Overall framework for development co-operation: major policy reforms
Reforming Dutch development policy
The new policy directions will apply to all the Dutch aid delivery channels, but so far only the bilateral (Dutch embassy-managed) programme’s new strategic orientation is clear. The lack of new direction for the entirety of the Netherlands’ aid delivery channels means that these are not yet aligned to the overall policy and with each other.
Complete the policy framework for development co-operation by:
• setting out the inter-linked principles, clear, overall objectives and criteria for each of the main aid delivery channels; and
• making clear how the new policy will be implemented through each of these channels
The reform of its development co-operation gives the Netherlands scope to achieve synergy among all of its main aid delivery channels (bilateral, multilateral, civil society, enterprise and humanitarian), ensuring that each is aligned to the new overall policy and with each other. This work has already started for the bilateral channel (Dutch embassy managed funds and centrally managed thematic funds). The Netherlands’ multilateral strategy of 2009 will need to be updated to reflect the new policy priorities, although some aspects remain relevant and can continue to provide a coherent framework. The new overarching policy is an opportunity for the Netherlands to take a fresh look at its civil society and enterprise channels and to align them more effectively with its broader development objectives. If one of the main purposes of the civil society channel remains the strengthening of civil society in developing countries, then the Netherlands’ rationale for working predominantly through Dutch NGOs to achieve this aim, rather than supporting southern NGOs directly, will need to be clarified. The Netherlands should also consider how the enterprise channel, with its focus on the private sector, can more directly support the broader Dutch aim of achieving a good climate for investment and business in partner countries.
There are risks associated with the Netherlands’ reforms of its development co-operation. The main risks are combining private sector development with the promotion of Dutch commercial interests and the risks of undermining earlier Dutch investments or those of its partners by withdrawing from countries and sectors.
To help to manage the risks associated with the reforms of its development co-operation, the Netherlands should:
• ensure that development objectives remain paramount and that the renewed emphasis on the private sector is not confused with the promotion of Dutch commercial interests; and
• plan and carry out the Netherlands’ exit from specific sectors and countries in a way that is consultative and transparent with partner country governments and other development partners, honours existing commitments and seeks to minimise negative impacts in aid-dependent countries.
The Netherlands needs to manage several strategic risks associated with its reforms. Firstly, care needs to be taken to ensure that the renewed emphasis on private sector development remains clearly distinguished and separate from the promotion of Dutch commercial interests. It should also ensure that its withdrawal from countries and sectors does not undermine its earlier investments or those of its partners– these withdrawals will need to be managed carefully and in accordance with the principles of aid effectiveness. The Netherlands also faces reputational risks when phasing out of these countries and sectors. The Netherlands’ shifting from sectors like education – which used to be a priority – into new ones, such as food security, may also result in mismatches of its personnel and priorities until the ministry re-tools and recruits sufficient expertise in the new thematic areas. The Netherlands will need to manage this re-tooling quickly and well to ensure that its policy priorities are implemented effectively.
Good practice: the Netherlands’ MDG 3 Fund and the Funding Leadership and Opportunities for Women (FLOW)
The Dutch MDG3 Fund is a centrally-managed programme that invests in projects promoting equal rights and opportunities for women and girls. The fund supports 45 projects worldwide, with an initial EUR 70 million distributed between 2008 and 2011 - a further EUR 70 million has been allocated for the period 2012-2015. The projects are aimed at securing property and inheritance rights for women, promoting equality of employment conditions and opportunities, increasing women’s participation in politics and public administration, and stopping violence against women. The activities funded differ widely, but all have been selected for their contribution towards achieving the Millennium Development Goals (MDGs) in 2015. FLOW is the successor to the MDG3 Fund, with EUR 70 million to be distributed from 2012 to 2015. The objective is to improve the position of women and girls, strengthen their rights and opportunities and allow them to fulfill their potential.
Towards better accountability: a public communication and awareness strategy
The government has made efforts to increase public information on the results of its development co-operation. The population of the Netherlands is increasingly sceptical about the impact and effectiveness of development co-operation, particularly the government-to-government kind.
