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Aid Strategy for

the Governmentof the Republicof South Sudan

Ministry of Finance and Economic PlanningRepublic of South Sudan

November 2011


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Foreword 2

Executive summary 3

Introduction 5

Progress in implementing the 2006 Aid Strategy 5

Objective 6

Partnership Principles 7

Mechanisms for aid coordination 8

High-level partnership forum 8

Quarterly Government–donor forum 8

Sector Working Groups and the Sector-based Approach 9

The Inter-ministerial Appraisal Committee and the appraisal of development assistance 9

Aid Information Management System 10

Benchmarks for aid delivery 10

Aid is aligned with overall Government and sector policies and plans 10

Aid is managed by Government institutions and uses Government systems 11

Aid is aligned with the Government budget cycle and channelled through Government PFM systems 12

Aid supports institutional capacity and systems 13

Aid is oriented to the achievement of outcomes 13

Aid is provided coherently and fragmentation is avoided 14

Aid is aligned to the New Deal for Engagement in Fragile States 14

Design of aid operations 16

Working with Government institutions 16

Choice of aid instruments 16

Managing risks 16

Implementing the Aid Strategy 18

Monitoring the implementation of the Aid Strategy 18

Strengthening Government systems and creating the conditions for effective aid 18

Changing the way aid is delivered 19

Conclusion 19

Annex 1: Indicators for monitoring donor performance 20

Annex 2: Aid and the budget cycle 21

Annex 3: Development of innovative aid operations 22

Contents



Since the passage o the Government Aid Strategy in 2006 the Government o South Sudan has made considerableprogress in managing aid to ensure that it contributes to the achievement o our overall vision or the nation. Coordinationmechanisms such as the Budget Sector Working Groups and the Inter-Ministerial Appraisal Committee have been established,a new database or recording and monitoring donor projects has been installed and a number o unding mechanisms havebeen set up to ensure that aid reduces the burden on government and aligns more eectively behind government priorities.Nevertheless, signifcant challenges remain, not least the current ragmentation o aid and lack o attention to strengtheninggovernment systems or the management o aid delivery.

This revised Aid Strategy has been developed in conjunction with the drating o the frst comprehensive Plan or the newRepublic o South Sudan. The South Sudan Development Plan centres on building strong institutions needed to promotea transparent and accountable state, as well as the promotion o private sector-led economic growth and basic servicedelivery to reduce the incidence o poverty among our population. Aid will play a critical role in the implementation othe Plan, representing a signifcant proportion o total public expenditure. It is thereore crucial that the government anddevelopment partners work harder than ever to improve aid eectiveness across all sectors to secure maximum dividendsor the population. This Aid Strategy sets out a ramework intended to achieve this objective.

The process o drating this updated Aid Strategy has allowed us to revisit the core principles o the 2006 Aid Strategy inlight o the challenges we have aced, as well as the need to ensure the Strategy remains relevant ollowing the conclusiono the interim period and the independence o South Sudan. It has also allowed us to incorporate the key messages arisingrom the ongoing international dialogue on aid eectiveness in ragile and conict aected states. Thus, this Strategy is anupdate o the 2006 Government o Southern Sudan Aid Strategy with a ocus on the next fve years, at which point thegovernment will review the Strategy again.

The development o the Strategy has gone through several stages o consultation, both within government and with ourdevelopment partners. Finally, it was approved by the Council o Ministers in August 2011. I sincerely hope that this Strategyachieves it objective o improving the eectiveness o development assistance so that the people o South Sudan beneft

ully rom the aid provided to them.

Kosti Manibe Ngai

Minister of Finance & Economic Planning

Republic of South Sudan

Foreword



Aid Strategy for the Government of the Republic of South Sudan

3

Background and objective

Between 2005 and 2010, South Sudan received in excesso $3 billion in international assistance. In 2006, theGovernment o the Republic o South Sudan published anofcial Aid Strategy outlining the process or coordinatingand aligning development assistance in South Sudan. ThisAid Strategy replaces the 2006 strategy.

The objective o this Aid Strategy is to provide a rameworkor development partners to improve the eectiveness odevelopment assistance and humanitarian aid delivery inSouth Sudan, by aligning unding with the Government’score priorities.

Partnership principles

The Aid Strategy is based on a set o principles that areintended to inorm the partnership between the Governmentand its development partners. Development assistance should:

1. Be Government-owned and -led.

2. Be aligned with Government policies as set out in theSouth Sudan Development Plan (SSDP) and BudgetSector Plans (BSPs).

3. Use Government systems and institutions or publicfnancial management (PFM), policy and servicedelivery, including at the State level.

4. Be predictable, over both the short and medium term.

5. Be coordinated and harmonised through sectoralmechanisms.

6. Be managed or results with project outcomes trackedalongside sectoral policy outcomes.

7. Be based on the principle o mutual accountability .

Mechanisms for aid coordinationThe Aid Strategy outlines our key mechanisms or aidcoordination:

1. A new High-level Partnership Forum (HPF) will providean opportunity or senior members o the Governmentand development partners to discuss key strategicpolicy issues o interest to both groups.

2. The Quarterly Government–Donor Forum (QGDF) willserve as the central mechanism or coordination andinormation exchange between the Government anddevelopment partners.

3. The Inter-ministerial Appraisal Committee (IMAC) will playa strategic role by reviewing and approving all sectoral AidFinancing Strategies, donor Country Strategies and majoraid operations expected to disburse over $20 million.

4. Sector Working Groups (SWGs) will be enhancedthrough the introduction o a more strategic Sector-based Approach, and a lead donor will be establishedor each sector.

Underlying the our main mechanisms or aidcoordination will be the Aid Inormation Management System (AIMS), which is an important tool or planninguture development assistance and reporting on existingaid operations. Data on the system will be secure, butalso publicly available to support eective coordinationamong partners.

Benchmarks for aid delivery

Drawing on the Partnership Principles, the Strategy setsout six core benchmarks or aid delivery, towards whichthe Government and development partners will workover its lietime:

1. Aid is aligned with overall Government and sectorpolicies and plans.

2. Aid is managed by Government institutions and usesGovernment systems.

3. Aid is aligned with the Government budget cycle andchannelled through Government PFM systems.

4. Aid supports institutional capacity and systems.

5. Aid is oriented to the achievement o outcomes.

6. Aid is provided coherently and ragmentation is avoided.

The Aid Strategy sets out the nature o these benchmarksand the role o the Government and its partners in achievingthem. The Government does not expect the benchmarks tobe achieved overnight. However, development partners areexpected to work with the Government to make signifcant

moves towards achieving these benchmarks over the lietimeo the Strategy. The transition to the delivery o aid usingcountry systems will be gradual, carried in collaboration withdevelopment partners.

The Aid Strategy is aligned with the principles o the NewDeal or Engagement in Fragile States (the New Deal), a newramework or international support to ragile states endorsedat the 4th High-Level Forum on Aid Eectiveness in November2011. The New Deal recognizes that support or ragile statesshould ocus on Peacebuilding and Statebuilding Goals, whichare necessary preconditions or sustained development. TheStrategy is one o the Government‘s means o implementing the

New Deal by contributing to meeting the FOCUS and TRUST principles (see Box 6). These principles provide a rameworkor a new country-owned and country-led engagement and aset o commitments to improve the eectiveness o aid.

Executive Summary



Design of aid operations

All aid operations should be designed in partnership withthe Government institutions responsible or managingand implementing them, in close collaboration with the

respective SWGs.

The Strategy sets out preerences or how dierentaid instruments should be used, which should guidedevelopment partners when designing their aid operations.It introduces two new aid instruments that use Governmentsystems: local services support (LSS), which will support thesystem o state conditional transers to und decentralisedservices; and budget support, which will be used orunding overall Government service delivery at both thenational and state level in support o policy priorities.

A ramework or the management o the risk associated

with providing aid to South Sudan is also set out.

Implementing the revised Aid

Strategy

The ramework or monitoring and evaluation (M&E) o theimplementation o the Aid Strategy has three levels:

1. Monitoring the implementation o the SSDP andsectors overall.

2. Monitoring o the results o aid operations themselves,using the AIMS.

3. Monitoring o donor perormance towards achievingthe benchmarks or aid delivery.

This will help the Government and development partnersto ascertain the degree to which implementation o thisAid Strategy has contributed to more eective aid and thecontribution o that aid towards the achievement o theGovernment’s policies.

