Transcript of Plenary Session on "Aid Effectiveness: What Role for Legislators in Monitoring Results?"By Abdoulaye Bio-Tchané, African Department Director, IMF,
At the Seventh Annual Conference of the Parliamentary Network on the World Bank
Cape Town, South Africa
March 17, 2007
Saumura Tioulong: Let's begin our work. My name is Saumura Tioulong. I am from Cambodia. And I am happy to invite you to take your seats because we are going to start the session. We're already running late, so don't complain if all of you cannot take the floor for questions. The presentations will be made, one in French, two in English, so may I invite you to grab your earphones and be ready to switch from one language to the other one, for those of you who are not bilingual.
Without any further ado, I am going to invite the first speaker for this very important session: Mr. Abdoulaye Bio-Tchané, who is the Director of the Africa Department of the IMF. Mr. Bio-Tchané was Minister of Finance of Benin, and I have the pleasure to give you the floor.
Mr. Abdoulaye Bio-Tchané: Okay. Thank you madam Chair. Ladies and gentlemen, good morning. I thank very much for this opportunity to speak on Aid Effectiveness at this conference. I think the audience is a very important one for us in the fund. Let me speak briefly about why it is so important that aid be effective, what donors and the fund are doing, and can do to help, and especially what parliamentarians need to do.
First, more and more aid is predictable. Aid flows are critical if international development agenda is to move forward. As you know, the goal is to achieve the MDGs by 2015 -- and no one here would be surprised to learn that most developing countries are seriously off track. In Africa, in particular, the MDGs cannot be met if current trends continue. It is therefore of paramount importance to scale up aid and speed up action, as the managing director stated yesterday - not just to meet the goals, but to meet the spirit of service too, and concern for the people of low-income countries, in particular in Africa. As you also know, the G7 at the Gleneagles Summit in July 2005 pledged to increase aid to poor countries by $50 million by 2010.
The centerpiece and benchmark for the effort on aid effectiveness is the 2005 Paris Declaration in which individual countries and international organizations committed themselves to harmonizing and aligning aid delivery. But just increasing the amount of aid is not enough. Aid that is driven by donor- and not recipient-country agendas is unlikely to be used effectively. That is why making aid more effective will take teamwork between donors and recipient countries.
Donors are already making commitments to make aid less difficult to use, more predictable, and better aligned with recipient priorities. One problem is that so far we have not seen much of the higher aid promised at Gleneagles, especially in Sub-Saharan Africa. Except in Nigeria, which is far from the poorest country there. Official assistance to the region edged lower in the last two years and is projected to be flat in 2007. This makes it more important for recipients to make effective use of the aid that is arriving. That is actually still quite substantial, averaging 9% of GDP and some 36% of government expenditures in Sub-Saharan Africa as a whole.
The effort donors have been making to coordinate their aid since the Paris declarations are therefore crucial. Ultimately though, our experience is that recipient countries themselves really will drive the donor harmonization agenda. Where donors are coordinating their work and aid is being well used, we usually find the country itself leading the development strategy.
When the recipient country has a clear vision of what it wants to achieve, donors will coordinate around this vision - as we have seen in Mozambique and Tanzania among other places.
When the aid effort is generally led by the recipient country, we usually find several critical common factors; Let me quote them.
• The development strategy usually documented in a Poverty Reduction Strategy Paper, the PRSP or similar Statement of Intent, reflect recipients' not donor priorities.
• Second, the strategy is effectively prioritized, it states, what the most important objectives are and what would be done if more money were available.
• Third, the strategy has political support. Obviously, this is an important step. Ownership by the authorities gives this strategy legitimacy and force in the eyes of donors and helps guarantee its effectiveness.
Using aid effectively takes more than a good strategy of course; the productivity of aid depends crucially on strong policies.
Sound macro-economic fundamentals, well-directed policies, solid institutions, and private sector participation are all necessary if aid is to be effective.
Then, how can the Fund help along with our partners such as the World Bank and the African Development Bank?
First, the Fund can help countries, and is helping countries prepare a realistic focus of the medium-term profile of aid flows, medium-term for us being about three-five years, a good horizon for planning. We can also advise on how they can manage economic policy consistently with these flows, and with what the economies can be realistically handled.
Second, what estimates are available and what it will take to reach the MDGs - integral scale up of aid flows, the Fund can help, and is helping countries design scenarios to address the macro-economic challenges that must be dealt with for each scenario.
Third, the Fund can help and is helping countries put in place public expenditure management tools that can use aid flows more effectively.
Fourth, the Fund can support and is supporting mechanisms under the Paris Declaration that make donors of aid and recipient countries accountable to each other and encourage all parties to regularly assess their progress.
Fifth and finally, the fund can continue, and is continuing to participate in donor coordination efforts. Fund staff often work with donor groups in each country, giving a signal of country economic performance and prospect, collaborating with the World Bank and other bilaterals and having an open exchange of views.
