OECD Development Co‑operation Peer Reviews: Italy 2019

5. Italy’s delivery modalities and partnerships

Abstract

This chapter reviews Italy’s approach to delivering in partner countries and through partnerships to determine whether its approach is in line with the principles of effective development co-operation.

Italy’s development co-operation is characterised by strong multi-stakeholder partnerships, including most recently with the Italian private sector and a broader spectrum of civil society. Calls for proposals and a project-based approach define many of these partnerships, which may not always be the most strategic means of engagement. Italy has made good progress on transparency and places a strong emphasis on country ownership, even if its choice of modalities could be even more supportive. Medium-term predictability continues to be an important challenge. The development effectiveness marker used for the purpose of project appraisals could assume a more important stocktaking role.

Partnering

Peer review indicator:

The member’s approach to partnerships for development co-operation with a range of actors (national and local government, UN agencies, development banks, CSOs, foundations, knowledge institutions, media, private sector) is consistent with development effectiveness principles

Strong multi-stakeholder partnerships are anchored in Italian development co-operation legislation. Italy has made adjustments to include more diverse development co-operation actors, including the Italian private sector. Calls for proposals define many of these partnerships, and these could be more flexible and streamlined. Medium-term predictability is a challenge, mostly due to implementation delays, but Italy has stepped up efforts to make its aid more transparent and accountable to the Italian taxpayer. Italy is a strong proponent of EU joint programming.

Multi-stakeholder partnerships are strong and EU joint programming is the default

Italian legislation and development co-operation illustrate the value Italy places on actors such as civil society organisations (CSOs), multilateral organisations, local authorities, universities and the private sector. This is a good example of putting the 2030 Agenda and, more specifically, sustainable development goal (SDG) 17 to strengthen global partnerships at the heart of Italy’s development co-operation. In this way, Italy’s national strategy for sustainable development and the monitoring of the strategy are opportunities to create a common vision across organisations, regions, institutions and enterprises in Italy to contribute to the realisation of the SDGs.

A good example of multi-stakeholder partnerships is the National Multi-stakeholder Platform on Energy and Development, created in 2016. The platform brings together institutional, public and private stakeholders to promote innovative projects, using the skills available in AICS offices combined with technology transfer, capacity building to plan and adapt regulatory frameworks, and twinning with Italian banks and companies, such as Eni, the Italian energy multinational.

Italy is committed to EU joint programming, giving precedence to the joint exercise before developing its own bilateral country strategy or framework, as seen in Senegal (Annex C). Italy is pragmatic in partnering with other EU member states, recognising that it usually has a small bilateral presence relative to other donors, as set out in Chapter 3.

A broader representation of civil society delivers mainly in priority countries

The participation of CSOs and other non-profit organisations in development co-operation draws on their complementary role in relation to partner country governments. In 2018, Italy broadened its CSO registry criteria to include actors other than non-governmental organisations (NGOs), making it more reflective of Italian civil society. The registry was approved by the Joint Committee and now includes 77 non-profit organisations of social utility, 41 foundations, and 2 co-operatives, in addition to 91 NGOs.1

The private sector is now a formal actor in Italian development co-operation

While Italy has long recognised civil and local authorities as independent actors in development co‑operation, it was only through Law 125/2014 that the Italian private sector is now recognised for its “contribution of companies and banking institutions to development processes in partner countries” (Republic of Italy, 2014[1]). How the Italian private sector operates in this context is still to be clearly determined, although firms are obliged to adhere to the UN Global Compact, which is good practice (Ceccarelli, 2018[2]). Memoranda of Understanding between the Ministry of Environment (MTTE) and partner countries funding environment and climate-related activities also include clauses on involving and partnering with the private sector.

To date, Italy’s support to private-sector engagement is through blending Cassa Depositi e Prestiti S.p.A. (CDP) resources with development banks and financial institutions to crowd-in private investment and extend loans and guarantees, including via the EU External Investment Plan (Chapter 3). According to the agreement signed between AICS‑MFAIC‑CDP in 2016, all development projects must be approved by the Joint Committee at the project design phase.

The first call for proposals open to the for-profit sector in support of partnerships between the private sector, CSOs, and other actors to co-finance innovative entrepreneurial initiatives and business start-ups in partner countries was launched in 2017. Firms submit proposals and guarantee 50% co-financing as a prerequisite to funding. Twenty-five firms submitted proposals, 13 of which were ultimately funded, including some start-ups, for which the co-financing requirement was waived (De Muro et al., 2019[3]). Following the low uptake of the first call for proposals,2 AICS went on a roadshow throughout Italy to raise awareness on the value of businesses and development co-operation actors working together, and to dispel ideas that this was about an “internationalisation” of Italian business. The second call for proposals was launched at the end of 2018 and had 60% more submissions from across Italy thanks to this awareness-building effort.3 In the future, Italy will also work to promote joint ventures in partner countries.

