copy the linklink copied!5. Walking the talk: Development partners are not fully facilitating country leadership over development efforts

This chapter examines how development partners are facilitating partner country leadership over development efforts. It focuses on alignment of development partners’ strategies and projects to country-led development priorities and results; forward visibility of development co-operation; use of partner country public financial management systems; and progress made in untying aid.

The 2030 Agenda for Sustainable Development emphasises the critical role of international public finance to complement domestic resources, particularly in the poorest and most vulnerable countries (UN, 2015[1]). According to preliminary data from the Creditor Reporting System (CRS) (OECD, 2019[2]), official development assistance (ODA)1 by Development Assistance Committee (DAC) member countries amounted to USD 149.3 billion in 2018, a drop of 2.7% in real terms over 2017. Furthermore, a declining share went to the neediest countries, with a 2.7% fall for least developed countries (LDCs)2 and in particular, a 4.4% fall for sub-Saharan countries. Excluding funds spent on hosting refugees, ODA remained constant between 2017 and 2018. As highlighted in the Global Outlook on Financing for Sustainable Development (OECD, 2018[3]), this stagnation in ODA is accompanied by a decline in private development flows and a 12% decline in overall external finance to developing countries between 2013 and 2016.3 In this context, it is more important than ever to increase the effectiveness of development co-operation so that all resources are channelled and delivered in the most effective way to leave no one behind and realise the ambition of the 2030 Agenda.

The Addis Ababa Action Agenda, which sets out the means of implementing the 2030 Agenda, recognises the need “to improve the quality, impact and effectiveness of development co-operation and other international efforts in public finance, including adherence to agreed development co-operation effectiveness principles” (UN, 2015[4]).

This chapter focuses on four aspects of development partner support: 1) alignment of development partners’ strategies and projects to country-led development priorities and results; 2) forward visibility of development co-operation, including its annual and medium-term predictability and its recording on partner countries’ budgets; 3) use of partner country public financial management systems; and 4) progress made in untying aid.

The key findings of this chapter are:

Alignment of development partner projects to partner country objectives, results indicators, statistics and monitoring systems is declining. Where development partners’ country strategies are closely aligned to country-owned results frameworks, partners’ projects also tend to be closely aligned. While some development partners have increased alignment of project objectives to partner country plans and strategies, such alignment is declining among many other development partners. Moreover, development partners are decreasingly drawing on country-defined results and using national statistics and monitoring systems. This signals a decline in Sustainable Development Goal (SDG) Target 17.15, which calls to “respect each country’s policy space and leadership to establish and implement policies for poverty eradication and sustainable development” (UN, 2015[1]). This is particularly the case for bilateral partners. Increasing the use of country-owned results frameworks (CRFs), along with efforts to use and strengthen national statistics and monitoring systems, would help ensure that development co-operation not only addresses partner countries’ priorities, but also contributes to their capacity to plan, monitor and evaluate their progress towards sustainable development.
Despite improvement in annual predictability, challenges remain on forward visibility of development partners’ activities. While the share of development co-operation disbursed within the same year as was planned has marginally increased, the data also indicate a significant amount of unplanned disbursements. This mismatch between planned and actual disbursements can impact development partners’ project implementation, and can hinder partner countries’ effective planning, budgeting and execution. Furthermore, data show a decrease in the availability of forward expenditure and implementation plans to partner countries and a decrease in the share of development co-operation recorded on partner countries’ national budgets.
Development partners’ use of country systems is greater where they have long-term partnerships with partner country governments and channel a greater share of funds to the public sector. On average, the use of country systems when channelling development co-operation to the public sector has increased since 2016. Data show that this increase is closely linked to whether development partners have a long-term presence in a country and disburse a greater share of funds to the public sector. In these situations, development partners also perform better on medium-term predictability. These findings reconfirm the importance of building strong, long-term partnerships; while resource- and time-intensive, such partnerships also lay the foundation for upholding the internationally agreed effectiveness principles.
Concrete steps are required to go beyond formally untying aid to better untie in practice. DAC members have made progress in increasing the share of untied aid, but ODA-funded contracts are still awarded largely to suppliers based in DAC countries. The obstacles that prevent suppliers in the partner country from securing aid contracts should be addressed to achieve real progress in untying ODA in practice.

copy the linklink copied!Where development partners are aligned at the level of country strategy, they also tend to be aligned at project level

Development partner alignment to country-led development priorities is at the heart of country ownership. With their endorsement of the Busan Partnership agreement, development partners committed to rely on CRFs4 to guide their support to partner countries and, to the extent possible, avoid parallel systems of monitoring and tracking results of their development interventions (OECD, 2011[5]). In the Nairobi Outcome Document (GPEDC, 2016[6]), use of country-owned results frameworks was reaffirmed as a matter of urgency for development partners. Furthermore, development partners also committed to support the strengthening of partner countries’ statistical capacity and monitoring and evaluation systems, with the aim of enhancing data collection and analysis.

Partner country governments are typically engaged in the design of the development partner’s country strategy, but less engaged in monitoring and evaluating these strategies. In addition to aligning their individual projects,5 development partners align to national priorities by way of their country strategies, which provide overarching and strategic guidance for the development partner’s support to a partner country (Box 5.1 and Figure 5.2). The 2030 Agenda is also increasingly used as a shared framework for results (Box 5.2). Development partners reported that 831 country strategies were in place in 2018. Partner country governments were involved in the preparation of 94% of the strategies (Figure 5.1). For almost three-fourths of the strategies, the partner country government signed off on the final document (73%) and/or the strategy includes results indicators that are drawn from CRFs, plans and strategies (72%).6 However, fewer (65%) use government data and statistics to report on the strategy’s results indicators. Moreover, 24% of the strategies that plan an evaluation do not include the partner country government in either the evaluation of the country strategy or a discussion of the evaluation process and results. In a small proportion of country strategies (6%), partner country governments were not engaged in the preparation of the strategy. About one-fourth (26%) of these cases are in extremely fragile contexts;7 examples of the other countries and contexts where some development partners’ country strategies were prepared without consulting the government include Kenya and Viet Nam. Disaggregating this result by type of development partner, 11% of DAC member strategies did not include the partner country government in the preparation of the strategy. In contrast, the strategies of United Nations (UN) agencies and multilateral development banks very rarely (1%) did not engage the partner country government.

Figure 5.1. Development partners’ country strategies strongly align to national priorities, but less so to country-owned results frameworks

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Box 5.1. How development partner alignment is assessed

In assessing development partner alignment to country-led development priorities, Global Partnership monitoring looks at two levels of possible alignment:

Alignment of country strategies and characteristics of development partners’ country strategies. This includes assessing whether: priority areas of the country strategy were jointly identified with the government; results indicators were drawn from country-owned results frameworks (CRFs); the partner country government is involved in monitoring and evaluation of the country strategy; and the strategy references the 2030 Agenda and the Sustainable Development Goals (SDGs).
Alignment of individual projects, including specific development partner interventions such as programmes and projects (referred to as projects in this report). This includes assessing whether: project objectives are drawn from country development plans and strategies; project targets, results and indicators are drawn from the CRFs; government data and statistics are used to monitor project results; and the government is involved in the project evaluation. The average of the first three elements in project-level assessment provides the official data to report on the extent to which the development partner respects the partner country’s policy space and leadership in setting its own development path (SDG Target 17.15).