The Netherlands should apply a strategic approach for strengthening communication and engagement with parliament, civil society and the public on development and the results of its development co-operation, including:
• formulating a communication strategy;
• targeting resources and appropriate methods to communicate results to key audiences; and
• engaging strategically with NGOs, development institutions and think tanks both at the policy and implementation levels.
The recent policy changes are partly a response to growing public and parliamentary pressure for the government to demonstrate the results of its development co-operation and how these address Dutch interests. To ensure the success of its reforms, therefore, the government will need to communicate to the Dutch public how the changes are helping the Netherlands to deliver real development results.
Although the Ministry of Foreign Affairs (which we refer to here as “the ministry”) understands the importance of communicating development co-operation efforts and results to taxpayers, it needs to develop a coherent set of messages for target audiences and do more to communicate and demonstrate achievements. The Netherlands has adequate resources for communicating to the public on the results of its development co-operation. These resources need to be used more strategically to direct specific messages to key audiences. In addition, the National Committee for International Co-operation and Sustainable Development (NCDO), the main Dutch body responsible for supporting the public debate on global citizenship, could also organise detailed analysis of the decline in support for aid among different groups of the population. This analysis could then inform a targeted communication strategy for the ministry.
Promoting development beyond aid: setting clear priorities for implementation
Strengthening Dutch commitment to policy coherence for development
The Netherlands’ approach to policy coherence for development has good foundations, but it is not yet fully owned by a broader range of government offices. Other donors can learn from the Netherlands’ experiences with whole of government approaches.
Building on the progress that the Netherlands has made in development beyond aid, it should:
put in place a clearly-prioritised and time-bound programme as part of its new globalisation agenda to ensure that relevant Dutch and European Union policies support (or at least do not undermine) their development policies. This programme should translate the Netherlands’ commitment to development into plans for action, and should include strategic cross-governmental goals.
Along with high-level political commitment, progress towards policy coherence for development depends on integrating the concept into all government departments, guided by clear priorities for implementation. The DAC recommends that all Dutch government departments sign up to a policy coherence plan of action that has clear priorities and deadlines. The basic framework for this plan lies in recent Dutch-supported work in the EU, especially the policy coherence for development commitments in the European Consensus on Development and related EU Council Conclusions. These documents identify five priority areas where coherence is particularly important: (i) global trade regimes and international financial markets; (ii) climate change and sustainable management of resources; (iii) food security; (iv) migration; and (v) fragile states, security and conflict.
The Netherlands has not yet internalised these five EU priority areas in its own work programmes. They are very much in line with the Netherlands’ new thematic priorities for its development co-operation and would provide the kind of framework for setting cross-departmental goals that is currently missing. Related to this, the Netherlands intends to develop a globalisation agenda which goes beyond development co-operation to tackle global challenges like the sustainable management of raw materials, energy scarcity, global pandemics, climate change, cross-border crime and international trade agreements. The Dutch government is now starting to develop this policy agenda in consultation with key stakeholders. The policy coherence for development programme suggested in this report should be a central pillar of this new globalisation agenda.
Investing time, energy and resources for effective whole-of-government approaches
Over the last five years the Netherlands has learnt several important lessons about the costs and benefits of engaging in whole-of-government approaches, particularly in fragile states. Of these, the most important is that effective whole-of-government approaches require a significant investment of time and energy from the start to define and agree common objectives among participating departments and then to discuss strategy and resources.
Good practice: the Netherlands' Security Sector Development (SSD) programme in Burundi
The innovative SSD programme in Burundi is a good practice example of a cross-government approach.
1. An integrated approach: recognising Burundi’s diverse issues, challenges and needs, the programme is a joint effort between the Dutch ministries for development, foreign affairs and defence.
2. Long-term Dutch commitment: the SSD programme is based on a memorandum of understanding which lasts eight years, beginning in April 2009.
3. A flexible approach: unlike other SSD interventions, the programme design is not set in stone and is designed to evolve over the eight-year period through continual dialogue and negotiation between the two parties.
4. An emphasis on good working relations: the MoU allows for effective working relationships at various levels, together with clear management and oversight mechanisms (see next point).
5. The use of a programme manager: a Dutch government official is responsible for coordinating the work and ensuring that the programme stays on schedule.