Italian local authorities are still active in development co-operation, but less so than before

Law 125/2014 refers to regions, autonomous provinces (Trento and Bolzano) and local administrations as development co-operation actors in their own right. Italy’s local authorities are a relatively small but important cornerstone of development co-operation that bring local know-how and investments to communities of a similar geographic scale in partner countries, including via universities and through peer‑to-peer exchanges and projects (OECD, 2018[4]). By law, local authorities may reserve up to 0.8% of their budgets for development co-operation projects, although recent budget constraints have squeezed their international development co-operation activities (Chapter 3).

Partnerships would benefit from more strategic, flexible funding modalities

Partnerships with local authorities, civil society and the private sector are largely defined by calls for proposals, which tend to require a disproportionate amount of staff time given the funding available. Work includes ensuring compliance with administrative decrees that follow public contracts law and are not necessarily adapted to non-public sector entities like civil society and the private sector.

For example, CSO project funding is in line with Italy’s priorities4 during annual calls for proposals that are sometimes thematic. However, sustainable partnerships with civil society and strengthening CSO capacity in partner countries often require longer-term capacity building and more predictable funding than currently offered.5 Unlike calls for proposals for emergencies, development CSOs are obliged to have an operational office in Italy to be eligible for funding. Partnering with CSOs for implementing EU delegated co-operation offers more flexibility to collaborate directly with partner country NGOs, including for non-humanitarian assistance.

Calls for proposals, including for emergency and humanitarian action (Chapter 7), may not be the most strategic or efficient partnership approach going forward, a point also raised in the 2014 Peer Review (Annex A). Instead, Italy might explore more programme-based support with various partners and stakeholders.

Medium-term predictability and delayed implementation is a challenge for Italy

Medium-term predictability (from the perspective of partner countries) has declined considerably. On average in the next three years only 26% of disbursements to partner countries are covered by indicative forward spending plans provided by Italy, compared to 61% in 2015. In fact, five priority partner country governments and nine other non-priority partners indicated that they had no visibility on bilateral ODA from Italy expected in 2019, 2020 or 2021 (OECD/UNDP, 2019[5]).

Poor medium-term predictability could in part be explained by the way some financial envelopes are structured. For example, up to 40% of the humanitarian budget is linked to a budget line for peacekeeping missions and determined only later in the calendar year (Chapter 7), affecting the timing of calls for proposals at the country level.6 In addition, under Italian law, taxpayers contribute an obligatory 0.8% of their annual taxable income to a non-profit organisation, or back to the state. Some of what returns to the state becomes ODA, but the full amount is only known later in the year.7 Finally, budget cuts tend to be decided towards the middle or end of the year, thus affecting the amount that can actually be disbursed in the same calendar year.

Bilateral programmes, including projects funded through calls for proposals, and to a certain extent, multilateral partnerships (Chapter 3) operate on a three-year programming cycle, even if budgets are decided annually. AICS has the flexibility to carry over funds from one year to the next, which provides a built-in buffer when project implementation is delayed, but does not necessarily make the forecast of funds that will be available from one year to the next any clearer. Long delays in implementation run the risk of undermining key partnerships and the delivery of Italy’s development co-operation programme in partner countries (Chapter 4).

Programming or planning beyond the three-year horizon is not possible; however, many projects stretch beyond the initial three years8 either because of delayed implementation, and/or because the programme continues to be relevant beyond the initial three years. A long pipeline of overlapping Italian investments from previous years means that the sum of Italy’s activities may no longer align to the partner country’s priorities; it also makes reporting results at the country-level much more difficult (Chapter 6).

Italy has improved aid transparency and accountability

Italy’s very first Freedom of Information Act was passed in 2016 and grants every citizen the right to access all documents held by public bodies (Longo, 2016[6]). Detailed information on public officials is published on government ministries’ public websites by default. In addition, Law 125/2014 requires all public entities to provide detailed information on budget allocations for development co-operation,9 parliamentarians have remarked that this is a great improvement. These two landmark initiatives, together with the regular update of the Open Aid Italia platform,10 confirm Italy’s commitment to transparency and accountability in public development assistance. This is also mentioned in Italy’s third national open government action plan (Ministry for Public Administration, 2016[7]).11 Italy joined the International Aid Transparency Initiative (IATI) in 2017, and its global aid transparency score rose to “fair” in 2018 (Publish What You Fund, 2018[8]), in large part due to the fact that it now publishes quarterly, real-time information.

