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1 FASTER BeTTer MORE IMPLEMENTING EC EXTERNAL AID

2 European Commission EuropeAid Cooperation Office Rue de la Loi 41, B-1049 Bruxelles/Brussels Fax : (32-2) europeaid-info@ec.europa.eu Internet Copies of Implementing EC external aid: Better Faster More are available in English, French, German and Spanish at: Neither the European Commission nor any person acting on behalf of the Commission may be held responsible for the use which might be made of the following information. Cataloguing data can be found at the end of this publication Luxembourg: Office for Official Publications of the European Communities, 2009 All photos are EC except the picture on page 28 which is UNICEF/ Sujan Map For reproduction or use of this material, permission must be sought directly from the copyright holder ISBN: European Communities, 2009 Printed in Belgium, August 2009 Printed on recycled paper that has been awarded the EU eco-label for graphic paper

3 IMPLEMENTING the European Community's EXTERNAL AID: BETTER, FASTER, MORE SUMMARY BETTER AID Quality at the heart of operations Quality assurance: an essential tool Measuring the impact 2.2. More clarity, focus & access A comprehensive make-over New-style programming documents Simpler procedures 2.3. Investing in aid effectiveness and partnerships Effective aid gives value for money Budget & sector support: meeting partners needs Working with international organisations Partnership and dialogue with civil society Accountable and transparent Raising awareness about what we do Map: Europe in the world FASTER AID A bigger global network with greater responsibilities Devolution pays dividends IT management tools Better management and control 3.2. Faster operations EC Budget operations European Development Fund 4. MORE AID More aid to address poverty and sustainable development EC Budget operations European Development Fund 4.2. Staff: matching needs and resources LOOKING AHEAD: FOCUSED ACTION FOR GREATER IMPACT Real gains from working with Member States and other donors Make it simple Continued use of budget support A better results-based approach Monitoring human resources List of acronyms 40 3

4 1 SUMMARY 4

5 Development assistance is a pillar of the external policy of the European Union. This brochure provides a record of how the European Commission implemented EU aid programmes and projects over the past five years. It also highlights current and coming challenges. It covers a period ( ) during which the EU worked intensively with its partners to be a strong leader in the world economy and to contribute to global solidarity and security worldwide. The publication of the brochure comes at an important time of institutional transition for the European Union: from one Commission and European Parliament to the next. The timeframe of the brochure is one of important changes in the international development agenda including measuring progress towards attaining the Millennium Development Goals (MDGs) and closer focus on issues of aid effectiveness. During this period, the EU redrew its own aid priorities with the adoption in 2005 of the European Consensus for Development. The brochure shows how EuropeAid, which is responsible within the European Commission for aid delivery, has provided over the past five years better aid, faster aid and more aid. It did so globally, working towards the Commission s five-year objectives. For example, under the Neighbourhood policy, the Commission has helped to extend economic development and prosperity across the EU s borders to neighbouring regions. Or under the European Development Fund (EDF) the Commission has continued to enhance global solidarity with African, Caribbean and Pacific partners. Another example is through migration programmes and peace-keeping missions, which contribute to stability across the world. The next three sections in this brochure look at where external aid has become better, delivery faster and how more aid also means more added-value. Achievements are recorded and case studies presented. Results are matched against criteria under the European Consensus and under key international objectives. The final section flags up some of the challenges that lie ahead and how EuropeAid plans to meet them. 5

6 CHAPTER 1 SUMMARY A question of teamwork EuropeAid is the Directorate-General of the European Commission responsible for implementing external aid programmes and projects across the world. Its activities cover all countries and regions benefiting from EU assistance (except pre-accession countries and the Western Balkans): its neighbours to the east and in the Mediterranean region, Russia, the ACP countries, Asia and Latin America. It aims to deliver development aid in an efficient and effective way. It seeks to maximise the value and impact of aid funding, while ensuring the accountability of its operations. EuropeAid s work depends on close collaboration with DG Development for the ACP regions and DG External Relations for the other regions and countries, as well as with Delegations around the world. It also works closely with DGs involved in sector policies like the environment and migration to handle the external dimension of these policies. Thus, EuropeAid implements policies and longerterm strategies for aid delivery designed by those DGs. Regional and country strategies under the EC Budget and the EDF limit the number of sectors to be supported in each beneficiary country in order to prioritise funding and reinforce the parameters of successful implementation. Development policy framework EuropeAid works to ensure that the aid it distributes makes a significant contribution to the development objectives of both the EU and the United Nation s MDGs. The Commission, with the international community, is committed to deliver on the MDG commitments - in particular to reduce global poverty by half by Delivering on these promises is more important than ever as developing countries struggle with the consequences of the global financial crisis and economic downturn. The brochure gives examples of how EuropeAid has set about this task. The EU s key development objectives are laid out in the European Consensus on Development which provides a common vision of development policy for both the Member States and the EC. It integrates the commitments of the international community; it affirms support for the MDGs and it reflects global changes and challenges, particularly in relation to security, migration and the social dimension of globalisation. EuropeAid s strategy for meeting its targets is encapsulated in the subtitle of this brochure: it is delivering better aid, faster aid and more aid. Better aid The Commission mobilises European taxpayers money to reduce poverty and to raise the social and economic well-being of people in developing countries. Its task is to make sure both groups get maximum value for money. EuropeAid has responded to the challenge by setting ever-higher standards for aid implementation, quality control, accountability and results monitoring. It has also moved to new and simpler processes as well as to more dynamic forms of partnership with beneficiaries and with other donors. Here, the priority is to achieve a better division of labour among the donor community. The combined purpose of these efforts is to go on providing better and more effective aid. The Commission has acted to strengthen aid effectiveness both at EU and at international level. The process started in 2005 the year of the European Consensus on Development and of the international Paris Declaration on Aid Effectiveness. Paris was reinforced in September 2008 by the Accra Agenda for Action (AAA), in which the European Commission and the Member States played a leading role. To make aid more effective, to create new synergies and to get aid to new areas, EuropeAid has created a network of partnerships. With beneficiaries, it makes greater use of national systems to empower local governments. It has also developed budget support as a delivery tool where EC aid is paid to the national budget for management and disbursement. The Commission is increasingly involved in the division of labour with other donors. These partnerships include joint programmes with bodies like the United Nations (UN) and the World Bank. These have enabled it to play a significant role in reconstruction programmes in places like Iraq and Afghanistan where it could not have acted alone. Internally, the Commission has devolved responsibility for implementing projects to actors on the ground, particularly to 115 of its Delegations across the globe. It has simplified procedures, inter alia by reducing the number of instruments for delivering aid from 35 to 10. Faster aid The devolution of aid management to Delegations, part of a reform agreed in 2000, has been a key factor in speeding aid delivery times. A project, which took on average nearly five years to complete in 2000, now takes a little over three years. The Commission has also reduced the time taken from project preparation to launch. Its timeframe is now similar to that of leading EU Member-State donors. To facilitate devolution, management and control procedures were overhauled, standardised and strengthened. 6