To conclude, ladies and gentlemen, let me say that now is a time of great opportunity for Africa. A large number of countries are pursuing economic reforms, and international environment is favorable. Global demand is strong for African products, commodity prices are high, debt burdens have shrunk and private investors are coming. And we are seeing higher growth than we have seen for a long time. But to convey this opportunity and to sustain an even higher growth and poverty reduction will require much more work from everyone.
Donors must continue their effort to coordinate their actions and provide more and more predictable aid to those countries that will use it well. Making aid work in countries where conditions are less favorable remains the challenge although there, the catalytic role of aid, its ability to spur reforms maybe the greatest. But, it is of course not only about aid. Success will require a vital and growing private sector, expanding exports and banking systems that safely and efficiently convert money into investment.
Developed countries need to open their market to African exporters, while African countries need to encourage trade amongst themselves. Meanwhile, countries should continue improving their economic policies and their management of public resources. They need to maintain their fiscal discipline that will avoid future debt crises, and allow the financial system to develop into a powerful instrument for development. They need to invest in health and education in order to bring the benefit of growth to all; but above all, countries must be willing to take and question ownership of reforms, that align development assistance with country priorities.
Here, parliamentarians have a key role to play in monitoring the use of aid resources and more generally, exercising effective oversight of countries' economic policies. Parliaments can help, first, by debating the priorities of development as presented in the poverty reduction strategies of the government. Second, holding the government to account in ensuring that these priorities are reflected in their annual budget. Third and finally, monitoring budget execution and insisting on proper auditing and reporting to parliament.
Active engagement of the international community would be crucial to making the emerging global aid framework more effective, but all of these will only work in support of efforts that are led by the recipient countries themselves, and of course by parliament. Thank you very much.
Saumura Tioulong: Thank you very much Mr. Bio-Tchané, director of the Africa Department at the IMF, for having told us very clearly what the fund can do to contribute to and make the development aid more efficient. And I have the great honor and pleasure to announce the presence of the Minister Ali Lamine Zeine, Minister of Finance of the Republic of Niger, who is going to speak to us in French. I think he will illustrate in a concrete way, some of the principles and theories that the previous speaker has stated. So, if everybody is ready, may I give the floor to Minister Zeine?
Ali Mahamane Lamine Zeine (through interpreter): Thank you Madam Chair, Honorable Members of Parliament, Ladies and Gentlemen, it is a great honor for me to speak to you this morning, to speak about aid effectiveness, and to speak about your involvement in the monitoring of the process of aid effectiveness. I would like to remind you of some facts regarding the process and give you some examples relating to my country, Niger. Ladies and gentlemen, since the end of the 1990's, the international financial community has implemented new initiatives in the framework of development aid towards -- in favor of developing countries.
They have set up new tools to mobilize resources, to support numerous initiatives in favor of poor countries, and to create global partnership frameworks. Indeed, when we look at the worsening of poverty that most of our countries are confronted with, the International Financial Community has decided to focus its aid on poverty reduction, which was translated in the development of PRSPs which will from now on, constitute the intervention frameworks for the donors to mobilize resources. This mechanism was strengthened by the HIPC Initiative, as well as the multilateral initiative to reduce debts of heavily indebted countries and encouraged countries to invest more in the fight against poverty.
We have to remember that in September 2000 the United Nations organized a special session to deal with the development of low-income countries during which they set themselves the millennium development goals, namely, to fight against famine, and good governance, the conservation of the environment by 2015. Given the huge resources needed to reach these goals, the International Community organized in 2002 a conference in Monterrey during which the participants decided to increase ODA and to improve aid effectiveness.
You will remember that this conference was followed by the Rome Declaration in February 2003, which enabled us to get the commitment of donors to harmonize their practices and procedures and the beneficiary countries, to improve their management and monitoring process. And following this declaration, a forum was organized, to which we were invited on the 28th February - 2nd March 2005 during which the Paris Declaration was adopted.
The implementation of the declaration involves certain reforms in the management of aid, not only on the part of the beneficiary countries but on the part of the donors as well. This declaration supports the commitments that have already been made in -- by Niger in order to eradicate poverty, and we were one of the first countries in the region to implement this strategy, which highlights the justification of some of the reforms that have been undertaken in the areas of finance and the reform of the procurement processes as well.
I would like to now give you the case of Niger, which is a large country, and a rather fragile country because of the climate conditions that prevail in Niger. Niger, Mali and (inaudible) natural corridor through Africa, and one of the main actors in the efforts towards regional integration, and Niger is also a peaceful country that has not been affected by conflict. Niger today has a lot of economic opportunities which have not been tapped, and today we are committed to ensure that our country is open to any potential investors.
Niger is a country where the rule of law prevails, where each actor can play and fully participate in a democratic debate. It is also a country where the decentralization efforts are fully underway. We remember the dark years of our past, and that is why we have set up some committees in order to deal with fundamental issues such as national identity and stability.
The stability contributed to the successful implementation of elections, and the organization of free and fair elections without any interaction, and which testifies I think to our commitment to undertake the necessary reform towards the development of our country, and which justifies I think to the -- to our commitment to undertake the necessarily reform to raise the development of our country. Ladies and gentlemen, in the past we were asked to improve the coordination of various aid practices and to harmonize these initiatives and to strengthen the capacities of the state in order to implement and monitor sectoral programs.