Country-level engagement

Peer review indicator:

The member’s engagement in partner countries is consistent with its domestic and international commitments, including those specific to fragile states

Italy applies the principles of ownership and mutual accountability in all its work in partner countries. It could use country-led arrangements even more to further align its programmes with national systems and programmes. The use of the development effectiveness marker at the project appraisal stage is good practice, but its use throughout the project cycle is not yet monitored.

Country ownership is at the heart of Italy’s country programming

In Senegal, the government used to convene an annual bilateral dialogue with Italy on implementing its country strategy. This took the form of a portfolio review of the sectors and regions where Italy was investing in Senegal’s development, and the dialogue concluded with a list of recommendations for Italy. Although this exercise has now been superseded by the EU joint programming exercise, it is clear that this level of dialogue and mutual accountability was valuable and Italy continues to operate on the basis of partner country ownership (Annex C).

Italy has stand-alone country strategies for 7 of its 22 priority partner countries (Chapter 2). In an additional 5 priority countries and territories, including Senegal, its EU joint programming strategy is the blueprint for its activities. This leaves 10 priority partner countries with no concrete strategy or obvious way of determining whether Italy’s overall country programme is in line with the partner country’s own strategy.

Programme proposals originate in any of the 20 country offices, and are in line with the partner country’s national strategy. In the latest Global Partnership monitoring round, unlike previous rounds and almost all other development partners, Italy has a higher percentage of funding recorded in partner countries’ national budgets and channelled through partner countries’ systems, whether it be audit, financial reporting, procurement, or national budget execution (Table 5.1). This is a positive trend and it would be good to sustain and consolidate it in future country programming.

Table 5.1. Italy’s results from the 2018 Global Monitoring Round

Source: (OECD/UNDP, 2019[5]), 2018 Monitoring of the Global Partnership for Effective Development Co-operation, https://effectivecooperation.org/wp-content/uploads/2019/06/Part-I-of-the-Global-Partnership-2019-Progress-Report.pdf

Greater sector-based approaches would boost Italy’s programme-based aid

Italy uses country-led co-ordination arrangements to deliver more harmonised and aligned aid. It has made some effort to concentrate its bilateral ODA and increase the size of its programmes, but project-type interventions are by far the main modality of choice for Italy’s bilateral programming.12 As seen in Senegal (Annex C), scaling up projects and providing more programme-based or sector support would help build stronger partnerships with partner country governments. In some cases, the project approach might be a good opportunity to pilot innovations in providing broader sector support (e.g. adapting school construction for people with disabilities), although this is not Italy’s stated intent.

A longer-term outlook and strategy for engagement might help existing (pilot) projects and programmes evolve with a view to scaling up though broader sector-wide approaches, as recommended in the 2014 Peer Review. In this way, Italy could maintain its current engagement while at the same time positively influencing other development partners – a point highlighted by government partners in Senegal (Annex C).

The development effectiveness marker is used for project design, but not implementation

The ex-ante development effectiveness marker, cited in the last peer review (OECD, 2014, p. 63[9]) – and see Annex A – is used by Italy to score project proposals against ten dimensions (for a maximum of 100 points). Nonetheless, the implementation of programmes or projects against these indicators is not monitored (see Chapter 4 and Box 5.1) and the use of the marker has not yet been the subject of any corporate monitoring on its uptake, as planned at the time of the 2014 Peer Review.

The 2018 progress report on Italy’s development co-operation activities consolidates information provided by the various ministries and local authorities. For the first time, the implementation of development co‑operation – whether it be loans, multilateral funding, or bilateral projects – is monitored against five aid effectiveness indicators (ownership, alignment, transparency, predictability, and private-sector engagement). The use of this information is a step in the right direction, but reporting against them by the various ministries, local authorities and country offices could be more systematic (MFAIC, 2018[10]).

An advisory committee for development effectiveness is now in place and a draft development effectiveness action plan for 2019-21 sets out indicators, baselines, and targets for country ownership, results-based management, inclusive development, and transparency and accountability that will be monitored on an annual basis.

Box 5.1. Italy’s development effectiveness marker

Adopted in 2013, the development effectiveness marker includes 10 components compared to the initial 12 (Table 5.2). Project proposals are scored against each component and the AICS “verification team” uses the process to appraise projects. An aid management system that allows for regular monitoring against these indicators would make them more influential. Italy is now considering how it might adopt a marker for humanitarian aid.

Table 5.2. Italy’s development effectiveness scoring system

Ownership - 12 pts	Inclusive partnerships - 6 pts
Harmonisation - 8 pts	Poverty reduction - 10 pts
Managing for development results - 10 pts	Gender equality - 8 pts
Alignment - 14 pts	Environmental sustainability - 10 pts
Mutual accountability - 10 pts	Untying - 10 pts TOTAL = 100 pts

Source: MFAIC and AICS project documents.

