THEMATIC EVALUATION OF THE EC SUPPORT TO GOOD … · OF THE EC SUPPORT TO GOOD GOVERNANCE FINAL...

THEMATIC EVALUATION

OF THE EC SUPPORT TO

GOOD GOVERNANCE

FINAL REPORT

Volume 1

Synthesis Report

Contract Number: EVA/80-208 Service Contract for the Evaluation (sectoral and thematic) of

European Commission Programmes and Policies in Third Countries, relating to Social and Human Development issues.

June 2006

Evaluation for the European Commission

A consortium composed of PARTICIP, Cideal, Channel Research and South Research c/o lead company PARTICIP:

PARTICIP GmbH, Consultants for Development & Environment

Headquarters: Hildastrasse 66, D 79102 Freiburg, Germany

Brussels Branch: Avenue des Arts 50 (5th floor), B 1000 Brussels, Belgium

Centro de Investigatión y Cooperación

al desarollo Madrid, Spain

Channel Research

Service Contract for the Evaluation

(sectoral and thematic) of

European Commission

Programmes and Policies in Third

Countries, relating to Social and

Human Development issues.

Thematic Evaluation of the EC support to Good Governance

Brussels, Belgium With the Collaboration of ECDPM

South Research

Leuven, Belgium

Project Supervisor is project manager of EuropeAid Co-operation Office, Evaluation Unit H6

Contract manager is Mr René Madrid from PARTICIP GmbH International Experts Jean Bossuyt (Team leader) Emery Brusset (thematic expert) Harry Garnett (thematic expert) Marc de Tollenaere (thematic expert) Katharina Madrid (thematic expert) René Madrid (Key expert) Marion Miketta (Junior expert) Lucio Filippini (Junior expert) Frédéric Ceuppens (Junior expert) Serani Siegel (Junior expert) Helge Rieper (Junior expert)

National Experts Ramon Seiffe (Domenican Republic) Mutaz Al-Taher (Jordan) Andrei Marusov (Ukraine) Lamien Ouando (Burkina Faso) Malika Ramoun (Algeria) Cassinda Ernesto (Angola) Herminio Castillo (Guatemala) Maria Pakpahan (Indoniesia)

The opinions expressed in this document represent the authors’ points of view, which are not necessarily shared by the European Commission or by the authorities of the countries concerned.

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Thematic Evaluation of the EC support to Good Governance Final Report - June 2006 - PARTICIP GmbH

FINAL REPORT

Volume 1 Synthesis Report Volume 2 Annexes Volume 3 Synthesis Note and Country Notes

VOLUME 2 - TABLE OF CONTENTS

Annex 1 Terms of reference Annex 2 Review of EC governance objectives and Impact diagrams Annex 3 EC policy and institutional framework of governance Annex 4 Comparative analysis of the different regional policies Annex 5 Evaluative questions, judgement criteria and indicators Annex 6 Evaluation analysis methodology Annex 7 Method of data and information collection and analysis Annex 8 Approach to quality assurance and common approach Annex 9: Selection process for the field visits Annex 10: Selection process for the CSP analysis Annex 11 Country Strategy Paper analysis Annex 12 Lessons learnt from other donors’ evaluations and some relevant EC

evaluations Annex 13 Integration of governance at the regional level Annex 14 Proposed list of weighting good governance in existing DAC-sectors Annex 15: Statistical analysis: EC budget commitments and payments analysis Annex 16 Delegation questionnaires: template Annex 17 Summary of the Questionnaire analysis Annex 18: Questionnaires for Delegations: management and main results Annex 19 Results from focus groups Annex 20 Links between findings, conclusions and recommendations Annex 21 Recommendations per Evaluative Questions Annex 22 Working Plan Annex 23 List of documents and information sources

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VOLUME 3 - TABLE OF CONTENTS

Overall analysis Synthesis Note Country Note 1 Angola Country Note 2 Burkina faso Country Note 3 Domenican Republic Country Note 4 Guatemala Country Note 5 Indonesia Country Note 6 Jordan Country Note 7 Ukraine

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TABLE OF CONTENT

1 EXECUTIVE SUMMARY ................................................................................. 1 1.1 Purpose of the evaluation............................................................................................... 1 1.2 Background to the evaluation........................................................................................ 1 1.3 Methodology .................................................................................................................... 1 1.4 Analysis and main findings for each evaluative question.......................................... 2 1.5 Main conclusions ............................................................................................................. 7 1.6 Main recommendations .................................................................................................. 8

2 INTRODUCTION........................................................................................... 11 2.1 Purpose of, and background to the evaluation.........................................................11 2.2 Commission’s strategies and programs : objectives and intended impact ...........12 2.3 Context: Brief analysis of the political, economic, social and cultural dimensions, as well as the needs, potential for and main constraints......................................................18

3 METHODOLOGY...........................................................................................20 3.1 General approach ..........................................................................................................20

3.1.1 Approach to the inception phase ...........................................................................20 3.1.2 Approach to the desk phase ....................................................................................21 3.1.3 Approach to the field phase ....................................................................................21 3.1.4 Synthesis phase ..........................................................................................................23 3.1.5 Main Limitations........................................................................................................23

3.2 Method of data and information collection ..............................................................25 3.3 Method of data and information analysis..................................................................29 3.4 Methods of Judgement .................................................................................................31 3.5 Quality assurance ...........................................................................................................32

4 MAIN FINDINGS AND ANALYSIS ..............................................................33 4.1 Mainstreaming and priority area .................................................................................33 4.2 Tools and working practices, financial mechanisms and instruments..................41 4.3 Tools and working practices, financial mechanisms and instruments..................46 4.4 Tools and working practices, financial mechanisms and instruments..................52 4.5 Partner-country ownership, relevance of Commission governance support, and flexibility in adapting to different country contexts .............................................................56 4.6 The three CS’s : Coherence, complementarity and coordination .......................61 4.7 Cross-cutting issues .......................................................................................................66 4.8 Achievement of objectives...........................................................................................69 4.9 Actors and levels of governance .................................................................................81 4.10 Institutional Capacity at the level of the EC.............................................................85

5 MAIN CONCLUSIONS AND LESSONS ...................................................... 91 5.1 Main conclusions ...........................................................................................................91 5.2 Main lessons .................................................................................................................101

6 MAIN RECOMMENDATIONS ................................................................... 102 6.1 Overall recommendation............................................................................................102 6.2 Strategic and operational recommendations...........................................................104

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LIST OF ACRONYMS

ACP States : African, Caribbean and Pacific States ALA : Asia and Latin America CARDs : Community Assistance for Reconstruction, Development and Stability in the Balkans CFSP : Common Foreign and Security Policy CIDA : Canadian International Development Agency CSE : Country Strategy Evaluation CSOs: Civil Society Organisations CSP : Country Strategy Paper DAC : Development Assistance Committee DFID : Department for International Development EC : European Commission EDF : European Development Fund EIDHR : European Initiative for Democracy and Human Rights EPA : Economic Partnership Agreement EQ : Evaluative question EU : European Union ICT : Information and Communication Technologies LICUS : Lower Income Countries Under Stress LRRD : Linking Relief, Rehabilitation and Development MDGs : Millennium Development Goals MEDA : Euro-Mediterranean Partnership MTR : Mid-Term Review NEPAD : New Partnership for Africa’s Development NGO : Non governmental Organisation NIP : National Indicative Programme NSA : Non State Actor ODA : Official Development Assistance OECD : Organisation for Economic Co-operation and Development PEFA : Public Expenditure and Financial Accountability PFM : Public Financial Management PHARE Applicant countries of Central and Eastern Europe

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PRA: Participatory Rural Appraisal PRSP : Poverty Reduction Strategy Paper RIP : Regional Indicative Programme RRM : Rapid Reaction Mechanism RSP : Region Strategy Paper SAAs : Stabilisation and Association Agreements SADC: Southern African Development Community SIDA: Swedish International Development Agency SPSPs : Sector Policy Support Programmes SWAp: Sector Wide Approach SWOT Strenghts, Weaknesses, Opportunities or Threats analysis TA : Technical Assistance TACIS : Countries of Eastern Europe and Central Asia ToR : Terms of Reference UNDP : United Nations Development Fund ZDCP: Zimbabwean Decentralised Co-operation Programme

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1 EXECUTIVE SUMMARY

1.1 Purpose of the evaluation The purpose of this evaluation is to provide the relevant external co-operation services of the European Commission and wider public with an independent evaluation of the EC’s support for good governance. The focus is on the relevance, the efficiency, and effectiveness of that support and the sustainability of the impacts on good governance in the different regions (ACP, ALA, MEDA, TACIS and CARDS) and countries.

1.2 Background to the evaluation The background to this evaluation is the rapid ascent of governance as a political priority in EC external action. Several factors explain why governance was pushed, in a relatively short time, to the forefront of the EC policy agenda, including: (i) ongoing democratisation and decentralisation processes in partner countries, leading to growing domestic demands for improved governance; (ii) the gradual adoption of more politicized and participatory approaches to development cooperation; (iii) the pressure to show value for money in development assistance; (iv) the use of new aid modalities like budget and sector support; (v) evolving partnership relations with particular regions (e.g. the European Neighbourhood Policy; the new EU Strategy for Africa) emphasising governance objectives; and (vi) the emergence of a good governance agenda at global level (which invites donor agencies to also respect principles and practices of good governance in their dealings with third countries). Yet despite strong political commitments, an equivalent solid EC policy framework for governance support has not been developed until recently. Furthermore, the field of governance continues to expand and ramify into broader development agendas related to key objectives of EC/EU external action, such as poverty reduction, conflict prevention, peace, security, economic governance, etc. As governance starts permeating all spheres of EC cooperation processes with third countries, there is a growing demand for strategic and operational guidance on how best to intervene in a variety of country and regional contexts. Since governance is a relatively new domain of intervention, the evaluation was conceived primarily as a stock-taking and forward looking exercise, aimed at drawing lessons from EC interventions in this complex arena and at providing recommendations to consolidate current policy frameworks and practices. In order to keep a manageable scope, the evaluation focused specifically on 4 governance clusters (i.e. the rule of law; public administration; civil society and decentralization/support to local governments). Two other governance clusters (i.e. the promotion of human rights and democracy) were not included and are therefore only addressed in a general way.

1.3 Methodology From the outset, it was understood that the evaluation has to respond to both the need for accountability and for learning. As good governance should be seen as a process, the evaluation has assessed achievements in the light of changes, developments and trends rather than against fixed and standardised targets. The evaluation team has been

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sensitive to the context-specific nature of good governance, and the different frameworks within which cooperation is conducted for the five regions. The evaluative approach was further specified by agreeing upon ten evaluation questions as well as different methods of data collection (i.e. analysis of 23 questionnaires from EC delegations ; analysis of 35 CSP ; 7 field visits; literature reviews; structured and unstructured interviews; PRA techniques ; SWOT analysis; 3 focus groups with EC staff in Brussels; identification of the intervention logic; ; instruments analysis; statistical analysis) that were used to cross-check the information obtained. Several limitations were encountered in the process of executing the evaluation • The evaluation struggled with the sheer scope of the governance agenda and the

divergent ways in which it is understood in different parts of the EC and the Delegations. The novelty of governance meant there was a deficit of accumulated knowledge and institutional memory in most areas.

• In the field phase, it generally proved difficult to convince the Delegations that the purpose of the country studies was to provide information for a study of the EC’s governance support as a whole and not at all an outcome evaluation of the Delegation’s own support.

• The planned country visit to Algeria (i.e. the second MEDA country to be studied) could not take place, as no agreement could be reached with the government.

• The short period available for field visits did not always allow the use of all standard methods for data collection (e.g. focus group discussions at country level).

• Availability of EC officials (especially RELEX staff) sometimes posed problems, both in Brussels (e.g. for the focus group discussions1) and in the field. This was compounded by the recent organizational restructuring, which led to a major rotation of staff.

• A shortage of both indicators of outcomes used by the EC for its governance activities and of well-established monitoring and evaluation systems, reducing the scope for assessing contributions made or (systemic) impact achieved.

1.4 Analysis and main findings for each evaluative question Ten evaluative questions (EQs) were considered. The main findings per evaluative question are presented below. • EQ 1: To what extent has good governance been prioritised and incorporated

in European Commission cooperation with third countries since 2000 and how has the approach to good governance evolved during this period? Over the last years, EC concepts and approaches to governance have evolved quite dramatically. The initial, rather restricted and technocratic governance focus (i.e. on public financial management and corruption) has been abandoned in favour of a holistic, overarching concept, embracing the various political dimensions of partnership relations with third countries and regions (including human rights, democratisation, etc.). Governance objectives have been increasingly prioritised (also in financial terms) and gradually

1 Respectively on EC strategies and support to difficult partnerships; on the way governance issues were considered during performance-based mid-term review processes; and on the nexus between budget support and governance. For a summary of the main outcomes see Annex 19

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mainstreamed at the policy level in all regional cooperation agreements, CSPs, RSPs as well as in key EC sectors (e.g. transport, food security, HIV/AIDS). Mainstreaming at the operational level is difficult to assess as there not much systematized information available on this. However, the evaluation shows that the rapid ascent of governance as a key political priority has not yet been properly ‘digested’ and internalized by the EC, both at headquarters and field levels. There is still substantial confusion on what governance really means and on how best to support it.

• EQ 2: To what extent and how have Commission-financed projects and programmes, and in particular capacity building activities including technical assistance and twinning programs, efficiently and effectively contributed to the progress towards good governance? Institutional development and capacity building are key to fostering good governance processes. A large share of EC governance funding is dedicated to capacity building. The evaluation found that project and programme approaches can, under certain conditions, be effective and efficient tools for promoting governance. The EC has made efforts to ensure that capacity building activities (TA and twinning programmes) respond to genuine needs. Its track record in providing capacity support for governance is mixed (across countries, sectors and type of programmes and actors targeted). The local environment, which constitutes a determinant factor for effective support, is not always properly assessed (e.g. in terms of incentives for change).This tends to dilute the potential effects of capacity building initiatives. There is clearly a need to strengthen the internal capacity of the EC to deliver sustainable institutional development support in a long-term perspective (aimed at systemic change). Another priority is to invest in the development of adequate tools to effectively promote organizational change processes in supported governance institutions.

. • EQ 3: To what extent and how have Commission-financed sector and budget

support efficiently and effectively contributed to the progress towards good governance […] in particular though improved public finance management, through improved accountability and transparency and through improved public service delivery? The EC has invested heavily in budget support (in terms of conceptual understanding, development of adequate tools, participation in donor fora, training). Solid evidence on the overall impact of budget support on a wide range of possible (region-specific) governance outcomes (including country ownership, capacity development, public financial management, public service delivery, etc.) is not readily available (nor evident to attribute to the EC alone). Country strategy evaluations shed a light on both the potential and pitfalls of introducing budget support in the often fragile political and institutional environment of third countries. A debate exists within the EC on the desirability of establishing a more explicit link between budget support and progress on political reforms Proponents believe this would reinforce the position of the EC in political dialogue on governance reforms. Emerging lessons of experience suggest that he full potential of budget aid --as a tool to promote governance-- is not yet tapped. The focus has been primarily on improving public financial management, less on influencing other critical governance processes (e.g. improved public accountability and Parliamentary control; strengthening oversight bodies, etc.). Budget support should not be seen as a panacea but ideally be combined with other tools (e.g. the provision of technical assistance or the support to budget-tracking watchdog agencies). Further policy development and

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learning will be needed on how best (i) to provide/manage sectoral budget support in support of governance reforms with the required standards in terms of quality and monitoring; (ii) to use budget support at decentralised level in support of local governance processes; (iii) to improve the overall capacity of the EC Delegations to make the link between budget support (as a financial tool) and the promotion of governance (e.g. in the framework of regular monitoring exercises or mid-term and end-of-term review processes and related governance assessments).

. • EQ 4: To what extent and how has the Commission efficiently and effectively

used the political and policy dialogue (at sector and country levels) to encourage and promote good governance approaches and practices? The EC has made significant progress with the use of political and policy dialogue as a strategic tool to foster good governance in a partnership mode. There is growing evidence of positive outcomes being achieved through dialogue. Yet further learning and experimentation is required, particularly on how best to (i) define a governance agenda ‘from the bottom-up’ through an inclusive, multi-actor dialogue; (ii) better assess and support the capacity of the different actors to participate and contribute to governance processes; (iii) ensure clear linkages between dialogue and concrete development challenges (e.g. poverty reduction, access to water, EPAs); (iv) enhance the leverage attached to dialogue (e.g. in relation to the provision of budget support); and (v) adapt internal EC processes and procedures to the specific requirements of supporting governance (e.g. greater flexibility in supporting multi-actor dialogue processes and partnerships).

• EQ 5: To what extent has the Commission assistance been sensitive to specific

partner country needs, and priorities, and to what extent and how has the Commission been flexible, in the programming process and in implementation, in adapting to different country contexts (e.g. post-conflict, difficult partnerships, effective partnerships)? In line with the new ‘aid paradigm’, the EC seeks to align its support to national and regional (governance) priorities of partner countries. EC supported governance programmes are generally consistent with national reform agendas (as spelled out in PRSPs or other policy documents) and sensitive to country specific contexts. Yet alignment is but part of the story. The challenge at hand is to adopt a more sophisticated approach to the whole question of partner country ownership by (i) reviewing the approaches and methodologies to ‘build’ genuine ownership of governance reforms; (ii) fully involving other actors in defining the governance agenda; (iii) better integrating governance in the LRRD process; (iv) increasing EC capacity for rapid and flexible support; (v) identifying the right type of governance indicators for different country/regional contexts.

• EQ 6: To what extent and how has the Commission ensured coordination and

complementarity with other donors, active in the governance area, and ensured coherence with EC policies and activities and with partner Governments’ priorities and activities? The EC has purposefully designed the steering of the activities it carries out in governance in close interaction with other agencies, donors and partner country governments. However, effective progress on the “3Cs” is hampered by (i) natural barriers to improved coordination/complemetarity, linked to conflicting political interests; diverging programming cycles; procedures that are either incompatible or inadequate; as well as concerns for visibility; (ii) the lack of an overall

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strategy on how to mobilise various instruments as well as a range of ‘governance actors’ to promote reform in a given country; (iii) insufficient analysis of practical modalities and mechanisms for coordination; (iv) limited opportunities/incentives for joint monitoring, evaluation and learning among the donor community and the EC/EU member states in particular; and (v) the fragmentation of the overall EC institutional framework between DG-DEV, AIDCO and RELEX. Also with regard to the coherence agenda, much remains to be done. Linkages between governance and other EC policies remain often vaguely defined. There is a need to further define how EC/EU member states apply the principles of good governance in their dealings with third countries in critical areas such as predictable aid flows; transparent decision-making processes (including when it comes to avoiding double standards); bureaucratic performance and mutual accountability.

• EQ 7: To what extent and how have cross cutting issues (social and

environmental) been incorporated in the provision of governance support, and to what extent do the resulting good governance processes successfully take these issues in to account?. The EC has invested much in mainstreaming cross-cutting issues both at political, strategic and project levels. However, evaluation reports and actors consulted underline the relative low degree of implementation and ownership of cross-cutting issues. With the exception of the EC Draft Handbook, practical information on how to properly integrate cross-cutting issues in governance processes is still missing. On the other hand, EC documents, and even quantitatively surveyed opinions, do not necessarily reflect well to what extent the mainstreaming of horizontal themes is actually taking place in the implementation of EC governance programmes (as a result of the work of Delegations and project staff). This holds particularly true for gender equality.

• EQ 8: To what extent and how have Commission strategies and programmes and projects, targeted at regional specific objectives as well as at the four clusters (rule of law and administration of justice, civil society, public administration reform, decentralisation) contributed to the progress towards good governance and to the encouragement and promotion of good governance approaches and practices? Over the last decade, the EC has supported a wide range of governance related programmes and processes in third countries. Evidence from different sources suggests that the programmes were globally relevant and coherent with region-specific objectives and that positive contributions have been made to the progress towards good governance. However, the jury is still out whether these positive outcomes will be sustained over time and lead to systemic changes in the overall governance culture at the level of a given country, institution or civil society organisation. In each of the four governance clusters considered in this evaluation, the Commission has made efforts to refine its intervention strategies (e.g. on how to engage with non-state actors) and operational approaches (e.g. the tools for vertical and horizontal analysis of governance provided in the EC Draft Handbook). Especially towards non-state actors, there have been quite some policy developments as well a wide range of innovative programmes launched. In the ACP countries, civil society is increasingly mainstreamed at all levels of the cooperation process (policy formulation; implementation; reviews). The framework to engage with local governments is relatively less developed, yet the EC is quickly catching up. However, important gaps remain in the overall response capacity

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in each of these clusters. In the years to come, EC will need to (i) acquire a better understanding on how to deal with the ‘politics’ of governance reform processes as well as with its role as ‘change agent’; (ii) relate in a more strategic manner with the different governance actors in a given country so as to jointly define a home-grown, realistic, and prioritised governance agenda; (iii) strengthen local ownership of its governance programmes; (iv) create coalitions of interests with internal political initiatives in public administration reform; (v) embed governance programmes in a long-term transformation agenda; (vi) identify the right mix of instruments for implementing country-specific governance strategies, (vii) refine institutional development strategies and tools used; (viii) better articulate support provided to different levels of governance; (ix) ensure that procedures and working methods support rather than undermine the effective realisation of stated governance objectives.

