Donor aid fragmentation remains a concern

Donor aid fragmentation remains a concern

May 2, 2014-

Despite government efforts to funnel foreign aid into high-priority projects, donor assistance has continued to remain scattered.

In a clear reflection of how foreign aid has been fragmented, each development partner on an average worked with nine counterpart ministries/agencies in the last fiscal year. This is, however, a relative improvement from fiscal year 2011-12, when each donor on an average was found to have been engaged with 11 different counterpart ministries/agencies. “Except for a few development partners, many are associated with more than 10 counterpart ministries/agencies,” states Development Cooperation Report (DCR) 2012-13.

The UN Country Team has the largest number of projects (138) and is engaged with 25 counterpart ministries/agencies. However, the number of projects under the UN system has dropped from 225 a year ago due to closure of several projects under the UN Development Assistance Framework.

The European Union follows the UN with 76 projects and engagement with 17 ministries/agencies. Asian Development Bank (ADB) has 68 projects in 15 ministries, and the World Bank (WB) and Switzerland are engaged with 38 and 36 projects in 14 and 16 ministries, respectively. The engagement of several donors with a single ministry shows there has been little donor harmonisation. “It is now high time to assess whether the mentioned ministries need such a big number of donor engagement in order to realize aid effectiveness,” states DCR aid.

Such is the fragmentation of aid that Chief Secretary Lilamani Poudel on first week of April gave written instruction to secretaries not to accept foreign assistance for small projects and for many geographical regions. In his letter, Poudel asked the secretaries to take aid for medium- and large-scale projects that generate income and employment and those related to infrastructure projects such as electricity, roads and airports.

The instruction was given citing scattering of resources, increased cost of monitoring, supervision and evaluation, lack of uniformity in quality and heavy expenses for report preparation, documentation and consultants as a result of accepting foreign assistance for smaller projects.

Economists say if donor assistance is scattered in many areas with small-sized projects, the transaction cost will be higher with less impact. Shankar Sharma, former vice-chairman of National Planning Commission (NPC), said foreign assistance given through a single basket had better results than ones given individually. “For example, the ‘Education for All’ programme, under which donors have given aid through a single basket (sector wide approach), has performed well, delivering children’s enrolment ratio of 94 percent,” he said.

The sector wide approach (SWAp) was introduced to lend in a certain programme by collecting donors’ fund in a single basket. SWAp has been implemented in certain programmers under Education, Health and Local Development Ministries.

Despite SWAp implementation, there has been large-scale aid fragmentation in Local Development, Education and Health Ministries. The Local Development Ministry has the highest number of donor engagement (23) and has highest number of projects (81). Sixteen donors engaged in 32 projects in Education Ministry, while Health Ministry has engagement of 19 donors in 77 projects.  

Former Finance Secretary Rameshore Khanal said there has been marked improvement in aid fragmentation compared to 10 years ago. “Majority of donors are not engaged in more than 3-4 areas. Before 2000, local directors of the donors used to select several projects and engage in several areas, but it has come down drastically lately,” he said.

According to Khanal, after the introduction of the 10th Annual Plan, efforts were made for donor harmonisation, and projects and areas in which donors engaged started to come down.

Sharma stressed SWAp should be implemented in ministries that handle large infrastructure projects. “Collective engagement of several donors for the development of Tanahun hydropower project is a welcome effort in this regard,” said Sharma.

According to the report, majority of technical assistance provided by the donors are off-budget and aid fragmentation in technical assistance is alarming.


Published: 03-05-2014 08:50

User's Feedback

Click here for your comments

Comment via Facebook

Don't have facebook account? Use this form to comment