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International aid and its management: Some insights for Zimbabwe
in the context of re-engagement
Mark
Simpson and Dale Dore, United Nations Development Program (UNDP)
July 24, 2009
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This paper is
part of the Comprehensive Economic Recovery in Zimbabwe Working
Paper Series
Executive
Summary
After years
of isolation from the mainstream of international development processes,
Zimbabwe's decision makers need to familiarize themselves
with the new aid architecture and mechanisms as the country reengages
with the international community. The purpose of this paper is therefore
to discuss the main principles and processes of various aid modalities,
international debt relief efforts and the management of aid flows
so as to enable decision-makers to ensure that engagement in these
initiatives best meet Zimbabwe's development objectives. In
doing so it draws on the international debate on the role and effectiveness
of aid and the experiences of other countries.
Broadly, the
paper is structured around three main themes. The first is the gradual
shift of aid delivery away from project-based approaches which are
specific 'stand alone' interventions by donors, towards
programme-based approaches where donors provide direct support to
various sectors and the national budgets of recipients (partner
countries). This evolution in approach finds expression in the second
theme, the Paris Declaration of 2005, which is a set of principles
to improve the efficiency and impact of aid. The third theme is
the need for a comprehensive and technically sound national development
strategy, known as a Poverty Reduction Strategy Paper (PRSP).
The Paris Declaration
groups aid delivery principles into five broad categories. 'Ownership'
is the first category whereby the partner country undertakes to
exercise effective leadership over the development policies and
strategies and coordinate development actions. The second and third
categories, 'alignment' and 'harmonization',
require donors to base their overall support on the partner countries'
national development strategies, institutions and procedures, and
ensure that their actions are more harmonized, transparent and collectively
effective. 'Managing for results', the fourth category,
means managing and implementing aid in a way that improves decision-making
to achieve development objectives. The last category, 'mutual
accountability', requires both donor and partner countries
to be responsible for development outcomes.
The formulation
of a national development strategy, or PRSP, through a participatory
process involving both government and non-state actors - the
private sector, labour and civil society - places ownership
of the development process firmly with the partner country. The
PRSP then becomes the centrepiece around which donors can align
and harmonize their own development assistance and, with improvements
in public financial management and national oversight by Parliament,
move towards providing direct budgetary support. Under such a scenario,
donors and partner countries are likely to benefit significantly
from greater transparency and oversight, a reduction in transaction
costs and fiduciary risks, as well as greater predictability of
aid flows.
The paper concludes
with measures that Zimbabwe needs to take when requesting debt relief
and managing aid flows as it re-engages with the international donor
community.
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