. • EQ 9: To what extent and how has the Commission adopted a multi-actor and

a multi-level approach to supporting good governance? The EC has embraced the principle of participatory development in all regions. Experimentation and ‘learning by doing’ are taking place with regard to multi-actor and multi-level governance approaches, either in particular sectors (e.g. rural development) or in specific governance clusters (e.g. support to NSAs, decentralization and local governments). In the process, the EC is confronted with a wide range of strategic and implementation challenges. These, in turn, indicate that there is a need to further invest in knowledge; in strategy development; in refining the quality of intervention approaches, dialogue modalities, working methods, tools and procedures; and in capacity building of EC staff (across the board).

• EQ 10: To what extent and how has the Commission developed its overall

institutional capacity to deal effectively and efficiently with the question of governance? The EC has done efforts in recent years to enhance the profile of its governance staff, particularly at the level of EC Delegations. Yet the evaluation clearly shows that the processes of internal capacity building on governance are at an early stage. Much remains to be done to create a corporate understanding of what governance entails and a culture of learning about ways and means to support it effectively in a variety of country contexts. The role of the new governance unit E 4 in Europe Aid is a most promising step forward. Other creative ways of linking EC staff and sources of practical knowledge to each other will be required (e.g. thematic networks on particular governance topics). The evaluation also found evidence that the overall institutional environment and the prevailing administrative culture are not always conducive to an effective delivery of governance support. There is a mismatch between key strategic objectives (i.e. the priority given by the EC to support governance (as a long-term process of societal transformation) and the available instruments, procedures and institutional incentives to effectively implement this commitment. EC Delegations consulted saw procedural bottlenecks as the major impediment for improved performance. Key institutional disincentives for doing a better job on governance are linked to (i) the disbursement pressures (governance is not a ‘big spender’); (ii) the limited time available for staff to invest in the content of governance, absorbed as they are by financial and administrative management tasks; and the (iii) the prevailing climate of risk-avoidance; (iv) the procedural difficulties of participating in basket funding mechanisms.

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1.5 Main conclusions Six main conclusions are proposed:

(1) The EC has made the right choice to put governance at the top of its political agenda and cooperation priorities considering domestic demands for improved governance2; the importance of governance for achieving the MDGs; the nexus between governance, conflict prevention, peace and security; the prospects of increased aid to poor countries (whose effective delivery will largely depend on improved governance) and the general move towards budget support modalities. (2) The EC has made substantial progress in dealing with governance, particularly in terms of defining what are likely to be the most effective approaches to sustainable improvements. (3) The EC is contributing to achieving general and region-specific governance objectives but impact on systemic change is uncertain (4) The role of the EC as a positive change agent still needs to be clarified. At this stage, a wide range of approaches seem to co-exist. In some countries, the EC seems reluctant to trust partner governments and refrains from supporting key governance reforms. In others, it engages very timidly in the governance arena, despite the huge needs for change. In still other countries, it tends to follow a too lenient approach with the partner country on governance matters. There are also countries (e.g. Ethiopia) where the EC adopts a high-profile and visible approach as a change agent, playing a diversity of political roles (e.g. brokerage; aligning EU member states; reaching out to civil society). The challenge will be to play a positive, pro-active role in supporting governance while avoiding the ‘conditionality trap’. (5) Major gaps still exist between centrally defined policy frameworks and actual implementation practices in the field, including: (i) a limited knowledge and use of existing policy frameworks, guidelines, etc.; (ii) a frequently observed ‘ownership deficit’ of EC supported governance programmes; (iii) the lack of integrated country strategies in support of governance; (iv) constraints to effective coordination, complementarity and coherence; (v) lack of adequate strategies and tools to support institutional development processes in a long-term perspective; (vi) limited progress towards the EC becoming a ‘learning organisation’ on governance; (vii) lack of clarity on how EC/EU apply principles of good governance and ensure mutual accountability. These gaps, in turn, tend to substantially reduce the potential contribution of EC interventions in governance-related processes (6) Systemic (institutional) constraints hamper effective and efficient EC action in governance. When dealing with third countries, the EC displays three main identities and related sets of competencies. It acts as a political player, as a

2 A good example is provided by the West African Network on Governance, an informal alliance of actors and institutions that seek to define a more adequate, home-grown governance agenda for Africa. In collaboration with the African Union Commission, the network recently organised an ‘Forum on Governance’ (Adddis Ababa, November 2005), calling upon donor agencies (EC) to change strategies and approaches to supporting governance in Africa.

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development agency and as a major donor administration (accountable for managing substantial aid volumes). The effective and efficient delivery of governance support presupposes a smooth interplay of these three identities and competencies. However, there are strong indications that the convergence between these three identities is not evident at this stage. In recent years, the EC has made major efforts to better play its political role and to adopt new development methodologies and tools and approaches that help to support governance processes (e.g. budget support for country-led reforms). Yet the dominant administrative culture seems increasingly at odds with the requirements of delivering effective and efficient governance support. EC efforts aimed at enhancing governance support will need to take into account this (growing) disconnect between politics, development methodologies and administrative rules and procedures

1.6 Main recommendations As the EC gets more deeply involved in the governance arena, it is increasingly confronted, much alike other donor agencies, with a wide range of conceptual, strategic and implementation challenges that require much more sophisticated responses. The EC should therefore gradually consolidate and deepen its policy and institutional framework for supporting governance. This is a key condition for ensuring that its overall policy response and implementation capacity matches the political priority rightly given to governance as a central objective of EU/EC external action. This, in turn, should help to make a qualitative jump forward and to reduce the perceived gap between policies and actual implementation practice.

THREE IDENTITIES OF THE EC

Delivering effective

governance Development

agency

Donor administration

Politicalactor

European Institutions (EP, Council, Court of Auditors)

EU

EU Member States

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This consolidation and deepening process implies the synergetic reinforcement of the three closely inter-related pillars of the existing EC framework for supporting governance in third countries:

• the political response capacity; • the development response capacity; • the institutional development response capacity

Strengthening the political response capacity is needed to deal properly with

the ‘politics’ of EC/EU governance support. It calls upon the EC:

(i) to build capacity to better understand the nature and dynamics of political and societal transformation processes in different country/regional contexts;

(ii) to effectively assume the role of a positive ‘change agent’ in governance processes;

(iii) to engage in multi-actor political dialogue processes on governance priorities; (iv) to pro-actively support a diversity of ‘governance actors’ in the framework a

comprehensive long-term governance strategy; (v) to exercise, when appropriate, relevant forms of leverage in support of reform

processes; (vi) to strengthen the capacity of EC Delegation to engage with EU Member States

on how best to improve the coordination and complementarity of governance support;

(vii) to ensure that the Union uses all resources at its disposal in its external relations in a coherent and effective way.

Enhancing the development response capacity should help the EC to better address the ‘what’ and the ‘how’ of delivering relevant, effective and efficient governance support in a wide variety of country/regional contexts. It includes:

(i) recognising the limits of current approaches in terms of ensuring the ownership

of governance programmes by the different actors concerned (state and non-state actors);

(ii) reversing the way of formulating and implementing governance strategies, by giving priority to the elaboration, negotiation, adoption and implementation of home-grown governance agendas, owned by the different stakeholders (through an enlarged political dialogue) and properly articulated with the various levels of governance (local, national, regional);

(iii) defining, on this basis, a truly coherent, country (or region) -specific, long-term governance strategy (for specific governance interventions and mainstreaming across sectors and themes); this should be complemented with a realistic (and limited) set of governance indicators, to be defined through multi-actor consultations (ideally with other donor agencies). Preference should be given to ‘process indicators’ that can be locally monitored.

(iv) moving beyond a primarily technical approach to capacity building (focused on structures, systems and processes) to a much more solid institutional

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development approach (that also looks at issues of culture, leadership, incentives, organizational behaviour and incentives for change);

(v) accepting that governance is best supported through multi-donor sector wide approaches; this, in turn, requires an intensified use of budget support modalities and a search to fully exploit the ‘governance potential’ of this financial instrument.

(vi) further investing in donor harmonisation and coherence.

Improving the institutional response capacity by creating a conducive institutional environment to deliver effective governance support. This requires action in terms of:

(i) enhancing the capacity of the EC to function as a ‘learning organisation’ at all

levels (including capacity to monitor, evaluate and review support to governance processes);

(ii) ensuring that the right procedures, financial tools and incentives are in place for flexible and effective responses adapted to field realities (e.g. rapid response capacity) or to the nature of governance processes (e.g. the capacity for the EC to engage over a longer period of time or to participate in basket funding mechanisms);

(iii) empowering EC Delegations to fully assume their role and comparative advantage in providing governance support (linked to the proximity to the field);

(iv) promoting more effective and efficient collaboration between DG-DEV, Aidco and Relex as well as with EU Member States on how best to deliver governance support;

(v) increasing the quantity and quality of staff with the required specialisation or training on governance in the different (sectoral and thematic) units at headquarters and in the field;

Based on this, a further set of 23 strategic and operational recommendations are formulated. In addition to this, the report makes process recommendations. In order to gradually make this consolidation a reality, the EC should fully mobilise and engage the staff in the change process. The way forward does not seem to lie with handing down more (centrally produced) policy but to make the change process a ‘living thing’, a networking experience at different levels that mobilises and harnesses existing knowledge, experiences, good practices and capacities across the institution. It means bringing the three above mentioned identities together to talk to each other, learn from current practices and jointly explore ways to better reconcile the political, developmental and administrative roles in delivering effective governance support.

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2 INTRODUCTION

2.1 Purpose of, and background to the evaluation The purpose of this evaluation is to provide the relevant external co-operation services of the European Commission and wider public with an independent evaluation of the EC’s support for good governance, in terms of the relevance, the efficiency, and effectiveness of that support and the sustainability of the impacts on good governance processes and in encouraging and promoting good governance approaches and practices, in third countries. The evaluation should make possible a general overall judgement of the extent to which Commission strategies, programmes and projects have contributed to the progress towards good governance. For this evaluation, a working definition was agreed upon. “Governance” refers to the structure, functioning and performance of public authorities/institutions at all levels. Governance is about the way public functions are carried out (including public service delivery), public resources (human, natural, economic and financial) are managed and public regulatory powers are exercised (including enforcement) in the management of a country’s affairs”. ’Good governance’ is considered as “a process and an aspiration” towards governance systems adhering to a set of key values3. It was furthermore agreed that in order to get a feasible scope, the evaluation shall focus on the support provided to four thematic governance clusters4. The background to this evaluation is the rapid ascent of governance as a political priority in EC relations with third countries and more generally the growing concern about the delivery environment which should underpin progress made with development commitments at the international level. Thus, the Millennium Declaration specifically emphasises the importance of good governance to meet the objectives of development and poverty eradication (the Millennium Development Goals, MDGs). This is confirmed in the Monterrey Consensus where it was agreed that good governance is essential for sustainable development, for sustained economic growth and for poverty eradication. Increasingly, the donor side of the good governance equation is also recognised. Both the Rome Agenda for Alignment and Harmonisation (2003) and the Paris Declaration on Aid Effectiveness (2005) firmly call upon donors to apply principles of good governance in providing support to third countries.

Yet despite strong political commitments, an equivalent solid EC policy framework for good governance and governance support has not been developed until recently. In 2003 the Commission has developed the first specific Communication on ‘Governance and Development’ (COM 615/2003), followed by a Draft ‘Handbook on promoting good governance in EC development and cooperation’ (2004). Furthermore, the policy formulation process is still ongoing, as regards in particular the links between governance, peace, security and development, and the support to governance in post-conflict situations and in case of difficult partnerships or fragile states. As governance starts

3 Including : (i) efficient, open, transparent (non-corrupt) and accountable public institutions at all levels, including clear decision-making procedures; (ii) sound, efficient and effective management of human, natural, economic and financial resources for the purpose of equitable and sustainable development; (iii) a democratic society managed with respect for human rights and democratic principles; (iv) civil society participation in decision-making procedures; (v) the existence of, respect for and enforcement of the rule of law and the ability to enforce rights and obligations through legal mechanism (see Terms of Reference p. 6). 4 The 4 thematic clusters are: support to public administration reform, including public finances; decentralisation and local government reform; the rule of law; and the empowerment of civil society related to good governance processes. The evaluation is not expected to focus specifically on two other governance clusters (i.e. human rights and democracy).

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permeating all spheres of EC cooperation processes with third countries, there is also a growing demand for strategic and operational guidance on how best to intervene in a variety of contexts. Against this background, the Commission services requested the Evaluation Unit common to three Directorates General (EuropeAid, External Relations and Development) to undertake the first Thematic Evaluation of EC support to good governance. Since this is a relatively new domain of intervention, the evaluation was conceived primarily as a stock-taking and forward looking exercise, aimed at drawing lessons from EC interventions in the complex arena of governance and providing recommendations to consolidate the policy framework and improve overall practice.

2.2 Commission’s strategies and programs : objectives and intended impact With the end of the Cold War, the political dimensions of development partnerships resurfaced and gradually came to occupy a central position. In the framework of EC cooperation, the initial focus was on human rights, democratisation and the rule of law. These principles were, for instance, included in the late 1990s as ‘essential elements’ in the Lomé IV bis Convention (1995-2000); further elaborated in several EC Communications; and used as the basis for launching the European Initiative for Democracy and Human Rights budget line (EIDHR). However, during the 1990s a growing consensus also emerged on the importance of functioning public institutions and ‘good governance’ to economic and social development as well poverty reduction. This awareness followed mainly on the disappointing effectiveness and efficiency of development assistance. As a result, the EC started to develop a policy framework for dealing with good governance, aimed at clarifying:

• the concept of ‘’governance’ and its main thematic clusters; • the overall rationale for EC support to governance combined with region-specific

objectives; • the intended impact of EC interventions; • the principles that should guide EC support to governance processes in third

countries. In order to fully understand the dynamics of EC policy development on governance matters, it is important to know that a variety of policy documents of a different legal status, value and nature, determine the way in which Commission interventions on governance are conceived, planned and implemented, as illustrated by the figure below. Based on discussions with the Reference Group, the evaluation team will primarily use the Communication on Governance and Development (615/2003) as the key policy document. The Governance Handbook will be considered as the main operational guide and the different regional agreements and regulations as a tool to capture region-specific approaches to governance.

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Fig 1: Overview on EC documents related to governance

Definitions and main governance clusters There is no internationally agreed definition of governance. At the EC level, the first formal definition appeared in the Cotonou Agreement (2000). It was the product of lengthy and difficult negotiations with the ACP Group5. The resulting governance concept clearly puts the primary focus on the technical/economic aspect of governance, i.e. the way resources are managed by the public institutions and administrations6. The link with the broader political dimensions is recognized as an important contextual element. Parties agreed to consider governance as a ‘fundamental element’ underpinning the Cotonou partnership. The 2003 Communication on Governance and Development took stock of the evolving governance debate and sought to further elaborate the overall EC approach to governance. One outcome of this process was a new definition of governance (see Box 1). Compared to the Cotonou Agreement, the focus is broader. The starting point is still

5 The ACP Group was generally concerned with the lack of a clear conceptual definition (and delineation) of governance (compared to other principles such as democracy, human rights and the rule of law). They also feared that governance would amount to a new conditionality, to be interpreted in a discretionary manner by the EC 6 Good governance is defined as the : “transparent and accountable management of human, natural, economic and financial resources for the purposes of equitable and sustainable development, in the context of a political and institutional environment that upholds human rights, democratic principles and the rule of law” (Cotonou Agreement, article 9.3)

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the way power is exercised and public resources are managed, but the political and societal dimensions of governance (i.e. human rights, democracy, the rule of law, civil society and decentralized government) move to the forefront of an expanded governance agenda. In principle, this Communication covers all partner regions (ACP, ALA, MEDA, TACIS, CARDS). Box 1: The EC definition of (good) governance “Governance refers to the rules, processes, and behaviour by which interests are articulated, resources are managed, and power is exercised in society. The way public functions are carried out, public resources are managed and public regulatory powers are exercised is the major issue to be addressed in that context.” The Communication further specifies that:

“In spite of its open and broad character, governance is a meaningful and practical concept relating to the very basic aspects of the functioning of any society and political and social systems. It can be described as a basic measure of stability and performance”.

As the concepts of human rights, democratization and democracy, the rule of law, civil society, decentralized power sharing, and sound public administration gain importance and relevance as a society develops into a more sophisticated political system, governance evolves into good governance”.

Building on this broader interpretation of governance, the Draft EC ‘Handbook on promoting good governance’ recognizes six major governance clusters:

• support for democratization; • promotion and protection of human rights; • reinforcement of the rule of law and the administration of justice; • enhancement of the role of civil society and its capacity building; • public administration reform, management of public finances and civil service

reform; • decentralization and local government reform/capacity building.

The Handbook furthermore provides guidance on how best to mainstream good governance principles and practices in all EC supported projects and programs It is interesting to note that the governance concept continues to evolve. Thus the recently issued EU-Africa Strategy (October 2005) makes the distinction between the “legality” of governance (resulting from formal election processes) and the “legitimacy” of governance (reflected in the society’s acceptance of government as a result of its track record on delivering development, stability, and social justice).

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Rationale of EC support to governance combined with region-specific objectives The desk analysis reveals that there is no such thing as a single, unified set of governance objectives that have been clearly defined and agreed upon across the board. Yet the 2003 Communication on Governance and Development provides several key justifications for giving priority to governance. • Governance helps to consolidate democracy, the rule of law and respect for human rights. Support to

governance is there to complement and enrich democracy assistance7. It includes “promoting power and influence of poor people through an enabling political process, promoting participation for women and men through focusing on institutional rules, norms and practices, from which rights and privileges derive”.

• Governance is key to sustainable development and poverty reduction. The nexus between governance and poverty reduction is fully recognised: “the structures and quality of governance are critical determinants of social cohesion and social conflict, the success or failure of economic development, the preservation or deterioration of the natural environment as well as the respect or violation of human rights and fundamental freedoms”.

• Governance is linked to security. The Commission acknowledges that “governance failures with roots in poverty are a key contributing factor to outbreaks of violent conflict [...] and that “security systems reforms are an integral component of good governance”

• Governance is crucial for economic growth and the integration of developing countries in the global economy. Poor governance (in the sense of inefficient administrations, lack of accountability and financial transparency, corruption, etc.) is seen to represent a major disincentive for investment, savings, resource mobilization, private sector development, etc. Furthermore, “the domestic governance context is key to taking advantage of the potential which globalization can bring. Only if countries have adequate institutional capacities and are willing to put in place a transparent, predictable and effective legal, regulatory, judicial and institutional environment, and are in a position to enforce rules and regulations, will they be able to attract sufficient domestic, regional and international investment”.

• Governance is at the core of the new aid delivery modalities. The introduction and increased importance of sector policy support programmes (SPSPs) and budget support has resulted in more emphasis on governance issues. Firstly, because their application depends on the existence of a set of governance conditions in the partner country. Secondly, because the new aid approaches can contribute to improved governance, as they seek to work through the partner countries own budgetary and planning systems/procedures and by doing so empowering and improving government processes and capacities8.

This clearly shows that the EC has defined for itself a comprehensive and ambitious agenda. Comprehensive, because the EC Communication on Governance and Development fully recognizes the very large, multi-dimensional nature of governance and related need to deal with it as a ‘cross-cutting’ issue, defying traditional policy and

7 In this context, it is interesting to note that Strategy Papers, linked to the 8th EDF under the Lomé Convention, often tended to assimilate governance with democratisation. This confusion generally ebbed away with the new CSPs (9th EDF), reflecting the emergence of a specific governance agenda. Thus, the CSP Malawi (2001-2007) argued that “while the democratic framework has been put in place”, investing in a culture of public accountability and transparency was needed for democracy to be “truly embedded and functioning and avoid that backsliding occurs”. 8 Budget support is linked to governance by incentives for improved public financial management; giving the Commission a stake in the dialogue on budget systems; strengthening domestic accountability; promoting Parliamentary accountability; reducing the pressure on national budgets; providing accompanying capacity-building support (COM 615/2003).

