ISBN 978-92-64-04147-9 Development Co-operation Report 2007 Volume 9, No. 1 © OECD 2008 Chapter 3 Aid Effectiveness: Implementing the Paris Principles This chapter describes current efforts to put the Paris Declaration on aid effectiveness into practice, with a particular focus on health. Lessons are also drawn from aid effectiveness work in support of key development priorities such as gender equality, environmental sustainability and human rights. Health is a complex sector that exhibits all of the challenges captured in the Paris Declaration. It is also at the forefront of the debate on aid effectiveness, with health donors and partner countries working to put the Paris principles into practice. Many challenges remain: i) focusing on results and developing capacities to assess progress; ii) focusing on ownership and making sure that countries, including civil society, are engaged in the design and implementation of initiatives; iii) focusing on collective action that builds on the comparative advantage of each partner; iv) paying attention to countries in fragile situations where sustained, harmonised and coordinated aid is essential. 51 3. AID EFFECTIVENESS: IMPLEMENTING THE PARIS PRINCIPLES Introduction The Paris Declaration on Aid Effectiveness was endorsed in March 2005, and already many initiatives are translating the five pillars of the Paris agenda (ownership, alignment, harmonisation, managing for development results and mutual accountability) into reality on the ground. These initiatives – some of which are described in this chapter – offer useful lessons on how to “put Paris into practice”. They also help to illustrate why making better use of aid leads to quicker and more sustainable development impact in countries – an important step in gaining international support for more, and better, aid. The wealth of evidence of how aid effectiveness bottlenecks have hindered achievement of the health Millennium Development Goals (MDGs) has encouraged donors and partner countries to change their ways of doing business in health. The health sector shows how aid effectiveness concepts are being increasingly used as a point of reference and applied in a sector where there is genuine scaling up and several new actors. This means that health is an important sector for tracking progress on the implementation of the Paris Declaration in the lead up to the third High-Level Forum (HLF) on Aid Effectiveness to be held in Accra, Ghana in September 2008. The opportunities and challenges of greater harmonisation and alignment for important cross-cutting issues are increasingly under debate. The recent workshop on Development Effectiveness in Practice, hosted by the Government of Ireland in Dublin in April 2007, reviewed how practitioners are applying the Paris Declaration’s overarching principles to advance gender equality, environmental sustainability and human rights. Its findings offer important guidance on how to translate better quality aid into better development results. Last year’s Development Co-operation Report outlined some of the headlines from the baseline survey that looked at commitments under the Paris Declaration.1 The first monitoring round assessing progress against this baseline is still in progress at the time of writing, and this chapter takes the opportunity to look at aid effectiveness in practice ahead of the Accra High Level Forum – drawing on the lessons emerging from work in health and on cross-cutting issues. The chapter is therefore organised in two parts: the first describes efforts to implement the Paris principles in the health sector; and the second outlines some examples of how aid effectiveness is being promoted in other policy priority areas such as environment, human rights, fragile states and gender equality. Both sets of issues will be considered further at Accra. Why aid effectiveness matters in health Health is a complex sector with multiple actors, needs and financing streams. With just seven years to go to the 2015 target date for achieving the Millennium Development Goals,2 the rapid increase in flows of development assistance to health, and the large number of donors active in the sector, have created a challenging environment for harmonisation and alignment efforts. In parallel with these developments, a significant 52 DEVELOPMENT CO-OPERATION REPORT 2007 – VOLUME 9, No. 1 – ISBN 978-92-64-04147-9 – © OECD 2008 3. AID EFFECTIVENESS: IMPLEMENTING THE PARIS PRINCIPLES body of work has been produced – including the studies and discussions undertaken in the context of the High Level Forum on the Health MDGs (2004-05)3 – which highlights the increasing difficulties countries face in adapting to the new aid architecture in health. This work demonstrates the need for all development