Performance Knowledge-Based Official Development Assistance Framework

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Performance Knowledge-Based Official Development Assistance Framework

Given the a priori setting of the themes this paper is inclined towards being open and

contrarian, stemming more from bottom-up thinking from a least developed country

perspective and experience and based on the principle of development equity and equality.

Development equity and equality is defined as the ODA for development should include the

interest of the recipient countries and the people from such recipient countries or D/LDCs to

have equal treatments, amongst other, in terms of voice, employment, capacity, and other

development dividends.

Remaining yet within the parameters of the themes provided in the call for essays, this paper

argues to propose a shift in paradigm from the current ODA practices embedded rather in

obligation of developed countries to uphold the convention on world development order (such

as the 1969 Pearson Commission), to ‘Performance-Based Official Development Assistance

(P-BODA)’ that can be monitored, measured and managed by using the tool ‘Performance

Knowledge-Based Official Development Assistance Framework (PK-BODAF)’.

Performance-Based Official Development Assistance or P-BODA is proposed by this paper

as an approach to implement ODA on the basis of performance of the OECD countries on

their 0.7% ODA commitments and the performance by the D/LDCs with ODA in terms of

their progress with Human Development Index (HDI) or poverty reduction.

To implement P-BODA managing ‘knowledge’ on performance on ODA by both the OECD

countries and the D/LDCs or the recipient countries is required, for which the monitoring,

measurement, and management tool proposed is Performance Knowledge-Based Official

Development Assistance Framework (PK-BODAF).

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1. Introduction

Official Development Assistance (ODA) literally in its meaning that the developed countries

(DC) have provided technical and financial support to the developing or least developed

countries (D/LDCs) to be ‘developed’— as it is defined and measured in terms of economy,

governance, standard of living (health, education etc.) and so on indicators has undergone a

process which surpass more than six decades.

More than six decades of processing development, as we know has resulted both successes

and failures and raised many critical questions on the performance of ODA and on

‘development equity and equality’. With the Millennium Development Goals (MDGs)

nearing its completion in 2015, the effort by Global Development Network in partnership

with Bill & Melinda Gates Foundation to organize the Next Horizons Essay Contest 2014 on

The Future of Development Assistance seeking inputs globally to attribute to reforms in ODA

processing is commendable.

However, the themes for paper submissions including instruments, bilateral and multilateral

institutions, middle-income countries, aid and governance, recipient role, and data and

technology, under which are raised critical questions that seek answers and solutions, are all

relevant and seemingly comprehensive, yet it can be argued that it is pre-determined, biased,

incomplete and lopsided towards the developed or donor country’s perspectives and dominant

international diversity of interest and objectives in development, and misses out on several

other issues of development equity and equality. While the given themes take into account the

role of recipient, it does not account well on the role of the donors. It does not strike the right

balance of voice and development equity and equality in the development processes and the

existing debates on ODA financing and spending.

Development equity and equality for the purpose of this paper is defined, as the ODA for

development should include the interest of the recipient countries and the people from such

recipient countries or D/LDCs to have equal treatments, amongst other, in terms of voice,

employment, capacity, and other development dividends.

Though it is understandable for maintenance of uniformity and consistency of inputs for

future development assistance reforms that the themes for the essays have been defined a

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priori, but keeping it ‘open’ would have resulted more open, critical and realistic inputs.

Given the a priori setting of the themes, this essay submitted thus is inclined towards being

open and contrarian, stemming more from bottom-up thinking from a least developed country

perspective and experience and based on the principle of development equity and equality.

Remaining yet within the parameters of the themes provided in the call for essays, this paper

argues to propose a shift in paradigm from the current ODA practices embedded rather in

obligation of developed countries to uphold the convention on world development order (such

as the 1969 Pearson Commission), to Performance-Based Official Development Assistance

(P-BODA) that can be monitored, measured and managed by using the tool Performance

Knowledge-Based Official Development Assistance Framework (PK-BODAF).

