52000IE0370

Opinion of the Economic and Social Committee on "Making sure that EC aid produces the best possible results"

(2000/C 140/13)

On 9 December 1999 the Economic and Social Committee decided to draw up an opinion in accordance with Rule 23(3) of its Rules of Procedure on "Making sure that EC aid produces the best possible results".

The Section for External Relations which was responsible for preparing the Committee's work on the subject, adopted its opinion on 16 March 2000. The rapporteur was Mr Wilkinson.

At its 371st plenary session on 30 March 2000 the Committee adopted the following opinion with 88 votes in favour and 5 abstentions.

1. Introduction

1.1. The Economic and Social Committee has given its opinion on development aid previously, most recently in 1997 (CES 596/97) which covered development aid (primarily to ACP countries), good governance and the role of socio-economic groups. The 1997 opinion stressed the Committee's continuing support for the EU giving economic and financial aid to developing countries, the central importance of good governance to sustainable development and the need for radical reform of the administration of development grants.

1.2. The EC currently spends over EUR 5,5 billion each year on development funding. When combined with the contributions that Member states also make bilaterally, the total EU effort amounts to well over half of the world's official development aid although the ESC deeply regrets that in quantitative terms, the European Union and the majority of its Member States are very far from allocating 0,7 % of their GNP to development aid, as the United Nations recommended in 1973. This effort covers a very wide variety of funding programmes and beneficiaries, although much of it is concentrated on help to ACP countries and countries that are applicants for EU membership.

1.3. The Commission has worked hard to improve its management of the development programmes and progress has been made. The two main changes have been, first the formation of the Service Commun Relex (SCR) in 1998 with responsibility for the technical, operational, contractual, legal, financial and accounting aspects and responsibility for assessing and auditing work done and secondly, the new structure for external relations, aimed at increasing policy coherence.

1.4. However, concerns remain; this is evident from reports in 1998 such as the Evaluation of Phare and the Evaluation of Aid to ACP countries, which both comment on the emphasis on input rather than on results. Structure, personnel resources and the need for a more appropriate system of financial controls continue to give concern.

1.5. Various studies and reforms are now in progress on both the policy and the management aspects of EC aid. The Committee hopes that this opinion will contribute to that debate by considering, and making proposals on, both these areas. Inevitably, many other important dimensions of development cooperation, such as the relationship between aid and trade, the need for debt relief or the question of building public support aid, fall outside the remit of this opinion.

2. Development Aid in a Changing World

2.1. Over recent years the context within which all development aid donors have worked has changed considerably. The main changes have been:

- the increased politicisation of aid, reflected in greater donor concerns for fundamental human and social rights, gender equality, democracy and good governance;

- the widening policy agenda, reflecting new priorities, such as the private sector and institutional development, and conflict prevention;

- the need to include more interests in the process, notably organised civil society, local government, business interests and social organisations;

- growing pressures to account more fully for aid funds;

- the need for greater coordination, complementarity and policy coherence.

2.2. However, this changing environment has been little reflected in the implementing strategy or the machinery governing aid delivery, despite a significant number of studies pointing to the need for change. Within the EU there has been little wide debate on what reforms are necessary, except in EU/ACP co-operation, where important reforms have been proposed for the successor to the Lomé IV agreement as mentioned later.

2.3. The Committee welcomes the Council's and the Commission's recognition that fundamental debate, which should lead to fundamental reform, is now urgently needed.

3. Key Challenges

3.1. The first key challenge in considering reform options for EU aid is to agree the nature of the problem. It makes little sense to look at bottlenecks in delivery without considering the more fundamental question of the specific role and added value of EU aid. The mandate of the Commission needs to be more sharply defined and agreed. Thereafter the related policy and institutional changes can be identified and implemented.

3.2. As part of EU policy as a whole, the decisions will essentially be political and will not be easy. For the reform process to succeed will require unambiguous political support from Member States and a stronger common European external policy, as well as support from others involved, including budgetary authorities and recipient countries.

3.3. The Committee hopes that Member States will take the decisions, and the subsequent actions, needed to strengthen the role of the EU in development aid and to increase its efficiency and effectiveness; and will give the subject more importance on the future political agenda.