In the 2018 Global Monitoring Round, assessment of alignment of country strategies is based on the 831 country strategies that development partners reported were in place in 2018 across the 86 participating partner countries.

Assessment of alignment of individual projects is based on more than 3 300 projects. Development partners reported on their six largest (in monetary value) projects from all their new interventions in each partner country of USD 100 000 or more, approved in 2017. Focusing on the six largest projects captures an illustrative sample of development partners’ current practices. The minimal qualifying amount of USD 100 000 is the total budget for the project as approved during 2017 (i.e. commitments), even if disbursement may be phased during subsequent years.

Figure 5.2. Alignment to national development priorities in country strategies and individual projects

Where development partner country strategies are closely aligned to the CRFs, projects also tend to be closely aligned. This correspondence of alignment in projects where there is close alignment in strategies extends across all elements, according to data from the 2018 Monitoring Round.8 For example, where development partners use the data and statistical systems of a partner country government or involve partner country governments in evaluations at the strategic level, they also tend to do so at the project level. Further analysis of the 2018 data shows that there is no statistically significant relationship between the quality of partner country national development strategies and development partners’ use of these strategies to align to country priorities and results. This finding, together with the results regarding the use of the CRFs, suggests that decisions on closer alignment to partner country priorities hinge on factors that are specific to the development partner.

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Box 5.2. The 2030 Agenda is increasingly being operationalised as a global results framework

Development partners increasingly reference the 2030 Agenda in their country strategies, demonstrating the utility of the Sustainable Development Goals (SDGs) as a framework for results around shared objectives. As discussed in Part I of this report, 90% of partner countries with national development strategies adopted in or since 2015 reference the 2030 Agenda and the SDGs. For development partners, the 2030 Agenda and/or SDGs typically are referenced in the narrative of the development partner’s country strategy or partnership framework (65% of 563 country strategies that started in or since 2015). Fewer refer to the SDGs at target level (37%) or indicator level (36%), although these shares are trending upward. Disaggregated by year of approval of the strategy, the data show that the proportion of country strategies referring to the 2030 Agenda and the SDGs at all levels increased between 2015 and 2018 (Figure 5.3). Of the most recent strategies (starting in 2018), 74% include reference to the SDGs to define priority areas or sectors and 59% apply SDG indicators in their results frameworks.

Figure 5.3. Development partners increasingly reference the 2030 Agenda in their country strategies

UN funds, programmes and agencies are taking the lead in using the 2030 Agenda as a global results framework. The 2030 Agenda and/or the SDGs are referenced in the narrative of their country strategy or partnership framework in 79% of strategies approved in 2015 or later (compared to 65% on average for all development partners). The United Nations’ strong performance in this area is further demonstrated at the indicator and target levels. Strategies of UN funds, programmes and agencies refer to the SDGs at indicator level 56% of the time (compared to 36% on average) and at target level 59% of the time (compared to 37% on average).

Alignment of the UN development system’s operational activities to country priorities continues to be strengthened, guided by the 2012 and 2016 quadrennial comprehensive policy reviews and bolstered by renewed commitment to drawing on the SDGs as a common results framework. Reforms called for in United Nations General Assembly Resolution 72/279 aim to further this effort.

One of these reform measures is the revitalisation of the UN Development Assistance Framework, now named the UN Sustainable Development Cooperation Framework (UNSDCF). The UNSDCF is the most important instrument for planning and implementing UN development activities at the country level. The UN guidance on establishing the UNSDCFs recommends using the SDGs as a common results framework that can be informed by country-defined and disaggregated baselines.

Sources: (UN, 2016[8]), Quadrennial Comprehensive Policy Review of Operational Activities for Development of the United Nations System, https://undocs.org/A/RES/71/243; (UN, 2012[9])Quadrennial Comprehensive Policy Review of Operational Activities for Development of the United Nations System, https://www.un.org/ga/search/view_doc.asp?symbol=A/RES/67/226; (UN, 2018[10]) Repositioning of the United Nations Development System in the Context of the Quadrennial Comprehensive Policy Review of Operational Activities for Development of the United Nations System, https://www.un.org/en/ga/search/view_doc.asp?symbol=A/RES/72/279; (UN, 2019[11]) United Nations Sustainable Development Cooperation Framework: Internal Guidance, https://undg.org/wp-content/uploads/2019/06/UN-Cooperation-Framework-Internal-Guidance-Final-June-2019.pdf.

copy the linklink copied!Alignment to partner country objectives, results indicators, statistics and monitoring systems is declining

On aggregate, individual project objectives remain fairly aligned with national development priorities, but this is declining for most development partners. Assessment of more than 3 300 projects in the 2018 Monitoring Round found that 83% of project objectives are aligned to country-led priorities. This is slightly lower than in the 2016 Monitoring Round (85%). Vertical funds (e.g. Gavi, the Vaccine Alliance) and other international organisations (e.g. the International Organization for Migration) increasingly draw most project objectives from national plans and strategies. In contrast, alignment of project objectives to national priorities is decreasing among UN agencies, multilateral development banks and bilateral development partners (DAC and non-DAC members)9 (Figure 5.4). The World Health Organization, however, is a good practice example of project-level alignment (see Box 5.4). Overall, development partners prefer to align to national development strategies and sector plans over other development planning instruments (Figure 5.5).

Figure 5.4. Alignment of project objectives has decreased for most development partners

Figure 5.5. National development strategies are the planning instruments most used by development partners to align to government objectives

Development partners’ reliance on government-defined results, statistics and monitoring systems has declined since 2016. While alignment at the level of project objectives is fair, only 59% of results indicators outlined in individual projects are drawn from the CRFs. Box 5.3 provides details on different elements of project-level alignment. Furthermore, only 50% of all results indicators are monitored using national statistics and monitoring systems. The decline since the 2016 Monitoring Round is significant for most development partners (Figure 5.6). Multilateral development banks are an exception in this regard, as their use of the CRFs and national statistics and monitoring systems increased since 2016. The share of results indicators monitored using national statistics and monitoring systems also increased among UN agencies. In their responses to the 2018 Monitoring Round, development partners cited data gaps and lack of disaggregated information as reasons CRFs are frequently not used. Findings discussed in Part I of this report confirm that such gaps exist. Only 35% of partner country governments (25 of 72) reported that timely, regular and accurate government data are available for all or most indicators in their results framework. This reconfirms the need for further efforts by development partners to help strengthen and increase the use of national statistics and monitoring systems, in accordance with commitments made in Busan and Nairobi. Box 2.4 in Chapter 2 and Box 5.5 in this chapter further illustrate the need for strengthening and using national statistical systems. Overall, the decline in alignment of project objectives, use of the CRFs, and national statistics and monitoring systems signals a decline in SDG 17.15 (Box 5.3).

