Official data on Italian aid in 2008

According to the 2008 DAC data, released on December 8th, the Italian ODA/GNI ratio was at 0.22%, with a 15% increase from its 2007 level, still second last among EU donors. By discounting debt relief, ODA/GNI decreases to 0.18% with Italy ranking last in Europe. However Italy increased it total aid disbursement by 468 million dollars ( 234 million, net of debt).

The top 5 countries are Iraq, Afghanistan, Palestine, Ethiopia and Lebanon. Iraq accounts for 45% in the total bilateral share, thanks to debt cancellations.

Italian aid - as share of bilateral aid - to sub-Saharan Africa decreases to the minimal share of 18,7%. The region received only 30% in the absolute bilateral aid increase ( 70 milion dollars, including debt), against 50% EU target. However, Italy has slightly sharpened its aid poverty focus, accounting for 25% of total bilateral aid from 24%, with an increase by 120 million dollars in one year.

As for sectoral investment, Italian support to Basic Social Services increases by 100 million dollars, accounting 7% of the total bilateral ( it was 5.4% in 2007).

Italia tied aid has decreased to 20% of total bilateral from 40% last year. By discounting debt relief, as being untied aid by default, Italian united aid share decreases from 78% to 38%, improving Italian ranking from the last position to the fourth last.

ODA from Italian Regions

According to a recent survey, the 22 Italian regions fund development cooperation interventions worth 45 million euro per year, to be counted within the Italian ODA. The first 4 most generous regions accounts to 74% of the total. Although decentralized cooperation is often featured as one of the postive development in the Italian development cooperation, financially speaking, it is still a limited actor. All regional resources account at 14% of the financial resources available the Italian Ministry for Foreign Affairs and as much as two big NGOs ,such as MSF and Save the Children, annualy raise from private contributions.

Italian debt relief activities since 2001 to 2009

The annual progress report on the implementation of the Italian law on international debt relief (Law n° 209/01) has been published. Since it has been implemented, from 2001 until June 2009, Italian bilateral debt relief activities amounted at 6,47 billion euro, with 61% in Africa and 68% included in the top five countries (Iraq, Nigeria, Congo, Mozambique and Ethiopia). Italian debt relief financially skyrocketed in 2005 (56% of the total amount). Later, each annual share is around 1%, showing the quick and successful implementation of Law 209/01. Moreover, Italian shaky aid quantity performance was yearly boosted by 22%, thanks to the reporting of debt relief operations. In the near future, Italian aid heavy reliance on debt relief operations and the exhaustion of the Italian debt stocks towards developing country is to bring about a significant and stable reduction in Italian aid levels. Eventually, 86% of the whole debt stemmed from the Italian export credit agency initiatives to support Italian firms abroad and not from concessional lending developing countries could not afford to pay back.

Ranking Italian response to Humanitarian emergencies

Last week, the DARA research center published the third edition of the Humanitarian response index, ranking 23 donors countries as for quantity and quality of their responses to Humanitarian crises. In 2009, Italy ranks third last, only followed by Greece and Portugal. In every index dimension, Italy performs consistently far below its peer donors average.

It ranks: 20th as for its response to humanitarian needs and for its generosity, second last in prevention, ability to work with humanitarian partners and evaluation of humanitarian interventions.
Italy’s recorded best scores concern timeliness of funding for onset disasters (ranking 4th best donor) and Italy is among the best 10 performers as for the investments in forgotten crisis.

Looking at the details in the Index dimensions, Italian flaws in responding to emergencies get clearer and clearer. Italy ranks: 4th last as for need assessment capacity; 3rd last at contributing to human rights protection, transparency in funding, ability to save human lives and protect human dignity and it is the worst donor as for funding timeliness to complex emergencies.

In order to increase its index performance Italy should reform her strategic and management response to humanitarian emergency following Norway, Sweden and Ireland examples; all scoring among the top three donors for all index dimensions.

Italian commitment to IFAD and conflict scenarios

During the 7^th IFAD replenishment Conference, Italy pledged 41 million euro to be disbursed by the end of 2009. So far, Italy has disbursed just 36%, ranking last among donors in terms of commitments/disbursement ratio, followed by Belgium (50%) France (67%) and the UK (74%). All IFAD donors, including developing countries, have already fully met their pledges. Last year, at the end of the 8^th replenishment, Italy further increased its financial commitment to IFAD by 56%, ranking as the second “virtual” contributor after the USA. Due to its relevant financial share, the low level in the Italian financial disbursement could financially harm the IFAD planned activities.