Aid volume and allocation: the Netherlands continues to meet its commitment
Dutch ODA remains high
While remaining committed to an ODA budget of not less than 0.7% of national income, the Netherlands is rapidly reducing its development co-operation; if not managed well, this cut could have negative impacts on the Netherlands’ partner countries. The Netherlands’ new policy directions are not yet driving the planning and budget process for all of its aid delivery channels.
To continue to meet its commitment and to support its reforms, the Netherlands should:
• prevent its ODA/GNI ratio from falling below 0.7%;
• ensure criteria and processes for allocating funds to the main aid delivery channels reflect the new policy priorities and strategic objectives;
• continue to concentrate multilateral ODA on a small number of entities, consistent with Dutch development priorities and taking into account agency performance; and
• increase transparency and strengthen decision making by continuing to improve the regional and sectoral reporting of bilateral ODA.
The Netherlands has surpassed the UN ODA target of 0.7% of gross national income every year since 1975. This is a great achievement. In 2010:
• The Netherlands was the sixth largest donor in the world, supplying 4.9% of DAC members’ total ODA, and all in grant form.
• Its net ODA was USD 6.351 billion, an increase of 2.2% in real terms over 2009.
• Its ODA as a proportion of GNI was slightly less than the year before: 0.81% versus 0.82% (paras. 54-55).
Dealing with budget cuts
General belt-tightening across the Netherlands’ government following the global financial crisis and a downturn in the Dutch economy means that the Netherlands will reduce the volume of its aid over the next two years. This will need to be managed carefully to avoid negative impacts on partner countries and to maintain predictable financial flows. It will cut ODA from 0.81% ODA/GNI in 2010 to 0.7% by 2012, with an interim step of 0.75% in 2011. From 2012 onwards the Dutch ODA budget will be 0.7% on average. This reduction in Dutch ODA will have a marginally adverse impact on EU aid volume targets, which were based on the Netherlands maintaining its ODA at not less than 0.8% of national income through to 2015. The DAC appreciates the Netherlands’ achievement in maintaining its ODA at not less than 0.7% of national income at a time of financial crisis.
Matching funds to policy priorities and strategic objectives
The Netherlands’ ODA budget process was relatively easy to manage while the allocation for development co-operation was increasing and policy directions constant; it will be more difficult following major budget cuts and shifting priorities from 2011 onwards. The ministry includes an indicative four-year rolling plan with each annual ODA budget that it presents to parliament – i.e. an annual ODA budget plus the proposed budgets for the next three years. This well-established budgeting and planning process builds on the previous year’s activities. This incremental approach to budgeting and planning will need to change quickly to ensure that the Netherlands’ reduced ODA is refocused on the new policy priorities and strategic objectives. In particular, the ministry will need to make sure its criteria for allocations to the main ODA delivery channels reflect the new policy directions (once these have been clarified for each programme area).
Making multilateral ODA more focused
The Netherlands has made large and strategic contributions to the multilateral system since the last peer review. Between 2007 and 2009, 25% of total gross Dutch ODA went to multilateral organizations, making the Netherlands the eighth largest DAC contributor of multilateral ODA. The Netherlands is an active participant in the governance structures of the multilateral organizations it supports. If it intends to carry on being a significant contributor with influence over the behaviour of the organisations that it supports, the Netherlands should continue to concentrate its multilateral ODA on a small number of entities, while also linking its support more closely to agency performance. It should measure agency performance through the agencies’ own reporting and evaluation systems, and the work of the Multilateral Organisations Performance Assessment Network (MOPAN) and other donors, and use this information to guide its decisions.
Increasing transparency in geographical reporting of bilateral aid
While the Netherlands has focused its aid more on poor countries since the last peer review, barely half of the reporting of Dutch bilateral ODA is country specific, making it difficult to get a complete picture of its portfolio. Every year since 2006, between 45% and 55% of total bilateral ODA reported by the Netherlands has not been country specific. The ministry is taking steps to tackle the problem and expects to report more detailed information on 2010 flows to the Creditor Reporting System (CRS) in 2011. This will improve the transparency of Dutch aid.