In terms o implementation, the Government isresponsible or strengthening its own systems and cancreate an environment or more eective aid. In orderto achieve this:

1. The Government will establish new and strengthenexisting aid coordination mechanisms, and ensurestrong leadership o these.

2. The Government will set out clear guidelines or thedesign and management o aid operations, showinghow they can use Government systems.

3. The Government will develop an approach to capacity

development.4. The Government will prepare and implement plans to

improve core governance unctions, including thosewhich address the specifc fduciary and system risksthat concern development partners.

5. The Government will strengthen its policies, plans anddelivery mechanisms at the sector level.

6. The Government will agree with development partnersclear milestones and temporary saeguards which willallow aid to use Government systems.

In the spirit o mutual accountability, Government expectsdonors to respond to its eorts to create a conduciveenvironment or aid by changing the way aid is delivered.This will require that:

1. Development partners support, use and respond to aidcoordination mechanisms and instruments.

2. Development partners increase the amount o aidmanaged by the Government.

3. Development partners ocus their capacity developmentactivities on strengthening Government policies, systemsand delivery systems.

4. Development partners provide aid, including projectsupport, that increasingly uses Government systems.

5. Development partners begin to ocus project supportto the Government on inrastructure provision andinstitutional development, and away rom undingoperational aspects o service delivery.

6. Development partners provide LSS or decentralisedlevel service delivery.

7. Development partners provide the Government withbudget support, starting at the sectoral level.

8. Development partners reduce the ragmentation o aid.




5

This Aid Strategy sets out the Government o theRepublic o South Sudan’s principles and rameworkor the management o development assistance. It isintended to replace the 2006 Aid Strategy and has beendeveloped alongside the South Sudan DevelopmentPlan (SSDP). At the end o the six-year ComprehensivePeace Agreement Interim Period, such a review othe Aid Strategy’s core principles also provides anopportunity to take into account key developments inaid management, particularly as the new Aid Strategyhas a ocus on improving the design and eectiveness outure aid operations. The revision takes into account key

international agreements on the provision o developmentassistance to which developed and developing countrieshave signed up. This includes the Accra Agenda orAction, the OECD principles or engaging in ragile statesand the New Deal or Engagement in Fragile States.

Introduction Progress inimplementing the

2006 Aid Strategy

The Government’s frst Aid Strategy1 was approved bythe Council o Ministers in 2006, ollowing a consultativeprocess among key stakeholders. In 2007, it was ormallyendorsed by all development partners and submitted tothe South Sudan Legis lative Assembly.

The 2006 Aid Strategy was intended to ‘co-ordinatedevelopment aid to South Sudan within a Government-led ramework, so that the people o South Sudan beneft

ully rom the aid which is provided to them’. It set out keyprinciples (Box 1) based on the 2005 Paris Declaration on AidEectiveness. In particular, it aimed to harmonise and aligndonors’ aid delivery, so that development assistance wouldbe provided in a manner that was cost-eective, accountableand aligned with South Sudan’s priorities, systems andprocedures. The Strategy noted that development assistance,when provided properly, ‘can contribute positively toeconomic growth, especially in countries which have goodpolicies and a strong institutional environment. It can alsoenhance service delivery, and act as a useul support toGovernment-led policy reorm and capacity building.’

To implement these principles, the 2006 Aid Strategyset out procedural mechanisms designed to ensure thatdevelopment assistance contributed positively to SouthSudan. The key mechanisms were as ollows:

• Budget Sector Working Groups (BSWGs) wereestablished to unction as the main body or Government-wide coordination and planning (including aid coordination).The groups consist o both Government spending agenciesand development partners, and currently meet annually inJune and July. They are responsible or producing annualBudget Sector Plans, which set Government priorities andexpenditure allocations or the next three years, and alsomap donor support. BSWGs have grown considerably interms o their capacity and eectiveness related to bothstrategic decision making and overall coordination sincetheir inception in 2006.

• The Inter-ministerial Appraisal Committee (IMAC) wasset up to carry out the role o appraising and approvingall donor-unded projects within South Sudan. It remains akey achievement o the 2006 Aid Strategy, as it representsa structure or Government ownership over developmentfnancing. Its main objective is to ensure that donor projectsare consistent with the Aid Strategy, are aligned with

Government priorities and avoid unnecessary duplication,concentration or neglect. This applies to all donor-undedprojects, including those channelled through third partiessuch as the United Nations (UN) and non-governmentalorganisations (NGO).

Box 1: 2006 Aid Strategy principles

1. Alignment o donor assistance withGovernment priorities.

2. Coordination o aid delivery with Governmentprogrammes, to avoid duplication,concentration or neglect.

3. Predictability o the volume and timing o aid ows.

4. Harmonisation o donor activities and programmes.

5. Institutionaldevelopment using aid to enhanceGovernment capacity.

6. Mutualaccountabil ity between Governmentand donors.

1. Ministry o Finance and Economic Planning. November 2007. Government o South Sudan Aid Strategy 2006-2011.



• The Government Donor Forum was established asa mechanism or coordination and communicationbetween the Government and development partners. Ithas proved a useul mechanism or sharing inormationat the technical level but has ailed to galvanise the

political support required.

Signifcant progress has been made in terms o utilising thesemechanisms to ensure that development assistance alignswith the seven Aid Strategy principles. Moreover, ows odevelopment assistance have moved slowly to becomeincreasingly aligned with the Government’s developmentpriorities and vision or South Sudan.2 However, assistanceremains ragmented and in many cases is still provided in amanner that contradicts the 2006 Aid Strategy’s intent.

Most challenging is the continued lack o alignment withthe Government’s priorities. In 2009, 45% o development

assistance was aligned with Government expenditurepriorities;3 in 2010 this fgure had only increased to 51%. Thislack o alignment and the continued provision o developmentassistance through mechanisms that ail to urther strengthenGovernment systems pose a signifcant challenge to both theGovernment and its development partners.

Some progress has been made in attempting to harmonisedevelopment assistance, with fve pooled unding mechanismsestablished since 2005. However, the overall percentage ounding going through pooled mechanisms dropped rom 34%in 2009 to 24% in 2010 owing to the prolieration o bilateralprojects over the period. Current data suggest that over 30

organisations are providing assistance on bilateral projects,many o which operate in a large number o sectors. Similarly,ragmentation within sectors remains high, with Health andEducation taking up 91 and 65 projects respectively in 2010.

In attempting to redress this situation, the Government anddevelopment partners have increasingly ocused on issues omutual accountability and the restatement o Governmentpolicies and priorities in order ensure that developmentassistance is provided or the overall beneft o the peopleo South Sudan through a Government-led ramework. Keypolicy statements have been as ollows:

• The Government and development partners’ agree-ment in 2009 on the Juba Compact and restructuringo pooled unds according to their perceived strengths.

• The Government’s statement on basic serviceprovision priorities.

• Publication o three Government donor books.

• Use o BSWGs and the move towards articulatingsector strategies both within the BSWGs and withregard to specifc agencies (Health and Education).

• OECD principles on State Building and Peace Building,to which Government was a major contributor.

• The 2008 and 2011 Paris Declaration Survey and the2011 Fragile States Principles Survey.

• The New Deal or Engagement in Fragile States.

2. Ministry o Finance and Economic Planning. April 2008. Expenditure Priorities and Future Needs 2008-2011; Vision 2040.

3. Government Donor Books 2009–2011.

The Aid Strategy covers all orms o international fnancingto the Government rom development partners, both at thenational and the state level..

The objective o the Aid Strategy is to improve the eectiveness o development assistance andhumanitarian aid to South Sudan in support o theimplementation o the Government’s priorities, so thatthe people o South Sudan beneft ully rom the aidprovided to them.

International assistance, when managed properly, willimpart signifcant benefts to South Sudan, but poor

management leads to a culture o aid dependency. TheGovernment intends to work with its development partnersto ensure that development assistance strengthensGovernment systems, increases accountability andsupports economic growth. This is best achieved bymoving towards a situation where development assistanceis aligned with the Government’s policy priorities andworks through its budget and fnancial managementsystems. The Government recognises that it is its ownbudget and resources that will have the most signifcantoutcome on poverty reduction and growth within SouthSudan. Its policy is or development assistance to beprovided to South Sudan in line with its priorities and ocused on publ ic inrastructure development, basicservice delivery and institutional development as part oa transition away rom humanitarian assistance.

