Afghanistan

Afghanistan: Enhancing aid effectiveness

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This statement focuses on the performance of donors in fulfilling their commitments under the Afghan Compact in three key areas: use of aid; transparency; and aid efficiency and use of Afghan resources. Whilst acknowledging that some of the analysis could apply to non-governmental organisations operating in Afghanistan, this paper is limited to consideration of the fulfilment of donor responsibilities.

Use of aid

Evidence indicates that the delivery of aid is being increasingly distorted by donors' domestic political agendas. A disproportionately high level of aid is being directed towards opium intensive or insecure areas of Afghanistan, particularly the south and south-east, in order to achieve counter-narcotics or counter-insurgency objectives. For example, USAID, by far the largest donor, allocates more than half of its aid to four highly insecure provinces in southern Afghanistan. This approach overlooks massive development needs in areas which are comparatively stable and creates perverse incentives - for provinces to create insecurity to attract resources. It also overlooks the potential for conditions in these areas to deteriorate.

The delivery of aid is being heavily influenced by domestic political demands for rapid results. Provincial Reconstruction Teams, for instance, have in many cases undertaken quick impact projects or short term assistance at the expense of projects which aim at more sustainable capacity building. In other cases, under domestic political pressure donors have pressed recipients to spend large sums rapidly, with little consideration for the utility, suitability or sustainability of the projects undertaken.

The fact that aid to Afghanistan remains predominantly supply driven has continued to undermine the prioritisation and sequencing of aid according to clear development needs. It also prevents or impedes Afghan ownership and direction of aid, which is vital for the development of state responsibility and accountability.

Given international assistance comprises more than 40% of (non-opium) GDP, and that more than two-thirds of all aid expenditure is spent outside the core budget of the Afghan government, the impact of this distortion of aid has far-reaching implications for development in Afghanistan,

Aid efficiency and use of Afghan resources

Under Annex II of the Afghanistan Compact, 'Improving the effectiveness of aid to Afghanistan', donors commit to ensuring that assistance is being used 'efficiently and effectively' and that 'taxpayers in donor countries are receiving value for money'. They also agree to:

- 'Reduce the external management and overhead costs of projects by promoting the Afghan private sector in their management and delivery;

- Increasingly use Afghan national implementation partners and equally qualified local and expatriate Afghans;

- Increase procurement within Afghanistan of supplies for civilian and military activities; and

- Use Afghan materials in the implementation of projects [...]'

There is little or no evidence that these objectives are being achieved. Drawing somewhat on external resources is unavoidable given the lack of suitable physical or human resources inside Afghanistan, but it is clear that a large number of projects do so to an extent which cannot be justified. High levels of contracting and outsourcing by major donors, sometimes with several layers between donors and beneficiaries, reduces efficiency, accountability and responsiveness to development needs.

International technical assistance for the purpose of building the capacity of the Afghan government is essential. However, there is widespread concern about the cost and effectiveness of foreign consultants, whose fees account for a major proportion of donor expenditure: international technical assistance accounts for a quarter of all aid to Afghanistan. Given the fact that consultants' salaries at US$100,000-$150,000 per annum are some 200 times the salary of an Afghan civil servant, and that associated costs and expenses more than double the overall cost of each consultant, it is essential to ensure a high level of scrutiny of their effectiveness.

Additionally, costs and duplication could be minimised through coordination of technical assistance, yet a very small proportion of this work, approximately one-tenth of all technical assistance, is coordinated. A related problem is that the vast majority of technical assistance is being undertaken in Kabul, which diverts resources from the urgent task of improving the delivery of services at a local level in the provinces and compounds the problems of centralisation.

Transparency

Under Annex II of the Afghanistan Compact international donors make the commitment to 'provide timely, transparent and comprehensive information on foreign aid flows, including levels of pledges, commitments and disbursements'. Although top-line data are recorded in the Afghan Donor Assistance Database (DAD), comprehensive and transparent data for aid flows have not been made available. In particular, the Database has insufficient details in respect of expenditures. As the Bi-Annual Joint Coordination and Monitoring Board (JCMB) Report from November 2006 concludes, 'There is an urgent need for the donors to report their expenditures on a regular basis with greater transparency' (para. 24).

This information is essential for full donor accountability and for Afghan oversight over the 'dual public sector'. It is also vital for the Afghan government, at national and local level, to undertake informed budgetary and development planning, for the National Assembly to be properly informed, and so that civil society organisation can factor it into their activities and planning.

Recommendations

Aid Review

- Donors should institute a review of their aid programmes and plans to ensure that they are consistent with Afghanistan's development priorities, in particular the aims and objectives set out in the Afghanistan Compact and the interim Afghan National Development Strategy (ANDS).

Indicators of Aid Effectiveness

- The Compact has 77 benchmarks for the Afghan government, but none for donors. As recommended in the Bi-Annual JCMB Report from November 2006, a series of aid effectiveness indicators should be agreed by donors and the Afghan government (para 37; 2.2). Indicators with correlative targets should be established for each of the objectives under Annex II of the Compact and other relevant objectives contained in the Paris Declaration on Aid Effectiveness (2005).

Transparency

- Donors should provide comprehensive information on aid flows to the DAD, which must updated and revised to include full details on all projects: how much has been spent, by whom, on what and where.

- In accordance with Annex II of the Compact, for each project donors should stipulate: (a) the amount of funds which flow to the Afghan private sector in the management and delivery of the project; (b) the proportion of work undertaken by Afghan partners and Afghan staff; (c) the proportion of supplies and materials which are locally procured; and (d) expenditure on foreign consultants, advisers and other staff.

- Donors should ensure that their decision-making processes for determining where and how aid is delivered are transparent.

Monitoring and reporting

- An independent Aid Ombudsman should be established, possibly by the Special Representative of the United Nations Secretary General for Afghanistan, with the assent of donors, to monitor compliance with respect to the proposed aid indicators, receive suggestions and complaints, and make recommendations for improving aid delivery and coordination.

- Each donor should regularly report to the proposed Aid Ombudsman (or in the absence of this, the JCMB) on the extent to which it meets or falls short of aid effectiveness targets. Monitoring of this kind would enable the identification of areas or projects where there is scope for greater effectiveness, efficiency and expanded national resourcing.

- A website should be established by the Ombudsman to set out comparative data on donor performance with respect to aid targets and indicators. It should also set out, in a more accessible way, the DAD information on Afghan aid flows.

Common rules on resourcing and contracting

- For wider and more consistent achievement of the Compact objectives, donors should also agree a common set of rules on procurement and contracting which are fair, transparent and promote the use of Afghan resources.

Aid and humanitarian response

It is important for donors to acknowledge that much of Afghanistan is in the process of protracted relief and recovery, and not purely the development phase widely assumed. A two-track approach is needed. Humanitarian actors are increasingly unable to provide adequate protection and assistance to displaced people and other populations at risk in the south and east of Afghanistan due to the significant deterioration in the security situation. Humanitarian space and humanitarian access continues to be seriously limited. Humanitarian response has also been compromised over time by reduced humanitarian coordination mechanisms.

If there continues to be a disproportionate focus on benchmarking of development, without an effective response to humanitarian issues, the situation has the potential to become a complex emergency due to ongoing armed conflict, mass return of Afghan refugees from Pakistan, and the inability to provide the protection and assistance needs of the Afghan people.