4. Policy

4.1. Effective EC aid must start with a clear and agreed policy. Since the EU is a supranational political entity, EC development policy will be shaded to allow for both the EU's fundamental interests (for example, aid given to the enlargement process) and its obligations as a global player towards developing countries in all their diversity.

4.2. The EU's overall policy must have strategic aims and must allow clear priorities to be set. These aims, and not various instruments or budget lines, must drive EC action. It must embrace all aspects of the EU's ties with recipient countries and must look for impact in its results. Development goes far beyond the transfer of resources to developing countries. An effective EC aid policy must take account of recipient countries' priorities in areas such as agriculture, environment and investment. It must seek to agree with beneficiaries which sectors should get aid, and the percentage of total EU aid that should be allocated to each sector.

4.3. The Committee acknowledges the overall EU development policy objectives defined in the Treaty of Maastricht. The ultimate aim of aid is to increase the stability and social performance of recipients so that they may develop their full potential to improve the well being of their people. Thus aid must be "capacity building", with its emphasis on the increasing responsibility for, and ownership of, projects by recipients.

4.4. It is estimated that one in four of the world's population lives in extreme poverty. Action against poverty is not only ethical, but also of wide benefit because stability, sustainable development and democratisation cannot be achieved in societies with extreme levels of poverty. The Committee recommends that EC aid should take into account the international development targets that have recently been agreed. EC action should focus on the root causes of poverty, which are normally political; different policy instruments (aid, trade, foreign policy, etc.) should be used in a complementary manner to this end. Action aimed at reducing poverty must be a central objective of EC aid, alongside other EU priorities.

4.5. We recommend that preference should be given to those countries that undertake to give priority to action that will reduce the root causes of poverty and that then demonstrate that they are serious in this undertaking. Adopting a more strategic approach also means concentrating EC aid on a number of sectors, where the Commission has a comparative advantage, and coordinating efforts with other agencies, which can take the lead in other sectors.

4.6. The fullest participation of more local development players, including socio-economic players, in the formulation and implementation of development policies and programmes is essential and can make a major contribution to good governance and sustainable development. It is also necessary to help in achieving the improved social performance that will follow successful development and in the integration of developing countries into the global economy.

4.7. In this context, the Committee welcomes the changes proposed for the successor agreement to Lomé IV, aimed at including the participation of such players in the mainstream of formulating and implementing ACP-EU co-operation. It calls on the EC to ensure that these reforms are in fact implemented, notably through improved dialogue, users-friendly information, access to funding and capacity building for economic and social actors.

4.8. One of the main causes of inadequate development is corruption, which is assessed as widespread in many recipient countries. While recognising that corruption also exists in aid-giving countries, EU policy on development must be accompanied by a programme aimed at reducing corruption. Since corruption feeds mainly off the lack of democratic controls, anti-corruption programmes should include more transparency, greater involvement of organised civil society, insistence on the need for recipients to develop and implement their own anti-corruption plans and an annual EU report on the fight against corruption. Funding for anti-corruption programmes should be permitted from the EC development budget.

5. Co-ordination

5.1. At Council level, most development matters are dealt with by the Development Council, but some are the responsibility of the General Affairs Council. Commissioner Nielson is responsible for the Directorate General for Development, but has direct responsibility only for the European Development Fund, covering ACP countries (and for ECHO); Commissioner Patten is responsible for a greater amount of funding, covering Phare, Tacis, Obnova and other programmes, and for Service Commun Relex (SCR).

5.2. Given the split of responsibilities in Council, between Commissioners and between the various Directorates General and SCR, further consideration also needs to be given to co-ordination within the Commission. In particular, the split of responsibilities between those who initiate and agree development projects (in the Directorates General) and those who then have to manage and assess the projects (SCR) must cause difficulties. The overall lead responsibility for policy must be clear.

5.3. A far greater problem area lies in trying to co-ordinate the EU programmes with those of other donors. In the first instance there are the bilateral programmes of Member States; there are also UN, World Bank, IMF and other programmes.