7 As a result of the reform, the amounts handled by EuropeAid have increased year on year. From 2001 to 2004, annual commitments went up by just under 30% and payments by 38%. In , commitments rose by nearly 50% and payments by 30%. Faster aid also covers short-term as well as longer-term projects and programmes. The Commission was able to move fast to provide recovery assistance in the wake of the 2004 Asian tsunami. It also provided rapid responses in post-crisis situations as in Georgia and Palestine, as well as in fragile states in Africa. More aid Between them, the EC and Member States provide almost 60% of all official development assistance to poorer countries. In 2008, the EC itself committed 12.3 billion to its global aid operations. This made it the third-biggest individual donor after the United States of America and Germany. EC aid flows will continue to increase in coming years. The availability of more money allows EuropeAid to do more in cooperation with other Commission DGs and with partners and stakeholders including Member States, international organisations, beneficiary countries, NGOs and the private sector. Thanks to extra resources, innovative approaches have been introduced, like MDG-contracts with a series of African countries which provide a long-term framework for delivering assistance. It has also been able to fund bigger projects, including support for regional organisations. More aid has helped the EC to deliver more appropriate responses to global challenges like economic instability, migration, security and the food crisis. Looking ahead EuropeAid has invested substantial effort and resources in the past five years to provide more aid, to deliver it where it is most needed, and to make it more timely and effective. But there is more to be done. Some changes and innovations are recent and must be pursued further. Gains already made need to be consolidated and expanded. Better means are required to measure results. Processes and procedures should be simplified even more. In such a context, the EC needs to focus on real priorities. One is to build on gains already obtained by working with Member States and other donors via co-financing. This means increased donor cooperation, less aid fragmentation, lower (shared) overheads and a recognition that, in particular situations, some donors are better placed to take charge than others. EuropeAid will develop innovative approaches through programmes like the Neighbourhood Investment Facility or the EU-Africa Infrastructure Trust Fund. It is important to press forward with the extension of budget support to partner governments and the use of country systems as preferred delivery mechanisms. These actions will further increase the sense of local ownership of development agendas, and raise the level of transparency and predictability. Greater predictability in the provision of aid flows enables developing countries to plan and manage their development programmes over the short and medium term. This, in turn, will provide reliable information on future aid needs. Human resources will continue to pose a challenge in the coming years. The ability of staff to handle increasing aid volumes (despite efficiency gains) will remain critical. It will also be important to ensure that the right expertise continues to exist in-house so that knowledge, skills and experience are in place to respond to emerging priorities and changing needs. Effective results-oriented monitoring will feed data into the coherent knowledge management system which EuropeAid is developing. Ongoing efforts will continue to obtain overall results on projects in terms of output and impact. In this way, data can be aggregated and compared, providing a value tool for future decision-making. The system will also include new communications support tools, which are already being tested. This is important for the visibility not only for its own projects, but also for those which it co-finances with other donor partners. The milestones are already in place for the coming years. The amounts handled by EuropeAid will rise by 17% in The need for action on the EC s part in post-crisis countries and regions and in fragile states is set to go on rising. Effective responses here will secure its reputation as a quick and reliable partner. The end of the next five-year period brings us close to the 2015 deadline for achieving the MDGs. 7

8 2BETTER AID 8

9 The Commission has taken action over the past five years to deliver even better aid. This action includes a commitment to aid effectiveness, an improvement in the quality of project preparation and implementation, and more partnerships with other donors and beneficiaries. It has also acted to increase its accountability, simplify its procedures, and clarify the rules for delivery and implementation. The Commission s progress in this area has been recognised by its peers, in particular by the OECD Development Assistance Committee (DAC). The DAC s peer review of the European Commission s aid performance, presented in mid-2007, noted progress since 2002 on aid effectiveness and financial management. At the same time, it encouraged the EC to focus on fewer sectors, to transfer more responsibility and ownership to local partners, and to extend the division of labour among donors. All this would reinforce what the DAC calls the Commission s federating role to link EC aid operations with those of individual Member States. Results on the ground are testimony to the improvements in aid delivery. Future priorities are to strengthen partnerships particularly under the 2008 Accra Agenda for Action and to improve its results-based approach and its accountability procedures. EuropeAid will also enhance the use of budget support as an aid mechanism. 9

10 CHAPTER 2 BETTER AID 2.1. Quality at the heart of operations Quality assurance: an essential tool At the centre of EuropeAid s work lies a process of comprehensive quality assessment and monitoring, to ensure that the projects and programmes it supports meet accepted standards. This aspect of work has been bolstered over the last four years. In March 2005, a specific Directorate was established to provide sector and methodological support and to reinforce quality assessment of operations. This allows EuropeAid to carry out quality-related activities: producing methodological guidelines, delivering training, carrying out peer reviews and external, results-oriented monitoring of implementation. part of Results-Orientated Monitoring (ROM), where ongoing programmes undergo periodic reviews by independent experts who examine their efficiency, effectiveness, relevance, sustainability and impact. In addition, qualitative studies have been done to compare lessons learnt across regions. A variety of guidelines and training products exist, translating theory into practice, including: Guidance on programming, design and management of general budget support. Institutional assessment and capacity development. Support to sector programmes. Environmental handbook for EC operations. Guidelines on technical cooperation. This guidance on aid delivery reflects the emphasis on ownership and alignment, as contained in the Paris Declaration and the Accra Agenda for Action. Peer reviews. The screening by the office Quality Support Groups system involves a structured peer review of operations during the identification and formulation stage. Coverage jumped from 39% of financing decisions in 2004 to 99% of financing decisions in Quality assessment also forms Reinforcing regional organisations The EC s regional programme has helped the regional integration organisations in eastern and southern Africa to develop their operational capacities. EC support to the Common Market of Eastern and Southern Africa (COMESA) and the East African Community (EAC), was twofold. It focused on the achievement of their integration agenda and on the expansion of their regional and multilateral trade. The programme, launched in July 2005, received funding of 33.5 million under the 9 th EDF. Results: Besides boosting the administrative capacities of COMESA and the EAC, the programme has pushed progress towards the adoption of a common external tariff. It has also improved their ability to take part in international trade negotiations. 10

11 Measuring quality during implementation Results-Oriented Monitoring scores of programmes and projects in 2008 (%) Measuring the impact 3 The Commission is now better placed to analyse impact and results. Evaluation is one important area where much has been done as regards the quality and impact of external aid. The evaluation function is common to three Directorates-General of the Commission: EuropeAid, External Relations and Development. From 2005 to 2008, about 40 major reports were published. The evaluations cover (a) countries or regions; (b) sectors such as transport, water and sanitation or rural development; (c) instruments such as micro-projects or budget support; and (d) channels for aid delivery like development banks, UN agencies or non-state actors. The Commission has produced guidelines for evaluating impact and results, and is a front-runner in terms of methodology. Better preparation and more screening for better quality of projects 71 Very good performance Good performance Not performing, major problems Performing with minor problems Key evaluation findings are: The relevance of EC aid programming and implementation is generally good. It addresses the needs of partner countries and corresponds to the EU s objectives. For most activities, the effectiveness is also good, with expected outputs delivered. But sustainability remains an issue mainly because exit strategies are not sufficiently built into projects. Although the EC delivers high-quality projects in various sectors (rural development, transport, statistics, governance, economic integration, trade, nuclear safety) they often have little impact on the sectoral policy of the partner country concerned. The Commission has made a major impact in some areas: infrastructure (road networks, the water sector); education (higher enrolment rate, but with no corresponding rise in quality); institutional and legal reform at sectoral and macroeconomic level. The EC s regional aid programmes provide considerable addedvalue, but the link between its national and regional activities must be strengthened. The devolution of aid activities to EC Delegations has brought positive results and a dramatic increase in the amount of aid spent. But Delegations need to organise their management capacities so as to avoid a fragmented approach to aid projects and better coordinate their activities across different sectors. New ways of delivering aid, such as budget support or using new channels (United Nations, development banks) have proved their worth, although the choice of delivery channel can be better explained. The European Commission needs to take a strategic look at ways of creating the best synergies between its aid programmes and their means of delivery. The European Commission has produced high-quality guidelines at Headquarters level, that have to be better translated in to real project implementation in the field. The Commission draws from these evaluation findings as lessons learnt for future aid programming and delivery. Coverage ratio of Quality Support Groups (%)

