Since the previous review France's aid system has undergone an extensive reform, approved by the Council of Ministers (Conseil des ministres) on 4 February 1998 and designed to simplify and increase the coherence of the institutional system of development assistance, making it more effective and more transparent.
The system has been reshaped around two pillars, the Ministry of Foreign Affairs (MFA) and the Ministry of Economic Affairs, Finance and Industry (MEFI), wherein are now centred the design, management and supervision of French co-operation. "Finance" continues to play a key role.
This reform is a response to the recommendations put forward at the last aid review, which had reached the conclusion that there was a need for better linkage of the different types of aid, consolidation of scattered operational services, more emphasis on the basic social sectors and gender equality -- as part of a more effective strategy for poverty reduction -- and increased partnership with aid recipients.
All the measures that have been taken are a step forward but, as the French authorities themselves acknowledge, the reform has yet to become fully operational.
France ranks third among the 22 Member countries of the Development Assistance Committee (DAC) in terms of the absolute amount of its official development assistance (ODA), which totalled USD 5 742 million in 1998. Calculated as a percentage of gross national product (GNP), France's performance that year put it in first position among the G7 countries with a ratio of 0.40%. Notable as this performance is, French aid declined by 32% in current dollars over the four years to 1998. This corresponds to a very significant reduction in the ODA/GNP ratio, which had reached 0.64% in 1994. However, according to the latest ministerial statements, aid will be maintained at its 1998 level ' although the fact that the French Overseas Territories (TOM) cease to be included in the ODA statistics as from 2000 means that the aid share of French GNP will automatically fall by another 0.06%.
Dismantling of the Ministry of Co-operation
The first step in the reform was to dismantle the Ministry of Co-operation, which had been handling relations with France's former colonies ever since their independence. The latter along with other countries, mostly African, that had been added over the years formed what was known as "le champ" (or "ambit"). The ministry was absorbed by the MFA with effect from 1 January 1999. Development co-operation functions were concentrated within a single unit, the Directorate-General for International Co-operation and Development (DGCID). The former State Secretary for Co-operation became the Minister with responsibility for Co-operation and the Francophonie, placed under the authority of the Minister for Foreign Affairs but with personal authority over the co-operation services.
The Interministerial Committee for International Co-operation and Development (CICID) was set up for the purpose of ensuring cross-ministry co-ordination, a weak point of the former system. It is chaired by the Prime Minister and serviced jointly by the MFA and MEFI. The other ministers concerned by co-operation matters are either members of the CICID or associated with its work. The CICID met for the first time on 28 January 1998, one year after it was established. The interval was used to determine the new priority zone for solidarity (ZSP) and to start reflecting on the broad lines of French aid strategy. A working group appointed by the CICID is to produce an annual evaluation report on the effectiveness of France's international co-operation and development assistance.
The ZSP has been created with the intention of making bilateral aid more selective and focused on the poorest, low-income countries without access to capital markets and where aid can be expected to have a significant impact. The countries initially selected at the first meeting of the CICID in late January 1999 were the former "ambit" countries, to which were added most of the other Sub-Saharan African countries (chiefly English-speaking countries in eastern and southern Africa) for reasons of regional coherence, the Maghreb countries, Lebanon and the Palestinian-administered territories, the Indo-Chinese Peninsula and the Caribbean. The ZSP is flexible, because the 61 countries in it are only potentially eligible for aid, and also because the list is not definitive: the CICID can alter it each year. From an operational standpoint, the ZSP is covered by the French Development Agency (AFD) and the Priority Fund for Solidarity (FSP). The FSP, which is managed by the MFA, finances programmes of institutional co-operation in the "sovereign" spheres (justice, economic administration, rule of law, defence, police) and in the social development sectors. Co-operation with countries not in the ZSP (all Latin America and all Asia except the Indo-Chinese Peninsula) covers cultural, scientific and technical fields and is of a general nature.
