This document is an excerpt from the EUR-Lex website
Document 52011SC1173
COMMISSION STAFF WORKING PAPER EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT
COMMISSION STAFF WORKING PAPER EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT
COMMISSION STAFF WORKING PAPER EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT
/* SEC/2011/1173 Final */
COMMISSION STAFF WORKING PAPER EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT /* SEC/2011/1173 Final */
1. PROBLEM
DEFINITION: what is precisely the problem, who is most affected and why is
public intervention necessary? In the current
global context, against the backdrop of key international challenges[1],
the legitimacy of aid discussion, and the new contextual settings both at EU
(post-Lisbon external action framework) and international level (G20, IFIs,
UN…), there is a need for change to “increase the impact of EU development
policy”. The aim is to make the EU's development policy fit to meet the
challenges of the coming decade, and to help partner countries bring about the
changes needs to accelerate their own progress towards poverty reduction and
the MDGs. Current
research[2] shows that, since 2005,
when the Paris Declaration was adopted, global aid allocation patterns have
deteriorated. In fact, numerous problems undermine the
efficiency and effectiveness of EU and other actors' development policies.
Firstly, aid fragmentation has increased in parallel to
ODA increases. There is a trend to deliver assistance in smaller parcels. At
the same time, donor proliferation has increased: globally, donors are
operating in more countries and, within these countries, in more sectors. At
the sector level, proliferation
is also rife: 41% of all sectors in recipient countries had recorded
disbursements from more than three EU donors in 2007. Secondly, the
proliferation of donor-partner country relationships results in high
coordination efforts which burden first and foremost the partner countries, but
also donor representatives in the field. Duplication of effort with other
donors -including Member States- together with the lack of coordination can
lead to sudden gaps in geographic/sector coverage (the so called "aid
orphans") and can create an atmosphere of uncertainty for the partner
countries and the main beneficiaries in these countries, very often including
the most vulnerable groups. Long-term costs
of ineffective aid are analysed by academics in terms of their impacts on the
quality of partner administration and of the economies of recipient countries.
Such costs are mostly given in qualitative terms although in some cases
quantitative costs could be found in terms of economic growth foregone or cost
increases from lack of predictability in development funding[3].
For example, long term costs linked to fragmentation alone result in the inability
of government to impose order upon project portfolio or even obtain an overview
of aid-funded investments and activities, lack of effective planning,
geographical patchiness, etc[4]. 2. ANALYSIS OF SUBSIDIARITY: Is EU action justified on ground of
subsidiarity (Necessity and EU value added)? According to
the Lisbon Treaty, development policy is a shared competence between the
Commission and Member States. The Commission will play its part in increasing
the impact of its aid, while fully acknowledging that other dimensions, aspects
and actors (such as policy coherence for development, aid modalities, country
ownership, etc) are complementary and ought to be taken into consideration in so far as
they have a bearing on the overall impact of EU development policy. Therefore
the EU's role in promoting coordination and coherence, its capacity to pool
services and resources, and to conduct the EU dialogue with partner countries is
necessary as action by the Member states alone cannot sufficiently fulfil these
functions. As a result, coordinated action by the EU as a whole has an
added value that, in terms of policy and financial leverage, is bigger than the
sum of individual action of 27 Member States and the Commission[5].
A 2009 study[6] estimated that the
potential benefits of a European approach to aid effectiveness would be in the
order of Euro 3 to 6 billion per year. As emphasised
by the public consultation on the Green Paper, the Commission should focus the
aid it manages on a more limited range of sectors and areas; choices should be
made more strategically than in the past, taking account of the EU's
comparative advantages and potential to make a significant impact. The
Commission has also a leading role to play in terms of initiating and
coordinating improved division of labour (DoL) between the EU and the Member
States. In order to
maximise this added value, a specialisation and better DoL could lead to
greater efficiency, economies of scale and lower transaction costs whose
benefits could be used to further reinforce the financial resources available
and to enhance the EU's negotiating/bargaining power, thus ensuring that the EU
is better placed to play a leading role at global level. 3.