12 CHAPTER 2 BETTER AID The road to poverty reduction Improving transport infrastructure has helped reduce poverty in many ACP countries. Roads, which carry 90% of Africa s long-distance transport, are vital for its development. In , the European Commission spent 4 billion in the transport sector in ACP countries. Examples of results: The Commission has provided more than 170 million for Tanzania s road network since 2002, including 30 million for the final stage of a major road upgrade between Dar-es-Salaam and Tanzania s second city, Mwanza, part of East Africa s central transport corridor. This has given more people access to markets and boosted regional trade. As part of its strategy to connect countries throughout Africa, the EC has also carried out major road programmes in Madagascar, Burkina Faso, Benin, Ethiopia and Ghana. Regional investments and business partnerships in southern Africa The SADC region will reap more benefit from the opportunities offered by an Economic Partnership Agreement with the EC if it invests in and modernises its productive sector. This means attracting capital, both from within and outside the region. The EU-SADC Investment Promotion Programme helps to achieve these goals. Results: Thanks to the programme, regional investment promotion agencies can provide better services to companies and make the region attractive to both regional and international investors. The programme organises largescale investment promotion meetings between potential business partners and supports individual SADC companies searching for partnerships or seeking to expand into new markets. 12

13 2.2. More clarity, focus & access A comprehensive make-over In 2007, a lot was done to simplify and clarify the structure of aid delivery. The number of financial instruments used for delivery was cut to 10 from more than 35. The use of new Strategy Papers reinforced the link between policy and regulation. Texts on EU international commitments (MDGs, untying of aid, the Paris Declaration) were updated. More types of beneficiaries became eligible, including local authorities. Modes of funding were extended to cover budget and sector support, twinning, debt relief, pool funding and operating costs. Mechanisms were introduced for cofinancing projects with other donors. Face up to challenges. The changes made 2007 a challenging year. Though EuropeAid achieved record commitments and payments, the late adoption of the new instruments limited its ability to plan ahead. A total of 92 annual activity programmes were adopted following approval of 95 long-term strategies. The European Parliament provided the Commission s Directorates- General in charge of external relations (the Relex family ) with comments and feedback on programming documents and annual programmes. The 10th EDF was launched on 1 July 2008, the date the revised ACP-EC Partnership Agreement took effect. It will provide funding worth 22.8 billion for the period Despite the delay, the EC was able to approve 62 Annual Action Programmes before the end of During 2008, EuropeAid committed a record 9.3 billion. Both the amount contracted and the payments made outstripped targets for 2008 under the EC Budget and the EDF. Payments reached their highest level ever New-style programming documents Adopting the new EC financial instruments led to the harmonisation of the multi-annual programming documents. Each document includes strategy papers setting the Commission s key objectives and an agreed Multi-annual Indicative Programme containing specific objectives as well as the corresponding financial resources. This process increased the transparency and predictability of external assistance. It linked programming to agreed international priorities and published documents on the internet. There was an attempt to limit the focus of the strategy papers (ideally to three sectors) in order to prioritise funding and scope. Mechanisms for co-financing. The new aid instruments and procedures enable EuropeAid to better harmonise delivery with other bilateral donors. In a given sector and country, the Commission can now delegate authority to another bilateral donor to act on its behalf. By the same token, a fellow-donor can transfer responsibility to the Commission to implement its projects and programmes. This is in line with the 2007 EU code of conduct on the division of labour which provides for task-sharing among EU donors to improve efficiency on the ground Simpler procedures Simplification at the conceptual and legal level was followed by important changes to the EC Budget and EDF implementation methods, allowing the Commission to implement its commitments on aid effectiveness. Rules for sub-granting were also adopted, where the grant beneficiary may make onward grants to third parties subject to certain conditions. In addition, the rules on interest on pre-financing were made more flexible. Another important simplification came with the alignment of the previously separate tender and contract procedures under the 10th EDF with those of the EC budget. The new rules are contained in the 2008 edition of EuropeAid s Practical Guide. The guide also includes innovative approaches for working effectively with national agencies, for joint management with international partners, and for co-financing projects with other donors. 13

14 CHAPTER 2 BETTER AID 2.3. Investing in aid effectiveness and partnerships Effective aid gives value for money The Commission has continued to work to improve the impact of its external assistance on the basis of the commitments made in the 2005 Paris Declaration on Aid Effectiveness. The Commission, along with the EU Member States, took the lead in preparing the Accra Agenda for Action (AAA). The AAA reaffirmed the aims of the Declaration and widened its scope. Effective aid: a constant priority The Paris Declaration, issued by the Second High-Level Forum on Aid Effectiveness in March 2005, was endorsed by over 100 governments, international organisations, civil society representatives and the European Commission. It marks a commitment to increase efforts in harmonisation, alignment and managing aid for results. It lists actions and indicators. The Accra Agenda for Action was adopted at the Third High-Level Forum in September It contains significant political commitments by donors and developing countries. The aid effectiveness agenda now involves a wider range of players. More partner countries, partners that are donors themselves, middle-income countries, regional development banks and non-state actors all play an increasingly important role in making aid more effective. From consensus to action. In 2005, the European Union approved the European Consensus on Development, the first significant overhaul of European development policy in 50 years. In 2006, Member States agreed a set of Communications on aid effectiveness and its implementation. Going beyond the Paris Declaration, the EU set even more ambitious targets to make aid more effective by channelling it through local country systems and improving donor coordination. EuropeAid helped develop a specific Action Plan in 2007 to mainstream aid effectiveness across its global programme. This includes providing tools to help staff at Headquarters and in Delegations to implement aid more effectively. During 2007 EuropeAid drew up strategies for increased use of country systems and to reform technical cooperation as a response to the aid effectiveness commitment to develop local capacities. The strategy has been well received by other donors. In 2008, the OECD/DAC finalised its second survey of partner countries and donor performance against the indicators of the Paris Declaration. This showed that the majority of the Paris targets will not be achieved on time. However, it also indicated that the EC is performing above the average of all surveyed donors. The survey served as one of the main analytical inputs for the Accra High-Level Forum of September 2008, at which there was a call to donors and partners alike to take for further steps to implement aid effectiveness. Paris Declaration: benchmarks for progress The Paris Declaration challenges developing countries to improve their povertyreduction strategies. It also urges them to improve and reform public financial management and procurement. For their part, donors should use country systems more and increase aid predictability. They should also avoid setting up project implementation units, which undermine local capacity development, apply the division of labour, make more use of programme-based approaches and better coordinate in-country missions. Following up these recommendations, the Commission should be able to: coordinate technical cooperation, cut the number of parallel project implementation units, raise aid predictability, and increase coordinated missions and studies. Major challenges for the Commission concern the use of country systems and fast-tracking the division of labour. 14