That is why we have decided to focus on sectoral programs, for which the funds would be allocated directly into the budget, and I would like name a few examples of our experience, since we have made some progress following the reforms that were implemented in the financial sector, which reforms intervened on a global manner at the level of our Poverty Reduction Strategy, which was implemented in 2002. And I think that from the end of May we will organize a roundtable with economic and financial partners in Brussels to look at updating of our strategy, to look at the past progress and successes and failures as well.
We have decided as well to start focusing on growth sectors of our economy. In the past our main goal was to eradicate poverty, but we forgot that without focusing, particularly on the growth -- sources of growth, it would not be possible to reach our poverty eradication goals, because in the past, most efforts were undertaken in the social sectors, and we have decided not to focus on the growth sectors.
We have also decided to develop mid-term expense framework towards this development. We have also developed 60 indicators on poverty, which will enable us to assess our progress. We have also initiated ongoing and frank dialog with our development partners to align the objectives of our donors to our national strategy, so that this aid has a positive impact on our economy, and once we have reached our economic growth goals to efficiently share the wealth.
We will also assess the impact of the strategies on the poverty levels, and certainly we will also assess the impact that our partners have had on the improvement of the standard of living of the people of Niger. And basically, within the framework of this dialog with our development partners, these are the main three elements that we discuss.-And of course we have two of our most proactive partners with us today.
At the global level, we have strengthened our National Statistics System with the creation of a National Statistical Institute, which enables us to produce reliable data, which will assist us in implementing an efficient strategy, and to monitor and assess the result of the strategy.
The creation of this National Statistical Institute should enable us to see some results - mixed here - and to show that in the past the data that were at our disposal were not reliable, but that through the creation of this institute, we will modify and we will improve the situation. Our development partners are following the results of our reforms as well in various frameworks. In the finance area, we have decided to focus on internal resource mobilization and we have decided to add value to our annual objectives, and the fact that we belong to the common market system should enable us to mobilize further resources on a local level. Regarding external resources -- we have an open dialogue with our partners to ensure that the resources are available on time but they have to be predictable. So, this dialogue is extremely helpful for us.
We have also enacted a new fiscal law in 2007 through this system. Regarding public expenditure, which of course is one of the areas of concern for low-income countries, we have implemented some reforms with the support of our partners. To name a few, we have developed new financial tools. We also have developed new tools to assist us in managing our public expenditure, managing our public funds. We have also put in place some measures to accompany our decentralization process, and the strengthening of our Central Reserve Bank supervisory role. We've also strengthened the capacities of our treasury.
So, these are basically the major reforms that have been implemented in the financial sector. We have also enacted a law regarding settlement mechanisms, and this is very important for our development partners, since it will give more transparency to the process.
So, these reforms which were supported by the IMF and the World Bank enable us to reach certain very positive results, and to mainly better manage our public funds.
Of course, the path has not always been smooth. We have been faced with some resistance towards these reforms, and one of our strategies of course was to sensitize our partners to the benefit of these reforms, and to enable us to improve the situation on the ground.
As you can see through this presentation, my country Niger has undertaken a lot of efforts to improve the situation on the ground, and in order to increase the trust of our partners, by implementing some indicators and some reforms, which I've already mentioned. This process will be ongoing, within cooperation frameworks with our partners, and of course I am at your disposal to answer any questions that you may have regarding this process. Thank you very much for your attention.
Saumura Tioulong: Thank you very much Minister Zeine for giving us experience from your country, Niger. Michael Koch is at the World Bank, and he mobilizes resources for development for the poorer countries. And without waiting any further, would you please explain to us what you do?
Michael Koch: Thank you very much. I am the de facto Finance Manager for IDA, which is a soft loan window of the World Bank. I am not a finance manager, but I have the pleasure of dealing with the donors, 40 donors to IDA to mobilize the resources. I will talk about the aid architecture. Aid has an architecture; but it does not have an architect. Aid architecture matters a lot for the aid effectiveness that was recognized by the IDA deputies, the IDA donors last week in Paris when this topic was discussed. It's useful to look at the overall trends of ODA - you will see that we are currently at a level of 0.33% of GNI for all donors that report to the OECD - that's the level we had about 15 years ago.
So, we are coming back to where we were. The scaling up of ODA has not yet occurred on that basis. However, in nominal terms, ODA has gone up. You see also that scaling up of Africa is starting, but we clearly have a long way to go.
In my presentation, let me start with some of the trends of official development assistance. I just mentioned that ODA has been increasing. We have a $105 billion into 2005. However, the most of the increase is because of debt relief. Debt relief is 70% of that increase. Debt relief, particularly to two countries, Iraq and Nigeria. If you look at a chart that explains all of this, you'll see the blue area on the bottom that is what we call "core development programs." This is the project and the programs that are implemented in developing countries. Most of the increase to the 105 billion is the light blue area on top and that's the debt relief. We have also seen increase in emergency assistance in response to the Pakistan earthquake and the tsunami, and we see higher cost of delivering the aid by the donors.
