CABRI 2005 COUNTRY PRESENTATION. Managing Aid Flows:The case of Ethiopia By Ethiopian Participants Maputo 30Nov.-2 Dec.,2005. 1. INTRODUCTION. multilateral and bilateral agencies have continued to support Ethiopia’s development through Official Development Assistance (ODA).
Managing Aid Flows:The case of Ethiopia
By Ethiopian Participants
Maputo 30Nov.-2 Dec.,2005
multilateral and bilateral agencies have continued to support Ethiopia’s development through Official Development Assistance (ODA).
International Financial institutions have been responsible for the largest share of aid to the country, followed by bilateral donors, the European Union, and the UN agencies, in that order.
In comparison with other developing country’s Ethiopia is, by far, receiving much lower per capita aid (USD 13).
The fundamental of aid management in Ethiopia include:
The enhancement of partnership through dialogue, coordination. harmonization, alignment, and information sharing is crucial;
Guided by these principles the following are Ethiopia’s aid policies that shall guide the country’s relations with donor countries and multilateral agencies.
. Monitoring & Evaluation
. Financial Reporting and Disbursement
. Other ( i. e . Delegated cooperation, MOU between GOE and DBS donors and country analytical work).
f. GOE financial calendar is comprehensive, so that donors can extend their support with high degree of predictability and consistency.
g. Monitoring and Evaluation Systems for SDPRSP have been established with indicators after through discussions with the donor community and stakeholders.
With in an agreed framework, World Bank, African Development Bank, European Union, Sweden, and Canada have expressed their willingness to provide direct budget support Norway, Ireland and Netherlands are considering offering budget support. Many bilateral donors will use Poverty Reduction Support Credit (PRSC-11) process of IMF to harmonize their assistance.
With in this popular modality of aid delivery, health, education, and transport partners have been discussing some arrangement such as pooling resources for technical assistance in the health sector and comprehensive harmonization in the transport sector where significant progress has already been made. Belgium, Ireland, Sweden, United Kingdom and Netherlands have decided to harmonize support of the Teacher Development Component of the education program with polling of funds relying on GOE laws, regulations and procedures.
This report has been prepared to provide an analysis of the country’s public sector procurement, including the legislative framework, organizational practices and to indicate areas needed for improvement to the world standards or international level. Since substantial delays occur in procurement due to cumbersome procedures and practices of the donor community, recommendation of this report are coordinated with donors such as the EU, UK and Sweden who are also engaged in procurement reform initiatives with the government. This document will provide strong support for the harmonization agenda in the area of procurement.
Critical to the provision of harmonized budget support in an annual basis is the ability of DBS partners to verify systematic improvement in the public sector fiduciary framework. As diagnostic tools, CFAA, CPAR, HIPC AAP, and PER have been prepared with huge costs. GOE and Donors have emphasized to find some mechanism under Intergovernmental Governance Review- IGR/IFA- Integrated Fiduciary Assessment for a “light” review of stocktaking of the quality of the public sector fiduciary framework – provided that implementation of EMAP program will be monitored under the PSCAP Program – on an annual basis as part of the DBS/PRSC cycle.
A key element linking the Government’s own fiscal processes to dialogue with partner providing direct budget support is the Joint Budget and Aid Review which replaces PER etc. Under this and Medium Term Fiscal Framework (MTFF), GOE has exchanged ideas about transition from project/program to Direct Budget Support (DBS) with donors who are either providing or intending to provide direct budget support. Since the GOE’s vision for DBS has been shared by the Donor community, it has encouraged those who cannot provide significant DBS support to support sectors via sector programmatic support, or earmarked budget support instruments, in preference to project aid.
The purpose of the Monitoring & Evaluation is to track progress and assess outcomes. So it the foundation for enhancing aid flows to the country. An effective M & E system should be comprehensive and cover all aspects. Data and information should be reliable and relevant.
By taking into consideration the above and donor concern that their information systems and needs should be coordinated as full as possible until such time that donors will be able to rely more extensively on government reporting and monitoring system, GOE has taken the lead with broad based participation by civil society and private sector stakeholders to collect data and information having the following objectives:
The GOE has developed an action plan to improve data and information base with identified immediate and long term requirements for strengthening the system. Under the coordination of the Welfare Monitoring Unit (WMU) of MOFED, GOE has completed a number of steps to strengthen the R& M system to replace Donors procedures and practices regarding M & E. Monitoring and Evaluation Workshop held in May 2004 was participated by all stakeholders including the civil society and PRSP-11 mission enriched the MOFED Evaluation Action plan by presenting on international experience on Monitoring and Evaluation. Another
The object of the Annual Progress Report (ARP) is to provide domestic and international stakeholders with a summary report on implementation of the SDPRSP including key result and challenges. Release of budget support is contingent on this annual report. It has become a key element in the revised fiscal calendar.
Impact of harmonization is identifying and measuring the achievement of the national economy. So the impact of harmonization can be measured by using general indicators like per capita income, GDP growth, employment/unemployment, inflation, income distribution, level of national savings. Balance of payment, fiscal instance or analyzing variables which directly influence the behavior of these indicators.
Through harmonized and aligned framework, total available resources (including foreign assistance as a supplementary for domestic resources) will be spent:
Harmonization is an attempt that takes place after building consensuses and agreed upon principals to generate specific results to enhance aid effectiveness by reducing costs of transaction and administrative burden on the government of Ethiopia to ensure ownership and leadership of development efforts of which the GOE is responsible for its citizen. In fact, this is a process in which lessons can be learned and disseminate.
The GOE has learned its lessons emanating from four areas which have been vial important to initiate, plan and finally for implementation of the agenda of harmonization and alignment.
a. Political will and commitment
b. Institutional Building
c.Wider Participation and consultation
d. Data Base Management System
Channeel 1: Funding through the consolidated fund and GOE’s formula based budget disbursement. Management is the responsibility of each level of government. Executed through MoFED, Regional BoFED and LocalWoredas.
Channel 2: Funding direct to sector public bodies to use and account for donor funds.
Channel 3: Donors finance projects directly (sometimes but not necessarily recorded in the governments development budget)
b. Externally driven judgment
c. Patience to see results
d. Staff awareness
e. Decline donor assistance
f. Additional requirements
g. Capacity constraint