DEVELOPMENT CO-OPERATION REVIEW OF SWITZERLAND
SUMMARY AND CONCLUSIONS (1996)

The Swiss aid effort has a number of striking features:

The systematic articulation and political endorsement of medium-term policy, operational and financial frameworks through a set of Framework Credits and associated Messages to Parliament.

A dual organisation system in which the Swiss Agency for Development and Co-operation (SDC), based in the Federal Department of Foreign Affairs, and the Federal Office of Foreign Economic Affairs (FOFEA) based in the Federal Department of Public Economy (FDPE), collaborate closely while pursuing different agendas, different approaches, and have to some extent different networks of support.

Strong and active intellectual leadership backed up by high quality staff in both agencies, with the policy and operational excellence of Swiss aid spilling over into the Swiss contribution to shaping the international development agenda and the governance of multilateral institutions.

An exposure to public opinion which is more consequential than in most other Development Assistance Committee (DAC) countries in that the system of referenda in Switzerland can be triggered either by popular disenchantment with aid or by popular enthusiasm for particular causes or measures. The well organised non-governmental organisation (NGO) community has a special role given both the positive and negative potentialities of this political mechanism. Development education is also important in this context.

At the project level, Swiss aid has been founded since its beginning on participatory approaches and strong local ownership, with evaluation and feedback mechanisms operating throughout the project cycle.

In combination, these features provide Swiss development co-operation with its particular character.

Policy Frameworks

The Federal Law governing Swiss international development co-operation and humanitarian aid adopted by Parliament in 1976, and the implementing Ordinance, place poverty alleviation and support to developing countries' own efforts at the centre of Swiss aid objectives, assigning highest priority to the poorest developing countries, regions and population groups. Apart from the Federal Law, the major policy statement for Swiss development co-operation is in the 'North-South Guidelines' (hereafter known as the Guidelines) issued by the Federal Council (Bundesrat) on 7 March 1994. These Guidelines explain the context of development policies in the 1990s, including globalisation in the political, ecological and economic domains, the interdependence between North and South, and the need for a coherent policy.(1) The development policy set out in the Guidelines is exceptional in calling for responsibilities in coherence by Switzerland and others, and covers the major themes prominent in international discussion of development co-operation such as:

• safeguarding and promoting peace and security, human rights, democracy and the rule of law;
  

• promoting welfare;
  

• increasing social equity;
  

• protecting the natural environment.
  

Swiss development co-operation is funded in a distinctive way whereby the Federal Assembly approves Framework Credits which come up for renewal periodically (approximately every four years). Each Framework Credit has a fixed ceiling of funding. There are six major Framework Credits in effect:

• technical and financial co-operation;
  

• economic and trade policy measures;
  

• Bretton Woods Institutions;
  

• capital participation in regional development banks;
  

• co-operation with central and eastern Europe;
  

• international humanitarian aid.
  

While subject to an annual budget process, these Framework Credits provide a policy structure for the areas concerned and a firm basis on which the development co-operation administration can carry out plans over several years as required by sound development programming. In some cases, the Framework Credit, as projected, is not exhausted within the time frame originally set out and so appropriations may stretch out for an additional period.

The next major Framework Credit coming up for renewal is the one for economic and trade policy measures. It has been defined based on the global economy, the increasing importance of trade and investment as a motor for growth and liberal international trade policies. It is aimed at helping to avoid the risk that the poorest countries will be marginalised from a trade and investment standpoint. A number of new instruments of development co-operation are being proposed. If accepted by the Federal Assembly this new Framework Credit would take effect starting 1 January 1997 and would run for four years with a programme credit of SF 960 million. Disbursements may extend over seven to eight years.

Organisation

With respect to aid management there is a division of labour between two administrations:

• SDC in the Federal Department for Foreign Affairs; and
  

• FOFEA in the Federal Department of Public Economy.
  

The SDC is primarily responsible for technical and financial co-operation and humanitarian aid and normally covers about 75 to 80 per cent of disbursements. The FOFEA is primarily responsible for economic aid and handles 15 per cent of disbursements. Both SDC and FOFEA have multilateral responsibilities and manage aid to Central and Eastern European Countries and New Independent States of the former Soviet Union (CEECs/NIS).

The division of aid management into two main organisations has its roots in the way the Swiss development co-operation system was created in the context of post-World War II reconstruction efforts. The fact that responsibilities are shared between two departments has both favourable and unfavourable aspects and the entire issue is presently being considered as part of the government-wide reform efforts by a high level government reform study commission. The traditional demarcation between the two administrations has become blurred in some fields. Such convergence requires more collaboration and some degree of reorganisation. Closer co-ordination could be achieved in such areas as aid to CEECs/NIS and country programmes.

Analysis and Implementation

In many ways the Swiss development co-operation system shows a strong capability for analysis and implementation in support of the strategies adopted. This can be found not only in the way policies have been crafted, but in guidance and approach documents used in the development co-operation system and intended for the use of aid recipients, and in co-operation programmes with NGOs, which are particularly strong in Switzerland. It is also evident in programmes in the field, some of which have had long gestation periods, but which have resulted in participatory projects with good prospects for sustainability. SDC follows a policy of country concentration with country programmes in some 17 countries. The strategies elaborated with recipient countries in those countries reflect a high quality of analysis. FOFEA, whose instruments are aimed at trade and the private sector, employ these instruments as measures to induce policy reforms. FOFEA plays a leadership role in construction of debt reduction strategies.

