Assizes of the Belgian Development cooperation:

Aid concentration

Hubert de MILLYOECD – DCD/aid effectiveness

Aid Fragmentation• Fragmentation is an issue for both donors

and partners– For donors – managing programmes in many

countries (Canada, EC, France, Germany, Japan, and US give aid to over 100 countries; Portugal in just 19 and New Zealand in just 21.)

– For partners – having to deal with a large number of small donors (37 countries have more than 24 DAC and major multilateral donors; in two thirds of these more than 15 of those donors account for just 10% of their aid.)

Concentration: Partners’ fears• Overall volume decrease (donor phasing

out without offsetting)• Donor quartel• Loss of flexibility• Increased risk (if donor failure)• Internal opposition : minefi vs line-

ministries (loss of like-minded donor at sector level)

Concentration: donors’ fears• Phasing out (how to announce bad

news?)

• Low control on existing aid

• Increased responsability, need of greater predictability

• Loss of flexibility

• Increased risk for disbursment

• Note on measurement:– Fragmentation measured for country programmable

aid (CPA) which excludes debt relief, humanitarian aid, imputed student and administrative costs, etc. – CPA is aid that is susceptible to programming at recipient country level

– Excludes small bilateral programmes of under $250,000, as not imposing the same coordination burdens as larger projects and programmes.

Fragmentation – Partners’ perspective

Quartile distribution of number of DAC and major multilateral donors by country

Number of donors together accounting for less than 10% of aid

In 33 partner countries fragmentation is a major issue – each has more than 15 donors providing just 10% of their CPA

Sectoral analysis• If donors concentrate their aid at the

sectoral level, the effect of fragmentation can be reduced, while still allowing space for smaller donors

• Analysis of fragmentation in two sectors: Health and Economic Infrastructure

Significant fragmentation in the Health sector

In 21 countries, in the health sector, more than 15 donors combined provide just 10% of their health CPA

Less fragmentation in the Economic infrastructures

Only 5 countries have 18 to 23 donors active in infrastructure(with more than 15 donors providing just 10% of their infrastructure

CPA)

Country case studies• Review of Cambodia, Rwanda, Tanzania and

Vietnam shows:– On average approx. 1/3 of donors represent 90% of aid

(9 to 12 donors)– In health on average ¼ of donors (4 to 8 donors) and in

Economic infrastructure sector 17% (1 to 4)• Case of Vietnam: Yet two small donors , Austria (with 0.2%

of global CPA) and Finland (0.4%) can manage fifth (8.0% share) and sixth (2.8%) position in aid to health in Viet Nam

• So there is scope for greater concentration at sectoral, country and global level

Vietnam: CPA in totalDonor CPA share Cumulative%Japan 34.5% 34%IDA 18.3% 53%AsDF 10.0% 63%France 5.8% 69%United Kingdom 4.2% 73%Denmark 3.5% 76%Germany 3.0% 79%Netherlands 2.9% 82%Canada 2.6% 85%Australia 2.4% 87%Sweden 2.1% 89%EC 2.1% 91%United States 1.6% 93%Finland 0.9% 94%Belgium 0.9% 95%Switzerland 0.9% 96%…..Austria 0.0% 100%

Vietnam: healthDonor CPA share Cumulative%Japan 22.9% 23%United States 18.6% 41%Austria 9.3% 51%France 6.7% 57%EC 6.1% 64%Germany 5.8% 69%The Global Fund 5.4% 75%Luxembourg 4.1% 79%United Kingdom 3.0% 82%Finland 2.5% 84%Belgium 2.5% 87%UNICEF 2.4% 89%IDA 2.2% 91%

Vietnam: economic infrastructuresDonor CPA share Cumulative%

France 22.8% 23%

Japan 21.8% 45%

Germany 15.3% 60%

Denmark 6.4% 66%

Belgium 6.1% 72%

Netherlands 5.4% 78%

EC 4.2% 82%

Sweden 3.9% 86%

Switzerland 3.8% 90%

Norway 2.5% 92%

Australia 1.9% 94%

Canada 1.6% 96%

United Kingdom 1.4% 97%

Sub-fragmentation• Intra-donor proliferation

– Various state agencies– Decentralised coop (cities, regions…)– ODA funded NGOs

• Budget lines proliferation– With different regulations– Without fungibility

Points for discussion• What “concentrated” means ? Donor

view vs partner view. LDCs vs MICs.• Cost of partnership• Partnerships : how many is too many,

how many is too little ?• Country strategy vs global strategies

(sectors or cci)• “Niche” vs “full high level partnership”

Donors: a dual strategy ?• Countries of « niche »

– Localised or sectoral partneship– Great number of countries– Small volumes

• Countries of concentration– Full partnership, Paris principles– 1 or 2% of local GDP (in medium LDCs)– Small number of countries

Thank you