New paradigms and challenges push donors to align efforts

During the Asian Development Bank’s annual meeting last May, the ADB and Inter-American Development Bank pledged to strengthen Asian and Latin American ties by formally partnering to explore research and capacity-building opportunities in the areas of disaster risk reduction, urbanization, and infrastructure development. “In the area of development and all the impacts from development, there are a lot of lessons that Latin America can take from Asia and Asia can take from Latin America,” IDB President Luis Alberto Moreno told Devex during the ADB Annual Meeting. That exchange followed ADB President Haruhiko Kuroda’s participation in the IDB annual meeting last March. “From here on, [ADB and IDB] will pursue joint research and seminars to better strengthen cooperation among our regions’ companies, intellectuals and policymakers. There are many ways to cooperate, and we have already started. There are concrete projects in the pipeline,” stressed Kuroda. The Japan International Cooperation Agency – an organization not particularly well-known for collaboration – is actively implementing its new policy of development cooperation by strategically utilizing partnerships with traditional development assistance organizations, as well as emerging donors such as Korea, China, Thailand, and the Islamic Development Bank. In 2009, JICA signed a partnership agreement with the United Nations Development Program to focus support in Africa and conflict-affected fragile states. With other partners, including the World Bank, ADB, and the French Development Agency, or AFD, JICA appears intent on coordinating on a wide-range of issues, global, regional, and local. In this new age of development partnership, major donors are increasingly trying to coordinate their funding, planning, and activities to achieve better outcomes. The near universal donor focus on “value for money” against a backdrop of intensifying globalization and looming aid austerity is helping promulgate and justify partnerships among donors across the world – targeting the most desperate countries, as well as the fastest emerging ones. Like most other forms of partnership, this movement is founded on the belief that aligning donor effort and resources can deliver greater development results than those of individual donors working in isolation. The principles of comparative advantage and rational division of labor are also present – if one donor is operationally efficient and effective in a certain country or sector, it simply makes more sense for other donors to play complementary roles rather than compete in the same space. Of course, working together and sharing development responsibilities, risks, and rewards is not entirely new for donors. Multilateral and bilateral donors have been aligning their goals and pooling their resources since the early 1990s as prominent multilateral institutions began facilitating donor dialogue through conferences, workshops, committees, steering groups, and other collaborative forums. While these forums no doubt resulted in more effective idea exchange, information sharing, and policy formulation, on-the-ground operationalization of donor partnerships has in reality been much more difficult due largely to bureaucratic roadblocks, as well as organizational and cultural differences of donor agencies themselves. Some specific challenges to partnership commonly cited by donors include: reaching consensus on development program policy, design, and outputs/outcomes, evaluating and measuring outputs/outcomes, managing financial resources, reconciling donor objectives with recipient country objectives, and agreeing on communication and coordination mechanisms. For these reasons and others, donor partnership rhetoric has outpaced implementation and pooled financing has accounted for a relatively small percentage of overall official development assistance. But today, donors are partnering in different ways not yet fully assessed or understood which will, ultimately, have a major effect on the business of global development. Spurred by calls from the 2005 Paris Declaration on Aid Effectiveness and 2008 Accra Agenda for Action for greater coherence in the delivery of development assistance, donors have been exploring an array of possible relationships and alignments. We will discuss donor partnerships in three specific contexts here – (1) climate change, (2) country-led development, and (3) multidonor trust funds – all of which play an important role in today’s development finance landscape and are critical for implementers to grasp. Climate Change. The international donor community’s uphill battle against global climate change appears to be attracting the most innovative and dynamic donor partnerships, due largely to the global nature and scale of the threat and challenge. The upcoming Rio+20 Conference on sustainable development should help take this climate change coordination to the next level. For instance, Germany’s Federal Ministry for Economic Cooperation and Development, or BMZ – an agency well-known for its leadership in combatting the effects of climate change – is currently conducting intensive dialogues with ADB, IDB, and the African Development Bank to win support for the use of renewable energy and climate protection measures. Last December, AfDB, ADB, the European Bank for Reconstruction and Development, IDB, and the World Bank agreed to work more closely in the fight against climate change by developing common tools and metrics for cities across the world. On a more tactical level, with climate change funding embedded in a wide range of other programming including disaster management, economic competitiveness, trade negotiations, and urban development, partnered donors are dedicated to creating targeted funding mechanisms to help developing countries cope with the challenges of a warming planet. Major climate financing mechanisms include the Global Environment Facility, the United Nations-managed Global Environment Fund, and the World Bank-administered Climate Investment Funds. >> Yes, we can? Obama’s Global Climate Change Initiative >> Breaking down the global climate change agenda As one of the largest fast-tracked climate financing instruments (14 donors pledging $6.5 billion), CIFs signify the extent to which donor partnerships are driving climate change finance. Channeled through the AfDB, ADB, EBRD, and IDB, CIFs help developing countries pilot low-emission and climate resilient growth with