OBJECTIVES OF EU INITIATIVE: What are the main policy objectives? As stated by
the Treaty, the main objective of EU development policy and practice is poverty
reduction in the context of sustainable development. The internationally-recognised
targets under this objective, subscribed to by the EU, are the Millennium Development
Goals (MDGs). A key international conference in September 2010[7]
highlighted the gap between current levels of attainment vis-à-vis the MDGs and
the targets themselves, with less than 5 years to go; there is particular
concern about the lack of progress in certain countries and regions (notably in
Sub-Saharan Africa) and against some of the MDGs (notably maternal and child
health). Given the
effort still needed if the MDGs are to be reached by 2015, the EU needs to
rapidly increase the impact of its aid on poverty reduction. Beyond 2015, the
EU will need to continue to support the global effort until poverty is
eliminated completely. The objective of the proposed change programme is
therefore to ensure that every euro of EU development aid generates the
greatest possible impact on poverty in developing countries, in order to
maximise the contribution made by the EU to the MDGs and longer-term poverty
elimination. It is assumed that
impact on poverty reduction can be improved by focusing EU aid geographically
and sectorally on a more limited range of countries and areas rather than
dispersing small amounts of aid too thinly worldwide. In doing so, the
Commission will remain a global actor on development issues, while, as a donor,
concentrating its aid on those sectors and countries where impact will be the
highest. In support of
this effort, the Policy Coherence for Development (PCD) agenda also contributes
to improving the real results of our development cooperation by reducing
inconsistencies and promoting synergies between the objectives of internal
policies and development. Moreover, increased coherence between external policy
objectives and development should be aimed for. 4. POLICY
OPTIONS: Which options have been considered and which have been assessed in
detail? Four major
options have been identified in the impact assessment: The first option
refers to the status quo, meaning that the aid allocation and
implementation processes do not change from the current system (no additional
EU action) and hence Commission-managed development aid would continue to be
allocated in a great variety of sectors and countries. In other words, the EU
continues to do "everything everywhere" thus not addressing the
problem of aid fragmentation. This option has been assessed in detail looking
at the current dispersed and fragmented EU development aid which represents the
base for an improvement towards a more efficient and effective system. The second
option refers to sectoral focus; in order to reduce sectoral dispersion of EU
aid, Commission would focus mainly on some areas and sectors, particularly
where it has comparative advantages, but would continue to provide aid to a
large number of countries ranging from the poorest to the most advanced
developing countries (LDCs to BRICS). The third
option concerns geographical focus; with the aim being to reduce the
geographical dispersion of EU aid, Commission would target its aid towards a
limited number of countries (chosen according to their needs, capacities,
interests and commitments), but would continue to have a wide sectoral
coverage. In the fourth
option, the EU would embrace both the sectoral and geographical foci by
proposing a differentiated approach to development aid
allocation, as well as an aid offer that is focused on
a limited range of sectors. The impact
assessment does not attempt to consider pre-determined sector and geographic
choices. Rather, it tests the principles of sectoral concentration and
geographic differentiation. The final choice of sectors and countries will be
the product of detailed country-by-country analysis and dialogue, following the
established principles of ownership and partnership enshrined in the Paris Declaration,
and discourse with other donors, particularly EU Member States, within the
framework of the Code of Conduct on Division of Labour. Strengthened
PCD, improved EU coordination, choice of aid modalities and the overall levels
of finance available for development, all factors which will also have an
impact on the EU's success at meeting its development objectives, will be
constants relevant to each of the four options. These elements are therefore
not considered as part of the assessment of impact. 5. ASSESSMENT OF IMPACTS: What are the
main economic, environmental and social impacts of each option particularly in
terms of (quantified/monetised) benefits and costs (including estimates on
administrative burden, other compliance costs and implementation costs for
public administrations)? Option 1 Under the status
quo option, Commission-managed aid would continue to be delivered to a wide
range of sectors and beneficiary countries. The Commission would thus maintain
a global and cross-sectoral presence, potentially giving it influence across
the board and possible leverage effect in all countries. The status quo
option does not tackle the problem of aid dispersion and fragmentation, thereby
increasing the risks of inefficiency in the future aid programme. Moreover,
scarce aid resources would continue to be spread too thinly, reducing impact
and resulting in the loss of relevance, legitimacy and visibility of EU aid. Option 2 Sharpened sectoral focus could contribute
to the higher impact of EU aid by concentrating resources on a limited number
of sectors, thus increasing the EU's critical mass. This could also increase
specialised expertise, visibility and reputation of the EU in a number of
sectors, particularly where it has recognised comparative advantage. In
addition, the Commission would maintain its global development presence, thus
allowing influence and possible leverage effect in all countries. Sectoral
concentration however runs the risk of creating a possible mismatch between
Commission's limited offer and demand from partner countries. This could result
in difficulties in spending all resources. In addition, a top-down approach to
sectoral concentration would undermine country ownership (a recognised
essential ingredient for aid effectiveness and overall success of development). Option 3 Sharpened
geographical focus could contribute to increasing the impact of EU aid by
targeting limited resources on those countries where they are needed most and
where aid could have greatest impact. In doing so, the Commission would apply a
differentiated approach to aid allocation and partnerships, based on
comprehensive political and policy dialogue with all partner countries, through
which the EU would define the most appropriate form of cooperation, leading to
informed and objective decisions on the most effective policy mix, aid levels,
financial instruments and aid arrangements. Geographical
focus might however run the risk of weakening EU influence and leverage effect
in certain countries and regions where it no longer operates. In the absence of
enhanced coordination and division of labour between EU and MS, it also risks
widening the gap between donor darlings and donor orphans, at a time when an
increasing number of EU donors are reducing their portfolios and exiting from a
number of developing countries. Both these issues can however be mitigated by
accompanying measures, such as a graduated exit strategy, forging new types of
partnerships with those countries which no longer receive grant aid and making
progress on joint programming and division of labour. Option 4 Sharpened
sectoral and geographical focus could contribute to significantly increasing
the impact of EU aid through better and more strategic use and allocation of
scarce aid resources. In doing so, the EU could increase its critical mass in
certain sectors and countries, thus allowing strengthened bargaining power and
increased leverage effect on resources and policies. By leading through
example, the Commission could increase the visibility and legitimacy of its aid
and encourage EU MS to do likewise. This would also strengthen the Commission's
role as convener and coordinator, notably on crucial aspects of division of
labour. 6. COMPARISON OF OPTIONS: What is the
preferred option on the basis of which criteria/justification? The Impact Assessment concludes that Option
4 is the strongest option. It would produce a more strategic, justifiable and
visible allocation of scarce EU aid resources which, instead of being spread
too thinly over sectors and countries, as in the status quo (Option 1),
would be focused where they are needed most and where they could have the
greatest impact on poverty. Option 4 combines the strengths of each of Options
2 and 3 and overcomes some of the limitations of a single-focus (sector or
geography). The approach embodied by Option 4 will
allow the Commission to achieve a more balanced and strategic role as donor,
which should have positive spin-offs in terms of its visibility and reputation.
7.
MONITORING AND EVALUATION: What are the arrangements to establish the actual
costs and benefits and the achievements of the desired effects? The Commission
already has regular monitoring and evaluation systems in place, covering the
breadth of its aid programme. It currently evaluates country and thematic
strategies, individual programmes and projects. Larger evaluation exercises
assess the complementarity and synergy between the different legislative
instruments, including non-spending activities. Complex evaluations may also
cover overarching political objectives as laid down in relevant political
processes as well as address cross-cutting and transversal issues relevant to
all or several legislative instruments. As far as possible, the Commission
associates all relevant stakeholders in the evaluation phase of the EU
assistance, including joint evaluations. [1] Such as financial crisis,
climate change, energy access, food insecurity, migration pressures, state
fragility, regional conflicts and international security, emergence of new
powers/investors/donors. [2] "Trends of In-country Aid Fragmentation and
Donor Proliferation: An Analysis of Changes in Aid Allocation Patterns between
2005 and 2009", Report on behalf of the OECD Task Team on Division of
Labour and Complementarity, First Draft – 24 March 2011, final version
forthcoming. [3] "Aid Effectiveness
Agenda: Benefits of a European Approach"
http://ec.europa.eu/development/icenter/repository/AE_Full_Final_Report_20091023.pdf [4] idem [5] As demonstrated above with reference to the study on
the aid effectiveness agenda: benefits of the European Approach from October
2009
http://ec.europa.eu/development/icenter/repository/AE_Full_Final_Report_20091023.pdf [6] "Aid Effectiveness Agenda: Benefits of a
European Approach", HTPSE Limited, October 2009, http://ec.europa.eu/development/icenter/repository/AE_Full_Final_Report_20091023.pdf
[7] UN High Level Plenary Meeting on the MDGs, New York.