The broad pattern of aid will be set by the CICID. Its assignment is to ensure coherence of the geographical and sectoral priorities for the different components of French co-operation, notably through the establishment of annual guidelines for global programming. The co-secretariat of the CICID has laid down preliminary strategic guidelines for official bilateral development assistance in a policy paper sent in September 1999 to the AFD, wherein explicit reference is made to the DAC strategy set forth in Shaping the 21st Century: The Contribution of Development Co-operation. The stated priorities are as follows: i) to strengthen productive investment, in order to lay the foundations for sustainable growth through increased agricultural productivity, financial arrangements to mobilise local savings, and consolidation of essential economic infrastructures; ii) to enhance institutional capacities, so as to consolidate and entrench the rule of law and democracy; iii) to contribute to rational management of natural resources and land use; and iv) to combat poverty by providing improved access for all to basic health care and primary education.
The High Council for International Co-operation (HCCI)
The High Council for International Co-operation (HCCI), created in November 1999, is an entirely new addition to the French institutional landscape. Depending upon the Prime Minister, it aims to involve civil society in France's development assistance policy by providing non-governmental actors with a forum for joint reflection. It has 60 members appointed for a three-year term and is chaired by a front-ranking politician. Its independence, as evidenced by the exclusion of government officials in office, allows it to deal with any question falling within its area of competence and to organise its own work. It should bring civil society into the debate on policy settings and content of development co-operation and assistance. Its opinion will be sought by the authorities, notably prior to the parliamentary debate on the subject scheduled for next March. It will submit an annual report on co-operation to the Prime Minister.
Aid implementation by the French Development Agency (AFD)
Implementation and direct management of co-operation activities are assigned to qualified agents, the AFD having been designated the central operator. As such it is in charge of most project aid in the context of economic and technical co-operation. It has retained its official status as a public corporation of an industrial and commercial character and a specialised financial institution, which gives it a certain degree of autonomy. Its area of competence has been extended, since it now manages the funds that formerly figured in the budget of the MFA and State Secretariat for Co-operation in respect of health and education infrastructures.
Reform of the financial protocols
The financial protocols have also been reformed. The protocols used to provide countries with block soft loans for subsequent allocation among different projects. The 1998 reform requires that each protocol be negotiated and signed in respect of a specified project that has been assessed by experts in the sector concerned. The protocols comply with the Helsinki disciplines prohibiting concessional financing of commercially viable projects. The relevant appropriations have been grouped into a single fund named Réserve Pays Emergents (RPE - Reserve for Emerging Economies), which comes under the heading of ODA but is intended to "enable French firms to acquire strategic export positions". Whereas the former protocols were managed jointly by the MEFI's Treasury Directorate and Directorate for External Economic Relations (DREE), the RPE is managed by DREE only. A list of some fifteen countries eligible to benefit (essentially non-ZSP countries) is drawn up and reviewed each year. The amounts involved are steadily declining. Protocol credit in 1998 totalled FF 2.7 billion (USD 458 million) and was used to finance 26 projects in eight different countries.
The Africa Unit of the Office of the President of the Republic
In the context of the reform the Africa Unit of the Office of the President of the Republic is one institutional survivor. Its competence is confined to Sub-Saharan Africa and it manages, in close conjunction with the government, the inter-head-of-state relations entered into by the French President. The Africa Unit, headed by a counsellor for African affairs, is associated with the processes of cross-ministry co-ordination and decision making for the countries concerned.
The reform of French development assistance is a move in the right direction but is taking some time to become operational and produce results. The changeover is liable to be made more difficult, despite manifest political will, by the fact that budget options remain unfavourable to even the maintenance of existing aid amounts. Also, the DAC is interested in figures, and the latest available are for 1998. Since the reform only entered into effect in 1999, the new policy being introduced will not show through. Any criticisms should therefore be seen as simply confirming the necessity of the changes expected.
The strategic framework still has to be completed
The general framework of aid strategy is evolving. This is evident from the six basic aims defined by the MFA for development co-operation strategy when the reform was launched: i) the exercise of civic rights in democratic institutions, through establishment of the rule of law and enactment of the principles of democracy; ii) the achievement of economic sovereignty, through fundamental consolidation of the economy and increased competitiveness; iii) the reduction of poverty, through the adaptation of education systems to national realities and the modernisation of social welfare systems; iv) urban development and support for decentralised initiatives; v) management of the human environment and natural assets; and vi) promotion of a culture central to evolving societies. The Prime Minister also stressed that aid "must be such as to help the recipient countries to manage their own development" (notion of ownership) and emphasised the need for partnership, a key component of the DAC strategy.