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institutional boundaries (and/or barriers)9. Ambitious, because the Communication makes it clear that governance is not simply a new dimension to be added to the list of development tools (or fashions), but a precondition for effective and sustainable impact on key development objectives These overall core objectives have been complemented with a varying set of region-specific objectives, as spelled out in different regulations and cooperation agreements. Box 2 below provides a comparative analysis of similarities and differences with regard to governance objectives that can be observed between the different regional policy frameworks, reflecting the specific history, peculiarities and dynamics of each region. A more detailed analysis has been worked out in the desk study (see Annex 1). Box 2: Intended impact of Commission’s interventions REGION

KEY GOVERNANCE OBJECTIVES

ACP

Governance is defined as a “fundamental element” of the partnership. The governance approach of the Cotonou Agreement is clearly based on a development and poverty reduction perspective, as well as on a concern to improve the overall effectiveness and impact of the comparatively high levels of ODA. A major importance is attached to reinforcing the rule of law (considered to be the cornerstone of the institutional structure of the State) and to developing civil society participation in development process. The fight against corruption is another key objective (as reflected in the existence of a specific consultation procedure and a possibility of suspension of aid)

MEDA

The Barcelona process and the European New Neighbourhood policy provide the strategic framework for an enhanced Euro-Mediterranean Partnership. Cooperation framed in Association Agreements and Action Plans, focuses primarily on political, security, economic, social and cultural matters in the perspective of creating an enlarged area of peace, stability as well as a Euro-Mediterranean free trade zone. The proposed deepening of the partnership has put helped to put governance issues more firmly at the centre of the relationship with MEDA countries.

ALA

Governance objectives are primarily linked to the promotion of a market economy, trade and investment cooperation and the fight against terrorism, drug trafficking and organized crime. The importance that the EU attaches to good governance and human rights is underlined by the establishment of joint working groups with the donor community, addressing issues such as support to democratization and conflict prevention

TACIS

Focus on creating conditions for economic development and transition to market economy, with related priority to reinforcing the rule of law through supporting institutional, legal and administrative reforms. The new TACIS regulation expands the governance agenda to include democratization, justice and administrative reform as well as, more recently, also poverty reduction. The European Neighbourhood Policy adds “stability” to the governance objectives

CARDS

The CARDS Regulation is an example of EC cooperation with post-conflict countries. In the last years, governance objectives evolved along with the prospects of a possible integration of the CARDS countries in the EU. Focus shifted towards institution building needed to implement the obligations in the Stabilisation and Association Agreements (SAAs).

9 A good example is the now much debated traditional divide between ‘development’, ‘foreign policy’ and ‘security’.

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For the general and regional governance frameworks, an attempt has been made to elaborate impact diagrams. However, this exercise encountered major limitations as the ‘raw material’ to be used (i.e. the different key policy documents) mainly consists of very general policy statements on a wide variety of objectives. These do not provide a solid basis for extracting genuine, state-of-the-art ‘impact diagrams’ related to governance. Inevitably, the impact diagrams presented in Annex 2 are also of a fairly general nature. Guiding principles for EC support to governance The analysis of existing policy documents makes it possible to discern the fundamental building blocks of the EC approach to promoting governance, as illustrated below Box 3: Guiding principles to support governance In several policy documents, these principles are further translated into broad operational guidelines. For instance, the Communication on Governance and Development distinguishes three broad types of partnerships10. It advocates a “regular and ongoing use” of policy and political dialogue involving different actors11 as well as “an increased use of sector-wide approaches to good governance, with budget support or other financial mechanism such as basket funding” in order to broaden ownership and to improve coordination and efficiency.

10 The Communication specifically mentions three different country situations in which specific approaches are needed: difficult partnerships; post conflict; effective partnerships 11 Not only Parliaments and institutions other than central government, but “other in-country stakeholders (representatives of political, social and economic interests as well as municipal and other decentralised authorities

AALLIIGGNNMMEENNTT--HHAARRMMOONNIISSAATTIIOONN-- Support to home-

grown agendas –focus on 3 “Cs” coherence, complementarity and

coordination

FFLLEEXXIIBBLLIITTYY AANNDD PPRRAAGGMMAATTIISSMM

Use all available windows of opportunities

CCOOUUNNTTRRYY SSPPEECCIIFFIICC AAPPPPRROOAACCHHEESS

No ‘one-size-fits-all’ models. Need for the

‘right’ policy mix

OOWWNNEERRSSHHIIPP AANNDD PPAARRTTNNEERRSSHHIIPP

Governance cannot be imposed from outside.

Progress will depend on an effective demand and capacity to carry

out reforms

LLOONNGG--TTEERRMM AANNDD GGRRAADDUUAALL PPRROOCCEESSSS

Governance as a process and an aspiration

intermédiaire entre la société civile

DDIIFFFFEERREENNTT AACCTTOORRSS ((state and

non-state) AANNDD LLEEVVEELLSS (local,

national, regional, global)

Guiding principles to

support governance

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2.3 Context: Brief analysis of the political, economic, social and cultural dimensions, as well as the needs, potential for and main constraints

EC policy documents fully recognise that governance touches upon the fundamental aspects of the organisation of a society such as the exercise of power; the relation between state and its citizens; the transparent and equitable management of a country’s resources; etc. Fostering good governance therefore involves “changes to long-standing practices, entrenched interests, cultural habits, even social and religious norms”12. In order to positively influence such change processes, donor agencies will need to have the capacity (i) to assess the political, economic, social and cultural dimensions of governance processes in a particular context; (ii) to identify possible drivers of change; and (iii) to elaborate country-specific response strategies in a long-term perspective13. “Governance is everywhere nowadays” was an observation often made during interviews. Several push factors explain the growing interest for governance. First, donor agencies increasingly see good governance as a determining factor (if not a precondition) for achieving development progress and effective aid delivery. Second, many governments in third countries have (formally) embraced the good governance agenda, as evidenced in Poverty Reduction Strategy Papers or national development plans. New initiatives on governance have been launched at national, regional and continental level (e.g. by the African Union/NEPAD). Third, there is also a growing societal demand for better governance in most third countries. Taking a birds-eye view on the state of affairs of the governance debate, it is possible to identify several key issues with regard to the delivery of effective governance support14: • How to keep the scope of the governance agenda “manageable”? Over the last years, the

governance agenda has grown exponentially, and it continues to expand, encompassing political, economic and corporate governance. This brings along conceptual confusion among the wide range of stakeholders potentially concerned as well as the risk that governance becomes a basket concept of limited operational relevance15.

• Whose governance? Governance is no longer the monopoly of central governments. It has become a concern for a variety of actors seeking to influence its agenda and to extract greater accountability from governments. This, in turn, raises a number of critical questions for external agencies. How do these different local stakeholders perceive and define governance? Who sets the agenda? To what extent are governance priorities defined through inclusive, multi-actor dialogue processes? How should the design and implementation of (EC) governance-related support programs be adapted to the new institutional landscape in third countries16?

• What impact can realistically be achieved? There is a whole debate on the role and possible impact of external agencies in promoting governance. The sobering experiences of investing in governance have helped to see the limits of what can be achieved by injecting aid and know-how into complex, long-term political and institutional reform

12 footnotes 11 and 12 refer to EC Communication on Governance and Development (2003). 14 Detailed presentation of the context of governance is given in Annex 3. 15 For an influential publication in relation to this debate, see Grindle,Merilee, S. Good Enough Governance : Poverty Reduction and Reform in Developing Countries. November 2002 16 For a fascinating application, see ‘Livelihoods in Crisis? New Perspectives on Governance and Rural Development in Southern Africa’ which explores the implications of changed state-society relations on policy-making and access of poor people to resources (e.g. water). IDS Bulletin, Volume 34, Number 3, July 2003.

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processes17. How to get good governance in poor countries, whose institutions almost by definition suffer from weak legitimacy, credibility and capacity? How much of an ally are civil societies in such environments, as they tend to display similar weaknesses? Who in a given country or context, are the ‘drivers of change’ that need to be supported? How can a ‘demand’ for good governance be promoted?

• How to promote good governance on the donor side? It is increasingly acknowledged that governance is not only an issue “over there, in third countries”. The good governance obligation also applies to external actors. This is reflected in the growing pressure on donors to practice principles of good governance in their dealings with partner countries. It implies recognition that certain forms of aid can undermine governance. It furthermore invites donor agencies to respect the commitments made on alignment and harmonization and to “to continue improving policy coherence in all relevant areas, such as for example environment, trade and agriculture”18 or to overcome the “global governance deficit”.

SUMMARY CHAPTER 2 The theme of governance has gradually moved to the centre of the EC policy agenda. It received high-level political recognition as a priority area in key policy documents and is now regarded as:

• a key principle of development cooperation; • a priority sector in its own right (with six priority clusters); • an issue to be mainstreamed across regions, countries and sectors, thus integrating their various

specificities; • an obligation for donor agencies themselves

17 For a recent overview, see Unsworth, S. Focusing Aid on Good Governance: Can Foreign Aid Instruments be used to enhance ‘Good Governance in Recipient Countries? Working Paper, Oxford University, Global Economic Governance, February 2005. 18Communication on Governance and Development, par. 6

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3 METHODOLOGY

3.1 General approach From the outset, it was understood that the evaluation has to respond to both the need for accountability and for learning (including recommendations to improve the overall EC performance in this area). In order to properly assess the learning objective, the evaluation team has applied an analytical approach aimed at assessing the extent to which objectives have been reached as well as looking at the reasons and determining factors behind the observed successes and failures. As good governance should be seen as a process, the evaluation has assessed achievements in the light of changes, developments and trends rather than against fixed and standardised targets. This is needed considering the relative novelty of governance as a key area for EC support and the ongoing evolutions. Efforts were made to ensure comparison with other donor agencies and their experiences with delivering governance programmes and building their own capacity. The evaluation has also been sensitive to the context-specific nature of good governance, and the different frameworks within which cooperation is conducted for the five regions. Given the lack of a clear, overall framework for good governance covering the evaluation period, and given the regional differences, the evaluation has assessed the European Commission’s cooperation activities supporting good governance, relative to the general and specific objectives of the different regional cooperation and development programmes. This approach has been balanced with the need to keep a level of coherence between the different regional perspectives and case studies so as to facilitate the synthesis of the findings, conclusions, lessons and recommendations in the final report. During their work, the evaluators have made efficient use of the existing sets of governance indicators, as required in the ToRs. 3.1.1 Approach to the inception phase The evaluation began with an inception phase, mainly devoted to structuring and preparing the evaluation approach and methodology. During this phase, the following activities were scheduled: • After acceptation of the Launch Note the evaluation team has examined relevant key

documentation on the past and current Commission actions concerning good governance. This material included data on the relevant Communications, strategy documents and instruments, evaluations, and discussions with Commission officials. During this documentary work, the consultants have also taken into consideration the methods that are currently being used by other donors. The team has examined the EC's stated overall objectives related to good governance.

• For this evaluation the EQs have been elaborated by the Evaluation Unit and further developed by consultants. The evaluative approach was further elaborated by presenting the selected evaluation questions, the related criteria and indicators as well as other data collection methods for improving the quality of the evaluation (questionnaire, CSP analysis, field survey preparation).

• The key output of the inception phase was the Inception Report. This document (i) confirmed the composition of the evaluation team composition; (ii) refined the approach/methodology; (iii) reviewed the overall EC objectives as well as the regional specific objectives related to governance (using diagrams to represent the main findings in a structured way): (iv) presented a final set of evaluation questions;

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appropriate judgement criteria for each evaluation question and relevant quantitative and qualitative indicators for each criterion; (v) proposed a final selection of countries to be visited ; (vi) clarified the methods of data and information collection both for the Desk and the Field Phases as well as the specific methods of analysis of the information and data collected (especially the methodologies and the tools to ensure the uniformity of case study approach and comparison of results as well as the approach to ensure quality assurance throughout the different phases of the evaluation); (vii) provided details on the work plan, specifying the organisation and time schedule for the evaluation process (to be agreed between the Contractor and the Commission and confirmed through a formal exchange of letters).

3.1.2 Approach to the desk phase The purpose of this phase was to make sure that existing relevant information (including data), within and external to the Commission, is gathered and taken into account in the evaluation. It aimed to ensure the effective use of already existing studies and evaluations and to gather the experience of the HQ staff in a structured manner (e.g. mainly through 3 focus group discussions, respectively dealing with governance and the MTRs; the nexus between governance and budget and difficult partnerships). • During the desk phase, a review has been carried out of relevant EC policy

documents, using two main sources: EC websites (especially the websites maintained by DG Development, DG Relex, and EuropeAid) and Commission services (especially during the course of interviews and during mission-preparation meetings). Other documents have been selected from the PARTICIP and ECDPM -internal information database. During this documentary work, the consultants have also taken into consideration the methods that are currently being used by other donors.

• A statistical analysis has been made, including all geographic instruments and the most important thematic instruments. Source for this analysis has been the EC-data bases CRIS Consultation and CRIS Saisie. Additional interviews and discussions with responsible staff were necessary. A detailed analysis at the level of the selected case countries in the context of the evaluation has also been made so as to facilitate the selection of projects to be integrated in the analysis.

• As final output of the desk phase, the Desk Phase Report is setting out in full the results of this first phase of the evaluation.

3.1.3 Approach to the field phase The Field Phase primarily involves collection of information from the field. The fieldwork has been undertaken on the basis set out in the inception report (as agreed by the Reference Group) while taking account of the suggestions made by the Delegations of countries to be visited. The evaluative approach consisted in the following components: • 7 field visits to EC partner countries, to document EC actions in the field and to gain a

better knowledge of potential strengths and weaknesses of the EC strategies at the level of it partner countries. Case studies have been carried out in the following countries:

o ACP: Angola, Burkina Faso, Dominican Republic; o ASIA: Indonesia;

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o LA: Guatemala; o MEDA: Algeria19, Jordan; o TACIS: Ukraine; o CARDS: has been covered from the desk. Country reports have been sent to the delegations for comments and will be

available in the volume 3 of the final report.

• A questionnaire survey of a sample of Delegations. The evaluative approach based on the evaluation questions has been translated into a structured questionnaire. This survey is aiming at gathering additional information on the status of good governance activities at field level. It allowed the evaluators to triangulate some of the findings from the field visits and the desk assessment (and vice versa), which will increase the validity of the data. The selection process of Delegations to be involved in the exercise has been based on the results of the statistical analysis. The Evaluation Unit has sent out the questionnaires to 40 delegations whereas PARTICIP has gathered the field questionnaire and analysed the data. 23 delegations answered the questionnaire:

o 10 ACP countries: Cameroon, Central African Republic, Congo Brazzaville, Congo DRC, Eritrea, Ethiopia, Mali, Rwanda, Sierra Leone and Zambia,

o 3 Countries from Asia: Afghanistan, China and the Philippines, o 5 countries from Latin America: Bolivia, Colombia, El Salvador, Nicaragua and Peru, o two TACIS countries: Georgia and Russia, o one CARDS country : Bosnia-Herzegovina, and o two MEDA countries: Egypt and Turkey. Two products have been produced; a detailed presentation of the answers given

by each delegation (Annex 18) and a summary of main issues (Annex 17). • Analysis of the role of good governance in CSPs. This study has assessed the integration of

good governance issues in a sample of CSP, how they are taken into account and mainstreamed. The process that has led to the selection of 35 countries considered various criteria (importance of payments made on good governance; type of partnership; geographical distribution, specific situation -post conflict and failed state-) is presented in Annex 11.

• Overall analysis of the various instruments related to good governance, in particular o ACP, MEDA, ALA, CARDS and TACIS o Democracy, Human rights and Thematic support, NGO Co financing,

Rehabilitation/Reconstruction, Decentralised Co-operation, Gender, Human Rights.

The assessment of the listed instruments/ budgetlines has shown in how far they support good governance related activities. Further, a comparison of the different instruments has given information about their linkages and coherence. The results have been integrated in the desk phase report and are presented in detail in Annexes 2 and 4.

19 The field mission to Algeria could not be carried out because no agreement was reached with the government.

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At the end of the field phase, the Synthesis Note has been prepared, summarising the data and information collected and presenting preliminary findings. This note took also in consideration the information gathered during the Desk Phase. The note is succinct and mainly constitutes a basis for a Reference Group meeting to prepare the synthesis phase. The Synthesis Note is focussing on main findings and stressed five overall orientations that seem to emerge from the evaluation findings. The Synthesis Note has been sent to the delegations together with the country notes. The Synthesis Note will not be published as a self-standing report. This Note has been presented to and discussed with the Reference Group meeting in October 2005. A Final version of the Synthesis Note has been produced integrating the few comments that were sent to the evaluation team.

3.1.4 Synthesis phase

• Final report. A first draft final report will be produced in accordance with the agreed time schedule and structure. The report integrates the main elements from the desk phase, and presents in detail the analysis (findings, conclusions and recommendations) that have been drafted in the synthesis note. Thus, the report makes a synthesis of the main results from the country reports as well as from document analysis, former evaluation reports, delegation answers to the questionnaire and comparative analysis between instruments, and drafts overall conclusions and recommendations. The first draft of the final report will be delivered to the Evaluation Unit, which is in charge of circulating it for comments to the Reference Group. Based on these comments the team will prepare a second draft version. Following comments made on the second draft, the evaluators will produce the final report, in accordance with the agreed time schedule, length (a maximum of 60 pages main text) and structure provided in Annex 3 of the ToR.

• A meeting of the Reference group is planned mid- December to discuss the first draft version.

• The evaluation team will participate in a Seminar in Brussels during which it will make a presentation to the Commission services and other relevant stakeholders on the evaluation’s findings, conclusions and recommendations.

The work plan in Annex 22 gives an overview of the various activities carried out within this evaluation. 3.1.5 Main Limitations Several limitations were encountered in the process of executing the evaluation:

• The desk study struggled with the sheer scope of a rapidly (expanding) governance agenda and the manner in which it is understood in different parts of the EC and the Delegations. It therefore had to be selective, concentrating on the most essential information. The novelty of governance meant there was a deficit of clear policies, accumulated knowledge and institutional memory in certain areas. It also proved difficult to assemble reliable statistical data (for details see Desk Report).

• The huge number of documents tackling one or more good governance issue, thus making the “synthesis work” more difficult;

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• In the field phase, it proved difficult to convince the Delegations that the purpose of the country studies was to provide information for a study of the EC’s support as a whole and not to carry out an outcome evaluation of the Delegations own support for specific governance activities.

• The planned country visit to Algeria (i.e. the second MEDA country to be studied) could not take place, as no agreement could be reached with the government

• The short period of visit did not always allow the use of all standard methods for data collection (e.g. focus group discussions).

• Availability of EC officials (especially RELEX staff) sometimes posed problems, both in Brussels (e.g. for the three focus group discussions that were organised20) and in the field. This was compounded by the recent organizational restructuring, which led to a major rotation of staff.

• A shortage of indicators of outcomes used by the EC for its activities, i.e. designed, collected and analysed in a systematic manner, over and beyond the useful project monitoring reports found in some locations.

• A large part of EC supported programmes in the field of governance have only recently been formulated or implemented21. It is generally too early for there to be significant outcomes on the ground (considering the nature of governance work). This imposes major limitations on the possibility of making judgments on impact.

Specific limitations linked to the various methods used are presented below (see Chap. 3.2).

20 Respectively on EC strategies and support to difficult partnerships; on the way governance issues were considered during performance-based mid-term review processes; and on the nexus between budget support and governance. 21 This holds particularly true for the ‘new generation’ of governance programmes that emerged in line with new EC policy orientations with regard to governance in the late 1990s.

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3.2 Method of data and information collection The table in Annex 7 presents all methods and tools that have been used to collect information as well as their main limitations. The table below only presents some methods to give an idea on the work that has been done to comply with methodological objectives of quality. Method of data and information collection

Specifications Limitations

Literature reviews

Policy documents have been obtained from two main sources: EC websites (especially the websites maintained by DG Development, DG Relex, and EuropeAid) and Commission services (especially during the course of interviews and during mission-preparation meetings). Other documents have been selected from the information database maintained by Particip GmbH and ECDPM as well as other main sites related to good governance. Focus has been put on evaluation documents from various institutions. The work that has been done within the evaluation service framework has been used as well as the services provided by the monitoring data base. Effective use has been made of lessons learnt by other donor agencies, as well as of ongoing work in the framework of initiatives like GOVNET. Specific attention has been put on former and ongoing evaluation reports and processes in the field of governance as well as on evaluation report that are dealing with cross cutting issues (gender, institutional strengthening, LRRD,…).

Due to the high number of existing document, the analysis had to focus on the most important ones, thus increasing the probability to miss relevant information or experience. Lack of information on the methodology used to get and analyse information.