Performance-Based Official Development Assistance or P-BODA is proposed by this paper

as an approach to implement ODA on the basis of performance of the OECD countries on

their 0.7% ODA commitments and the performance by the D/LDCs with ODA in terms of

their progress with HDI or poverty reduction.

To implement P-BODA managing ‘knowledge’ on performance on ODA by both the OECD

countries and the D/LDCs or the recipient countries is required, for which the monitoring,

measurement, and management tool proposed is Performance Knowledge-Based Official

Development Assistance Framework (PK-BODAF).

2. Instruments for Development Assistance

Before getting into which financial instrument can yield the best development results for the

ODA supported internationally agreed development and development financing targets, it is

of imperative to assess the financial agreements and targets set by the donor countries for

providing ODA.

Retrospectively in 1970 developed countries agreed to provide at least 0.7% of their gross

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national income (GNI) in aid or ODA.1 As has been the convention ODA is given by

governments and other agencies from donor or developed countries to support the economic,

environmental, social and political developments of the developing countries. Most of the

ODA comes from 26 members (25 countries plus the European Union) of the Organization

for Economic Cooperation and Development’s (OECD) Development Assistance Committee

(DAC). While assistance from private sources, foundations and individual donors are

considered aid it is not classified as ODA.

While many countries have not met the original 0.7% commitment, some have made various

national commitments to reach this or other levels. For example, the EU has pledged to meet

0.7% by 2015, while Australia has pledged to reach 0.5% by 2017/2018. Sweden, Norway,

Luxembourg and Denmark have also consistently exceeded their own national targets (of

1%). By contrast Greece, Italy, Spain, Japan and the US give less than 0.2% in aid — as does

Korea, although it only joined the DAC in 2010 and has set a national target of 0.25% by

2015.2 See Figure 1 below.

Figure 1: Status of 0.7% ODA commitment target of OECD countries

Source: Development Initiatives (http://devinit.org/factsheet/0-7-aid-target-2/)

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1 In 1969, the Pearson Commission – in its report Partners in Development – proposed a target of 0.7% of donor GNP to be reached “by 1975 and in no case later than 1980.” This suggestion was taken up in a UN resolution on 24 October 1970. Source: History of The 0.7% ODA Target, http://www.oecd.org/dac/stats/45539274.pdf 2 http://devinit.org/factsheet/0-7-aid-target-2/

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Since financing instrument for ODA is related to the commitment made by the developed

countries there should be also instrumental mechanisms to monitor and oblige the

performance of the OECD countries in meeting their 0.7% ODA commitments. The OECD

DAC should be able to play a proactive and authoritative role in fulfilling the 0.7%

commitment by the OECD countries, and nurture ownership by them of development

financing. The performance of ODA in terms of commitment by the donors or developed

countries should be monitored and mobilized by the OECD.

On the part of how the 0.7% commitments should be disbursed or which should be the right

financial instruments for ODA, either as grant, loan, or debt, it can be argued that there should

not be any ODA as loan or debt. Or ‘less loan and more grant’ should be provided as with

ODA as loan the D/LDCs tend to get ‘indebted’. The moot argument is if the sole objective of

ODA is to attribute to reduction of poverty in D/LDCs then ODA provided as loans resulting

the D/LDCs being in debts may not be of much help. Rather the ODA as loans, the OECD

countries should invest for growth in trade with business communities in the D/LDCs.

ODA should be provided as much as possible solely as grants by meeting 0.7% commitment

by the members countries in the OECD. Official Development Assistance should not be tied

to diversity of interests of any economic, environmental, socio-cultural, geographical,

colonial past, international and national security, and political vested interests of the DCs or

the OECD countries.

Besides un-tying the tie-ups there should be a mechanism to monitor on how the ODA is

spent or who gets the ‘ODA dividends’ in line with the principle of development equity and

equality. The financial instrument should be so designed and agreed, not only in terms of how

ODA should be received by the D/LDCs but how it would be spent or administered by OECD

member countries.