At the end of October, the Government issued the third Decree extending Italian military missions abroad till the end of 2009. Although it provides financial resourses for the army, the Decree generally includes a financial envelope to fund development cooperation activities in countries in crisis. This last decree appropriates 6.8 million euro to development cooperation activities with the total level for 2009 up to 82 million euro. In comparison to last year, 2009 ended with a 12 million euro gap for development cooperation initiatives.

Italian scores in the Commitment to Development Index, 2009

The Centre for Global Development has recently published the 2009 Index for Commitment to Global Development - CDI. The Index is supposed to assess the overall policy framework of each OECD country under the global/economic development lenses. The aim is to understand which donors policies should be reviewed or replicated in order to foster global development. The index is built on 7 policy areas - such as development, trade, investment, migration, environment, security and technology - and it allows cross country comparison.

In 2009 Italy ranks fourth last, improving one position from last year. Thanks to the 2008 increase in aid financial quantity and the numbers of unskilled migrants, Italy could raise its overall score in 2009. Since the index inception, the Italian performance has been very low due its technology, development and migration policies. As for the latter, Italy hosts a limited percentage of unskilled migrant workers and refugees fleeing from humanitarian crises. The Italian aid initiatives are financially inadequate, too fragmented and tied to the purchase of national goods and services. Eventually, Italy neither publicly invests nor encourages private investment in R&D, via tax incentives. As for regions, Italy is deemed to achieve the best results in terms of external policies fostering development in North Africa and Middle East while the Far East seems to be harmed the most.

Goverment commits to increase aid allocation before end of December

On October 27, the Government agreed on two bi-partisan parliamentary motion on increasing financial resources to development cooperation before the end of 2010. The minority motion was also accepted when mention to financial increase up to 500 million euro for the Ministry of Foreign Affairs was removed. Now it just engages the government to significantly increase resources for development cooperation

The minority motion also commits the Government to start the Parliamentary debate on aid reform again, taking into account discussions during the last legislature, and eventually to clearly state which aid financial commitments will be met in 2010 due to dearth of financial resources.

The majority requests are more vague than the previous ones, asking the Government to fulfil its commitments towards the Global Fund and international food aid agreements, while also increasing development cooperation staff.

Both texts commits the Government to increase aid allocation from current levels by the end of December. However, it is worth noting that the about to be issued decree on peace keeping missions in 2010 would have provided for an aid in fragile states contexts, in any case, in continuity with the past, with no need of any a Parliamentary activity. The actual fulfilment of this engagement by the government should be measured net of the Peace-keeping Decree.

The Italian and Development Aid

According to the recently released Eurobarometer poll on the EU citizens perception on “commitments towards development cooperation”, despite the financial crisis, 90% of the Italian public support development cooperation as important, with 47% asking to keep the aid financial promises versus 13% supporting a freeze or cut in current aid levels. Italian public is ranks 7^th as for awareness on the MDG, (32%) ,and 9^th for importance give to development cooperation. However, only for a small percentage (20%) consider public development aid as aimed to solidarity only without any self interest. 27% consider aid as an investment to ensure greater stability, 24% to prevent migration flows and 24% to counter terrorist spreading in developing countries

Italy and policy coherence for development in 2009

According to the recently EC report on Policy Coherence for Development (PCD), all 12 priority policy areas listed in 2005 have moved in the right direction, at national and the UE level. The report structure is not transparent and it does not allow to list which Member States are more progressive or at the bottom of the Policy Coherence reforms. According to the report, all PCD areas showed some progress with Italy being indirectly praised for its reform on migration policy ( multy-entry VISA), energy ( support to the Carbon fund) and medical research policies to support developing countries academic institutions. These remarks are quite contradictory with what Italy reported to the Commission when submitting its questionnaire. In its submission, Italy considered “very weak” the whole EU progress on the PCD agenda over the last 2 years. On average, it self-assessed its PCD performance positively, yet acknowledging the lack of any progress in terms of implementing the link between poverty reduction and migration, the support to e-government and lack of implementation for the EC strategy for Energetic needs in developing countries.