Interviews both structured and unstructured

In Brussels, interviews have been organised with EC staff (various units and reference group) as well as other key persons working in other organisations. In case studies countries a higher range of actors has been interviewed (see below). Three types of interviews have been carried out: structured, semi-structured and unstructured interview. All types can be used at the various stages of the evaluation process, but usually unstructured interviews were used first and the structured interviews at the end of a process when detailed information was needed. Semi-structured guide or precise checklist has been prepared before the interviews. Evaluation questions have been integrated in these structures. An example of such a guide is

Lack of availability of EC staff Lack of confidence may bias the information given. Conflict and lack of freedom may bias the information collected. Lack of representativity

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presented in Annex 7. Interviews were carried out in large group, in small groups or with one person. Interviews with one person have been used in case of conflict or as regards sensitive issues, or at the beginning of a process to get a quick overview on a specific issue. Small groups were more appropriated to discuss specific perceptions with persons who share a similar condition-statute, and allow to a certain freedom of expression. Interviews in large groups have their strengths in getting quickly a high quantity of information (discussion of problems in an identification study) or get a large consensus on an issue after a planning exercise. Views of European non-state actors involved in EC-related governance activities have also been gathered.

of interviewees may give an unbalanced perception of reality.

Questionnaires The evaluative approach based on the evaluative questions has been translated into a structured questionnaire. Both close and open-ended questions have been used. The questionnaire survey is aiming at gathering a wider range of information on the status of good governance activities from the field. It allows the evaluators to triangulate some of the findings from the field visits and the desk assessment (and vice versa), which will increase the validity of the data. In the structure of the questionnaire a distinction is made between descriptive, evaluative and prescriptive parts. The descriptive information serves to relate individual responses to the content of the analysis. As to the evaluative part, it will cover the crucial aspects of project preparation and design, relevance, efficiency, effectiveness, impact and sustainability, whereas the prescriptive part aims to find out about recommendations and possible amendments. The country selection process has been carried out by the evaluation unit. No questionnaire was used in the field during the case studies.

Delegation may not have the time to answer

Focus groups

The instrument of focus groups is based on small group discussions. The participants are chosen by a screener, which allows comparing different variables among the various groups. It can be used to get qualitative data and in-depth information from a variety of persons with different perspectives that reflect together on a common issue in an open exchange. These persons could e.g. be the ones who are affected by an intervention in the retrospective. But also future needs could be assessed by this method. In addition, focus groups allow preparing other data collection tools. It is a scientific reliable and valid and acknowledged method for

Standard focus group method is time and resource consuming. Information available on persons may constitute the visible part of the iceberg thus neglecting

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social research. The evaluation team has considered focus group discussions to compare and contrast experiences on the following topics: • Link between governance and budget/sector support • Promoting governance in difficult partnerships • Governance during the mid-term reviews The organization of focus groups in Brussels has been very time consuming. Summary notes were produced with the main outcomes For the case studies, it was almost impossible to organise focus group in a “scientific” way as it would have meant far more resources for the preparation. A simplified version of focus group in the direction of group interviews has been used.

other key elements which may explain perceptions.

Case studies 7 field visits to EC partner countries have been carried out, to document EC actions in the field and to gain a better knowledge of potential pitfalls and strengths of the EC strategies on the level of it partner countries. A senior expert and a national expert from the visited country have conducted each field visit. The national expert has prepared in advance the field survey by contacting the delegation, collecting documents, preparing country profile and arranging meetings. In addition, three selected field visits have been accompanied by a junior expert to provide additional resources for extended focus group interviews, document collection in a more comprehensive sample of projects. Countries selected for these expanded field visits were those with a higher intensity of EC involvement in the relevant areas. Documentation has been collected prior to the mission in Brussels from relevant DG Relex, DG Dev and EuropeAid staff. A list of projects and programmes to be considered during the field missions has been communicated to the RG. The evaluation team has organised a briefing with the delegation and the NAO by launching the field survey. In the standard programme, during the field visits, approximately 8 days were to be dedicated to meeting different stakeholders (in the EC Delegation, in partner organisations (line-ministries, NGO’s, multilateral and bilateral funding agencies, etc.) and national actors involved in good governance issues. Other donors (both multilateral and

Relative brevity of the field visits, made necessary by the time constraints of this evaluation The selection of countries in the ToRs has made the search for good national experts easier. Insufficient communication between the unit in Brussels and the delegations may have reduced the acceptance of the case studies. It has led to one refusal and sometimes to a more difficult start of the work.

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bilateral) as well as major NGO’s involved in good governance were interviewed as well for benchmarking of the EC approach. A mixture of participatory techniques, including face-to-face interviews and focus group discussions were used. Approximately four days were to be spent on field visits to selected programmes and projects. Techniques included interviews, PRA techniques and focus groups with beneficiaries (women and men), local implementers and other key stakeholders. Before leaving, the team has given a detailed on-the-spot orally debriefing on their provisional findings. Finally the team has prepared a country note for delivery to the Evaluation Unit. These notes have been sent to the Reference Group as well as to the concerned delegations.

Lack of workshop prior to the case studies to discuss and prepare the missions, together with the national experts.

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3.3 Method of data and information analysis The table below presents the main methods and tools that have been used to analyse information as well as their main limitations. Here again, the full table is presented in Annex 7, the table below only give some examples. The main tool for the analysis is the inter-angulation or the cross-checking of information within a method and between methods. Method of data and information analysis

Specifications Limitations

Literature reviews

Main information issued from documents is summarized (reading grids or notes). Due to the broad scope of the evaluation, no overall check list has been made. Issues that are regularly mentioned are automatically taken into consideration. Issues that are specific to a situation are put in a “pool of issues” and are cross checked with other methods and retained if confirmed. Issues or experiences that are too much country specific have not been integrated (except the countries in which case studies have been carried out).In some cases the authors of documents have been contacted to get ore information that could help to assess the validity of the information.

The compiling of such an amount of information remains difficult even if systematic collecting tools are used (reading grids for example). Difficulty to assess the validity of conclusions and recommendations of other evaluation reports when information on finding is missing.

Interviews both structured and unstructured

Sometime the same person has been interviewed 2 or three times along the evaluation process. It has led to more confidence and a higher quality of the information. The position and the statute if the interviewee has been taken into consideration to analyse the information. Consistency of the message has been checked by comparing response on a similar issue at various stages of the interview or between the various interviews.

Lack of representativity of the analysis.

Questionnaires The responses have been analysed in two ways: the quantitative data has been presented in form of tables or graphs, using if needed statistical

Risk of simplification by summarising the questionnaires.

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formats. The qualitative data has been structured according to the recurrence of key words or concepts in three or four categories (high, medium, low). Effective use has been made of the findings collected by previous questionnaires sent out by the EC on governance related issues. A summary has stressed out main results.

The questionnaires of the survey have generally been answered by one or two persons, so that answers don’t automatically fully represent the whole delegation’s perception to the respective question. Delegation responses vary a lot both in length and character, as well as in their quality, so that they may lead to false conclusions.

Workshops Workshops were very useful to analyse information. Each issue has been discussed along the experience of each team member; key elements have been listed. Reasons for different perceptions have been analysed and conceptualised. Lessons have been listed out for each evaluative question and main orientations have been discussed.

Lack of participation of national consultants.

Case studies The team is cautious not to generalize the conclusions drawn out of project experience but to focus on main lessons that could be of importance for future projects or strategies. Here again, multi-angulation and cross checking of information gathered with various methods are two key element in the analysis.

Limitations that applies for the other methods that are also used in case studies.

Use of evaluative questions

Evaluation questions build the basic frame for the evaluation process. They aim at structuring the information not at analyzing it.

Risk to focus exclusively on the EQ at the expense of an integrated analysis.

Synthesis All the information sources used have been cross-checked before being integrated in the synthesis note and the synthesis reports. Evaluation results are therefore not relying on only one information source

The importance of the EQ in the methodology could lead to an insufficient overall analysis

The analysis on how evaluation criteria (relevance, efficiency,) were fulfilled has been carried out at the global level, as each of them is dealing with almost all evaluative questions. It remained difficult to assess these criteria in an overall way, as the scope of governance is broad and the variety of situation high.

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3.4 Methods of Judgement The judgement process is decomposed in three steps: 1) Specific judgement for each EQ

• Judgement criteria have been developed for each EQ. There are mainly 3 to 4 judgement criteria per EQ. For each of these judgement criteria, indicators have been listed out as well as sources of information and the most relevant methods to get information (see Annex 7 for more information).

• The degree of fulfilment of each judgement criteria has been based on the information gathered (and cross checked) through the various methods.

• A Balanced judgement integrating the responses to the various judgement criteria has been made at the end of each EQ. There is no systematic weighting of the various judgement criteria within an EQ. In order to limit the subjectivity of this process systematic quotation are made and reference documents are put in annex in their raw form.

2) Specific judgement for each evaluation criteria

• A table has been drafted linking the evaluation criteria and the EQ Evaluation questions

Types of evaluation criteria 1 2 3 4 5 6 7 8 9 101 Relevance X X X X X X X2 Effectiveness x X X X X 3 Efficiency X X X X X X4 Sustainability X X X X X X X5 Coherence X X X X x x

• A rough assessment has been made on the importance of each EQ as regard to the various evaluation criteria.

• A balanced judgement has been made integrating the responses to the various EQ.

3) Overall judgement of evaluation results A two way process has been followed.

• A balanced judgement has been made integrating the specific judgement on the various EQ and evaluation criteria. Here again there is no weighting of the various EQs in the overall judgement.

• A judgement has been made based on the five key conclusions that have been presented in the synthesis note, which are not structured along the EQ but take elements from various EQ. This process is ore intuitive based.

Both processes have been compared and harmonised to finalise the conclusions and recommendations.

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3.5 Quality assurance Our common approach is presented in Annex 8 based on the quality criteria for assessing the quality of the evaluation. The methodology is aiming at ensuring the highest quality of the evaluation report. It presents what has been carried out in order to fulfil the quality criteria used by the evaluation unit to assess the evaluation reports, e.g. Meeting needs; Relevant scope; Defendable design; Reliable data; Sound analysis; Credible findings; Validity of the conclusions; Usefulness of the recommendations; Clearly reported; Contextual constraints. The evaluation team includes one key expert as an “internal quality assessor” and another as an “external quality assessor”. Each quality assessment involves the different members of the team in an iterative way (team member; team leader; internal assessor; external assessor; evaluation unit).

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4 MAIN FINDINGS AND ANALYSIS Answers to each evaluative question, indicating findings and conclusions

4.1 Mainstreaming and priority area EQ 1 : To what extent has good governance been prioritised and incorporated in European Commission cooperation with third countries since 2000 and how has the approach to good governance evolved during this period?

JC 1: EC concepts and approaches on good governance have evolved over time

The EC concepts and approaches to governance emerged and evolved in a rather ad hoc manner since the mid-1990s (as this was the case with most donors). Their development was conditioned by several factors, including: (i) political openings in partner countries; (ii) the gradual adoption of more politicized approaches to development cooperation; (iii) the pressure to show value for money in development assistance; (iv) the use of new aid modalities like budget and sector support; and (v) the evolution of thinking on international cooperation (e.g. with regard to norms and values underpinning global partnerships). At policy level, important evolutions can be observed with regard to concepts and approaches to good governance since 2000 as illustrated in Box 4 Box 4 : Evolution in EC governance concepts and approaches

Broadening the definition. Initially, the notion of governance primarily focused on the technocratic-financial aspects, i.e. related to the efficient and transparent management of resources by public institutions. Over time it evolved into the holistic, over-arching concept (embracing the broader state-civil society relations, democratization and human rights) now to be found in the key EC policy documents (in principle covering all regions).

Clarifying the linkages. Increasingly, EC policy documents explicitly recognize the linkages between promoting governance and achieving broader development objectives (e.g. poverty reduction; conflict prevention; stability and security). As a result, there is a gradual shift in (mental) approaches from governance being treated as a ‘self-standing sector’ to governance being seen as a ‘cross-cutting issue’.

Moving away from project approaches. The EC Communication on Governance and Development calls for “an increased use of sector wide-approaches to good governance, with budget support or other financial mechanism such as basket funding”. Sector approaches to governance are gaining momentum in the different regions.

Embracing a multi-actor and multi-level approach to governance. EC policy documents systematically recognize the need to involve a wide range of actors other than central governments in governance processes as well as to engage at different governance levels (local, national, regional, global) for ensuring relevance and positive outcomes.

Promoting governance through political dialogue. Across regions, the EC increasingly sees regular and ongoing dialogue, involving different actors22 as an effective tool to openly discuss good governance priorities and relevant implementation strategies.

22 Not only Parliaments and institutions other than central government, but “other in-country stakeholders (representatives of political, social and economic interests as well as municipal and other decentralised authorities

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These are promising evolutions, reflecting a growing sophistication of EC policies and approaches to governance. Moreover, the search for a solid and coherent EC policy framework for supporting governance is an ongoing process. Thus, efforts are done to clarify the governance objectives in different regional agreements; to further develop relevant intervention strategies within each ‘governance cluster23; to further explore the links between governance, peace, security and development; to test out the Draft EC Handbook on Governance in a number of pilot countries24; to refine the governance conditions and operational approaches to providing general and sector budget support, in close dialogue with other donors. Perhaps not surprisingly, considering the speed of these policy changes as well as the scope and complexity of governance, the evaluation team found that the recent evolutions in governance concepts and approaches have generally not yet been properly ‘digested’, let alone ‘internalized’ by Commission units and staff at different levels. As a result, there is no shortage of conceptual and operational confusion on “what governance really means and how best to support it”. This confusion can relate to a variety of key aspects such as: • the definition of (good) governance25; • the scope of the governance agenda (e.g. the distinction between political, economic and

corporate governance and their possible linkages); • the concrete linkages between governance and key development objectives (such as

poverty reduction) and situations (relief, rehabilitation, development); • the operational implications of mainstreaming governance in all programmes and

projects; • strategies, approaches, tools and methods to be used to promote governance in different

contexts, particularly in ‘difficult partnerships’; • the roles to be played by the different actors in setting the agenda, designing and

implementing programmes; • the meaning (and limits) of the EC acting as a ‘change agent’; • the identification of relevant and feasible indicators and assessment processes for

monitoring and evaluating progress achieved; • the reciprocal good governance obligations of the EC/EU. Key manifestations of the prevailing state of ‘confusion’ include: • Within the EC as a whole, a huge variety of interpretations tend to (co-) exist at different

levels26, ranging from rather narrow-technocratic approaches (focusing on the managerial aspects of public affairs) to broad-based holistic approaches (considering governance as a cross-cutting issue) with a strong political connotation (ramifying into issues such as human rights, democracy, etc.). This huge diversity was noted during the field missions and is confirmed by the CSP-analysis (see below).

23 This is done with varying levels of intensity according to the governance cluster concerned. Since 2000, the EC has put in place a rather comprehensive framework for dealing with ‘non-state actors’, particularly in the context of the Cotonou Agreement. By contrast, the policy framework to support local governments is much less developed. 24 A case in point is Ethiopia, where the EC Delegation has been actively promoting the effective use of the Handbook, including towards EU Member States. 25 During the field phase, it was interesting to note that Delegation staff often started the interview with a request towards the evaluation team to define governance 26 Examples of differentiated approaches to governance can, amongst others, be found in the regional agreements; between EC headquarters and Delegations; between DG-DEV and RELEX; within different units of a Delegation; between the technical staff involved in governance programmes and the macro-management level of Delegations; between the EC and the European Parliament (e.g. in relation to the desirable focus of the European Initiative on Human Rights and Democracy), etc.

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• In some regions (e.g. MEDA), EC officials prefer to use other conceptual frameworks (i.e. the UNDP definition), perceived to be more attuned to the governance thinking and needs in MEDA countries than EC policy frameworks and concepts.

• Within Delegations, it seems not always clear “whose job it is to take care of governance”. A tendency has been observed to confine governance to the specialised unit or staff directly dealing with specific governance issues (e.g. human rights, public sector reform, justice). However, there is considerable evidence of a focus on governance in other sectors and programmes funded by the Commission in the country involved. Yet these possible indirect contributions to governance are often not recognised as such, nor integrated into the overall governance strategy of the EC.

• At country level, there is often no truly shared governance vision and strategy between the EC and the partner government (beyond a broad consensus on general objectives, enshrined in formal documents). This situation may also reflect a lack of societal agreement among local actors (public and private) on the precise meaning of governance and the main challenges and priorities of the political transformation process.

JC 2 : Good governance has been prioritised and mainstreamed into CSP/NIP, RSPs, sector policies and into programmes and projects

The findings of the evaluation confirm the growing prioritization of good governance at the political and policy level. This is reflected by the following elements: • All EC cooperation agreements contain provisions on governance-related essential

elements (human rights, democratic principles, rule of law). The Cotonou Agreement goes a step further by explicitly addressing the concept of governance and corruption as a ‘fundamental element’.

• The Joint Statement of the Council and the Commission on EC Development Policy (November 2000) considers institutional capacity building and governance (including the fight against corruption and the rule of law) as “decisive in strategies to reduce poverty”. Governance has been re-affirmed as a political priority in the “European Consensus” document27

• The EU Development Council on 30.05.02 adopted conclusions on “good governance, democracy and development” and welcomed the Commission’s intention to deepen its work on governance.

• The Council provided its full political support to the EC Communication on ‘Governance and Development’ (615/2003) in its conclusions of 19 November 2003 ‘Governance in the context of Development Cooperation’ (14453/03).

• Governance and institutional strengthening are key political priorities in the reinforced partnership under the “European Neighbourhood Policy” (Wider Europe) and in pre-accession CARDS countries

• The new EU Strategy for Africa, approved by the Council (December 2005), envisages to create a ‘Governance Facility’. It would provide additional support for implementing governance reforms, primarily those resulting from reviews carried out in the framework of the ‘African Peer Review Mechanism’ (APRM).

27 The European Consensus document (December 2005) replaces the EC Development Policy Statement as the overarching policy framework for EU/EC relations with third countries..

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• The legal provisions of the different regional agreements allow the EC/EU to conduct a political dialogue on governance related issues in all regions and through a variety of institutional arrangements.

• In a growing number of CSPs, governance is both a central component of the country analysis and a political priority underpinning the partnership28. Regional programmes increasingly complement national-level instruments.

• Funding to governance is on the increase (see below) Yet, how much of a priority is governance in the actual practice of EC cooperation? Also here, the evaluation team found a huge diversity of situations across regions and countries. For analytical purposes, it is possible to identify four basic types of scenarios, as evidenced in Box 5. Clearly, these should not be regarded as clear-cut divisions, nor is it claimed that all country programmes easily fit into one of these configurations. However, they help to see general trends in EC approaches to prioritising governance. Box 5: Priority given to governance in the actual practice of EC cooperation? Four basic ‘cas de figure’ can be distinguished: 1) The political priority given to governance in the CSP is consistently carried forward at

the operational level and translated into a comprehensive and strategic implementation approach29.

2) The CSP fully recognises the critical importance of governance and calls for an active role of the EC/EU. Yet this political commitment is not translated into a coherently articulated response strategy in the NIP (with the role of the EC being reduced to supporting a limited set of governance projects)30 or in an effectively implemented governance strategy (due to a variety of reasons lack of government commitment, weak capacity, bureaucracy, etc.)31.

3) The CSP and NIP remain relatively vague on governance issues (generally reflecting a reluctance from the partner government to undertake reforms), yet indirect efforts are made by the EC to promote it (‘par effraction’), using amongst others the EIDHR32.

4) In a fourth possible scenario, both the CSP and the NIP remain relatively silence about the governance challenges, despite their critical importance in the country under consideration. Also at the operational level, there is no comprehensive approach to governance. Support is confined to a limited set of technically-oriented activities (primarily towards the public sector). Political dialogue is erratic while there is no solid engagement strategy with non-state actors33.