15 Budget & sector support: meeting partners needs Ownership drives aid effectiveness. The Commission invests in general budget support and sector budget support as aid delivery vehicles for several reasons. They help to increase local ownership, promote capacity development by the beneficiary, ensure alignment of aid with national policy and reduce the transaction costs of aid delivery. In concrete terms, budget support concerns the transfer of aid to a partner country to be disbursed through the national budget. The Commission s use of budget support depends on a risk assessment being carried out, and on the right conditions being met in the partner country concerned. Increased budget support is in line with the EC s commitments under the Paris Declaration, the Accra Agenda for Action and the European Consensus on Development. Total commitments for budget support rose by around 110% from 3.9 billion in the period to 8.5 billion for This steep increase is partly due to the high commitments (approximately 1.5 billion) for innovative MDGs contracts with seven African countries in Meeting Aid effectiveness targets: more budget support programmes Budget support helps cut poverty in Vietnam Vietnam is the primary beneficiary of European aid amongst members of the Association of South-East Asian Nations (ASEAN). EC aid to Vietnam will reach 304 million for as against 174 million in , of which 54 million was budget support. The objective of budget support in Vietnam has been to support socio-economic development. Results: During the period of EC support: In , the annual average growth rate was 7%, one of the highest in the region. The portion of the budget for education and training went from 15% in 2000 to 20% in Infant mortality (children under five years old) fell from 42 per 1000 in 1999 to 28 per 1000 in General budget support and sector policy support programmes cumulative (million ) General budget support Sector budget support This cooperation was made possible through the introduction of the principle of joint management in the 2003 EC Financial Regulation. This allows the Commission to channel its aid funds through another international organisation after checking that the latter s financial procedures comply with internationally-accepted standards. These checks provide the Commission with sufficient assurance of sound financial management. Most joint-management activities have also been backed up by a framework agreement, making it easy to match the contractual requirements of both parties. Measures were agreed with the UN and the World Bank in 2006 to ensure that European participation in these initiatives is clearly identifiable Working with international organisations Delivering results together. During , cooperation with international organisations, particularly the United Nations and the World Bank, has enabled the Commission to deliver aid in a range of circumstances, particularly in post-crisis situations, where it could not have acted alone. The Commission thus played a significant role in reconstruction assistance following the 2004 tsunami as well as in Afghanistan and in Iraq. It was also able to contribute to international initiatives like the Global Fund against Aids, tuberculosis and malaria, and multi-donor programmes on electoral assistance. 15

16 CHAPTER 2 BETTER AID The Commission employs a range of measures to ensure that the funds it channels through international organisations are properly used and controlled. As well as the audits carried out by the organisations themselves, the Commission can also carry out its own on-the-spot checks through the verification agreements in place, focusing particularly on Community funds to check that systems and procedures are working as intended at field level. Combined with regular monitoring, reporting and evaluations, the Commission has at its disposal all the means required to control the use of Community funds. The recent agreement reached with the UN on common terms of reference for verification missions and the entry into force of a new Administration Agreement with the World Bank are two examples of how improvements are continually being made to the way the Commission works with international organisations. Two major evaluations were completed in 2008 on Community aid channelled through both the UN and the development banks and the EIB. Both evaluations point to the benefits of this cooperation and are generally supportive of the Commission s partnerships with these international organisations, which deliver benefits to those in need in developing countries Partnership and dialogue with civil society EuropeAid and EC Delegations have enhanced their partnership with civil society organisations both as implementers of EC aid, and as key stakeholders in the dialogue on external assistance. Extending dialogue and coordination. EuropeAid has maintained active dialogue with Member States, Partner Countries, the European Parliament and civil society organisations since Regular meetings ( quadrilogues ) and seminars have been organised in the EU and in partner countries to supplement ad hoc contacts and promote partnership and dialogue. To increase coordination with other donors, EuropeAid initiated and actively participates in the Donor Exchange, Coordination and Information Mechanism, a process to create synergies for civil society development. opportunities to leverage the assistance aimed at stimulating growth, investment, trade and job creation. Working with the private sector allows for further additional development-related finance to be mobilised as well as to encourage investment into key areas to stimulate economic development, such as in infrastructure, water or energy. Two examples are the ACP-EU Water and Energy Facilities (see box) but others can be found in this brochure, like the Neighbourhood Investment Facility and the Africa-EU Infrastructure Fund. Water and electricity for African partners The ACP-EU Water Facility provides people in ACP countries with water and basic sanitation, while the ACP-EU Energy Facility offers access to energy for the rural poor. Both work with actors from the beneficiary countries and Europe, including the private sector. Results: Under the Water Facility, 14.5 million people are expected to gain access to safe water, particularly in sub-saharan Africa. Of these, 3.5 million will also benefit from access to improved sanitation and 10.5 million will receive hygiene education. The Energy Facility will provide 2.5 million people with access to electricity from renewable sources (wind, solar, hydro and biomass). It should also enable up to seven million people to connect to the energy grid. EuropeAid has made it easier for civil society organisations to get information on, and apply for, EC funding by introducing a dedicated tool ( PADOR Potential Applicant Data Online Registration) to allow applicants and partners to register by themselves in order to simplify the procedure. In 2009, this will be backed by an online Civil Society Helpdesk designed to provide stakeholders with quick and clear answers to their queries (e.g. funding opportunities and procedures, best practices). EuropeAid also works with private sector partners to deliver programmes on the ground. These partnerships provide 16

17 Accountable and transparent A European response. The Commission has worked with the European Parliament and EU Member States on the way it prepares and implements aid strategies agreed by the EU institutions. The dialogue with the Member States focuses on better policy coherence and coordination in the field. The institutions quickly acted together to make sure that a European response to crises like the tsunami, or the steep rise in world food prices in , was prepared, agreed and implemented within a very short period of time. The increasing powers of the European Parliament in recent years require the Commission to consult it on many aid issues. This kind of process increases the chances of formulating a clear EU stance on key items. Commission officials regularly attend meetings of relevant parliamentary committees, and more informal contacts are also organised, as during the annual discussions on the EC s draft budget. Held to account. The Commission is accountable to the European Parliament and the Member States for the proper use of funds for external actions. To this end, it has completed a major upgrade of its internal control systems so that money can be fully accounted for. The European Court of Auditors reviews EuropeAid s accounting and financial control systems each year and many of its recommendations have been implemented. Following an examination by the Court of the Commission s management of technical assistance, a new strategy was drawn up in close consultation with Member States and other key stakeholders. Transparency has also been reinforced. For example, since mid EuropeAid has been publishing detailed information about the beneficiaries of EC funds on its website. The Commission has responded to several concerns expressed by Parliament in relation to EC funds channelled through international organisations such as the UN. A full report was provided on significant contributions to trust funds. Specific websites were created to provide information on assistance in Iraq and Afghanistan Raising awareness about what we do The Commission has developed a more strategic and structured approach to communication, using a mix of tools and channels. The aim is to make the contribution of the European taxpayer to international development aid more visible. The main achievements over the last five years include: A multi-annual communications strategy to raise awareness in Europe and beyond of the results of EU external assistance. Mainstreaming communication into the entire project cycle, from design to implementation. Updated and adapted communications tools, including a more interactive website, a results-focused annual report and publication of case studies. A wide range of information and training events, fairs, exhibitions and journalist seminars. EuropeAid opened an information centre for the general public in Brussels. A multimedia youth campaign in six of the new Member States, which have joined the EU since 2004, and a series of attractive communication and didactic material targeting thousands of teenagers throughout Europe. This new approach has already contributed to raising awareness of the EU as the biggest aid donor in the world. It has also enhanced the Commission s credibility as a source and provider of external aid and helped to increase public support for EU official development assistance. 17

18 CHAPTER 2 BETTER AID Europe in the world Results guided by the European Consensus and areas for Community action The European Consensus on Development identifies shared values, goals, principles and commitments which the European Commission and EU Member States will implement in their development policies. In particular, it identifies nine areas for Community action, to guide programming and action at country and regional level, which should respond to the needs of partner countries. Here are just a few practical examples of results in each area. Governance, democracy and human rights and support for economic and institutional reforms Supporting democracy Observing elections around the world is a highly visible aspect of EU diplomacy. The organisation and despatch of observation missions is the responsibility of EuropeAid under the European Instrument for Democracy and Human Right (EIDHR). Missions are present before, during and after voting takes place. EU observers verify that conditions exist for a free, open and fair vote. These include voter registration, access to the media, the freedom to campaign, and the provision of information to citizens. During , EuropeAid despatched observation missions to over 50 national elections. For example, in Latin America observation missions were organised for elections across the region including in Bolivia, El Salvador, Ecuador, Guatamala, Nicaragua and Mexico. Social cohesion & employment Enhancing trade and investment by SMEs The AL-INVEST programme assists small and medium-sized enterprises (SMEs) in Latin America to move beyond their national markets. It funds projects by chambers of commerce, trade associations and export-promotion agencies. SMEs provide over 70% of private sector employment in Latin America. They are important drivers of social cohesion through job creation, knowledge transfer and income generation. In the past four years, AL-INVEST organised events involving SMEs and business organisations. As a result, over 500 business agreements were signed. Conflict prevention & fragile states Help for fragile states in Africa Through the African Peace Facility, the Commission supports African efforts in conflict prevention and management through capacity-building, technical assistance and funding peace support operations. The Facility received 440 million under the 9th EDF, and 300 million is already earmarked under the 10th EDF for , making the Commission the biggest donor to African-led peace-keeping operations. The African Union and African sub-regional organisations are involved in restoring peace in Darfur, Somalia and the Central African Republic. 18

