Review of the Development Co-operation Policies and Programmes of Portugal

See also Portugal's Aid-at-a-Glance

Overall framework and new orientations

The challenge of implementing the poverty reduction agenda

Portuguese development co-operation has undergone several institutional and policy changes since the last Peer Review. The Portuguese Institute for Development Support (IPAD) was created in 2003 as the central planning, supervisory and co-ordinating body for Portuguese aid. As part of the Ministry of Foreign Affairs, IPAD co-ordinates Portugal’s aid programme, which involves multiple actors including over 15 different ministries, 308 municipal governments as well as universities and other public institutions. In November 2005, the Council of Ministers approved the new strategy for development co-operation entitled “A strategic vision for Portuguese co-operation”. The strategy cites commitment to the Millennium Development Goals (MDGs) as one of the five guiding principles of Portuguese development co-operation while maintaining the geographic focus on the Portuguese speaking countries of Africa (“the PALOPs”) and Timor Leste, in south-east Asia.

The new strategy is a welcome step forward. However, Portugal faces significant implementation challenges to reorient its programme accordingly. Commitments to increase official development assistance (ODA) in line with the MDGs and strengthen the poverty focus of the programme will require a strategic review of current ODA allocations. Operationalising these commitments will also require specific steps to reinforce the integration of poverty reduction throughout Portugal’s development programme and mobilise key actors around the poverty goals. Given that IPAD requires a cadre of development specialists and considering the fragmentation of Portuguese aid and the reliance on line ministries’ expertise, these issues create significant management, co-ordination and coherence challenges.

Policy and sectoral guidance is needed

Portugal’s sectoral and thematic priorities are linked to applying its stated comparative advantages (e.g. language, culture and similar legal and institutional frameworks) in its priority countries. Priority sectors encompass education, good governance, participation and democracy; sustainable development and the fight against poverty. A clearer integration of the MDGs into these priorities, accompanied by appropriate institutional arrangements and guidelines, is needed to ensure that poverty reduction is the key objective pursued. Sectoral guidelines should be based on needs assessments and be flexible enough to adapt to each country’s situation. They should describe in concrete terms the integration and use of Portuguese co-operation channels and instruments, including multilateral co-operation, with the ultimate objective of more coherent planning and programming around the strategic priorities of Portugal’s aid programme. With time, it will be easier for Portugal to develop performance criteria linked to the relevant planning processes conducted at country level.

Nine of the top ten recipients of Portuguese aid, including five out of six priority countries, are considered to be fragile or conflict-affected states. Portugal has not articulated a global policy on conflict prevention, peace building and fragile states. However it can be commended for sustaining its engagement in its priority countries over the very long term and for making considerable efforts to respond to issues of fragility in Timor Leste. While the new strategy provides some insights into how Portugal should approach fragile states, a more deliberate action-oriented agenda on how to tackle issues of insecurity, violent conflict and state fragility should be elaborated. Such an agenda could be the subject of a dialogue within the Community of Portuguese speaking countries. The DAC "Principles for Good International Engagement in Fragile States" and the lessons learned from piloting the principles could provide useful background material. The DAC Guidelines on Helping Prevent Violent Conflict as well as DAC Guidance on Security System Reform and Good Governance could also be used. Portugal’s experience in Timor Leste would be valuable in this respect.

Portugal’s desire to be an active player in the decision-making processes of multilateral institutions requires a careful mix of financial contributions, quality of representation and positioning on substance. A framework for co-operating with key multilateral agencies, using selectivity criteria to help monitor their performance, could be elaborated. Whenever possible, Portugal is encouraged to work jointly with other donors on this and other issues linked to aid effectiveness.

Fostering public support

Portugal has made some improvements in response to the 2001 DAC Recommendations as concerns the dissemination of development co-operation information. The campaign “Pobreza Zero” which is part of the world-wide alliance “Global Call for Action Against Poverty”, received great support in Portugal and coverage of the PALOPs is prominent in the media. A welcome feature of Portugal’s new strategy for development co-operation is to make education for development a key priority and to include it in school curricula. Such efforts are necessary as the public debate on development co-operation in Portugal and public knowledge of development results are limited. A communication strategy, to be implemented by IPAD with adequate funding, would foster greater understanding of, and public support for, development co-operation.