Compared to other donor agencies, many of which are encountering chronic staff problems, the Swiss aid administration is particularly well-endowed with committed, experienced staff and this has on balance been a positive contribution to the quality of Swiss aid. The Federal Assembly, when apprised of the situation in view of the restrictions on civil service hiring, authorised a mix of civil service employees and private contract staff in the Swiss development co-operation system. Primarily through this approach, the Swiss aid administration has been able to assure a high quality, committed staff, imbued with Switzerland's development philosophy and strategies.

Swiss evaluation methods reflect both the participatory approach and the strength of analysis of its development co-operation staff. While using both external evaluations and self-evaluations, the system is turned towards participation by recipients in a common search for solutions and a process of internalisation on the part of recipients, so that evaluations become an integral part of the participatory development process itself. Further refinements and improvements in the evaluation system are in train, particularly to determine whether projects and programmes are effectively contributing to the strategic directions as intended.

ODA Volume

In 1995 aid disbursements from Switzerland amounted to $1.1 billion, a fall of 6 per cent in real terms. Bilateral disbursements represented 72 per cent of total net official development assistance (ODA) while multilateral disbursements represented 28 per cent. Switzerland's membership in the Bretton Woods Institutions as of 1992 has made a considerable difference in the profile of Swiss ODA, and Switzerland's multilateral contributions have increased as a proportion of ODA in recent years. The ODA gross national product (GNP) ratio fell from 0.36 per cent to 0.34 per cent, partly due to reduced payments to regional development banks and funds. This performance made Switzerland the tenth-ranking DAC Member in ODA/GNP ratio and the fourteenth-ranking Member in absolute disbursements.

Switzerland has never subscribed to the 0.7 per cent ODA/GNP target set by the United Nations. However, the Guidelines set a target of 0.40 per cent of gross national product, a policy announced by Switzerland at the United Nations Conference on Environment and Development (UNCED) in June 1992. Unfortunately, Federal budget plans for 1996-99 project a drop in the ratio. Given the quality and effectiveness of Swiss aid, and particularly its strength in participatory development, which is in short supply in the donor community, Switzerland should try to make progress towards the 0.40 per cent target established in the Guidelines.

Public Support

The fact that civil society in popular votes has approved both the bilateral and multilateral programmes, including joining the Bretton Woods Institutions in 1992, gives the Swiss development co-operation programme a firm and clear political anchor. This is important in view of the fact that, in other cases in Switzerland, the population through referenda has rejected a proposal to join the United Nations (UN) and to join the European Economic Area (EEA), the latter stalling Switzerland's bid to join the European Union (EU).

Every four years SDC arranges for non-governmental organisations (NGOs) to commission opinion polls. In the most recent one (January 1994), although most people overestimated public and private aid efforts, an overwhelming majority still favoured either increasing (25 per cent) or maintaining present aid levels (over 50 per cent). The development programme, thus, has a strong popular basis which is evident in the vibrant Swiss NGO community and in civil society at large.

NGOs play a comparatively large role in Swiss development co-operation. In 1994, for instance, the level of ODA channelled through NGOs (including international NGOs) amounted to $162 million or 16.5 per cent of total net ODA as compared to a DAC average of less than 2 per cent. NGOs not only play a large role in carrying out programmes in concentration and non-concentration countries, but also in public education about development co-operation. NGOs provide valuable analysis about the development co-operation programme, and about broad issues of coherence and economic policy related to it. The Swiss system for encouraging NGO participation and consulting with the NGO community is one of the strongest among DAC Members.

Coherence

The Guidelines specifically call for a coherent policy towards the South; they acknowledge that contradictions exist which need to be highlighted and tabled for the political decision-making process. A range of mechanisms, designed to deal with coherence issues, have been put in place. There has been an open debate among civil society and NGOs on sensitive issues such as flight capital, arms sales, corruption, environment, domestic agricultural subsidies and export guarantees. No one would suggest that these issues are subject to simple, immediate solution. However, a real effort has been made to deal with them and others. On a comparative basis, it can be fairly said that no DAC Member has gone further in studying and coming to grips with difficult coherence issues in its relations with developing countries than Switzerland.

Conclusions

The seriousness and quality of the Swiss aid programme are not in doubt. With its emphasis on local participation and ownership, Switzerland's 'aid style' is very much in line with the DAC's Shaping the 21st Century: The Contribution of Development Co-operation, OECD, Paris 1996; at the aid review meeting, the Swiss Delegation expressed its strong support for this DAC strategy. Switzerland is also making an important contribution to progress on development issues in international fora. The particularly demanding nature of Swiss popular democracy places a premium on a good development education effort and on confidence in the efficiency and effectiveness of Swiss aid. Through the system of Framework Credits, policies and financial support are subject to systematic renewal and political approval.

Two main issues for the Swiss authorities arise from this Review:

First: the agendas and approaches of the SDC and FOFEA, are converging to a significant degree, producing closer collaboration than has heretofore been exhibited between the two offices at all levels. This collaboration is essential and is being supported at all levels, but it is time-consuming. It is desirable that the highest degree of synergy possible be attained between them. In this situation it seems important to take stock of the progress made in the integration of the Swiss aid effort in the two-agency system and to ensure that the structures and collaboration are as efficient and fruitful as possible.

Second: Switzerland should be moving faster to attain the 0.40 per cent GNP target for ODA that was established in the North-South Guidelines approved by the government.

(1). The policy frameworks described in the review reflect essentially the development co-operation policies and programmes of Switzerland applicable to traditional developing countries. For CEECs/NIS countries, there is a separate law, ordinance and Framework Credit. The objectives (promotion of political and economic transformation) and emphasis in co-operation are different, although many co-operation features are similar to those in developing countries, in particular for CEECs/NIS countries included in Part I of the DAC list.

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