Yet over and above its development assistance policy, France has an international co-operation policy with wider-ranging objectives. As a permanent member of the United Nations Security Council and a member of G7, France wants to exert an influence in the world, where the French language plays an important role. This was made clear by the Co-operation Minister speaking before the National Assembly when he introduced his budget for 1999: "I shall sum up these priorities for international co-operation as four simple and basic aims: to build up our capacities for influence abroad; to identify and anchor elites in our partner countries; to confirm our position in development co-operation; and to associate civil society with our ambition". There are thus two levels of objectives, which poses the problem of their mutual consistency. And the different policy papers so far produced do not constitute a global strategy involving all the actors in the aid system. So it would be desirable for the CICID to prepare a document outlining France's development assistance strategy, which could be put before Parliament at its forthcoming debate. A policy paper of this kind would specify the ranking and linkage of the different objectives, and would be very useful to the public as well as to the system's operators.
The aid system should strengthen its coherence around the fundamental objective of poverty reduction
Poverty reduction has certainly become one of the objectives of aid, but it is not the ultimate goal. This is largely because three aid cultures coexist: that of the MEFI, whose essential concerns are macroeconomic equilibrium and commercial penetration; that of the MFA, centred on cultural outreach and development of the Francophonie; and finally that of AFD and the former co-operation ministry, which reason in terms of developing infrastructure, human resources and institutional capacities. To date there has been no directive to build the aim of poverty reduction into project choice and design, say at the level of geographic area or sector coverage. According to DAC statistics, the basic social sectors still represent only a tiny share of French aid in the case of primary education and basic health care. The very large amounts earmarked for education are allocated to secondary and especially tertiary education, notably via the imputed cost of university studies in France for students from countries on Part I of the DAC list. The changes envisaged here imply an aid shift to the basic social sectors.
The geographical distribution of aid has to be made consistent with the aim of poverty reduction
French bilateral aid is not concentrated on the poorest countries: the least developed countries (LLDCs) received only 22% in 1998 (compared with a DAC average of 24%). The top ten recipients include only four low-income countries (LICs), of which only one, Madagascar, is an LLDC (the other LICs are Côte d'Ivoire, Cameroon and Senegal). Per capita aid has the same pattern, showing the same kind of distortions. The richest countries in terms of per capita GDP, like Gabon and the Congo, receive amounts of aid per capita much larger than those for LLDCs like Burkina Faso and Mali. Aid is very heavily concentrated on the top ten recipients, which obtain 56% of the total, the remaining 44% being dispersed over more than 130 countries.
Macroeconomic aid is still heavily preponderant
Macroeconomic aid in the form of debt relief and structural adjustment assistance accounts for a very large share of French aid. As of 1989 the weight of ODA debt relief has progressively increased. Total macroeconomic aid peaked in 1994 at USD 2 756 million (32.6% of total ODA). After the CFA franc devaluation it was possible to reduce the amount and share of adjustment assistance considerably, but implementation of the debt reduction initiative for the heavily-indebted poor countries (HIPCs) will bring the figures up steeply; in 1998 the debt relief share alone stood at 18%. France is, with Japan, one of the top two creditors of the group of countries eligible for the HIPC initiative, this being largely explainable by the weight of outstanding French loans to Côte d'Ivoire and Cameroon (USD 3.6 billion at end-1998). France strongly supports this initiative, though its implementation is likely to pose problems if it is accompanied, as planned, by a cessation of aid in the form of loans to those two countries. Moving from loans to grants for the countries covered by the HIPC initiative will call for a particular budget effort, in order to maintain or increase flows of aid to these countries.