Objective




7

The Aid Strategy is based on a set o principles intendedto inorm the partnership between the Government and itsdevelopment partners. These Partnership Principles mustinorm both Government policy and development partnersin their engagement with the Government and people oSouth Sudan. The Partnership Principles are as ollows:

1. Government-owned and-led: This is the overarchingpartnership principle. The Government must own alldevelopment aid, taking responsibility or externallyunded programmes and their eective delivery. Fullownership by the Government o aid operationswill ensure that assistance promotes, rather thanundermines, institutional development. An open andtransparent dialogue on the other six partnershipprinciples is necessary i this is to be the case.

2. Alignment with Government polic ies: Aid operationsshould be aligned with the Government’s stateddevelopment priorities and policies. The Governmentspecifcally requests that its development partnersalign their support with the aid unding prioritiesit has set out (or example in the SSDP) and withsector policy priorities set out in Budget Sector Plan(BSP). This wil l be managed through Sector WorkingGroups (SWGs), the IMAC and ultimately the High-level Partnership Forum (HPF).

3. Using Government systems and institutions:Development assistance should be coordinated with theGovernment’s planning and budgeting systems, as part oan open and transparent dialogue led by the Governmentwith its development partners. Development assistanceshould adhere to Government fnancial management,procurement and reporting systems to the maximumextent possible. The Government commits to making

eorts to strengthen these systems over time. Aidshould also be aligned to the Government institutionsresponsible or policy, inrastructure and service delivery,in support o the Government’s policy o decentralisation.This promotes, rather than undermines, institutionaldevelopment, building institutional capacity by ullyengaging the Government.

4. Predictability : Aid must be predictable in both theshort and the long term. Development partners shoulddisburse annual aid commitments in ull and seek toensure project aid is spent when Government systemsare not used. Where aid uses Government systems,

the Government will attempt to ensure the activitiesit unds in the budget are realised as planned. Therealisation o short-term development aid commitmentsis not sufcient or transitioning rom humanitarian

provision to long-term development assistance.Funding commitments o development partners shouldbe matched to the government planning process,starting with the SSDP and the Government’s three-year Medium-term Expenditure Framework (MTEF),as established through the SWG process. This enablespredictable development planning and fnancing.

5. Coordination and harmonisation o support : TheGovernment requests that its development partnerscoordinate and harmonise their delivery o developmentassistance through sectoral mechanisms to avoidconcentration, duplication and neglect. Furthermore,development partners should ensure aid operationswithin and across sectors complement each other.This will reduce the management burden placed onindividuals, Government agencies and ofcials.

6. Managing or results: The Government recognises theneed to measure progress and track project outcomesto ensure the people o South Sudan receive theservices promised to them. This requires both theGovernment and its development partners to ensurethat all projects have clearly stated outcomes andoutputs, monitored through the Government’s systems.It also requires that adequate attention be providedduring the design and implementation o aid operationsto ensure that institutions and systems have the capacityto deliver such results. In doing so, the Government andits development partners can ensure that the peopleo South Sudan beneft rom both the Government’sresources and those o its partners.

7. Mutual accountability : The Government ullyrecognises the importance o providing accountabilityto development partners and, as such, is committed

to establishing transparent, participatory planningmechanisms and strong fduciary systems withinGovernment. At the same time, it expects developmentpartners to provide ull and regular accountabilityto Government on the perormance o their aidoperations and on their adherence to the principles othe Government’s Aid Strategy, as set out above.

Partnershipprinciples



The core principles o the Aid Strategy is thatdevelopment assistance be owned by the Government and ully aligned with the Government’s development priorities . To achieve this, it is important that developmentpartners engage in the Government’s planning processand that development assistance be reected withinthe Government budget. Transparency is critical, soall development partners are aware o Government’spriorities and o the processes they need to align andcoordinate their a id within a Government-led ramework.

Participation is essential, so development partners cansupport the priorities that their aid is to be aligned withand work with Government to identiy gaps in capacityand service delivery that require donor support.

As a part o the revision o the 2006 Aid Strategy,the Government has examined the unctioning othe participatory mechanisms established to managedevelopment assistance to South Sudan. Thesemechanisms represented a substantial step orward inmanaging development assistance and, with the exceptiono the High-Level Partnership Forum (HPF), have not beenmodifed signifcantly. The mechanisms are:

1. The High-Level Partnership Forum (HPF) which is toprovide an opportunity or senior members o theGovernment and development partners to discusskey strategic policy issues o interest to both groups.

2. The Quarterly Government–Donor Forum (QGDF)which will be the central mechanism or coordinationand inormation exchange between the Governmentand development partners.

3. The Inter-Ministerial Appraisal Committee (IMAC)which is to play a more strategic role, reviewingand approving donor country strategies and agship

projects expected to disburse in excess o $20million, as well as sectoral aid fnancing strategies.

4. Sector Working Grioups (SWGs) which will becentral to aid coordination, being enhanced throughthe introduction o a more strategic Sector-basedApproach, with a ‘ lead donor’ or each sector.

Another important instrument is the Aid InormationManagement System (AIMS), which is an important toolor both planning uture development assistance andreporting on existing aid operations.

High-level Partnership Forum

The HPF is a response to an acknowledged need orurther high-level coordination and dialogue between theGovernment and development partners. This meeting will

occur on an annual basis, and will ocus on key policy issueso interest to both groups. It will be chaired by H.E. theMinister o Finance and Economic Planning and will consisto all key Government Ministers and State Governors.

The meeting will occur in the frst six months o eachfnancial year and review the previous year’s budgetaryperormance, as well as development partners’ ongoingactivities and outcomes achieved within the period. It willalso be an opportunity to review progress against the SSDPand to discuss Government and development partners’unding projections across sectors. Finally, the HPF will be amechanism or monitoring progress by the Government o its

development partners in the implementation o this Strategy.

Quarterly Government–Donor Forum

In addition to the HPF, the Ministry o Finance and EconomicPlanning (MoFEP) on behal o the Government will convenethree QGDFs with development partners. These orums will bethe main mechanism or technical coordination o donor activities.They will discuss issues o mutual interest and key aspects o theplanning and budgeting cycle. The meetings will be held at atechnical level and involve the ollowing representation:

• Government representation will consist o at a minimum

the MoFEP and the Ofce o the President. The Ministryo Foreign Aairs and the Ministry o Labour, PublicService and Human Resource Development will alsobe invited to attend.

Mechanisms foraid coordination

Figure 1: Aid coordination structure

Minister of Finance andEconomic Planning

IMAC

SWGs

HPF

QGDF

Heads of mission

Lead donor representatives

Lead sector donors




9

• Donor representation will be limited to the lead sectordonors (see below), a lead multilateral donor and alead bilateral donor. These lead representatives will bechosen rom among the donors themselves.

The QGDFs will provide an opportunity or collaborativeexchange o inormation between donors and theGovernment on topics o interest (e.g. budget execution,international aid initiatives) and key challenges currently beingaced in the technical implementation o the Aid Strategy.

Sector Working Groups and the

sector-based approach

The SWGs, ormerly the Budget Sector Working Groups,are the main orum or sector-level planning and budgeting.They are made up o all spending agencies in a sector as

well as development partners in that sector. To date, theirmain unction has been limited to the annual preparationo BSPs, which set out the sector’s objectives, targetsand expenditure priorities or the coming three years.The Government intends to strengthen and broaden thei rrole so they are the main mechanisms or advancing theimplementation o this Aid Strategy and, more broadly,the Government’s policy priorities. They will henceorthbe called SWGs to reect this broader role.

This will be achieved through the introduction o aSector-based Approach to policymaking, planning,implementation and monitoring and evaluation (M&E),

which will involve the ollowing:• Elaboration o clear sector policies and plans aligned to

the SSDP and setting out the roles and responsibilitieso dierent actors, systems o service delivery andstrategies or capacity development.

• Development and review o fnancing strategies orsector policies, including aid and the way aid will bedelivered in the context o the SSDP.

