Ghana’s Experience in the Area of Aid...
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Transcript of Ghana’s Experience in the Area of Aid...
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT
Trade and Development Board, Fifty-third executive session
Geneva, 27–28 June 2011
Panel Session on “Enhancing Aid Effectiveness: From Paris to Busan”
Ghana’s Experience in the Area of Aid Effectiveness
Ms. Helen AlloteyDirector, External Economic Relations, Ministry of Finance and Economic Planning
Accra, Ghana
The views expressed are those of the author and do not necessarily reflect the views of UNCTAD.
PANEL DISCUSSION 53RD EXECUTIVE SESSION OF THE TRADE AND DEVELOPMENT BOARD (TDB) "Enhancing Aid Effectiveness for
Africa's development”
GHANA'S EXPERIENCE IN THE AREA OF AID EFFECTIVENESS
Presented byHELEN ALLOTEY
DIRECTOR EXTERNAL ECONOMIC RELATIONS MINISTRY OF FINANCE AND ECONOMIC PLANNING ACCRA‐GHANA
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CONTENTIntroductionAid Effectiveness Indicators clustered to ((i)creating enabling environment by GOG & change of behaviour by DPs)Aid Effectiveness Progress AchievementsChallengesQ1‐Aid Catalyzing other forms of Development FinanceQ2‐ Community Improvement of Quality of Aid DisbursedQ3‐Lessons of SSC &Contribution to Aid EffectivenessQ4‐Institutional Mechanisms to Improve on the quality of Aid.
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Introduction• Ghana was among the original signatories of the PD in March 2005..
• In February 2005, prior to the signing of PD the GoG and DPs operating in Ghana, signed an Aid Harmonization MOU, to further increase the effectiveness of Development Assistance in Ghana.
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Introduction cont.
The principles contained in this MOU and the eventual principles contained in the Paris Declaration were in all respects similar.
Led by GoG and in conjunction with Ghana’s DPs, developed and Aid Harmonization and aid effectiveness action plan with concrete activities and actions, to monitor progress both at local and international levels.
This received endorsement at its CG meeting. 5
Aid/Eff. Indicators clusteredThe first cluster ‐represented Indicators which call
for creation of enabling environment by GOG, for DPs to align and harmonize development assistance and thus reduce administrative burden of donor assistance.Indicators 1‐ Ownership of operational
Development StrategyIndictor 2a and 2b –Sound Financial Management
and Procurement SystemsIndicator 4 – Capacity Building PlanIndicator 11‐ Result oriented Framework
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Aid/Eff. Indicators clustered cont.
The second set of Indicators, call for change of behaviour by DPs:
Indicator 3‐Aid alignment on national prioritiesIndictor 4‐ Coordinated TA programmesIndicator 5‐ Use of Country SystemsIndicator 6‐ Phase out of Parallel PIUsIndicators 7‐ Predictability of Aid Indicator 8‐ Aid is untiedIndicator 9‐ Common and programmatic approach Indicator 10 – Joint Mission and joint analysis
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Aid/Eff.Progress Aid effectiveness agenda has undergone three rounds of survey in 2006, 2008, and 2011, to assess progress.
Ghana participated in these three rounds of survey and the 2011 survey was completed in March 2011.
Conclusions from these three surveys, showed very mixed results. No major advancements in progress towards achieving the 2010 targets.
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AchievementsDevelopment of two separate NDFs and growth strategies: the GPRS II (2006‐2009) and GSGDA (2010‐2013).The GSGDA provides the basis for the preparation of
development plans and budgets for the various sectors and district levels throughout the country. Various sectors and sub‐national strategies are linked to
this NDF.All the sectors and districts align their plans and
development budgets, to the NDF.These annual budgets are submitted to the MoFEP for resource allocation and incorporation into the national government budget. The national budget is then subjected to review and subsequent approval by Parliament through the passage of Appropriations Bill.
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Achievements cont.
Budget formulation process has been opened up since 2006 to encourage the general public to submit inputs for the preparation of Economic Policy and Budget Statement. Demonstrated leadership and developed Aid Policy and
aid mechanism preference towards achieving MDGs by 2015 and sustaining its transition to a MIC; to serve as a strong foundation for dialogue between GoG and DPs; recognizes need for GoG to improve its structures and systems to ensure effective coordination and delivery of aid; emphasizes DP collaboration rather than fragmentation.
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Achievements cont.
With these progress made, Ghana has met the first agreed target under the Aid /EFF of having an operational development strategy.
DP PAF tool to measure the extent to which DPs adhere to the common agreed principles for aid delivery has been developed and is being implemented.
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Achievements cont.• since 2008, the CG process has been expanded to include Civil Society representatives.
• To improve financial accountability, financial legislations such as the Financial Administration Act (Act 654); the Internal Audit Act (Act 658) and the Public Procurement Act (Act 663) have been enacted.
• Since 2009 the Parliamentary Public Accounts Committee meetings on audit findings are held publically to improve accountability.
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ChallengesInadequate DP interest in using Ghana’s country systems.substantial proportion of ODA inflows into Ghana,
continue to fall outside the budget and PFM framework,makes monitoring of the financial inflows difficult
and impacts negatively on achievement of development results,undermines capacity to manage own development
agenda & sustainability of development programs,
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Challenges Cont.Persisting disconnect between DP capitals and field
offices in Ghana.
Persisting fragmentation and unpredictability particularly with project aid.
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Q1‐AID CATALYSING OTHER FORMS OF DEV. FINANCE
With recent rebasing in Ghana & LMIC status, with some oil and gas find, as well as aftermath of financial and economic crises and fiscal consolidation in some donor countries, increased ODA may be limited.
Current tax effort’ below 15% of GDP, & Govt. working at strengthening its tax administration efforts.