How can this ‘dilution effect’ be explained from an ambitious governance agenda in the CSP to a low-profile implementation approach? An interesting perspective on this question is provided in the CSP-analysis carried out by DG-DEV in relation to good governance. It indicates that a high convergence tends to exist, at the general policy level, between partner country agendas on governance (also reflected in PRSPs) and EC analyses/response

28See general conclusions of the questionnaire as well as the CSP-analysis. 29 Examples of such a strategic approach (in line with key EC documents) were found in Mozambique, Peru and South Africa. 30 This situation prevailed in both Malawi and Lesotho, as evidenced in the respective Country Strategy Evaluations (CSE Malawi 2003, CSE Lesotho 2004) 31 Angola seems to fit perfectly well in this scenario, according to the Country Note. 32 Morocco could be included in this category. Governance is scarcely mentioned in the CSP and narrowly targeted (i.e. ensuring a leaner civil service). Yet there are important human rights and democracy challenges to be addressed. EC primarily uses horizontal budget lines to provide support to political reform processes (e.g. MEDA democracy). 33 This appears to be the situation in Eritrea, according to the questionnaire

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strategies34. Yet according to the study, the main weakness of governance agendas in the CSPs is that they do not clearly set out priorities and objectives on governance. Furthermore, CSPs were also found to provide little information on indicators that would inform the review process and related performance assessment. Governance indicators in particular, are “virtually non-existent”. Our CSP analysis confirms the increased risk of a mismatch between formally stated and agreed governance objectives and effective action on the ground. How much progress has been achieved with mainstreaming good governance? A distinction should be made between four different types of mainstreaming. • Country Strategy Papers and National Indicative Programmes. The CSP-analysis clearly shows a

huge variation in ways of dealing with the issue of governance, reflecting different levels of ‘governance mainstreaming’ as well as partnership modalities35. The full scale of possible approaches can be found in the random analysis carried out for this evaluation. They range from (a small number of) truly strategic and integrated governance approaches (e.g. Chile, Burundi) to CSPs presenting a narrow, primarily technically-oriented governance concept (e.g. China, Morocco). In between, the majority of the CSP do attach importance to governance (labelled in different ways) and include various governance clusters. Yet what is generally missing in this category of CSPs is an explicit overall strategy showing the wider picture; clarifying the overall intervention logic of the EC; specifying critical linkages (e.g. between governance and poverty reduction); justifying the choice of instruments; presenting governance indicators, etc.

• Regional Strategy Papers and Regional Indicative Programme. A survey (see Annex 11) shows that RSPs/RIPs generally make a reference to governance, proposing to treat it as a cross-cutting issue, to be included in the implementation of programmes and projects. Some regions go a step further. Thus, specific regional programmes on governance exist in West Africa (‘Appui à une politique régionale de prévention des conflits et de bonne gouvernance’) and in MEDA (‘Enhancing the Rule of Law and Good Governance’)36. In the SADC region, governance features prominently in the focal sector of ‘Transport and Communications’ as regards ICT. The main objectives are to assist Member States in the development of an appropriate regional regulatory framework and transparent legislation for e-Governance. Non Focal Areas include Promotion of peace and security and role of gender (e.g. reduction of levels of organised crime, money laundering bribery and corruption) and Promotion of human rights and democratisation (e.g, strong and focused human rights civil society organisations in the region). In the Caribbean, the focal Sector Intensification of regional integration includes achievement of enhanced governance in the public sector.

• At the level of sector policies. A (non-exhaustive) desk review of key policy documents

related to major EC sectors of intervention37 shows that governance has been to a large extent mainstreamed. All major governance dimensions (e.g. the promotion of national

34The DG-DEV assessment of CSPs on governance reveals that in almost 90% of CSPs there is a coincidence on identified challenges and priorities on governance (even if the EC analysis is generally more critical). 35For instance, the CSP for Bosnia & Herzegovina (CARDS) is of particularly high quality, spelling out a comprehensive and practical governance strategy. However, the weakness is that, considering the political situation, the document is more an EC document than a government owned strategy. A similar assessment prevails for the East-Timor CSP. 36 In addition to a host of other regional initiatives touching upon governance : Further, other programmes also deal with governance promotion (Programme on Regulatory approximation in the Fields of the Neighbourhood Policy and Completion of the Euro-Mediterranean Free Trade Area; the Euro-Mediterranean Cooperation Programme between the Cities, Local and Territorial Authorities (MEDACT); the Programme Regional MEDA JHA II; and the Programme Regional EUROMED Youth III) 37Including food security; transport; education; peace, security and development (see desk study report)

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policy frameworks; the need for sound public finance management; the participation of all relevant actors; the search for greater transparency and accountability; the focus on institutional strengthening, etc.) are part and parcel of the proposed EC strategies and approaches in key sectors of intervention. Actual practices tend to vary widely according to the countries38 or sectors involved39. This is confirmed by the field missions. Jordan presents an interesting case. At first sight, the governance component is rather small and it is difficult to find much evidence of mainstreaming in the overall intervention strategy and programme documents. Yet a more detailed analysis of the programme activities reveals that governance is a quite central, albeit largely implicit, element of different cooperation programmes.

• Programmes and projects. The Draft Handbook on Governance presents a practical tool to facilitate a mainstreaming of governance in all EC aid interventions. It invites EC task managers to address good governance both through a ‘horizontal analysis’ (geared at projects and programmes that do not primarily concern the areas covered by the six governance clusters and where governance concerns are often neglected)40 and a ‘vertical analysis’ (for the projects and programmes or components of programmes that address specifically the themes of one or more of the governance clusters). In the context of this evaluation, it was not possible to make a proper assessment of the degree of mainstreaming in overall EC aid interventions, partly because systematized evidence on this matter is not readily available. However, impressionistic evidence gathered during the desk and field phase or derived from other sources41, suggest that much remains to be done in this area, including to familiarise and train EC officials with regard to newly developed tools (such as the ‘horizontal analysis’ presented in the Handbook).

JC 3 : Financial volumes and number of projects and programmes targeted to good governance objectives in the different regions are increasing

The prioritization of governance is also reflected in the financial volumes involved over the period 1995-200442. Based on our calculation method, good governance related commitments represent 27% of the total EC commitments. About one third of good governance related commitments has been disbursed over the period. It was not possible within the framework of this evaluation to assess whether this disbursement rate is higher or lower than for other cooperation sectors. In relative terms, PHARE and CARDS have a higher commitment to governance than other regions (over 40%). This is probably due to the acquis communautaire. ALA-Asia has the lowest governance commitment of all regions (12%). TACIS, ALA Latin America and CARDS show the highest gaps between commitments and payments. The ACP countries

38 In answering the questionnaire, six countries report a medium and three a low extent of mainstreaming. A relative majority of 9 countries experience active governance mainstreaming, sometimes focusing on particular sectors. 39 Country Strategy Evaluations generally indicate that governance concerns are effectively mainstreamed in the transport sector. In other key sectors for the EC (e.g. food security, water and sanitation), it would appear that the degree of mainstreaming governance is less systematic and consistently applied across the board. This is also being confirmed by thematic evaluations (gender; rehabilitation; food aid and food security; population and development). 40 The purpose is to ensure that all projects and programmes, at every phase of their development, promote good governance in practice. Ideally, the horizontal analysis verifies that the ‘guiding principles’ (detailed in PCM guidelines) are followed and that the governance criteria expressed by all ‘core concerns’ are respected. 41 On the whole EC Country Strategy Evaluations, carried out in different regions, tend to indicate a rather low level of mainstreaming governance as a cross-cutting issue in all programmes and projects. 42 The overall EC assistance to governance is based on the sum of all regional and relevant thematic instruments (EIDHR, Decentralised Cooperation, NGO-Co-Financing, Rehabilitation) over the period from 1995-2004.

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have the highest commitment in absolute numbers, but are in a middle group in relative terms (26%). ACP and MEDA show the best disbursement rates. Over the period considered (1995-2004), there is generally an increase in governance commitments until 2000-2002, demonstrating the increasing importance given to governance in EC policies, but also resulting in a widening gap between commitments and payments (in particular in the ACP and ALA-Latin America). CARDS and PHARE show a continued steady growth of governance commitments while ALA-Asia, TACIS and MEDA demonstrate an irregular pattern of commitments over time. JC 4 : Good governance has been adequately addressed in (performance-based) mid-term review

Mid- and end-of-term reviews offer, in principle, the opportunity to apply the principle of performance-based partnerships, aimed at ‘rewarding’ countries that make effective progress in reform (including on governance). However, each Regulation and Agreement that governs EC co-operation with the respective regions approaches the question of the reviews differently. Some Regulations, such as the ALA Regulation of 1992, do not foresee a multi-annual programming process, while the Cotonou Agreement has very elaborate provisions on the matter. In several countries, notably those covered by the new policy for Wider Europe and the New Neighbourhood Policy, the programming and review of external assistance is also fully integrated into and influenced by the wider political dialogue with the country. The form and timing of the MTR process and the results produced therefore differ from region to region43. In ACP-EC cooperation, a rather formal and comprehensive ‘mid-term’ review process was conducted and finalised in 2004, involving 62 of the 76 ACP countries. The MTR process largely confirmed the validity of existing strategies44. Yet all MTRs provided an opportunity to update the programming documents, particularly in relation to governance. An internal assessment made by DG DEV 45 indicates that all MTRs included some overall assessment of aspects related to governance such as human rights, corruption, decentralisation, the rule of Law, the functioning of the judiciary and security sector and the democratisation process. The main governance problems reported were corruption and lack of financial and qualified human resources in partner countries’ institutions, leading to limited capacity to implement envisaged reforms. Some countries were ‘penalised’ because of bad governance performance. For Cameroon, for instance, the Commission decided to reduce the A-envelope by 37 M€ because of difficulties to absorb aid and major concerns about the implementation of the national budget. It also concluded on the need to stop the budgetary support as the proper governance conditions were not fulfilled. The growing prioritisation of governance is reflected in the distribution of resources across sectors after the MTRs. A tentative analysis by the Commission of changes in the distribution of multi-annual resources across the main sectors after the MTRs in all regions indicates that the largest absolute increase is in the category of government and civil society (DAC Code

43For an overview see the ‘Progress Report on the Mid-Term Review of the first generation of Country Strategy Papers’, Commission Staff Working Paper, 25 April 2005, SEC (2005) D 2877. 44Only in 8 cases, the MTR led to a change in strategy (focal sectors) and/or rewrite of the CSP (Commission Staff Working Paper, p. 8) 45 Internal EC note 1461 of 6 April 2005.

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15), where activities are largely focused on institution building and improving governance46. Based on this first MTR experience, the Commission recognises the need for quality improvements in assessing governance. It was found that the assessment methodology that had been developed by the Commission was not used stringently, leading to very differing degrees of depth and type of analysis. This points to the need to further streamline programming tools in view of the second generation of CSPs.

CONCLUSIONS EQ 1

Over the last years, EC concepts and approaches to governance have evolved quite dramatically. The initial, rather restricted and technocratic governance focus (i.e. on public financial management and corruption) has been abandoned in favour of a holistic concept, embracing all political dimensions of partnership relations with third countries and regions. Governance objectives have been increasingly prioritised (also in financial terms) and gradually mainstreamed at the policy level in all regional cooperation agreements, CSPs, RSPs as well as in key EC sectors of intervention. Mainstreaming at the operational level is more difficult to assess as there is not much systematized information available on this. Evidence from recent evaluations suggests that the degree of mainstreaming varies widely across sectors and countries.

However, there are clear indications that the rapid ascent of governance as a key political priority has not yet been properly ‘digested’ by the EC, both at headquarters and field levels. This is reflected in (i) a fairly substantial amount of conceptual and operational confusion on what governance really means and on how best to support it; (ii) hugely different approaches to dealing with the governance at country and regional level; (iii) a tendency to confine governance to specialised units or staff directly dealing with specific governance issues (iv) and in the existence of many ‘grey zones’, at strategic and operational level, which will need to be further clarified if the EC is to be an effective ‘change agent’ in governance related processes (e.g. the lack of baseline assessments with regard to governance; the standard quality requirements of CSPs; the effective use of mid-term reviews as a tool to ensure a performance-based partnership, etc.).

46A substantial increase for governance related programmes were decided in the context of the NIPs for 2005-2006 for Afghanistan Russian Federation Bosnia and Herzegovina, Tunisia, , Morocco, Bangladesh, Colombia, Albania , Peru and Ukraine In the context of re-allocation of resources within ACP programmes, the support to the sector 15 in the programme for Nigeria also increased considerably, reflecting an attempt to put in place a performance-based allocation to states that invest seriously in better governance.

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4.2 Tools and working practices, financial mechanisms and instruments EQ 2 : To what extent and how have Commission-financed projects and programmes, and in particular capacity building activities including technical assistance and twinning programs, efficiently and effectively contributed to the progress towards good governance and to the encouragement and promotion of good governance approaches and policies? This evaluative question addresses the ‘tools of trade’ and has two main objectives. First, to look at the use of project and programme approaches47 in promoting good governance. Second, to focus specifically on the efficiency and effectiveness of capacity building activities, including technical assistance and twinning programmes, in supporting good governance processes. This analysis should examine how capacity building activities are incorporated in the partner organisations and the extent to which this support results in, or has the potential to result in, long-term, sustainable, systemic effects. The assessment should take into account the source of financing, i.e. whether it is a thematic (including EIDHR) or a geographical budget line, and its importance to the effectiveness and efficiency of the support. JC 1: Both the ‘project approach’ and the ‘program approach’ are effectively and efficiently used to promote good governance The first generation of EC-supported governance initiatives during the 1990s in different regions, were designed and implemented as projects and programmes. This reflected the approach to aid delivery that prevailed at the time. Country strategy evaluations looking back at the period 1995-2000 typically found a myriad of projects targeted at different governance clusters (democracy, human rights, support to local governments, civil society) and funded from different sources (geographic and thematic)48. From 2000 onwards, a gradual shift towards a sector-wide approach to promoting governance reforms can be observed, particularly in the ACP region. Still, the project and programme approach remains an important tool, particularly in third countries where the conditions for budget support are not considered to be fulfilled (e.g. Angola, Indonesia). Governance activities in Ukraine were pursued through both targeted small-scale projects and programmes. Legal approximation to EU legislation is one of the long-term objectives and includes technical assistance in legal analysis and advice. The main form of assistance in Dominican Republic is in the form of particular projects or programmes. In the area of governance more than 70% of this aid is dedicated to technical assistance, advice and training. In other countries visited (e.g. Jordan, Burkina Faso), a combination of sector support and programmes/projects are used to promote governance. In the scope of this evaluation, it is not possible to make a comprehensive and sophisticated analysis of the effectiveness and efficiency of projects and programmes as a tool to

47 Project: A project is a series of activities aimed at bringing about clearly specified objectives within a defined time-period and with a defined budget. Programme: Can have various meanings, either: (i) a set of projects put together under the overall framework of a common Overall Objective/Goal; (ii) an ongoing set of initiatives/services that support common objectives (i.e a Primary Health Care Programme); or (iii) a Sector Programme, which is defined by the responsible government’s sector policy (i.e a Health Sector Programme). Source: Guidelines on Aid Delivery Methods; Project Cycle Management; February 2004; European Commission - EuropeAid 48 The Country Strategy Evaluation of EC-South Africa cooperation (2002) provides an interesting example. It shows how the EC sought to support the post-apartheid political reform process through a wide range of projects and programmes.

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promoting governance. Yet evidence from different sources makes it possible to make some general observations: • Ideally a sector approach is followed to sustain governance reforms, as it provides much

greater potential to generate partner country ownership (especially for public-sector related governance reforms). Furthermore, it facilitates multi-donor coordination and allows for broad-based and long-term support strategies. Yet the use of project or programme approaches can be strategically justified, for instance to ‘test out the water’ or to initiate a learning process. The project modality, for instance, proved its effectiveness and efficiency in launching the experimental decentralized cooperation approach (both at the level of the EDF and the EU budget line on decentralization). Under the 8th EDF, a ‘Zimbabwean Decentralised Co-operation Programme’ (ZDCP) was launched, which developed into a successful programme that laid the ground for both the participation of Zimbabwean civil society in policy processes and innovative process approaches to managing local development affairs.

• Much depends on the quality of the design process and related choice for suitable implementation arrangements. The Dominican Republic country note reports that EC governance support was conceived in such a way that it allows for multi-annual processes in which it is possible to test out the preparedness and capacity to reform of different parts of government as well as to provide successive phases of assistance. Another example relates to the micro-projects, a preferred tool for EC support to local grassroots initiatives. Over time, the instrument has been sophisticated so as to overcome the traditional shortcomings of ‘stand-alone’ project approaches. In several countries, efforts have been made to adopt a more programmatic approach and to embed the projects into a wider vision on local development and local governance (i.e. by promoting an active role for local governments in the management of the programme).

• Evaluative findings suggest that projects and programmes can be effectively and efficiently used as a step in the process towards sector-wide approaches.

• A key concern, also noticed in several evaluation reports, is the extent to which projects and programmes are integrated in a broader, coherent governance strategy for a given country. This is crucial for governance interventions, which by definition require a long-term perspective for change to be achieved.

• The European Initiative for Democracy and Human Rights (EIDHR) has been able to fund governance-related projects carried out by civil society that usefully complement government programmes. A particular added value of the budget line has been to fund human rights initiatives in difficult environments, as the projects do not require the formal approval of the government.

• In cases where the EC has embraced a sector policy support programme to a particular governance cluster, it is strategically important to combine this with targeted project support (e.g. to civil society actors monitoring budget expenditures in the sector benefiting from EC support).

• According to the questionnaire, respondents consider project/programme aid especially useful for promoting civil society, as it allows for “tailor made” support. Its most important advantages are its targeting capacity and flexibility. Disadvantages are seen in “long and sometimes bureaucratic procedures” which do not lend themselves easily to “dynamic processes of change”

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These elements call for a prudent approach to assessing the value of project and programme approaches in promoting good governance. Their usefulness largely depend on contextual factors; available windows of opportunities; the way in which the ownership issue is addressed (generally the Achilles heel of project approaches); as well as the existence of an overall integrated donor governance strategy towards a particular country. This being said, most interviewees welcomed the overall EC shift towards sector policy support programmes, as this tool was seen to have a comparatively greater potential to stimulate local ownership, facilitate dialogue, reinforce government institutions and ensure sustainability

JC 2: The Commission-financed capacity building activities aimed at promoting good governance respond to a genuine and effective demand The existence of a genuine demand for particular capacity building activities is generally seen a key factor for successful interventions. The EC, like other donors, has been struggling to cope with the ‘demand side’ of capacity support. The questionnaire reports that Commission-supported capacity building activities are seen to respond to an effective demand in eleven countries, while this is only true to a lesser extent in nine countries. According to participating EC Delegations, the effective response to demands highly depends on the sectors concerned and the respective country contexts. In Burkina Faso, and to a lesser extent in Guatemala, the evaluation noted that technical assistance, and particularly training, was a major part of the activities, where it had been relevant and effective. In Jordan a strong support was expressed in the twinning modality (a project has recently started with the Jordanian Audit Bureau). In the Dominican Republic the projects responded to a genuine demand on the part of the civil service, yet they were contaminated by local dynamics. The turnover of absolutely all personnel in public services at the time of elections leads to a poor retention of skills, as new people take over every four years. This highlights the utility of carrying out the projects over electoral cycles and to fully integrate the political nature of the State’s civil service into the design of capacity building programmes. Ukraine presented the challenge of political transition after the “orange revolution”. Under the old government, the demand for capacity building was mostly connected to the provision of equipment, and the capacity building component was taken as a necessary evil. There is now more demand for institutional capacity building to help re-engineering a capable state that delivers public goods to its citizens in a transparent and accountable manner. The Angola country note stresses the critical importance of a qualitative design process. The justice sector saw many attempts at formulation of a good strategy. Only one major study was done, but the Government was not happy with the scope and focus of the programme. The proposal was very comprehensive and included support to all relevant institutions (courts, ministry of justice, attorney general, etc), a revision of the legal framework of the sector, a revision of the remuneration and human resource structure, improving the registries, training, mediation & arbitration and increasing citizen’s access to justice. The Government seemed to prefer a more physical investment oriented approach, for example the rehabilitation or construction of courts and houses for judges. During the formulation process, the President of the Republic established a special commission to determine the needs of the justice sector and a reform framework. Although the commission has now been working for 18 months, no results have been released yet, but they are anticipated to come out before the end of 2005. Based on the findings of the commission the proposal may be

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revived. According to AIDCO, quoted in the Country Note, the reason why these two major governance programmes did not advance is because they are the result of “top-down input-oriented approaches that are not based in real processes”. Some additional points are worth noting. First, the evaluation found little evidence of a systematic and sophisticated use of tools such a ‘needs assessment’ or an ‘institutional analysis’ to better capture the ‘demand side’ and to identify the most suitable capacity building support inputs and modalities. Second, during focus group discussions, the point was recurrently made that the EC needs to invest more in developing tools and approaches to promote effective organisational change within the institutions it supports. Third, in the questionnaires, EC Delegations stress the multiple roles and uses of project and programme approach in promoting good governance processes49. Main advantages of the project approach is seen to be its flexibility; a better adaptation to real needs; a better control on the funding involved; a higher visibility and clearly defined objectives, outputs and activities. The main disadvantages that were mentioned are the long procedures to get the ball rolling; the short duration; the lack of coordination and the limited impact and sustainability. There is no systematic analysis of the added value of project and programme approach, especially as regard a typology of situations where it could be of high relevance. JC 3: The Commission-financed capacity building activities aimed at promoting good governance are framed in a coherent institutional development strategy

It would appear that Commission-financed capacity building activities are not yet systematically framed in a coherent, long-term institutional development strategy. A wide range of activities are funded, yet these are generally not underpinned by a broader strategic view on how to promote lasting institutional development; on how best to integrate the ‘political dimensions’ of capacity development (e.g. related to power, vested interests, etc); and on how to cope with the issue of ‘incentives for change’. Several country notes report a fragmented approach to capacity development, whereby some key governance actors are not sufficiently or adequately supported (e.g. civil society). Procedures may also prevent an integrated approach to capacity development. In Burkina Faso the evaluation noted that the very logic of subsidy contracting for NGOs creates a competitive framework within which it is not possible to do capacity building in the preparation of proposals. This would give an advantage to one organization over another. It leads to an unnecessary restriction in the scope and quality of proposals presented. The Call for Proposals approach also tends to exclude government agencies which are designed to be independent from the executive branches, and which are not used to a contract based approach (for example the Independent Electoral Commission, the Superior Information Council, the Court of Auditors, the Cours de cassation, the Committee of Ethics, the Ombudsman). The questionnaire confirms this assessment. In only five countries were Commission-financed activities aimed at promoting governance framed in a coherent institutional development strategy, while fifteen countries argue that this is “sometimes” the case (depending on sectors and individual programmes). During the focus group discussions, the point was made that EC is not yet fully equipped, particularly in terms of tools and working methods, to promote effective and lasting organisational change within key public institutions it supports.