References

[2] Ceccarelli, G. (2018), Development – A Private Affair? The involvement of the Italian private sector in rural development cooperation programmes, Oxfam Italia, http://www.oxfam.org (accessed on 17 April 2019).

[3] De Muro, P. et al. (2019), What goes around comes around. Evidences from the first call for private engagement in the international development cooperation in Italy, Salerno University Proceedings, https://icsb.org/wp-content/uploads/2018/11/DE-MURO-MARCHEGIANI-PRATESI-SGARRA1.pdf (accessed on 16 April 2019).

[6] Longo, A. (2016), “Ecco il testo del decreto Foia, la trasparenza della PA parte da dicembre”, La Repubblica, 19 May 2016, https://www.repubblica.it/tecnologia/sicurezza/2016/05/19/news/ecco_il_testo_del_decreto_foia_la_trasparenza_della_pa_parte_da_dicembre-140128514/ (accessed on 2 May 2019).

[10] MFAIC (2018), Relazione annuale sull’attuazione delle politica di cooperazione allo sviluppo (in Italian), Ministry of Foreign Affairs and International Co-operation, Rome, https://www.esteri.it/mae/resource/doc/2018/01/relazione_2016_finale.pdf (accessed on 27 May 2019).

[7] Ministry for Public Administration (2016), Open Government in Italy: 3rd Action Plan, 2016-2018, http://open.gov.it/wp-content/uploads/2016/10/2016-10-07-3rd-NAP-Italy-English-version.pdf (accessed on 2 May 2019).

[4] OECD (2018), Reshaping Decentralised Development Co-operation: The Key Role of Cities and Regions for the 2030 Agenda, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264302914-en.

[9] OECD (2014), OECD Development Co-operation Peer Reviews: Italy 2014, OECD Development Co-operation Peer Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264213241-en.

[5] OECD/UNDP (2019), 2018 Monitoring of the Global Partnership for Effective Development Co-operation, OECD, Paris and UNDP, New York, https://effectivecooperation.org/wp-content/uploads/2019/06/Part-I-of-the-Global-Partnership-2019-Progress-Report.pdf.

[8] Publish What You Fund (2018), Italy-Agency for Cooperation and Development (AICS) Donor Profile, http://dx.doi.org/10.2.

[1] Republic of Italy (2014), Law no. 125 of 11 August 2014 - Unofficial translation, https://www.aics.gov.it/wp-content/uploads/2018/04/LEGGE_11_agosto_2014_n_125_ENGLISH.pdf (accessed on 12 April 2019).

[11] Segato, L., N. Capello and V. Gamper (2018), Independent Reporting Mechanism (IRM): Italy Progress Report 2016-2017, https://www.opengovpartnership.org/sites/default/files/Italy_Mid-Term_Report_2016-2018_EN.pdf.

Notes

← 1.  In addition, current work between MFAIC and the Ministry of Labour is creating linkages between the AICS register (defined by Law 125/2014) and the Third Sector entities register, which is regulated by Law 106/2016.

← 2.  The main challenges were building good partnerships with both Italian and local organisations, and designing inclusive projects that are economically sustainable and innovative.

← 3.  This time, 40 firms participated, and 22 proposals were funded.

← 4.  Fifty percent of funding through civil society goes to African priority countries, 30% to priority countries outside of Africa, and 20% to non-priority countries, of which 10% are in Africa.

← 5.  In 2018, over 300 CSO proposals were submitted for three-year funding.

← 6.  This uncertainty was also compounded by the fact that until recently the call for proposals was done on a regional basis and the amount allocated to fund CSOs in each country was not determined in advance.

← 7.  The majority of the “otto per mille” goes to recognised religious organisations and primarily the Italian Roman Catholic church.

← 8.  In Senegal, some projects had been running for the past 10 years.

← 9.  The Ministry of Economy and Finance provides a three-year outlook in an annex to the budget law adopted at the end of each year. This outlook presents ODA projections by ministry and budget line (and thus not all off-budget resources). For example, this does not include the revolving fund for development co-operation, the financial, administrative and accounting management of which is entrusted to CDP. On the other hand, the law does include an estimate of the portion of the European Union budget contribution that will be allocated for public development based on the European Union’s EuropAid ODA forecast.

← 10.  See http://www.openaid.esteri.it.

← 11.  The Independent Reporting Mechanism refers to the involvement of civil society in monitoring its commitments in the national action plan of Open Government (Segato, Capello and Gamper, 2018[11]).

← 12.  Core contributions to multilaterals and in-donor refugee costs are the two types of aid that are the biggest by volume for Italy.