Organisation and management: getting the most out of the Netherlands’ overall effort
Improving synergies and links among the Netherlands’ aid delivery channels
Synergy among the Netherlands’ main aid delivery channels and operational links between headquarters and the field are not sufficiently strong. This means the Netherlands is missing out on opportunities for greater coherence and effectiveness. The Netherlands’ planned organisational changes provide a timely opportunity to address these issues.
To improve the synergy among its different aid channels, the Netherlands should:
• involve its field teams more in planning and managing the main aid delivery channels, particularly the civil society, enterprise, thematic and humanitarian programme areas; and
• turn its country strategies into more comprehensive planning tools that cover all of the Netherlands’ contributions to partner countries.
The Netherlands could have a greater impact by improving the links and synergies among the funding channels based in the Hague and those in its embassies. Because these different channels are managed separately, the Netherlands is missing out on opportunities to maximise its contribution, making insufficient use of perspectives from the field and depriving its embassies of the information necessary to be able to represent and co-ordinate the full Dutch effort. The following simple changes to procedures could help achieve synergies among the Netherlands’ aid delivery channels and deepen field-headquarters relations for mutual benefit:
• Make planning more comprehensive. Current multi-annual strategic plans for partner countries only cover the funds managed by the Netherlands’ embassies. By broadening the next generation of country strategies to include more centrally-managed bilateral funds, the Netherlands could lay the foundations for more comprehensive planning, programming, information sharing and monitoring.
• Make planning for the centrally managed programmes inclusive by involving the field teams fully in the process.
• Share analysis more widely. The managers of aid delivery channels which are not currently included in country strategies may also benefit from having access to the analyses (often these look at country performance and constraints at general and sector level) that lie behind these strategies.
Improving information on results
Country strategies do not describe the overriding goal of Dutch development co-operation in that country and there is not always a clear focus on objectives and how to measure them. These omissions make it difficult to report results.
Ensure that the Netherlands’ development objectives – at global, country and programme levels – are explicitly defined and measurable, and that the type of information needed for managing for results, accountability and learning is clear.
The Netherlands has made a strong push to improve its results reporting since the last peer review, but it has struggled to satisfy parliament and the public’s need for information on the impacts of Dutch development co-operation. It seems that the roots of the problem of gathering good information on results may lie in the planning stages, both for country strategies and individual projects, which lack clear statements of objectives and how and what to measure. Current country strategies do not describe the overriding goal of Dutch development co-operation in the partner country, or how planned activities will help to achieve this. The ministry has tried to solve this problem by adding “results chains”, which set out in logical order the inputs, outputs and outcomes of individual projects or whole country programmes. It now plans to ensure that the next generation of country plans take the overriding objectives of Dutch development co-operation for that country as their starting point and that results chains feature strongly in country strategies.
Strengthening knowledge management
The Netherlands has not yet established an effective knowledge management system, although it is now a corporate priority. In particular, knowledge and experience is still not shared systematically between different teams and between the field and headquarters.
Put the knowledge management strategy into action by identifying:
• pools of knowledge and knowledge gaps;
• practical actions to harness in-house experience, monitoring and evaluation; and
• a way of ensuring this knowledge and evidence is used to inform policy and operational decisions and to strengthen and professionalise Dutch development co-operation.
The ministry has made knowledge management a corporate priority and has developed an “operational” plan for improving the management of (i) talent; (ii) organisational structure; and (iii) information technology. The authors of the plan conclude that lack of corporate ownership was the main reason behind the failure of most of the 43 initiatives to improve knowledge management over the past 10 years. Past initiatives relied on individuals who took a personal interest; they fell apart when those people changed roles. Despite being called an “operational plan”, the document does not set out specific actions or identify the main knowledge gaps. The ministry’s next step should be to translate this plan into action through a clearly prioritised and time-bound programme, including specific aims and indicators to measure success.
Getting the most out of the Netherlands’ human resources and expertise
Dutch development co-operation has already experienced staffing cuts and more are expected. The ministry does not yet have full information about its staff and their expertise or strategic planning for how best to deploy them and this means that it is not getting the most out of the staff it has.