Figure 5.6. Development partners’ reliance on country-defined results, statistics and monitoring systems is decreasing

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Box 5.3. The Global Partnership monitoring exercise is the sole source of data to measure SDG Target 17.15 on “respect for each country’s policy space and leadership”

Building on the Paris Declaration, which emphasised that development partners must align to national priorities to achieve long-lasting results (OECD, 2005[12]), the 2030 Agenda recognises that “each country has primary responsibility for its own economic and social development”. Furthermore, endorsement of the 2030 Agenda constituted a global commitment to “respect each country’s policy space and leadership to implement policies for poverty eradication and sustainable development, while remaining consistent with relevant international rules and commitments”, as is stated in Paragraph 63 (UN, 2015[1]). While there is no agreed definition, respect for policy space and leadership can be understood as allowing a country to determine its own path to sustainable development, including by defining its development priorities and results. Alignment at the level of individual projects is critical to reinforcing and respecting country policy space and leadership in a practical and operational manner. In this regard, the Global Partnership assessment of development partners’ use of country-owned results frameworks and planning tools (see Box 5.1) is recognised by the UN Statistical Commission as a measure of progress towards SDG Target 17.15 on respect for partner countries’ policy space and leadership to establish and implement policies for poverty eradication and sustainable development1 (UN, 2016[13]).

The extent to which the CRFs and planning tools are used in the design and monitoring of new development projects dropped from 64% in the 2016 monitoring round to 62% in the 2018 round (Figure 5.7 and Figure 5.8). This signals a decline in SDG Target 17.15 (UN, 2015[1]). For bilateral partners, the decline corresponds to decreased alignment of project objectives to country-led priorities and decreased reliance on country-defined results, statistics and monitoring systems. For multilateral partners, the decline is due to a decrease in the reliance on country-defined results, statistics and monitoring systems2. As was the case in the 2016 Monitoring Round, use of the CRFs and planning tools remains higher on average among multilaterals than with bilateral partners. Within the multilateral partner group, multilateral development banks (72%) drive the average up, while UN agencies (56%) lag behind. The decline is 7 percentage points more pronounced for bilateral development partners, from 64% in 2016 to 57% in 2018.

Figure 5.7. Decreasing use of country-owned results frameworks indicates declining respect for country policy space and leadership, especially for bilateral partners

Note: DG Indicator 17.15.1 (“extent of use of country-owned results frameworks and planning tools by providers of development co-operation”) is the only indicator to measure SDG Target 17.15 (“respect each country’s policy space and leadership to establish and implement policies for poverty eradication and sustainable development”).

← 1. The indicator is the average of alignment at three levels: objectives, results, and monitoring and statistics. For the 2018 monitoring exercise, this was calculated for the 70 development partners in 80 partner countries for which data are available at all three levels; in 2016, calculations were for 73 development partners in 81 partner countries. This reduced sample did not allow for comprehensive representation of all types of development partners. Therefore, for this specific indicator, figures are presented aggregated by the two broader types of development partners: bilateral and multilateral.

← 2. In the context of the SDG follow-up and review, the Global Partnership provides data on SDG Indicator 17.15.1 only for bilateral development partners. For the purpose of the Global Partnership monitoring exercise, the methodology for SDG Indicator 17.15.1 is extended to multilateral development partners.

Partner country government involvement in project evaluations has increased slightly, but is not consistent across development partners. Project evaluations not only improve the design and implementation of future projects, but also promote dialogue and co-operation among development actors. Involving partner country governments in evaluations is critical to strengthen country ownership, reinforce accountability and build trust. Data from the 2018 Monitoring Round show that a final evaluation was planned in 70% of all projects, a drop from the 77% reported in the 2016 monitoring exercise. However, a slightly larger share of the projects that plan a final evaluation – 59% in the 2018 round versus 57% in the 2016 round – envisage some degree of government involvement. Half of these projects (50%) that plan a final evaluation anticipated the government would be involved in defining the evaluation scope, 2% planned for the government to contribute to financing the evaluation and 12% planned government involvement in both. The data show that government involvement in project evaluations expands as the size of the project increases. Notwithstanding the size of their project, non-DAC bilateral partners, UN agencies and vertical funds are more likely than other development partners to involve partner country governments in project evaluations.

Figure 5.8. Government involvement in evaluations has slightly increased, but remains mixed across development partners

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Box 5.4. The World Health Organization ensures strong project-level alignment

The World Health Organization (WHO) performs well above the overall development partner average across all assessed areas pertaining to project-level alignment (Figure 5.9). This could be driven by the agency’s strong emphasis on aligning its country-level interventions to national development strategies and country results frameworks.

As a technical agency providing support to its member states, WHO works closely with relevant partners to effectively respond to country priorities and needs in achieving Sustainable Development Goal 3 (ensure healthy lives and promote well-being for all at all ages).

Figure 5.9. The World Health Organization outperforms on project-level alignment

The Country Cooperation Strategy (CCS) outlines the alignment of WHO’s support to national health plans and strategies. The CCS is WHO’s medium-term strategy, guiding agency planning, budgeting and resource allocation to achieve the health-related Sustainable Development Goals in each country where WHO works.

An integral part of the CCS is the use of monitoring and evaluation as a tool to assess WHO’s performance at country level. As noted in the 2019 country presence report, WHO enhances implementation, monitoring and reporting on its technical co-operation through joint WHO and government mechanisms (WHO, 2019[14]). The number of country offices reporting they have such mechanisms in place has risen steadily, from 77% to 89% between the 2015 and 2019 country presence reports.

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Box 5.5. Building statistical capacity: Strengthening national statistical systems through their use

The need to use and strengthen national statistical systems is a shared and interlinked challenge for partner countries and their development partners. As discussed in Part I of this Progress Report, two-thirds of partner countries reported that they lack national statistical capacity to track implementation of the national development strategy. The 2018 data show that only half of the results indicators included in development partners’ individual projects are tracked using national monitoring and statistical systems and that development partners cited data gaps as one reason country results frameworks are frequently not used. These findings point to an impediment that requires concerted efforts from both partner countries and development partners to address these underpinning challenges. Alongside partner country efforts to strengthen statistical capacity and national monitoring and evaluation systems, development partners can play an important role in strengthening statistical systems by using them. International development partners are often viewed as important and frequent users of national data, and can create positive incentives for national statistical offices to increase and strengthen official statistics in line with both domestic and international demand (Sethi and Prakash, 2018[15]).

