Division of labour

In early 2007, the European Union agreed on a code of conduct that would raise the effectiveness of aid. Whilst the Paris declaration requires donors to coordinate amongst each other and align the policies and procedures of partner countries, it is not an effective answer to the increasing number of development actors in each country and the resulting administrative burden. A recent World Bank report revealed that the number of donors operating in each country had trebled since the 1960s, and reports that the average size of each project is no higher than 1.5m USD.¹ Therefore, the division of labour (DoL) approach aims to go beyond the harmonization agenda, with the objective of reducing the number of donors involved in the same kind of activity. In early 2007, the EC proposed a roadmap towards a better concentration of aid for all member states.

The challenges of the new division of labour in the EU are threefold. The demand is that countries should neither work in every sector in one country (in-country), nor in all countries (cross-country), nor in everything (cross-sector). Instead, each donor should limit sector involvement per country to two working areas, should reduce the number of partner countries and should, whilst taking into account the opinion of the recipient country, start thinking about what he or she is good at – both geographically and sector-specifically. ²

How does Spain do? On sector basis (in-country), an examination of the country strategy papers shows a wide-ranging dispersion of sectors in many countries: on average Spanish Development Cooperation works in ten sectors per country. Spain still has to select fewer sectors to work with in each country.³

In terms of countries to work in (cross-country), the Spanish Master Plan specifies 23 priority countries (or territories), 15 special attention countries and 14 preference countries outside of Europe. In comparison with the focus on fewer countries that has occurred over the last decade in other European countries, these still appear to be far too many countries to work in. In addition, the term priority country seems somewhat unclear, since within the first ten aid recipients only five figure as priority countries, indicating a gap between planned priorities and actual funding. The Master Plan 2005-08 promises to dedicate 70 percent of all funds to priority countries. As of 2006 this had not been accomplished. (see chart below).

The table above summarizes the 30 main recipients of bilateral aid, or 70 percent of all bilateral aid. Therefore, the seven “priority countries” (out of a total of 23) that are not among the 30 main recipients are not covered in this table. In place of these seven priority counties, there are 14 non-priority countries within the top 30. The fact that some priority countries do not get into the top 30, and that the top 30 only account for 70 percent of bilateral aid, indicates dispersion and aid fragmentation.

Further analysis of the table produces the following results: the micro-credit (FCM) and the development credit (FAD) instruments are way off declared priorities. The rest of government merely follows the priorities defined by the Master Plan. Debt cancellation and swaps do not adhere to the plan, which is understandable as these activities are coordinated internationally by the Paris Club, and Spain cannot impose the priorities of its Master Plan on this association. The AECI is shown to be highly dispersed, some of which can be attributed to the large amount (35 percent of all AECI spending) dedicated to regional programmes, in which priority countries might or might not enter. Oddly, the bodies that adhered most to the plan seem to be the autonomous regions and municipalities, operating through decentralized development cooperation. One possible explanation could be that the funds controlled by the Agency and decentralised cooperation pursue developmental, long-term goals, whereas other instruments (FAD, FCM, debt) are determined by political (foreign policy and visibility), short-term criteria.

In terms of pinning down the comparative advantages of Spanish Development cooperation (cross-sector), no progress had been made either. On the contrary, a series of Spanish plans call for the adjustment of sector spending to OECD standards. For example, the Master Plan stipulates an increase in humanitarian aid up to 7 percent of ODA, the average OECD level, while the Annual Plan 2007 laments low spending on the sectors of water, sexual health and habitat, and calls for increases in order to meet OECD averages.⁴ In terms of country presence, Spanish development cooperation has expanded its potential priority country list by moving into Africa – once again following the mainstream. Development cooperation strategy has in effect mandated the levelling of current spending patterns with the OECD average. An alternative strategy would be to concentrate on those sectors where there is already accumulated experience, or start choosing sectors in which to build comparative advantage. Why do everything?

Assuming the Code of Conduct to be a cornerstone of European development policies, these are some pending tasks for the planning and allocation of Spanish ODA funds.