In order to get the most out of the staff and expertise it has, the ministry should:
• treat development as a discipline within the ministry;
• map staff expertise and experience;
• introduce strategic workforce planning; and
• improve support to and incentives for locally-recruited staff.
The Netherlands is acutely aware of recent calls to professionalise its development co-operation and to manage the challenge of staff rotation. The Committee was informed of on-going efforts to this end. The ministry is seeking to recruit the right kind of expertise for its new policy priorities while also retaining and developing existing staff. There is a risk, however, that shifting sector priorities may result in the loss of experienced professionals whose sector expertise no longer fits with policy priorities, even though such people’s implementation and policy experience could be relevant to managerial and technical roles. To tackle this problem the ministry should identify its in-house expertise. As one senior official of the ministry put it to the review team, “there is a lot of knowledge and expertise here, but nobody knows where to find it”. Linked to this, the ministry does not conduct strategic workforce planning. This planning will be essential if the ministry is to make best use of staff as it implements its new policies.
The ministry has increased the number of people it recruits within partner countries, but these locally-appointed staff cannot climb to mid-range or senior positions and cannot transfer to other Dutch embassies. Recognising the importance of local staff in delivering a quality programme, the Netherlands should continue to look at ways to make better use of local staff expertise and at how these employees might achieve higher grades, including specific career development options.
Aid effectiveness and results: building on progress and strengths
Progress in implementing the Paris Declaration
The Netherlands has made good progress in applying the principles of the Paris Declaration but has struggled to advance in some key areas, notably in making its aid more predictable, using partner country systems and conducting analytical work in partner countries jointly with other donors. This means that, by 2008, the Netherlands had met only four of its eight targets for the Paris Declaration indicators.
To make its aid more effective, the Netherlands should:
• find ways to make its support more predictable, clarify its approach to conditionality and increase its use of partner country systems;
• improve the transparency of its plans, activities and funding decisions for its partners and other stakeholders; and
• continue to untie its aid.
In addition to helping to meet the collective targets in the 2005 Paris Declaration, the Netherlands set itself clear aid effectiveness targets for 2010 based on those agreed by EU members. The Netherlands started from a strong baseline, meeting three of these targets in 2005, and a fourth by 2007. Most notable has been the increasing share of Dutch support to capacity development which is co-ordinated. However, there has been slippage on other targets, particularly the extent to which the Netherlands is conducting country level analytical work jointly with other donors. The ministry has made good use of the OECD monitoring survey results to help focus its efforts. An action plan prepared in 2009 identifies two priorities: (i) improving aid predictability; and (ii) making more use of country systems. A key aim for the first of these priorities should be to tackle the short term volatility that affects certain Dutch supported programmes, such as general budget support.
The Netherlands has increased the proportion of its aid which is untied; overall, 86% of Dutch aid was reported as untied in 2009. The DAC commends this progress – it means that the Netherlands is meeting its commitments under the 2001 DAC Recommendation and the Accra Agenda for Action, and addressing an issue raised in the 2006 peer review. This untying ensures the effectiveness of Dutch aid – it improves value for money by ensuring partners are able to choose the most appropriate project and supplier, and it allows for greater partner country leadership. The Netherlands should therefore resist pressure to shift from its current commitment to untie more of its official development assistance.
Building on the strengths of Dutch embassy-managed programmes
The Netherlands has been most successful in applying the aid effectiveness principles to the channels managed by its embassies in its partner countries. When it comes to the Netherlands‘ other aid delivery channels, it has applied the aid effectiveness principles less consistently – this has contributed to the mixed performance against the Netherlands’ own aid effectiveness targets.
To ensure a higher proportion of its aid its delivered effectively, the Netherlands should:
• programme more of its non-delegated bilateral resources through the Dutch embassies in the 15 partner countries to maximise existing strengths – notably flexibility and capacity; and
• ensure these 15 embassies have the necessary skills and mandate to improve the predictability of Dutch aid, make more use of country systems and improve the transparency of Dutch plans, activities and funding decisions.
