Development Co-operation Review: Main Findings and Recommendations

Sweden's leading role in development co-operation

 

Sweden has remained a leader among Development Assistance Committee (DAC) Member countries in the percentage of gross national product (GNP) devoted to official development assistance (ODA), in spite of a recent economic austerity programme. However, government-wide budget cuts implemented since 1995 have resulted in a decline of total ODA disbursements from a high of 2.0 billion United States dollars (USD) in 1992 to USD 1.7 billion in 1999. As a result, Sweden's ODA/GNP ratio fell from a peak of 1.03% in 1992 to 0.70% in 1999. As part of the austerity measures, the Parliament suspended its previous target for ODA allocations of 1% of GNP, replacing it with a floor of 0.7%. Now that Sweden's economic reforms have had their desired effect, the ODA/GNP ratio is expected to increase again to reach 0.81% in 2003. Sweden's commitment to maintaining a high ODA/GNP ratio, even in challenging economic times, is a commendable example for many other DAC Members.

Since 1962, Sweden's overall goal in development co-operation has been to raise the living standard of the poor. This emphasis is strongly rooted in Sweden's historical perspective of its own economic and social development. Poverty reduction is seen holistically and multi-dimensionally, with six objectives - economic growth, independence, equity, democracy, environmental protection and gender equality - interacting with each other in order to achieve the overarching goal of poverty reduction. The consistency of Swedish aid with this overall goal is demonstrated by the focus of its bilateral ODA, mostly extended as grants, on countries with low levels of per capita income. In particular, about half of Sweden's allocable bilateral ODA is directed to sub-Saharan Africa. In terms of sectoral allocation, Sweden committed 15% of its bilateral ODA to basic social services in 1997-98, compared to the DAC average of 10%. Sweden's multilateral efforts are substantial, both as a major financial contributor and as an active proponent for institutional reform.

Sweden's leadership in policy formulation relating to development co-operation and poverty reduction is well known. Sweden is also actively experimenting with new approaches in its country operations to improve aid effectiveness. For example, in all the main recipient countries, field representation of the Swedish International Development Co-operation Agency (Sida) has been merged with the local embassy to form "integrated embassies." A pilot project has also been launched to increase delegated responsibility to the integrated embassies in Nicaragua, Tanzania and Viet Nam. Although the cost and staffing implications could be substantial, the assessment of the pilots would be of interest to many DAC Members. In another trial exercise, Sida and the Norwegian Agency for Development Co-operation may represent each other in countries where they are not already present. Sweden's initiatives in creating new aid paradigms, such as developing cutting-edge modalities to ensure the accountability of budgetary support while simultaneously handing over control to partner governments to take ownership of their programmes, reflect a laudable risk-taking approach to co-operative relationships. Sweden is also in the forefront of donors trying to carry out sector-wide approaches.

Sweden vigorously applies lessons-learned and regularly re-assesses its modus operandi. Sida has strong and well-developed evaluation functions at both the department and agency levels. It has started a rigorous evaluation of its country programme in Tanzania, which exemplifies Sweden's concern for quality programming. Sida also recently completed a study to evaluate its evaluation process, which examined whether evaluations were useful and used by partners. The results of this study could be of interest to many other donors.

Challenges faced by Sweden

Sweden's bilateral co-operation focuses on some 20 countries governed by long-term strategies and bilateral co-operation agreements. At the same time, Sweden has co-operation activities with approximately 100 other countries. As a result, less than half of Sweden's bilateral ODA is currently provided through specific budgets for the long-term co-operation countries. One explanation for this is the progressive establishment of budget lines for Sida's nine operational areas, which have no geographical limitation. Another reason is the increasing allocation for humanitarian assistance and conflict prevention, which now consume 20% of Sweden's bilateral ODA budget. It also reflects rising pressures for aid in a wider range of countries. Given Sweden's commitment to poverty reduction, the DAC questioned whether this dispersion of resources might not dilute its more targeted efforts in the programme countries and noted that there is an absence of well-developed phase-out or exit strategies. The DAC also questioned how Sida ensures that NGO activities - which receive a third of bilateral ODA - are in accordance with Sweden's policies and priorities.