specific programs in clean technology, sustainable forest management, and renewable energy. Specifically designed to also leverage national and private sector resources, financing for CIFs is expected to rise along with the growing number of emerging economies opting to go green. Procurements linked to CIFs follow the implementing agency’s rules and procedures which could be the World Bank, AfDB, ADB, EBRD, or IDB. (See one open Climate Investment Fund tender to support the Regional Disaster Vulnerability Reduction Project in Saint Vincent and the Grenadines.) Country-led Development. Historically, development stakeholders report of an inherent tension between international donor programming and recipient country agendas. It is no secret by now, however, that donors are harmonizing their programmable aid with the needs, goals, and priorities of recipient countries. These needs, goals, and priorities are increasingly being defined by official national development strategies which are chiefly developed and managed by a central planning authority within the recipient country government. In most cases, donors provide valuable guidance and input during the strategy development stage, but their principal responsibility is to apply assistance in a coordinated way that directly supports achieving the country’s self-designated strategic objectives. In the Philippines, the Australian Agency for International Development, ADB, Canadian International Development Agency, and World Bank are all working together in support of the government’s widely-publicized public-private partnership reform agenda. Guided by the Philippine Development Plan 2011-2016, these donors are collaborating to enhance the government’s capacity to develop, package, competitively tender, and implement PPP projects. Recently, the donors released a Strengthening Public-Private Partnerships (PPPs) in the Philippines tender which clearly highlights the donor partnership and advanced coordination, but is being bid out by ADB in close consultation with the Philippine Department of Finance. The Public-Private Partnership Center, an attached agency to the Philippine National Economic and Development Authority, coordinates and monitors all PPP activities, including the Project Development and Monitoring Facility, a revolving donor-sponsored fund created to support the preparation of pre-feasibility and feasibility studies, tender documents, and various forms of bidding assistance. Staying in the Philippines, official development assistance of AU$5 million ($4.84 million) from AusAID to alleviate poverty through social protection could certainly make an impact, but combine that money and AusAID’s significant on-the-ground technical expertise with a World Bank loan of roughly $513 million and an ADB loan of $400 million targeting the same development challenge and you have a much more potent formula for success. Today, this donor partnership is responsible for building and sustaining the country’s conditional cash transfer program – the cornerstone of the government’s official poverty alleviation strategy being managed directly by the Philippine Department of Social Welfare and Development. For CCT programs in the country, donors and the Philippine government coordinate through a joint DSWD-World Bank Social Protection sub-working group of the Philippine Development Forum – the primary mechanism for facilitating substantive policy dialogue among stakeholders on the Philippine development agenda. So in addition to understanding the funding, program, and procurement plans of partnered donor agencies, implementers are finding that it is more important now than ever to study the recipient country’s short-, mid- and long-term development plans and network locally. Multidonor Trust Funds. Donors are also finding that responding to the needs of post-conflict and fragile states require a special partnership approach. Multidonor trust funds are vehicles which pool and disburse development aid through an administrative agent under tailor-made rules and regulations and are the development finance tool of choice in many of the most difficult operational environments from Haiti to South Sudan to Afghanistan. While they have been around for some time, MDTFs are designed to boost the predictability and stability of development funding and are being deployed to support a wide range of humanitarian, reconstruction, recovery and peacebuilding activities. (Here’s an overview of a few of the world’s largest MDTFs.) The World Bank often serves as the primary administrator and trustee of MTDFs so, while there are these tailor-made rules and regulations, competitive bidding is commonly carried out using World Bank bidding and procurement procedures and rules. For example, while the Afghanistan Reconstruction Trust Fund is supported by a remarkable 31 donors, the World Bank has taken the administrative lead, releasing the following procurement notices over the course of the last several months which have followed World Bank bidding and procurement guidelines: - Afghanistan Reconstruction Trust Fund (ARTF) Third Party Monitoring of Core National Investment Programs - Afghanistan Reconstruction Trust Fund (ARTF): Consultant Services, Monitoring Agent - Rural Access Project (ARAP) in Afghanistan: General Procurement Notice Although MTDFs have been lauded for their ability to serve as platforms for policy dialogue, align development strategies and programs, reduce administrative and transactional costs and risks, increase procurement and operational transparency and provide access to important country-level data and information, there has been some criticism of MDTFs. In a report last year, the Australia and U.K.-funded Governance and Social Development Resource Center asserted that MDTFs have “generated disappointing results” and most have failed “to translate theoretical advantages into practical success.” Despite these challenges, most analysts are expecting an increase in the deployment and usage of MDTFs, especially in light of ongoing hostilities associated with the Arab Spring, NATO troop withdrawal in Afghanistan, and the constant threat of natural calamities. With this trend in mind, implementers must make a concerted and early effort to understand the collective strategies of multiple donors in these fragile, high-pressure areas, as well as the procurement guidelines, rules, and procedures of the agent responsible for administering MDTFs and other pooled funds. Christine Dugay contributed to this report.