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Development effectiveness

In the Financing for Development outcomes, governments commit to efforts to enhance the effectiveness of international development cooperation and ODA in particular. The Addis Ababa Action Agenda presents a range of commitments to enhance the quality, impact and effectiveness of international development cooperation, including adherence to agreed development effectiveness principles. 

In this regard, development partners committed to align activities with national priorities, untie aid, promote country ownership, support results orientation and strengthen country systems, use programme-based approaches where appropriate, strengthen partnerships for development, reduce transaction costs, and increase transparency and mutual accountability. They also committed to make development more effective and predictable by providing developing countries with regular and timely indicative information on planned support in the medium term. The Addis Agenda also notes that efforts to pursue effective development cooperation will be addressed primarily in the Development Cooperation Forum (DCF) of the United Nations Economic and Social Council (ECOSOC), while taking into account the efforts of other relevant forums, such as the Global Partnership for Effective Development Cooperation (GPEDC). The data, information and analysis contained below draw on the findings of the latest DCF Global Accountability Survey, conducted since 2008 by UN DESA, in collaboration with UNDP, and of the 2016 Monitoring Reportof the GPEDC.

National development cooperation policies (NDCPs)

As both the 2030 Agenda and the Addis Agenda reflect a broader concept of development cooperation, including diverse modalities and actors, countries are starting to shift from aid policies to a more comprehensive national development cooperation policy approach. Some countries have started to reflect key aspects of the 2030 Agenda for Sustainable Development, such as the importance of all three dimensions of sustainable development, commitments to address inequality, and the universality of the new agenda and its applicability to all countries in their policies.

Country results frameworks

The 2016 GPEDC Monitoring Report, which found that ninety-nine per cent of countries have development strategies at the national and sector levels, noted that 74 per cent of countries have priorities, targets and indicators in a single strategic planning document. At the same time, it found that in the design phase, 85 per cent of new development cooperation interventions draw their objectives from these country-led results frameworks.

Untying of aid

Country ownership is strengthened by untying aid, which removes barriers to open competition for ODA-funded procurement and allows local procurement and strengthening of local economies. The share of tied ODA has continued to decline, from 22 per cent in 2015 to 19 per cent in 2016. Progress is uneven, however. Effectiveness also hinges on untying aid not only formally, but also de facto—for example, by transparently notifying the public of aid offers ex ante. However, such transparency provisions are met inconsistently. Greater efforts should be made to provide relevant information about tenders to potential bidders, in particular domestic bidders. The growing role of blended finance, which often aims to leverage private investment, increases the importance of ensuring that aid is fully untied and thus also effective in supporting private sector development in developing countries.

Tracking allocations for gender equality and women’s empowerment

According to UNDESA’s DCF Global Accountability Study, gender equality and women’s empowerment is promoted in 58 per cent of national development cooperation policies.  The survey outcomes show that 57 per cent of countries include gender-specific targets in their NDCPs.  However, gender-disaggregated expenditures and results are tracked by only 21 per cent of developing country’s development cooperation information systems. 

Transparency and quality of data

Many development actors have made progress in the comprehensiveness of publicly available information on development cooperation, and moderate progress in upgrading reporting practices to make reporting more timely. However, publishing forward-looking information to enable countries’ effective planning and strategic management of diverse development resources remains as a challenge. 

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Development co-operation providers have made important progress in reporting on their development cooperation to the OECD-DAC Creditors’ Reporting System (CRS), including non-DAC members voluntarily reporting to the CRS. The number of providers being assessed on their timeliness, completeness and quality of reporting has increased from 25 in 2014 to 46 in 2016. The overall picture is positive, with 71 per cent of the 46 assessed providers scoring good or excellent in their timeliness, completeness and quality of their reporting.

The OECD also conducts the Survey on Donor’s Forward Spending Plans. An assessment of the timeliness, completeness, accuracy and public disclosure of Forward-Spending information of 42 development partners, including non-DAC members, for their 2015 data revealed significant progress, with two-third of providers scored in the good and excellent categories. However, 11 providers have experienced a decline in the scores since 2013. Completeness and accuracy of the reported aid forecasts were among the key weaknesses of those providers that obtained lower scores.

More than 500 organizations, including donors, NGOs, foundations, development banks and private sector, publish data through the International Aid Transparency Initiative (IATI), a voluntary, multi-stakeholder initiative. IATI data is timely, comprehensive and forward-looking in a format that is machine-readable, comparable and openly accessible.

In 2016, IATI has worked to better meet the needs of humanitarian actors and to this end has worked to establish new guidance on the reporting of humanitarian data. The most recent update to the standard to version 2.02 also includes the ability to publish results and needs assessments and to tag activities to specific SDGs. These upgrades to the standard together with sustained outreach activities by UNDP in its role as coordinator of the IATI Secretariat have also led to an increase in membership numbers in IATI from 66 to 75 members, including four additional UN agencies (UNIDO, UNEP, FAO and WHO). Concerted efforts are being made to increase the use of available data, particularly at country level, and several countries announced plans to integrate IATI data into their Aid Information Management Systems. See IATI website for more.