19 Water & energy Committed to nuclear safety EC assistance for nuclear safety started in Funding comes from the Instrument for Nuclear Safety Cooperation (INSC), whose budget for is 524 million. The INSC concentrates on nuclear safety and waste management in Russian and Ukrainian power plants. In parallel, the Instrument for stability (IfS) has set aside 266 million to mitigate the proliferation risks of chemical, biological, radiological and nuclear materials. The IfS also helps control exports of dualuse goods and re-trains former Soviet weapons scientists on civil activities. Infrastructure, communications & transport Financial leverage to help the EU s neighbours The Neighbourhood Investment Facility (NIF) uses EU grants to leverage loans from European development banks (the EIB and EBRD) and similar banks in Member States. The NIF targets large investment projects in the energy, transport, environmental and social sectors. EuropeAid oversees the implementation. The Facility is funded by the EC Budget ( million per year) and by contributions from Member States. In 2008, 15 projects were identified, representing a total investment of 2.7 billion. Environment & sustainable management of natural resources Sustainable farming for poorest areas The poverty rate in rural Bhutan is as high as 38%. Over 90% of the population work in agriculture where unsustainable cultivation methods still prevail. Thanks to the EU natural resource management s actions in the Wang watershed area: Farmers adopted new technologies which lead to greater income generation. Environmentally sustainable watershed, land and farm management techniques have been developed farmers, herders, private foresters and commercial loggers benefited and 34 private forests were established. Human development Responding to health tragedy in Burma/Myanmar Six donors, including the EC, established the Three Diseases Fund (3DF), to help those suffering from Aids, tuberculosis and Malaria in Burma/ Myanmar, following the premature withdrawal of the Global Fund to fight Aids, Tuberculosis and Malaria from the country in The EC is the second largest donor to the 3DF, providing 18 million of a total of 76 million, over a four-year period. Since April 2007, assistance has covered much of the country, reaching out to remote communities with mobile and fixed clinics. Rural development, territorial planning, agriculture and food security Securing food supplies EuropeAid oversees the Food Security Thematic Programme, which supports innovative food security approaches, and has a budget of 216 million in The thematic programme complements the geographical programmes. This set-up notably aims at supporting countries to move from dependence on emergency food relief to normal development assistance. For instance, in Ethiopia, a large number of people have benefited from support to the household income through the Productive Safety Net Programme, in order to alleviate hunger and fight against extreme poverty. Trade & regional integration Training Africa s trade experts Export-led growth is vital for development. EuropeAid s TradeCom Facility has helped ACP countries reform trade policies and acquire the skills needed to negotiate international trade agreements. Knowledge transfer has focused on tariff liberalisation, trade in services, intellectual property, investment and legal issues. As a result, TradeCom has enabled officials in the Central African region to coordinate their positions and negotiate effectively with the EC. As regards multilateral trade, TradeCom is helping Uganda, Sierra Leone and Zambia meet their WTO obligations. 19

20 3 FASTER AID 20

21 Devolution of responsibility from Brussels to EC Delegations on the ground has helped speed aid delivery since it was introduced in As a result, the average time to implement an EC-funded project is just over three years. In 2000, the average implementation time was almost five years. The improvement puts the EC on a par with national EU donors. Results on the ground bear testimony to the improvement. Witness the Commission s speedy action to rebuild livelihoods after the Asian tsunami, or its quick response in post-crisis situations like Georgia or assisting fragile states in Africa. EuropeAid will continue to work on faster delivery, particularly in fragile states or in post-crisis situations. It will cooperate with other donors to find ways to secure the speed and effectiveness of its aid. 21

22 CHAPTER 3 FASTER AID 3.1. A bigger global network with greater responsibilities Devolution pays dividends The devolution of aid management to 81 Delegations around the world was an important component of the reform of EC external assistance launched in This process coincided with the creation of more than official and external staff posts. It was implemented from 2001 to Performing better. Before the reform, 55% of funding was managed centrally at Headquarters and 45% jointly with Delegations. At the end of 2008, 82% of funding was managed directly by Delegations. Following a series of verification missions to Delegations and a report from the European Court of Auditors in 2004, the devolution system was fine-tuned in The final progress report on the devolution exercise was issued by EuropeAid in June Delivering closer to the ground: EC Delegations manage most operations Devolved geographical & thematic operations in 2008 (%) Following the reform, EuropeAid s performance improved substantially between 2001 and Initially, in , commitments went up by just under 30% and payments by 38%. From 2004 to 2008 commitments increased by nearly 50% and payments by 30%. 18 Managed by Delegations Managed by Headquarters 82 22

23 More Delegations. The number of EC Delegations has increased in recent years. At the end of 2008, there were 115 country Delegations dealing with external aid and six Delegations to international organisations. Six new Delegations or offices were created between 2005 and early 2009: Belarus (2005); Moldova (2005); Iraq (2006); African Union in Ethiopia (2007); Azerbaijan (2007); Timor-Leste (2007). In addition, four offices were upgraded to full Delegations: Sri Lanka (2005); Armenia (2007); Cap Verde (2007); Sudan (Juba) through opening an office attached to the Delegation in Khartoum (2007). Present where it matters. One of the Commission s comparative advantages is its capacity to work in difficult countries where few other donors are present as in the case of the Central African Republic (CAR). With funding of million under the 10th EDF, EuropeAid contributes to a substantial programme to alleviate poverty and, with the Delegation, plays a leading role in several sectors (infrastructure, health, justice and finance) IT management tools Big efforts have gone into improving and adapting IT management systems in the last five years to serve devolution: CRIS (Common Relex Information System) is now an integrated system handling programmes funded by the EC budget and the EDF. It provides common management tools and solutions for both Headquarters and Delegations. A number of portals have been set up via the Europa website to improve work with external partners, including on-line services for potential applicants for grants and access for external project evaluators. The names of beneficiaries are published on the Europa EuropeAid site. CRIS has been adapted to be fully compliant with modern accounting standards namely accrual accounting. CRIS has been officially recognised as a local system of the Commission s accounting system ABAC. Aid Orphan: The Central African Republic Despite its huge needs (the CAR is ranked 178 out of 179 on the 2008 UNDP Human Development Index), it is largely neglected by the donor community. In 2007, the CAR received $178 million in ODA compared with a sub-saharan average of $470 million. Results: The Commission acts as a catalyst to drive forward the government s priorities, which include creating economic hubs within the country. Other donors say they are interested in this approach. Under the EC s new cofinancing arrangements, the Commission hopes that donors not currently active in the CAR will contribute to joint programmes. New aid delivery modalities have been introduced, requiring the development of appropriate control and management systems. More attention is being devoted to the quality of controls and on ways to assess their cost-benefit ratio, with a view to determine a realistic tolerance level of error Better management and control Over the period , a series of measures were taken to overhaul and strengthen the management and control of external aid, in a devolved management context: Use of standard contract documents and financial, contractual and operational guides. Simplification and harmonisation of procedures. A major staff training effort. New strategies for audit, supervision and control, including annual audit plans and standard terms of reference by type of audit. An ex-post transactional control function to verify that payment controls were correctly carried out. 23

