Italian aid fragmentation

According to a December DAC study on country aid fragmentation, between 2004 and 2008 donors fragmented initiatives increased. The main purpose of the study is to agree on a measure to label an aid relation as being a “concentrated action”. The criteria used is twofold: 1) being among the top 10 donors in the partner country or 2) allocating a share of aid to the partner country that is more than the average that those to average partner country. These top down and arbitrary criteria are a compromise between small and big donors, while not including partner country perspective to assess when an aid relation can be labelled as “significant”. Following the DAC methodology, fragmentation of Italian aid has slightly increased, and the Italian development cooperation should phase out and re-allocate aid activities in 12 out of 33 priority countries.

Another study by the OECD Development Center assesses the sectoral fragmentation, pointing out to likely sectoral specialization, as measured by the financial investment made. The Italian investment in the production sector are the least fragmented among all aid sector. This result is shared by other small donors such as Portugal as aid initiatives in favour of the economic sector can be big project, being financially oversized for the aid budget of those agencies. When Italian sectoral fragmentation is analyzed for the social sector investment in the detail, the results are especially poor in health, population and water. In these sub-sectors, Italy is supporting the most fragmented initiatives among DAC donors.

The European Commission has released a study trying to assess the financial advantages for the EU donors by fully applying the aid effectiveness criteria. The study sums up different estimates for volatility, uncoordinated donors mission and analysis and eventually it states that the EU could save between 3-6 billion euro a year with a Paris Declaration compliant management. By applying the same methodology to Italy, the annual spending reduction is more limited that at the EU level, at around 160 million euro.