Recommendations

• Building on the parameters of the new strategy for development co operation, Portugal should develop and implement a multi year, results based action plan and adjust its policies and practices to reflect the poverty focus throughout its development programme. It should adopt a systematic and consistent approach to poverty reduction based on poverty needs assessments and integrating the gender equality dimension.
• Portugal is encouraged to develop sectoral guidelines based on needs assessments. These guidelines should be flexible enough to adapt to each country situation.
• Portugal should prepare a multilateral strategy based on specific allocation criteria. The strategy should identify priority issues of concern to Portugal and be linked to the bilateral aid programme.
• Linking Portuguese experience in immediate post conflict transition periods with other experiences in fragile states could provide helpful lessons. A global policy on fragile states supported by policy and operational work specifically devoted to conflict prevention and peace building, could also add considerable value.
• IPAD should elaborate and implement a communication strategy to foster greater understanding of, and public support for, development co-operation.

Aid volume and distribution

Fulfilling commitments made at international level

The Portuguese government has associated itself with the European Union (EU)’s collective undertaking to attain a 0.33% ODA/gross national income (GNI) target in 2006, 0.51% by 2010 and 0.7% by 2015. The preliminary report on Portugal’s ODA for 2005 gives an ODA/GNI of 0.21% (USD 367 million). Meeting the ODA level of 0.33% of GNI by 2006, as agreed at the Barcelona Summit in the context of the Monterrey Conference, appears unlikely at this stage. At the end of 2005, the government’s budget deficit exceeded 6% of gross domestic product (GDP). While it is expected to narrow over 2006-07 and real GDP growth will gain momentum, the Portuguese economy is nevertheless likely to lag behind average growth in the euro area.

The government intends to make a serious effort to reach the target of 0.51% by 2010. This commitment is welcome given Portugal’s overall tight fiscal situation and the need to balance the national budget in a context of economic difficulties. In the light of actions taken by most DAC members to reconsider and increase their ODA commitments and targets, a higher level of ODA/GNI would be consistent with international trends and with the poverty reduction and other development objectives which Portugal has set for itself.

Aid allocation may need to be reviewed in the light of the new strategy

Portugal concentrates on a handful of very poor countries, with a high proportion of bilateral ODA going to sub-Saharan Africa. Of the top ten recipients of Portuguese bilateral aid in 2003-04, eight were least developed countries (LDCs). In terms of aid modalities, debt relief and technical co-operation (TC) dominate Portuguese co-operation, with TC representing approximately 32% of total gross disbursements on average between 2000 and 2004. By contrast, projects and programme aid represented only 2% of gross bilateral disbursements, compared to 16% for the Development Assistance Committee (DAC) members in 2004.

Assistance to basic social infrastructure and services (BSS) was not a strategic choice of Portuguese co-operation between 1999 and 2004. Support to BSS fluctuated between 2.5% and 2.8% during that period (compared to 4.2% in 1990). Activities in key cross-cutting areas for poverty reduction, such as gender equality, are not recorded in Portugal’s statistical returns to the DAC, and there are no policy guidelines on the integration of gender in development. By contrast, allocations to governance-related projects show the relative weight given to this priority topic, with average gross disbursements representing USD 37 million or 20% of bilateral disbursements (discounting debt forgiveness in 2004), a considerable increase compared to levels recorded throughout the 1990s. Aid to and through non-governmental organisations (NGOs) has been negligible since the 1990s.

Education absorbs a major share of technical co-operation in the form of imputed student costs and scholarships. In 2003, imputed student costs represented 32% of TC disbursements and scholarships 5%. Bringing foreign students to Portugal to study is costly in absolute terms and the opportunity costs in terms of developmental gains foregone are high. Considering Portugal’s partner countries’ needs in education at all levels, the questionable development benefits of scholarships and the well documented negative effect of brain drain on poor countries’ development, the Portuguese authorities should carefully reflect on how education can be addressed from a systemic and development-oriented perspective. Analysing needs in the education systems of the priority countries and addressing them in the context of national education strategies would be important steps which Portugal should take in collaboration with the governments and donors concerned.