So, the core development programs have not increased on that basis yet, and we hope they will in the future. In terms of multilateral ODA, it has accounted and does account for about 30% and that includes the World Bank and the other regional banks. 70% is bilateral. Let me, in the interest of time, go to the next chart which explains what the slide before was saying. The largest provider of ODA among the multilateral organizations is now the European Commission. If you look at the very right side of that chart, the large blue bar that is the European Commission. Number two is the UN system and number three is IDA, the light blue bar. This was very different 20 years ago. In the 80s, IDA was the largest and now the sequence has reversed.
Let's look at the distribution of ODA - where does it go? By income level of the recipients, we have good news--more aid to the poorest countries. On the bottom of these bars, you have the blue area: these are the least developed countries as per the UN definition. We have added a red bar on top of it; these are other low income countries, less than $825 per capita.
So, these two groups of countries now receive about 67% of the aid, which is encouraging. It comes up from about 60% in the 60's. The other good news is more aid is coming to Sub-Saharan Africa. It increased from 20% of the ODA share to about 38% today over the last 40 to 45 years. So that's good news. However, what you also see is a very strong increase for the social sectors, and if you have an increase in the social sectors, you have to see a decline somewhere else. The decline is in infrastructure and in production.
The social sector which is primarily education and health has now a share of 60% of total ODA that can be allocated to Sub-Saharan Africa; more than half goes in Sub-Saharan Africa to education and health. And of course, then you see a decline in the share of infrastructure, which is primarily energy and roads and communication and you see a decline in production, which under the OECD definition includes agriculture, mining, industry, and also forestry and fishery. Let me show you that in the graph. It is easier to see that way. The blue are is the social sectors, primarily health and education going from 33% 15 years ago to 60% today and that's in Sub-Saharan Africa. And you see the corresponding decline in the infrastructure from 29-19% and in production down to 12%. So, this is a rather dramatic picture we find and we have to discuss what that means.
Let me go now to the topic of proliferation of aid channel. This is about more channels becoming available. More donors, more aid agencies. From a donor's point of view, the number of bilateral donors has increased from five or six after the World War II to at least 56 today. Many of the new donors are the ones that are not members of the Development Assistance Committee of the OECD such as China, India, Brazil, and you have now 230 plus multilateral international organizations that are active in ODA and on the top of that you have many, many NGOs and you have private donors, private foundations. The number of international organizations, funds and programs is now higher than the number of developing countries they were created to assist. Proliferation of new funds and programs has led also to a specialization in particular sectors or themes.
More and more the new entities are single purpose entities for specific sector or specific type of program. We'll come to that. It's the global programs and the vertical funds. And finally you have most proliferation in the health sector; more than 100 major organizations active.
From the country point of view, this has also shown up. The average number of donors per country has tripled over the last half century and more importantly since 1990. If you look at countries where you have forty donors or more, we had zero of those countries, fifteen years ago; today, we have 31. So you have a lot more donors active in each country.
Multiple aid channels impose an additional strain on the already weak implementation capacities of low income countries, and many donors have different procedures and processes. So, harmonization, we'll come to that, is critical.
The other aspect is that, I've mentioned that before, you have more and more earmarking, more of the aid is earmarked for specific purposes. Let me show you an example here, on global programs and vertical funds This is the example of aid for infectious disease control - just that single purpose of ODA. If you look at the chart on the bottom on the left side, you have Sub-Saharan Africa, 36% of the ODA allocated for the health sector in Sub-Saharan Africa is allocated for the single purpose of aid for infectious disease control. So, of course then all of the rest of the health sector, you know, gets the balance of 64%.
So, earmarking may contribute to an underfunding of other investments which are equally important for growth and for poverty reduction. We need to have a balance between sectors and among interventions in one single sector. This example was mentioned yesterday by President Wolfowitz; I'm going to give you a brief. It is the case of Rwanda. Basically what you see is that most of the aid in the health sector is not going through the government; it goes by the donors to the implementing agencies directly. It is very difficult for the government to track the resources, let alone to ensure consistency with government programs.
You also see that money is allocated primarily for HIV/AIDS and for malaria and only one million in this case is allocated for integrated management of childhood illnesses which is, however, a major problem in that country. But the donors have earmarking. The money can only be used for one specific purpose and that is the outcome.
Let me go now to the question of fragmentation. Proliferation is one side, more donors. Fragmentation occurs if you have many more donors without a substantial increase in the overall volume of aid and that is what we have seen. For example, you now have have about 60,000 donor-funded ODA activities - that's up from 20,000, 15 years ago and the average size of donor intervention is now $1.5 million; it's a fairly small size. The size would be even smaller if we took into account the debt relief.
So you have a lot of fragmentation and also one-third of all of the aid is for technical assistance, which in many cases is self-standing, free-standing and not very well coordinated. This chart, I think, tells it. I just mentioned the increase in the number of activities. The blue line goes from about 20,000; actually, that is just less than 10 years ago to 60,000 today whereas the average size goes from $2.5 million to $1.5 million.
What does it all mean? It means we have a high complexity of the Aid Architecture. This is increasing the transaction costs for donors and for recipients, and ultimately, this is going to lower the aid effectiveness. Let me just go to the box for the example of Tanzania. A large share of aid to that country is through more than 700 projects managed by 56 parallel implementation units. Half of all technical assistance provided to the country is not coordinated with the government, and Tanzania received 541 donor missions. That's more than two per working day. During 2005, only 17% of those missions involved more than one donor. So, there was a huge tax on the government just dealing with the number of donors in the country.
What can we do? If we cannot change the architecture because we don't have an architect, we have to work with what we have; and one thing we can do and we must all do, and more donors have to do is to work within the framework of the Paris Declaration.
There are five principles; the first three are critical to this debate today. Ownership at the country level is important; partner countries exercise effective leadership over their own development policies and strategies. Alignment is important; the donors have to align with government policies as much as possible, and harmonization among the donors is also critical. We have 12 targets which are going to be monitored until 2012; two of them are relevant for this discussion.
So let me conclude: ODA has grown recently - dramatically, if you want, but most of it was for debt relief. Now debt relief is expected to come to an end, and we expect to see an actual increase in the ODA for programs and for projects - what we call the allocable ODA - and that is very good news, if the promises of Gleneagle and Monterey are going to be kept. However, we have to use the aid effectively. Number one, we need complementarity across national, regional, global development priorities. Donors have to talk to each other, we have to talk to the government. We need hopefully, less earmarking for single purpose interventions; we need more fundable aid. Finally, we have to strengthen the ability of recipient countries to use the aid productively because we do expect an increase in the number and the volume of quick disbursing operations, which is basically budget support. Thank you very much.
Saumura Tioulong: Thank you Mr. Koch for this very good presentation. I am sure you'll have many questions. Before opening the floor to questions, I would just like to remind one point to all of you, my colleagues, friends and fellow parliamentarians. You have just heard a panel of three speakers--two come from IFIs, one from the International Monetary Fund, another one from the World Bank, and the third one comes from the Executive Branch, whereas the attendance is mainly consisting of parliamentarians. My point is the following: we all of us are members of a parliamentary network, which can be very powerful, because we come from the parliaments from almost all of the world. And I am not sure that all of of you, my friends and my colleagues understand that this represents a big power. We can if we want to, use this power to influence many things in the world.
I would just like to take an example. This morning, I took part in a meeting on Climate Change, and many of my colleagues have complained that some big polluters in the world did not accept to sign the Kyoto Protocol. And all of them were complaining, what can we do? How can we force them to sign? I think that we have the answer here in this room. If all of us decide to send a letter to say, America -- the United States is one of the biggest polluters in this world and they have declined to sign the Kyoto Protocol. But China also has refused to sign the Kyoto Protocol. Why don't we decide to use this Parliamentary Network?
It is supposed to be a Parliamentary Network on the World Bank, but what prevents us from using it for whatever other purpose we think is good for the whole world? Fighting against climate change or trying to do something in order to defend ourselves against the bad effects of climate change is something that is very legitimate for parliamentarians in the world to do. So, this is my only point. Please don't forget that we belong to a very important and potentially influential network. Please use it, that's why this organization has been created. We all have the privilege to be a member of this Parliamentary Network - let's use it.
I volunteer to draft the letter and I appeal to all of you who want to draft a letter to those big polluters who do not accept to do something about the bad effects of climate change to join me, we will draft the letter and have all of you sign it while we are here, and to send it to whoever we want it to be sent.
Okay, this is enough from me. I have abused my role as the Chair, and I would like to open the floor for questions to anyone of our three speakers here. I will start with the right hand side here, with three questions, and then we will go to the left hand side, and we will give an opportunity for our speakers to answer. Yes sir, from Brazil, one - sorry, from South Africa.
Ben Turok: Ben Turok from South Africa. We are working on a solution to part of these problems; and the solution is a partnership, not between government to government but between parliamentarians and parliamentarians. So, we've identified three countries in Europe and six countries in Africa. We are beginning to track the actual quantities that are flowing, but much more importantly, the policies which underpin these flows. You see, we get stuck on the data - 0.7, 0.8 - but if the increase of 0.1 is going in the wrong direction, the increase 0.7 to 0.8 doesn't matter. What matters is the nature of the relationship. And just to endorse your point, I Chair the NEPAD Contact Group of African Parliamentarians and we have a dialogue with AWEPA from Europe. Between us, AWEPA identifies the donor amounts, and we in Africa identify the direction at a parliamentary level. And the important point is that partnership must include partnerships between the parliamentarians in both donor and recipient countries and we must build those relationships. That will help a great deal, what is clearly not a very satisfactory situation. Thank you.
Saumura Tioulong: Thank you. We will take one more question from India.
Robert Kharsheing: Thank you. My name is Robert Kharsheing; I serve in the Upper House of India's Parliament. Today we heard that there is a Swiss MP and I come from a multi-party system in India and many parts of the world, -- I was wondering whether any discussion - any thought has been given to discussing systems of government and how they affect aid, because the Swiss system of the magic formula of having Consensus Government -- Governing perhaps could apply greatly to Asia, Latin America and Africa, where, if less corruption is there because of consensus government, then perhaps the utilization and the delivery system could be much more effective. Thank you.