Project aid risks continuing to diminish
Inasmuch as the other components of French aid are stable or increasing, at least in percentage terms, like aid to TOMs or multilateral assistance, project and programme aid in the form of grants and loans is a residual item. Aid in the form of debt relief has remained at a high level since peaking in 1994. In a context of overall decrease of ODA, the amounts available for the other forms of aid have therefore declined in recent years. Technical co-operation expenditure has been more or less flat -- USD 2 207 million in 1994, USD 2 088 million in 1998 -- and the decline in structural adjustment assistance has not been steep enough to prevent gross disbursements of project aid from falling in recent years. According to the French Memorandum, total project aid decreased by 47% between 1994 and 1998.
The scale of multilateral assistance is to a large extent determined by European aid
Multilateral assistance accounts for one-fourth of French ODA. Its share grew over the three years to 1998, increasing in gross disbursement terms from 20% in 1996 to 21% in 1997 and 24% in 1998. This is a little short of the DAC average (29% in 1998). The ODA share going to UN agencies is well below the DAC average of 7%, since French flows to those institutions in 1998 amounted to only USD 120 million, i.e 1.7% of gross ODA disbursements or 7.2% of multilateral assistance. This probably reflects some doubt about the UN system's effectiveness, as well as the recent reduction, and comparatively low level, of voluntary contributions, essentially for budgetary reasons. Contributions to the World Bank and regional development banks, although larger (USD 376 million in 1998), represent 5.4% of total ODA compared with a DAC average of 10%. Finally, there is a clear political will to increase multi/bilateral aid.
France's contribution to European aid, which totalled USD 785 million in 1998 (47% of multilateral assistance and 14% of ODA), is easily the largest component of French multilateral assistance. Of this total, 40% represents payments to the European Development Fund (EDF) to finance aid programmes for the ACP countries (Africa, Caribbean and Pacific) and 60% the contribution to the general budget for non-ACP countries. France is the leading contributor to the EDF at 24.3%, while its participation in the European Community's general budget was 17% in 1998. It wants to put a heavier emphasis on this component of its aid, and has been actively concerned with the effectiveness of European aid and the need for reform. In line with the proposals of the Tavernier Report on French development co-operation, France also wishes the principle of subsidiarity to be applied to Community aid. This would mean the designation of lead agencies -- by sector and by country assisted -- to which Community aid implementation would be delegated.
Partnership is developing more on a local ownership basis
Participation of recipients has become a major policy thrust, notably for AFD projects related to micro-credit and local development. The former co-operation ministry was likewise involved for a long time in micro-finance projects with a high participatory content. Of all the DAC countries, France is probably one of those with the greatest experience in this domain, where many such projects have now reached the stage of financial equilibrium and autonomy. Furthermore, in the wake of the CFA franc devaluation a Special Development Fund (now renamed the Social Fund) was set up to finance small locally designed projects. Finally, the move towards decentralisation in a growing number of countries has led to the creation of local investment funds, many with French aid support, which are largely managed by members of local civil society. But this type of assistance still accounts for only a very small share of project aid.
France is seeking to develop partnership with aid recipients. But the former "Orientations à Moyen Terme" (medium-term guidelines) drawn up by the former co-operation ministry have not yet been replaced by country strategies, and the joint commissions that continue to meet every three years have not prepared any strategy documents. The country strategy papers due to be produced will not be discussed with recipient countries and will remain internal government documents. However, it is planned to draw up framework agreements on partnership, in consultation with the assisted countries, along the lines of the agreements already negotiated in the framework of certain joint commissions. This will be a step forward, provided that the agreements are founded on the development strategies of the partner countries.
France is an ardent advocate of the rule of law as an essential condition for sustainable development. It has engaged in very active co-operation to promote the rule of law, in the context of administrative capacity and local development. France has thus acquired considerable experience and know-how in areas like support to democratic institutions and the electoral process, training of magistrates, co-operation in matters of security and police training, and administrative co-operation including support for the decentralisation process. This institutional co-operation, which is divided among a great many actors, would be improved by closer meshing to make it better co-ordinated and more visible.