49 For instance , they allow for a ‘safer’ approach in a new field of cooperation such as governance; for a ‘tailor made approach’ in particular country contexts; or for the financing of specific support to institution building)

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This ought not to be surprising, as these issues go to the core of the development challenge and have proven particularly difficult to address through external assistance. The debate on effective capacity building approaches is ongoing at different levels, including in the context of OECD-DAC. The focus of attention is strongly on issues such as (i) improving country ownership of capacity development strategies; (ii) combining support to state building with civil society development; (iii) positively influencing the factors that may lead to sustainable capacity development; (iv) fully integrating the political nature of capacity development, with the related need to identify ‘drivers of change’; (v) moving towards ‘system approaches’ to capacity development50. Most interviewees agreed on the need to further develop internal capacity at all levels of the EC to cope with the broader agenda of institutional development, as it largely conditions the effectiveness of aid and governance support in particular. EuropeAid has initiated in 2004 the development of some analytical tools and training materials on capacity development. In this context, institutions and organizations are being assessed through an ‘open systems’ approach which takes into account both the environment -the outside structural factors shaping their capacities- and their internal structure, functioning and expected output51. These are promising steps forward. The challenge will be to ensure the effective dissemination and internalization of these new tools among practitioners in the field. JC 4: The Commission-financed capacity building activities aimed at promoting good governance have been sustained after the completion of the intervention It proved difficult to properly use this judgement criterion during the evaluation. This is mainly due to the lack of indicators dealing with governance, the weak development of M& E systems as well as the lack of impact analysis, especially as regard to capacity building activities. The generally perceived lack of a long-term strategic focus in EC approaches to capacity building may suggest a low sustainability of supported activities but it may be very different from case to case, and probably strongly related to the degree of ownership of the activities.

50 For an overview, see J. Ubels, ‘From local empowerment to aid harmonisation’, Capacity.org., Issue 26, September 2005 51 EuropeAid. September 2005. Aid Delivery Methods Concept Paper, a contribution to development thinking. Institutional Assessment and Capacity Development. Why, what and how?

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CONCLUSIONS EQ 2 Institutional development and capacity building are key to promoting good governance. A large share of EC governance funding is dedicated to capacity building. The evaluation found that project and programme approaches can, under certain conditions, be effective and efficient tools for promoting governance. They can also help to prepare the ground for a more structured approach (e.g. through sector policy support programmes). A systematic analysis of the added value (strengths and weaknesses) of project and programme approaches is generally missing, particularly at country level. The EC has made efforts to ensure that capacity building activities respond to genuine needs. Its track record in providing capacity support for governance is mixed (across countries, sectors and type of programmes and actors targeted). The local environment, which constitutes a determinant factor for effective support, is not always properly assessed (e.g. in terms of incentives for change). Yet there is also a need to strengthen the internal capacity of the EC to deliver sustainable institutional development support in a long-term perspective aimed at systemic change (e.g. by further refining strategies, approaches, tools for promoting organisational change, etc) as well as to monitor capacity outcomes.

4.3 Tools and working practices, financial mechanisms and instruments EQ 3 To what extent and how have Commission-financed SPSP and budget support efficiently and effectively contributed to the progress towards good governance and to the encouragement and promotion of good governance approaches and practices, in particular though improved public finance management, through improved accountability and transparency and through improved public service delivery? At policy level, the EC has marked budget support -where possible- as the privileged tool for the future delivery of development cooperation52. This evolution was confirmed during a focus group discussion on the nexus between budget support and the promotion of good governance, organised with EC officials during the desk phase. The group noted that the introduction and increased importance of sector policy support programmes (SPSPs) and budget support had resulted in more emphasis on governance issues. The purpose of budget support and SPSPs is to increasingly work through the partner countries own budgetary and planning systems/procedures and by doing that empowering and improving these systems and procedures while building government’s capacity53. Secondly, most of the SPSPs and budget support programmes are accompanied by technical assistance targeted to mainly the finance ministry and/or to sector ministries. This evaluation question should help to better understand the effectiveness and efficiency of supporting good governance processes through aid modalities such as budget support and SPSPs. The question should also cover the more general effects on good governance values (e.g. accountability,

52 European Commission. 2003. Building Our Common Future, Policy Changes and Budgetary Means of an Enlarged Union 2007-2013, Report of the ‘Peace Group’ – The EU as a Global Partner: Priorities and Instruments. See also the Draft Communication related to the new ‘Joint Declaration by the Council, the European Parliament and the Commission of the European Union Development Policy - The Brussels consensus’, June 2005 53 Budget support is linked to good governance by incentives for improved public financial management; giving the Commission a stake in the dialogue on budget systems; strengthening domestic accountability; promoting Parliamentary accountability; reducing the pressure on national budgets; providing accompanying capacity-building support (COM 615/2003).

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transparency, effectiveness in the management of public resources) of budget support and SPSPs. JC 1: Commission-financed SPSP and budget support have contributed to good governance approaches and practices, amongst others by improving public finance management The EC has started to provide budget support to ACP countries in the early 1990s in the framework of structural adjustment programmes agreed by the countries with the Bretton Woods Institutions. By the end of 2003, almost a third of the EC’s external assistance to ACP countries through the EDF was provided as general or sectoral budget support focusing on reducing poverty and ensuring an equitable access to social services. More recently, budget support is being increasingly used in regions outside the ACP54. Budget support is demanding: it requires a commitment to sound public finance management in third countries and close co-ordination on the part of the donors. It is also complex in political and technical terms. Direct budgetary assistance may be granted if “public expenditure management is sufficiently transparent, accountable and effective”55. If taken as absolute criteria, very few countries would be eligible. However, the EC advocates the need for a process-oriented approach and a flexible application of budget support. This would make it possible to accompany committed governments to gradually improve overall performance in public financial management (PFM). This is seen as “an explicit goal of the budget support approach, a condition for the realisation of its full potential, and a pre-requisite for eligibility”56. To this end, the EC generally provides accompanying technical assistance with budget support. In the questionnaire, EC Delegations that use sector budget support are on the whole positive on the potential of this aid delivery mechanism for promoting good governance practices. For instance, the SPSPs are considered to foster partner country ownership (Philippines, Ethiopia); to test out genuine political commitment (Cameroon); to ensure strong political dialogue (Mali); to facilitate close collaboration with the private sector and local authorities (Egypt); to mainstream governance issues (Philippines in the planned SWAp for the health sector); to promote donor coordination and harmonisation; to improve sustainability (Bolivia, Georgia). Interestingly, sector support in Bolivia is seen as a means to help Government defining its own reform process. The EC Delegations involved also identified possible disadvantages, including the difficulty to find “reform champions” (Bolivia); the risk of non-compliance (Cameroon); lower control and visibility for the EC (Philippines) and insufficient planning and budgeting capacity in governance-related institutions (Rwanda). A similar positive analysis emerges with regard to Delegations that provide general budget support. If conditions are favourable, it can be an effective tool to ensure ownership and empower government (Mali, Nicaragua, Peru); to have a structured dialogue and possibly higher policy leverage with the government on the need to improve public finance management (Bolivia, Georgia); to strengthen government execution of national policy priorities (Bolivia, Mali); to build institutional capacities within government systems without creating parallel structures (Georgia); to reduce transaction costs (Sierra Leone); to ensure

54 In Asia, the percentage of EU assistance deployed in sector-wide approaches has doubled since the mid-90s (EC Annual Report 2004). 55 Cotonou Agreement , Article 61 56 Annual Report 2005 on the European Community’s development policy and the implementation of external assistance in 2004, p. 106

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faster disbursement (Bolivia); and to combine direct budget support with technical assistance (Georgia). Country Strategy Evaluations point to both successes and major difficulties in providing budget support. In some cases, the state of public finance management proved too weak to continue with budget support and major re-orientations were advocated (e.g. CSE Malawi, 2003 and CSE Lesotho 2004). Ukraine presents an interesting case, as the public finance management process has not been addressed through budget support, but rather through programme aid. The EC’s support for public financial management reform in this country has focused on the supreme audit body, the Accounting Chamber, and on the Treasury. Progress in this area has been rather slow, mainly because the necessary legislative changes were not made that would have made it possible for the Chamber to audit the revenue as well as the expenditure side of public accounts. On the positive side, the project helped the Chamber to contact and learn from like bodies elsewhere in Europe (UK, Poland, Sweden, Lithuania and Germany). Modern standards of auditing were introduced. The Chamber established regional offices for the first time and a new law on the Accounting Chamber was drafted. The EC support paved the way for further reforms. Support to the Treasury for improvements in public financial management is being led by the World Bank, with support from the EC57 and Japan. The suitability of budget support and SWAps was discussed by the evaluation team with the EC staff, Government and other donors. The World Bank is planning to mobilize Government and donors around a SWAp for public financial management, but feels that substantial preparatory work would be required. A Public Expenditure Review and Public Financial Management study are planned. The Government too is keen on SWAps. All governance staff met by the team in Ukraine favours the programmatic approach characteristic of SWAPs. They defined a “program” as a series of separate activities undertaken by different institutions leading to the achievement of sectoral goals over a relatively long period of time, and gave examples of cases where projects have become programs. For example, through the annual planning process at the Commission, support for public financial management reform began with capacity building in the Accounting Chamber, moved on to the management of public finance in the Treasury and Ministry of Finance, then turned to tax reform (thus completing the revenue to expenditure cycle), then moved on to internal audit. A similar progression has taken place in the judicial sector. However, it is clear that many more years of support will be required to improve the whole public financial management system, including districts and regions as well as ministries, and reform of the public finance responsibilities of the legislative as well as executive branches of government. As with other reforms, changes in behaviour will be required since so many key participants retain the attitudes of the command and control economy. In Jordan the EC has provided direct budget support in the form of several Structural Adjustment Facilities as well as through an Emergency Budget Support Programme of € 35 million under MEDA II (in the context of a large effort by the international community to help alleviate the negative consequences of the conflict in Iraq). These programmes basically seek to promote a viable macro-economic framework within a framework of greater openness and a substantial reduction in the budget deficit. In addition to this, the modality of sector support is increasingly used in EU-Jordan cooperation, including for decentralisation (see the new “EU Support Programme for Poverty Reduction through Local Development in Jordan”). If properly implemented and monitored, the programme 57 The EC has provided $3 million to fund technical assistance to the Ministry of Finance to improve capacity to prepare, execute and account for public expenditure.

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may impact positively on several governance clusters such as public sector reform, sound public financial management, decentralisation and civil society participation. The sector support modality also applies in the “Support for regulatory reform and privatisation (SPRP)” and in the justice sector. During consultations, both sides highlighted the potential benefits of budget support. It allows the EC to support (the development of) national policy agendas and implementation strategies; to increase ownership; to empower government institutions to play their role in the development process; to have a structured political/policy dialogue on key governance issues (e.g. public financial management) and broader reforms (e.g. privatisation, decentralisation); to ensure faster disbursement and reduce transaction costs; to reduce the pressure on national budgets, thus reducing the risk for social unrest or conflicts, etc. The provision of technical assistance is generally seen as a relevant instrument to facilitate an effective use of the instrument of budget support. JC 2: Commission-financed SPSP and budget support contribute to building a culture of transparency and accountability Budget support has been carried out for a decade in Burkina Faso, but really took off during the period 2002-2005 with the elaboration of the first PRSP. During this phase, budget support was conceived as a “test” of a new approach to conditionalities. This means that the milestones for disbursements were linked to the conditionalities of the International Financial Institutions, mainly related to macro-economic issues. This implicitly coincides with many characteristics of good governance: design of a public expenditure framework based on results monitoring; approval by the IMF of macro-economic stability; and improvement of public resource management. The case of Burkina Faso clearly shows that budget support creates real possibilities of increasing both Government ownership and accountability in the implementation of activities. By placing the resources directly into the government budget, the decision making process becomes more ‘national’ than would be possible with the traditional project mode of operations. This may lead to a considerable shift in the dynamics of certain target Ministries, both governance-related departments (such as Justice in Burkina Faso) and those more directly related to the Millennium Development Goals (such as education and health). During field visits, it was also observed that budget support is understood and handled by a very limited number of stakeholders in the ministries and the donor agencies. This reflects the technical nature of the instrument. Yet considering its critical and growing importance in development partnerships and in governance-related processes in particular, it would appear useful to invest more in adequate information flows and multi-actor dialogue processes on the purpose, implementation modalities and achievements of budget support. One of the key strategic issues that arise in Burkina Faso and elsewhere is the precise nexus between budget support and governance. The main EC conditionality with regard to governance is rather narrowly defined (i.e. transparency and efficiency of financial management). This restrictive use of performance indicators is linked to the desire not to overburden budget support with conditionalities, which could lead to paralyse it. Yet some EC officials in the field (e.g. in relation to Ethiopia) strongly pleaded in favour of expanding the use of governance indicators without negative consequences for the further development of the modality. In their view, a stronger link between the provision of budget support and progress on the different governance clusters (e.g. human rights, democratisation,etc.) could

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help to increase the potential leverage of the EC (e.g. in the political dialogue process) as well as the impact of budget support on broader governance reforms. The Country Note on Jordan reports that it is difficult to assess the extent to which Commission-financed SPSPs and budget support have effectively and efficiently contributed to good governance processes. Four factors help to explain this. First, the link between budget support and improving governance is often formulated in a very general, indirect or implicit way. Programme documents seldom include an elaborated vision, strategy and approach on how to operationalise and monitor the link between budget support and expected governance outcomes. Second, the staff in charge of budget and sector support does not necessarily adopt a clear governance perspective in managing the programmes (as proved to be the case with the regulatory reform and privatisation programme, which the mission analysed in more detail). This, in turn, may be linked to the fact that governance issues are not yet fully mainstreamed and internalised across sectors and units. Third, the governance focus in relation to budget and sector support is very much on public financial management. Rightly so, yet there are other governance dimensions which could be usefully addressed through budget support. For instance, the whole issue of public accountability seems to be a relatively neglected area so far. Experiences from other countries show that it can be highly productive to complement the provision of budget aid to creative forms of support to ‘controlling bodies’ and civil society watchdogs. Fourth, there has not yet been a systematic effort at the level of the EC to monitor and evaluate the potential impact of budget support on improving governance. Considering the volumes of budget support provided and the central place governance occupies in the Association Agreement and related NIPs, it might be useful for the EC Delegation to develop a stronger in-house capacity to ensure such a monitoring and evaluation role. JC 3: Commission-financed SPSP and budget support have contributed to good governance approaches and practices by improving public service delivery The evaluation team was not in a position to address this judgement criterion in a solid and consistent manner, for a variety of reasons, including lack of evidence allowing to draw conclusions on the link between Commission-financed SPSP and improved public service delivery. JC 4: The Commission has provided effective and efficient TA aimed at developing governance capacity in the framework of SPSP and budget support It is generally too early to judge the effectiveness and efficiency of TA provided. Furthermore, monitoring and evaluation systems are not yet in place to look in a systematic way to this specific aspect. Much will depend on the extent to which (i) the TA is well-embedded in the public administration services concerned; (ii) process approaches to implementation are followed, which duly take into account the long-term institutional development needs for a truly systemic improvement; (iii) sustainable local capacity can be developed (and retained).

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CONCLUSION EQ 3 The EC has invested heavily in budget support (in terms of conceptual understanding, development of adequate tools, participation in donor fora, training). An example is the EC’s (lead) involvement in the development of the Public Expenditure and Financial Accountability (PEFA) instrument, aimed at developing standard methodologies for assessing and monitoring public financial management in third countries. Solid evidence on the overall impact of budget support on a wide range of possible (region-specific) outcomes (including country ownership, capacity development, good governance, public service delivery, etc.) is not readily available. Country strategy evaluations shed a light on both the potential and pitfalls of introducing budget support in the often fragile political and institutional environment of third countries. Furthermore, it is not possible to assess the impact of Commission budget support on its own, since it contributes to the same outcome as all other budget support provided. The focus group discussion on this EQ provide some other valuable conclusions for the overall evaluation study: • The need to apply the ‘right instruments mix’. Budget support is not a panacea or an

instrument that can be applied everywhere. It can also not target all aspects of the governance agenda. Hence, if impact is to be achieved on governance, the EC is well-advised to combine, as far possible, different instruments (e.g. budget support together with targeted projects providing technical assistance or strengthening civil society participation in policy processes).

• Partner countries capacity to adopt the necessary governance standards -even with full donor support- requires further testing. In this respect, additional efforts are necessary to reach a common understanding among donors and third countries concerning the definitions, advantages and risks inherent in budget and sector approaches

• The use of mid-term review processes can be refined, particularly with regard to assessing the governance performance of partners and devising the right type of response strategies.

• Sectoral budget support is perceived to present a key challenge. The task at hand is to refine objectives, guidelines, modalities as well as relations with general budget support. SPSPs call for a debate on additionality, on sectoral level public financial management requirements and on sector policies.

• The possible links between the provision of budget support and ongoing decentralisation processes need to be further explored (e.g. how to implement budget support in decentralising environments?).

• General and sectoral budget support must remain based on solid eligibility criteria and serious quality control.

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4.4 Tools and working practices, financial mechanisms and instruments EQ 4: To what extent and how has the Commission efficiently and effectively used the political and policy dialogue (at sector and country levels) to encourage and promote good governance approaches and practices? All EC policy documents emphasize the critical importance of political and policy dialogue in supporting good governance processes. Two judgement criteria are proposed to assess the way in which EC has used this strategic instrument. JC 1: Significant progress has been achieved in using political and policy dialogue at different levels as a tool to promote good governance approaches and practices Evidence was collected from different sources that the EC increasingly uses political and policy dialogue with partner countries as a means to promote good governance: • Nine EC Delegations report a “strong” use of political and policy dialogue, most others

recognise “some” use of both tools to encourage governance reforms, regardless of the region.

• An increasing number of CSPs stress the need for political and policy dialogue in order to make progress on governance (as an objective in itself or as a component of sector support).

• In all countries visited, political dialogue was an important component of the EC intervention strategy, albeit actual practices tend to vary considerably.

• The importance of political dialogue in dealing with ‘difficult partnerships’ was strongly emphasized during the focus group discussion on the topic. It helps the Commission to “stay engaged”; to keep a door open for aid programmes that benefit populations; and to prepare the ground for a possible transition to more effective partnerships58.

• The design of specific governance support programmes usually involves substantial dialogue (e.g. to ensure alignment to national governance strategies or to exert pressure on the government to support particular governance reforms59).

• The shift from project approaches to sector wide approaches (particularly in the ACP region) has given a boost to policy dialogue on key sectors of EC support (e.g. transport) covering also governance matters (again with important differences across countries and regions).

• There is also growing evidence of EC efforts to back up the provision of budget support with a structured and ongoing political dialogue on governance, emphasizing close coordination with other donor agencies.

• Country Strategy evaluations also report an increased use of dialogue, particularly at sector level or in the framework of providing budget support (see the 2003 CSE Malawi).

