Aid management is key to improving aid effectiveness. While the environment in fragile states may seem complex, implementing aid management systems can actually be easy. The example of the Central African Republic shows how strong aid management can help to make sure that aid is properly tracked, aligned with local priorities and delivering the expected results.

1. CENTRAL AFRICAN REPUBLIC | http://dad.minplan-rca.org
Aid management in a fragile,
low capacity context:
the case of CAR
Kersten JAUER
United Nations Development Programme
Page 1

2. CENTRAL AFRICAN REPUBLIC
Contents
A. What makes CAR a fragile state
B. How to adapt the aid management system (DAD) to fragility
C. Why fragile can be easy
D. How aid management drives policy (examples)
Page 2

3. CENTRAL AFRICAN REPUBLIC | http://dad.minplan-rca.org
A. What makes CAR a fragile state
Page 3

4. CENTRAL AFRICAN REPUBLIC
Situated in the heart of Africa
CAR
Indicator Value
Size 1.1 x France
Population 4.2m
GDP per head $398
GDP (‘07) $1.7bn
Aid $317m
HDI 178 of 179
Life expect. 43 years
Literacy 47%
Page 4

5. CENTRAL AFRICAN REPUBLIC
Landlocked in the fragile centre
Chad
Sudan
Nigeria Darfur
CAR
Cameroon South Sudan
Bangui
DRC
Congo Uganda
Gabon
Rebellion or conflict
Page 5

6. CENTRAL AFRICAN REPUBLIC
Political instability since Emperor Bokassa
Jean-Bédel Bokassa
Head of state 1966-1979
Crowned emperor in 1977
Page 6

7. CENTRAL AFRICAN REPUBLIC
No development in more than two decades
One of only two LDCs where HDI is lower, not higher, than in 1985
Human Development Index (HDI) Growth, Base = 100 (1985)
+45%
Burkina Faso, Niger, Guinea-Bissau,
Mali, Mozambique, Chad, Ethiopia
CAR
DRC +30%
+15%
100
-15%
1985 1990 1995 2000 2005
Source: HDR (2007)
Slide 7

8. CENTRAL AFRICAN REPUBLIC
Almost no IT capacity and knowledge
Internet users per 100 inhabitants – almost nowhere lower than in CAR
United Kingdom 79.6
United States 74.0
Thailand 18.0
Pakistan 10.5
India 7.0
Armenia 6.4
Sri Lanka 5.7
Zambia 5.6
Namibia 5.3
Rwanda 3.1
Afghanistan 1.8
Yemen 1.6
Somalia 1.1
Iraq 1.0
CAR 0.4
Source: ITU (2008)
Page 9

9. CENTRAL AFRICAN REPUBLIC
Foreign assistance fell significantly
Aid to Sub-Saharan Africa rose 87% since 1985, but fell 49% for CAR
ODA Growth, Base = 100 (1985)
Sub-Saharan Africa +100%
CAR +80%
+60%
+40%
+20%
100
-20%
-40%
-60%
-80%
1985 1990 1995 2000 2005
Source: OECD (2007), Development Assistance Disbursements (constant USD), All donors
Slide 10

10. CENTRAL AFRICAN REPUBLIC
Hardly any international presence
Late 2006, only 4 int. NGOs, UN/EC there, but no World Bank, IMF, AfDB
Birao
Ndélé
Paoua
Kaga-Bandoro
Bossangoa
Bozoum
Bouar Sibut
Bambari
Bangui
EC France
Slide 11

11. CENTRAL AFRICAN REPUBLIC
Government disconnected from aid effort
Only 25% of development projects were documented in national accounts
160 development
projects entered
in DAD
40 documented in public expenditure
report for 2007
0 50 100 150 200
Page 12

12. CENTRAL AFRICAN REPUBLIC
Rapid progress since 2007
From close to zero to DAD + HIPC completion in little more than 2 years
• No Poverty Reduction
<> PRSP published HIPC completion
point reached
Strategy (PRSP) Int. advocacy Donor Round
campaign Table in BXL
• No effective fundraising
strategy started
• No humanitarian clusters or Hum. clusters Sector and
dev. coordination groups started regional dev.
committees
• No PIP, MTEF, etc. started
Democratic • Knowledge about aid forms World Bank Paris Declaration signed
elections and modalities virtually clears arrears and HIPC decision
inexistent in ministry of point reached DAD project
planning or finance started
2005 2006 2007 2008 2009
Slide 13

13. CENTRAL AFRICAN REPUBLIC
Sharp increase in presence creates volatility
Late 2008, 30 international NGOs, UN, EC, World Bank, IMF, AfDB and more
Birao
Gordil
Ndélé
Kabo Sam Ouandja
Paoua
Bocaranga Kaga-Bandoro
Bossangoa
Bozoum Mbrés
Bouar Obo
Sibut
Bambari JUPEDEC
BANGUI
EC France
Slide 14

