Should Multilateral aid have results?

Multilateral resource allocation: best practice approaches (Article – ODI Project Briefings 51, November 2010)

When DFID changes track on development, it is important to notice as DFID is one of the thought leaders among donor agencies. If ODI writes about it, it is important to notice, because ODI is one of the voices DFID is likely to follow. This is why the ODI project briefing “Multilateral resource allocation: best practice approaches for Multilateral resource allocation” is important. This is why the central thesis of the report, that multilateral results are difficult to quantify and we could settle for now for a transparent, quantifiable , auditable system, makes me uncomfortable. It seems an effort to plead for status quo. It outlines a superficially quantified and auditable system, but under the hood the data are subjective and debatable. More importantly, it sidelines the more important issue of results and effectiveness, because “objective measurement is difficult”.

Will this “best practice approach” lock the donors in a transparent system, taking away the pressure to move to better results? Will process and tools drive the donors for the foreseeable future instead of outcomes and results?

Governments have judged their private sector partners on their results and cost efficiency for years in a transparent way. Why would this be impossible for Multilateral Organisations (MO)? Choosing to fund organisations of which it is difficult to measure the results and effectiveness seems not a best practice. Perhaps we could measure the results by assessing the difference without funding? Is there another way? I think so.

The central problem with the thinking expressed in the briefing is the partnership approach, where an organisation is funded because of its institutional setup and not for its results. The funding becomes an entitlement that is not questioned. In a partnership approach, the UN-organisation has a role within the wider UN-system. This “ UN-system” however is a misconception: the UN-ecosystem is not a coherent system. To the contrary, each individual Multilateral Organisation was created by all member states because a certain distinct value, e.g. child care, or health standards, had to be addressed in its own sector, separately from the others. Those values stand on their own, and serve the global public needs only in this sector. In a sectoral approach or results based approach , the UN-organisation has a role within a certain sector (e.g. global public goods in health). You should assess the role of the organisation within this sector, and compare it to the alternatives in the sector. In a sectoral approach you are not expected to compare the performance across multilateral organisations, as there should be only one organisation in the sector fulfilling this role. You should not compare allocations among MOs, because they are in different sectors.

This choice between a partnership approach and a results based approach has important budgetary implications: in a results based approach there will be a funding balance sought among the different actors in the same sector, according to their contribution to the results. In the partnership approach the different UN-agencies will be funded from the UN-budget, and essentially compete with each other for funding. Within a partnership approach it is difficult to measure up which organisation is the most efficient; in a sectoral approach it is clear to most actors what global public good is needed and provided by the multilateral organisation.

For instance in the health sector, WHO is responsible for the global public goods such as the standard health procedures, but will also compete for operations with national governments, NGOs, the World Bank, and other UN-organisations such as UNICEF. Should we fund WHO for its “efficiency of procedures compared to the FAO” or should we fund them for the work they do in the sector?

Most Multilateral agencies have a creative approach to fundraising. While they pay lip-service to the UN-principles on funding, their fundraising is businesslike, and takes the reality of development funding into account. They try to cover all the markets:

  • Core funding is the bedrock of the organisation. This money mostly comes from multilateral budgets. Core budgets are supervised by the boards, and fund the administration, core responsibilities and whatever the board finds fit to approve.
  • Thematic funding gives flexibility within a sector. This money comes mostly from thematic funds from donors.
  • Project money can come from a myriad of donor budgets: multilateral budgets, thematic budgets, geographical budgets. The big money is in this line. A lot of small projects is together a lot of money. As administration is automated, the overhead per project is limited. The proof of this being that all organisations accept nearly all projects offered.

The objective is to maximise funding for the organisation. The board looks mostly into the core budget. Thematic spending is accounted for to the donor group that feeds this fund. Projects are on one by one accounted for. Most boards have no complete picture of what is happening. This gives management a lot of freedom.

The board members meanwhile, have seldom any management experience. The oversight happens mostly by diplomats who first defend the policy positions of their country and not by economists asking for efficient organisational management.