Saumura Tioulong: Thank you very much. This is a question for I suppose the two of you maybe. Yes, Sir.
Speaker (through interpreter): Thank you very much Mrs. Chair. I am a Chair of a country of Gabon and the experience of Niger is very interesting for me, and I would like to ask the Finance Minister of Niger. I want to congratulate him for the quality of his presentation. And in regard to the setting up of an information system, where parliamentarians have free access to this system of information. Secondly, in regard to the implementation for transparency, I would like to know if in Niger parliamentarians are associated with the implementation of this system and what are the implications for parliamentarians? Thank you very much Mrs. Chair.
Saumura Tioulong: Okay, we shall begin with Michael Koch. You can answer Ben Turok's first question, and then the representative of the IMF will answer the second question, and then the Minister's question.
Michael Koch: Of course we have to be cautious about how we use the 0.1 increase; it's really not about going to 0.7, it's about using the increments and what we have today most efficiently. And to do that, we definitely have to have more coordination among the donors. We also find that as I mentioned in my presentation that the earmarking of aid is really an issue. Imagine all of the aid was earmarked for one sector; everything went to agriculture. You can imagine that this would be very inefficient. So, we have to look at the effectiveness of the incremental aid that becomes available, we have to be transparent about what we do, we have to co-ordinate publicly, and we have to work with the government. So, I would fully endorse that. Thank you.
Mr. Bio-Tchane: Well, let me say a couple of things on Mr. Ben Turok's comments. First obviously, I will endorse his comment and his proposal, and particularly on the issue of effectiveness as compared to increase, I clearly agree with him that it's more important to make sure that aid and resources are used more effectively than any incremental increase, and from that perspective, it's really -- the more we get rid of the earmarking, the better we are. Second, the more aid and donors are coordinated, the more they harmonize their instruments and actions in the field, the better the recipient countries are, and from that perspective, there is an important debate on -- particularly among the donors, that's the issue of budget support.
I know most of the donors are quite reluctant to use that instrument, but clearly, it's the avenue. If you really want to scale up aid, if you really want to make sure that the aid is used effectively, if we really want aid to be translated in additional infrastructure, in additional human resources, then we need to use more budget support. Of course, it has an impact also on governance, because the only way we can make sure that public expenditure management systems in the countries become more transparent, more effective, is really to assist countries in strengthening the system. If country authorities and donors put their head together in improving the system, then it will work. But if the donors continue to use their own system, then of course they have no incentive to improve the public expenditure management system of the countries, and that's really the biggest challenge we have.
Finally in response to the MP from India, I think the question is really what's the relation between effectiveness and governance? Clearly, it's been demonstrated that's the more you have a good governance system - it could be a multi-party system, but it could be different, the better -- the more aid is effectively used. Of course, there is clearly a relation between the two. Finally, we didn't have the question on EITI, but let me say that in most of the countries this instrument is being used, the more civil society organizations are involved, the better it is because after all this is an instrument to improve governance, particularly in the extractive industries, and of course, civil society and parliamentarians are part of the system, and they should clearly get attention in the system. Thank you.
Speaker: I am the Head of the Assembly in the Gabon asking a question on the involvement of parliamentarian in the management of information. I will say yes to the first question and second; because first we have a tool which is a finance bill which has another support, which is our strategy of poverty reduction; the declaration of the head of state and the government and our economic reform program. These elements will allow us to elaborate with other information, and that is collected through partners to have a finance bill, which will be put to consideration to the Assembly and you know that parliamentarians, don't start considering a bill before all these data are available. It means they have access to the information, and moreover, there are some times in the parliament where ministers are called, and maybe the government to come to the Parliament and give them information. As far as we are concerned, we have been called to explain to the Parliament and we have given them all information they require.
On the Transparency Initiative, the EITI, we are just at the beginning. The department in charge of these initiatives, is our department, and we have a big intention to speak to the parliamentarians and the mining code was voted by the parliamentarians, and some of them have all raised this preoccupation as you all just did, and it has been considered in the assembly. I can tell you that, yes, we have the intention to associate the parliamentarians in this process.
Hugh Bayley: My name is Hugh Bayley MP from UK. Contribution, this is the one option to do so on this enormously important subject of the effectiveness of aid, which really I think naturally and rightly, overarches all our discussions over the last two days and all our concerns on this issue. The first of the two conclusions I draw from our discussions over the last two days is, that contrary to my expectation, there had been no complaints here at all about excessive conditionality by multilateral or by bilateral donors; I thought the World Bank would be criticized on that ground, during our proceedings; perhaps they thought so themselves - that hasn't happened.
On the contrary there has been a very strong sense, made quite explicitly yesterday on a number of occasions that in some areas, notably in the areas of governance and in insisting on the role for Parliament, the World Bank and other donors, multilateral and bilateral, have been too hesitant, have been too pusillanimous that they might -- ought to have been a bit more forthright. And I think that goes as well for egregious economic policies, which have been destructive and tended to actually impede rather than help poverty reduction. So, I think that's a very important point that we should take on board.
