In percentage of GNP, Swiss ODA was slightly up in 1999 - 0.35%, compared with 0.32% in 1998, due to an increase in humanitarian aid as a result of the Kosovo crisis. However, it was still below the target of 0.4% of GNP set since 1994, and which figures in the government's legislative programme. Furthermore, the constitutional obligation to reduce and then stabilise the federal budget deficit leaves little hope that the percentage will rise in the near future (Switzerland is not a member of the United Nations and has never signed up to the objective of 0.7% of GNP set by that organisation). In 1999, it ranked seventh among the DAC Members in terms of the ODA/GNP ratio, up three places since the previous aid review, but was still in fourteenth place in terms of net ODA disbursements.
An opinion poll carried out in 1999 showed that 76% of the population supported development assistance (56% were in favour of maintaining it and 20% were in favour of increasing it). This strong public support is also reflected in the support of a large majority of members of parliament. Furthermore, a large community of non-governmental organisations (NGOs) has a strong influence on Swiss policy. They play a key role in informing and educating the public about development assistance, and act as a spur on the administration, especially by seeking to ensure that development policy is consistent with other policies that have an impact on the development of aid recipients. A consultative commission plays an important role which should be strengthened in order to maintain support for Swiss development co-operation policy.
The concentration of aid on the poorest countries
The hallmark of Swiss ODA is that it is targeted at the poorest countries. Ten of the seventeen priority countries of the SoIn percentage of GNP, Swiss ODA was slightly up in 1999 - 0.35%, compared with 0.32% in 1998, due to an increase in humanitarian aid as a result of the Kosovo crisis. However, it was still below the target of 0.4% of GNP set since 1994, and which figures in the government's legislative programme. Furthermore, the constitutional obligation to reduce and then stabilise the federal budget deficit leaves little hope that the percentage will rise in the near future (Switzerland is not a member of the United Nations and has never signed up to the objective of 0.7% of GNP set by that organisation). In 1999, it ranked seventh among the DAC Members in terms of the ODA/GNP ratio, up three places since the previous aid review, but was still in fourteenth place in terms of net ODA disbursements.uth are in the least developed country (LLDCs) category, six are low-income countries (LICs) and only one, Peru, is a middle-income country. In consequence, the share of gross disbursements of allocable bilateral aid which went to LLDCs in 1999 was 37%, well above the DAC average (25%). Given that the corresponding percentage for LICs was 27%, the combined share of both categories of country was 64% in 1999, again above the DAC average (56%).
Debt reduction policy
Since the early 1990s, Switzerland has played an innovative role in debt relief by setting up counterpart funds to finance small social and environmental projects. Consequently, virtually all of the bilateral debt owed to it has already been cancelled. For this reason, in the past three years its contributions have been made within the framework of the Heavily Indebted Poor Countries Initiative (HIPC) in the form of payments through various multilateral debt reduction funds. The share of debt relief in total ODA is small (2% in 1999), but it is planned to make a further contribution of USD 38 million to the enhanced HIPC initiative.
Swiss humanitarian aid represented 21% of total ODA in 1999, an increase on the previous year, due to the additional funds made available for the Balkans. It is implemented primarily by the Swiss Disaster Relief Unit (ASC), which comprises 1 500 volunteers, is very well organised and can intervene remarkably rapidly. Increasingly, Switzerland seeks to co-ordinate its humanitarian aid with reconstruction assistance, as when it helped refugees from Kosovo to return to their country.
A flexible budgetary framework
The Federal Assembly approves multi-annual framework credits with fixed ceilings, which are renewed periodically (every four years or so). This enables the administration to plan for the medium term, while the allocation of credits is flexible, and they can be extended.
Aid is implemented within the framework of medium-term country strategies. This has several advantages. Firstly, both the local authorities and the representatives of civil society are involved in drawing up programmes. The time frame for these strategies is five years; strategies are then divided into annual programmes which are discussed by the co-ordination offices and Swiss project agencies. The five-year and annual programmes comprise not just sectoral or project objectives but also cross-cutting goals: gender equality, decentralisation and the promotion of democracy, etc. That said, these strategies would be more effective if they were more clearly incorporated in the strategies of the countries concerned.
The co-ordination offices in the priority countries are independent of the embassies; wide powers have also been delegated to them by headquarters, especially for the purpose of identifying and executing projects. They can commit up to CHF 200 000. The number of expatriate personnel is limited (74 at the end of 1999), and there is a policy of recruiting qualified local professionals. Overall, therefore, the number of field staff seems sufficient.
Information policy and raising public awareness of development issues
Significant amounts (nearly CHF 5 million a year) are spent on raising public awareness of development issues. The objective is threefold: to make people understand that development co-operation is necessary, to explain what has been done in this area, and to show that it is in Switzerland's interest to give aid. About of a quarter of this amount is spent in schools, through a foundation which brings together the Confederation, cantons, NGOs and teachers' associations. Information is also provided through the media and publications like Un seul monde, published by the Swiss Agency for Development and Co-operation (SDC).