Another “best practice” approach

A results based approach to oversight on the multilateral organisations would start from a sector approach and define the role of the organisation within the sector.

Where the organisation really provides a global public good, the oversight should happen fully by the board. The funding allocation is very much like the funding for a government department in the home country: efficiency is a necessity, bud political priority and needs decide on the level of funding. Professionalisation of the board is necessary.

Where the organisation has a competitive edge for operations, they compete with other actors for funds. The picture is of course more blurred than this: they compete with the program country administration for direct funding through bilateral funds, but on the other hand coöperate with them too. The same happens with NGOs or the civil society.

It is in operations where the big money is. In operations results are measurable and can be compared with the results obtained by the other actors. Operations that can be done directly by other actors should not be single sourced to the multilateral agencies. By abandoning the push to form consortia and cartels in all areas, and stimulate competition instead, value for money would result, just like in all other government spending areas.

Compound indicators for meaningless conclusions

The five lenses approach, although it claims to be auditable, fails to be accountable as it fails to give “best value for money” being the measuring stick for government funding.

The five lenses measure clusters of related indicators in five different areas and bring them together in one evaluation framework. Eliminating competition and results from the framework means that funding will depend the quantification of often crowd-sourced assessments. Crowd sourcing can be useful, but is dangerous in areas where group think tends to occur, with development among government officials being certainly one of these areas.

The congruence with donor’s objectives is the first lens, and difficult to argue with. All donor funding should happen in line with the donor policy. If a donor funds against his own policy, well.

It seems incredible to find in the second lens, development effectiveness, only excuses for NOT measuring effectiveness. The lens is limited to process indicators like MEFF ( rule one of the logical framework: never make your means an objective) or MOPAN (crowd sourcing amongst donor diplomats). It could be seen as an insult by all the MOs who did work hard to get their indicators right and measure them.

What would be the outcome of the measurements in the third lens “role in the international architecture”? How do you distill an auditable number from these measures? It is remarkable how the role of “global public good provider” (appropriateness of the mandate) is mixed with the competitive role in the marked “alignment of activities with comparative advantage”. You would expect the board (with the donor included, and having a veto over all the decisions) to assure that the activities are aligned with the core mandate (I could expand on this one). These core activities should be well done, but without comparative advantage, because they fulfil a natural monopoly for the global public good. Comparative advantage is only relevant in sectors where there is competition, and not in the area where the organisation has a natural monopoly. Where there is comparative advantage, competition should play, and the funding should probably not be multilateral.

The fourth lens is also rather strange, as the potential for improvement is a reward for past bad management. Normally you would think past behaviour is seen as a proxy for the future. Those who reformed before have little scope for improvement. Moreover, it would also reward the organisations that can easily be instrumentalised by one donor, while the reform dynamic should mostly happen in the oversight bodies.

I am still wondering how scale made it as fifth lens. Indeed, it is more efficient for a donor to write 1 check of 1 billion than to write 1000 checks of a million, but the relationship with results is unclear to me. It is definitely easier to transform a small organisation than a big one. I wonder whether there is any link – all other parameters like professionalism and organisation the same – between size and efficiency. A small organisation with a focused mandate will probably be a lot more efficient than an unfocused sprawling dinosaur. However, a machine like WFP might be more efficient then an amateuristic outfit.

The total absence of the role of the oversight bodies in the document is worrying, and the prominent role given to informal donor gangs is a bad sign for the future of the multilateral system. The 5 lenses, without an assessment of the role in the boards, mean in practice that the donor and board member does not take responsibility for the management imposed on the organisation in the board.

Conclusion

The Multilateral Organisations have gone through important reforms, and some of them are more efficient than ever. Some Multilateral Organisations fulfil a central role in the development of the sector where they provide operations and global public goods. It is a disgrace not to reward them with funding in line with their results.

This entry was posted in development and tagged , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *