Select Committee on International Development Minutes of Evidence

Memorandum submitted by the Department for International Development


  1.  There have been significant improvements in the policy framework for EC programmes in developing countries, although these have not yet fully penetrated the multiplicity of legal, political and policy instruments governing the programmes. A new structure for implementing external programmes has been established in Brussels, but its completion overseas will take several years. Management systems and procedures have begun to improve; this needs to be seen through. Plans for increasing the EC's development skills are encouraging.[1]


  2.  Previous Select Committee reports have given a comprehensive account of past weaknesses in EC development programmes. In April 2000 the Commission set out proposals for the establishment of an overall Development Policy. In May 2000 the Commission set out a programme for reform of the structure for managing these programmes. And on 1 January 2001 the Commission established the EuropeAid Cooperation Office as a key part of its management reforms.


  3.  On 10 November 2000, the Council and Commission agreed a joint Declaration on the EC's overall Development Policy. This followed discussion in the Council of the proposals set out in the Commission's Communication of April 2000. The Government strongly welcomes the Declaration, which:

    —  Establishes—for the first time—poverty reduction as the central objective of EC development programmes. It also clarifies that this policy applies to EC programmes in all developing countries as defined by the OECD's Development Assistance Committee.

    —  Focuses Community activities in a limited number of areas. Six areas are listed in the policy but the EC plans to be a leading donor in only one or two areas in each country.

    —  Stresses the importance of more effective coordination with other donors and coherence between the EC's development policies and its other policies which affect developing countries.

  4.  The text of the Declaration complements a number of other important steps to improve the EC's policy framework. The Cotonou Agreement[2] signed in June 2000 establishes poverty reduction and the achievement of the International Development Targets as the overarching objective of EC-ACP partnership, the MEDA II Regulation[3] recognises the importance of the International Development Targets, and the CARDS Regulation provides for the EC's Balkans programme to tackle inequality and social development alongside its political objectives.

  5. The Community has also sought to increase its collaboration with the International Financial Institutions over the establishment of Poverty Reduction Support Programmes and the funding associated with them.

  6.  Considerable work remains to be done though to operationalise the Development Policy across all the programmes that it applies to. In some cases the relationship between the Development Policy and the relevant regional programme's Regulation is unclear and the implications of the poverty focus of the Development Policy has not been discussed or explored. In addition, the Commission is likely to need to clarify its sectoral policies to take account of the Development Policy Declaration and other recent changes in the international environment.


  7.  A further key issue is the allocation of resources. The Government believes that the present allocations of the EC's Official Development Assistance[4] need to be adjusted significantly in order to secure the achievement of the EC's objectives. The balance of EC spending is out of line with international best practice. Extreme poverty is concentrated in Sub-Saharan Africa and South Asia but the percentage of EC aid spent in low income countries has fallen dramatically from 70 per cent in 1989 to 51 per cent in 1999. This compares with the average among EU member states of about 60 per cent—even higher for some donors (74 per cent and rising for DFID).

  8.  Research shows that the most effective use of aid in poverty reduction is when it is focussed on countries with high poverty levels and good policies. An unpublished World Bank study[5] showed that in 1998, while 63 per cent of global aid went to countries with high poverty levels, only 38 per cent of EC aid did; and 18 per cent of EC aid went to countries which had both low levels of poverty and poor government policies. 1999 figures show EC aid per capita in middle income countries was $1.20 but only $0.55 in poor countries. Asia, with two-thirds of the world's poor, has a smaller share of EC external spending than the Mediterranean and Middle East (with about 2 per cent of the world's poor)[6].

  9.  The Government believes that to be effective, EC development programmes must be focused on reducing poverty. Evaluations show that a clear poverty objective is essential, though the range of actions (good governance, infrastructure, health, education etc) can be wide. This does not mean reducing our engagement in or support for middle-income countries—they are home to 12 per cent of those living on less than $1 a day—but the instruments for helping them will differ. They need technical assistance to reform policies and improve governance, and market access to help build export-led growth. Loans and technical assistance should be far more significant than grants. They can raise their own financial resources (domestically and internationally) far more readily. Low-income countries cannot. $1 million of aid spent in Uganda lifts far more people out of poverty than $1 million of aid spent in Morocco.


  10.  The establishment of EuropeAid marks a major change in the Commission's structure for managing its external programmes. The intention has been to bring together a larger number of the steps from conception of a programme to its implementation in order to overcome the breakdowns which were occurring in the previous Commission structure. The two headquarters Directorates-General—DG Development and DG Relex—are now therefore principally concerned with policy and strategies, while EuropeAid is charged with designing and implementing programmes to meet the objectives in those strategies.

  11.  There are advantages and disadvantages to this model. The UK's own programmes are implemented in-house with no separation between the policy and operational aspects. Other respected donors, such as Sweden, rely on agencies with considerable autonomy to implement their programmes. The Government has supported the establishment of EuropeAid as part of a reform package which is likely to improve the overall effectiveness of EC programmes. We believe that the key factors that will affect EuropeAid's success are:

    —  Maintaining the closest possible communications with DG Development and DG Relex at all stages of project management in order to be able to adapt the programmes to changing policy and political circumstances.

    —  Ensuring significant input by EuropeAid staff into the strategy process to ensure that issues related to the implementation of programmes are taken into account when strategies are established.

    —  Providing longer planning horizons for the design and implementation of programmes to implement these strategies.

    —  Effective deconcentration[7] which gives Commission delegations overseas greater responsibility and authority for implementation of EC programmes and greater capacity to engage in policy dialogue with partner countries and other donors.

    —  Incorporation into the Commission of staff with significant expertise in key development issues, eg health, education, governance, both in Brussels and in overseas delegations, on either a permanent or contract basis.