Despite a slight increase in the share of total official development assistance (ODA) for data and statistics since 2015, further investments are required to meet the demand for more and better-quality data. The overall amount of ODA for data and statistics remained low in 2016 (USD 623 million), representing only 0.33% of total ODA (PARIS21, 2018[16]). In 2018, only 56 of the 102 countries with national statistical plans had secured adequate financing to implement them; only 3 of these are in sub-Saharan Africa (PARIS21, 2018[16]). Tracking implementation of the Sustainable Development Goals (SDGs), however, requires an unprecedented amount of data and statistics, from both official statistical systems and new sources (UN, 2018[17]).

A handful of development partners provide a large share of global support for better data. The World Bank, United Nations Population Fund, Eurostat, International Monetary Fund and United Nations Children’s Fund supplied 69% of total commitments in 2016 (PARIS21, 2018[16]). Foundations also are recognising the critical role of data in eradicating poverty and are delivering on the commitment to leave no one behind. Between 2013 and 2015, foundations provided 2.4% of their three-year total philanthropic support for development to projects with a strong data and statistics component. However, their support tends to be concentrated in specific sectors, overlooking the wider structural needs of national statistical systems (PARIS21, 2018[16]).

Different international partnerships and initiatives are blossoming to bridge the data divide for sustainable development. In the same spirit, the Development Assistance Committee agreed in 2018 to support a new workstream on Data for Development that will respond to the six data actions called for in the Development Co-operation Report 2017: Data for Development (OECD, 2017[18]). This new workstream will establish a community of practice between development partners of development co-operation and the statistical and data for development communities. Through awareness raising, knowledge sharing and development of good practices, the project will help development partners to make more strategic and higher quality investments in national statistical systems in a way that harnesses the data revolution for sustainable development. Complementary to these efforts, the Bern Network1 on Financing Data for Development was convened in early 2019. Assembling a broad range of stakeholders, the Bern Network aims to create more effective and co-ordinated funding mechanisms for statistical systems. Results of the network’s efforts will be presented at the World Data Forum 2020 in Bern, Switzerland.

← 1. The Bern Network on Financing Data for Development is an outcome of the Bern High-Level Dialogue on Funding for Data for the SDGs held on 24 January 2019 in Bern, Switzerland.

copy the linklink copied!Annual predictability has improved slightly, but aggregates hide important variations

Predictable development co-operation enables successful implementation of development plans, yet predictability has improved only marginally since 2011. Global Partnership monitoring assesses annual predictability of development co-operation by looking at the proportion of funding that development partners disburse to partner country governments within the fiscal year during which it was scheduled to be disbursed. Development partners have made continuous commitments to improve predictability,10 and on average, annual predictability improved (from 83% to 87%) between the 2016 and 2018 Monitoring Rounds. However, progress has been marginal over the eight-year period since 2011, when annual predictability was 85%. At aggregate level, all types of development partners have improved predictability since the 2016 round, but progress is mixed among and within groups (Figure 5.10).11 Country studies have confirmed that unpredictable development co-operation has a negative impact on the management of public finances and undermines efforts by partner countries and development partners to achieve development results (Mokoro Ltd, 2011[19]). Both shortfalls and over-disbursements in the total amount of funding disbursed to the public sector can have serious implications for development partners’ implementation of projects on the ground and, overall, on the government’s ability to implement its development efforts as planned; these also can hinder effective planning, budgeting and execution (Celasun et al., 2008[20]).

Figure 5.10. On aggregate, annual predictability improved for all development partners

Predictability of funding varies across countries. In 31 of the 86 countries that participated in the 2018 Monitoring Round,12 development partners disbursed a total of USD 2.4 billion less than what they had originally scheduled. Among these were Kosovo13 and Moldova, where development partners disbursed approximately half (55% and 54%, respectively) of the total amounts scheduled. On the other hand, in more than half the countries participating in the 2018 Monitoring Round (52 of 86), development partners disbursed more funding than what they had originally scheduled. In total, USD 5.8 billion was reported as disbursed beyond the amount originally scheduled by development partners. Armenia and Ethiopia are examples of countries where development partners disbursed, in total, about twice the amount originally scheduled. Predictability is particularly important in highly ODA-dependent countries where variations in development flows can severely affect the ability of the government to implement development strategies (Celasun et al., 2008[20]). Data disaggregation shows that the share of development co-operation disbursed within the year for which it was originally scheduled – and thus annual predictability – was lower (83%) in highly ODA-dependent countries than in medium and low ODA-dependent countries (86% and 89%, respectively). Discrepancies also are observed between the LDCs and non-LDCs. Despite commitments to increase predictability in fragile contexts (PBSB Dialogue, 2016[21]; 2011[22]), annual predictability is on average lower in extremely fragile contexts (73%) than in non-fragile contexts (89%) (Figure 5.11). On the other hand, the share of funds disbursed beyond the amounts originally scheduled is much higher in extremely fragile contexts. Such over-disbursement is likely due to the unplanned and volatile nature of the crises that are prone to occur in extremely fragile contexts.

Figure 5.11. Predictability is lower in least developed countries, extremely fragile contexts and highly ODA-dependent countries

copy the linklink copied!Forward visibility of development co-operation is decreasing, hindering parliamentary oversight in partner countries as well as national government ability to plan and budget for development efforts

Medium-term predictability is a requirement of effective development planning. In addition to assessing annual predictability,14 Global Partnership monitoring assesses medium-term predictability by measuring the extent to which partner country governments receive indicative forward expenditure or implementation plans (hereafter referred to as forward expenditure plans) regarding development partners’ planned activities for one, two and three years ahead. When development partners share forward expenditure plans on development co-operation with partner country governments, this information can be used for effective planning of medium-term policies and programmes and in the formulation of national budgets that are subject to parliamentary oversight.

Forward visibility of development co-operation from development partners is lower than it was in 2014. Data from the 2018 Monitoring Round show that, on average across three years, partner country governments reported they had received development partners’ forward expenditure plans covering two-thirds (67%) of estimated development co-operation funding. As was the case for results of previous monitoring rounds, the availability to partner countries of forward expenditure plans was typically higher for the first year ahead (81%) and decreased for the second and third years ahead (to 65% and 56%, respectively) (Figure 5.12). These findings mean that in 2018, on average, partner country governments had forward visibility and could start mid-term planning on only 56% of development co-operation funding that was expected to be received from their development partners in 2021. Forward visibility is much lower in extremely fragile contexts (61%) than in fragile or non-fragile contexts (68%). The DAC Recommendation on the Humanitarian-Development-Peace Nexus adopted in early 2019 provides a timely response for improving predictability in fragile contexts, calling for the use of predictable, flexible, multi-year financing wherever possible (OECD, 2019[23]). Tracking progress to ensure that this Recommendation translates into action will be important.15

