Italy's aid reform spawns new agency

The Italian parliament has finally passed a new law that sets out an ambitious agenda for a comprehensive reform of Italian aid — and with it, the birth of a new development cooperation agency. Entered into force last month, the new law provides organizational, regulatory, administrative, budgetary and accounting autonomy to the Italian Cooperation Agency. While details on funding have yet to be deliberated, ICA is confirmed to have a financing facility at its disposal. This facility will be funded by Italians’ postal savings and is meant to improve “access, control and coordination of the financial activities of banks and multilateral funds.” This move seems to buck the trend for aid agencies being folded into foreign affairs departments, as in the case of Australia and Canada. The Italian agency won’t have complete autonomy, however. It will be supervised by the foreign affairs ministry, which will be renamed Ministry of Foreign Affairs and Development Cooperation. The ministry, through its development cooperation directorate-general, will remain ultimately responsible for Italian foreign aid. But the expectation is for the ministry to take on an increasingly “strategic and political function,” leaving operations and day-to-day work to the newly formed agency. ICA is expected to create up to 200 new jobs in Italy and about 100 staffers would be needed to implement the agency’s activities abroad, according to Luca De Fraia, Action Aid’s deputy director in the Southern European country. The headquarters will be stationed in Rome, but the agency is also expected to open offices abroad. And access to these posts for non-Italians will be granted in line with both Italian and European regulations on staff selection for public agencies. The new legislation also institutionalizes the role of the deputy minister for development cooperation, who will take part in government cabinet meetings whenever development issues are on the agenda. “With this reform, cooperation will no longer be merely a part of foreign policy, but an integral one,” Deputy Foreign Minister Lapo Pistelli said in a statement on the law’s approval. While De Fraia told Devex that “each country needs to find its institutional balances and Italy needs the kind of cooperation tool the reform is aiming to shape,” Gianfranco Cattai, president of the Association of Italian NGOs, does note that the new law signals a major policy shift. A greater role for the private sector? The reform would allow for a greater number of projects and tenders. It also aims to enhance the role of the private sector in aid and promote public-private partnerships “in compliance with the law, human rights and the rules of corporate social responsibility.” But what does this mean in concrete terms? “The text talks about promoting the private sector, but it is cautious on saying whether it will give more projects to the sector, partly because the country doesn’t have experience on these matters,” De Fraia said. The law has gray areas and “the relationship with the private sector is still unclear,” Cattai said, adding that there is no clarity of whether the law refers to large multinationals only or even small companies and cooperatives. “We believe very much in the partnerships between Italian and African for-profit entities and we want to work in that direction,” Cattai said. “If the reform will enhance these partnerships, the results could be very interesting.” One notable change, De Fraia explained, is the “broadening of the community of development actors eligible for public funding through selection procedures, which is now expanded beyond national or local government entities and development [nongovernmental organizations] … It acknowledges the for-profit sector as a development actor eligible for [official development assistance] funding.” According to De Fraia, a set of “appropriate procedures” on the involvement of the private sector in development activities has yet to be defined, but he sees the country at something of a crossroads when it comes to selecting private sector participants to implement cooperation activities. The reform is expected to lead to concrete results “within the next three to six months,” following discussions on a series of procedures to delineate various practical aspects of the reform, including the competitive procedures and how they apply to the private sector as opposed to civil society organizations. “With the reform, Italy finally acquires its own way of doing foreign policy that goes beyond the concept of aid [toward] a consistent set of policies that have to be translated into investments and partnership relations between countries,” Cattai said. Check out more insights and analysis provided to hundreds of Executive Members worldwide, and subscribe to the Development Insider to receive the latest news, trends and policies that influence your organization.