The two-pillar system: the SDC and the seco
Swiss aid is managed by two separate agencies - the SDC, which is part of the Federal Department of Foreign Affairs (DFA), and the State Secretariat for Economic Affairs (seco), which belongs to the Federal Department of Economic Affairs (DEA). They manage respectively 75% and 13% of Swiss bilateral ODA. They come under the Federal Law of 1976 and thus operate within the same legal framework for international development co-operation but do not have a common operational strategy. Each one has its own objectives, instruments and means. The SDC has its own Guiding Principles and in June 2000 drew up Strategy 2010. The difference in the instruments employed by the two agencies can explain why the seco's contribution to poverty alleviation is only indirect. It does however promote development concerns in the DEA. This dual approach is usually perceived by the actors as being a big advantage. A number of overlaps and contradictions continue to exist despite the numerous efforts and progress made since the last review to develop a common operational strategic approach between the SDC and the seco.
The dispersal of aid
Notwithstanding the SDC's stated policy of concentrating aid, in 1998 the 17 priority countries received only 47% of gross disbursements of allocable bilateral aid. Over the years, four special programme countries (South Africa, Madagascar, Palestine and Rwanda) have been added to the list of priority countries, so that in practice there are now 21 priority countries. The seco has its own priorities and does not have a policy of concentrating aid on specific countries. In addition, the programme for Eastern Europe also includes nine priority countries (excluding Russia), six of which are DAC Part I countries. All told, therefore, there are 27 "priority" countries, which is a lot for a medium-sized programme. Another factor conducive to the dispersal of aid is that the aid channelled through NGOs which is included in bilateral ODA (25%) and country programmes (within the Swiss legal framework), does not have to meet the criteria for priority countries. Lastly, a number of country programmes are not sufficiently focused on a limited number of sectors and projects, and sometimes there are too many small projects, some of which tend to be self-perpetuating. As a result, aid tends to be scattered among countries, thereby reducing its effectiveness and impact.
Insufficient emphasis on poverty alleviation.
It is generally very difficult to appraise the effectiveness of aid, but the cross-cutting analysis "Poverty reduction and empowerment" commissioned by the SDC goes some way towards doing so. It relates to the period 1992-97, and concludes that the involvement of numerous intermediaries and the fact that target groups are defined very vaguely results implicitly in an indirect approach being taken to poverty alleviation. It also shows that, perhaps for want of a precise definition of poverty, in more than 50% of projects the target group is not defined, while the lack of indicators hampers initiatives in the field. 40% of projects aim to satisfy basic needs, while the promotion of civil society figures among the goals of many activities. Nearly 50% target women in particular. Gender issues, although not systematically built into programmes, are becoming increasingly important.
Regarding the sectoral breakdown of aid, despite Switzerland having committed itself in full to the 20/20 initiative, which aims to ensure that 20% of aid is allocated to basic social services, this aim remains difficult to achieve. Basic education accounted for only 2% of bilateral aid commitments in 1998-99, and health for only 3%. If aid for population initiatives, water distribution and sanitation measures is included, aid to basic sectors represented 13% of allocable bilateral aid and 15% of allocable total ODA. By way of comparison, the corresponding percentages for the DAC were 10% and 11%.
Development of the sectoral approach
For a long time the SDC has adopted participatory approaches which encourage grassroots development and empowerment. Perhaps this explains why it is somewhat sceptical about the sectoral approach, in this echoing the concerns of Swiss NGOs and project consultants about an approach which tends to marginalise them. But there has been some evolution on the issue since the last review, perhaps because the limitations of the traditional project-based approach have become increasingly apparent. The positions of the co-ordination offices on the matter differ widely but the example of Tanzania shows clearly the merits of the approach.
Apart from small projects with local communities, the SDC's projects are implemented all too rarely by their beneficiaries. Admittedly, 25% of resources go to various institutions like the International Committee of the Red Cross (ICRC) or NGOs in the form of subsidies to their programmes. But some of the projects funded by the SDC are implemented either directly by the SDC itself (29% of disbursements in 1998) with the aid of independent executants. Others are implemented by so-called "régisseurs"- outside consultants or NGOs (27%) selected by the SDC itself, in most cases by direct agreement. This approach is questionable, since it is not conducive to empowering the recipients. In addition, the fact that consultants are not selected by competitive tender can push up the cost of their services, and thus the cost of carrying out projects. Lastly, it is always the same agencies and consultants that are involved, which is not conducive to the adoption of new approaches and ideas or to flexibility. The fact of always using the same consultants increases the number of project phases, projects take longer to complete and their viability is jeopardised accordingly. A new law on public procurement which was passed at the beginning of 1996 requires that all contracts in excess of CHF 50 000 be put to out to tender. The principle of competitive bidding still has to be applied more systematically however.
Support for the private sector
Support to the private sector now takes the form of partnerships with private investors. The seco has stakes in 20 financial companies which are specialised in developing countries. There is also the Swiss Organisation for Facilitating Investments (SOFI). This fairly comprehensive arsenal of instruments was strengthened by the creation of the Swiss Development Finance Corporation (SDFC), a financial company with a capital of CHF 55 million. It is to be wondered, however, why the seco has only a minority stake in the capital and a minority position on the Board, and does not participate in operational management, which is handled by consultants, but will have to cover a large portion of the deficits which are inevitable during the first years of operation. The seco and the management company have agreed investment policy criteria but the fact the seco sits only on the Board of Management does not guarantee that management decisions will always be guided primarily by development considerations.
The independence of the evaluation system
In 1996, the SDC abolished the old evaluation service. In the project cycle management system the evaluation function was split into a strategic control unit attached to the management, and four operational control units in the operational divisions. The latter decide the evaluation programmes, carry them out or commission consultants to carry them out, draw lessons from them and are supposed to provide feedback from them. The evaluation function in the seco is in the process of being strengthened but only one, part-time, official is assigned to it, which seems insufficient.
The SDC's new system does not seem to comply with DAC principles regarding aid evaluation, since the fact that the evaluation units are part of the SDC is not conducive to their independence. Moreover, the emphasis placed on monitoring, and especially on self-evaluation and interim evaluations, means that evaluations tends to focus on the implementation of the different parts of a project rather than on their results and impact. Even though outside evaluations are done by consultants in 10% of projects, they usually take place at the end of each project phase, and ex post evaluations are infrequent. The network of consultants is limited, which also raises the question of their independence. Evaluation of horizontal or sectoral strategies and policies should also be developed. Lastly, local partner involvement could be improved.
The main problem with the SDC's staff structure is the high average age. This reflects low staff turnover, partly due to the lack of mobility between the SDC and other directorates in the DFA, and the fact that for a long time very few young people were recruited. This is likely to pose serious problems in the next ten years as existing staff retire and have to be replaced. In contrast, as part of a major restructuring in 1999, half of the seco's staff was replaced in the space of a year; the problem is thus the opposite of that in the SDC, since it will take time for these new recruits to acquire experience.
The North-South Guidelines place particular emphasis on the need for coherence between the various policies with an impact on the development of aid recipients; this emphasis can serve as an example for other DAC Members. The SDC has put a lot of effort into ensuring such coherence, in particular by drawing up a 1995-98 action plan for implementing the guidelines. In practice, however, it is still difficult to achieve. Efforts to do so have often been perceived by other departments as an attempt to encroach on areas that lie outside the SDC's sphere of competence.
Progress has been made in some areas, for example with arms exports, on which the SDC is systematically consulted. Political conditionality, the aim of which is to improve compliance with human rights by the recipient countries, has also acquired increasing weight, which can lead to the content of some programmes being modified. The Federal Council has had to decide whether to maintain or break off co-operation with certain States, though the severance of relations is considered to be a last recourse and to date has not been done. Lastly, civil society in the form of NGOs can voice its concerns.
However, there are still problems in other areas such as export risk guarantees. Guarantees have been provided for projects whose social and environmental impact is questionable. Transfers of illegally acquired capital are another problem area. Switzerland has ratified the OECD Convention on the bribery of foreign public officials, the application of which will become more effective with the forthcoming introduction of the criminal liability of legal persons. The Money Laundering Act which came into force on 1 April 1998 is a step forward in efforts to curb capital flight.
Thus, there are still inconsistencies between the various policies that have an impact on developing countries. That said, Switzerland is certainly one of the DAC Members with the most coherent approach to development assistance, its aim being to eliminate the most flagrant inconsistencies. For this purpose, it has procedures for highlighting and resolving them while ensuring that the objectives of development policy are taken into account as far as possible.
On the basis of these conclusions, the DAC recommends that Switzerland:
Continue to reduce any inconsistencies that may remain between the SDC's approach and that of the seco, while at the same time pursuing efforts to develop a common operational strategic approach.
Take advantage of the improved economic and budgetary situation to increase rapidly the total volume of aid to at least 0.40% of GNP, which is a stated policy objective, without losing sight of the United Nations target of 0.70%.
Increase the concentration of aid, by reviewing the list and number of priority countries more regularly.
Review all the projects that have been going on for a long time and that tend to be self-perpetuating.
Reaffirm that poverty alleviation is a fundamental objective around which all other objectives should be organised; gradually review country strategies in the light of this objective, which presupposes that a larger portion of aid should go to basic social sectors.
Take account of international development goals (IDG) and participate in the efforts of the international community to define progress indicators.
Ensure a more systematic gender mainstreaming in the aid system.
Continue to examine the possibility of making more use of a sector-wide approach in aid implementation.
Continue the decentralisation process that is already under way with a view to more frequent involvement - in the form of budgetary support - in the design of sectoral programmes, in which the SDC and the seco are starting to participate.
Take measures to give local partners responsibility for carrying out projects, and implement more effectively the provisions of the 1996 Act which require that project executants be selected by tender.
Overhaul the aid evaluation system so as to make it independent and to improve feedback from evaluations.
Address the difficulties encountered with staffing, and especially the need for more stability in the seco's staff.
Strengthen the role of the consultative commission for international development and co-operation.
Continue to seek more coherence between co-operation policy and other policies that can have a negative impact on developing countries.