While acknowledging progress in completeness and timeliness of data from development partners on development cooperation, the latest DCF Accountability Study calls for greater attention and efforts to address the persisting challenges facing developing countries, including uneven accessibility of development cooperation information systems for different stakeholders; difficulties in collecting quality data through existing development cooperation information systems; and lack of financial resources to develop and strengthen development cooperation information systems.

 

Similarly, the GPEDC 2016 monitoring found that while a number of countries have aid or partnership policies in place, progress in enhancing mutual assessments at the country level remains hindered by the lack of inclusiveness and transparency in the review process. While more than two-thirds of countries (69 per cent) that participated in the GPEDC 2016 monitoring conduct joint review of progress towards country-level targets together with their partners, less than half of the countries involve local governments and non-state stakeholders in these assessments or make the results public.

Development cooperation funds that are on-budget and thus subject to parliamentary oversight for governments receiving these funds provide greater clarity on available resources, and help to avoid undermining domestic decision making and accountability procedures with regard to the allocation and use of cooperation funds. The 2016 Global Monitoring Report found that two-thirds of development co-operation finance now recorded in budgets is subject to parliamentary oversight, and a growing number of countries track gender budget allocations – almost twice as many compared to the previous monitoring round. There is room for improvement, however, in budget planning processes and information management systems for public expenditure.

Effectiveness of the United Nations system
The United Nations development system is seeking ways to improve the effectiveness of its development cooperation through the Quadrennial Comprehensive Policy Review (QCPR). Restricted aid earmarked for specific projects contributes to fragmentation, competition and overlap among entities, and discourages United Nations system-wide focus, strategic positioning and coherence. Mobilizing of core funding is one of several issues addressed in the Secretary-General’s proposed Funding Compact, an agreement by Member States and the United Nations development system that aims to reverse highly fragmented funding and improve transparency and accountability. 
In presenting his proposals on repositioning of the United Nations development system to better respond to the 2030 Agenda for Sustainable Development, the Secretary-General has placed the effectiveness of the system’s development cooperation front and center, emphasizing three key principles: reinforcing national ownership; developing country-contextual responses; and ensuring the effective delivery of development results on the ground
Tax exemptions on aid goods and services
Aid-funded projects are often exempt from taxation, through tariffs on imported goods, value-added tax, or income taxes for personnel and enterprises, with a view to ensuring that a greater (or the full) share of aid is allocated towards the targeted project or programme. However, such exemptions run counter to broader efforts to reduce exemptions in tax systems, and to the overall aim of strengthening the mobilization of domestic resources. In response, Members States committed in the Addis Agenda to “consider not requesting tax exemptions on goods and services delivered as government-to-government aid, beginning with renouncing repayments of value-added taxes and import levies.” 
 
 
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This issue has been on the agenda of the United Nations Committee of Experts on International Cooperation in Tax Matters since its first session in 2005. Draft guidelines were produced in 2007. The International Monetary Fund (IMF), Organization for Economic Cooperation and Development (OECD), United Nations and World Bank Group have since continued to raise the issue. While progress was initially slow, it has recently gathered momentum. Following the early example of France, the World Bank, the Inter-American Development Bank and the Asian Development Bank, the Netherlands and Norway started to refrain from asking for tax exemptions. In 2015, Denmark, the Netherlands, Poland and Sweden submitted a joint letter to the European Commission, calling on the European Union to phase out the practice. In 2017, the Addis Tax Initiative decided to examine the issue. The United Nations Tax Committee will also continue its work on this topic in its current session. In February 2018, at the first Global Conference of the Platform for Collaboration on Tax, the Platform’s partners (i.e., the IMF, OECD, United Nations and World Bank Group) noted that they intended to “review current practice, and provide guidance and recommendations, on the tax treatment of ODA funded goods and services”.

South-South cooperation and effectiveness

Southern partners are also enhancing efforts to monitor the quality and effectiveness of their development cooperation. They are designing assessment systems and processes for their projects and programmes, in line with the Nairobi outcome.  For many Governments, this coincides with the institutionalization of coordination mechanisms and legal frameworks, as is the case, for example, with Brazil, China, India, Mexico, Thailand and others. Many of these initiatives correspond with the principles defined in the Nairobi outcome document of the High-level United Nations Conference on South-South Cooperation. Contributions by regional institutions include the Ibero-American General Secretariat’s technical support for quantification and assessment through the Ibero-American Program to Strengthen South-South Cooperation. Various intraregional development cooperation mechanisms and frameworks have also emerged to enhance policy coordination; examples include the Forum on China-Africa Cooperation, the India-Africa Forum Summit, the BRICS Summit, and the IBSA Summit. Read more on the estimates of South-South flows in the section on South-South cooperation.

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