To elaborate, reforms need to be considered on what amount or percentage of the ODA

should be spent on consultancy and technical costs from the DCs and for the actual

beneficiaries in the D/LDCs. On the part of the recipient the ODA should be instrumented to

monitor the performance by D/LDCs with the ODA in meeting their national development

goals, as well as progress on HDI and poverty reduction.

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Given the current practices in development grant or loan administration and expending, and

the discriminatory approach and management, besides other, in terms of employments in

development agencies as national and international personnel, that in turn determines the

discriminatory benefits, also needs to be reformed in terms of development equity and

equality — respecting every race, religion, education and culture as equal.

The biasness in development that the development standards are defined on the basis of such

indicators such as development of infrastructures, technologies, health and education services

in the North and the perceptions that capacity for development relies in the North also needs

to be reformed. As long as the expertise and capacity in it’s own terms from the South or the

D/LDCs are not recognized and respected, then the D/LDCs can never be developed in

alignment to the global development standards and goals, as ‘development’ is a relative

notion. As every society and culture is a relative and unique entity in itself and process, so

should be development. Development should be discoursed and defined in terms of social and

cultural relativity and individuality of a country or a nation-state.

Due to global standardization of development and development as North vis-à-vis South the

discriminatory approaches or instruments in development practices are racial, dis-respectful

and humiliating sometimes to people in general from D/LDCs and those working in

development sectors.

Thus the financial instrument for effective ODA in terms of administration and management

by OECD should be not only in terms of how to disburse the money to the D/LDCs but how it

can be sensitive to being non-discriminatory in terms of qualifications, employments, benefits

based on development equity and equality.

Similarly, the size, volume and duration of ODA to the D/LDCs should be determined by the

annual ranking progress made in the HDI by the D/LDCs and subsequent performance to

climb the HDI ladder. Or the progress made in upgrading itself from being low-income-

countries (LIC) to middle-income countries (MIC) eventually to high-income countries

(HIC).

To sum up ODA should use financial instruments that are based on performance of both the

donors or developed countries and the D/LDCs on the principle of development equity and

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equality supported by P-BODA.

3. Bilateral and Multilateral Institutions

The prevalent practice of disbursement of ODA so far has been mostly through bilateral and

multilateral institutions with its own sets of pros and cons. Though rigorous argument can be

harbored for both, looking at it from the Southern and cost effective perspectives, arguments

can be made more in favor of bilateral rather than multilateral.

However, the bilateral ODA should be organized to work directly with D/LDC governments

with minimal intermediary costs. If the ODA is not to leak, to actually reach and benefit the

D/LDCs then the intermediaries as the development agencies in the form of multilaterals

(such a UN, development banks and others) and international non-governmental organizations

(INGOs) or consultancy firms or development contractors from the donor or Northern

countries as well in the South, with their high development overheads should be gradually and

systematically reformed to be downsized and if necessary discontinued. The foreign

ministries of the donor countries or the OECD countries should work directly with the D/LDC

governments cutting down on the intermediary costs.

As far as the arguments made for reforming multilateral and intermediary channeling of ODA

is concerned, it can be counter-argued that such multilaterals or intermediaries besides

rendering just management and actual implementation functions of ODA, they function as

well as global governance, cooperation entities and mechanisms in global peace, security,

economic, humanitarian relief, and other critical global situations, or to maintain the

imperatives of the world orders. However, such requirements for global cooperation and

governance can be fulfilled by making OECD and other sub-regional, regional and

international cooperation entities, in the context of Asia such as ASEAN and SAARC,

empowered and effective.

In lieu of the multilaterals having the capacity to manage bilateral ODA, the donor countries

or OECD should rather work bilaterally and directly with the D/LDCs to set up robust and

rigorous governmental development agencies as high as the national development ministries

that can handle the ODA from the donors or OECD in the D/LDCs directly and efficiently.

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As far as possible, donor’s aid system should be organized bilaterally between a donor and a

D/LDC aligned to the D/LDC’s development priorities and sustained development goals, with

emphasis on P-BODA.

4. Middle-income Countries

Middle-income countries are the 86 countries that fall into the middle-income range set by the

World Bank's World Development Indicators. They account for just under half of the world's

population; are home to one-third of people across the globe living on less than $2 per day;

and are found in all six of the World Bank's geographical regions. They cover a wide income

range, with the highest income MIC having a per capita income 10 times that of the lowest.

The group has grown in number since the mid-1990s, including 10 countries (for example

China and Egypt) moving from the low-income to middle-income category.3

Keeping aside the issues of ODA to MIC when we look at which country and continents

received the highest ODA, the OECD reports indicate that in 2009 Africa received the largest

amount of ODA at US$28 billion. Of that, US$25 billion went to countries south of the

Sahara, with Sudan receiving approximately US$1.9 billion and Ethiopia getting US$1.8

billion. Asia received the second largest amount at US$24 billion. The top ODA receiving

countries were: Afghanistan (US$5.1 billion), Iraq (US$2.6 billion) and Vietnam (US$2.1

billion). These three countries on the basis of HDI are ranked as: Afghanistan – 169 (low

human development); Iraq – 120 and Vietnam – 121 (medium human development).4

The similarities with these three countries are also that they were subject to internal political

unrests with dictators or religious fundamentalisms that sometimes are also identified as

countries in transition, and to some extent pose as threat to international security issues. This

indicates that the ODA whether as grants or loans to pay off debts have been disbursed not on

the basis of HDI of the ODA receiving countries, but tied to diversity of global interests.

Since the main objective of ODA is poverty reduction whether its MICs or LICs, ODA should

be provided on the basis of HDI tied to performance. ODA receiving countries whether MICs !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!3 http://web.worldbank.org 4 http://hdr.undp.org/en/data

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or LICs in order to receive ODA should be also required to maintain a certain fixed matching

fund in order to ensure sustenance and alignment.

In other words, as mentioned already ODA to MICs or LICs should be on the basis of their

performance with ODA and capacity to manage matching funds and sustainability, and

improvement in their HDI based on the P-BODA.

5. Aid and Governance

ODA is definitely often criticized for reducing accountability of government and funding

corruption. But ODA should be accountable not only in terms of the recipient countries but

the OECD donor countries as well.

The aid giving countries or donors or OECD countries should be accountable to whom? To

the taxpayers and decision-makers in their own countries or the poor people in aid receiving

countries that are supposed to benefit from the ODA?

For ODA to improve governance in D/LDCs it (ODA) has to first develop it’s own good

governance. The argument for good governance of ODA could be in terms of how the ODA is

spent. Transparency and accountability should be built into how much of the ODA is spent

where and how? It should be reinforced by policies within the OECD and the member

countries on how much of the 0.7% ODA commitments by the OECD countries should be

spent on administering and managing the ODA by OECD countries? Just as the loan part of

ODA requires that 25% of the development loans to be match funded by the loan receiving

D/LDCs, in the context of ODA spending also by OECD, similar percentage or 25% or less

could be the ceiling for ODA administrative and management overheads.

If one is to have an insight on how the ODA is expended, cases reveal that major part of the

ODA gets spent on international consultancies and travels. For example in the Asian

Development Bank’s administered Project Preparatory Technical Assistance (PPTA) to

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Nepal5 under the Climate Investment Fund in 2011-2012, US$ 423,000 or 42% of the total of

US$ 900,000 was allocated for international consultancy. For national consultancy it was only

US$ 213,000 or 23% of the total.6

For the institutionalization of good governance in terms of development equity and equality

and ODA to work in D/LDCs, an international convention needs to be attained by OECD in

consultation with the D/LDCs to set ODA spending standards in the North as well as the

South.

As for the ODA receiving countries in order to ensure the sustenance of the ODA supported

development programs and projects and to mitigate dependency on ODA there should be a

mechanism for D/LDCs for matching contribution or cost sharing, possibly in line with the

ODA loan provisions (25% cost sharing of the ODA loan) tied to P-BODA to continue or to

discontinue to receive ODA.