Now, secondly, my second conclusion from these two days of discussions is that, obviously conditionality shouldn't be applied brutally by some sort of unilateral demands - that would be absurd. Conditionality, and it's perhaps not a happy word, but in so far as it has a role, has a role as a part of a dialogue, part of a partnership. But clearly, that dialogue, that partnership can't be conducted between 56 donors let us say, to take the example Mr. Koch has just given us - and a particular recipient country - that is very dangerous and that will never work. Therefore, I draw a practical conclusion that as far as possible we ought to coordinate institutionally and there is an obvious opportunity for us to do that on the European Union.
I can see no reason at all, why the member states who themselves have substantial overseas aid and development programs, should not combine with the Commission, which as we have just been reminded, as actually the single largest bilateral donor, and conduct these dialogues with recipient countries, and on a single basis. Say that they coordinate among themselves exactly the points they want to make, the issues they want to raise, and then they have one conversation. And if we did that, we had the EU and we had the USAID that do their own thing, and the World Bank - three main channels for this dialogue, I think we get a great deal of more effective relationship with the recipient countries, and we make a great deal more progress and currently we appear to be making and ensuring that the flows of aid are used with maximum effectiveness and there's common understanding and common commitment on both sides to the programs and the actions that are required. Thank you.
Saumura Tioulong: Thank you for your comment. I am looking for real questions; because Minister Zeine is going to leave in a few minutes - he has to take a plane, so if you could introduce yourself and ask quickly the questions, so that he may answer.
Speaker: Well, by way of introduction, I am a Member of Parliament from Lesotho just around the corner. Question to Mr. Koch perhaps. It's around sovereignty-- sovereignty of the donor agencies on the one hand, and sovereignty of a poor, socially disadvantaged, economically a very weak state on the other. It's not very different from the comment made from the last speaker before me from the British Parliament. What can be done - what should be done institutionally, globally in order to curtail the very fierce sovereignty of the donors who want to dictate to a poor recipient, talking to them in so many voices, and there is no capacity, no personal -- even intra-recipient country -- there is the Ministry of Foreign Affairs and International Corporation and Ministry of Development Planning who compete between themselves. So, there's sovereignty within the country and between the donors and the recipients on the other. What do you think globally we can do in order to control that sovereignty? Thank you.
Saumura Tioulong: Thank you for this question about sovereignty, I am sure that all of us have ideas. One more question from here - this side. Yes, please.
Abdoulaye Lamana (through interpreter): Thank you. My name is Abdoulaye Lamana, MP from Chad, and head of Oversight Committee in Chad. As an MP, I would like to ask you, if the monitoring of the Parliament as you've mentioned, is indeed somehow biased because of the project, practically what we have in Chad. I think it is the same thing in Niger where there are times where big institutions have to come and be like a referee, all in great numbers before the budget is established and sent to the assembly in a way that practically, MPs can approve expenditures. If there is an income -- what is a pain for Chad, but if the budget is ready and sent to the assembly, there are so big difficulties that we may end up going through modifications. Don't you share this opinion?
Mamadou Diop: My name is Mamadou Diop, a MP from Senegal. The increase of aid in education and the health sector, which we want to link with other sectors to lead us to start reflecting on striking the right balance because what we live in our country is that the budget from health is using all the means and it is taken from the salaries for teacher, and has consequences. We cannot recruit skilled teachers and we cannot give them best salary and as a result there is a perturbations in the society then we have to have means in health and education. We have to invest in health and education. We do not have to reduce from health to put elsewhere. We have to create new investment. I don't want these questions to lead us to reconsider the investment but to find means to invest in other sectors because actually, what is happening is a reverse trend.
So, we also have to stop using the ODA to increasing the debt. It is in this level that the network of parliamentarians have to advocate for the writing off the debt; otherwise, we are going to go in a vicious cycle and we will never get out of that. You have to increase the ODA and increase also the investment, but you also have to keep to your commitment. We have said that in OECD countries, you reach up to 7% now we are going about 1% of GDP. This is being too much and yet the countries are not committing themselves on MDG. And yet parallely, there is sustainable poverty, and we in a process of a human world or are we in a world where the biggest eating the smallest. Thank you.
Male Speaker: Thank you Sir from Senegal for this philosophic debate. I hope that we will have an answer to that. We have a very last question.
Abel Mabounda: I am Abel Mabounda from the Parliament of Mozambique, and I am a member of the NEPAD contact group. I would first to recommend that in our next sessions on aid we should also include amongst the speakers, a representative from the UNDP and the European Union since we have been informed that they are also one of the three largest providers of ODA. Secondly I would like to ask Mr. Michael Koch why is it that the donors coordinate their actions, particularly in Tanzania and Mozambique, and they don't see the need of coordination of their local citizens. They continue leading with the government and don't involve effectively the parliaments and the civil society. Thank you.