• In-country: Limit sectors per country, for example to two in priority countries and one in special attention countries. This should be included as a guideline in the the preparation of DEPs and PAEs.
• Cross-country: Limit the number of priority countries. The current shift towards Africa is part of the moves towards “normalising” Spain in comparison to other donors. In contrast, Spain could build on its relation with the Middle East and Latin America. The debate on middle-income Countries within the UN Office for Financing Development, led by Spain, is one approach. Civil Society is advised, however, to watch out for an outright political or ‘post-colonial’ agenda. Similarly, the new focus on West Africa could be driven by interests of security and migration control rather than developmental considerations. The weak point in the DoL agenda is seemingly its naivety when it comes to selection of priority countries.
• Cross-sector: Initiate a reflection on the comparative advantages of Spanish development cooperation – what are we good at? And what development model does Spanish aid want to pursue: replicating the successful experiences of Spain abroad, or starting to specialise in a few genuine Southern solutions, making use of the potential for cross-country comparison. This is best being done in collaboration with partner countries. Possible ideas could include social security, co-development, decentralization, fisheries, tourism and fiscal administration.

The preconditions for successfully tackling the challenges that will arise from further work on the DoL agenda are these:

• Division of labour and reduction of sectors has to be integrated into the planning tools for country strategies. Evaluations have to consider DoL as an element of aid effectiveness. Therefore, a clear definition of what a “sector” is has to be made. The confusion in the Master Plan on priority sectors [estrategias sectoriales] and horizontal priorities [prioridades horizontales] has to be dissolved.
• Investment in institutional and human resources capacities in both headquarter and field offices. In order to define priority sectors, country offices have to have negotiation powers. Headquarter should be able to speak with ‘Brussels’ and other agencies to work on delegated cooperation, and form part of a united approach to define European complementarities and identify the Spanish specialisation.
• A more serious and deeper dialogue with partner countries would include them in the identification of Spanish strengths. This should go beyond the “comisiones mixtas”, the rather formal framework agreements.
• Spanish NGOs have to be included in the dialogue on how to achieve more aid effectiveness by dividing labour. Given the established domains, there will be public pressure to neither reduce priority countries nor sectors. Sector framework agreements [Convenios Sectoriales] are a first step towards building the particular strengths of NGOs. It will be difficult for some parts of civil society to accept that their particular affiliation will not be covered by new priorities.

Spain, in its attempt to “normalize” the system, has focused on catching up in all areas and levelling out the differences. The PACI 2007 announces the preparation of an action plan to react on and measure the achievements of the Paris Declaration. The fluid state that Spanish

cooperation finds itself in is a unique opportunity to make progress in this respect. Since Paris 2005, the aid effectiveness agenda has moved on, and any plan should integrate concrete proposals for the division of labour. The Spanish Plan has to lay out a reaction to the European agenda for division of labour, outlining the steps to downsize the number of partner countries, focus more clearly on specific sectors within countries, and start reflecting on Spain’s comparative advantages. This is not to argue for a backlash against Spanish development cooperation reforms, and a move back to post-colonial relations. Spain could instead ride the wave of reform to steer its emerging institutions towards a more focused and specialised mode of delivery, leapfrogging the phases other agencies and ministries have gone through. Aid harmonization and division of labour could lead towards a Europeanization of Spanish development cooperation. This could be established by benchmarking Spanish programmes against other European practices, using instruments like joint country strategies and delegated cooperation, and striving towards a common stand in influencing multilaterals. As a result, Spain could emerge as a thematic leader in some policy areas. The debate on what these areas and counterparts could be has only just begun.

• 1 World Bank 2007: Aid Architecture: An Overview of the Main Trends in Official Development Assistance Flows, Washington
• 2 See Nils-Sjard Schulz 2007: La división del trabajo entre los donantes europeos
• 3 For an analysis of sector concentration in DEPs see Annex 1 in: Nils-Sjard Schulz 2007: La división del trabajo entre los donantes europeos, op cit; see the discussion ond how to define “sector” in Simon Maxwell’s contribution in the ODI blog .
• 4 See the sector Directive I, pp.- 23 - 29 in the Annual Plan 2007