58 This approach was successfully followed in the Sudan, where political dialogue continued -despite the sanctions and the absence of structured cooperation. This helped to deliver humanitarian assistance while preparing the ground for a possible restart of cooperation once the peace agreement would be signed. . 59 In several countries, dialogue was key to ensure government acceptance of civil society support programmes with a strong governance component (e.g. Ethiopia, Mauritania)

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• The EC is involved in political dialogue processes at regional, continental and global level. For instance, recent attempts to elaborate a new EU policy towards Africa have been preceded by political dialogue with the regions as well as with the African Union. The Barcelona process and European New Neighbourhood Policy provide another important framework for institutionalised forms of regional dialogue.

The nature and form of political and policy dialogue obviously depends on a variety of factors, including the geopolitical and economic interests at stake (e.g. the EU-China dialogue); the specific regional provisions and institutional arrangements60; the political commitment of the partner country; the aid delivery mechanisms and the available capacities on both sides and the dynamism of civil society in the country61. Many examples could be given to illustrate the positive influence of dialogue on governance62. Thus, the Country Note on Burkina Faso observes that the tool of political dialogue has been used by the EC in the budget support steering group, involving all donors, to influence the revision of the PRSP and to lobby the Government to deepen the participation of non-state actors in the policy making process. In Jordan, the choice for a prudent and constructive approach to political dialogue (fully aligned to domestic reform agendas) has contributed to build trust for setting-up a structured dialogue on human rights (the first example of this kind in the Arab region). In the Dominican Republic, an intensive (technical) dialogue took place in aspects touching the programming of the 9th EDF, in particular as regards the water sector. In this area, the programme was shifted towards budget and institutional development, away from the originally planned process of privatisation. The EC is on a learning curve with regard to dialogue. It has also shown preparedness to refine dialogue policies and practices based on lessons learnt. Thus, the recent revision of the Cotonou Agreement has rendered political dialogue under Article 8 more systematic and formal, amongst others with a view to improve the application of Article 96 consultations. However, the evaluation also found several limitations to the efficient and effective use of political and policy dialogue (across regions) linked to factors such as: • Reluctant partner governments. The available space for a genuine political dialogue can be

very limited, especially in difficult partnerships. The questionnaire on Eritrea, for instance, makes it clear that there is hardly any room for discussing governance issues. In other countries (e.g. Angola) a formal political dialogue on governance takes place, but its effectiveness and impact is seriously hampered by the lack of government commitment to reform.

• Under-utilisation of existing provisions for dialogue. There are indications that EC has at times been hesitant to make full use of political dialogue to sort out major bottlenecks in the partnership63. This may be linked to prevailing country conditions; the relative novelty of

60 The Cotonou Agreement clearly provides the most elaborate framework. Political dialogue is seen as a key principle, to be used to openly discuss a wide variety of common concerns, including governance (article 8). It has elaborated procedures for consultations and sanctions to be applied when essential elements are breached (article 96) or for the specific case of corruption (article 97). Political dialogue also takes place at the all-ACP level through a host of joint institutions. 61 Several Delegation staff interviewed saw this a major hindrance, as recipient governments from poor countries often lack the institutional capacity to engage in a solid sector policy dialogue 62 During the 1990s, the EC successfully used the tool of dialogue to ensure the smooth functioning of an aid coordination mechanism to Somalia, that sought to broker political solutions while providing humanitarian assistance. In Guatemala, the EC was the driving force behind establishing a ‘Meso-dialogue’, an attempt to bring together the different stakeholders in defining cooperation priorities. The EU-Madagascar political dialogue during the 2002 crisis is perceived as a model, as it managed to facilitate a smooth transition and the adoption of major political and economic reforms. 63 The Lesotho Country Evaluation (2004), for instance, revealed that no use hade been made of Article 8 of the Cotonou Agreement to discuss delicate governance issues such as the government’s poor public finance management and limited commitment to implement gender reforms

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the approach; lack of ‘political capacity’ at the level of EC Delegations; or the tendency to adopt a-political approaches to aid delivery64.

• Disconnect between high-level political dialogue and implementation processes. The field visits generally converge to give a two track picture of actual dialogue processes. On the one hand, the EC is active in the technical dialogue related to the implementation of projects, while on the other hand the political dialogue on those policy sectors is pitched at a general level, and does not address the specific constraints of the projects. For example in the Dominican Republic they do not touch on relations of the main project’s Technical Management Unit with the lead Government counterparts. As a result, the Technical Management Unit is largely left on its own for the day to day resolution of difficulties, seeking to obtain support for initiatives which are lagging behind, in spite of written commitments from the Government. This disconnection between high level political dialogue’ and ‘down-to-earth’ cooperation processes, was also observed in Angola, Ukraine and Jordan. Yet this medium level between general objectives and administrative decisions is precisely the source of most of the blockages, while the existence of a soft consensus at the top level of the country precludes direct discussions of Government priorities and support to the projects. Furthermore, there is often not sufficient human resource capacity in the Delegation to follow up from the points of blockage of the project. This makes the projects dependent on the general level of political will for enhanced governance in the country.

• Missing links. The evaluation also found evidence of limited linkages between governance objectives and other key objectives of EC development cooperation (poverty reduction; LRRD ;…). In a similar way, much remains to be done to ensure sufficient linkages between the various levels of dialogue (local, national, regional, global).

• Limited leverage. For political dialogue to be effective, sufficient levels of leverage are needed. The Angola Country Note makes the point that competing interests among EU member states tend to reduce the scope for an effective political dialogue, underpinned with sufficient levels of leverage. In a broader sense, experience suggest that EU Member states are often reluctant to give the EC a ‘mandate’ to play a pro-active role in political dialogue processes. The recent crisis in the partnership with Ethiopia, related to the oppression of opposition forces contesting the election results, has re-ignited the debate on whether or not the EC should link the provision of budget support to progress on political reforms (human rights, democracy). Some argue that such a link is badly needed, both in terms of respecting the ‘policy-mix’ approach65 and above all in order to ensure enough leverage.

• EC structures and processes. The structures of the EU and EC do not always lend themselves to an effective political dialogue. In Guatemala, the EC is only represented by a sub-Delegation, with the Head of Delegation based in Nicaragua and visiting only occasionally. In Ukraine the frustration facing the Commission is that following the Orange Revolution it could not provide an adequate follow up on its policy agreements with the Government through quick aid (e.g. immediate technical support). The consequence is that others donors are taking the lead in critical civil service reforms. The Delegation feels that it has not been able adequately to support the new government in its critical early months when support for reform from the electorate has been strong.

64 In many EC Delegations an important institutional (and cultural) split can still be observed between ‘development technicians’ and ‘governance advisors’.. 65 According to the proponents of a stronger link between the provision support and effective progress on broader governance reforms, the Cotonou Agreement is all about effectively using all the different instruments for an effective implementation of the overall country strategy. In this logic, it makes little sense to deal with human rights and democracy only in the framework of political dialogue processes (art 8 and 96). In their view, the absence of broader governance indicators in budget support tends to weaken the position of the EC in the political dialogue.

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• Who sets the governance agenda? As mentioned before, there is a growing societal debate within third countries on governance. This increasingly leads to the formulation of ‘home-grown’ reform agendas, that do not always coincide with national policies and approaches to governance, on which EC dialogue processes are generally based66. These are promising evolutions, as they point to a growing ownership of the governance challenge by society itself. Yet they challenge the EC (and other donors) to fundamentally review their approach to dialogue so as to ensure both a truly ‘bottom-up’ approach as well as an inclusive process (see also EQ 9).

JC 2: Participatory approaches are promoted in political and policy dialogue In the late 1990s, the EC fully embraced the principle of participatory development, following a general trend in international cooperation (e.g. in the PRSP processes). As a result, all regional agreements now formally recognize the role of ‘non-state actors’ and decentralized authorities in policy and political dialogue processes. Specific guidelines have been produced to increase NSA participation in overall project cycle management, and especially in the programming process. Project documents and evaluation reports increasingly include a reference to NSA consultation processes. CSPs generally confirm the importance of civil society participation in the development process. Nevertheless, they seldom include a good analysis of the prevailing institutional landscape and a proper identification of the various ‘governance actors’ (e.g. parliaments, constitutional bodies, civil society watchdogs, local governments, etc.), their weaknesses and strengths and the role they could play (have played) in the formulation and implementation of a national or regional governance agenda. The questionnaire and other sources reveal that in a variety of third countries (across the different regions), promising steps have been taken to effectively involve a wide range of ‘non-state actors’ as well as local governments in (sector) policy dialogue and, to a lesser extent, also in political dialogue processes. Often this has been done with the agreement of the partner country. In many cases, however, the EC has had to exercise pressure to ensure genuine participation of other actors than central governments. In still other instances, the EC faces fierce government resistance Evidence also suggests that further experimentation and ‘learning-by-doing’ will be required to properly institutionalize an effective ‘multi-actor dialogue’ approach in relation to (sector) policies and political dialogue. This is required in order to improve the quality of the consultation processes; to ensure an inclusive approach to participation (which also fully recognizes the role of Parliaments and local governments); to support the monitoring role of civil society (e.g. with regard to EC budget aid) and to ensure that good governance standards are also applied by civil society actors, etc.

66 A good example is the work done by the ‘Réseau pour la Refondation de la gouvernance en Afrique’, an informal West-African network of governance actors (both public and private). Based on extensive consultations throughout the region, they formulated an alternative vision on governance as well as a set of proposals to move forward.

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CONCLUSIONS EQ 4 The EC has made significant progress with the use of political and policy dialogue as a strategic tool to foster good governance in a partnership mode. There is growing evidence of positive outcomes being achieved through dialogue. Yet the full potential of this instrument is not yet tapped. Further learning and experimentation is required, particularly on how (i) to define a governance agenda ‘from the bottom-up’ through an inclusive, multi-actor dialogue process; (ii) to better assess and support the capacity of the different actors in a given country or region so as to enhance their participation and contribution to promoting governance; (iii) to focus the dialogue more sharply on concrete development challenges (e.g. poverty reduction, access to water, EPAs); (iv) to enhance the leverage of the EC in dialogue processes (e.g. in relation to the provision of budget support); (v) to adapt internal EC processes and procedures to the specific requirements of supporting governance (e.g. greater flexibility in supporting multi-actor dialogue processes and partnerships).

4.5 Partner-country ownership, relevance of Commission governance support, and flexibility in adapting to different country contexts

EQ 5: To what extent has the Commission assistance been sensitive to specific partner country needs, and priorities, and to what extent and how has the Commission been flexible, in the programming process and in implementation, in adapting to different country contexts (e.g. post-conflict, difficult partnerships, effective partnerships)? This evaluation question is all about ownership, alignment and flexibility to adapt to the different needs, priorities and demands of partner countries. This calls for an assessment of both the relevance of EC governance support (in the light of national agendas, including PRSPs and specific sector priorities) and its capacity to understand and adapt to changing and differing situations/contexts. Two judgement criteria are proposed for this evaluation question67. JC 1: Extent to which elements of national policy priorities are reflected in the EC strategy in the area of governance Alignment to national agendas has become a priority concern of EC/EU cooperation. This also holds true for EC support to the promotion of governance reforms in third countries. Yet progress so far has mainly been realised at policy level (e.g. in CSPs) and much less in actual practice.

67 In the initial version of the evaluative questions, three judgement were retained. However, during the evaluation, it became clear that the second judgement criterion (mainly focused on a quantitative analysis) was both very difficult to answer and of minor importance considering the issues at stake in this section.

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At a general policy level, the EC consequently seeks to align its governance support to national and regional agendas. This is part and parcel of the EC’s overall shift away from ‘project support’ (i.e. the dominant aid modality till the mid-1990s) to a much more strategic, multi-annual ‘programming approach’68. It is also consistent with the prevailing discourse on donor alignment and harmonisation as well as with the move in many parts towards budget support. There is no shortage of examples illustrating this paradigm shift. In Guatemala, clearly a post-conflict partnership, the 1996 Peace Accord provided a comprehensive framework for the peace agreement, and allowed up to 85% of the EC budget to be dedicated to governance, arguably a key theme of development in the country. In Jordan, a country considered to be an ‘effective partnership’, EC cooperation is fully aligned to the different national development strategies linked to the modernisation process of the Jordanian political and economic system. In Burkina Faso, the EC has a longstanding history of trying to promote local ownership of reform processes through innovative and co-ordinated forms of donor support, including in relation to national governance agendas. Angola, a post-conflict and ‘difficult partnership’, has no sector policies or specific policies on governance. Yet the key priorities of its ‘Estrategia de Combate a Pobreza’ have a strong governance focus. In the Dominican Republic the EC has made genuine efforts to ensure that the design of governance programmes is compatible with local conditions, including at the technical level. A good example of this can be seen in the funding given by PARME to electoral support in 2004, which had not been foreseen in the original logical framework, but proved to key to supporting the democratic process in the country. The project specific objectives and activities of PARME have been adjusted periodically to ensure their relevance. For example PARME introduced in 2004 the contractual agreements called ‘Compromisos específicos’ which are signed by the National Authorising Officer and the Head of Delegation to shore up the commitment to certain areas of activity under the project. EC Country strategy evaluations, particularly in the ACP countries, generally indicate relatively high levels of alignment to partner country sector policies (at least if these exist) as well as EC efforts to help developing such sector policy frameworks (in case they are not available). In several countries, the EC has aligned its support to priorities and strategies identified in the PRSP (e.g. the EC support to education in Tanzania). However, at a more downstream level of programming and implementation, the degree of adaptation to local conditions is often reduced, possibly leading to a negative impact on the ownership of the reforms. The following factors may contribute to this situation: • Flaws in programming. Experience suggests that the existence of a formal national

governance agenda should not be equated with government commitment to reform. This is fully confirmed by the questionnaire. A large majority of EC Delegations consider an “unfavourable environment” as the main constraint to promoting effective governance. Hence, the need to go beyond general policy declarations and to seriously analyse the political and institutional conditions and incentives for change in order to identify the most adequate governance intervention strategy. However, evidence suggests that such a thorough political economy analysis is not always (properly) done during the programming process. Thus, the Angola study, for instance, reports that EC programming was unrealistic as it did not take into account the lack of government

68 This shift is particularly noticeable in ACP-EC cooperation, yet other regions gradually evolve in the same direction.

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commitment to reform, nor did it reflect the limited financial leverage of the Commission.

• Inappropriate modalities of programme identification. Both the Dominican Republic and Angola country notes observe that current approaches to programme identification may be detrimental to building ownership. Specific needs are defined as part of a broad process of dialogue with the state and with other donors. Yet the centre of gravity tends to lie with the feasibility studies, which are generally carried out by external consultants. This approach tends to put the ownership of the formulation process with the consultant, rather than the direct stakeholders. The agreements are signed, and after a lengthy process (three years for PARME) the project is implemented. Declarations underlining the coherence of objectives are made by the Government. But the aims and achievement of the results are not necessarily owned by the government.

• Inappropriate modalities of programme implementation. Alignment can also be negatively affected by ‘stand-alone’ approaches to implementation. For instance, in Indonesia, the EC is providing project support to a major governance reform (i.e. the decentralisation process) rather than joining a multi-donor framework set-up for that purpose.

There is a clear potential for budget support to overcome some of these hurdles. Budget support is embedded in the national public policy planning, and unifies the transactions for the allocation and disbursement of money. It also seeks to put the responsibility for programme formulation and implementation firmly in the hands of domestic institutions. However, there are several dilemmas associated with choosing an alignment approach in governance related processes. First, the EC (and other donors as well) often find themselves in front of governments that may be committed to reform but lack the basic capacities to formulate and implement home-grown agendas. Second, governance strategies are no longer the monopoly of central government agencies (as mentioned in EQ 4). In most third countries, alternative governance strategies are being proposed by other actors. This raises thorny issues for external agencies willing to intervene in the governance arena. Whose agenda should be supported? How can the voice of other actors be heard and integrated in the programming process? What are the implications for the type of programmes to be supported? It would appear that the EC, like other donors, is still struggling to cope with this new configuration of actors involved in governance processes. The confrontation between different ‘local views’ on governance priorities can already be discerned in EC supported civil society programmes69. It is likely to gain momentum as non-state actors and local governments70 occupy a more central position in the governance debate. The overall findings pertaining to this question also suggest that the distinction between three types of partnership, brought forward in EC policy documents, seems of limited practical relevance. Thus, the Delegation in Burkina Faso was keen to highlight that even though its environment is considered a model, it may hide considerable difficulties. The EC’s legitimate concern to align itself to government agendas may lead to a weaker focus of governance (depending on government levels of commitment to change). A similar logic could be applied to Jordan. The country is a beacon of stability in the region and cooperation

69 Mauritania offers a case in point. The government was willing to accept an NSA programme in the NIP, provided the support was confined to helping NGOs to better deliver on technical aspects of the fight against poverty. The EC Delegation defended a more political approach, as foreseen in the Cotonou Agreement, and pleaded for a programme oriented towards strengthening civil society organisations as ‘governance actors’ (as requested for by reform-minded civil society organisations) 70 The ‘voice’ of the local governments is also increasingly heard in the governance debate. These actors tend to push very strongly for genuine democratic decentralisation, often against the will of the centre. This is likely to put pressure on donor agencies to clarify their position towards decentralisation. Do they ‘align’ with government or do they support the claims of local governments?

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tends to run smoothly, as reflected by high disbursement levels. Yet a more in-depth analysis clearly reveals major systemic bottlenecks to effective governance reforms. For instance, the issue of public sector reform has been on the agenda for decades, yet very little progress has been achieved so far. Promoting genuine change in other areas (e.g. civil society participation, women’s right, parliamentary reform, fight against corruption) also proves to be a long uphill struggle. JC 2: Ease of adjustment and timeliness of change of programme content in governance EC policy documents recognize that governance involves long-term processes of change, that need to be supported in a flexible way, taking into account country specific conditions as well as windows of opportunities that may arise as a result of internal or external dynamics. To what extent is the EC properly equipped to intervene in a flexible way or to adjust its programme content to changing conditions and new opportunities? Different sources of information (i.e. questionnaire, focus group discussions, interviews and country notes) indicate that EC decision-making processes and procedures generally constitute major stumbling blocks for timely and adequate governance interventions. The Ukraine study clearly shows that the EC was unable, mainly for procedural reasons, to quickly react to urgent demands for governance support after the Orange Revolution. These difficulties are generally acknowledged by Commission officials. Yet there are also examples where a swift and rapid response has been possible, despite procedural limitations. Thus, a recent evaluation of EC governance support to Georgia argues that the EC was able to take advantage of the new windows of opportunities, created by the ‘Rose Revolution’. It succeeded in doing so by drawing creatively on a variety of instruments, including the ‘Rapid Reaction Mechanism’ (RRM), which allowed for a quick release of funds to support, via the UNDP, the election process. This flexibility was highly appreciated by all stakeholders. EC activities in support of the elections provided a platform for unprecedented synergies with other international actors 71 and became an outstanding example of donor coordination in Georgia . A special mention must also be made of the connections between governance and LRRD (Linking Relief, Rehabilitation and Development). Although none of the country studies included a country emerging from conflict, the evidence collected in a previous EC evaluation72 and others show that it is often difficult to depart from humanitarian assistance because of a poor governance environment which precludes development aid (often requiring a more consultative approach than humanitarian aid). Experience in contexts as diverse as Côte d’Ivoire, or Kosovo, show the importance of moving early on into governance activities to ensure that the minimal conditions can be established for more structural forms of aid. The EC has developed such tools, for example in the Democratic Republic of Congo (transition programmes in health), in Nepal (Rapid Reaction Mechanism). This places it ahead of other donors, such as the World Bank, which is only gradually permitting its LICUS73 Trust Fund to operate in fields distinct from those of Ministries of Finance.

71 See E. Krylova. European Community: Policy and Practice on governance and democracy: the case of Georgia. Research study commissioned by One World Action, 2004. 72 Evaluation of EC Rehabilitation Activities, November 2003, AIDCO. 73 Lower Income Countries Under Stress

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The focus group on ‘difficult partnerships’ fully acknowledged the complexities of pushing governance reforms in this type of environments (see Annex 19). The EC is to be commended for its clear choice to “stay engaged” with difficult partnerships. Yet much alike other donor agencies, it faces major strategic and operational challenges to deliver effective (governance) aid. The task at hand is to continue investing in joint learning (e.g. in the context of the DAC Working Group on the topic), dialogue with local stakeholders, experimentation and risk-taking. CONCLUSIONS EQ 5 In line with the new ‘aid paradigm’, the EC seeks to align its support to national and regional priorities, owned by partner countries. EC supported governance programmes are generally consistent with reform agendas (as spelled out in PRSPs or other policy documents) and sensitive to country specific contexts. Yet alignment is but part of the story. The challenge at hand is to adopt a more sophisticated approach to the whole question of partner country ownership by (i) reviewing the approaches and methodologies to ‘build’ genuine ownership of governance reforms; (ii) fully involving other actors in defining the governance agenda; (iii) better integrating governance in the LRRD process; (iv) increasing EC capacity for rapid and flexible support.

