Debate

Three risks with the financial management of development assistance

The expert group for development assistance analysis (EBA) has mapped which state actors decide on which funds within Swedish development assistance. The survey shows that the size of the development assistance budget varies greatly, sometimes during the same year. It also appears that development assistance is increasingly tied up in multi-year agreements, and that decisions are delegated to a large extent. There are several risks with this type of control, write Sonja Daltung and Jan Pettersson.

The Swedish state's international aid is extensive. The so-called development assistance framework (one percent of the estimated gross national income) this year amounts to just over 43 billion; about as much as the defense budget. Who decides what is financed with these funds?

Several different actors at different levels are involved in deciding on Swedish development assistance, from the Riksdag, government and authorities to actors in partner countries. Sida decides on the majority of development assistance, but a large part is also decided by the government or within the Government Offices. This part is paid in the form of core grants to international organizations, such as development banks and UN specialized agencies, funds and programs. An increasing share of development assistance money is also used to finance activities outside the development assistance budget, through so-called settlements.

The expert group for development assistance analysis (EBA) today publishes a report on which state actors decide on which funds within Swedish development assistance, for what purposes and on what formal grounds. The survey gives rise to a number of reflections and questions. We would like to highlight three areas in particular that there is reason for both EBA and other actors to think more closely about.

Variations in the size of the development assistance budget risk reducing the possibility of conducting long-term development cooperation.

Funds from the development assistance framework that are used in areas of expenditure other than the development assistance budget are called settlements. The largest item in the settlements in recent years has been costs for receiving asylum seekers in Sweden. The size of this item varies both between years and during one and the same year because the budget is revised twice (spring and autumn amendment budget).

The settlements' share of the development assistance framework has grown over time and is now significant. Following the decision on the spring amendment budget on 21 June, the development assistance budget has only 65 per cent of the budgeted development assistance for 2016 (Figure 1). The settlements for costs for refugee reception in Sweden now amount to 28 percent of the development assistance framework, an increase of more than SEK 4,1 billion compared with this year's original budget. Based on the information provided so far by the government, the increased settlements appear to be mainly (around 60%) financed by postponing grants to multilateral organizations, followed by reductions in aid through geographical strategies (aid directly targeting countries and regions) and thematic strategies (aid for special purposes, such as democracy and climate).

Figure 1. Distribution of the development assistance framework in the Budget Bill 2016 and in the current budget.
Figure 1. Distribution of the development assistance framework in the Budget Bill 2016 and in the spring amending budget.

Prior to the decision on the spring amendment budget, the Riksdag's Foreign Affairs Committee stated that “changes in the allocation to the extent proposed by the Government risk impairing the effectiveness of development assistance. It also complicates the Riksdag's work of examining the government's budget as a whole and influencing the direction of policy ”.

What significance do these changes have between and within budget years for the opportunity to pursue long-term development cooperation?

2. Many multi-year agreements risk reducing the government's opportunities for governance.

The opportunity to be able to sign multi-year agreements with partners is a prerequisite for being able to conduct development assistance activities in an efficient manner. Through so-called authorizations, Sida is given permission to enter into such agreements, despite the fact that each budget only extends over one year. Being able to make promises about future financial commitments is also an important instrument for driving Swedish development policy priorities in international organizations and forums. At the same time, these multi-year agreements reduce the possibility of adapting the budget to unforeseen events in the rest of the world, as does the government's ability to redirect aid in the short term.

Swedish development assistance seems to be increasingly tied up in multi-year agreements. How well do today's authorizations interact with the strategies that govern development assistance?

Extensive delegation of decisions can contribute to situational assistance, but at the same time risks making assistance difficult to manage and uncoordinated.

In other policy areas, the authorities' use of financial resources is relatively detailed, but not in development assistance. The Government manages development assistance by stating amounts per purpose, ie how much development assistance is to go to the various partner countries (geographical strategies) and how much is to be used for different priority subject areas (thematic strategies). These strategies in turn state what kind of results are to be sought, but at an overall level, which means that many and different efforts can be considered.

It is a clear conclusion from several of EBA's studies that aid efforts in individual countries must be adapted to the context in the specific country in order to be useful. This presupposes that decisions about these types of initiatives are made close to the places where they are implemented. What a Swedish embassy in a partner country decides on depends on the country context and the focus and size of development assistance. This is natural and should increase the possibilities for well-adapted and substantiated decisions. But it can also be problematic from a governance perspective.

EBA's survey shows that Sida largely delegates decisions. The vast majority of the decisions on Swedish development assistance funds made at Sida and at embassies are made at unit manager level or equivalent (this applies to both the number of decisions and calculated in kronor). What does this mean for the coordination of Swedish development assistance?

The three case studies in the report (Afghanistan, Liberia and Mozambique) show that many different Swedish actors may be active in one and the same partner country, and the impression is that these actors do not always know each other's activities. From both an information and coordination perspective, it appears important that there is a close dialogue between the various actors who in the same partner country decide on the use of Swedish development aid, and that the work in the field is coordinated as much as possible.

Sonja Daltung and Jan Pettersson

The report is available for download at www.eba.se.

 

The Expert Group for Development Aid (EBA) is a state committee that analyzes and evaluates Swedish development assistance. EBA contributes knowledge that can improve development assistance and highlights current issues and important topics that have not received sufficient attention. EBA builds bridges between politicians, researchers and practitioners - areas that do not always talk to each other and EBA's seminars are a natural meeting place for debate on important development assistance issues. The goal is to contribute to good aid that is implemented effectively.

This is a debate article. The author is responsible for analysis and opinions in the text.

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