24 CHAPTER 3 FASTER AID 3.2. Faster operations The timeframe of EC aid operations is in line with those of other leading EU donors. This emerges from a study completed in mid-2008 which compares aid implementation processes, decisionmaking at Headquarters and in the field, and procedures. The study compared the Commission with France s, Agence Française de Développement (AFD), the UK s Department for International Development (DfID), the Directorate-General for International Cooperation (DGIS) of the Netherlands and the Swedish International Development Agency (SIDA). A key finding of the study is that the EC s operational timeframe - from preparation to launch - is comparable to the other EU donors involved in the study. In addition, the devolution of responsibility from Brussels to EC Delegations has helped increase the speed of aid delivery. The average time for implementing an EC-funded project is now just over three years, compared to five years in EC Budget operations Following the operational reforms and devolution, the average time taken to implement a project fell from 4.5 years in 2001 to 3.2 in 2004 and 2.9 in Faster completion also meant increased payments during this period. Total payments reached a record level in 2008 of 3.8 billion. Commitments also increased to a record level at end-2008 of 4.4 billion. Faster aid covers short-term as well as longer-term projects and programmes. While the Commission was able to move fast to provide assistance to rebuild livelihoods after the Asian tsunami, it is also committed to supporting populations in conflict. The Commission is one of the largest donors of aid to Palestinians, providing basic services to the population. In 2009, the Commission outlined a range of actions which the EU can take to help developing countries face the ongoing economic crisis. One aspect is to mobilise projects funded both by the EC budget and the EDF to help the EU to meet its target to raise average ODA levels to 0.56% of EU GNI by A second is to frontload and refocus commitments on the most vulnerable countries and populations, and to pursue the aid effectiveness agenda. The Commission also agreed to streamline its own financial rules and budgetary implementation. In this context, the Commission will endeavour to make payments within 30 days as against the current 45 days. Rebuilding livelihoods after the tsunami The earthquake and resulting tsunami that hit Indian Ocean countries on 26 December 2004 was one of the worst natural catastrophes in a generation. More than one million people were homeless and the total cost of reconstructing homes, infrastructure and relaunching economic activity will exceed 10 billion. The international response was unprecedented. The Commission and Member States rapidly committed more than 1 billion (with 350 million from the Commission). EuropeAid and local EC Delegations oversaw delivery on the ground. Results: Four years on, the affected communities are recovering, with housing reconstructed, the environment rehabilitated, basic education and health services restored and infrastructures like main roads and harbours rebuilt. record 4.8 billion at the end of Payments also increased to reach record levels at end-2008 of 3.2 billion. Operational management has also accelerated. For the first time, all outstanding funds from the 9th and earlier EDFs were committed before the new (10th) EDF came into force. This example of sound budgetary management also brings the EDF implementation into closer alignment with the EC budgetary cycle. After the 10th EDF became effective on 1 July 2008, the Commission was able to commit 23% of its resources within six months. EUROPEAN COMMISSION operations are comparable to other leading EU donors Implementation timeframe per donor from preparation to launch (weeks) DGIS SIDA EC DFID European Development Fund For the European Development Fund, the average implementation period fell from 5.5 years in 2001 to 3.8 years in The EDF portfolio has grown since 2004; commitments under the EDF hit a AFD

25 Delivering faster: the number of years to complete a project has been reduced by over 30% since 2000 Number of years to complete a project (Budget+EDF) Number of years Support for Pakistan earthquake victims Following the Pakistan earthquake in October 2005, the Commission provided 50 million to restore the socio-economic fabric in the stricken zone. Results: Public infrastructure has been rehabilitated and plans for the reconstruction of 293 schools are under way. 180 shelters and six permanent schools have been constructed. Over 1000 dialogues were conducted to provide support for the affected communities and 950 community organisations were set up. Critical support infrastructure (irrigation schemes, link roads) has been rebuilt and numerous vocational training activities carried out (carpentry, masonry, candle-making, handicrafts). The Commission introduced new guidelines in 2007 for responding to situations of fragility. It also took steps to improve its effectiveness in fragile situations by using a range of instruments, such as budget support. Through the African Peace Facility (APF), the Commission has supported African efforts in conflict management and prevention through capacity-building, technical assistance and financing peace and security missions in places like Darfur, Somalia, the Central African Republic and Comoros. Quick post-crisis responses Lebanon 2006: Following the 2006 war between Israel and Lebanese militias, emergency assistance was provided for the evacuation of over people and short-term humanitarian needs were addressed. The total EC contribution was 54 million. Results: In the post-war context, EC assistance initially addressed reconstruction and rehabilitation needs in Lebanon, including de-mining. For the period 2007 to 2010, EC focus is on further supporting reconstruction and recovery, in addition to encouraging political, economic and social reform. Georgia 2008: After the clashes between Georgia and Russia in August 2008, the EC put together a comprehensive assistance package of up to 500 million, part of which EuropeAid is implementing over a three-year period. Results: The bulk of the assistance, provided under the European Neighbourhood and Partnership Instrument, supports the Georgian government s strategy to allow for the dignified and safe return of internally displaced people as well as to support decent living conditions for the displaced population and their participation in society. Emergency support for Palestinians The Commission has used two instruments to deliver emergency aid to Palestinians since The Temporary International Mechanism (TIM: ) eased the impact of the socio-economic crisis on the Palestinian population. It was followed in February 2008 by PEGASE. What did they do? Results: TIM allowances were paid directly to over households. With a typical family size of six, this amounts to almost one quarter of the Palestinian population. In the West Bank and Gaza, TIM helped cover running costs, food and equipment for hospitals and schools. In Gaza, TIM contributed to maintaining essential utilities, including electricity, water and sanitation for 1.3 million people. In 2008, 309 million of EC funds from PEGASE supported governance, social development, economic and private sector development and public infrastructure. 25

26 4More AID 26

27 Taken together, the European Commission and its Member States provide almost 60% of all official development assistance around the world. In 2008, the Commission committed a record 12.3 billion for external aid. This made it the world s third largest donor, after the United States and Germany. The financial resources available to EuropeAid will increase by 17% from 2009 to More aid money has provided scope for innovative approaches and large-scale projects including: MDG contracts for African countries where EC aid is linked to the attainment of Millennium Development Goals; The use of EC funds to leverage investing funding from European and international development banks; Support for regional organisations. At the same time, EuropeAid has achieved internal efficiency gains as the ratio of staff per 10 million of aid has dropped from 4.8 in 2004 to an average of four over the last three years. But there is limited scope for further reductions. 27

28 CHAPTER 4 MORE AID 4.1. More aid to address poverty and sustainable development The European Commission devotes a substantial part 12.3 billion, or around 9% - of the total annual EC budget to external aid worldwide. This is a token of its commitment to eradicate poverty and promote sustainable development with its partners across the globe. Of the 12.3 billion aid, over 70% is managed by EuropeAid and the local EC Delegations. Low-income countries, including the least developed, are the biggest beneficiaries of Commission development assistance, accounting for 41% of total funds in European Commission budget for external assistance in billion (9% of total EC budget) 9 Part of European Commission budget for external assistance in 2008 (%) 91 EC budget for external aid 2008 EC budget inside EU 2008 The Commission s focus is on support for social infrastructure, in areas like education and health, followed by economic infrastructure, centred on transport and energy. Geographically, EuropeAid s delivery is weighted in favour of African, Caribbean and Pacific regions as well Europe s neighbours to the east and south. EuropeAid also works on a whole series of thematic programmes with global reach and which cover core values like human rights, and sustainable development, as well as cross-cutting themes like gender. Increased aid has also allowed the EC to deliver more appropriate responses to global challenges linked to the environment, sustainable development, energy security, food security as well as to migration and international peacekeeping. A number of innovative steps have been taken to structure and manage immigration flows for the benefit of countries of origin and transit of refugees and of the EU itself. The combination of additional resources and co-financing opportunities has made the Commission a major player in places like Iraq and Afghanistan. Partnerships with the private sector create investment opportunities whereby EC funding can leverage greater investments from private sector partners from the beneficiary countries and from Europe. This is already happening both in Africa and Asia. Some examples follow of how this is working on the ground. 28