Promotion of gender equality is still insufficient
It is certainly intended to do more to promote gender equality, but no tangible progress has been made as yet. The mainstreaming of gender equality concerns into the aid effort still constitutes a challenge. But there is an awareness of the problem in the AFD, where suitable directives are expected to be approved some time in 2000. A very great deal remains to be done, especially in the MFA, which seems to favour projects that target women, before the gender equality issue is recognised as such. A clear-cut position, a definite strategic resolve and a strengthening of institutional capacities seem to be lacking.
The environment is recognised as an important concern. Rational management of natural resources and land use constitutes one of the four strategic aims of the DGCID Development Directorate. Teams of specialists in the MFA and AFD design specific environmental preservation projects. However, systematic integration of the environment issue would require additional resources. Significant moves towards this end have been made in the AFD, but in the MFA environmental concerns seem to require further emphasis. It should be noted that substantial progress has been made by the French development finance institution Société de Promotion et de Participation pour la Coopération Economique (PROPARCO), which has adopted the standards applied by the International Finance Corporation (IFC), and by the French global environment facility, which has worked to introduce the environmental dimension into development programmes.
Promotion of the private sector
This is one of the strong points of the French aid system. Promotion of the private sector is effected via institutional measures and also through PROPARCO, a 68%-owned subsidiary of ADF, the remainder of its equity capital being shared among different partners in the private sector. PROPARCO's activities, venture capital provision and banking, are not reported to the DAC as ODA. PROPARCO conducts its activities with recognised professionalism, providing capital (in the form of equity investment or loans) for the local private sector either direct or, in the case of small businesses, through banks and financial institutions.
These are regarded with some scepticism, even though the AFD assists sector-specific programmes on the basis of case-by-case analysis. The aid authorities take the view that the requirements for successful sector-wide approaches are seldom met: existence of a single sectoral strategy determined by the government of the recipient country, close co-ordination among the donors concerned, harmonisation of procedures, and so on. By contrast, project aid seems simpler to implement and is generally of good quality. The fact that three-fourths of ODA project aid is made of loans tends to be an advantage in that this type of financing makes it necessary to ensure viability and durability of the projects funded. France is arguing for a new conception of project aid, consistent with the sectoral and budgetary approaches, in which projects are components of sector-specific programmes.
Progress still needs to be made here. At present, aid evaluation is shared among three units, in the Treasury Directorate, the MFA and the AFD, none of these units being independent of its superior authority. Assessments are outsourced, except in the AFD, where the evaluation budget is very small and all the relevant work is done in-house. Furthermore, recipients are not generally involved in the process, and the evaluation findings are often treated as confidential, even vis-à-vis recipients. Transparency is low: external circulation is the exception in MEFI and limited in the AFD, but is the rule in the MFA. Explicit procedures of evaluation feedback for the design of new projects seem to exist only in the AFD.
Development assistance and commercial objectives
Development assistance may be inconsistent with commercial objectives and vice versa. Theoretically, French bilateral assistance is tied aid, even if the wording of the origin clause that formalises this feature permits the financing of goods and services originating from franc zone countries or other assisted countries, on terms that may vary according to the instruments used. Aid tying is admittedly practised by many DAC countries, but it does lead to cost overruns, by restricting the playing field in competitive bidding where only a very small number of firms can compete. The effectiveness of aid could be increased if a more substantial portion were untied. This calls for the active involvement of France in the search for a consensus on untying aid to the least developed countries, within the framework of current efforts in the DAC. With protocol-linked assistance, aid tying means a constant concern with fostering commercial penetration and local investment by French firms.
Development assistance and cultural outreach
Aid can also serve as a tool of cultural outreach policy. France carries with it a great history, which explains the world presence of the French language and culture. Part of French aid is therefore related to cultural outreach. This is particularly apparent in the countries that were not in the former co-operation ministry's "ambit" but are now in the ZSP. In these countries the international co-operation activities conducted by the embassies are essentially cultural, scientific and technical. This type of assistance is not related to poverty reduction and the DAC Strategy, but it is reported as ODA under the rules in force. Educational co-operation, notably through the French education system abroad, focuses primarily on the high achievers in the countries concerned. The MFA has a culture of international co-operation. Its absorption of the former co-operation ministry has given it the opportunity to acquire an aid culture also. Activities to develop local cultures in assisted countries should also be mentioned.
