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