Figure 5.12. Forward visibility is declining

Decreasing availability of forward-looking information is mirrored in partner country budgets, weakening parliamentary oversight of development resources. Including development co-operation funding in partner country budgets16 helps to align these resources with partner country priorities, contributes to strengthening domestic budgetary processes and institutions, and strengthens domestic oversight of development resources (CABRI, 2008[24]). The proportion of development co-operation recorded on budget and subject to parliamentary oversight has declined since the 2016 Monitoring Round. Between 2011 and 2016, the share of development co-operation recorded on budget increased from 57% to 66%, but then fell to 61% in 2018 (see Figure 5.13 and Part I of this report). Comparison of only countries that reported in both the 2016 and 2018 Monitoring Rounds shows the same negative trend. Furthermore, in a number of countries (33), including some extremely fragile contexts,17 development co-operation recorded on national budgets was greater than what development partners had planned to disburse in those countries. Both underestimated and overestimated development co-operation funding on national budgets weaken the ability of government to account effectively for development co-operation to their domestic stakeholders. Development partners and national governments share responsibility for ensuring that development co-operation is on budget. For partner countries, analysis of the 2018 monitoring data shows that a higher share of development co-operation is recorded on the national budget when an aid information management system is in place.18 At the same time, it is essential that development partners provide accurate projections in a timely manner to ensure that estimates are meaningfully reflected on national budgets.

Figure 5.13. Availability of forward expenditure plans and share of development co-operation on budget follow the same trend

Against the overall decline, UN agencies improved their forward visibility since 2016. While the proportion of development co-operation covered by forward expenditure plans and recorded on budget decreased overall, it has increased for some development partners19 (Figure 5.14). Since 2016, for example, UN agencies improved forward visibility of their development co-operation. Their share of development co-operation recorded in partner country budgets also grew, although it remains among the lowest (along with that of other international organisations) relative to all development partners. Despite the decline, multilateral development banks performed better than other multilaterals.

Figure 5.14. In contrast to most other development partners, UN agencies are both increasing the availability of forward expenditure plans and development co-operation on national budgets

Forward expenditure plans are more readily available where a development partner and partner country government have an established relationship. Data analysis shows that more forward expenditure plans are available to partner countries where development partners have a country strategy (or partnership framework) in place or where a higher share of development co-operation is disbursed directly to the public sector.20 This confirms the findings of the 2016 Progress Report, noting that established partnerships between partner country governments and their development partners increased the extent to which effectiveness principles are upheld in country. These analyses also highlight the importance of investing in long-term partnerships for development. For development partners, establishing a country strategy together with the partner country can be key. For partner countries, the findings confirm the utility of establishing policy frameworks for development co-operation. Such frameworks build trust and strengthen partnerships through defined roles and responsibilities for stakeholders, and also define joint commitments for effective development co-operation (see Chapter 4 of this report on mutual accountability mechanisms).

The decreasing share of development co-operation disbursed to the public sector points to the need to ensure comprehensive and timely information sharing with partner countries. According to 2018 Monitoring Round data, direct disbursements to the public sector made up about two-thirds (65%) of development co-operation ultimately disbursed at country level by development partners, or USD 37.8 billion of the USD 58.8 billion disbursed overall.21 This is a notable decrease from the share found in the 2016 Monitoring Round (80%), suggesting that a larger share of development co-operation is being disbursed to non-state actors (e.g. civil society organisations, the private sector and others) in participating countries. This shift is reflected in the decreased share overall of forward expenditure plans that are made available to partner country governments and of development co-operation that is recorded on national budgets. It also points more broadly to a need to rethink how development partners can ensure that information sharing on development co-operation with partner country governments is sufficiently comprehensive and timely to support both informed development planning (by governments and as part of the associated parliamentary oversight) and country ownership and sustainability of national development efforts.

copy the linklink copied!Increased use of procurement systems is largely driving the marginal progress made by development partners in using country public financial management systems

An essential element of country ownership is the use by development partners of a country’s public financial management (PFM) systems. Use of countries’ own systems to deliver development co-operation helps to strengthen these systems as well as to promote country ownership. This also ensures sustainability of development results, lowers transaction costs by eliminating the creation and maintenance of parallel structures, and provides an entry point for partners to harmonise their processes (CABRI, 2014[25]). In recognition of these benefits and following commitments made in the Paris Declaration (2005) and the Accra Action Agenda (2008), the Busan Partnership agreement (Paragraph 19) affirms that use of country systems should be the default approach for managing co-operation provided to the public sector (OECD, 2011[5]). Box 5.6 discusses the use of country systems in more detail.

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Box 5.6. What does it mean to use country systems?

A country’s public financial management (PFM) system consists of different regulations, standards and processes that guide how the government uses and keeps tracks of its financial resources. (This is discussed in Box 2.5 in Chapter 2). The question of whether a development partner uses country PFM systems, then, is not black and white; the various system components can be used to varying degrees.

The Global Partnership monitoring exercise assesses the extent to which development partners use mechanisms and procedures related to four PFM system components: 1) budget execution; 2) financial reporting; 3) auditing; and 4) procurement.

In terms of budget execution procedures, the Global Partnership assesses whether development co-operation is on budget, meaning it is included in budgets that are submitted for parliamentary approval, and on treasury, meaning it is disbursed through a country’s treasury system.1 Figure 5.15 illustrates in greater detail what it means to use each of the four system components.

Figure 5.15. Characteristics of use of country public financial management systems

← 1. The Global Partnership monitoring exercise determines the share of on-budget development co-operation (Indicator 6) based on partner country governments’ reporting on the amount that is recorded on the national budget in the reporting year. To assess use of national budget execution procedures (Indicator 9b), the exercise takes a broader approach, asking development partners whether: funds are recorded in annual budgets, the use of funds is subject to budget execution procedures without adjustment, funds are deposited and disbursed though the national treasury system, and the opening of separate bank accounts are required.

Development partner use of country PFM systems has increased slightly overall, with notable gains made in the use of procurement systems. Globally, use of country PFM systems has increased slightly, from 50% in the 2016 Monitoring Round to 53% in the 2018 round. The 2016 data signalled a need for accelerated efforts to increase the use of country procurement systems; the notable 13 percentage-point increase in the use of procurement systems reported in 2018 demonstrates that development partners, and particularly multilateral development banks (MDBs), did make that effort.22 At the same time, use of budget execution procedures increased by only 3 percentage points between the 2016 and 2018 rounds, while use of financial reporting and auditing systems fell by 3 and 2 percentage points, respectively (Figure 5.16).