Development assistance and investment in the oil sector
Development assistance policy and energy independence policy are difficult to bring into line. Like other industrialised countries, France has supported the efforts and projects of its big oil companies, notably through the provision of ODA or, more directly, government subsidies and guarantees for production projects in the oil countries concerned. A recent report by the National Assembly's foreign affairs committee entitled "Pétrole et éthique, une conciliation possible" (oil and ethics, a possible reconciliation) is critical of this policy. It states: "In Africa, the oil bounty has not helped development. In Angola and Congo-Brazzaville the heads of state have used it to buy arms". Arguing for greater coherence, the report states: "Parliament should be informed of the decisions to provide public subsidies and guarantees for oil production projects, since it considers the present rules on conditionality to be inadequate. Those rules, based on economic criteria, take insufficient account of the social and environmental impacts of oil production. [Furthermore] the existence of a double standard in the observance of human rights, anti-corruption laws and social and environmental standards is not acceptable. It is France's duty to encourage the spread of anti-pollution conventions, to combat social 'dumping' and, with its partners, to tackle corruption". The use made of the oil rent is being considered from a number of angles, and the DAC encourages France to pursue these efforts.
Development assistance and human rights
Better account is taken of the relationship between development assistance and the promotion of democracy and human rights. France is the country of human rights and has always been an ardent defender of them. Yet for a long time development assistance made no room for this concern. A change of direction occurred in 1990 when the French President, speaking at the La Baule conference, established a linkage between receipt of aid from France and democracy in the recipient countries. This linkage was reasserted in what came to be called the "Balladur doctrine", which was formulated in September 1993 and sought to reserve aid for countries that were correctly governed, at peace with themselves and democratic. In the few years since then, France has been developing activities to promote good governance, democracy and the rule of law, including on a regional basis.
In Togo, French co-operation has been both suspended and, as is now the case, reduced. But cessation of aid is sometimes difficult to envisage in the franc zone countries, where it might lead to economic collapse with consequences for a country's whole system. Since 1995 "democratic conditionality" has been more pragmatic and no longer applies to all types of assistance, but only to direct aid to a State (thus not penalising the population). France broadly supports the decisions of the European Commission, which has become stricter on democracy and human rights since the revision of Lomé IV, and it has strengthened its action in this sphere during the last few years.
Information of public opinion and awareness-raising
There is no systematic policy for informing and educating public opinion and making it aware of development issues, the need for aid and French strategy in this regard. The authorities are of the opinion that this is not their responsibility but that of NGOs. Nor is there any specific budget for developing this type of activity. This puts France at a fairly far remove from average DAC practice.
French NGOs are very active in humanitarian aid and development assistance and in some cases have a very considerable outreach, as again evidenced recently by the award of the Nobel Peace Prize to Médecins Sans Frontières (MSF). But France is right at the end of the line of DAC countries as regards both direct support to NGOs and the aid share distributed through NGOs. Even if there is a desire for dialogue, via the Commission Coopération Développement (COCODEV) and now via the HCCI, this does not translate into use of NGOs as intermediaries in the management of official aid. The NGOs put it down to official distrust of their capabilities and the durability of their activities. The major French NGOs therefore have to obtain their funding from their own members, the Brussels Commission and even other governments. Funding allocated to NGOs by the MFA in 1998 totalled no more than USD 15 million, representing 0.3% of ODA.
Decentralised co-operation is a rapidly developing aid item that the French government is trying to promote and co-ordinate. Under legislation passed in 1992 French local communities (regions, departments and communes) may engage in international co-operation activities, and many have eagerly seized this opportunity, so much so that the aid amounts involved are estimated at about USD 170 million for 1998. These sums are not reported to the DAC as ODA, although the reporting rules applying at present do not preclude this. Co-operation of this type is between one civil society and another, one town and another, one region and another, and as such is performed in a spirit of partnership and local ownership of the aid received. Given the very rapid growth of initiatives, the French government wishes to see greater co-ordination. Accordingly, special officers are being appointed in the co-operation services of embassies.
On the strength of the foregoing analysis, the DAC congratulates France on having:
The DAC recommends that France:
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