5.4. It would clearly be helpful to accelerate and deepen measures to increase complementarity between EC and Member States' work. The EC's Communication to the Council and the European Parliament of May 1999(1) attempts to promote complementarity and would provide a useful starting point. Recognising the value of EC aid in conveying European values of co-operation and stability and the notion of a participative democratic system, EC should specify what value added it excepts from its development work. The move towards a more sectoral approach, in close coordination with other Member States or agencies, is welcomed.

5.5. If Member States could work jointly with the Commission on analysing the needs of each recipient country and then use this as the basis for establishing, with the recipient, a strategy to meet the needs identified, the complementarity of EU and Member State work would be more easily assured.

5.6. At present even the exchange of information on bilateral projects is not good. Once a strategic and realistic EU policy agenda has been set, and given the necessary political will, it should be relatively easy to establish a system for deciding who should do what, so that the "three Cs policy" (co-ordination, complementarity and coherence) agreed by Council becomes a reality.

5.7. Co-ordination with third parties (UN, World Bank, etc.) will be more difficult, but should become easier as a more successful EU aid programme shows its value. The World Bank proposal for a Common Development Framework could also be useful in this respect.

5.8. All concerned must work in the closest co-operation to ensure that the output (results achieved) are as good as possible for the inputs (resources used) involved. This would include ensuring that resources allocated are used to the full, rather than the present much less than optimal figure.

6. Procedures

6.1. It is widely documented and recognised that procedures for setting up and managing projects have been far too complicated and have involved far too many people in even simple decisions. This appears to be changing as the result of the work of SCR. It remains to be seen whether, in practice, the new procedures are resulting in better and quicker delivery and a reduction in too much bureaucracy. Authority must be delegated more effectively and accountability needs to be clearer. This would improve motivation, ease the demands on staff time and, most importantly, make it much easier to see where problems that do arise can be corrected.

6.2. Member States naturally wish to remain involved in EC funded aid, but they should concentrate on strategic issues and avoid the temptation to micro manage projects if procedures are to be flexible and responsive enough.

6.3. The role of the EU delegations in countries receiving aid has been increased and this can only have a positive effect. Not only will direct links with those benefiting from the aid be improved, so that their needs and their wider concerns are fully taken into account, but the opportunity will exist for much simpler and quicker decision making. This opportunity must be grasped.

6.4. Decentralisation to EU Delegations (or to some other decentralised body, such as the Decentralised Implementation Units proposed by the European Parliament) will only work if there is a match between the decentralised resources available and the responsibilities to be covered. The involvement of local players (central and local government and the representatives of organised economic and social life) in the management process will help to increase ownership of the programmes while reducing the workload on the EU delegations. The Committee supports the increased application of decentralised co-operation with local players, but regrets the problems generally encountered by bodies representing the economic and social interest groups in gaining access to this kind of cooperation. The ESC therefore proposes that staff be appointed within the EU delegations with specific responsibility for improving relations with civil society organisations.

6.5. Decentralisation requires trust and a change of emphasis from pre project to post project control by Commission staff, with full audit being a post project activity. It would also require the amendment of EU financial regulations. Amendments must also allow for fact that there are only limited financial management resources available to many recipient countries.

6.6. The use of NGOs in the implementation of aid is considerable, involving substantial funds on a yearly basis. It is also important because of the possibility of co-financing by NGOs. The Committee sees no reason why NGOs should not be used as "contractors" to deliver aid, but they are only one part of society; others should have equal opportunities to participate in EC aid programmes. The expected harmonisation of EU budget lines gives an excellent opportunity to improve coherence by creating a "civil society" budget line accessible to the broad range of societal actors, including social and economic actors, from the EU and from recipient countries. The decision must be based on the contribution that they can make towards achieving the agreed strategic objectives.

6.7. In accordance with the need for a culture that is "results oriented", the key area needing improvement is evaluation. Each project must work to evaluation criteria, established when the project is agreed and capable of amendment as a project continues. The evaluation function must be independent of those operating the projects and in co-operation with representatives of the receiving nation who are in a position to judge the value of the work completed; these should include representatives of civil society.