• Development o M&E mechanisms to assess progressin implementing sector policies, plans and budgets.

SWGs will have a central role in coordinating the Sector-based Approach. This will involve both expanding therole o SWGs and deepening the planning process. Inorder to ensure eective coordination, the Governmentcommits to ensuring that the SWGs meet regularly, atleast three times a year:

• A frst meeting would review the previous year’sperormance.

• A second meeting, at the start o the planning process,would involve reviewing perormance mid year andidentiying priorities or the orthcoming plan period.

• In a third meeting, SWGs would approve the BSP inadvance o the budget process.

Development partners’ participation in the SWGs isintended to increase Government ownership o aid

operations to ensure overall support is aligned withsectoral priorities as articulated by the sector in their BSPs.Development partners are requested to reect ongoingand planned aid operations as part o their technicalengagement at the sector level. SWGs will review this

aid to ensure that it is coordinated, complementary andaligned with the Government’s policies

For each SWG, the Government requests thatdevelopment partners select a lead agency to coordinatethe international community’s inputs into the sector. Theseagencies will co-chair the sector and, in conjunctionwith the sector chairs, provide reports to the QGDF onsector progress. Reports on sector perormance will bepresented by the Government at the HPF on a yearly basisor review. In dialogue on policy and perormance issues,donors are requested to agree a common position andcommunicate this through the lead agency.

The division o labour between the Government anddevelopment partners within a sector is established in theroles and responsibilities outlined in the BSPs and reviewedon a yearly basis. Development partners are requested toagree a division o labour among themselves with regardto key sectors o support. This means individual donorsshould harmonise their activities within their portolio,by limiting the number o small projects unded and byconcentrating assistance to some, rather than all, sectors.Where donor headquarters are insistent on engagement inmultiple sectors, these agencies should consider engagingin silent partnerships with other development partners,

delegating their cooperation to them and working throughthe lead agency.

The Inter-Ministerial Appraisal

Committee and the appraisal of

development assistance

The MoFEP is the Government institution mandated tomanage all Government budgetary and fnancial issues,including ows o donor aid. Prior to accepting developmentassistance, the Government believes it is extremelyimportant to ensure this assistance is in line with its statedpriorities and its Partnership Principles.

The IMAC, chaired by the MoFEP, has eight core members 4 and is responsible or approving all aid operations, prior toaid unding documents being signed. Signatory authority or all donor development assistance rests solely with the Minister o Finance and Economic Planning . In thisregard, the Minister will sign all major donor countrystrategies and large donor projects, provided they havebeen endorsed by the IMAC. All spending agencies romwithin a sector are invited to meetings to discuss projectsand strategies that are relevant to their sector.

However, the IMAC will play a more strategic role than ithas previously done. In order to do so, it will not attemptto appraise all aid operations but only larger programmes– those which are expected to disburse over $20 million a

4. Core members are Finance, Regional Cooperation, Ofce o the President, Legal Aairs, Centre or Statistics, Environment, Gender and the LocalGovernment Board.



year. It wi ll ocus on reviewing and approving overall donorcountry strategies and sector aid fnancing strategies.When appraising donor strategies and aid operations,the IMAC will seek to ascertain whether 1) proposals areconsistent with stated Government policy priorities, as laid

out in the SSDP and by SWGs; and 2) have complied withthe management cycle and benchmarks or aid deliveryin their design, and with associated operational guidelineselaborating these (see below).

Aid Information Management

System

The Government commits to maintaining the AIMS torecord and track all development assistance in South Sudan.The AIMS will be an important tool or both planning utureexternal assistance and reporting on existing aid operations.

Data on the AIMS database will be secure, but will beavailable publicly in order to support eective coordinationamong partners. Inormation rom the AIMS will be includedin various planning documents (such as BSPs, the MTEF andBudget Execution Reports), will be used to support variousaid coordination mechanisms and will provide the basis orthe annual publication o the Donor Book. Inormation willalso be disseminated to the State Ministries concerned.

For the AIMS to work eectively requires developmentpartners to provide timely inormation regarding all aidoperations on a regular basis. Once ully operational,partners will be able to directly input the inormation intothe system via the internet. The Government commits toproviding guidance on the required reporting requirementsand on how to use the AIMS.

Benchmarks foraid delivery

Drawing on the Partnership Principles, this section establishessix core benchmarks or aid delivery that the Governmentand development partners will work towards over the fveyear period o the Aid Strategy:

1. Aid is aligned with overall Government and sectorpolicies and plans.

2. Aid is managed by Government institutions and usesGovernment systems.

3. Aid is aligned with the Government budget cycleand channelled through Government public fnancialmanagement (PFM) systems.

4. Aid supports institutional capacity and systems.

5. Aid is oriented towards the achievement o outcomes.

6. Aid is provided coherently and ragmentation is avoided.

The Government recognises that these benchmarks cannot beachieved immediately: achieving them will require signifcantwork by both the Government and development partners,and the process will be iterative. The Government mustdevelop and strengthen its policies, systems and institutions

with support rom its development partners; developmentpartners are requested to respond to this by making sure aidincreasingly uses such policies, systems and institutions. TheGovernment and development partners will monitor progresstowards the achievement o these benchmarks.

Aid is aligned with overall national

and sector policies and plans

In order to strengthen ownership o development assistance,it is important that aid be aligned with Government policiesand plans. This must happen at two levels:

• Overall, aid should be aligned with Government aidfnancing priorities, which are explicitly stated in the SSDP.

• At the sector level, aid should be aligned with sectorpolicies and plans.

In the development o the SSDP, the Government hasestablished a clear set o policy priorities or the mediumterm. These are likely to evolve over time and shouldguide development partner decisions on where to allocatetheir overall unding. At the sector level, the Governmentwill need to work towards developing the necessary

policies and plans to enable policy alignment to happenin a meaningul way. Policies at this level will need toset out clear institutional responsibilities within the sector,systems or service delivery and strategies or capacity




11

development. This will take longer, and will require thesupport o development partners. The introduction o theSector-based Approach in sectors where aid fnancing isa priority will be important in this regard.

Under a clearer policy ramework, the Government willask development partners to align their support with thesepriorities. Aid Financing Strategies will be developed as aninstrument to acilitate policy alignment, or the SSDP overalland or sectors that represent a priority or aid unding (Box 2).

Furthermore, development partners, in their countrystrategies and in the design o their aid operations, should

articulate how their plans are aligned with Governmentpolicies. The process o policy alignment will be managedthrough the SWGs, the IMAC and ultimately the HPF.

Aid is managed by Government

institutions and uses Government

systems

Currently, the vast majority o aid is managed by donorsdirectly, or transerred to international or local NGOswhich manage the unds and deliver services. NGOshave played a key role thus ar and will continue to do soin the development o South Sudan. Nevertheless, a coreobjective o the SSDP and this Strategy is to build strongerGovernment institutions and service delivery systems.For this to happen, aid must increasingly be managed byGovernment institutions and use Government’s chosensystems or delivery against policy priorities.

A frst dimension involves the Government being involvedin the management o aid operations. There are threestages to this:

• Government institutions taking part in oversight/

management committees o aid operationsimplemented by non-governmental institutions andmonitoring and evaluation assessments.

• Government institutions being responsible ormanaging aid operations, supported by a ProjectManagement Unit (PMU) in the institution. WhilePMUs are an important interim step, it is importantthat development partners only introduce one per

Government institution, which should be chargedwith managing all donor assistance on its behal.

• Government institutions being ully responsible ormanaging aid unds using their own institutionalstructure. In this case, donors can provide technicalassistance to Government institutions to support themto perorm their unctions in managing aid.

The second dimension involves those aid operationsincreasingly using Government systems (and institutions) or delivery. There are two stages to increasing thedegree to which aid is managed by and uses Government

systems and institutions:

• Government setting out and implementing plans toimprove core governance, systems and implementationcapacity at national, sector and state levels. This willinvolve identifcation o the key constraints to servicedelivery and how these can be addressed.

• Alongside this, development partners setting out how theywill support the implementation o these plans and increasetheir use o Government systems as they are strengthened.

A frst step in this regard is or sectors to set out clearly the systems

and institutions or service delivery in their policies and plans.In this context, the Government has emphasised theimportance o decentralisation and is seeking to strengthenState and County Governments in the provision o localservices. Furthermore, it means that the role o NGOs andthe private sector will change. Development partners arethus requested to support both decentralisation and thechanging role o NGOs (Boxes 3 and 4).

