Instruments and structures of development cooperationconcluded

Accompanying Measures to Budget Support in Sub-Saharan Africa

In development cooperation, direct financial transfers to partner countries’ national treasuries are often supported by what we call accompanying measures. The evaluation has looked at nine countries in Sub-Saharan Africa, investigating how and under what circumstances these measures make general budget support more effective. The evaluation was completed in 2015.

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Budget support – in other words, the direct transfer of financial resources to a country’s national treasury – is intended to help governments implement their national development policies autonomously. One aim here is to support the implementation of strategies to combat poverty; another is to promote good governance in the partner country through support for jointly agreed reform processes.

In addition to the financial contribution, budget support also comprises non-financial elements, including technical cooperation, capacity building and, in many cases, political conditionality. The use of these instruments is intended to help improve the partner countries’ public financial management. It should also strengthen democratic control – through parliament, civil society and the media.

Germany and other EU countries have also advocated these “accompanying measures”. However, there have until now been no specific investigations of the effect of the measures.

Findings and Recommendations

Accompanying measures make budget support more effective.

They strengthen public financial management in the partner countries, for example the court of auditors and the national tax authority, and thus reduce the risk of the misappropriation of funds. The existing focus of accompanying measures on the management of the public finances should be retained.
 

As a result of a decrease in budget support in many countries, it is also becoming more difficult to exert an influence on the appropriate – poverty-oriented – use of the national budget.

This makes it more important for the partner government to be accountable to local stakeholders and institutions. Accompanying measures should be used to strengthen these stakeholders in their democratic control function. This is especially the case for countries that have an increased risk of corruption as a result of growing income from the extraction of natural resources.

Coordination – both between partners and budget support donors and among donors themselves – with regard to planning and implementing accompanying measures is unsatisfactory in many places.

The donors should make greater use of policy dialogue to identify partner needs for additional support and coordinate the accompanying measures more effectively within the donor group.

 

The evaluation was completed in 2015. This is a summary of the findings and recommendations; you can find the complete findings and recommendations in the report.

Objectives of the Evaluation

Accompanying measures to budget support have become more important in German development cooperation. The evaluation has considered whether, how and under what circumstances accompanying measures can contribute to achieving the objectives of the budget support. It has addressed questions regarding the relevance of these measures, the ways in which they work and the associated success factors. In addition, it has reviewed the interaction of accompanying measures with other elements of the overall budget support package such as policy dialogue, conditionality and donor coordination.

Background

The direct transfer of financial resources to national treasuries is intended to enable recipient countries to implement their national development strategies autonomously. Existing multi-donor evaluations indicate improvements in government spending towards addressing poverty, as well as a strengthening of public financial management systems in countries receiving budget support (see also the evaluation synthesis by Orth et al. 2017).

However, despite its development policy potential and the overall positive findings, budget support remains a controversial instrument, mainly because of the associated fiduciary risks. These include the risk of the misappropriation of budget support funds, as well as the danger of funds being used inefficiently and for purposes other than combating poverty.

In addition to the financial contribution, the standard package of budget support programmes includes non-financial elements such as conditionality, an intensive policy dialogue between donors and the partner government, and accompanying measures. In the short to medium term, accompanying measures aim to reduce the fiduciary risks of budget support. This can be achieved, for example, by financing additional audits.

In the medium to long term, accompanying measures to budget support aim to strengthen government institutions of public financial management, such as the court of auditors, the national tax authority or decentralised units of financial administration. Furthermore, accompanying measures can enable parliaments and civil society to exercise democratic control in national budget processes more effectively.

Team

Contact

Portrait von Dr. Johannes Schmitt
© DEval

Dr Johannes Schmitt

Senior Evaluator - Team Leader

Phone: +49 (0)228 336907-946

E-mail: johannes.schmitt@DEval.org

Portrait Jörg Faust
© DEval

Prof. Dr Jörg Faust

Director

Phone: +49 (0)228 336907-902

E-mail: joerg.faust@DEval.org

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