29 EC Official Development Assistance in 2008 Europeaid s sectoral commitments in 2008 Part of external aid budget managed by EuropeAid in 2008 (%) ODA by sector managed by EuropeAid in 2008 (%) Action relating to debt Humanitarian Aid EuropeAid EC Budget 4.4 bn 6 Other/unallocated/unspecified EuropeAid EDF 4.5 bn 6 30 Production sectors Multisector/Crosscutting Non-EuropeAid EC Budget 3.1 bn 2 1 Economic infrastructure and services Commodity Aid and General programme assistance Social infrastructure and services The environment and sustainable development Migration flows The EC s thematic programme Environment and sustainable management of natural resources, including energy funds initiatives which are part of Europe s response to global challenges. Results: The Global Energy Efficiency and Renewable Energy Fund (GEEREF) approved its first investments totalling 22 million in two renewable energy investment funds in December 2008 (one each in Africa and Asia). The Forest Law Enforcement, Governance and Trade (FLEGT) action plan seeks to keep illegally-logged timber out of the EU market. Ghana and the Republic of Congo concluded the first FLEGT Voluntary Partnership Agreements. Others are being negotiated with Cameroon, Liberia, Malaysia and Indonesia. The Global Climate Change Alliance (GCCA) provides substantial EC resources to address climate change in the poorest developing countries. Pilot projects for adaptation and mitigation will be launched in 2009 in Vanuatu, the Maldives, Cambodia and Tanzania. Managing migration flows and boosting cooperation with countries of origin, transit and destination along the main migration routes are priorities of European development policy. The AENEAS and DCI-MIGR programmes managed by EuropeAid assists in these tasks. Results: Major achievements to date include: Funding of 15 million to UNDP for a joint initiative to address capacities, remittances, rights and communities. The creation, with the International Centre for Migration Policy Development, of a body of experts to provide short-term advice to third countries on curbing irregular immigration and other issues. Mobility partnerships with Moldova and Cap Verde and training programmes on illegal migration and border management in Ukraine and Belarus. An initiative for leveraging remittances and promoting migrant entrepreneurship in Ghana and Suriname. 29

30 CHAPTER 4 MORE AID Poverty focus EuropeAid's net disbursements per income group from 2004 to 2008 (%) EC Budget operations After the record level of 4.4 billion in 2008, annual commitments are to go on rising until 2013, the end of the EC s current financial period. Payment levels which averaged 3.7 billion a year in are expected to keep pace. Clearing the backlog. EuropeAid has made a big effort to clear up past financial commitments and in particular to avoid the accumulation of unspent monies or open commitments. Although commitments have increased substantially over recent years, the level of open commitments has not risen: it stood at 10.4 billion in 2005 and remained little changed at 10.7 billion in The value of dormant commitments (where there had been no financial transaction for more than 24 months) fell by 32%, from 705 million in 2002 to 477 million at end LDC+OLIC LMIC REGION/UNALLOC UMIC LDC : Least Developed Countries OLIC : Other Low Income Countries LMIC : Lower Middle Income Countries UMIC : Upper Middle Income Countries REGION/UNALLOC : Regional Programmes and Unallocated EuropeAid s worldwide operations EuropeAid s commitments per programme and region in 2008 (million ) DCI Latin America Other (Admin, Evaluati ad-hoc ) 442 EIDHR, INSC, IFS 348 Budget ACP ENPI CBC ENPI East DCI 5 Thematic programmes 4890 DCI Asia ENPI South ENPI South: European Neighbourhood Policy Instrument (South Mediterranean and Middle East) ENPI CBC: European Neighbourhood Policy Instrument-Cross Border Cooperation DCI Asia (including central Asia): Development Cooperation Instrument Budget ACP: Budget for African, Caribbean and Pacific countries EIDHR: European Instrument for Democracy and Human Rights INSC: Instrument for Nuclear Safety Cooperation IFS: Instrument For Stability ENPI East: European Neighbourhood Policy Instrument (Eastern Europe and Caucasus) DCI Latin America: Development Cooperation Instrument (Latin America) EDF: European Development Fund (ACP countries) DCI 5 Thematic programmes: The DCI includes five thematic programmes: i. Investing in people, ii. Environment and sustainable management of natural resources including energy; iii. Non-state actors and local authorities in development; iv. Food security; v. Migration and asylum. Other (admin, evaluation, ad-hoc ). EDF A joint commitment The Centre for Information and Migration Management in Mali reflects the commitment of the Mali government and the European Commission to establish a joint approach to migration. Results: This innovative project links migration with relevant information on associated aspects like employment, vocational training and development. The Centre was opened in Bamako in October 2008, by the Commissioner for Development, Louis Michel, and the Mali President, Amadou Toumani Touré. 30

31 As an example, EuropeAid closed the European Community Investment Programme. The programme had promoted joint ventures in emerging markets. Due to the high number of intermediaries and related actions, the liquidation of ECIP was particularly complex. EuropeAid tackled the backlog, closing almost all files and recovering more than 36 million. Customs reform and security in Afghanistan The Commission has supported Afghan Customs reform since 2003, constructing border posts and providing technical assistance. Results: Building three customs facilities on the borders with Pakistan, Tajikistan and Uzbekistan. Funding the United Nations Office on Drugs and Crime (UNODC) to strengthen Afghan-Iranian border control and cooperation and support control of the trafficking of chemical precursors for heroin processing. Support for UNDP Tajikistan to strengthen three border posts with Tajikistan and to train border police. The EC has funded the establishment of a national Afghan police force. With contributions of million since 2002, the EC is the largest contributor to the Law and Order Trust Fund. The EC is also a major contributor to the Counter-Narcotics Trust Fund and under the Instrument for Stability (IfS) helps to fight drug trafficking from and to Afghanistan with 9.5 million trans-regional projects. Getting aid to where it is needed. As budget commitments and payments continue to rise in the coming years, the focus on efforts to reinforce food security, eradicate poverty, and strengthen stability and good governance will also continue. The EC adopted a 1 billion three-year food facility in December Financial decisions increase year-on-year A food facility for the world s hungry Commitments under the EC Budget and the EDF (million ) The 1 billion Food Facility is the EU s main rapid response mechanism to the growing food security problems faced by many developing countries. A 314 million package of projects has been adopted to support agriculture and improve food security in 23 developing countries. Results: The facility will deliver three kinds of assistance: Encouraging agricultural supply response by improving access to agricultural inputs and services. Mitigating negative effects of the food crisis on the poorest consumers for example, through measures to strengthen safety nets. Increasing production - through microcredit, investment, equipment, infrastructure and storage as well as vocational training. Under the EC Budget Under the EDF 31