Box 2: Sector and SSDP Aid Financing

Strategies and division of labour

Following fnalisation o the SSDP and this Aid Strategy,an Aid Financing Strategy in support o the SSDP willbe developed. This will be updated ollowing each

iteration o the SSDP and will set out:• The envisaged architecture o aid inancing

within sectors.

• The donors involved in each sector.

• Indicative unding levels across sectors overthe SSDP period, and any remaining undinggaps in priority areas.

Box 3: Supporting decentralised

service delivery

This is best achieved by establishing strong national policiesand systems or decentralised service delivery at thecentre, rather than directly supporting individual States.

• In the provision o fnancial aid, aid operationsshould use central Government transer systemsestablished or unding decentralised service delivery,and not create parallel unding mechanisms.

• Capacity development activities should supportsystemic strengthening across states in aconsistent manner.

This should lead to development partners supporting

sustainable central Government and State Governmentsystems and institutions.



Aid is aligned with the Government

budget cycle and channelled

through Government PFM systems

A core dimension o Government systems is PFM. It isimportant that aid unding be increasingly incorporatedinto the stages o the Government budget cycle, romplanning and budgeting through to budget execution,accounting and auditing processes. Table 1 shows thekey dimensions o the budget cycle, and how aid undingcan use Government fnancial management systems.

The Government does not expect aid operations to useGovernment systems in ull rom the outset. However,there are simple steps development partners can take touse Government systems without any additional risk totheir unding. Including aid in BSPs, the annual budget and

reports is an example o this.

However, or development partners to begin usingGovernment budget systems in other areas, such asTreasury, procurement, accounting and auditing, theGovernment will make eorts to address key weaknessesin these areas. In order to enable this to happen, theGovernment will work in partnership with donors:

• To continue to assess the strengths and weaknesses oits PFM systems regularly.

• To identiy and agree to implement actions to addresskey weaknesses in these systems.

A key frst step will be or the Government to put in placethe legal ramework, including the enactment o the PublicFinancial Management and Procurement Bill.

While budget support represents the moststraightorward way o ensuring aid ollows anduses the Government budget cycle, it is important toemphasise that project support has the potential to useall dimensions o the Government budgetary cycle aswell. As part o the implementation o the Strategy, theGovernment will develop guidelines on how project aidas well as budget support can use Government planning

and budgeting systems. The government accepts thatsaeguards will need to be agreed and auditing o donorunds being channelled through Government systemswill be required.

Box 4: The evolving role of NGOs and the

private sector

NGOs are likely to continue to play a very signifcant

role over the lietime o this Strategy. However, theirrole will change.

• Services delivered by NGOs or private sectororganisations on behal o the Government willincreasingly be contracted by the Government andhave their contracts managed by the Government.In many sectors, or example Health and Education,this may be an important interim step towards theuse o Government systems or service delivery. Insome sectors, there may be a permanent role orNGOs and/or private providers in service delivery.

• Direct donor unding or NGOs can continue in areas

where Government does not have a mandate – orexample activities such as advocacy, transparency,accountability and community mobilisation.

The precise role o NGOs needs to be worked out ona sector by sector basis.

Table 1: How external nance should use the Government planning and budget cycle

Planning and budgeting

Budget sectorplanning

• Three year projections or non-governmental and Government aid appear in BSPs. This inormation iscaptured in the AIMS.

Annualbudget

• All aid unding provided to and managed by the Government orms part o the Government’s annual resourceestimate and budget allocations to Government spending agencies.

• Aid unding is aligned with the Chart o Accounts.

Budget execution and accounting

Treasury • Financial aid is disbursed into a Treasury account in the Bank o South Sudan.

• Financial aid is managed through Government systems or cash management and expenditure control.

Procurement • Externally unded expenditures use Government procurement systems.

Accounting • Externally fnanced expenditures are recorded and accounted or using the Government accounting system, inline with the annual budget and budget classifcation system.

Reporting and auditing

Reporting • Expenditures and outcomes or all non-governmental and Government aid are captured in the AIMS and the Donor Book.• Expenditures and outcomes or all Government aid appear in relevant budget perormance reports, BSPs and

budget documents.

Auditing • Externally fnanced expenditure audited by the Audit Chamber.




13

Aid supports institutional capacity

and systems

Over the past fve years, the Government has signifcantlyincreased its operational capacity. Development partnershave increasingly ocused on strengthening the institutionaland human capacity o the Government at both nationaland state levels. To continue to build on this, the Governmentrequires development partners to consider how theiroperations will develop the capacity o the National andState Government. To date, the approach to capacitybuilding, by both the Government and the internationalcommunity, has been neither coordinated sufciently norcomprehensive enough. The SSDP sets out a more coherentstrategy or capacity development.

It is important to emphasise that the best way or aid to

support institutional capacity is or aid to use Government policies, systems and institutions, as described in the previous three benchmarks. However, in order to complement this,aid has an important role in supporting the strengthening oinstitutional capacity and systems through training, studiesand the provision o technical assistance. Attracting SouthSudanese capacity into the civil service is also a key priorityor Government, which development partners should support.

Specifcally, aid should support institutional capacity and

systems at two levels:

• Addressing systematic weaknesses across Government institutions in core governance unctions and skillsareas in a coordinated manner: This must be based onthe leadership o the Ministry o Labour, Public Serviceand Human Resource Development. Programmesshould be delivered across Government and at scale.The implementation o piecemeal skills developmentprogrammes is not acceptable. The development ogovernance unctions should be led by the GovernmentCapacity Building Strategy and build on institutional needsassessments, to provide institution-specifc strategies.

• Addressing sector-specifc service delivery and capacity issues through mechanisms at the sector level: Thisinvolves identifcation o key constraints to service

delivery at the sector level and specifc capacitydevelopment needs. It then involves the identifcationo means to responding to these through capacitydevelopment and other activities. Through Sector-basedApproaches, the eectiveness o capacity development

activities in the sector should be reviewed regularly.

Activities at these two levels must reinorce each otherbut not overlap. This requires strengthened coordination ocapacity development, to be led by the Ministry o Labour,Public Service and Human Resource Development. Thismeans crosscutting capacity development activities need torespond to sector-specifc concerns, while activities at thesector level do not duplicate sector crosscutting activities.5

Aid is oriented to the achievement

of outcomes

The Government recognises the need or it to increasethe transparency o its unding allocations and to hold itsagencies to account or the activities they undertake. Tosupport the Government in this process, a benchmarkor development partners must be the provision ooutcome-oriented support. At the highest level, thismeans inancing that is irst and oremost aligned withthe Government ‘s political priorities and not drivenby the policy objectives o development partners.Furthermore, when designing aid operations, activitiesshould be aligned explicitly with the achievemento the Government’s policy objectives. Adequate

attention must also be provided during the designand implementation o aid operations to ensuring thatinstitutions and systems have the capacity to deliver.

Development partners are requested to report regularly on the planned and actual activities and outcomes oaid operations and not just on unding allocations andexpenditures. This should be done via the AIMS and theBSP process (see annex 2).

Furthermore, i activities and outcomes are to beachieved as planned, development partners must providepredictable unding in line with their commitments set

out in BSPs and the annual budget. Development partnersshould not cut aid within the fnancial year, as this willadversely aect service delivery, unless there are clearinstances o gross mismanagement o unds. Instead,development partners should have the option to cut aidin subsequent fnancial years.

Nevertheless, Government expects and accepts that donors will make aid conditional on the Government’sperormance as well. This must be done in a waywhich strengthens the incentives or the Government toperorm. The SSDP sets out targets, and these will beurther refned through the development o sector plans

and M&E rameworks, in the context o Sector-basedApproaches. These indicators and targets orm the apex oa perormance monitoring ramework or the Governmentand its development partners.

Box 5: Attracting South Sudanese capacity

• Young educated and skilled South Sudanese

rom the diaspora and within the countryrepresent the best opportunity or buildingstrong Government institutions.

• It is these people who will run the Government inthe uture and the oundation o uture capacity.

• Development partners are requested to supportthe Government in the development o innovativeways o identiying and attracting SouthSudanese to work in the civil service.