Italian Budget law: no increase to the 2009 minimal aid level

Today, the Parliamentary budget session has officially started in the Senate. The executive budget proposal restate the same financial level of the aid budget for the Ministry of Foreign Affairs as in 2009, despite the G8 pledges. The MFA proposed budget for development cooperation is set at 326 million euro, in real terms the same level as in 2009. However, only 173 million euro could be committed to new development initiatives, as the remaining is needed to fund on going multiannual activities and cover administrative costs. This financial amount is even more limited when compared with how much Italian NGOs are able to collectively fund raise from the private sector- up to 300 million euro per year. More broadly, the whole budget does not seem to allocate financial resources to actually pay the first Italian instalment to the IDA 15 - 284 million euro. Needless to say that the Italian contribution to the Global Find against AIDS, tubercolosis and malaria, together with the IFAD and the Asian development Funds contributions would need an extra budgetary appropriation to be met. The Government has to present a special law to cover almost 1 billion euros to fund peace-keeping and enforcement missions in 2010, that will provide the last opportunity for Italy to star honouring its aid pledges, to support countries facing the economic effects of the crisis.

Italian tied aid to the LDCs

According to the last DAC report on implementing the 2001 recommendations, in 2007 only 53% of Italian aid bilateral commitments to LDCs were untied, pushing Italy to the bottom of the DAC donors list. The main sectoral share of the LDCs tied aid is due to Power plant initiatives (19 million dollars) and emergency distress (16 millions dollars) interventions ( 36% in total). It is important to note that according to the 2001 DAC recommendations, emergency relief has no obligation to be untied. In 2008 the value of emergency tied aid might further increase as Italy shipped 25 miilion euros worth of food aid ( chicken meet, mailnly) being purchased from 4 Italian companies.

The 2007 tied aid result in LDCs is quite surprising as Italy amended its International development Law's section dealing with tied soft loans, in order to comply with the 2001 and 2008 OECD/DAC recommendations on aid untying. This figure might point out to the need to better communicate internally changes of the Italian aid regulatory framework in order to chance long-established aid management practices

Italian ODA in 2009 after the G8 Summit

At the G8 summit, Prime Minister Berlusconi reaffirmed his commitment to meeting the aid pledges which Italy endorsed over the past few years. At the press conference of July 9^th, he confirmed the disbursement of the Italian contribution to the Global Fund to fight AIDS Tuberculosis and Malaria ‑ 130 million euro + additional 30 million euro to fill the Fund 2009 financial gap ‑ by the end of August; the Prime Minister’s statements were not entirely clear as dollars were mentioned instead of euro. Moreover, Italy is reported to have committed a total of USD 450 million over three year as its share of the 20 billion dollar G8 pledge to mobilize funds for a global response to the food crisis.

The Italian Government’s announcements on aid can be seen as a response to the media campaign which culminated in the last few weeks to the Summit. The international media message was simple: Italy lacked the legitimacy to chair a Summit African session due to the grave cuts in aid. Italian aid is estimated to shrink from 0.22% ODA/GNI in 2008 to 0,15% - 0,17% in 2009 in the light of the current GDP forecasts, where the upper level might possible if IDA instalments were paid in time.

In reality, the Summit did not add substance to these promises; on the contrary, a press release by Minister of Foreign Affairs (MFA) Franco Frattini included references only to the 2015 EU ODA target (0.7% ODA/GNI) with no mention of the 0.51% ODA/GNI by 2010. More worryingly, the Government asked MPs to drop a 15 month deadline for a modest 60 million increase in the MFA aid envelope - equalling the 2006-2008 appropriation - off a Parliamentary motion on the G8 conclusion if they wanted to get the Government’s support.

In the wake of Summit, the Italian Government approved the Financial Perspective 2010-2013 paper: there is no tangible reference to aid increases. The Ministry for Foreign Affairs’ annex to the Financial Perspective mentions the need for a re-alignment plan of the Italian aid, yet this suggestion did not pass into the final document.

To sum up, the budget appropriation session just started is not making provision for an increase in ODA levels, which currently reflect the 56% cut in the Ministry of Foreign Affairs (MFA) managed aid (about 23% of on-budget ODA). If no change in the current financial legislation is passed, the MFA aid will face a further 33% reduction in 2011, after a minimal increase in 2010.

Italy not meeting DAC recommendations on aid untying to LDC

Over time, by adopting the OECD/DAC untying recommendations, the waiver got permanent for the HIPC and the Least Developed Countries (LDCs). Unfortunately, according to the last DAC report on implementing the 2001 recommendations on aid untying towards the LDCs, in 2007 only 53% of Italian aid bilateral commitments to LDCs was untied, ranking Italy at the bottom of the DAC donors list.

Threats to aid effectiveness implementation

There are warning signals that could weaken the implementation of the recently approved aid-effectiveness . The new evaluation unit – re-established after 2 year all posts were vacant - has no budget to commission independent external evaluations. Lack of political will and budget resulted in a complete stop of any independent evaluation activity by the Italian development cooperation since 2002. Recently, Director of the local Italian Cooperation offices were prohibited hiring staff in a decentralized way. This is another worrying signal, slowing down further decentralization, that should be aimed at enabling strategic decision-making at country level.

Italian Plan on Aid effectiveness approved

On July 14th, the Steering Committee of the Italian development cooperation, chaired by the Ministry for Foreign Affairs, Hon. Franco Frattini officially approved the Italian Plan on Aid effectiveness. It is a 11 page document, including 26 specific reforms to be implemented by the Ministry of Foreign Affairs in order to have the Italian development cooperation compliant to the Paris Declaration principles. This is the first comprehensive politically binding document attempting to translate international aid effectiveness commitments into internal action, as unlike other donors no Italian aid-effectiveness plan had followed the 2005 Paris Declaration. The adoption of the 2009 plan is not unexpected. In December 2008, the new three year strategy of the Italian development cooperation, had already pointed out aid effectiveness as one of the priority for the Italian development cooperation. The actually drafting started in January 2009, fully including Italian civil society in the aid effectiveness task team. The 6 month long exercise was speeded up by the international pressures arsing from the G8 Presidency and the still on-going DAC peer review. Although it was a participatory processes, the Plan is the result of an Head Quarter led effort with no actual involvement of the field offices. While this HQ approach is against the Paris Declaration principles, the Italian aid system is still too centralized and the aid effectiveness agenda too marginal in the field work that any serious attempt to reform had to stem from the Head Quarter. After its approval, the Plan implementation is the most critical phase as the approved reforms are to change the business-as-usual aid management attitudes. Plan implementation is likely to face resistance at Head Quarter and at field level, requiring a continuous engagement of the political leadership. Despite the fact that the Ministry chaired the Steering Committee, the Plan was strongly and continuously pushed by parts of the middle level management, succeeding at channelling the issue at high political level. On the positive side, the recommendation of the Italian Peer review and the approaching of the fourth International High Level Forum on aid effectiveness could provide some hook to keep the political interest in on aid effectiveness. As for the plan contents, the steering committee debated the extent of further untying. Civil society had asked the Plan to be ambitious on concessional loans and food aid untying, as Italy is generally among the worse EU donors in terms of aid untying. This bad record is mainly due to a legislative obstacle in the Italian law on international cooperation compelling all concessional loans to be tied unless special waiver is issued. Over time, by adopting the OECD/DAC untying recommendations, the waiver got permanent for the HIPC and the Least Developed Countries. Currently the main share of the Italian tied commitments is due to loans. Civil society had called on amending the tying paragraph in the International development cooperation Law. The plan only limited its further untying ambitions to scoping or exploring ideas for further untying, excluding any change or amendment of the Italian Law on international cooperation.

In 2009 only 11% of the Italian aid commitments to Sub-saharan Africa

Since 2005, the share of bilateral aid to Subsaharan Africa has been constantly descreasing from 39% to the minimum of 18% in 2008, according to the DAC data. According to the ActionAid real time estimates of 2009 allocations, despite the renewed official commitment to allocate half of funding for new aid initiatives in Sub-saharan Africa, only 11% of the Italian bilateral commitments were due to the region - only 23% towards the LDCSs.

71% of the Italian public support meeting aid pledges

According to a recently released Oxfam opinion poll on the Italian general public, 71% support meeting the 0.7 aid target, event in the current economic turmoil, with 41% agreeing on an immediate financial increase in the current aid levels. The result is consistent with those from previous surveys, showing the interest of the Italian general public on aid issues. Eventually, when asked about aid spending priority, 60% said aid should support access to public health facilities of the poorest people in developing countries.

The Italian 200 million euro food aid debt

Following the signing of the 1999 Food aid Conventions, Governments agreed to make available 2,5 tons of grains per year. Italy pledged an annual contribution of 36,2 million euro, but the Italian last disbursement dates back to 2004. So far Italy has accumulated a 200 million euro debt towards the Food aid convention commitments.

Italy announcing its proposal on innovative finance for health

On May 29th , Italy officially presented its innovative fiance proposal to leaverage resources for health financing beyond ODA. to the official document, the De-Tax aims to earmark a share of VAT taxes generated by participating businesses in participating countries for health systems development, combined with a voluntary contribution from businesses. The participating government would divert 1% or more of VAT on any good or service sold by businesses associated with the initiative to a designated fund for health systems development, while businesses, on a voluntary basis, would commit a share of their profits on related transactions to the same fund. De-Tax is aimed at fostering private solidarity. Its success depends on the number of participating businesses and the level of consumers’ support. Revenues would depend, in part, on the level and quality of publicity, and the administrative and transaction costs imposed on businesses.

In Italy the de-tax was launched on an experimental basis in 2003 in a triennial measure (2003-2005) and an overall coverage of 11 million Euros, the initiative never got off the ground. It has now been re-proposed with a focus on developing countries, but its philosophy is completely contrary to the international principles of aid efficiency and risks increasing the cost of transactions and fragmentation, making the entire aid system even more complex.

Actionaid report on Italian ODA launched

ITALY AND THE FIGHT AGAINST WORLD POVERTY is the fourth annual ActionAid report on Italian development cooperation,. In this series of reports, we assess the progress made by Italy in maintaining the commitments undertaken since 2000 in the fight against world poverty, drawing on the contribution of experts from the world of politics.

Last year’s report highlighted the re-launch of Italian cooperation in satisfactory terms, although acknowledging the inadequacy of the results achieved. This year, ActionAid once again reports signs of improvement and gives credit to the possibility of change. While there are still signs of recovery, the most recent financial political choices made are a cause for concern: unless there is a rethink, the planned reduction of financial resources will lead to a further marginalisation of ODA, making it an insignificant policy element for which the effort undertaken for its re-launch, or parliamentary efforts to ensure reform, will be of limited value.

The Italian Prime Minister’s inauguration speech to the Chamber of Deputies presented development cooperation as a means of ensuring the contractual capacity of the Italian system in the commodity market. During his first appearance before the Joint Foreign Affairs Commissions, the Foreign Minister Mr Frattini explained the necessity for a renewal in the debate on the legislative reform of development cooperation, by parliamentary initiative. However, since then there has been no progress on this.

This year, the areas of improvement concern the ability of Italian cooperation to stick to the timeframes for disbursing aid commitments on time (Italy is third best among European countries), the increased focus on least developed countries and an overall improvement of aid effectiveness criteria. Furthermore, the quota of bilateral aid allocated to basic essential services has doubled, and the concessionality of loans increased, while the level of volatility has decreased. Lastly, Italian aid has been concentrated in fewer countries, although the tendency to support the proliferation of micro-initiatives remains prevalent.

In terms of the total 2009 Italian state budget, which has increased by 3% in total, the resources allocated to international cooperation have been reduced by 24% overall and funds under the Ministry of Foreign Affairs have been reduced by 56%.

Since the approval of the law ruling on development cooperation (Law 49/1987), Italian cooperation has always been below the European average in financial terms. At the end of April 2008, it was 0.20% of Italian GDP (according to DAC figures) or 0.22% (according to Italian cooperation estimates). This compares to the European average of 0.42% of GDP, and is the second lowest rate out of 15 in Europe and less than the 0.25% G8 average. However, the difficult domestic and international situations do not justify such low levels of aid. If Italy had acted as the other donor countries did under similar circumstances, it would have been able to maintain a minimum level of aid of 0.29% of the GDP (net of debt cancellation), whereas the Official Development Assistance (ODA)/GDP ratio was 0.18% in 2008, net of debt.

Two consecutive state budgets led to an increase of 86% in the cooperation resources available to the Ministry of Foreign Affairs in 2007 and 2008, in addition to 1 billion Euros outside the budget in 2007. However, the 56% cut in resources managed by the Ministry of Foreign Affairs in the 2009 state budget – approximately 410 million Euros – has dragged Italy back to the minimum levels registered in 1997. For the first time, the Ministry will have less funds available for cooperation than those privately raised by non-government organisations (NGOs).

This cut is a severe blow to the current process of improving cooperation management, and will not solve the national economic problems: the development cooperation resources managed by the Foreign Ministry amount to 0.09% of state expenditure. For 2009, Ministry of Foreign Affairs figures and the estimates of the European Commission show that Italian aid will be 0.13-0.16% of GDP.

The most worrying facts, in addition to those regarding aid quantity, concern the decreased importance of sub-Saharan Africa in terms of the allocation of resources and the difficulty that the overall national institutional system has in promoting cooperation efforts and implementing coherent mechanisms. Lastly, specific attention must be given to the areas in which Italian cooperation is not only already below the European average, but where the results are actually deteriorating (sectoral concentration, aid towards least developed countries, coherence of policies and the untying of aid).

Aid transparency: Italy among the least transparent in the UE

The CONCORD 4th edition of the Aidwatch report includes the first transparency ranking of the EU 27 official development cooperation. Increased transparency is considered a vital item for aid effectiveness and it is an international commitment signed in 2008. The European NGOs respectively ranked its official development policies according to a fixed set of transparency criteria. In this first ranking, Italy resulted 6th last EU donors, scoring just a little better than Greece, Latvia, Bulgaria, Slovak and Slovenia. This poor performance is due to the dearth of information publicly available and linguistic barrier preventing from access citizens in partner countries.

2008 Italian ODA at 0.22%

OECD/DAC data on ODA released at the end of Mach will need to be corrected on the rise for Italy.
As a matter of fact, following one moth later re-calculation, Italy notified the DAC to have reached 0.22% of GDP from the previusly stated 0.20%. The previously missing 300 million euros came from the lack of conversion from euro to dollar of some multilateral contributions. Though the last Governemnt can be praised for this, this positive result is well below the politically set quantitative target of 0.33%, set by the Prodi's government for 2008.

DAC Reviewers start their field visit in Italy.

On May 11th , the 10 people DAC peer reviewers team, consisting of France, Greece and the DAC secretariat, has started their first field visit. This is part of the DAC Peer review process, expected to produce an official report by the end of November. In April Italy had presented to the DAC a 100 page long report listing the Italian development cooperation progresses since the last peer review in 2004. During this week long visit the DAC reviewers will be on a fact finding mission to gather firsthand information on the Italian development cooperation. They will meet many stakeholders, including members of Parliament and NGOs. The Reviewers are to visit Lebanon in their second filed visit as one of the priority country of the Italian development cooperation to assess it at field level. NGOs will present their own assessment on the lack of progresses and missed opportunities of the past five years. Moving from the official report of the Italian development cooperation, the NGOs counter memorandum acknowledges that while the overall legislative reform of Italian development cooperation framework has not yet produced any results, the Directorate-General for development cooperation (DGCS) has attempted to implement some of the recommendations of the DAC peer review conducted five years ago, especially during last year.

Driven by the pressure of the DAC approaching deadline, the DGCS has quickened the pace and attempted to conclude and finalise processes that started in past years. In September 2008, an internal Task force was set up to overcome Italian cooperation management inertia and implement international policies on aid effectiveness, even without a legislative reform. Despite these efforts, this late undertaking will not enable results to be available in time for the OECD examination, postponing the implementation of the expected changes to a future date. The Italian Memorandum to the DAC in many section often refers to these processes as “on-going” or “underway”. This “underway-ism “ tone indirectly makes clear that no major Peer-review oriented reform was fully implemented over the last 5 years. In the same line, despite the current analysis on aid effectiveness, and on aid quality, in the past there had been no strategic reflection on how to comply with the Paris Declaration commitment till the Accra conference. Three years were wasted while other OCED countries were attempting to implement their aid effectiveness national Plans.

Current policy and planning processes will start being implemented and face institutional resistance in the second half of 2009. Yet, the lack of financial resources and the reduced international screening on Italy after the G8 Summit will mean that two of the main incentives will be lost in the implementation phase, increasing the risk of a renewed stalemate.

The 2004 DAC review acknowledged that its 2000 recommendations were still not implemented. Now, the almost 10 year old recommendations are still valid as there was no protracted effort to implement them.

Italian development cooperation following migration flows

The Italian Parliament is about to approve a bill enabling the government to streamline and speed up bilateral cooperation agreements with countries signing migration repatriation agreements.

This controversial article is part of a broader bill, aiming at boasting Italian economic productivity; particularly it specifically entrusts the government to review its development cooperation administrative procedures in order to speed up development cooperation interventions, including management, in emergencies contexts and with partner countries that signed up to migration control and repatriation agreements. The article clearly details that additional priority is to be given to countries agreeing to jail their citizen that were initially jailed in Italy. This article is an infringement of international human rights and of the main aims of the Italian development cooperation, as stated in the Law. Eventually the article approves a 2 million euro cut of the Italian development cooperation to fund the expenditure stemming form the implementation of the Italian-Israel Treaty.

Italy to push DAC on Tied aid definition

Ahead of the next DAC WG on statistics, Italy is asking the DAC to classify local procurement of good and services as either “untied” or “partially tied”. Italy is putting forwarded its requests following Accra commitment to favour local procurement responding to demands. The overall results of the this change will be mixed. On the one hand, it will encourage donors policy reforms to favour local procurement. On the negative side, its insertion within the untying heading will allow all donors to immediately improve their scores on aid untying, with no policy change needed, possibly disliking national business.

Italian strategy for multilateral organizations

In 2009 the Italian development cooperation has issued its first strategy on multilateral organizations (3 page document). The strategy is only an annual document and does not include all the multilateral organizations. It does not refer to Regional Banks, as the document was published by the Ministry of Foreign Affairs with no clear engagement by the Ministry of Economic and Finance ( responsible for dealing with Banks).

However, contradictory, the documents breaks down the sectoral multiannual investment for multilateral organization with emergency 27% and food-agriculture 22% as the main sectors. The selection criteria followed the priority issue of the G8 presidency and evaluations by the Italian embassy. In line with the 2009-2011 strategy, the Italian development cooperation deems an asset for the multilateral organization having an headquarter in Italy, worth investing. There is no reference to any coordinated evaluation of multilateral effectiveness among partners, including donors and partners countries.

According to the document, Italy is to reduce its financial contribution to fewer multilateral organization due to financial constraints and will to further concentrate. 40 multilateral organizations are mentioned throughout the text, with FAO, WHO and UNPFA, being the most frequently referred to. This strategy commits the Italian development cooperation to develop multilateral organizations specific guidelines in case the Italian contribution be above 10 million euro.

2009 Italian ODA

According to the Italian Financial Perspective 2008/2011, the Italian ODA / GDP should have been 0.33% but it is 0.20%. Although there is an increase of 1% increase compared to 2007, if you take into account data in real terms, the level of ODA has remained broadly stable. European objectives remain far apart. The shares of Official Development Aid to be distorted by the accounting of the cancellation of the debt of developing countries, for 2008, net of cancellations, it has gone from 0.16% in 2007 0.15% ODA / GDP. In real terms, there was a reduction of 100 million dollars on the values for ODA in the period 2007-2008. Taking into account the commitments made in the past, this is a gap estimated at 3 billion dollars for 2008.

Italy working towards aid effectiveness

Last December the Italian development cooperation approved the 2009-20011 strategic plan that was meant to also provide some political direction to the work of the newly established task-force on aid effectiveness. The strategic plan states that aid effectiveness is deemed as a key priority as a response to Italian ODA quantitative limits. The dearth of financial resources could threaten any major reform as the management structure has no incentives and future perspectives. The Task-force is supposed to steer the internal debate and produce the national plan on aid effectiveness in close collaboration with the national civil society.

The 2009-2011 strategic guidelines for the Italian development cooperation officially endorses the principle of democratic ownership and commits to align future Italian country strategy paper to Partners countries national development strategies. In terms of processes the Italian commitment to ownership aims at engaging local civil society in strategic talks and a more-structured consultation with Italian-based civil society. However, there is no mention to increase transparency and accessibility of aid information to allow a better quality and timely reporting of aid. Italian reporting to the DAC is poor with non systematic reporting of DAC sectoral markers, such as gender, governance or environment. Moreover, with a view to enhance mutual accountability, the language barrier – all aid documents mainly available in Italian- should be tackled to allow citizens in Partners countries to be aware of the Italian interventions.

Despite this important effort to set clear and accountable policy criteria, the strategic guidelines does not help the effort to increase Italian aid predictability. The taskforce on aid effectiveness should explore some change to ensure a stable amount of financial resources, and at least establish a commitment to promptly communicate to partners countries financial changes. Eventually, so far the multi annual country planning is not transparent and its final documents are not publicly available to the Italian and partner country citizen.

The strategic plan shortly refers to the issue of common donors arrangements by mentioning the possible use of general budget support but no reference neither to any plan for increase nor to preliminary conditions to use the modality is made. Moreover, last September an amendment to the current legislation on development cooperation was approved to allow the Italian cooperation offices on the field to receive financial transfers from the European Commission and EU member States in order to be able to fully take part in the future EU work on division of labour. Italy is taking part into the EU exercise into 4 countries (Albania, Lebanon, Mozambique and Ethiopia).

However any improvement on the Paris Declaration indicators is linked to the possibility for Italy to participate into pooled funds or multi-donors funds, obliging to review internal administrative procedures. The strategic guidelines do not refer to any work on procedural reform to ensure greater flexibility, being specifically targeted to the aid effectiveness commitment. Yet, over the last two years, the Directorate General for Development Cooperation has being working on procedural reforms, that should be accomplished and also steered to comply with Paris Declaration targets.

Eventually the multi-year strategy is apparently silent on the problematic areas for the Italian development cooperation to meet the 2010 targets on aid effectiveness.

As for the use of country systems, the guidelines still refer to article 15 as the sufficient condition to meet the Paris declaration objective, not referring to the poor results score in 2008. The Italian development cooperation used art.15 as legal basis to take part into the General Budget Support in Mozambique, but there is scope to reduce the administrative burden. The internal on-going work on procedural reform could provide an opportunity to move forward towards the use of country systems. It has to be borne in mind that by using country systems, donors countries accept Partner countries, budget, reporting and auditing procedures. As for local procurement target, a recent DAC study assumes that Italy’s procurement for the development programme by the Ministry of Foreign Affairs Directorate General for Development Co-operation and other public organisations follows competitive procedures in line with the EU Procurement Directive, but was unable to establish to what extent bids from local or regional firms are allowed. In both cases, if the on-going procedural reform is on opportunity, policy guidelines need to be developed to clearly state the level of fiduciary risk.

The three-year plan acknowledges the recent efforts on decentralisation of decision making, increasing the number of Local Technical Units in the field, with both a national or local staff. However they do not announce for any further delegation for decision making at local level, including in financial management. A general finding from the Paris Declaration Survey is that those donors whose operations are more decentralised to their country offices or embassies tend to be more supportive of partner ownership and the use of country systems. In the Italian context the increase in delegate authority at filed level is also linked to the increase in number of the implementation units. The positive effort to move decentralization forwards should be coupled with a time table plan of parallel implementation unit reduction or restructuring. Italian PIU increased by 33% between 2005 and 2007, mainly thanks to those in Morocco, Ethiopia and Egypt.

As for joint missions and analytic work, despite the most improvement Italy recorded in 2008 survey, Italian performances are still respectively second last and third last within the EU. In the first aid effectiveness survey Italy was the second last EU donors concerning its joint work, two years later, it is still the second furthest donors from joint missions and analytic work targets. Joint work in Albania and Mozambique was particularly critical, while in Ethiopia had already met the Paris Declaration Target. Improvements on the two targets do not require any complex administrative reform to take place, it only needs a clear directives to encourage and monitor joint work. In the Italian context, it is important to note that missions by the Italian local authorities contribute to the overall result on joint work, hinting to the need of better coordination of the whole Italian cooperation system.

In the Plan, despite the specific section on concessional loans – representing the greater share of the Italian tied aid - there is no reference to further untying or support to local procurements of good and services throughout the document. As for local procurement, last December the Italian development cooperation increased the percentage of locally purchased services for some sectors for concessional loans. This move is in line with Accra commitments and further progress could be built on this. More importantly, despite the fact that article 6 of the current development cooperation legislation ties all loans, a non-legal reform was approved in 2002 to comply with the DAC recommendation on aid untying for Least Developed Countries. More specifically the Inter-ministerial Committee for Economic Planning approved the reform to allow the LDC untying. The same process is envisaged to extend the untying to the Heavily Indebted Poor Countries, proving that further untying can be quickly achieved.

http://www.cininet.org/download/CINI_Document_Planning.pdf