Recommendations

• Portugal needs to scale up its ODA to implement its MDG commitments by 2010. This will require transfers of new money to its partner countries. An ODA growth implementation plan with a specific time-frame should be elaborated, focusing on resource mobilisation and allocation to activities that have a clear poverty orientation.
• Portugal should review sectoral aid allocations and choice of modalities with a view to strengthening the poverty focus and impact of its development co-operation programme. It should make a special effort to clearly integrate a gender dimension and avoid supply-driven approaches.
• Portugal should carefully consider the risks inherent in bringing students from partner countries to study in Portugal in terms of brain drain versus development gains. It should broaden its approach to education, linking it more closely to the objective of poverty reduction, building institutional capacity at all levels.

Promoting policy coherence

High level commitment is needed

Portugal should endorse policy coherence for development as a government objective in the context of the action plan linked to the new strategy for development co-operation. A high level communication linking policy coherence and poverty reduction could be issued. The role that institutions like the Council of Ministers for Co-operation and/or IPAD might play should also be clarified. The Institute should be strengthened in terms of analytical capacity and human resources with a view to substantially improving policy coherence and line ministries should commit to supporting IPAD’s enhanced functions in this regard.

Addressing the concerns of poor countries

Portugal complies with the 2001 DAC Recommendation on Untying ODA to LDCs and can be commended for having joined the recent consensus to eliminate the coverage thresholds of the Recommendation. This move is unlikely to result in a large increase in untying of Portuguese aid, however, as a significant proportion is disbursed in the form of TC, which is outside the scope of the Recommendation. While Portugal’s efforts to follow DAC Good Procurement Practices for ODA in respect of local procurement is acknowledged, priority should be given to further untying TC and to ensuring that future disbursements via the new financial institution for private sector support will not be tied.

Portugal is one of a small number of DAC members hesitant to broaden the DAC Recommendation on Untying to include only other low income countries (OLICs). A number of progress reports on the implementation of the Recommendation show that since 2001, the volume of ODA to LDCs has increased significantly, as has the share of total ODA to LDCs. These developments suggest that extending the Recommendation to OLICs is unlikely to result in aid diversion to countries or projects not currently covered. While burden-sharing is important to make further progress on untying, Portugal is encouraged to join DAC efforts to move the untying agenda forward.

Portugal participates in and is bound by EU policies. With increased expertise it could play a greater advocacy role on behalf of its priority countries to ensure that issues of concern to them receive adequate attention in Brussels.

Recommendations

• Portugal is encouraged to endorse policy coherence for development at the highest political level and to clarify the role that the Council of Ministers for Co operation might play to promote it across government ministries. This would provide a solid foundation for efforts aimed at ensuring that the concerns of partner countries are taken into account in the formulation of development co operation and other national policies.
• Portugal is encouraged to further untie its aid and to ensure that disbursements via the new financial institution for private sector support will not be tied.
• Portugal could consider developing its capacity to advocate within the EU on behalf of its partner countries.

Aid management and implementation

Adopting multi-year programming

To co-ordinate the various entities involved in Portugal’s development co-operation, IPAD set up a planning system that centralises and processes the financial information provided by all public entities and private bodies. The system reconciles Portugal’s policy orientations with the triennial country programming cycle leading to the elaboration of country-specific indicative co-operation programmes (ICPs) which constitute the strategic document for Portuguese co-operation in each priority country. ICPs are prepared every three years by IPAD in collaboration with embassy staff. Specific projects for each priority country are identified and entered into annual co-operation plans which are negotiated yearly at different levels within the Portuguese administration.

The planning system has improved the transparency of the financial process and provides a consolidated, though still incomplete, view of financial commitments. However, it is not optimal for partner countries nor for other actors within Portuguese development co-operation as it does not facilitate longer term commitments. Secondly, the system concentrates on inputs only and is generally not adapted to the requirements of the aid effectiveness agenda calling for harmonised donor practices, aid predictability and attention to results. One particular practical constraint is that all projects not completed in the first year have to be re-authorised by the Ministry of Finance following detailed discussions. Thirdly, despite the fact that IPAD takes the lead in the formal country planning process, a multiplicity of less formal processes bring a wide array of actors from line ministries in Portugal into direct contact with their counterparts in the partner country in a way that leads to fragmented programme development. Finally, the process generates high administrative and managerial costs at the expense of strategic, monitoring and other field related activities.

While IPAD is commended for the considerable efforts it has already made to strengthen the planning and programming of the Portuguese aid system, the government is strongly encouraged to adopt a multi-year programming framework and to engage in methodological innovations that should result in a better linkage between development objectives, inputs, outputs and results. Additionally, the value added derived from the involvement of line ministries in planning and programming should be weighed against the advantages of bringing all planning and programming activities together under IPAD.