Sweden strongly supports the development partnership strategy described in Shaping the 21st Century: The Contribution of Development Co-operation. Nevertheless, the DAC noted that neither poverty reduction as an overarching goal nor the international development goals (IDGs) have been specifically incorporated into Sida's strategy documents. Sweden could bring out more explicitly the linkages between the six sub-objectives set by parliament and the overarching poverty reduction goal, particularly at the country level. Examples include linkages with free-standing activities supporting human rights and democratic governance, areas of increasing emphasis in Sida's programming.

Sweden supports endeavours by the international community to define appropriate indicators to assess the achievement of the IDGs. Once defined, Sweden will consider incorporating the indicators in its aid programme to assess results. In the meantime, Sweden is encouraged to increase the focus on the IDGs in its operations, as part of its broader efforts to improve results-based management, and establish an overall monitoring system for cross-cutting issues, including gender equality.

Emerging need for greater policy coherence

In Sweden, the perception of the general public and the private sector of the role of ODA is changing. While public support for development assistance remains strong enough to sustain high aid level, there are some signs of weakening. Opinion surveys show donor fatigue and a lower expectation of ODA as a catalyst in achieving poverty reduction. At the same time, the private sector believes that both Sweden and poor countries would benefit from enhanced trade relations. Therefore, there are some pressures for Sweden's own economic interests to be reflected more in the development co-operation programme. At a broader level, development co-operation is also being placed increasingly within the wide range of competing foreign policy priorities, such as relations with the Baltic Sea region and the Balkans, as well as Sweden's role in the European Union.

These competing interests reflect the acknowledged need for greater coherence among Sweden's different policies and priorities affecting developing countries. In 1995-96, major re-organisations of the MFA and Sida were carried out as part of an effort to bring more coherence to Sweden's external relations. While the objectives have mostly been achieved, the MFA is still faced with some key policy coherence issues, such as the importance of reconciling trade, environment, security, agriculture, migration, and refugee issues with poverty reduction. Efforts are also needed for Sida to complete the merger: the agency intends to integrate activities in the infrastructure sector and research co-operation more fully into its overall systems and at the country level.

Other areas where coherence could be more fully addressed are export credits, debt reduction and the untying of aid. For example, while operations by the Swedish Export Credit Guarantee Board (EKN) on behalf of Sida follow Sida's environmental guidelines, its other operations in developing countries fall under the EKN board's own environmental policy which was established recently. According to some NGOs, the effective implementation of this policy could be challenging. While Sweden's long-term and active involvement in debt relief is well known, it also remains an important creditor through its export credits, with USD 2.6 billion owed by low-income countries in 1999. The extent to which research co-operation and NGO support are earmarked for Swedish entities could also be discussed further.

Compared to several other DAC Members, parliamentarians in Sweden are involved substantially in the details of the nation's development co-operation. As a notable example, the Parliamentary Commission of Inquiry into Swedish Policy for Global Development was recently set up to investigate how coherent policies should be formulated in combating poverty under the new conditions created by globalisation. The Commission is expected to submit a report and comprehensive proposals for revising Swedish policy in October 2001.

Recommendations

Based on these findings, the DAC:

• Strongly endorses Sweden's plan to increase ODA so as to reach 0.81% of GNP in 2003 and encourages it to reinstate the long-standing goal of 1% ODA/GNP within a specified time-frame.
• Urges clarification of the status of long-term co-operation countries and their appropriate share of bilateral ODA. The development of guidelines on sustainability, phase-out and exit strategies of projects and country programming would be beneficial.
• Suggests that Sweden consider, in view of their strong support for the development partnership strategy, reconfirming poverty reduction as its overarching goal.
• Encourages greater attention to the IDGs, improved results-based management and establishment of an overall monitoring system for cross-cutting issues. ODA activities assessed as having no direct or indirect effect on poverty should be reviewed to ensure consistency with the stated goal.
• Supports continued implementation of new and innovative approaches in country operations to improve effectiveness - in particular, the preparation of a plan for expanding the decentralisation and delegation of authority to field offices.
  Encourages stronger mechanisms and developing staff skills relating to policy coherence in the MFA, including linkages between other areas of external relations with poverty reduction.
• Welcomed Sida's intention to integrate activities in the infrastructure sector and research co-operation more fully into the overall system and at the country level.
• Appreciates Sweden's strong support for multilateral institutions and endorses the continuation of such efforts.
  Suggests that Sida pursue appropriate ways to follow-up on the findings and recommendations in its recent study on the usefulness of evaluations.
  

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