Developing Capacities for Effective Aid Management and Coordination (DCEAMC) project supports to improve coordination between the ministries and the National Planning Commission for aid management and setting up a database as a single point of information on aid.
Foreign aid is very important to Nepal and especially now to support the peace process and the country’s recovery from ten years of violent conflict. Aid has made a large contribution to Nepal’s development progress and to it being on track to meet most of the Millennium Development Goals. Nepal received $1.1 billion of official development assistance (ODA) in fiscal year 2010-11. ODA financed 21% of all government expenditure for that year, and over 40% of capital expenditure.
Nepal is a signatory to the Paris Declaration on Aid Effectiveness, 2005. Together with its donors, Nepal has committed to the five Paris principles for more cost-effective aid that makes a greater impact in line with developing countries’ priorities. Nepal was an active participant in the follow-up to the Paris Declaration and has completed two monitoring surveys (2008 and 2011), and one evaluation (2010) on the implementation the Paris principles in Nepal.
The latest survey (2011) found some persisting challenges, including difficulties to operationalize a national development strategy in an unstable political context, donor reluctance to increase use of national management systems for aid delivery, and harmonization efforts which remain focused on a few sectors (education, health, local development), while aid fragmentation has increased.
UNDP launched a new round of support in 2009 in the form of Developing Capacities for Effective Aid Management and Coordination project (2009-2012), in partnership with the Ministry of Finance, to strengthen the Government’s aid management and coordination system. The Developing Capacities for Effective Aid Management and Coordination project helps localise the Paris Principles to make official development assistance produce more results. It will assist the Government to implement the recommendations of the 2007 and 2010 surveys and help establish the mechanisms for involving all main stakeholders in more effectively managing aid.
Previous UNDP support (including the Strengthening Aid Management and National Execution project — 2003–2006) was geared to improving the capacity of the Ministry of Finance to manage and coordinate aid. One of the main lessons learned has been the need to not only work with the Ministry of Finance but also with the other ministries and with the National Planning Commission that are involved in managing and disbursing aid, and also with the donors.
National aid management platform— The scattered information across the systems of different government agencies on aid receipts, budgets, expenditure and impacts has been a major constraint to more effective aid in Nepal. The project has helped overcome this constraint by assisting the Government to set up an online database as a central source of information on aid- an initiative being undertaken in many developing countries in line with the Paris Declaration's call for more transparent and coordinated aid. The project has helped customise a standard software package that enabled Nepal's Aid Management Platform to be installed in the internnational Economic Cooperation Coordination Division (IECCD) of the Ministry of Finance in April 2010, and launched with development partners and pilot line ministries in 2011. The AMP platform has already had a positive impact, allowing for better reflection of aid in the national budget, and as a tool to support donor coordination. The platform will be publicly launched in 2013, in line with Government’s commitment to increased aid transparency. AMP data has also been used to produce a revamped development cooperation report in 2012.
Skills for aid management- Self assessments in 2010 identified the capacity development needs of four of the main ministries (finance, health, education and local development) plus the National Planning Commission that are responsible for managing much of Nepal's foreign aid. These assessments provided the basis for a project supported programme to build the aid management and coordination capacities of over 147 officials from these ministries, on issues such as results-based management, sector-wide approaches (SWAps), negotiation skills, aid effectiveness, and meeting management. In order to address the relatively low level of understanding of aid effectiveness principles at local level, the project will also provide introductory training to local Government officials in 2012.
Coordination mechanism- The project has supported the revamping of the Nepal Portfolio Performance Review (NPPR) mechanism- a forum for discussions between government and donors. The revised NPPR format has been launched in December 2011. It will now allow all donors to participate in the review process that will include new components on mutual accountability and aid effectiveness alongside the existing components on government management systems.
Monitoring implementation of the Paris declaration - UNDP and the Asian Development Bank supported the 2010 evaluation by the government and its development partners of the usefulness of the Paris Declaration. The project also supported the Ministry of Finance to carry out the second (2011) survey on the implementation of the Paris Declaration principles in Nepal- looking at the 12 key indicators of aid effectiveness. This survey found that mixed progress has been made from 2007 with more harmonised aid, more coordinated technical assistance and improved monitoring but with more aid and procurement bypassing government systems. The results of these exercises were informative for the Fourth High Level Forum on Aid Effectiveness in Busan, Korea in November 2011.
Project focus in 2013
- Extend access to the Aid Management Platform to all ministries receiving official development assistance and give civil society and the general public access to the information. Integrate AMP with national budget and financial management systems to improve the tracking of aid funded expenditure. Improve geocoding information on the geographic allocation of aid.
- Extend the capacity development work to other ministries that receive large amounts of foreign aid, and to local level officials.
- Support the Ministry of Finance to monitor the recently agreed aid effectiveness targets as part of the NPPR, to lead dialogue with donors on achieving these targets and to finalise Nepal's new foreign aid policy.