Saumura Tioulong: Thank you very much for all these questions. I am sorry. We don't have much time. Can all of our three speakers wrap up in 3 minutes each. Should we do like last time; start with you, Michael and then you, Mr. Bio-Tchane and then the Minister.
Michael: Thank you very much. On the question of the sovereignty of the state and the sovereignty of the developing agency, I can think of four measures. I am sure you can think of many more. One is to have information. If you want to exercise your sovereignty, you need to know as a local government what is going on in your country. Many of the interventions are done directly by foreign implementation agencies. I think you can have a requirement, that you at least are informed of everything that is going on in your country in ODA.
The second one would be coordination. You can have round tables at the country level where all donors, all agencies have to come; it's required that they attend; that they report on what they do, and then start to co-ordinate among themselves.
A third one is, have a requirement of use of local implementation agencies; and inform the other donors; inform the donors that you would like to see -- actually make it mandatory to some extent if you can, to use local agencies. The last measure is a simple one: if you increase multilateral aid, you are going to have more co-ordination as well.
On the question of the health versus infrastructure: no one wants to speak down the importance of health and education, but if you don't have an increase in the allocable ODA, and you have an increase in the percentage of health and education, you necessarily have a reduction in infrastructure and in production - that is just what the numbers tell us. I would fully agree with you that having more aid will solve this issue. We need to get more aid. We need to get more aid for programs and for projects. And the last question from Mozambique, why is it that local entities are not involved - the donors go their own way? I think there are certain impatience on behalf of donors. They want to spend the money quickly. There may also be public perceptions in the donor countries that things are done more efficiently if implemented by foreign agencies. We have to work against that. We have to explain how important it is to make development sustainable by empowering the local government. Thank you.
Mr. Bio-Tchane: Thank you Madam Chair. Just a couple of things; one is to support particularly what Michael said. I clearly take note of what you said about the right balance we have now between conditionality and ownership, and also that the fact that we are paying today more attention than ever to the conditionality issues-- having the right balance, being the least intrusive as possible - that's what we are trying. I think its -- and I thank you for recognizing it. To a couple of response to from my colleagues from Chad and Senegal - let me say this in French since this question was raised in French.
Interpreter: "I think it is a fundamental question, which is asked here, and I would like to answer you as a former Minister of Finance, because first of all, on the debate on sovereignty, the referring to the IMF, I think that there is one reference which is done here for one year, and how do you allocate this fund? This is a national decision, and this is what the IMF - what it does. What they do is, to help the government, so that they may see, what do they need the most from the international community and how are you going to allocate these resources?
Now for the parliamentarian from Senegal, I say that there is an important debate which we have now coming out of a series of debt relief, debt redemption. It is important that in the meantime what is happening in Africa --the financial reform in Africa, has got a credit culture for the private sector and also for the government to loan the money and pay back. We cannot get out of this cycle and carry on asking for the debts to be relieved.
I think it is a very important question which we must ask, that at the time we are coming out of this cycle of debt cancellation that we have to know how to manage our economy, as well as for the private sector. You have seen in so many countries, that so many banks find themselves with unpaid credit just because people from the private sector refused to pay the money they owed. So, we are heading to a new situation where the credit culture should be re-established in a way that funding can be assured for social sector and economic sector, and the credits coming from the sector be refunded. Thank you Madam Chair.
Saumura Tioulong: Thank you, I'd like just to add one thing concerning the comment made by the government regarding the budget. I have to recall that with the international and financial institution, namely the IMF, this mid-term review as my colleague said, aims to advise countries in this situation about resources, or what do we say, how to build capacity in resources? What can we do to identify the resources for us to decrease the deficit or to spend in the area, which we defined as priority areas. And it was suggested to the assembly the budget's discussion.
Once that is done, we will send this information to the Finance Committee; we have informal contacts, which helps us to be at the same level of information. And despite all that, it has happened that there have been debates before the budget discussion, and that the budget has been rejected and the government took that into account. So, this dimension of control and action on what the executive is doing is very important. I agree with you. When MPs rejects an expenditure, they suggest a new expenditure, and they also have to indicate from where that money will come from.
I think, as for me, concerning ODA, my personal opinion is that we have to - relativize in a way that countries who are supporting us through resources from ODA we can hope that we can mobilize more funds.
I suggest all debt should be canceled. The example of Niger nowadays, the World Bank and other institutions multilateral, they hold before this initiative more than 75% of Niger's debt. With the setup of this initiative, we have reduced significantly our debts in a sustainable way. But even if they say that we cancel all debts, we will still need new resources to fund our development. And what we have to do? We have to help to ask for increase in ODA. I think we can have to emphasize on other options, which are a balanced partnership between these countries, those who are buying our raw materials.
If I take our country for instance, we know that price of uranium in the market. If we can apply that, probably our country can have more resource. In this trade, which we have opened and balanced for our state, we should make sure that there are resources available to fund our economy; it means that they should buy our raw material at the right value. It is my opinion. I hope that our countries can get out of this situation.
Sure, you can join me in giving a hand to our three speakers. Thank you. Thank you for those who asked the question.
IMF EXTERNAL RELATIONS DEPARTMENT
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