Sectoral approach
Aid effectiveness is a target for donors but there can be divergences in the means to achieving it. The decline in the project-approach, considered too ineffective (low country-ownership, over-fragmented projects, high management costs…) has been accompanied by an increasingly sectoral approach which today tends to be the new beacon for development aid implementation. A sectoral approach finances a country’s public policy in a given sector, particularly in social sectors such as health and education. The adoption of the Millennium Development Goals led donors to finance recurrent expenses for the first time (salaries and operating expenses). Sectoral aid made this possible.
Issues for a Sectoral Approach
Health and education are probably the two sectors where aid harmonisation policies have been the most successful, particularly in Least Developed Countries (LDCs) which are highly dependent on external aid. In some countries Ministries of health and their partners have, through Sector Wide Approaches (SWAps), set up alignment policies and procedures with varying levels of harmonisation in financing, implementing and monitoring health programmes. At the same time, an increasing concern for foreseeability and sustainability in international aid, clearly seen in the health sector where long term financing of recurrent expenses is required, has led donors to make the health sector one of the first to benefit from new innovative financing mechanisms. Several countries recently adhered to the French proposal for an airline ticket tax to fund the fight against AIDS, tuberculosis and malaria by creating an international drug purchase facility (UNITAID). The tax came into force on 1 July 2006 and could generate up to 200 million euros annually. The British, with support from France and other countries, also propose to use the IFF mechanism (International Finance Facility) to fund immunization (IFFIm) and raise some 4 billion dollars, to be managed byGAVI, over the next ten years.
A lack of resource absorption capacity is a major handicap in countries where Ministries of finance and health cannot handle scaled up financing. In addition to political commitments on the part of governments, various eligibility criteria are indeed theoretically required in the framework of a sectoral approach: (i) level of stability of the economic framework, (ii) existence of a poverty reduction strategic framework or a national development strategy, (iii) existence of a sectoral policy and implementation capacity, (iv) a public finance management system, (v) a system to evaluate development outcomes and (vi) agreement between donors on harmonisation procedures.
Considerable reforms may be underway but contradictions do exist between the concern for raising aid effectiveness within the framework of a harmonized sectoral policy and the increase in global partnerships whose considerable vertical programme financing is often not entered in the accounts of national budgets and not implemented with the coordination mechanisms in place. UNAIDS, faced with the scaling up of HIV/AIDS financing and programmes, has called on the donor community to comply with “three principles” in an attempt to manage these contradictions: a single concerted action framework, a single coordination authority and a single monitoring and evaluation system. The Global Task Team has also devised harmonisation criteria for UN organizations.
More recently, in September 2006, the main health partners decided to test a mechanism for technical and financial support to some countries in order to enable them to scale up their health programmes and get closer to the Millennium Development Goals.
A harmonised sectoral approach is in line with both international community commitments on aid harmonisation and AFD’s own strategic orientations and provides a sound framework to strengthen health systems. In the case of inefficient governance (particularly in “post-crisis” countries) where a sectoral approach would be premature, periodic health system strengthening programmes are envisaged within the framework of projects.
Support in the design and implementation of sectoral approaches, or strengthening sectoral approaches already in place are, when prerequisites are met, a priority strategy for strengthening health systems and includes targeted support (human resources, financing, medical goods and service supply etc). This type of support aims at strengthening dialogue with governments, strategic piloting in the sector, managing human and financial resources (in an expenditure framework negotiated with the ministry of finance) and improving public expenditure management.
In cases where a harmonised sectoral approach is premature, coordination processes with the State and other donors are still encouraged as well as a mutualisation of means or cofinancing. Authorities are also supported in coherent sectoral policy design fully integrating external contribution.