6. Recipient Role

To reiterate, the main objective of ODA is poverty reduction in D/LDCs. Though

development theories and approaches portend pre-requisites for poverty reduction and

development such as political stability, democratization, health, education and various other

sectoral developments. The bottom line however is economic development. With economic

development and the population getting out of poverty and meeting their basic needs for food,

shelter and respectful employment with respectful income, most of the sectoral development

challenges are expected to be addressed.

If we take the case of Nepal, after a decade long internal political conflict, in the post conflict

situation the priority of the government in Nepal is hardware development sector, primarily

infrastructures such as road, power and industry. The software parts such as gender and social

inclusions are not much of a priority as much as hardware sectors are. !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!5 Nepal is one of the low income and least developed countries in South Asia with 145 HDI ranking. 6 Asian Development Bank, Concept Paper, Project Number: 44214 September 2011, NEPAL: Building Climate Resilience of Watersheds in Mountain Eco-Regions

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The Government of Nepal adopted Sector-Wide Approach (SWAp) to development some

years ago that has been able to bring together the government, donor and other stakeholder

and align ODA with government’s development investment and financing plans. However,

evidences are lacking investing ODA in which sectors are most effective or yield results to

reduce poverty.

In such a context it can be argued that the ODA recipient countries like Nepal should develop

it’s own P-BODA management and monitoring system capacities. Information and

knowledge on investing ODA in which sector has brought about effective performance and

poverty reduction should be managed to identify effective development sectors attributing to

poverty reduction and further concentrate ODA in those sectors.

To be able to effectively manage P-BODA, D/LDCs should build their capacity on not only to

manage how much aid comes and how it gets channeled and expended, but what works and

what do not. In few words recipient countries should build their capacity to manage

development processes and outcome ‘knowledge’, and use it for further development sectoral

prioritization.

7. Data and Technology

The availability and access to open data leading to open development and open governance

with the advancement in technology to organize and make available to the authorities and

public alike ‘big data’ can surely transform policy- and decision-making in development.

However, there are several challenges and requirements that need to be addressed before open

data and technology can bring about change or transformation in development processes of

either policy-making or spending decisions. For coherence of argument these challenges can

be broadly categorized into two.

First and foremost in the D/LDCs the governments do not have the culture of using data for

policy- and decision-making, and even if it does exists then it lacks rigour. The capacity in

terms of human resources and technology are also lacking. On the other hand the citizens are

also not conscious enough to use open data and information to assert their rights to

development services from the governments. Or make the government accountable. This

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further gets complicated when there are fundamental problems like the citizens are not aware

of their basic rights to development services from the governments, and governments not

being downward accountable to the citizens.

Secondly withstanding the generation of data in ODA and it’s disbursement made available

through technologies, the challenge is which specific and required ‘knowledge’ that can really

bring about change in development can be derived from the plethora of data and information

available?

The development sector still lacks exact ‘knowledge’ on what has worked from the ODA and

what has not. What kind of ODA administration and management and investment of ODA in

which sectors in D/LDCs, in what ODA administration modalities has performed well and

delivered desired or targeted development goals and results are still lacking.

To put in place the Performance-Based Official Development Assistance proposed by this

paper the requirement of data and information on ODA performances is also of high order but

definitely attainable.

Given the argument that having only open data pose the challenges of what knowledge can be

useful from the data available and accessible to make effective ODA decision and spending, it

becomes necessary to generate, organize, manage and communicate knowledge on the

performance of ODA. So, the performance-based ODA decision-making approach or the P-

BODA needs to build in ‘knowledge on performance’ and function in the parameter of

Performance Knowledge-Based Official Development Assistance Framework (PK-BODAF).

The PK-BODAF can be used as the tool to measure, monitor and manage the P-BODA.