Increasing IPAD’s technical development co-operation expertise

IPAD manages Portugal’s development co-operation programme with a staff of 169. The Institute is not represented at country level and few staff combines the field experience and technical development background necessary to deal with the complex challenges facing Portugal’s development co-operation programme. To increase the effectiveness of co-ordination, management and oversight of aid interventions and to consolidate a more strategic view, IPAD needs to shift from an administrative approach towards a more strategic and development co-operation-oriented culture with appropriate technical development expertise. This requirement is evident at headquarters but also at country level, where the shortage of development co-operation personnel is an impediment to the effective monitoring of Portuguese interventions. A strong role for senior advisors in priority countries would help to resolve this as well as encourage synergies between the different strands of work carried out by the various actors of Portuguese co-operation. It would also contribute to institutionalising the dialogue with other donors, including in the context of the implementation of the aid effectiveness agenda.

Fostering a culture of results

The creation of an evaluation division within IPAD and the elaboration of an evaluation strategy and action programme are welcome initiatives since the last peer review. The institutional location of the division, though, limits the development of a systematic and strategic approach to the preparation of the evaluation programme as well as feedback and follow up phases. Finding capable and independent Portuguese speaking evaluators and dealing with administrative obstacles to attracting international evaluators still present difficulties. Furthermore, evaluation results still need to shape policy making and programming choices. As the co-ordination function of the Inter-Ministerial Commission for Co-operation (CIC) is strengthened, it may be desirable for this body to have a role in the formulation of the evaluation work plan and in assessing the resources (staff and budget) needed to implement an effective evaluation programme across the entire Portuguese development co-operation system. It would also be important to strengthen capacity to undertake evaluations at field level.

Reaching out to NGOs

Non-governmental organisations (NGOs) play a marginal role in Portuguese development co-operation despite recent steps to involve them more. The Portuguese government should consider broadening its dialogue with NGOs to include systematic consultations on country programming, ways of achieving the MDGs in the context of increased ODA and the aid effectiveness agenda. Portuguese NGOs might also be encouraged to work more with local NGOs in Portugal’s priority countries as a means of strengthening the capacity of civil society in partner countries.

Progressing on the aid effectiveness agenda

Portugal signed the 2005 Paris Declaration on Aid Effectiveness and participates in international debates regarding the monitoring of its implementation. Consequently, the current Portuguese Action Plan on Harmonisation and Alignment which precedes the Paris Declaration, needs to be updated. At a minimum the plan could specify the time frame for achieving its objectives and identify the responsibilities of the public administration entities involved in development co-operation.

The new strategy for Portuguese co-operation calls for strengthening political and strategic control over development co-operation using the CIC. It appears that the Commission has not functioned well enough as an institutionalised mechanism for co-ordinating development co-operation policy. Meetings have essentially taken place on an ad hoc basis and have not focused on issues of a strategic nature. The Portuguese authorities are encouraged to reflect on the most effective way to set up a systematic and formalised framework for inter-ministerial exchanges going beyond information sharing and to give IPAD sufficient resources to support the CIC.

At partner country level, Portugal faces the challenge of developing a common vision and operational framework for collaborating with other donors. Portuguese embassies are not sufficiently empowered with resources and authority to make decisions closer to field realities and to collaborate more actively with other donors, including in the context of the aid effectiveness agenda. As it stands now, Portuguese co- operation is aligned with the national poverty reduction strategies and/or development plans of its six priority countries and is mainly project-based. Portugal’s participation in sector and budget support is constrained by its budget planning and programming process and limited aid management presence in the field. Real progress in reorienting Portugal’s development co-operation in line with the new strategy ultimately depends on its ability to decentralise some decision-making authority and human resources to the country level; increase the predictability of aid disbursements and adopt new aid delivery mechanisms as appropriate. A comprehensive approach to monitoring, evaluating and managing for results also needs to be developed.