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Q1‐AID CATALYSING OTHER FORMS OF DEV. FINANCE CONT.
GoGs financial and technical support needs, remain enormous & far beyond the resources available internally or directly from ODA.
Traditional aid institutions, may leverage ODA and catalyze huge pools of internationally mobile private funds towards facilitation of private investment as risk sharing and direct support for improvements in investment enabling environment. 16
Q1‐AID CATALYSING OTHER FORMS OF DEV. FINANCE CONT.
Rapid aid exit or unstructured disengagement by the DPs in response to Ghana’s attainment of MIC status will cause economic and social stresses, particularly in the food production, infrastructure, education and health which are all highly dependent on donor support. Only a phased, jointly negotiated and
rationalized and gradual, aid exit may be considered. 17
Q2‐ AID COMMUNITY IMPROVEMENT OF QUALITY OF AID DISBURSED
How can the aid community improve on the quality of aid disbursed.through the use of Country Systems as this will help build stronger and more effective partnerships as well as deepen ownership of our development agenda. minimize off‐budget disbursements on stand alone projects that do not feature in the Government’s budget functional classification or the Chart of Accounts. avoid such project funding expenditures, that may not easily be captured in the Government’s financial accounting and reporting system.
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Q2‐ AID COMMUNITY IMPROVEMENT OF QUALITY OF AID DISBURSED CONT.
Regarding OWNERSHIP,substantial progress made in assuming ownership by
developing/refining national development strategies and plans, and broadening the participation of non‐government stakeholders to achieve more inclusive ownership. continued to achieve progress in reforming areas that
lend transparency to the use of country systems like procurement, public financial management, and auditing systems
therefore expects that ODA flows should begin to be fully aligned with overall national priorities as in the NDF
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Q2‐ AID COMMUNITY IMPROVEMENT OF QUALITY OF AID DISBURSED CONT.
On improving on aid allocation and aid coordination:
more attention to be focused on the systems and processes leading to the spending, i.e. the national budget.
To be able to allocate and coordinate funds efficiently there is need for accurate information on aid flows in the budget cycle as follows:
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Q2‐ AID COMMUNITY IMPROVEMENT OF QUALITY OF AID DISBURSED CONT.
(i) Programme and project aid should be integrated into spending agencies’ strategic planning and budget submissions
(ii) intended use of aid, reported in budget documentation,
(iii) included in the revenue and appropriations approved by parliament,
(iv)disbursed into the government’s main revenue funds and managed through government systems
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Q2‐ AID COMMUNITY IMPROVEMENT OF QUALITY OF AID DISBURSED cont.
(v) recorded and accounted for in the government’s accounting system, as per the government’s classification system,(vi) audited by the government’s auditing system(vii) included in Government’s ex post financial reports.
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Q2‐ AID COMMUNITY IMPROVEMENT OF QUALITY OF AID DISBURSED cont.integration at the higher level—planning, budgeting
and parliamentary approval—call for donors to make clear aid commitments in advance, communicate commitments timely, and disburse funds predictably.
This allows for accurate picture possible of available development resources—and increases chances of producing a realistic development budget that coheres with development policy and ensures optimization of development effectiveness.
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Q2‐ AID COMMUNITY IMPROVEMENT OF QUALITY OF AID DISBURSED cont.
At budget execution levels—integration into treasury, accounting, auditing mechanisms—would require donors to exercise confidence and trust, in the government’s fiduciary controls.
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Q3‐ LESSONS OF SSC &CONTRIBUTION TO AID EFFECTIVNESS
How can lessons from South‐South cooperation contribute towards greater aid effectiveness?The size of SSC is not fully known but b/n China, India, Saudi Arabia and Venezuela, Brazil, South Africa and Turkey, together some data sighted puts it at about 10% of all ODA.The growing number of new partners from the South, may have potential to facilitate process of economic transformation in the developing countries and therefore leading to aid and development effectiveness.
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LESSONS OF SSC & CONTRIBUTION TO AID EFFECTIVNESS cont.
However aid from the emerging countries, in particular China, has been a target of criticism, as to its effectiveness on:(i) level of flexibility, (ii) the content of aid programmes, (iii) the lack of use of the recipient‐ country’s procedures and technical capacities, (iv) the unsustainable exploitation of natural resources, (v) the issue of tied aid and risk of indebtedness of recipient countries.
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Q 3‐LESSONS OF SSC &CONTRIBUTION TO AID EFFECTIVNESS cont.
Nevertheless despite the progress of SSC, the traditional donors are and will remain for many years to come, the main providers of aid to the developing countries.Consequently, SSC may not be seen as a substitute for cooperation with traditional partners from the North, but rather as a complement to such cooperation. North‐South and SSC could be combined, and
developed into a form of triangular cooperation, for increased and enriched aid and development effectiveness. 27
INSTITUTIONAL MECHANISMS TO IMPROVE ON THE QUALITY OF AID?
(i) A strong Central Finance Agency i.e. Ministry of Finance ‐ whose functions are central to the management of public finances and include upstream planning and budgeting, fiscal planning, down stream budget execution, cash management and financial reporting and treasury management.(ii) capable of rallying DPs and exercises leadership in determination of allocative efficiency and use of aid and other resources.(iii) Capable of aligning national strategies , to sectors and to the Budget.(iv) capable of building blocks for strategies, indicators and a Monitoring and Evaluation system. 28
INSTITUTIONAL MECHANISMS TO IMPROVE ON THE QUALITY OF AID? Cont.(v) A well coordinated and strong integrated Financial Management System which links PFM and the service delivery.
(vi)A strong Public Accountability system‐ including strong internal and external audit institution.
(Vii) Enhanced Parliamentary oversight and a strong Civil Society participation in matters related to allocation of national resources.
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