Figure 5.16. Use of country public financial management systems has grown since 2011

The MDBs, followed closely by DAC members, lead in using country systems. DAC members’ use of country PFM systems continued to grow, increasing from 47% to 55% from the 2016 to the 2018 Monitoring Rounds (Figure 5.17). Among the countries showing the greatest individual increase in the 2018 data (listed in order of largest volume of disbursements to the public sector) were Japan (from 68% to 74%), EU institutions (from 45% to 52%), Australia (from 33% to 41%), Korea (from 46% to 86%), Canada (from 52% to 75%), Italy (from 51% to 94%) and Norway (from 56% to 81%). Beyond the improvements made by these members, other DAC members maintained their high use of country systems, including Sweden (66%), Denmark (92%), Ireland (63%) (also in order of largest volume). On the other hand, use of country PFM systems by non-DAC bilateral partners declined from 2016 to 2018 and results for UN agencies and vertical funds largely stayed the same during this period.23

Figure 5.17. DAC members lead in increasing use of partner country public financial management systems

copy the linklink copied!A development partner’s relationship with a partner country is a stronger determinant of its use of country PFM systems than the partner country’s characteristics

No clear link is evident between the strength of country PFM systems and their use by development partners. The political commitments around the strengthening and use of country PFM systems are grounded in mutuality: partner countries have committed to strengthen these systems and development partners have committed to increase the use, and thus further improve the quality, of the systems. However, results show that factors other than system quality nevertheless continue to determine development partners’ use of country systems. According to 2018 data, there is no obvious correlation between the quality of a partner country’s PFM systems and the extent to which development partners use them.

The highest use of country PFM systems occurs in lower middle-income countries. The extent to which development partners use the systems of low-income countries is considerably below the global average of 53%, but notably increases for those of lower middle-income countries (Figure 5.18). This increase seems to largely reflect greater reliance on loans to deliver development co-operation. The share of disbursements to the public sector in the form of loans, as opposed to grants, rises from 30% for low-income countries to 74% for lower middle-income countries, and further analysis shows that loans are much more frequently administered using country systems.24 A small number of Eastern European and Western Asian UMICs appear to be driving the observed downward trend in use of country systems in countries with gross national income per capita above approximately USD 1 800.25 Use of country systems in small island developing states (SIDS) is in line with this trend. A majority (13 of 20) of the SIDS participating in the 2018 Monitoring Round are either UMICs or high-income countries, and in SIDS, country PFM systems are used for only 28% of funds disbursed to the public sector. This could be related to capacity challenges faced by some SIDS (see Box 2.7 in Chapter 2 of this report) in setting up and operating PFM systems that can manage financial flows from various development partners.26 In extremely fragile contexts, 34% of development partners’ funds that are disbursed to the public sector use PFM systems. In other contexts, 55% of development partners’ funds use these systems.

Figure 5.18. Lower middle-income countries show highest use of country systems

Individual development partner use of country PFM systems varies substantially. Individual development partners’ use of country PFM systems is not consistent across their partner countries. In other words, it is not that some partners always use countries’ systems and others do not. Rather, development partners are making a choice on a case-by-case basis about when to use country PFM systems. For example, about half of providers used country systems for all of their disbursements to the public sector in at least one country, but also chose not to use country systems at all in at least one other of their partner countries.

Development partners that have increased their funding to the public sector have also increased their use of country PFM systems. The global increase in the use of country PFM systems has been driven mostly by development partners that have increased the share of their co-operation that is disbursed to the public sector. In partner countries that experienced an increase in disbursements to the public sector between the 2016 and 2018 Monitoring Rounds, use of country PFM systems reached 57% in 2018 (compared to the global average of 53%).27 In 32 countries that participated in both rounds and that together represent more than USD 18 billion in public sector disbursements, changes in the share of funds disbursed to the public sector and use of country systems moved in concert. This could indicate that where development partners are firmly set on working with the public sector, they are also set on strengthening and using national systems.

The longer development partners engage in partner countries, the more they tend to use these countries’ PFM systems. Building trust takes time. So does identifying both shared priorities and areas for potential, larger scale development co-operation programmes to justify initial transaction costs in starting to use country systems. Moreover, using country systems might require both the development partner and partner country to first better understand each other’s relevant institutional arrangements and legal provisions. Data from the 2018 Monitoring Round suggest a positive correlation between the length of time that a development partner engages in a partner country and its likelihood to use that partner country’s systems. Analysis also shows that use of country systems is increasing most strongly in the first few years of a development partner’s engagement in a new partner country.28 This suggests that use of country systems, among other things, benefits from building institutional knowledge and relies on practice and improvements over time.

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Box 5.7. Determinants of use of country public financial management systems

While Global Partnership monitoring points to some factors that may shape development partner decisions to use partner country public financial management (PFM) systems, it is understood that many other considerations also influence the degree to which development partners use these systems. A 2014 study by the Collaborative Africa Budget Reform Initiative (CABRI) looked at some of these factors. While it is not a comprehensive list, the following were identified as possible determinants of the use of country PFM systems by development partners:

Fiduciary factors. Development partners continually cite fiduciary concerns – ensuring that development co-operation resources are used for the intended purpose and achieve value for money – as the primary consideration in using partner country PFM systems. This should mean that stronger systems result in increased use. However, and as noted in this chapter, there is no clear link between these two variables.
Non-fiduciary factors. Research shows that development partners consider non-fiduciary factors when determining use of partner country PFM systems, including the strength of development policies, political stability and human rights situation.
Partner country development co-operation policies. Research shows that when partner countries specifically highlight use of their PFM systems as the preferred approach for managing co-operation provided to the public sector, use of these systems increases.
Development partner capacity. Partner country PFM systems vary, requiring that development partner staff build specific knowledge of an individual partner country’s procedures and regulations.

Source: CABRI (2014[25]), Towards a Greater Use of Country Systems in Africa: Recent Trends and Approaches, https://www.cabri-sbo.org/en/publications/towards-a-greater-use-of-country-systems-in-africa-recent-trends-and-approaches-synthesis-report

copy the linklink copied!Further action is needed to go beyond formally untying ODA to better untie in practice

Bilateral development partners have consistently committed to untying their ODA. Untying ODA means removing the legal and regulatory barriers to open competition for procurement funded by official development assistance. In practical terms, ODA is considered untied when the development partner does not attach geographical constraints on its use. There has been a formal recommendation on this matter by members of the DAC since 2001, when they agreed to untie ODA to the LDCs (OECD, 2019[26]). Since then, coverage of the Recommendation has been extended to more countries,29 although it still does not cover all countries receiving ODA. This commitment to untie is based on the understanding that untying ODA increases the effective use of funds in terms of value for money and promotes partner country ownership and alignment, as this gives the recipient of the funds the freedom to procure goods and services from anywhere in the world, including from domestic stakeholders (OECD, 2019[27]).