5. For example, donors should not respond to weaknesses in PFM systems in a sector by setting up a new accounting system within a sector Ministry.



Our partners should not cut unding on the basis oailure to achieve outcome targets alone. In cases wheretargets are not achieved or perormance is poor, theGovernment requests that development partners workwith the sectors to identiy the key issues underlying

poor perormance and to work towards improvingperormance in a constructive manner.

Thereore, development partners should base their conditions on agreed actions to improve sector outcomes.The Government and development partners shouldcollectively agree actions (over which Governmentagencies have control), which are designed to improvesector outcomes, as part o the BSP process. I theGovernment ails to implement the agreed actions withoutgood reason, development partners should be able toreduce their support. However, i such actions ail to havethe desired outcomes, this should not result in cuts to

donor support.

Aid is provided coherently and

fragmentation is avoided

When donors are designing their overall aid strategiesor South Sudan and individual aid operations, theymust ensure their aid does not contribute to undueragmentation and also that it i s complementary. Donorsmust take into account other aid operations andGovernment-unded activities in a sector and ensurethere is not a plethora o small projects across sectors.

Aid must not duplicate activities unded by other aidoperations or the Government.

In order to reduce ragmentation, the Government requestsdonors to adhere to the ollowing principles:

• A donor should only engage bilaterally in a sectori they are providing in excess o $20m to that sector.

• When a contribution to a single sector amounts toless than $20m, the donor should channel it througha pooled und, or engage in a silent partnership withother development partners operating in the sector,delegating cooperation to them and working through

the lead agency.

• For capacity building projects which have a dominantTechnical Assistance component, any supportvalued at under $1m per annum should be giventhrough a pooled und. Furthermore, these projectsare obliged to have a training component or SouthSudanese employees or ofcials, in order to buildnational capacity.6

Aid Financing Strategies, developed as part o theimplementation o Sector-based Approaches, andinormation rom the AIMS will be important tools in

ensuring complementarity and monitoring the coherenceo aid operations. The MoFEP and the IMAC will reviewcompliance with these principles.

6. In exceptional circumstances, the Government might waive this requirement – or example pilot projects supporting innovative approaches to servicedelivery/capacity development.

Aid is aligned to the New Deal for

Engagement in Fragile States

The Aid Strategy is aligned with the principles o theNew Deal or Engagement in Fragile States (the NewDeal), a new ramework or international support toragile states endorsed at the 4th High-Level Forum onAid Eectiveness in November 2011. To date, 35 countriesand agencies have endorsed the New Deal, including alldonors active in South Sudan. The Government was anactive participant in the New Deal development throughits membership in the g7+ group o ragile states.

The New Deal notes that the Millennium DevelopmentGoals, the international standard or measuring humandevelopment progress, assume sound institutional,fnancial and human capacity to deliver services –

circumstances that rarely exist in ragile contexts.The New Deal proposes an intermediary step wheredevelopment partners use the fve Peacebuilding andStatebuilding Goals (PSGs) as the basis or working inragile and conict-aected states. The PSGs representthe pre-requisites or achieving the MDGs and include(1) legitimate politics, (2) security, (3) justice, (4) economicoundations and (5) revenue and services.

To achieve the PSGs, members o the g7+ group oragile states and development partners have committedto FOCUS on new ways o engaging in ragile states andto build mutual TRUST by providing aid and managing

resources more eectively (see Box 6).

The Aid Strategy is one o the Government’s tools orimplementing the New Deal. The table 2 below showshow the Aid Strategy builds on the FOCUS and TRUSTcommitments made by development partners and g7+members in order to improve the eectiveness o aid.

Box 6:

FOCUS A new country-owned, country-led wayo engaging through:

• F ragility assessment

• One vision, one plan

• Compact

• Use country systems

• Support politicaldialogue & leadership

TRUST A set ocommitments to achievebetter results through:

• T ransparency

• R isk Sharing & RiskManagement

• Use & Strengthen

Country Systems• Strengthen Capacities

• T imely & Predictable Aid




15

Table 2:

NEW DEAL Principles South Sudan Aid Strategy Benchmarks

Consistent with the FOCUS principles, which commits

development partners to align their support to a country-ledand country-owned transitions out o ragility based on aragility assessment, vision and plan.

Benchmark 1. Aid is aligned with overall Government

and sector policies and plans

TRUST Principle 3: Use and strengthen country systems .This principle ocuses on strengthening national publicfnancial management systems and oversight mechanisms toenable development partners to make greater use o countrysystems or aid delivery.

Benchmark 2. Aid is managed by Governmentinstitutions and uses Government systems.

TRUST Principle 1: Transparency. This principle ocuses onthe transparent use o aid, to be achieved by tracking aidows and their contribution to development results. Recipientgovernments commit to increasing the transparency obudget processes, including aid receipts, while developmentpartners commit to making aid data available in a mannerconsistent with international standards such as theInternational Aid Transparency Init iative (IATI).

TRUST Principle 5: Timely and predictable aid. This principlerecognizes the importance o acting switly and predictablyin ragile contexts by using simplifed and accountable ast-track fnancial management and procurement procedures,publishing three-to-fve year indicative orward estimates oaid, and reporting on aid ows.

Benchmark 3. Aid is aligned with the Governmentbudget cycle and channelled through Governmentpublic fnancial management (PFM) systems.

TRUST Pr incip le 4 : Strengthen capacities. Recognizingthe importance o building critical domestic capacity andstrengthening institutions, development partners commit toreducing the number o programme implementation units(PIUs) in government institutions, improving the eectivenesso external technical ass istance, reaching agreement onremuneration codes o conduct or national experts andacilitating peer learning among ragile states.

Benchmark 4. Aid supports institutional capacity andsystems.



Design of aidoperations

Box 7: Rapid delivery of infrastructure

A key early priority will be the rapid development opublic inrastructure in South Sudan – such as roads,schools, health centres and power. To date, externalproject support has been slow to deliver in this regard,with donor procurement procedures oten not well-suited to delivering rapid progress. The Governmentwould like to work with development partners to

develop an approach to project support that enablesrapid delivery o inrastructure across South Sudan.

The preceding section set out key principles and benchmarksor aid delivery and the mechanisms by which aid will becoordinated. These must be at the centre o the designingo aid operations. This section sets out some core principlesshowing how aid operations should be designed.

Working with Government

institutions

All operations should be designed in partnership with the

Government institutions that will be responsible or managingand implementing them, in close collaboration with therespective SWGs. Where the Government implementingagency is initially unclear, the development partner will workwith the SWG, through adhoc sector meetings as requiredto identiy a lead Government agency.

In circumstances where aid is multi-sectoral, the MoFEP will bethe lead Government counterpart, unless agreed otherwise.The design process must include consultation with StateGovernments, as they are responsible or the actual deliveryo services. The IMAC and the MoFEP remain responsible orapproving all development assistance prior to implementation.

Furthermore, aid operations should explicitly put institutionsand systems or the delivery o inrastructure and servicesat the heart o design. Development partners and theGovernment should thereore support the identifcation othe major constraints to improving inrastructure and servicedelivery within sectors, and actor the implementation ostrategies to overcome these constraints into the design oaid operations and BSPs.

Choice of aid instruments

Currently, all development assistance to the Government is

provided in the orm o either standalone or pooled projectsupport, which unds much o Government service delivery.Many o these projects are ragmented. International andlocal experience has demonstrated that conventionalproject unding o service delivery is not a durable way tobuild sustainable systems or service delivery.

Thereore, over the lietime o this strategy, the Governmentwould like to see development partners start to provide aidin the orm o two other instruments: local services support(LSS) and budget support. Table 3 (overlea) sets out thepreerred ways to use these instruments and project support.

An aid operation may include more than one instrument. Forexample, a pooled und could include a combination o LSS7 to support the costs o service delivery and project supportto und capacity development activities. Pooled unding o

7. These proposals or innovative fnancing mechanisms are set out in Annex 3.

aid operations is preerred to standalone operations. TheGovernment preers grant fnancing as opposed to loanfnancing. The Government will also develop a debt strategy,which will set out principles or Government borrowing.

