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Cutting the Red Tape

February 21, 2003—Developing countries and international aid donors are poised to embark upon a new campaign to cut the red tape that can ensnare even the best-intentioned efforts to help the poor. Officials from 26 developing nations and representatives from dozens of aid agencies will meet in Rome on February 24 and 25 to decide how to simplify the policies and procedures that guide aid delivery across the world.

The World Bank is working together with other multilateral and bilateral donors and a small group of developing countries to improve the coordination of aid policies and practices. Experience with these early projects has shown that capacity in developing countries can be improved and strengthened quickly when donors better coordinate their activities and harmonize their procedures. Pilot programs have been launched in Jamaica, Ethiopia and Vietnam, and the World Bank expect the Rome forum to conclude with several other countries deciding to initiate harmonization programs.

"Those of us in the development community must take off the national and institutional flags that are often attached to projects merely for good public relations at home," said World Bank President James D. Wolfensohn. "If, as a global donor community, we can get our act together, we will better serve those people in the poor countries who now want to lead their own development efforts."

There are more than 63,000 donor-funded development projects worldwide, each governed by countless demands, guidelines, and procedures designed to protect the project and ensure that aid gets to the poor. However, the demands of producing multiple environmental reports, project audits, and procurement assessments for each donor can overwhelm developing country governments whose resources are usually already stretched thin. A United Nations study found 1,500 projects in Burkina Faso alone, and as many as 850 in Bolivia.

World Bank studies show that a developing country typically deals with 30 aid agencies across a wide range of social sectors. On average, each donor sends at least five missions a year to oversee their projects, placing an enormous strain on the recipient government that can find itself hosting three aid missions a week. Too often, the impact of foreign aid is diluted because it is delivered by multiple high-cost aid boutiques. A vast consultancy industry has sprung up around aid delivery and is worth US$4 billion a year in Africa alone.

"We’re going to have to change decades of past practices," said James Adams, Vice President for Operational Policy at the World Bank. "The Rome meeting offers us the chance to begin doing exactly that. Following the spirit of the Monterrey conference, donors and developing countries need to work more effectively together to remove the bottlenecks in delivering aid. We can achieve that by reviewing our aid policies, procedures and practices and aligning them with a common approach that reduces the burden on the poor countries."

The challenges are daunting and there are too many examples of aid gone wrong. In a forestry project in Vietnam, it took donors 18 months and 150 government workers to purchase five vehicles because of differences among the aid agencies over procurement policies. In Bolivia, five donors backed a survey to measure changes in household poverty, but each required separate financial and technical reporting. The government official assigned to the project found that she spent almost half her time simply dealing with donor requirements than actually undertaking the survey. In Tanzania, health officials found the sheer number of projects, and the accompanying demands to host missions and prepare reports, were simply beyond its administrative capacity.

Some countries working with the World Bank and other aid groups have been able to strengthen their capacity to deal with donor requirements and better assess their own needs. A small number of countries, such as Uganda, have even begun to decline projects that do not fall within their medium-term development plans. However, most developing countries have yet to reach this kind of institutional strength and need the donor community to ease their burdens.

For its part, the World Bank pledges to coordinate more closely with other aid groups; support governments trying to play a stronger leadership role in development; and review, overhaul and adopt practices that align our efforts with the wider donor community.

 




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