The share of untied ODA increased in the period from 2015 to 2017,30 but progress has been uneven across development partners. DAC members self-report to the OECD on the tying status of their ODA (i.e. whether each activity is tied, partially tied or untied). According to analyses of the latest reported data, the untied share of total DAC ODA increased from 76% in 2015 to 81% in 2017. When disaggregated by DAC member, however, the data show that progress has been uneven: 7 DAC members have fully untied their ODA; a further 9 members reported 90-100% of their ODA as untied; and 14 DAC members reported less than 90% of ODA is untied, including 7 that reported less than 70% of untied ODA (Figure 5.19). Since 2015, five DAC members increased their share of untied ODA by 20% or more. As new members join the DAC, they also start reporting on the Recommendation. Hungary, for example, joined in 2016 and reported 87% untied ODA in 2017.

Figure 5.19. Despite progress, not all DAC members have yet fully untied their official development assistance

Development partners’ good global performance on untying aid is not trickling down to all partner countries. Data on ODA commitments to the 56 partner countries that participated in both the 2016 and the 2018 Global Partnership Monitoring Rounds show an increase in the share of untied aid, from 76% in 2015 to 82% in 2017. Nevertheless, the proportion of untied ODA received by many partner countries decreased in the same time period (Figure 5.20). This was the case for a number of the LDCs, among them Guinea-Bissau and Lao People’s Democratic Republic, that experienced a drop of at least 10% in the share of untied ODA despite the LDCs being specifically covered by the DAC Recommendation on Untying Official Development Assistance. Overall, the share of untied ODA declined from 2015 to 2017 for 17 of the 43 LDCs that participated in the 2018 monitoring exercise; for most of the others, the share increased (25 countries) or remained the same (1 country).

Figure 5.20. Official development assistance to some least developed countries is increasingly tied

While DAC untying rates are generally improving, ODA-funded contracts are still largely awarded to suppliers based in the country of the development partner. Reports on the DAC untying Recommendation not only track DAC members’ commitments to untie ODA, but also provide analyses of the contracts awarded, including information about the countries in which the winning suppliers are based (OECD, 2018[29]; 2017[30]). In 2016, about 40% of ODA-funded contracts were awarded to companies based in the development partner country, according to the 2018 (OECD[29]) report on the untying Recommedation. While this might be the natural result of competitive and open procurement, it is also possible that bidding processes are imbalanced in favour of the development partner market. The same report notes, for instance, that for nine DAC members,31 70% of contract volume was awarded to suppliers based in their own country. Awarding ODA-funded contracts to suppliers in partner countries helps to create jobs, generate income and build capacity in these countries. It also supports the main objectiveof ODA: to promote the economic development and welfare of developing countries.If contracts are won by suppliers based in the country of the development partner, partner countries will not reap these additional benefits produced by ODA.

To increase its effectiveness, ODA that is de jure untied should remain de facto untied. Research by Ellmers (2011[31]) found that development partners’ procurement practices can make it difficult for some companies and individuals to win ODA-funded contracts and end up favouring specific suppliers or countries. Even when legally there are no geographical constraints, certain procurement practices may create uneven tender conditions and thus skew contract awards. Practical barriers that can hinder firms based in partner countries from winning contracts include language (e.g. tenders advertised only in English or only in the language of the development partner); communication channels (e.g. tenders advertised only on international platforms and not using media outlets from the partner country in question); and the size of contracts (e.g. large contracts that are not split into smaller, more manageable lots), among others (Meeks, 2018[32]). To fully realise the intended benefits of untied ODA, development partners need to ensure that their procurement practices do not create obstacles that potentially prevent suppliers from any country, including from partner countries, from winning ODA-funded contracts for the provision of goods and services.

References

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[24] CABRI (2008), Putting Aid on Budget - Good Practice Note: Using Country Budget Systems, Collaborative Africa Budget Reform Initiative, Pretoria, https://www.cabri-sbo.org/uploads/files/Documents/report_2008_cabri_transparency_and_accountability_use_of_country_systems_english_putting_aid_on_budget_-_good_practice_note_-_using_country_systems.pdf.

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[19] Mokoro Ltd (2011), “Synthesis of findings and good practices”, in Aid Predictability Volume 1, OECD, Paris, http://www.oecd.org/development/effectiveness/49066202.pdf.

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[26] OECD (2019), Revised DAC Recommendation on Untying ODA, OECD, Paris, https://one.oecd.org/document/DCD/DAC(2018)33/FINAL/en/pdf#_ga=2.203348817.1312642867.1559033644-1414738044.1526984290.

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[29] OECD (2018), “2018 report on the DAC untying recommendation”, DCD/DAC(2018)12/REV2, OECD, Paris, https://www.oecd.org/dac/financing-sustainable-development/development-finance-standards/DCD-DAC(2018)12-REV2.en.pdf.

[3] OECD (2018), Global Outlook on Financing for Sustainable Development 2019: Time to Face the Challenge, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264307995-en.

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[12] OECD (2005), The Paris Declaration on Aid Effectiveness, OECD, Paris, https://www.oecd.org/dac/effectiveness/34428351.pdf.

[28] OECD (n.d.), Creditor Reporting System (database), OECD, Paris, https://stats.oecd.org/Index.aspx?datasetcode=CRS1.

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[22] PBSB Dialogue (2011), A New Deal for Engagement in Fragile States, International Dialogue on Peacebuilding and Statebuilding, https://www.pbsbdialogue.org/media/filer_public/07/69/07692de0-3557-494e-918e-18df00e9ef73/the_new_deal.pdf.

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[11] UN (2019), United Nations Sustainable Development Cooperation Framework: Internal Guidance, United Nations Sustainable Development Group, New York, https://undg.org/wp-content/uploads/2019/06/UN-Cooperation-Framework-Internal-Guidance-Final-June-2019.pdf.

[10] UN (2018), Repositioning of the United Nations development system in the context of the quadrennial comprehensive policy review of operational activities for development of the United Nations system, United Nations General Assembly, New York, https://www.un.org/en/ga/search/view_doc.asp?symbol=A/RES/72/279.

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[1] UN (2015), Transforming Our World: The 2030 Agenda for Sustainable Development, United Nations General Assembly, New York, https://www.un.org/en/development/desa/population/migration/generalassembly/docs/globalcompact/A_RES_70_1_E.pdf.

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Notes

← 1. Official development assistance flows are defined by the OECD as those flows that go to countries and territories on the DAC List of ODA Recipients and to multilateral development institutions; they are provided by official agencies and administered with the promotion of the economic development and welfare of developing countries as their main objective; and they are concessional in character. More detail on the definition is available in (OECD, n.d.[33]).

← 2. As of December 2018, 47 countries are included in the UN Committee for Development Policy list of least developed countries. The list is available at: https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/ldc_list.pdf

← 3. The 2018 report, Global Outlook on Financing for Sustainable Development, found that foreign direct investment to developing countries plunged by around one-third over 2016 and 2017.

← 4. Global Partnership monitoring uses a broad definition of CRFs to account for the possibility that some countries may not articulate their priorities through a single, integrated CRF. This broad definition includes CRFs in national or subnational strategies, sector plans, ministerial or institutional plans, and joint government-development partner strategies. The full CRF definition is available in GPEDC (2018, pp. 50-51[7]).

← 5. For purpose of readability, “programme and projects” are hereafter referred to as projects across this report.

← 6. Of the strategies that do not include results indicators drawn from CRFs, plans and strategies (28% of all strategies), 63% are in partner countries where there is a single, integrated CRF that is part of the national development strategy. The remaining 37% of strategies are in ten partner countries where there is no integrated country-owned results framework within the national development strategy. However, this does not exclude that sector strategies or other national planning documents could contain results frameworks to which partners could align.

← 7. The 2018 OECD fragility framework classifies 58 contexts as fragile across a spectrum of intensity and in economic, environmental, political, security and societal dimensions. Of these 58, 45 are partner countries that participated in the 2018 Global Partnership Monitoring Round. The OECD further classifies 15 of the 58 fragile contexts as extremely fragile; 12 of these 15 are partner countries that participated in the 2018 Monitoring Round. The OECD (2018[34]) report, States of Fragility, presents the fragility framework.

← 8. The relationship between alignment of country strategies and alignment of individual projects was tested on the four assessed elements of alignment and found to be statistically significant for each element. The data draw on development partner-partner country pairs for which information is available on alignment at the level of both country strategy and project and where the country strategy started in 2017 or earlier.

← 9. When disaggregated by development partner, some types of partners have increased alignment of project objectives. However, for the vast majority of projects on average across all development partners, alignment at the level of the projects’ objectives decreased since the 2016 round, driving down the global average.

← 10. Commitments to improve predictability of development co-operation that were made in the Paris Declaration on Aid Effectiveness (OECD, 2005[12]) have been renewed in the Busan Partnership agreement (OECD, 2011[5]), the Nairobi Outcome Document (GPEDC, 2016[6]) and the Addis Ababa Action Agenda (UN, 2015[4]).

← 11. The greater predictability of development co-operation by other international organisations is largely explained by International Organization for Migration improvement (from 75% to 98%) and by the high annual predictability of organisations that reported at country level for the first time in the 2018 Monitoring Round. Aggregate figures for UN agencies and other international organisations for the 2016 Monitoring Round have been adjusted to reflect changes in the way they were classified.

← 12. In the 2018 Monitoring Round, information on development co-operation funding scheduled for disbursement to the public sector and disbursements was available for 84 countries.

← 13. . This designation is without prejudice to positions on status, and is in line with United Nations Security Council Resolution 1244/99 and the Advisory Opinion of the International Court of Justice on Kosovo’s declaration of independence.

← 14. Annual predictability is the extent to which development partners disbursed scheduled funding to partner country government within the same fiscal year as planned; medium-term predictability refers to whether development partners have shared forward expenditure plans with partner country governments.

← 15. Fostering humanitarian-development-peace coherence is one of six action areas in the Global Partnership’s recently endorsed tailored approach to monitoring effective development co-operation in fragile contexts. The tailored approach includes a placeholder for which an indicator to measure humanitarian-development-peace coherence is to be developed based on agreed actions, including monitoring the recently adopted DAC Recommendation on Humanitarian-Development-Peace Nexus.

← 16. The term “on budget”, as used in this report and measured by Indicator 6 of the Global Partnership for Effective Development Co-operation monitoring framework, refers only to the recording of funding planned by development partners in the parliament-approved budget. It does not indicate whether or not the development partner used the government budget process to disburse the funds.

← 17. See Footnote 7.

← 18. Analysis of the 2018 monitoring data shows a positive and statistically significant correlation between the existence of aid information management systems and the share of development co-operation recorded on national budgets.

← 19. Non-DAC bilateral partners and vertical funds diverged from the overall trends in that the decrease in the share of development co-operation covered by forward expenditure plans did not correspond to a lower share of development co-operation recorded on budget. This can be partially explained by variation among the two groups in reporting on the two indicators and by changes in the composition of the groups between 2016 and 2018.

← 20. Data analysis shows a positive correlation between the existence of country strategies and forward expenditure plans. Data analysis additionally indicates that the higher the share of development co-operation disbursed to the public sector, the higher the share of development co-operation for which development partners have made forward plans available to partner country governments.

← 21. While the proportion of development co-operation funding that goes to the public sector declined sharply in all contexts, this decline is even more pronounced – from 77% to 31% over the same period – in extremely fragile contexts. Data from the OECD Creditor Reporting System show a slight increase, from 1.4% in 2015 to 1.5% in 2017, in the proportion of core support to civil society organisations in extremely fragile contexts as a share of total ODA disbursed in these contexts.

← 22. The MDBs improved use of country procurement systems overall by 18 percentage points between the 2016 and 2018 Monitoring Rounds.

← 23. For non-DAC bilateral partners this decrease may relate to a change in the sample. Eleven non-DAC bilateral development partners are included in both the 2016 and 2018 Monitoring Rounds. Nineteen non-DAC development partners were included in the 2016 round and 24 in the 2018 round.

← 24. Data from the 2018 Monitoring Round show a strong positive relationship between the share of loans (in disbursements to the public sector) and use of country systems. On average, a 10 percentage-point increase in the loan share of a country is associated with a 4.9 percentage-point increase in the use of country systems, according to analysis based on 80 countries participating in the 2018 Monitoring Round for which data are available.

← 25. In addition, 64% of development co-operation funding is disbursed in loans in the UMICs compared to 74% in lower middle-income countries, further contributing to the observed trend.

← 26. It should be noted that while the relationship between use of country systems and national income holds for SIDS – mainly because they are overwhelmingly UMICs or high-income countries – SIDS do not drive this trend. When SIDS are excluded from the analysis, a very similar pattern to that presented in Figure 5.17 is observed.

← 27. The analysis is based on the 69 countries that participated in both the 2016 and the 2018 Monitoring Rounds and provided development partner data on use of country PFM systems and disbursements. The same trend is not observed for those countries in which there was an increase in the use of country PFM systems in 2016. This indicates that the observed difference is not driven by initial differences, but rather a change in disbursements to the public sector over time.

← 28. The duration of engagement between a partner country and a development partner is gauged by the number of years the development partner has reported disbursements to the OECD-DAC Creditor Reporting System, going back from 2018 to the beginning of the reporting in that partner country or to the first break in reporting for more than two consecutive years.

← 29. The Recommendation on untying now extends to the LDCs, heavily indebted poor countries, other low-income countries and countries that are eligible only for financing from the International Development Association (IDA) (“IDA-only countries”).

← 30. The latest available data at the time of writing are from 2017.

← 31. According to the “2018 Report on the DAC untying recommendation” (OECD[29]), Table 6, the nine DAC members are Australia, Canada, the Czech Republic, Finland, Poland, Slovenia, Sweden, the United Kingdom and the United States.

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5. Walking the talk: Development partners are not fully facilitating country leadership over development efforts