Donor coordination in anti-corruption

Joint donor principles

The Development Assistance Committee (DAC) is the principal body through which the OECD deals with issues related to co-operation with developing countries. Coordination around anti-corruption issues is done through the Network on Governance (GOVNET) and here the Anti-Corruption Task Team. See the Govnet homepage for anti-corruption.

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The DAC principles | DAC principles background | Donor harmonisation background

The DAC principles for coordination of Anti-Corruption work

The DAC Principles for Donor Action in Anti-Corruption build in elements of the alignment and harmonisation principles (see below) to focus on anticorruption work. They show the linkages needed in anticorruption work within a country, between donor headquarters and country offices, with the private sector, and in building up the global knowledge base on how best to fight corruption.

The DAC principles set a common agenda for government and donors focusing on:

• Government capacity (which are the crucially weak parts of that capacity?)
  
• Donors' own role in the process: ways in which donor interventions might be reducing that capacity, e.g. exemptions on donor imports of goods, lack of transparency, working off budget, relation to their own firms and behaviour of those firms in promoting non corrupt practices

They put the spotlight on donors working together and via each other where possible, so that successful collaboration is not how many donors are around a working group table, but how effectively a small group works, representing a large group. Since donor collaborative work against corruption is at an early stage in many countries, they also provide the opportunity for starting that work on firm principles.

The principles have been revised after testing them with a selection of 10 country programmes to determine whether they are currently being applied in-country, to give examples of best practice and to identify any gaps or improvement to the principles that might be needed to reflect current practice principles.

The overriding emerging conclusion is that the principles / key activities reflect best practice and that their widespread application would enhance effectiveness in combating corruption. The findings of the analysis indicate that:

• National compacts between governments and donors, memoranda of understanding and anticorruption trust funds can be effective ways of strengthening a commitment to combat corruption and provide a framework for monitoring progress (although care needs be taken not to alienate donors that are not participating.)
  
• Donors need to do more to encourage those developing countries that have not yet signed up to international standards to do so (e.g the UNCAC, and other regional Conventions).
  
• Donors need to take more effective action to help those countries that do not have satisfactory national anti-corruption strategies to develop improved strategies that address internationally agreed standards and which are integrated with wider national development programmes.
  
• Many national anti corruption plans fail to address money laundering (e.g implement FATF recommendations.) and this appears to be a gap in coverage that donors could help to repair.
  
• National anti corruption plans often do not address both central and lower tiers of government (provinces, districts); they need to as the latter can typically account for 50% of expenditure.
  
• There is scope for greater involvement of the private sector in the development and implementation of national anti-corruption strategies.
  
• It is recognised that the most effective donor partnerships are those that have identified a donor "champion".
  
• Also, to be fully effective, it is clear that donor forums must have a high-level government counterpart.
  
• Donors recognise the need to do more to address the supply side of corruption, (e.g encouraging their Governments to ratify and apply the OECD Convention on Bribery) although there are a couple of examples of donor innovation in this area.
  
• More donor coordination on country analysis is seen to be desirable. This would reduce financial and other transaction costs in government and among donors.

A need for dissemination of the DAC principles?
An important question that needs to be given attention is whether the DAC principles are well known at the country level? Have country offices/staff been sufficiently briefed on the rationale for, content of and suggested implementation of these international initiatives?

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DAC principles background

In 2003, the DAC Network on Governance (GOVNET) developed a report on Synthesis of lessons learned of donor practices in fighting corruption. The report reviewed both direct and indirect donor approaches in combating corruption, and highlighted that donors' efforts were characterised by limited capacity, competing priorities and piecemeal approaches, which hindered the fight against corruption.

GOVNET members (at a workshop on Lessons Learned in Anti-Corruption in February 2004), agreed that, as practitioners, it would be essential to have 'principles for action' which are meant to guide and help shape approaches rather than dictate action.

In March 2004, the GOVNET agreed on the importance of the "draft principles for donor action in anti-corruption" that had emerged from the lessons learned of donor practices in anti-corruption and informally approved them.

A GOVNET Task Team took work on the draft principles forward and with a selection of 10 country programmes tested whether they are currently being applied in-country, to give examples of best practice and to identify any gaps or improvement to the principles that might be needed to reflect current practice principles.

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Donor harmonisation background

In 2002, following the Millennium Declaration, OECD DAC formed a task force that drew up detailed recommendations for the harmonisations of procedures (the Rome Declaration on Harmonisation - referred to as the Rome declaration). These were endorsed in 2003 by more than 40 bi- and multilateral donors and 28 developing countries.

The purpose of the DAC alignment principles, as set out in the Rome declaration in 2003, is to make aid more relevant, effective and efficient by:

• Donors using recipient country systems wherever possible
  
• Donors working with governments to help develop systems that are internationally acceptable, where these systems are presently inadequate.

The alignment principles apply to all processes involved in the investment cycle: from analytical work (including feasibility studies), through financial management, procurement, reporting, auditing, to monitoring and evaluation.

Supporting the alignment principles is a commitment of donors to harmonise their operations, involving joint studies, joint missions, joint offices and delegated cooperation (that is, working through each other). In this way,donor congestion around governments is reduced and their demands are less contradictory and superfluous.

Success in alignment and harmonisation depends on commitment by individual donor organisations to achieving it. OECD DAC (2003:30) recommends that donors:

• create top-level advocates ("champions") of harmonisation in their organisations
  
• encourage initiatives in partnership and joint working by country offices
  
• decentralise decision-making to country based staff to enhance the potential for locally determined partnership working
  
• manage staff to create the right environment for collaborative and flexible behaviour (in selection, training and turnover of staff, the interpersonal skills required for effective partnerships are emphasised; inappropriate pressures on staff to compete with other donor organisations need to be removed)
  
• set transparent performance standards for themselves for achieving harmonisation
  
• participate in assessments of performance in aid management in order to create transparent incentives to good practice
  
• review the legal framework under which they operate if it is felt to hinder joint working with other donors and governments using common systems

Making harmonisation routine
Effective implementation of donor harmonisation depends on vigorous donor leadership in-country and follow-up from the DAC. Some countries and donors will go faster than others. It is not the principles or the proposals for putting them into action that are inadequate, rather that there are not always obvious and immediate benefits for individual donor organisations. In this sense it is not just about developing joint activities but adapting to a new way of working, or attitude, where harmonisation is a principal consideration by staff.

Harmonisation and politics
Furthermore, some developing country governmental actors do well out of donor congestion (e.g. more workshops and trips abroad), while raising recipient country systems to acceptable levels of transparency and efficiency can be politically difficult. Therefore one can not expect donor harmonisation to have great momentum in every country - even though most donors have signed up to the OECD DAC principles.