Developing capacities locally and fostering ownership

Portugal uses language teaching and training as key instruments for building institutional and human capacities in its priority countries. It makes considerable efforts to train teachers in order to expand the teaching, in Portuguese, of the various disciplines at all stages of the education cycle, from primary school through higher university. While language is an important tool for identity building within society, as is the case in Timor Leste, the objective of language proficiency may be eclipsing broader capacity objectives, for example in the policy and enabling environment. Sustainability issues (e.g. recurrent costs, local involvement and ownership, handover or exit strategies) should be addressed and systematic monitoring and evaluation ensured. Focusing efforts on upgrading the language skills of individuals without tackling the weakness of the organisations and systems in which they work also can undermine local capacity or, at best, results in minimal impact. In this sense, language should be seen as an instrument for fostering development.

Portugal should take a close look at its approach to capacity development and assess the long term impact and value for money of current interventions. A strategic approach towards upgrading key public institutions, and working collaboratively with other donors and partner governments to assess sector-wide needs and design appropriate capacity development programmes to address them, is encouraged. Such programmes should incorporate mechanisms to measure the development impact of capacity and institution building efforts. The Portuguese authorities should also concern themselves with retaining and building on existing capacities and make use of the partner country diaspora to the extent possible.

Recommendations

• As is called for in the aid effectiveness agenda, Portugal should adopt multi year programming to increase aid predictability for partner countries and Portuguese implementing agents.
• To increase aid effectiveness, IPAD should be given overall control of the bilateral aid budget. To reduce transaction costs, it should also have the authority to manage the annual carry forward of unspent funds.
• The Portuguese authorities should delegate greater authority to the embassies and strengthen them with additional human resources. They should experiment with sector wide and programme approaches as well as forms of delegated partnership, working jointly with other donors whenever possible.
• IPAD should shift from an administrative to a more strategic and development-oriented culture. This means acquiring additional technical development expertise and expanding training activities to cover substantive development-related themes.
• Portugal should continue to strengthen its evaluation culture across the board, building on progress already achieved within IPAD’s Evaluation Division as well as targeting line ministries.
• The Portuguese authorities should facilitate constructive dialogue with civil society organisations extending beyond the funding relationship to allow for a sharing of experience in areas of mutual interest.
• Language instruction is a necessary but not a sufficient condition for strengthening human and institutional capacities. The Portuguese authorities are encouraged to adopt a more strategic approach to the use of technical co-operation for capacity and institution building, based on an assessment of needs in the sectors in which they are most active and working jointly with other donors to the extent feasible.

Humanitarian aid

Portugal endorsed the “Principles and Good Practice of Humanitarian Donorship” (GHD) in 2006 but an overall strategy for its humanitarian aid still needs to be put in place. At present, Portuguese humanitarian aid is provided chiefly in kind or via civil society organisations. For some emergencies contributions are channelled through international NGOs and multilateral organisations. Portugal’s humanitarian response operates largely on a case-by-case basis, with no stated preference for working with United Nations organisations, nor for contributing to the core costs of the global humanitarian aid system. On average, annual disbursements for emergency and humanitarian aid have been slightly below 2% of ODA.

A small unit within IPAD co-ordinates humanitarian aid and is also responsible for relations with NGOs. There are no technical specialists in humanitarian aid serving in this unit. IPAD is expected to mobilise other government ministries’ contributions to emergency situations as appropriate. Neither humanitarian decisions nor funds are delegated to embassies in the field, however, these may have an advisory role.
Portugal’s new strategy for development co-operation does not suggest a higher profile or larger role for Portugal in humanitarian aid. However, it acknowledges the need for Portugal to play its part in the international effort to provide a timely and adequate humanitarian response. It also notes the significance of recovery and transition to sustainable livelihoods and mentions the importance of co-ordinating humanitarian response among the various actors, notably the United Nations and the European Commission. Also cited are prevention measures and early warning mechanisms.

Recommendations

• Given the vulnerability of its major partner countries to natural and conflict-related emergencies, Portugal should develop a policy for its humanitarian aid to guide its response to future situations. Such policy should ensure consistency with the endorsed “Principles and Good Practice of Humanitarian Donorship” and address the need for investments in disaster preparedness and mitigation.
• Within a growing ODA budget, Portugal should also consider further increasing its allocations to humanitarian aid, including prevention and preparedness, emergency response and recovery and reconstruction in line with GHD and a needs based approach. It should also ensure that staff with appropriate technical expertise and experience are assigned to the organisational unit responsible for humanitarian aid.
  

The full report of the Peer Review of Portugal is forthcoming.

Visit the OECD country website for Portugal.