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Aid effectiveness: Trends and impacts of shifting financial flows to CSOs
Southern Africa Trust (SAT)
March 02, 2007

http://www.southernafricatrust.org/Research_report.html

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Summary

Significant changes are taking place in the global aid architecture. A number of efforts are also being made to mobilise additional development finance and to make aid more effective in reducing poverty. The purpose of this study commissioned by the Southern Africa Trust is to generate knowledge and insight about how changes in global aid policies is affecting donor support to civil society in Southern Africa.

The report notes that civil society has a critical role to play in ensuring that aid becomes effective in reducing poverty, but also finds that traditional donor agencies are not always strong in providing direct support to strengthen the capacity of civil society to participate in poverty reduction and to make governments more accountable. The report identifies a number of critical issues which needs to be addressed by donor agencies and civil society organisations. This includes the role of NGOs in service provision and how this relates to sector- wide programmes and budget support; the linkages between support to civil society and support to governments in poverty reduction and efforts to improve governance; the scope for increased practical co-operation between donor organisations, including intermediaries; the role of civil society in advancing regional co-operation and integration; and the tensions between support to advocacy versus support to organisational development.

Foreign development assistance is a major source of funding for civil society organisations throughout Southern Africa. The report identifies a number of current and emerging trends in development assistance which in various ways may impact on the volume and quality of support provided.

Several efforts are currently being made to increase the effectiveness of aid provided to developing countries. This is increasingly revolved around the concepts of alignment, harmonisation and ownership. Through the Paris Declaration and, in Southern Africa, the Windhoek Declaration, a practical blueprint is emerging which it is assumed will improve the quality of aid provided and help reduce poverty.

Aid effectiveness has so far focused almost entirely on support to the state. Little attention has been paid to the role of civil society and how support to that sector can be improved. Based on data from donor agencies and from interviews with aid officials, civil society representatives and other stakeholders in seven SADC countries (Botswana, Lesotho, Malawi, Mozambique, South Africa, Zambia and Zimbabwe) the report makes a number of observations. The report finds that aid to civil society is significant and increasing. It also notes that the bulk of this aid is channelled through Northern or international NGOs with only a minor portion being disbursed directly from the embassy or agency mission to local civil society organisations.

The report also finds that tied aid is very prominent in civil society support, mainly through the extensive use of Northern NGOs as a channel for civil society support.

The report also finds that the main share of donor support to civil society is provided to organisations providing services in a range of sectors such as health, education and agriculture. This has expanded with the additional funding to civil society organisations active in the HIV/AIDS area. A minor share is provided for civil society engagement in governance issues and efforts to make public policy more accountable. Such support is however, increasing in countries where donors provide budget support.

Furthermore, the report finds that support to civil society in Zimbabwe is large, mainly because civil society organisations are used as service providers and implementers of donor programmes in that country. South African and South African-based organisations, particularly NGOs, are also increasingly seen as channels for donor support to civil society in the region. Finally, it is noted that support to and through civil society has been important in regional support-programmes. Limited efforts have been made to strengthen civil society's capacity to engage in policy dialogues (beyond the significant support provided to a small number of specialised NGOs).

The main donors to civil society in the region is a small group of bilateral agencies, but there has been an influx of a number of new special purpose funding facilities and philanthropic foundations. A few donor agencies which traditionally have not provided much support to civil society have also moved into this field. This had led to increased funding but also added significantly to the diversity and the complexities of the architecture behind civil society support. The role of the World Bank in providing direct support to civil society is limited. The Bank has however a strong influence through its role shaping the policy environment in many countries. It has helped improve the conditions for dialogue between governments and civil society.

There is a variety of support models and delivery mechanisms in place to support civil society. Nearly all of the traditional donor countries also have a variety of budget lines and facilities for financial support in addition to those provided directly from the agency in the field.

At the country level support is either provided directly from the agency mission through a civil society account or as a subcomponent of other programmes. Most support is however, provided through indirect channels where agency missions outsource the management to others. This can be NGOs in their home country, local funding facilities or umbrella organisations such as NGO coalitions or civil society networks.

There is a clear tendency for some, but not all, bilateral agencies in the field to reduce their direct support to individual civil society organisations in favour of local and often joint delivery facilities. In some countries, this trend is coupled with an expanded use of international and Northern NGOs as delivery mechanisms. This is very evident in service delivery but some agencies also use such organisations to provide capacity building support and small grants to community based organisations. Support to national NGOs focusing on governance issues and advocacy tend to be funded directly from the agency mission. At lower levels and in communities such support tends to be provided either through new joint/local funding facilities, or through Northern NGOs.

The extent of donor co-operation in providing support to civil society remains limited, but it is growing among the bilateral agencies in the field. There is little co-ordination involving other support channels. Intra-donor co-ordination also remains limited.

Donor co-operation is mainly confined to donor forums where experiences and lessons learnt may be exchanged both at the technical and more strategic level. There are also a growing number of examples where smaller groups of likeminded donors - but rarely involving more than two or three agencies - agree to co-fund or even establish a donor pool to support a specific organisation or programme.

The impacts of these emerging trends cannot be measured at this stage. The report does, however, conclude that certain types of civil organisations are better resourced than before. Civil society networks and organisations have emerged as an alternative voice and opinion to government, but their capacities to engage in public policy debates are in most countries limited and even more so at the local and district levels.

The traditional donor agencies have so far not proved very effective in providing support for organisational strengthening and capacity development of civil society. The agency missions rarely have sufficient staff to provide this type of support. Another major limitation is also that most of the main donor agencies have not yet developed a proper strategic approach for civil society support. For many agencies civil society is simply an instrument in place to provide services and implement activities. New efforts and approaches by some agencies are however, being developed which may make a small difference.

Most regional support is provided to professional NGOs. It was also found that few donor agencies have been able to link efforts to support civil society at the country level with support at the regional level.

The final chapter concludes that civil society have a critical role to play in ensuring that that a more harmonised aid to governments become more effective. A number of critical issues need to be explored and addressed to make civil society support more effective. This includes the role of civil society in service provision and as implementing agencies for donor programme. The linkages between support to governments and support to civil society in poverty reduction and efforts to improve governance also requires further study, does it strengthen the capacity of civil society in policy engagement? The study also notes that there are limitations to harmonisation and its ability to ensure increased effectiveness. The study argues that it is important to maintain a diversity of funding channels, and to recognise that each donor agency may have different strengths and weaknesses.

However, the report concludes that a number of steps can and should be made to improve donor co-operation, especially at the practical and strategic level. Donor fora enabling discussion and sharing of experiences are important. Likewise there is scope for much improvement in technical co-operation to minimize transaction costs for grant recipients. Frameworks for harmonisation of aid to governments through budget support and sector wide programmes may also help facilitate better co-operation in supporting civil society both in sectors and on cross-cutting governance issues.

The report also identifies important entry points for improved policy engagement between civil society and SADC both at regional, thematic and national levels. Recent developments between SADC and its international co-operating partners pose new challenges and new opportunities for engagement.

Finally, the conclusion notes that support to umbrella bodies has been an important trend in donor support to strengthen civil society and their capacities to participate in policy dialogues. Impressions from field visits are, however, that this focus unintentionally may have led to a situation where the secretariats of the umbrella or network organisation increasingly take responsibility for advocacy activities while network functions are pushed to the background.

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