6.8. Evaluation and monitoring are not a scientifically accurate procedure, nor can its results be guaranteed until after some years. But it is necessary to show that results are improving. The evaluation results are already largely available in the public domain, but an annual report on EU development aid globally should be produced for the benefit of both EU and other audiences.

7. Resources

7.1. To achieve the best results adequate human resources must be devoted to planning, conducting and evaluating projects or to ensure effective coordination on the ground. It is clear that the EC expansion of roles, responsibilities and budget lines, has not been matched with an appropriate increase in human resources. Creative and efficient ways should be found to address this major impediment to improved aid effectiveness.

7.2. Improving the human resource base is not simply a question of numbers. It is also vital to consider the skills, and particularly the new skills, required to implement a broader development agenda effectively. Options to fill gaps in skills that are identified include greater complementarity by using EU wide expertise and the use of local experts (where available), which would boost local employment and enhance capacity building.

8. Communications

8.1. There is, as stated earlier, already much information on EC development aid in the public domain. However, the Committee suggests that there is a need to inform EU citizens of the reasons for, and value of, such aid; they have a right to know how their money is being spent in this as in other areas.

8.2. In the recipient nations, the quality of the development work can be expected to play a significant role in informing the public. The involvement of free, independent and representative organisations from society in the decision and management processes for projects will be the best way to ensure that the results have real impact, but the Committee recommends that the EC, together with the government of the recipient country, should also undertake systematic information of civil society about development aid. The EC is also invited to increase support for direct partnerships and collaboration between organised social and economic actors from Europe and the recipient countries.

8.3. This effort should be assisted by liaison committees that include the local economic and social actors and local EU representations able to give advice on all phases of the development work (initiation, progress and evaluation). The Committee would welcome involvement in this work.

8.4. To add to the impact of EC development work a single "identity" should be established and promoted (along the lines of "US Aid", which is instantly recognisable). This "identity" should be used for all EC funded aid programmes, whatever name may be used for the individual programmes internally.

9. Recommendations

The Committee makes the following recommendations on EU development aid.

9.1. The overall policy for EU development aid must have strategic aims that take full account of other EU policies and of political priorities as well as of principles laid down in the Treaty.

9.2. Some preference should be given to aid that tackles the root causes if inadequate development and poverty and to the strengthening of economic and social organisations, essential for sustainable development.

9.3. A complementary policy to reduce the effects of both active and passive corruption must also be implemented.

9.4. For each recipient country the EU and the country concerned must first agree on which sectors should receive aid, by percentage, instead of agreeing lists of projects.

9.5. It is essential that the Commission co-ordinates more effectively its development aid efforts with those of the Member States, and other donors, where possible.

9.6. Procedures must be changed to simplify them, making them more flexible and delegating authority more, while clarifying accountability.

9.7. Decentralisation is necessary and should be increased. Local EU delegations should establish contacts to allow the active participation of local economic and social actors.

9.8. To ensure the best management and the best possible results from programmes, all socio-economic actors, including the private sector, local government trade unions and NGOs, must have equal opportunities to participate in EC aid programmes.

9.9. The Commission must ensure that the resources allocated to EC development aid are adequate for the tasks given.

9.10. An annual report should be produced on the whole EC aid programme. It should be submitted to the European Parliament and to the European Economic and Social Committee as well as to others.

9.11. The full involvement of organised civil society in each recipient country is essential to ensure the impact of EC aid and its success. It must be promoted vigorously and must be included in the evaluation process. It must also be a factor in deciding in the allocation of further EC funding for development.

9.12. A single EC aid identity should be established and promoted.

9.13. The Committee intends to take an active part in ensuring greater transparency and democratisation of EC aid programmes through the greater involvement of local economic and social actors, and would welcome a clear mandate in this respect.

9.14. Finally, the Committee notes that the essential and inescapable ingredient for a successful EC aid programme is political will on the part of the Member States. It urges the Member States to show that will.

Brussels, 30 March 2000.

The President

of the Economic and Social Committee

Beatrice Rangoni Machiavelli

(1) COM(1999) 218 final of 6.5.1999.