Though the detail narrative and discourse of the PK-BODAF is beyond the scope of this

paper, as it needs more work and experimentation, the theory of change for the P-BODA can

be hypothetically stated as: “ODA can result development equity and equality when it is

based on the performance knowledge of ODA in the two pronged perspectives of OECD

countries and the recipient countries.”

The basic concept of PK-BODAF can be illustrated as given in the Figure 2 below.

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Figure 2: Performance Knowledge-Based Official Development Assistance Framework

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!Conclusions

• As discussed in the paper the reforms that are required for the ODA to be implemented

with the principle of ‘development equity and equality’ adoption of the approach of

Performance-Based Official Development Assistance under the Performance Knowledge-

Based Official Development Assistance Framework can be an option.

OECD and ODA {self-performance knowledge in terms of development

assistance (aid money) commitment (0.7%) and administrative spending = P-BODA}

= ODA PERFORMANCE KNOWLEDE (ODA-PK)

Bilaterals = ODA-PK

Multilaterals = ODA-PK

Intermediaries (INGOs, consultancy forms, contractors)

= ODA-PK

D/LDCs or ODA Recipient Countries (performance knowledge in terms of ODA in specific

development sectors and HDI progress) = ODA-PK and HDI PROGRESS

Performance*Knowledge0Based*Official*Development*Assistance*Framework/PK0BODAF*(Performance!of:!OECD!countries;!recipient!in!terms!progress!on!HDI!and!poverty!reduction)!

PRINCIPLE OF DEVELOPMENT EQUITY AND EQUALITY “ODA can result development equity and equality when it is based on the performance knowledge

of ODA in the two pronged perspectives of OECD countries and the recipient countries.”

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• Performance-Based Official Development Assistance or P-BODA on one hand means the

performance of the OECD member countries on their 0.7% GNI commitment to ODA. On

the other it means the performance of the D/LDCs or the recipient countries with the ODA

in terms of progress on HDI or poverty reduction.

• In order to implement the P-BODA there is need for managing knowledge on the

performances of ODA and P-BODA need to build in ‘knowledge’ on performance that is

attainable by adoption of Performance Knowledge-Based Official Development

Assistance Framework.

• The attributes of reforms that are required for ODA to uphold development equity and

equality are two pronged.

• First the reforms are required to be realized in the administration and management of

ODA by the OECD and the member countries. The ODA should be administered and

managed with development equity and equality in terms of how much of the ODA can be

expended by OECD or member countries for it’s own administration and management.

• Secondly, the ways ODA is received by the D/LDCs need to be reformed on the basis of

P-BODA. Recipients countries should continue to receive ODA or the size and volume of

ODA to them should be determined by their performance with the ODA and capacity to

match and sustain the ODA. And their progress with HDI (from LIC to MIC to HIC) and

poverty reduction.

• ODA should not be a resource base for the D/LDCs to be dependent, but a catalyst to

build the base for them to progress on HDI or reduce poverty and eventually to be

independent of ODA.

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References

• Asian Development Bank, Concept Paper NEPAL: Building Climate Resilience of

Watersheds in Mountain Eco-Regions, Project Number: 44214 September 2011

• Development Initiatives, Fact Sheet. Available at: http://devinit.org/factsheet/0-7-aid-

target-2/

• Gautam, N. (2013) Trends of Official Development Assistance (ODA) in Nepal.

Available at:

http://www.academia.edu/3618359/Trends_of_Official_Development_Assistance_

ODA_ in_Nepal

• UNDP Human Development Report. Available at: http://hdr.undp.org/en/data

• http://web.worldbank.org

• OECD, History of The 0.7% ODA Target. Available at:

http://www.oecd.org/dac/stats/45539274.pdf)

• Shah, Anup. (2012) Foreign Aid for Development Assistance. Available at:

http://www.globalissues.org/article/35/foreign-aid-development-assistance

• UNDP, Annual Report 2013, Nepal

• www.oecd.org

Performance Knowledge-Based Official Development Assistance Framework

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