March 24, 2005

Major donors warn against 'parallel systems'

A joint mission formed by some of Mozambique's major international partners, including the World Bank, the UN Programme Against AIDS (UNAIDS), Norway, Sweden and Britain, have warned against donors setting up "parallel systems" that bypass the government. A document has stressed the virtues of a "country-led approach" to aid, which relies on the Mozambican government's own anti-poverty strategy, and includes channelling funds directly to the Mozambican state budget. Clearly addressing those donors who still keep the Mozambican state at arm's length, the mission warned "the development of accountability within government, including within the Cabinet itself, can be undermined by the provision of aid funds directly to priority sectors through parallel structures created by donors". It noted that individual Mozambican ministries were often "more dependent for funding on donors than on the Ministry of Finance".
The mission also warned that "large amounts of the aid Mozambique receives is spent completely outside the government system, even though aid is often used to expand the provision of basic services for which the government will ultimately have to take responsibility. This can seriously undermine the sustainability of public service provision". It was true that donor-run aid projects could immediately improve the condition of some poor people, the mission conceded, "but there is strong evidence that the only way to achieve a broad based and lasting reduction in poverty is to help build effective states, with accountable governments which implement good policies and provide good basic services to all". Certainly there were risks involved in the "country-led approach", given Mozambique's "poor financial management systems and weak accountability". "But working through projects or through parallel systems does not reduce those risks - it merely bypasses and hides them", the joint mission argued. "One of the great benefits of using the government's own planning and budgeting process is that it allows us to make the risks we face explicit, and to focus our attention on tackling them". The project-based, donor-led model was unlikely to improve matters. "We are convinced that unless donors use the government's own systems for monitoring and reporting, and unless aid is increasingly channelled through the central budget, the incentives for government to improve these systems and develop the capacity they need will remain low".
So far 16 donors (including the World Bank, the European Commission, the Nordic Countries and Britain) are providing at least some of their aid through "untied budget support", directly financing government expenditure. This budget support, the document said, under a Memorandum of Understanding of April 2004, "is directly linked to the implementation of reforms which the government itself has said are crucial for economic growth and poverty reduction". The budget support, the mission added, "is complemented by substantial donor programmes of technical assistance for capacity building, aimed at improving the effectiveness of government in policy making and implementation". But this had not been properly coordinated. The mission called for "improved harmonisation" of technical assistance "to ensure that it is meeting real needs and developing capacity in a sustainable way". The mission concluded that the "country-led approach" is working in Mozambique. "There is a long way to go, but if we stay the course, if we are patient and persevere even when we encounter obstacles, we can help Mozambique lift itself out of poverty", the document declared. (Agencia de Informacao de Mocambique, Maputo)

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