14. CENTRAL AFRICAN REPUBLIC
Sharp increase in aid creates volatility
Annual aid gross disbursements by nature (origin of funds)
Development $317m
Humanitarian
$251m $242m 33%
Clearing of debt arrears
$126m
$117m
67%
$81m
$63m
2002 2003 2004 2005 2006 2007 2008
Page 15

15. CENTRAL AFRICAN REPUBLIC | http://dad.minplan-rca.org
B. How to adapt the aid management system to fragility
Page 16

16. CENTRAL AFRICAN REPUBLIC
Achieve more by doing less
Adapting aid management to fragility
5 Design incentives! 1 Have one tool only
• No govt. signature under AWP • Integrate humanitarian and
without data in DAD development aid well (OCHA)
• No portfolio, UNDAF, CAS review • No other PIP or project tracking
not based on DAD data database at national level (3W)
4 Stay relevant Improve contract and tool 2
• Make DAD key tool for PRSP, dev. • Design tight technical
Key steps
coordination groups, dec. makers specifications and create an online
(the case of CAR)
• Make DAD unit a point of entry bug tracking application
• Focus on accessible reporting • Reflect pooled fund contributions
while avoiding double-counting
Go international and learn from standards • Prepare for the future (1st and 2nd
• Do not host locally, and build a website to centralize docs and reports level implementers, transaction
• Be compliant with DAC reporting directives (definitions, types, markers) details)
• Use OECD sector codes but remain compatible with PRSP sectors • Simplify Paris Declaration tracking
3 (work with OECD sector codes)
Page 17

17. CENTRAL AFRICAN REPUBLIC
Implementing an aid management system
Twelve months to design, install, enter data and report on aid for 3 years
Contract with Synergy Prelim. data for Prelim. data for 400
signed 2007 published 1st sem. 09 and
2008 final publ.*
Prelim. data for
2008 and 2007 300
final published*
Core DAD pilot DAD donor profile DAD finals deployed
deployed pilot deployed
Pub. expen- 200
diture review
Projects in DAD
Design of contract Data entry and AWP PRSP ‘08 PRSP ‘09
and detailed technical training starts reviews review review
specifications
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
* Exceeding OECD DAC coverage
Slide 18

18. CENTRAL AFRICAN REPUBLIC | http://dad.minplan-rca.org
C. Why fragile can be easy
Page 19

19. CENTRAL AFRICAN REPUBLIC
The more fragile, the harder
Fragile environments do have generic disadvantages
1 Limited skills
• Limited pool of potential collaborators
(national and international)
• High training needs everywhere
(starting from zero)
4 Poor connectivity Higher turnover 2
• VSAT connection typically Disadvantages • Organisations arrive and leave
512kbps (shared with 30+ users) more quickly
(the case of CAR)
• Working online with DAD directly • Humanitarian projects are 12
difficult to 18 months maximum
• International staff stay 3 to 12
Higher political risk months
• Change of leadership • National staff move frequently
• Change of staff / product
preferences
3
Page 20

20. CENTRAL AFRICAN REPUBLIC
But also: the more fragile, the less complex
Fragile environments can offer advantages to aid management
1 Simpler aid modalities
• Only grants, no loans
• Donors or PIUs implement projects
(DEX not NEX)
• Aid only through official channels
4 Clean slate Smaller group of actors 2
• Few or no legacy systems Advantages • Fewer (resident) bi- / multilaterals
• Chance to build back better (the case of CAR) • Fewer int. and local NGOs
• Easier access to decision makers
Simpler public financial management (realistic approach)
• Internal revenue limited, aid represents very high share of budget
• Public investment plan is function of development projects (DAD)
• Mid-term expenditure plan is function of aid (DAD) plus int. rev.
3
Page 21

21. CENTRAL AFRICAN REPUBLIC
Public financial management shortcut
Internal revenue has little relevance for investment and budget planning
Foreign aid in 2008
$317m
Internal revenue
$105m
0 50 150 250 350
Page 22

22. CENTRAL AFRICAN REPUBLIC
Public financial management (PFM) shortcut
DAD as a tool for PFM Govt. expenditure on int. rev. + bud. support
• Only $1.5m in public $81m, Salaries (51%) $45m, Debt (28%)
investments financed with
internal resources
• 99.9% of public investment Budget support
is financed through
development aid, all of
which documented in DAD $1.5m,
Investment (1%)
• DAD thus simplifies public
investment and mid-term
$6m, Transfers / subsidies
expenditure planning (4%)
$17m, Interest (10%)
$9m, Current costs
(6%)
* Intern. resources plus non-specific budget support, but excluding aid financed projects and programmes,
Source: Budget execution report 2008
Page 23

23. CENTRAL AFRICAN REPUBLIC | http://dad.minplan-rca.org
D. How aid management can drive policy
Page 24

24. CENTRAL AFRICAN REPUBLIC
Track PRSP financing and alignment
Monitor aid alignment to nationals goals and the poverty reduction strategy
Humanitarian
(1) Peace and Poverty reduction
$82m (115%) $71m strategy pillar Needs
security
Development
(2) Governance and $55m (81%) $68m
rule of law
3) Econ. recovery
$265m (31%) $884m
and reconstruction
(4) Human capital $206m (79%) $262m
Budget supp. / debt $59m
without HIPC
* Total value of specific projects / agreements signed Oct. 2007, plus commitments made in Mar. and Sep. 2007 for road construction Baoro - Garam Boulaye,
including for multi-year projects and activities
Page 25

25. CENTRAL AFRICAN REPUBLIC
Measure alignment of aid and poverty
Combine needs indicators and aid data to shape the policy debate
Prefecture Hum Dev Σ Number of poor
1 Bam.-Bangoran 5,6 1,6 7,2 > 20.000
2 Bangui 5,8 53,5 59,2
$7m $10m 16 > 40.000
3 Basse-Kotto 0,0 1,7 1,7
> 80.000
4 Haute-Kotto 5,4 1,0 6,4
5 Haut-Mbomou 0,1 1,0 1,1 $24m
> 120.000
4
6 Kémo 0,0 2,5 2,5
$19m > 180.000
$15m
14
7 Lobaye 0,0 3,9 3,9
15 1
$6m > 320.000
8 Mambéré Kadéï 0,0 1,5 1,5
9 Mbomou 0,0 1,1 1,1 10
$8m $6m 6
10 Nana-Gribizi 12,7 2,1 14,8
$3m $2m $1m $1m
11 Nana-Mambéré 3,5 4,8 8,3 5
12 Ombella-M‘Poko 3,1 2,8 5,8
11 $2m 13
3
8 12 $60m $2m 9
13 Ouaka 0,1 1,9 2,0 7
2
14 Ouham 20,6 3,4 24,0 $5m $4m
15 Ouham-Péndé 16,3 2,3 18,6 Expenditure 2008
16 Sangha-Mbaéré 0,0 4,8 4,8 15
Humanitarian
17 Vakaga 8,9 1,0 9,9
Non-specified 7,4 79,7 87,1
Development
Bangui
Page 26

26. CENTRAL AFRICAN REPUBLIC
Identify new challenges to development...
Analysis of the impact of the global economic crisis on CAR...
Cubic metres Carats
30,000 60,000
Wood (cut) Wood (sawn) Diamonds
25,000 50,000
20,000 40,000
15,000 30,000
10,000 20,000
5,000 10,000
01/07 07/07 01/08 07/08 12/08
Page 27

27. CENTRAL AFRICAN REPUBLIC
... and support development partners’ response
... showed insufficient aid levels in affected diamond/wood prod. regions
Commitments*
< $5m
> $5m
> $15m
> $30m
> $60m
> $120m
Bangui
Diamonds
Woods
* Projects signed in 2007/08
Page 28

28. CENTRAL AFRICAN REPUBLIC
Push for better project management
Poor project management quality Budget delivery profiles compared
• DAD and simple research allows aid 100%
management unit to push Good: at least
50% of budget
implementers spent in first 6
months 75%
• Weak project management capacity
in government and multilateral aid 5 months lost
agencies 50%
• Often, large parts of the budget are
only spent during the 4th quarter 25%
Budget spent
• Severe deficiencies in procurement, Bad: 50% of
budget spent in
recruitment and finance lead to last 2 months
delayed and sub-standard results 0 3 6 9 12
Month
Page 29

29. CENTRAL AFRICAN REPUBLIC
Signal danger ahead to decision makers
Development aid stabilizes while humanitarian aid is likely to decline
Development $317m
Humanitarian
$251m $242m
Clearing of debt arrears
$126m
$117m
$81m
$63m
2002 2003 2004 2005 2006 2007 2008 2009*
* Based on data available as of July 2009
Page 30

30. CENTRAL AFRICAN REPUBLIC
For more information
• http://dad.minplan-rca.org
• Désiré Yassigao | desire.yassigao@minplan-rca.org
Project coordinator | Ministry of Planning
• Kersten Jauer | kersten.jauer@undp.org
Senior Information Manager | UNDP
• Tino Kreutzer | tino.kreutzer@undp.org
Information Manager | UNDP
Supported by the ARCAD project – Building capacity for the implementation of CAR’s poverty reduction strategy
Aid coordination | Public finances | Anti-corruption measures | Administrative reform | Business environment
Page 31