Development effectiveness – a primer for the uninitiated

I promised an embarrassingly long time ago to try to address a series of question which arose from a friend’s question about whether globally the ratio of labour and capital was right or not…at least that’s the way I remember the question.  In any case, in stumbling through the answer, I came up with 6 new questions, and this post is aimed at the second of those – what is development effectiveness?

The Paris Declaration on Aid Effectiveness (2005) is an international agreement which encapsulates the principles of a demand driven rather than supply driven development assistance market. It was followed up in 2008 with the Accra Agenda for Action.

The Paris Declaration encompasses commitments by over 100 Ministers, Heads of Donor Agencies and other senior officials to continue to increase efforts in harmonisation, alignment and managing aid for results with a set of actions and indicators that can be clearly monitored and evaluated.

Joint progress toward enhanced aid effectiveness is addressed through the following:

· Ownership – Developing country partner governments set their own strategies for poverty reduction, improve their institutions and tackle corruption

· Alignment – Donors align their activities to these objectives and use local systems

· Harmonisation – Donor countries coordinate, simplify procedures and share information to avoid duplication and reduce transaction costs through streamlined collaboration

· Results – Developing countries and donors shift focus from inputs to development results and results get measured

· Mutual Accountability – Donors and partners are accountable for development results

Some implications of the above shift are:

· The emergence of common/shared development goals and frameworks, which can be widely communicated to stakeholders and supported by the spread of information technology and internet based social networking

· The introduction of Results-Based Management, shifting the focus of development projects from the traditional inward-looking, input orientation to an outcomes-based approach, supported by increasingly effective monitoring and evaluation tools, data collection and validation processes

· The growing acceptance that development knowledge resides primarily in developing countries, with the resulting changes in the development industry in terms of sourcing technical expertise and role of “counterparts” (increasingly seen rather as project “owners” or “stewards”) in project design and implementation

The provision of aid assistance through Official Development Assistance (ODA) and country-owned development initiatives and programs converge when there is harmonisation and agreement over the expected outcomes of the assistance and how to measure the associated benefits. There is a convergence of aid and development effectiveness measurement around criteria such as:

· Relevance: consistency with a country’s overall development strategy and its development partners’ strategies; the degree to which the project objectives remain valid and pertinent either as originally planned or as subsequently modified owing to changing circumstances within the immediate context and external environment of that project

· Efficacy/effectiveness: the extent to which a project brings about the desired outcomes, starting with the achievement of the project objectives – the greater the focus on this aspect in project design, the better the objectives are defined

· Efficiency: the optimal transformation of inputs into outputs. How well were the project inputs – financial, material and human resources – used? What is the extent to which the project benefits are commensurate with these inputs? This is typically measured using economic and financial rates of return or other measures of cost effectiveness

· Success:

1. Impact: the overall effect which goes beyond the achievement of outputs and immediate objectives and tries to capture the social, economic, environmental and other developmental changes that have taken place as a consequence of the project or projects
2. Sustainability: the durability of positive project results after the termination of the project; the likelihood that the project results will be maintained over the intended project lifetime, taking into consideration factors such as technical soundness, government commitment (including a supportive legal and regulatory framework), socio-political support, economic and financial viability, institutional, organisational and management effectiveness, environmental impact and resilience to exogenous factors
3. Contribution to capacity building or institution building: the extent to which a project enables target groups to be self-reliant and makes it possible for government institutions, the private sector, and civil service organizations to use positive experience with the project in addressing broader development issues

Other important factors used to measure aid effectiveness, where financial assistance is provided as part of a larger development assistance program include:

· Institutional development impact: to what extent did the project contribute to improvements in norms and practices (institutional mechanisms and capacity, policy frameworks, etc.) that enable the country to make more effective use of its human, financial and natural resources?

· Borrower performance: the adequacy of the Borrower’s assumption of ownership and responsibilities during the project, from identification through to operations and fostering stakeholder participation. To what extent does the Borrower establish a basis and criteria for measuring sustainability?

· Lender’s performance: if the Lender is a Development Finance Institution (DFI), then its agenda is much broader than purely financial, and it has an interest in ensuring the quality at entry of the project, and based on its own experience and capacity, to ensure that implementation and operation and management arrangements are sufficient and appropriate for the proposed intervention.

Approaches based on logical frameworks, uncomplicated baselines and clear indicators are a way to ensure that effective monitoring and evaluation of aid effectiveness occurs.