region, a role CSOs can effectively engage in and facilitate.

·         Stakeholder engagement will offer CSOs greater voice in SADC policy dialogue and enable greater perspective of evolving donor trends, especially as regards capacity building.

d)    Investment in enabling and enforcing NGO coalitions could be an option as they are more effective and united to a common goal in influencing policy and engaging donors in various issues. They also serve as a more potent voice in articulating the issues affecting the citizens in the region from a non partisan perspective, an aspect conducive to growth and better welfare of the regions citizens.

4.3. Plenary Discussions

Discussions on the research findings highlighted:

a)    The need for a better conceptualisation and definition of CSOs in the poverty debate.

b)    The need for a determination of issues and principles to guide a strategic approach by CSOs so as to be able to be more accountable for results.

c)     Engagement of CSOs within the framework of the APRM as an avenue to influence the aid effectiveness debate.

d)    Reflection on the fundamentals of how aid functions as the underlying power dynamics are in favour of donors.

e)    Attention to the politics involved in donor interactions.

f)     The need for a deeper assessment of the pattern of allocation of funds between CSOs and governments.

g)    The need for greater attention to the role of the private profit-making sector in the aid effectiveness agenda.

h)    The need to identify issues that motivate better aid delivery.

i)      Increased domination of the aid agenda by northern NGOs in the SADC region,

j)     Efforts being made by northern NGOs in harmonising aid so as to minimise demands on CSOs in the SADC region.

k)    Gaps in service delivery in the SADC region in the context of capacity development. This calls for the need for capacity building among CSOs in the region.

l)      That the harmonisation principle is pegged on the strength of the organisation of civil society and its diversity in the region, the question being whether one size fits all stakeholders or whether aid should be more focused on a case by case basis.

m)   The need to explore and identify the specific roles of the three major stakeholders in the aid effectiveness agenda; donors, SADC Secretariat and CSOs.

n)    Increased use of budget support by donors and the uneasy relationship between CSOs and government on service delivery.

o)    The effects of minimising transaction costs on operational space for donors and CSOs.

p)    The need to invest in the diversity of CSOs.

q)    The definition of capacity requirements as regards CSOs and how much should be invested in capacity building.

r)     The effects of issuing pre-determined calls for proposals that set the agenda for work undertaken.

s)     The need to balance reducing transaction costs and aid effectiveness.

t)     The need for greater investment in public-private partnership initiatives.

u)    Need for SADC-based CSOs to engage northern NGO’s to ensure their operations are aligned to national and regional development plans.

v)    The need to develop appropriate strategies for CSOs to influence the aid debate so that CSOs are not just passive recipients of aid.

w)   The need for realism about what CSOs can and cannot do.

x)     The need for identification of points of parity and strategic fits among different CSOs in the SADC region.

The session concluded that CSOs have a crucial role to play in the aid supply chain especially given their diversity and specialisation. This is evident from the research findings that have noted a trend of increased aid to CSOs in the region. However, CSOs have to collaborate so as to maintain relevance and have a greater influence on policy dialogue and points of engagement in the aid supply chain. We now look at the experience of one such agency that could provide such an avenue of collective influence for CSOs in the region in the aid effectiveness process.

5.    Multi-donor approaches to southern African CSO institutional development: challenges and opportunities, by Neville Gabriel, Southern Africa Trust

The Southern Africa Trust was established with the aim of strengthening the engagement of regional CSOs in the development and implementation of policies aimed at overcoming poverty. As an organisation, it provides a useful example of and for a multi-donor approach to the institutional development of CSOs. The opportunities and challenges of this approach are discussed below.

5.1.    Emerging Learning from the Southern Africa Trust

The goal of the Trust is for regional civil society organisation to be:

·         Effective: CSOs should have a regional impact on policy formulation and implementation so that policies work better to overcome poverty. This can be done through capacity building of stakeholders who engage in policy work.

·         Active: CSOs should be vocal participants in policy dialogue. This is done by facilitating CSO engagement in policy processes.

·         Inclusive: Through the adoption of a multi-stakeholder approach to widening participation among various constituents and creating an enabling environment for excluded civil society voices.

·         Informed: Sharing learning and analysis and building knowledge networks. This will impact on the quality of evidence-based policy generation.

·         Resourced: Support to policy work will be provided through the allocation of grants.

The purpose of the Southern Africa Trust is thus, to support deeper and wider engagement in policy dialogue to overcome poverty in the region.

Learning outcomes of the Southern Africa Trust ’s approach include:

a)    A pragmatic approach that is based on the realities facing targeted constituencies, works best. In the aid effectiveness debate, the approach of the Trust is that changes are happening to the way aid is provided and this is already having an impact of CSOs in the region. The question is therefore: what can we do about this for the benefit of CSOs and for more effective poverty reduction?

b)    Increased support to CSO capacity building can improve aid effectiveness since CSOs are part and parcel of the aid supply chain. However, CSOs must demonstrate that they credibly and legitimately represent voices of the poor.

c)     Assessing the power dynamics in aid supply and absorption must include assessing the power dynamics amongst different interests amongst CSOs as well. There are, for example, major differences of interest and influence amongst the NGO establishment and community based organisations, as between bigger and better resourced professionalized NGOs and other types of NGOs.

d)    The question of whether it is advisable for CSOs to access funding through governments in southern Africa is a moot question since it is only a question of which governments CSOs will be willing to take money from, either through direct donor aid or budget support. Greater engagement between CSOs and governments is required in southern Africa if we are to build developmental states that are sustainable. However, there is no doubt that the type of government that CSOs access funding from will influence the shape of CSO programmes.

e)    Donor administrative systems lag behind political developments in aid coherence, resulting in a dysfunction between formation of policy and translation of those policies into operating systems, negatively affecting the intended goal of aid harmonisation processes.

f)     The increasing deconcentration of donor delivery mechanisms to regional and national levels, taken together with a reduction in administrative capacity by most donors, is resulting in an increased concentration of financial resources in fewer CSO recipients according to a kind of “bigger is better” principle, because this is administratively easier. CSOs that benefit are mostly well-established, big, and highly professional service delivery or research-type institutes. This is changing the nature of civil society organisation in the region.

g)    Many donors face the same challenge of reduced capacity but increased budgets. This trend is evident in downsizing of donor staff while at the same time receiving more aid allocations for them to disburse. This impacts on their efficiency, hence the increased need for them to utilise a multi-donor approach so as to outsource the management function to reduce their own transaction costs.

Key implications of these learning outcomes are that: