2008 Italian geographical aid commitments

According to ActionAid estimates on Italian aid commitments on different regions, sub-saharn Africa is ( 30%) followed by Asia (24%), Middle East (22%), America (11%), Eastern Europe (9%) and North Africa (4%). Only 50% of total committed aid has a geographical allocation. It is important to note that North Africa, Middle East and Easter Europe count as one single Region (Mediterranean ) for the Italian development cooperation . Therefore accounted for 35% of the Italian commitments. From 2009, according to the new multi-year strategy, Sub-saharan Africa should receive 50% of commitments while the Mediterranean region only 25%. A signficant re-shift within just one year.

Italian Cooperation in Water and Sanitation

As President of the G8, Italy to play a steering role on Water and Sanitation intervention in Sub-Saharan Africa (SSA) as it is tasked to revise the 2003 Evian Action Plan on Water and Sanitation. However, Italy is the least active in the Water and Sanitation (WSS) sector both globally and in Africa compared to the G7+EC, ranking last in the average annual disbursement to WSS in SSA with US$1.64 million. According to the OECD DAC Credit Reporting System, in 2006, the relatively higher commitment of US$3.9 million to WSS in SSA was not matched by any significant disbursements. Regarding the disbursements, this could be due to no investments made or because results were not reported. The reliability of Italy’s reporting system is questionable so these figures are at best indicative.

Only 14% of Italy’s bilateral ODA to the WSS sector went to Sub-Saharan Africa (SSA). However, according to the Italian Ministry of Foreign Affairs, SSA has been the main geographic focus of Italian bilateral ODA over the last few years. According to the OECD DAC donor profile (2008) on Italy, particular attention of Italian ODA is given to the Mediterranean and Middle East Region in the framework of the Barcelona Process (whereby Italy, France and Spain founded the Euro-Mediterranean Information System on the know-how in the water sector – EMWIS).

The priority sectors of Italian bilateral ODA are broadly those that concern the MDGs but more explicitly are reported as health and gender equality, and since 2008, rural and agricultural development and environmental protection. In a governmental report that forecasts investments and programmes for 2008, no mention is made of water and sanitation as a priority area. Moreover the Ministry of Foreign Affairs’ annual reports (2003 – 2006) to Parliament on Italian ODA refer to 4 initiatives and action plans of the G8 as part of their description of the international framework for development cooperation, namely, the Global Fund to Fight AIDS, Tuberculosis, and Malaria, the Africa Action Plan, the Geneva Plan for e-government, and Education For All. However, in the latest (2006) report to Parliament on Italian ODA, the water sector is mentioned as one of the main recipients of Italian ODA in SSA, although this could be due to the significant level of ODA directed to emergency relief activities, which often include water and sanitation activities. The OECD DAC donor profile (2008) on Italy reports that WSS activities are deeply intertwined in most operations and that water supply is often found as a subcomponent in food security initiatives. Nevertheless, without a distinctive cooperation policy on water, data from the Italian Ministry of Foreign Affairs are generally insufficient and inconsistent to determine whether the WSS sector is/was a main recipient of aid.

According to the OECD DAC Credit Reporting System and in terms of the average annual ODA disbursed to all sectors and on a global scale, the proportion going to the WSS sector is very small at 1%. Within the geographical area of SSA the proportion going to WSS is even less at 0.2%. In both instances, Italy ranks last out of the G7+EC.

Italian ODA disbursements to WSS in SSA have varied in their focus. In 2004, 67% was invested in large WSS systems, and 16% in both basic WSS and Water resources policy/administration and management. In 2005 a more pro-poor approach was adopted with 55% of disbursements to WSS in SSA going to basic WSS. Development projects promoting access to water as well as environmental sustainability also include the principles of partnership, at local and global levels, and the equitable sharing of water resources among stakeholders and across geographical and administrative boundaries. Furthermore, the Italy promotes the mainstreaming of women’s empowerment into its water projects (OECD DAC Secretariat and the World Water Council, 2008).

The majority of ODA goes through bilateral channels followed by multilateral, and multibilateral channels. In 2008, forecasts show ODA going to multilateral agencies that focus on gender issues, climate change and environmental protection, agricultural development and food security, and emergency relief. NGOs are also typically used for implementation in the WSS sector. Moreover, within the WSS sector, Italy is increasing its involvement in joint programmes and programme-orientated joint financing with other donors, in line with its adoption of the 2005 Paris Declaration, to enhance aid effectiveness and increase recipient government ownership of development projects (OECD DAC Secretariat and the World Water Council, 2008).

2009-2011 concentration is to produce a major shift in Italian geographical priorities

The 2009-2011 strategy attempts to identify priority sectors and countries to ensure the greatest concentration of the Italian interventions due to limited financial resources.

The regional aid distribution commits to international consensus with Sub.-Saharan Africa receiving 50% of bilateral aid, including loans . However, in terms of aid effectiveness, the predictability of absolute country flows on three-year period is not mention, though more significant than the share of total resources. For example, between 2008 and 2009, while maintaining 50% of available resources, Sub-Saharan Africa’s absolute aid might halve due to the 56% cut to the total aid appropriations. The strategy could have clarified its commitment to maintain constant trends in a 3 year period in the priority partner countries at least. It is important to note that predictability is different from volatility. It only refers to timely reporting of aid to Partners countries rather than constant financial flows. However, ensuring a constant flow in aid resources in the main priority countries reduces aid volatility improving its quality.

It is important to stress that the planned aid geographical shares do not reflect the current proportions of regional Italian aid allocations between 2006-2007. Balkans -the Mediterranean and the Middle East Region as a whole had received 45% net-of-debt aid, while it is supposed to receive only 25% over the next three years. Compliance with the new geographical concentration will oblige the Italian cooperation to reduce its aid share in the Mediterranean to the advantage of the American region and Sub-Saharan Africa. This change together with a reduction in total financial resources is likely to result in a significant reduction in absolute aid to the Balkans, the Mediterranean and Middle East Region.

However, this regional planned share seems unlikely to be implemented due to the financial commitments to Libya, stemming from the Italy-Libya Treaty. In fact, the agreement allocates around 200 million euros a year for the next 20 years - equivalent to the resources currently available for all DGCS aid activities in 2009- to development cooperation activities.

Furthermore, the document highlights 23 priority countries, 15 countries with medium priority and 20 countries, whereby over the next three years the Italian cooperation is to phase out. In total, there are 58 partner countries for development aid over the next three years. It is a major improvement, significantly reducing Italian aid fragmentation. In 2007 94 countries received Italian aid, 86 partner countries in 2006. The 2009 concentration is in line with other European countries. In 2007, Spain pointed out 52 partner countries, Sweden set a list of 33 partner countries and Finland only 8 countries. The list of 23 priority countries will force a partial shift in the strategic allocation of Italian aid. In fact out of the first 23 Partners in 2006-2007 only 15 were among the first 23.

The Strategy does not make clear the difference in aid activities between high and medium priority countries. Only in sub-Saharan Africa, the strategy states that in high priority country Italy will directly implement, while in medium priority country Italy will deliver- almost delegating – via international organizations.

The listed priority sectors are eight, but rise up to ten, with other areas listed throughout the document of intervention. The sectoral concentration is still poor as total DAC sectors are only 12 , far away from the EC Code of Conduct on Division of Labour.

2009-2011 strategy: no resources, focus on aid effectiveness, but forgetting coherence

The 2009-2011 Strategy for development cooperation is more transparent in terms of the financial resources available for development in 2009 - 0.11% ODA/GDP - and clarifies the policy directions on the reform of the cooperation management system. The more innovative and important aspect is the attempt to identify a limited number of geographical and sectoral priorities for the bilateral and multilateral channel. However, except for the geographical concentration, the sectoral result is mixed.

The document takes into account the 2004 DAC recommendations and the conclusions of the 2008 aid related conferences - Accra on aid effectiveness and the Doha Financing for Development for the public-private partnership . Unfortunately, the document provides little detail on the strategic policy beyond the issues part of the Directorate General for Development Cooperation mandate. This lack is possibly due to the limited contribution t provided by the Ministry of Finance, raising the question about boundaries of the strategic directions: Guidelines for the whole Italian cooperation or solely for the Directorate General for Development Cooperation?

While referring to the need to monitor the effectiveness of interventions for development effectiveness beyond aid, the document makes no reference to the need to monitor and ensure policy coherence for development. The document aims to enhance an Italian system for development cooperation, including private actors, but it has to policy guidelines for all the actors whose actions have an impact in developing countries. The pursuit of policy coherence requires a high political commitment and an institutional coordination effort. The absence of any reference to policy coherence for development limits the future compliance to the DAC recommendations.