The Dutch embassies have established a good reputation and are able to deliver their development assistance effectively. Two traits underlie the success of Dutch-embassy managed development co-operation: flexible co-operation and strong technical capacity (Box 3). The ministry should ensure these strengths are maintained and build on them to improve the broader spectrum of Dutch development co-operation. The plans to focus support on just 15 countries is a good opportunity to ensure that the relevant 15 embassies have the flexibility and capacity to spend a larger budget effectively and to oversee all Dutch development co-operation in partner countries.
Good practice: Dutch embassy managed programmes in Tanzania
A range of partners in Tanzania – including Tanzanian government officials, NGO partners and other donors – emphasised to the peer review team how the Dutch embassy’s flexibility and capacity meant its field-managed contribution to the health sector and decentralisation reform efforts meant much more than simply financial support.
• In the health sector, the Tanzanian government appreciated Dutch flexibility to re-direct support to fill crucial gaps based on what was needed in Tanzania, rather than what was in vogue at home. The embassy also helped a health NGO to complete a successful malaria project when another donor withdrew the final phase of funding.
• The Netherlands agreed to join the World Bank in providing financial support to the Tanzanian programme for decentralisation and reform of local government. When the World Bank was slow to disburse funds, the Dutch flexibility made sure the programme started on schedule.
• Having identified that monitoring was a weakness in the health sector, and that embassy staff had specific expertise, embassy and government officials worked together to produce a monitoring plan and framework.
• In the context of local government reform, the Dutch embassy was involved in policy development; it pressed for better monitoring, follow-up of audit reports, and engaged closely in joint reviews. Its capacity allowed it to lead a push for improvements in programme implementation.
Towards better humanitarian donorship
The urgent need for a formal Dutch humanitarian policy
The lack of a clear policy mandate for Dutch humanitarian assistance means that the Netherlands has no formal humanitarian objectives, no guidance for cross-government co-ordination on humanitarian issues, and no anchor for effective and accountable programming.
The Netherlands should finalise its cross-government humanitarian policy, which should include clear humanitarian objectives and promote:
• advocacy work to strengthen the global humanitarian system;
• continued respect for the humanitarian imperative, both within the ministry and across government;
• stronger linkages with other Dutch programmes and more structured discussions with parliament and partners;
• further programme efficiencies; and
• accountability for Dutch humanitarian objectives.
The Netherlands plays a key role in strengthening the global humanitarian system: this work is useful and relevant and should continue. To support this system strengthening work, the Netherlands uses its respected voice and significant funding to drive through key humanitarian reforms, promote more effective delivery by multilateral agencies and improve co-ordination. However, this important work has not yet been anchored in a cross-government humanitarian policy.
The lack of a clear policy mandate limits possibilities for effective cross-government co-ordination, and restricts discussions with partners and parliament. This may become critical in the near future if, for example, the humanitarian team needs to defend the humanitarian imperative in policies such as the overall Dutch “3D” – defence, diplomacy and development – strategy. The lack of a policy also makes it difficult to verify whether the Netherlands is allocating sufficient funding for, or achieving, its own humanitarian objectives.
Building on good practice to become more efficient
Making the programme more efficient could reduce the workload of humanitarian staff in the Hague – freeing them up for more strategic and analytical tasks – while also helping improve the quality, timeliness and predictability of funding.
To support effective and efficient humanitarian aid the Netherlands should:
• refine its rapid response mechanisms for sudden onset emergencies; and
• expand the use of multi-annual funding streams in complex emergencies and protracted crises.
An effective rapid response mechanism ensures that help reaches disaster survivors as quickly as possible, and also reduces the workload for donor personnel, giving staff and partners more time to analyse the evolving situation on the ground. The Netherlands has a variety of tools to support a rapid response, but it could be more efficient, such as by using pre-positioned funding and simplified fast-track procedures.
The Netherlands should extend its current multi-annual funding agreements with certain NGOs to all partners working in protracted crises. Increasing funding authority to embassies could also make co-operation more flexible, build technical capacity and promote strategic links between Dutch humanitarian, stability and development programmes in these complex situations.
The Netherlands (2006), DAC Peer Review: Main Findings and Recommendations
The Netherlands (2001), Development Co-operation Review: Main Findings and Recommendations
Peer reviews in development co-operation