partners to change their behaviour in order to make best use of the additional funding available for better health outcomes. Health has been chosen as a sector deserving special attention (a “tracer sector”) to monitor progress in the implementation of the Paris Declaration as part of the preparations for the Accra HLF.4 This sector provides concrete examples of what aid effectiveness aims to achieve and how the way aid is provided impacts on development results. In this way, it offers useful lessons and recommendations for other policy areas. The increasing aid effectiveness challenges in health Health has become a major recipient of aid – including from innovative financing sources. For a variety of reasons – humanitarian concerns, fear of epidemics (HIV/AIDS, pandemic influenza), and recognition of health’s importance for economic growth, poverty reduction and realisation of human rights – health is a central pillar of most development policies. Development assistance for health has increased from just over USD 6 billion in 1999 to USD 13.4 billion in 2005.5 The bulk of this increase can be credited to new major global stakeholders or global health partnerships (GHPs) such as the GAVI Alliance (formerly known as the Global Alliance for Vaccines and Immunisation) and the Global Fund to fight AIDS, Tuberculosis and Malaria (GFATM). Other sources include specific and new programmes such as the US President’s Emergency Plan for AIDS Relief (PEPFAR) and private foundations such as the Bill and Melinda Gates Foundation. Funding from these global programmes and philanthropies account for 20% to 25% of development assistance for health. Estimates suggest that there are now, depending on definition, between 80 and 100 global health partnerships. Several GHPs aim to improve aid effectiveness by mobilising and channelling funding to countries more quickly than via traditional routes. Nevertheless, many studies suggest that the situation has become more complex, as countries with limited capacity to manage and spend aid effectively attempt to deal with the multiplicity of aid instruments and mechanisms on offer. The challenges raised by these trends make it even more urgent to tackle aid effectiveness in health. Health has long been at the forefront of the debate on aid effectiveness, by pioneering, for example, the design and implementation of sector-wide approaches in the 1990s. Beginning in spring 2003, a series of informal high-level fora on the health MDGs, co-piloted by the World Bank and the World Health Organization, brought together senior- level representatives from developed and developing countries with major GHPs and public and private organisations in health to discuss ways to scale up aid in order to achieve the health MDGs.3 Through in-depth country and qualitative analytical studies on key issues related to aid effectiveness, including fiscal space and sustainability, the role of GHPs at country level and delivering better aid in post-conflict states, this work has highlighted ineffective aid practices at country level and identified the bottlenecks that prevent progress in developing countries. One major concern is that, with an ever-increasing proportion of development assistance for health being channelled through vertical funds which target assistance on specific diseases or sub-sectors, aid is not aligned with government priorities and holistic health systems’ approaches are insufficiently funded. Health aid is increasingly earmarked for specific purposes: only about 20% is given as general or sector budget DEVELOPMENT CO-OPERATION REPORT 2007 – VOLUME 9, No. 1 – ISBN 978-92-64-04147-9 – © OECD 2008 53 3. AID EFFECTIVENESS: IMPLEMENTING THE PARIS PRINCIPLES support to finance governments’ overall programmes, while an estimated 50% of health aid is off-budget. In the case of Rwanda, although the government has identified seven strategic objectives for health, donor funding is heavily earmarked for just one of these (HIV/AIDS), leaving other priorities underfunded and preventing balanced investment in the health system (Figure 3.1).6 Figure 3.1. Distribution of donor funding for health by strategic objective in Rwanda Other health services HIV/AIDS funding USD million 80 60 40 20 0 Human resources Drugs, vaccines, consumablesGeographical accessFinancial ac Health servi Referr Instituti al institutions onal capacity cess ces 1 2 http://dx.doi.org/10.1787/174801252062 Source: Republic of Rwanda Ministry of Health. A study undertaken by McKinsey & Co. to assess the impact of GHPs at country level demonstrated that, although there have been benefits in the form of increased political and technical focus and greater financial resources for major health threats, the high number of donors present in health