Managing risksFurthermore, the Government understands there aresignifcant risks or development partners with regard toproviding development assistance in South Sudan. TheGovernment and development partners should jointlyidentiy the major risks associated with the provision osupport, especially in the case o LSS and budget support,and develop Risk Management Strategies in all instances.These will set out the key risks in using Governmentdelivery and fnancial management systems andstrategies or addressing them. Temporary saeguards will

be agreed as a means o reducing risk, to be removedonce Government systems are strengthened.




17

Table 3: Preferred use of aid instruments:

Instrument What is it? Preferred Use of Instrument

Standalone

project support

• Project support is unding which is kept separaterom mainstream Government expenditures

• Any aid separately identifable rom expendituresin Government plans, budgets and reports isconsidered by the Government as project support

• Project support can use Government planning,budgeting, procurement and fnancialmanagement systems

• The preerred use o project support in support o servicedelivery is or large-scale public inrastructure projects andhumanitarian aid

• Project support is also an eective vehicle or the provisiono time-bound technical assistance and capacity building,when the Government leads in the process

• Where project unding unds the operational costs oservice delivery and/or small-scale inrastructure, this shouldbe at the Government level

• As they are strengthened, projects should use Governmentprocurement and fnancial management systems and processes

• Pooled project support is preerred to standalone projects

Pooled

projects

• Pooled unding is a orm o project support but isjointly unded by multiple donors, providing a morecoordinated implementation mechanism

• The preerred use o LSS is or State- and County- levelservice delivery and community development throughconditional t ransers

• Specifc and temporary saeguards may be put in placewhere there are signifcant weaknesses in Governmentsystems, until such a time as those weaknesses are addressed

• The objectives o LSS should be linked to the achievemento sectoral outcomes set out in the SSDP and elaboratedin BSPs. In doing so, it can strengthen sectoral systems orservice delivery at both national and state levels

Local Services

Support

• LSS is disbursed directly to the GovernmentTreasury and uses Government planning andbudgeting systems

• LSS will be earmarked to specifc conditional stateand county transers

• LSS unded expenditures will be separatelyidentifable in the expenditure budget

• LSS may be jointly unded by multiple donors, or bya single donor

• Budget support is the preerred mechanism or undingoverall Government service delivery at national and statelevels in support o Government expenditure priorities

• Provision should be linked to overall achievement oGovernment priorities set out in its development plan andelaborated in BSPs

• Budget support also can support improvements in systemsor PFM, public service management and decentralisedservice delivery

Budget support • Budget support is disbursed directly to theTreasury and uses Government planning andbudgeting systems

• General budget support is un-earmarked andallocated through the Government budget. Sectorbudget support may be earmarked to specifcsectors or sectoral State transers

• Expenditures unded by budget support will notbe separately identifable in the budget

• Budget support is disbursed directly to the Treasury and usesGovernment planning and budgeting systems

• General budget support is un-earmarked and allocatedthrough the Government budget. Sector budget support maybe earmarked to specifc sectors or sectoral State transers

• Expenditures unded by budget support will not beseparately identifable in the budget



I this Aid Strategy is to be implemented successully,the Government must be increasingly involved in themanagement o aid, and more aid should be channelledthrough Government systems. The reality o aid delivery isvery dierent at the outset.

This section frst sets out the ramework or monitoring theimplementation o the Aid Strategy. It then sets out the keyactions the Government will take to strengthen its policiesand delivery systems, thus creating the conditions or moreeective aid. Finally, it sets out the required response romdevelopment partners, changing the way aid is deliveredand ensuring it is increasingly managed by the Governmentand uses Government systems.

Monitoring the implementation of

the Aid Strategy

The ramework or monitoring the Aid Strategy’simplementation has three dimensions:

1. The ramework or the M&E o the implementation othe SSDP and its successors and o plans at the sector

level by the Government and development partners willenable assessment o the achievement o Governmentpolicy outcomes. It will also allow the Government tomonitor the degree to which its policies, systems andinstitutions have been strengthened.

2. The ramework or monitoring the results o aidoperations themselves, through the AIMS, will enable theGovernment and development partners to assess thedegree to which external aid is contributing towards theachievement o Government policy outcomes and thestrengthening o Government systems and institutions.

3. The third dimension relates to the monitoring o donor

perormance individually and collectively, in movingtowards the benchmarks or aid delivery set out in thisdocument. Indicators or monitoring these benchmarksare set out in Annex 1.

Strengthening Government

systems and creating the

conditions for effective aid

The Government has the primary responsibility or ensuringthat this Aid Strategy is implemented successully andthat development assistance successully supports theimplementation o its policies and the development o SouthSudan. It is the Government that can create an environmentor more eective aid. In order to achieve this,

1. The Government will set out an overall Aid Financ ingStrategy which will set out its priorities or unding,levels o unding required, preerred aid instrumentsand a suggested division o responsibilities. This willbe updated periodically.

2. The Government will establish new and strengthenexisting aid coordination mechanisms, and ensurestrong leadership o those. This includes establishmento the HPF and strengthening the roles o the QGDF,the IMAC and SWG.

3. The Government will set out clear guidelines or the design and management o aid operations andhow these can use Government systems. These willinclude guidelines or aid using Government budgetsystems and principles and rameworks or projectaid and LSS.

4. The Government will develop an approach to capacity development. This will include aramework or coordinating capacity developmentand guidelines or the design and management otechnical assistance and training.

5. The Government will prepare and implement plans toimprove core governance unctions, including thosewhich address the specifc fduciary and system riskswhich concern development partners. This includesareas such as PFM, public service management anddecentralisation. Regular assessments o progress inthese areas will be made.

6. The Government will strengthen its policies, plansand delivery mechanisms at the sector level. Initially,the Government will ocus on the sectors that arepriorities or aid unding in the SSDP, establishing twoSector-based Approaches within the frst year oimplementation o the Aid Strategy. Progress will bemonitored regularly through sector M&E systems.

7. The Government will agree with development partners clear milestones and temporary saeguardswhich will allow aid to use Government systems.This will need to take place or core governanceunctions as well as at the sector level. Specifcally,the MoFEP will develop a plan to address keyfduciary risks in aid using Government PFM systemsin the frst year o Aid Strategy implementation.

Implementing theAid Strategy




19

Changing the way aid is delivered

In the spirit o mutual accountability, the Governmentexpects donors to respond to its eorts to create aconducive environment or aid. This will require that:

1. Development partners support, use and respond to the aid coordination mechanisms and instruments established by the Government. Among themselves,donors will establish their own coordination structuresto enable them to do this. This also means partnersbehaving in a transparent and accountable manner,using instruments such as the AIMS, Aid FinancingStrategies and BSPs.

2. Development partners increase the amount oaid managed by the Government . This meansprogressively increasing the degree to which the

Government is involved in the management o aid. Itollows that development partners should reduce theamount o aid unding that they manage directly orprovide directly to NGOs.

3. Development partners ocus their capacity development activities on strengthening Government policies, systems and delivery systems within theramework established by the Government.

4. Development partners provide aid, including project support, which increasingly uses Government systems. Development partners will rom the outsetmake eorts to use elements o the planning and

budget cycle which do not add risk to their unding.As the Government achieves agreed benchmarksin strengthening its systems or puts in place agreedsaeguards, development partners will respondby using other elements o Government systems.

5. Development partners begin to ocus project support to Government on inrastructure provision andinstitutional development, and away rom undingoperational aspects o service delivery. Furthermore,projects should be designed in such a way that they

deliver this inrastructure rapidly.

6. Development partners provide LSS as a mechanismor unding decentralised delivery in state, county andultimately community level.

7. Development partners provide the Government withbudget support, starting at the sectoral level, duringthe lietime o this Strategy.

8. Development partners reduce the ragmentationo aid by ocusing on ewer sectors, engaging inharmonised unding mechanisms and reducing thenumber o small aid operations.

Conclusion

This Strategy has set out the principles, coordinationmechanisms and benchmarks or aid in South Sudan, andguidelines or the design o aid modalities. Overall, it sets outa clear ramework or the management o aid and a cleardirection or changing the way aid is delivered.

Implementing the Strategy will require signifcant eorton the part o both the Government and its developmentpartners, but together they will be able to make signifcantstrides towards the achievement o the benchmarks or

aid delivery. This in turn will both support improvements inthe eectiveness o aid and ensure that aid supports theachievement o Government policy priorities.

In this way, aid has signifcant potential to support the buildingo the Republic o South Sudan and the welare o its people.



Benchmark / Indicator Denition

1: Aid is aligned with overall Government and sector policies and plans

1.1 % aid provided to SSDP priority programmes rom totalaid unding

Defned as those programmes identifed as priorities or aid unding in the Aid FinancingStrategy and subsequent Sector Aid Financing Strategies

1.2 % o donors with a currently valid CAS submitted to theGovernment along with IMAC Form 1

Defned as the number CAS submissions to MoFEP

1.3 % o sector aid fnancing strategies with donor unding over$20million approved by IMAC

Defned as the number o Sector Aid Financing Strategies (over $20m) reviewed byIMAC in a given FY

1.4 % o aid operations over $20 million reviewed by the IMAC Defned as the percentage o aid operations over $20m reported in the AIMS that arereviewed by IMAC

2: Aid is managed by Government institutions and uses Government systems

2.1 % aid or which the Government has a management role Defned as where the Government is either a Chair or Co-Chair o the Steering/Management Committee or the aid operation

2.2 % o sectors with a ull Sector Based Approach Defned as where a sector has a clear policy and strategy; an elaborate Budget SectorPlan; a unctioning M&E system and established donor coordination mechanisms

2.3 % aid directly managed by Government institutions Defned as where unds are directly managed by the ministry, whether by mainstreamsta, contract sta or PMU reporting directly to GRSS sta

2.4 % aid provided as LSS, RIDF or budget support Defned as where unds are disbursed according to LSS/RIDF ramework or aredisbursed directly into the government single treasury account

3: Aid is aligned with the Government budget cycle and is channelled through Government PFM systems

3.1 % donor agencies providing indicative three-year sector level

commitments by the deadline in the budget process

Defned as where a donor agency enters 3 year inormation into the AIMS by the

deadline requested in the Aid Call Call Circular3.2 % donor agencies providing indicative and frm annual

programme allocations by the deadline in the budget processDefned as where a donor agency enters 3 year inormation into the AIMS by thedeadline requested in the Aid Call Call circular

3.3 % sectors preparing ull sector aid fnancing strategies A ull aid fnancing strategy is one which give details on how the sector plans to meetAID strategy bencham

3.4 % aid incorporated in detailed budget estimates andAppropriation Act

Defned as where aid allocations eature in the appropriation act

3.5 % aid disbursed to RSS Single Treasury Account Defned as where unds are disbursed directly into the government single treasury account

3.6 % aid managed through the Financial ManagementInormation System

Defned as where aid is managed using the Freebalance FMIS, where reports aregenerated using the ull Government chart o accounts

3.7 % o aid using government procurement systems To be determined

3.8 % donors reporting on time to the AIMS on a quarterly basis Defned as the percentage o donors reporting on time as set out in the Aid CallCircular / Budget Timeline

3.9 % aid audited by the Audit Chamber To be determined

4: Aid supports institutional capacity and systems

4.1 To be determined To be determined

4.2 To be determined To be determined

5: Aid is oriented to the achievement of outcomes

5.1 % projects reporting on planned and actual activities &outputs in the AIMS

Defned as the number o project entries in the AIMS which report on actual outputs

5.2 % o annual aid allocations reported as spent in the AIMS Defned as the percentage o donor allocations reported as spent

5.3 % sectors with agreed perormance measurement rameworks Defned as the percentage o sectors with agreed perormance measurement rameworks

6: Aid is provided coherently and fragmentation is avoided

6.1 % o aid provided through harmonised mechanisms Defned as aid channelled through pooled mechanisms & silent partnerships

6.2 % o bilateral programmes disbursing at least $20m per annum Defned as the percentage o all bilateral programmes disbursing at least $20m per annum

6.3 Average annual aid disbursement by a donor to a sector Defned as the average disbursement by donors at the aggregate and sector level

6.4 Average number o sectors a donor is engaged in Defned as the number o sectors in which a donor is disbursing unds

6.5 Average size o aid operation Defned as the total aid disbursed in the year divided by total number o aidoperations reported on in the AIMS

Annex 1: Indicatorsfor monitoring

donor performance8

8. Note, there is ongoing work to develop a ull perormance monitoring ramework and these indicators are currently under review.




21

Planning and budgeting

The Government wishes to ensure that donor inormationon expenditure projections and outturns are incorporatedin the annual budget and MTEF. This is important in termso both accountability and alignment o donor aid within aGovernment-led ramework.

In order to achieve these objectives, both the Governmentand its development partners must work together to ensurethat inormation is:

• Aligned with the Government’s budget classifcations,including programmes and activities, operating and capital;

• Provided or Government- and non-Government-aligned aid;

• Provided in a timely ashion; and

• Is accurate.

Development partners are requested to provide the MoFEPwith projections o unding or aid operations and activities, on a sectoral basis, including those contributions channelled

through non-Government mechanisms, or the ollowing three fnancial years. This inormation will be used orcoordination purposes and will be provided to the MoFEPand each SWG on a quarterly basis as directed by thegovernment. In particular, the MoFEP will require inormation:

• prior to the annual planning process – indicative allocationsand activities or review by the sectors; and then

• at the start o the budget process, at which donorsshould provide frm commitments or the orthcomingfnancial year.

Development partners are requested to provide the MoFEP

with indicative commitments at a programme level or everyaid operation within their portolio or the next three fnancialyears. The project inormation must be clearly mapped tosectors and Line Ministries, to activities/programmes withinLine Ministries and to geographic locations (at a minimumto the States involved). This inormation should be providedusing the AIMS.

Budget execution, accounting and

audit systems

To ensure that this takes place, to enhance transparencyand to minimise the management burden placed on theGovernment, donor unds channelled through or managedin conjunction with the Government should be governed by the same fduciary and fnancial management procedures that apply to Government expenditures fnanced by domestic revenues. This reers to the Government’s systems

or opening and managing bank accounts, payments,procurement and accountability, as established by theMoFEP and the Auditor General.9

Reporting and auditing

The Government has established a system or aid reportingand evaluation, which is transparent and participatory and pays adequate attention to the evaluation ooutcomes. Too oten, donor aid projects are measuredin terms o the amount o money spent rather than theoutcomes achieved, and new projects are ormulated

beore the outcomes o existing projects have beenevaluated properly. The existing AIMS reports not only onexpenditure but also on project outcomes to ensure thatdevelopment assistance can become more eective. Thismust be maintained in the new AIMS.

Just as they must appear in BSPs, partners must report on allaid operations, including those that do not use Governmentbudget execution and accounting systems. Furthermore,at the closure o each operation, donors will be asked tosubmit an end-o-project report to the relevant SWG andthe MoFEP. The MoFEP will each year request specifc sectorsto evaluate lessons learnt rom project implementation and

outcomes within the sector, and every year will producea donor project evaluation report which summarises thelessons learned rom each sector’s report.

Annex 2: Aid andthe budget cycle

9. Guidelines will be prepared by the MoFEP as to how this can be achieved or dierent aid modalities.



A key way to kick start the implementation o the AidStrategy will be or the Government and developmentpartners to jointly design and start to implement a numbero innovative aid operations within one year o fnalisationo the Aid Strategy. These are intended to support theachievement o priorities set out in the SSDP and to start theprocess o strengthening and using Government systems:

• LSS unding o conditional state transers or service

delivery in the Health and Education sectors;

• The establishment o a und or rapid delivery olarge-scale public inrastructure, ocusing on roads,water and energy. As identifed in the SSDP, insufcientinrastructure is a major constraint to economic andhuman development and will be a key priority orSouth Sudan ollowing independence. The ocus o theund should be on construction o asphalted inter-statetrunk roads, construction o water supply systems inmajor urban centres and electricity generation anddistribution networks in major urban centres;

• An enlarged Capacity Building Fund ocused on buildingcore governance unctions.

The Government will still require more conventional projectsupport at the national level to complement these initiativesin the near term. Furthermore, additional LSS and pooledunding operations will be developed subsequent to theseinstruments. It is envisaged that preparation o budgetsupport operations will begin within the frst three years oAid Strategy implementation.

Annex 3: Developmentof innovative aid

operations

Download - Aid Strategy forthe Government of the Republic of South Sudan (2011)- Govt. South Sudan

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