    —  Simplification of procedures to allow much faster progress from conception to implementation of programmes This will require changes both within the Commission and in the procedures of Management Committees which provide member state input into the approval process.

  12.  The Commission are addressing all these points but it is clear that there will be differences in the degree of their implementation. The Government is in continuous discussion with the Commission about ways of supporting them in establishing the most effective possible structure. In some cases responsibility lies as much with member states as with the Commission.

The European Agency for Reconstruction (EAR)

  The CARDS programme for the Balkans is now the EC's largest regional programme with an annual budget of about 800 million. In order to improve management of the programme, the Commission established the European Agency for Reconstruction (EAR). The EAR began operations in Kosovo in February 2000, replacing the former EC Task Force, and has extended its activities to Serbia and Montenegro during 2001. The EAR is responsible for preparing, implementing and evaluating programmes for reconstruction. It also monitors changing circumstances on the ground and advises on ways the EC might respond to them. It has a team of resident administrators and sectoral advisers. The EAR may implement programmes on behalf of other agencies or donors. It has its operational centre in Pristina and offices in Belgrade and Podgorica. There is a general services office in Thessaloniki.

  The EAR has a Governing Board comprising representatives of Member States and the Commission. The performance of the EAR to date has been impressive. It has developed annual programmes in a timely fashion, in close consultation with the administrations in Kosovo and Serbia and other donors. Its programmes have been operational within several months (90 per cent contracting and 60 per cent disbursement rate in 2000), which compare with the usual EC time delay of around 18 months from project approval to implementation. We continue to support the activity of the EAR through direct contacts in country and in the Board and seek to draw lessons for EC assistance elsewhere.


  13.  There have been some important advances. One of the objectives of the Commission's reforms of EC external services was to establish a common framework for the management of its programmes, regardless of the region. Following a debate in the Council during 2000, the Commission established guidelines for the production of Country and Regional Strategy Papers which it was agreed would be used for all external programmes. These guidelines mark a significant improvement. They place emphasis on the policy framework established by partner countries (seeking to work wherever possible in the context of Poverty Reduction Strategy Papers). They seek to focus the EC's programme on a smaller number of key areas, clarifying the objectives of the EC in each country and promoting greater collaboration with other donors. An interservice Quality Support Group—the iQSG—chaired by a DG Development senior official reviews most strategy papers and promotes best practice across the external services. Country Strategy Papers are being produced for all African, Caribbean and Pacific and Mediterranean countries this year and for all other regions next year.

  14.  One area where more progress is needed is in establishing clear objectives, targets and indicators for EC programmes. At present, the Commission also lack effective management information systems. The Government has pressed for the adoption of objectives and indicators at both corporate and programme level and is discussing with the Commission, the Parliament and other member states possible collaboration to produce these. The Commission plan to introduce a new management information system in 2002.

  15.  New procedures for financial and staff management are also being established by the Commission which should go a long way towards improving performance. The number of contracting procedures has been reduced from over 46 to 8, greatly simplifying procurement. There is also a process of delegation of financial responsibility away from the previous centralised system to officials within each policy area. Once the Council has agreed a new Financial Regulation, it should be possible to delegate responsibility further.

  16.  The new Financial Regulation should also allow progress to be made to improve the speed at which commitments are converted into payments. At present there is a very large number of commitments which were made over five years ago but which have never been completed and paid. This delay decreases the chances of the project having the impact that was originally intended. The Commission have considerably reduced the level of such delayed commitments8[8] but there is still about 2 billion in this category at present.

  17.  Staff management is being reformed across the Commission. It is particularly important to introduce greater flexibility within the Commission's external service in order to ensure that they are able to attract suitably qualified staff with development skills that would be able to increase the level of expertise in the Commission. The Government welcomes proposals to increase the length of contract which the Commission can offer such experts from one to six years.

  18.  Past reports of the Committee have observed that the Commission has comparatively fewer development staff than other donors. These measures will rectify this to some extent, the Commission will not find itself as well-endowed as some major donors. But nor does it need to be. Today donors should seek increasingly to share analysis and expertise, operating in joint programmes. The new Financial Regulation should contain provisions that make this easier for the Commission.


  19.  The Government strongly welcomes the efforts that are being made to reform the European Community's development programmes. These reforms have already delivered a clear poverty reduction policy, more streamlined structures and a better set of programme management tools. Significant steps are also being taken to improve financial and staff management in the Commission's external services. Implementation of all these reforms is obviously now the key issue. The Commission have said that this will take at least several years. The Government agrees and believes that successful implementation will depend on continued efforts by member states and the European Parliament to focus EC programmes on a limited range of issues, increased collaboration between the Commission and other donors, and adoption of satisfactory new Financial and Staff Regulations. In addition, the Commission, Council and Parliament will need to take significant steps to target resources where they will be most effective in reducing poverty both by allocating a higher proportion of grant resources to low income countries and by using a wider range of instruments to achieve our objectives in middle income countries.

Department for International Development

25 October 2001

1   The Department for International Development published a revised Institutional Strategy Paper on Working in Partnership with the European Community in August 2001. Back

2   The EC-ACP Convention which replaced the series of Lome« Conventions covering trade and political relations and development assistance. Back

3   Governing the EC's programme of assistance to the countries of North Africa and the Middle East. Back

4   As defined by the OECD, ie assistance to developing countries. Back

5   David Dollar, 2000. Back

6   EC spending is 0.15 per capita in Asia and 3.31 in the Mediterranean. Back

7   Deconcentration is the term used to describe the process of delegating authority (and staff) to Commission offices overseas. Back

8   The Commission define commitments which have not yet been paid as "abnormal" if they were made more than five years ago or have had no action taken on them in the past three years. Back

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