32 CHAPTER 4 MORE AID Stability and good governance in neighbouring countries Good governance is a key priority of the European Neighbourhood policy. What has been done? Example of results: An EC project under the EIDHR has enabled expelled Belarusian students to study in neighbouring countries, in particular at the European Humanities University in Vilnius. In Jordan, the Commission supports efforts to improve media performance and give civil society a say in public decision-making. A project to support exposed families and children in Ukraine has considerably reduced the numbers of children in residential care institutions and doubled the number of social workers. A special governance facility has been set up in addition to normal country allocations. In the Mediterranean region, up to 550 judges, prosecutors and lawyers and 318 senior police officers have been trained in the fight against organised crime, terrorism and human trafficking European Development Fund Record commitments and payments. For the first time ever, the Commission committed all funds from one EDF (the 9th) before the entry into force of the new one, the 10th EDF, in This was possible because between 2005 and 2008, annual commitments averaged 3.4 billion, by far the highest level ever. It is foreseen that EuropeAid will maintain, if not exceed, this level, until EDF payments have also followed an upward trend. Commitments rose from 2.5 billion in 2005 to 3.2 billion in 2008, and are expected to reach 3.6 billion in The high level of commitments under the EDF did not lead to a big increase in open commitments. Commitments rose from 9.8 billion at the start of 2005 to 10.5 billion at the end of The amount of old and dormant commitments was reduced from 1.5 billion in 2005 to around 1.1 billion in Through its action to clear up past commitments, EuropeAid was able to close not only the 6th EDF (in 2006) but also the 7th EDF (in 2008). Efficient operations: payments have increased since Payments under the EC Budget and the EDF (million ) Under the EC Budget Under the EDF MDG Contracts EuropeAid has worked hard to make general budget support a longerterm, predictable vehicle of development assistance. Millennium Development Goal contracts are an innovative mechanism to provide budget support for the full six-year period of the 10th EDF. MDG contracts are reviewed at mid-term and adjusted in the light of the beneficiary s progress towards achieving MDG-related targets. In this way, the Commission sharpens the focus on poverty programmes and makes them more results-driven. Only the best-performing aid recipients qualify for MDG contracts. The first contracts were concluded at end-2008 with seven African countries (Mali, Burkina Faso, Ghana, Mozambique, Uganda, Rwanda and Zambia) for a total value of 1.5 billion. 32

33 Developing infrastructure networks in Africa Limited access to transport, communications, water, sanitation and energy seriously impedes economic growth in Africa. The EU-Africa Infrastructure Trust Fund was established in April 2007 to improve interconnectivity, facilitating regional integration and trade. By the end of 2008, donors had pledged million to the Fund, including an EC contribution of million for instance. In the energy sector, the Fund approved an interest-rate subsidy of 15 million for the Caprivi electricity interconnector in Southern Africa, whose total cost is estimated at 315 million. In transport, the Fund approved a 29 million grant in December 2008 for the rehabilitation of the road, rail and port systems of the Beira corridor in Mozambique (total cost: 205 million). 33

34 CHAPTER 4 MORE AID 4.2. Staff: matching needs and resources Over recent years, EuropeAid has adapted its human resources to meet changing needs. The focus has been on priority areas and efficiency gains. However, pressure on human resources is now increasing, particularly concerning the number of staff required to handle the EC s growing financial portfolio and its emerging priorities. As part of the devolution of aid management, the EuropeAid Directorate-General had transferred 217 posts from Headquarters to Delegations by It also transferred some functions and posts to DG Enlargement in 2005 and DG External Relations in EuropeAid also contributed yearly to the Commission s central pool (e.g. 54 posts in 2006). All in all, the net decrease of EuropeAid s establishment plan during the period amounted to 338 posts. More adjustments. In addition to these staff adjustments, EuropeAid Headquarters made two changes in its internal structure, the first in March 2005 and more recently in July On both occasions, priorities were assessed and redeployments identified that could provide efficiency gains. Thus, in a context of zero growth in human resources, management improved despite the growing volume of responsibilities under the EC s new financial framework for and the 10 th European Development Fund. While these growing volumes constitute a major challenge for EuropeAid and for Delegations, the Directorate-General fully met the 2008 redeployment objective agreed by the External Relations group of Commissioners. This involved redeploying 56 officials dealing with external aid management in Delegations and nine in EuropeAid. 34

35 Efficiency gains at threshold. Data for recent years show that since 2004, where the number of staff per 10 million of aid was 4.8, the average ratio in the last three years has dropped to 4 staff/ 10 million. Further reduction in the number of staff in Delegations may impair the benefits of devolution and external aid management. The pressure on human resources also needs to be re-assessed in the context of new emerging priorities like handling the 1 billion food facility or providing rapid responses to crises in conflict zones. The Commission s decision to open new Delegations and its increasing dependence on contract agents are also relevant factors. Staff per 10 million has dropped from 4.8 in 2004 to average 4 per 10 million (1) Number of staff per 10 million committed (1) Staff managing external assistance at EuropeAid Headquarters and in Delegations 35

36 5 LOOKING AHEAD 36

37 Being one of the world s biggest aid donors brings big responsibilities. This includes creating relations with beneficiaries based on support and partnership. Properly constructed in common, assistance programmes should lead to economic growth and increasing self-sufficiency on the part of beneficiaries and the elimination over time of aid dependency. Instruments which help transfer ownership to them like making more use of local systems, increased provision of budget support, and the extension of MDG contracts are steps in this direction. They go hand in hand with greater efforts by the European Commission to make sure that its aid offers the best value for money both for the people its supports in developing countries and the European taxpayer on whose behalf the money is spent. By doing so, it will reinforce its own internal efficiency and productivity. It will also benefit from more co-financing and a better allocation of responsibility among donors. These will help produce efficiencies and cost-savings for donor and recipient alike. EuropeAid has achieved a lot in the past five years, but there is more to be done. Better means are required to measure results. Processes and procedures should be simplified even more. These actions will be even more crucial than before. The effects of the global economic downturn have added a new dimension, whose impact cannot yet be assessed. The Paris Declaration targets for aid effectiveness will be reviewed, no doubt critically, at the High-Level Forum in 2011, and the 2015 deadline for achieving the MDGs is drawing closer. 37

38 CHAPTER 5 LOOKING AHEAD: FOCUSED ACTION FOR GREATER IMPACT 5.1. real gains from working with Member States and other donors The code of conduct on the division of labour among EU aid donors was adopted in The Financial Regulation of 2007 allows the EC to co-finance actions with other bilateral donors through so-called delegated cooperation. By early 2009, eight donor agencies had been approved for managing EC funds and contracts were being signed. This process has provided the EC with new opportunities for reducing overhead costs for donors as well as for partner countries. In addition, it helps the European Commission to coordinate its aid activities with those of Member States, thereby creating an effective body of European Union development aid on the ground. This takes up the OECD/DAC recommendation, in its 2007 review of EC aid, for the Commission to build on its federating role and work with Member States to use their comparative advantages strategically when they deliver European development cooperation in-country, and across countries and sectors. EuropeAid will continue to examine opportunities for further co-financing and consider other options in the current legal framework for more varied and flexible partnerships, including with the private sector. It will also develop further the EC s innovative tools for aid promotion and delivery Make it simple EuropeAid has taken steps over the past five years, often with other Commission services, to simplify rules and procedures. This is work in progress. EuropeAid s 2008 comparative study with four leading Member State donors (France, UK, Netherlands and Sweden) also revealed that the EC operates in a more constraining procedural framework than the other donors, for example in the use of local country systems. More clarity will be provided in different management modes, to facilitate work with all aid beneficiaries. In particular, procedures for civil society organisations will be considered. More use of country systems. In 2005 in Paris and 2008 in Accra, donors committed themselves to increased use of partner country systems, and partner countries undertook to improve their national systems. The 2008 OECD/DAC survey of the Paris indicators showed that, while to some extent partner country systems had improved, donors were still not using them as expected. The EC made this issue a priority at Accra and EuropeAid is currently revising its own systems and procedures to allow greater use of national country systems in a decentralised management mode. 38