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4.6 The three CS’s : Coherence, complementarity and coordination EQ 6: To what extent and how has the Commission ensured coordination and complementarity with other donors, active in the governance area, and ensured coherence with EC policies and activities and with partner Governments’ priorities and activities? JC 1: Donor coordination mechanisms are in place at different levels In recent years, the Commission has made considerable efforts to improve coordination with EU Member States. A key push factor for this has been the adoption by the EC of the new aid paradigm which stresses the need to support national and sectoral policies and to move towards budget support-type of mechanisms. This shift in strategic focus brings along a need for the EC to link up more closely with the work of other donors through a variety of mechanisms (e.g. working groups, informal meetings, multi-donor committees in charge of public finance management and budget support, etc). Most CSPs attach a relatively great importance to coordination issues. The CSP analysis also reveals a growing use of overview tables presenting donor interventions, especially those of EU Member States. Yet much less information is generally provided on how coordination works in practice at country and EC levels (in terms of approaches, modalities, procedures). The questionnaire survey stresses that, with the exception of Eritrea, all countries have their Delegations involved in some form of co-ordination fora (such as committees, working groups etc.) regarding governance with other actors active in this field (government ministries, EU Member States, World Bank, UNDP, bilateral donors like USAID, non-state sctors etc.). Generally, coordination takes place in the form of either thematic donors’ meetings and/or regular EU MS meetings often focusing on specific issues. In this context, the Commission’s efforts to ensure coordination and complementarity with other donors is acknowledged by the vast majority of responding countries, even if in El Salvador problems remain due to the non-existence of a local delegation. The Country Notes confirm the existence of donor working group meetings dealing with governance. In the Dominican Republic, for instance, there are monthly coordination meetings, chaired by the World Bank, on international cooperation. Under this umbrella, several sectoral coordination groups have been set up, dealing respectively with health, education, food security, natural resources, justice and anti-corruption measures (which is chaired by USAID), and decentralization (which is chaired by the EC). These groups mirror the Government’s sectoral reform commissions, coordinated with CONARE. They are seen to be primarily useful in terms of exchanging information about activities. Interviewees generally attributed more importance to the meetings of Ambassadors, but the results of these meetings are not disseminated, and do not generally relate to the programmes and activities. There appear to be times when the coordination mechanisms become more active, but in these cases national events (such as elections) and personalities (an activist Head of Delegation) are the more important factors, rather than the coordination mechanism in itself. In Jordan, coordination is generally perceived to run smoothly. Different coordination groups exist in the specific area of human rights, good governance and Democratisation. There is also a specific EU Human Rights thematic group, gathering EU member states and

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providing a forum for more in-depth analyses of human rights and democratisation issues and for follow-up on the implementation of the Neighbourhood Policy. At the global level, the dialogue processes foreseen under the Euro-Med partnership create opportunities for intra-European coordination, including common positions and linkages between EU political and development responses (an example is the emergency budget support provided to Jordan in the framework of the war in Iraq). Yet it is generally not easy to see how these high-level partnership processes contribute to a more coordinated, complementary and coherent action at country level (particularly in the governance area). At internal EC level, there is no coordination mechanism within the EC (Delegation-DGDev-AidCo) to discuss, in a structured manner, an overall approach to promoting governance in Jordan. Yet the setting-up of an informal group on civil society for MEDA countries at the level of headquarters, has proven of much use for the EC Delegation in Jordan. It has facilitated the exchange about policy developments in Brussels, experiences and lessons learnt in other MEDA countries, regional initiatives, etc. In some countries, the EC plays a pro-active role in pushing for donor coordination on governance. In Ethiopia, for instance, the Delegation recently took the initiative to create an EU Governance Task Force. It also co-chairs a Public Finance Management Donor Group and the semi-annual Joint Direct Budget Support Mission. In view of the substantial resources dedicated to public finance reform, the Delegation in the Central African Republic is chef de file for donor coordination in this area. The EC also increasingly leads donor coordination efforts at sector level (e.g. on decentralization in Mali). Little evidence was found of country-led initiatives to coordinate donors on governance. In some instances, joint commissions were established to set up to deal with governance (e.g. in the Democratic Republic of Congo). JC 2: There is complementarity between the interventions of the EC, the EU Member States and other donor agencies active in the governance area The consensus of those interviewed for the evaluation is that there is willingness by the EC and others to share knowledge, and to provide relevant actors with updates on programme activities. The existence of a strong national policy framework may help to develop complementarities among donor agencies, as illustrated by the case of Burkina Faso. The country does not have a strong institutional framework, but certainly has a well developed policy framework, translated into quite sophisticated national, sectoral and regional plans. This allowed different donors to focus on specific aspects, even regional ones as in the case of Danida. The EC took a more national perspective and grounded its own programmes in sectoral strategies designed by the government, reflected by decentralized authorities. However, there are various factors that drastically reduce the scope for building complementarities. The EC Delegations’ analysis of strategic priorities is still done through separate processes from those of the Governments and other donors, and there has not been a consistent and broad based effort to carry out joint evaluations on governance, nor to pool technical assistance resources74. Project execution remains widely separated by the different procedures and public tender requirements. Governance support provided in other sectors or programmes (for example urban planning in the Dominican Republic or support to regulatory reform in Jordan) is often overlooked and therefore not included in processes aimed at improving donor coordination and complementarity. All this may contribute to 74 There are of course exceptions to this general trend. Thus, the CSP-analysis reveals that Egypt has a certain tradition with joint funding and multi-donor evaluations.

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seriously undermine the relevance of donor consultations, as happened in Guatemala with the ‘Mesa de Meso-dialogo’. The meetings became more formalistic and fewer decisions and outcomes were achieved. This, in turn, fuelled the belief among local donor representatives that they would be better off without the meetings altogether. The EC contracting process marks it out from broader EU and donor coordination because of its lengthy nature, particularly during the identification stage. In situations where timely action is required, the heavy administrative workload does not allow the Commission to remain updated on new priorities; to respond in a timely manner to structural needs or to follow the lead provided by certain member states. In Ukraine, for instance, the World Bank, CIDA, SIDA and DFID are planning to set up a multi-donor trust fund to support the new wave of civil service reforms. The EC is not as yet part of this arrangement, although it might be expected that the EC would have a central role is supporting the very reforms that would prepare Ukraine for EU membership. In other countries the EC finds itself confronted with the inadequacy of the procedures when it comes to participating in multi-donor schemes with basket funding modalities. The issue of visibility also stands out in this context. In the Dominican Republic, for instance, EC projects often develop a unique logo and image (often based on an acronym), combining the EU flag and that of beneficiary country. While this may help to show the project to the public and enhance EC visibility, it has also led many observers to complain that it seems as if it was the EU that was reforming the state, rather than assisting in its reform. The EC currently seeks to downplay the singularity of its contributions while emphasising the link with state-led reforms. The CSPs generally give no indication on the added value of the various existing instruments, so that it seems difficult to ensure complementarity between them as well as with the instruments used by other donors. Joint reviews of experiences and donor exchanges on good practices in the field of governance promotion are still rare. . JC 3: The Commission has ensured the overall coherence of its governance interventions Several indicators exist to assess the overall coherence of EC-supported governance interventions. Is there coherence between EC political and development responses (particularly conflict prevention strategies in difficult partnerships)? And between the different (financial) instruments available for promoting good governance approaches and practices (e.g. EDF and EIDHR)? Are attempts made to ensure coherence with common foreign and security policies and with other relevant EC-EU policies? Is the strategy coherent with the guiding principles spelled out for EC governance support, including the need to engage with different categories of governance actors as well as to promote governance at different levels (local, national, regional, global)? A huge variety of situations can be found across regions and countries with regard to the overall coherence of EC response strategies. This makes it difficult to make a general judgement. It would appear that examples of fairly coherent governance approaches co-exist with countries where EC has not been in a position to move forward on this critical point. CSP analysis and case studies stress the need to further develop the coherence of EC interventions in governance, especially as regard to:

• the role of governance in the LRRD process;

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• the analysis on how to reach coherence between the different (financial) instruments available for promoting good governance approaches and practices (e.g. EDF and EIDHR) ;

• the analysis on which role can be taken over by the different actors in the governance arena (central and local governments, parliaments, NSAs, others);

• the analysis on the consequences of common foreign and security policies on governance;

• the coherence between actions undertaken at different governance levels (local, national, regional, global);

• the analysis on the overall coherence with other relevant EC policies (governance, trade, agricultural support, etc.)

In relation to the Country Notes, Guatemala offers an interesting case of a fairly coherent overall EC intervention strategy. The coherence between EC political and development responses was ensured by embedding the support provided in the Peace accords, which provide for both social and political objectives. By drawing its objectives from these Accords, it was possible for the EC to ensure that its programmes were fully in line with the political objectives of the EU, and the limited set of Member States that are part of the lead donor group. Furthermore, a relatively strong coherence could also be noted at the level of the financial instruments used, with activities funded from regional funds as well as those funded from budget lines, in particular the EIDHR projects. In the Dominican Republic, coherence is mainly sought with regard to EU common positions on cooperation priorities, including the preservation of an independent regulatory framework based on European legal codes, as well as a balanced integration of the economy into global trade. In Jordan, the new European Neighbourhood Policy seems to provide a conducive framework for a more integrated and coherent approach towards the promotion of governance as a central component of an intensified political partnership JC 4 : Degree of alignment between EC response strategies in the area of governance and the partner Governments’ priorities and activities? The need to align EC response strategies is generally accepted and implemented in the different regions. The new aid paradigm as well as the introduction of multi-annual programming have facilitated effective alignment. This trend is likely to continue and be further stimulated as a result of the ongoing debates on donor alignment and harmonization. Alignment presupposes the existence of domestic policies on governance. With regard to the position of Governance issues in the PRSP, six delegations report it to be mainstreamed, nine to be considered crucial for poverty reduction, nine countries consider it a programme on its own, and in four countries (Eritrea, Bolivia, Bosnia-Herzegovina and Turkey) it receives only marginal mentioning. PRSP does not exist at all in El Salvador and China while Peru knows no PRSP as such, but references to it in the Concept Note for Peru and the “Acuerdo Nacional”. In a large majority of the countries participating in the questionnaire survey (17 of 23), the alignment was ensured through dialogue with Ministries related to Governance issues. Only in Eritrea, Ethiopia and Bolivia this did not happen. The Ministries most often involved in this kind of dialogue are Interior, Justice, Public Health, Finances and Education. Foreign Affairs, Economy, Development and Security were also mentioned a few times. In 19 of our

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23 responding countries, there was or is also consultation between the delegation and other actors working in the Governance area (multilateral and bilateral agencies, NGOs, academic institutions etc.). Consultation between the delegation and other actors usually takes place on a regular basis in the form of donors meetings dealing directly or indirectly with governance issues. Such meetings often include UN organizations, especially financial and/or Human Rights agencies, as well as representatives of civil society and other non-state actors. 75 % of the countries in the survey reported that Governance issues have a focal position in the respective CSP while six delegations reported a non focal position with Eritrea stressing that the description on good governance and related issues of the CSP was “not shared by the Government”. The case of Eritrea provides a clear illustratation of the difficulties of ensuring alignment to government policies when these are largely absent or formulated in a rather vague manner. A similar dilemma was encountered in Angola. On paper, the government has defined a governance reform agenda, which also served as a basis for the CSP. In practice, the commitment to effectively implement agreed priorities was found to be very limited. The EC is now confronted with the challenge to redefine its overall governance approach for the 10th EDF so as to ensure a more realistic alignment.

Conclusions EQ 6 The evaluation reveals positive trends towards a better application of the “3C’s” in the governance areas, albeit with important differences across regions and countries. In some countries, the EC adopts a pro-active role in pushing for better coordination, making use of its position as ‘neutral’ player. Additional incentives in this direction are provided by the generalised move towards budget support as well as the adoption of the Paris agenda on harmonisation and alignment. However, further progress is likely to be hampered by (i) natural barriers to improved coordination/complemetarity, linked to conflicting political interests; diverging programming cycles; procedures that are either incompatible or inadequate; as well as concerns for visibility; (ii) the lack of an overall strategy on how to mobilise various instruments as well as a range of ‘governance actors’ to promote reform in a given country; (iii) insufficient analysis of practical modalities and mechanisms for coordination; (iv) limited opportunities/incentives for joint monitoring, evaluation and learning among the donor community and the EC/EU member states in particular; and (v) the fragmentation of the overall EC institutional framework between DG-DEV, AIDCO and RELEX. Also with regard to the coherence agenda, much remains to be done. Linkages between governance and other EC policies remain often vaguely defined. There is a need to further define how EC/EU member states apply the principles of good governance in their dealings with third countries in critical areas such as predictable aid flows; transparent decision-making processes (including when it comes to avoiding double standards); bureaucratic performance and mutual accountability.

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4.7 Cross-cutting issues EQ 7: To what extent and how have cross cutting issues (social and environmental) been incorporated in the provision of governance support, and to what extent do the resulting good governance processes successfully take these issues in to account? In assessing this question, it is important to take into account that several cross cutting issues (e.g. democracy, human rights) already form part of the broader definition of ‘governance’ that is currently being used in key EC policy documents. They are constitutive elements of the governance agenda and are treated as specific ‘governance clusters’ in the EC Draft Handbook. Hence, in this EQ the focus will mainly be on gender equality, environment and conflict prevention. JC 1 : Cross-cutting issues: gender equality, environment, democracy and human rights and conflict prevention, have been satisfactory mainstreamed into the governance projects and programmes At policy level, the EC has been concerned with the incorporation of cross-cutting issues in its development support. Specific guidelines and handbooks have been produced (gender, environment) and check-list have been developed for integrating cross-cutting issues in the project cycle. The main findings and conclusions of the recent evaluation on “Policy commitments on gender in EC development co-operation”75 confirmed the high profile of gender in EC development co-operation. However, the report also observes that « while the commitments to promote gender equality in all Community support are strong, they have not yet been disseminated in a form that is easily understandable and accessible to staff and co-operation partners. As a consequence, knowledge of the objectives and strategy of the EC concerning gender in development is very low amongst many Commission staff and co-operation partners. » The evaluation furthermore detected the following key limitations:

• Actions insufficiently integrated and few sustained effects ; • Limited financial resources to support gender mainstreaming ; • Weak capacity to support gender mainstreaming ; • Institutional culture insufficiently supportive of gender equality ; • Varied approaches to integrating gender in procedures and instruments ; • Weak monitoring and reporting on gender equality.

The ongoing EC evaluation on water and sanitation also stresses the weak results achieved as regard gender awareness and mainstreaming in this sector.76 At first sight, our own analysis would confirm a rather low level of mainstreaming of gender issues in governance. Thus the questionnaire reports that cross cutting issues such as gender (as well as environment) have been incorporated in the provision of governance support only to a low (12) and medium (9) extent in the countries surveyed. A high degree of incorporation was reported by Turkey only. In this respect, low incorporation is being observed mainly in ACP countries, while medium incorporation can be found above all in

75 Thematic Evaluation of the Integration of Gender in EC Development Co-Operation with Third Countries ; Final report ; March 2003 ; PARTICIP GmbH. 76 Thematic Evaluation of the Water and Sanitation Sector; Synthesis report; Draft Version; November 2005; PARTICIP GmbH.

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Asia and Latin America. The CSP analysis underlines that cross cutting issues are to be considered but very few present a practical strategy to integrate them in the selected sectors. On second analysis, however, there is a danger of overlooking the work of mainstreaming which the EC has carried out on behalf of gender and environmental vulnerabilities, either because of obvious misunderstandings concerning the sector (for example “gender is about equality of treatment for women”) or because of the rather superficial treatment of cross cutting issues in programme documents. Yet concerns withy cross cutting issues tend to surface rather consistently during the implementation process, as evidenced in the different case studies of the current evaluation (with the exception of Angola). In the Dominican Republic, for example, gender is not immediately visible in the programme design and the reporting. Yet is a declared cross-cutting issue of the PARME activities and has been effectively implemented in decentralization and penal reform. This is mostly because of the importance of the conditions of women in both areas, in terms of participation in decisions taken in Municipalities (only 13 Mayors are women out of 140), and in terms of living conditions in the prisons (where considerable progress has been reported by the mid-term evaluation of PARME and by the recent monitoring mission) as well as rehabilitation of female prisoners. PARME has also been providing technical assistance to the Secretaría de Estado de la Mujer (known as SEM) which is in charge of the normative content of Government policy as regards gender parity. Jordan also offers an interesting perspective. Partly influenced by the broad agenda promoted in the European Neigbourhood policy (e.g. and its focus on ‘shared values’ and legal approximation, including in the field of environment), the different cross-cutting issues have been incorporated in the overall cooperation process. Gender equality is the focus of the several programmes, ranging from supporting women’s participation in political life to integrating gender concerns in health-related areas. Conflict prevention is linked to programmes aimed at addressing the social problem of underemployment (rightly perceived to be a major potential source of conflict). The € 35 million Emergency Budget Support to help Jordan coping with the negative impact of the Iraq war is another illustration of conflict-sensitive approaches by the EC. The next steps in mainstreaming cross-cutting issues is to incorporate these efforts more explicitly into an overall governance strategy as well as to better monitor results achieved on good governance processes. Conflict prevention remains a central issue in Guatemala. In this country the main cleavages run between ethnic communities, and it would be easy for a development programme to reinforce the exclusionary practices of the ruling classes. The evaluation finds instead that the risk analysis documents written within the Delegation, as well as objectives of the different activities, are well aware of these issues. Indonesia offers an interesting example of EC support to the environment (forestry sector), strongly coloured by a governance approach JC 2: Cross-cutting issues are taken into account in good governance processes The evaluation, as put forward in the Inception Note, sought to find evidence of checklists, of participatory methods, gender balance in the management of projects, and dialogue mechanisms. However as it turns out, the better indicator was the analysis of the sub-objectives dealing with gender and of the amounts allocated to each.

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In Guatemala gender has been appropriately linked to indigenous peoples, as in many cases it is precisely women of Indian origin who suffer most from discrimination in the existing mode of governance in the country. The evaluation found that five of the governance projects in the country have been assigned a specific gender budget, amounting to 3.1 million Euro, plus the full 6 million Euro for the projects which includes gender in its specific objective. This extensive involvement in gender contrasts with the official reporting figures of the EC in this country and with the CRIS database surveyed by the evaluation, which only suggest the paltry figure of a few tens of millions allocated worldwide for gender in governance77. . Moreover each component was subjected to a common monitoring framework, and a “Mesa de Género” had been created to coordinate all gender impact from within the Delegation. In Burkina Faso the environment is a specific dimension of support to civil society. This includes the preservation of natural parks, and the sensitization of civil society on this issue. Gender and environmental sensitivity is also included in the Calls for Proposals emitted as part of the Rule of Law project (PADEG), with the result that 9 out of 36 projects carry out advocacy work on women. The current mainstreaming work at the level of the EC has penetrated part of the project cycle, up to the stage of implementation. However, indicators of impact of all these activities tend to be notably absent. Also the current reporting modalities generally do not allow for a proper monitoring and evaluation of impact achieved78. However, it is plausible to conclude that in those countries where it is applied (three out of the six for which there are Country Notes in this evaluation), the impact is positive. At the same time, practical implications of a pro-active governance strategy integrating gender still need to be further analysed. CONCLUSIONS EQ 7

EC has invested much in mainstreaming cross-cutting issues both at political, strategic and project levels. Evaluation reports and actors assessment still underline the relative low degree of implementation and ownership of cross-cutting issues; and this may be stronger for governance. With the exception of the EC Draft Handbook, practical information on how to better integrate cross-cutting issues in governance process as well as on how to improve practical ownership is still missing. On the other hand, EC documents, and even quantitatively surveyed opinions, do not necessarily reflect well to what extent the mainstreaming of horizontal themes actually takes place in the implementation of EC governance programmes, as a result of the work of Delegations and project staff. This holds particularly true for gender equality.

77 Figure 2, Desk Study, Thematic Evaluation of EC Support to Good Governance, “Distribution of Commitments Among Governance-Related Sectors”. 78In recognition of these problems, the Bangladesh Country Strategy Evaluation (2003) recommended the EC to develop a tool to ensure the mainstreaming of cross cutting issues (for example a check list which indicates objectives and indicators for each intervention design). The EC agreed with the suggestion yet argued that this would require additional staff to effectively apply the tool.

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4.8 Achievement of objectives EQ 8: To what extent and how have Commission strategies and programmes and projects, targeted at regional specific objectives as well as at the four clusters (rule of law and administration of justice, civil society, public administration reform, decentralisation) contributed to the progress towards good governance and to the encouragement and promotion of good governance approaches and practices? This question relates to the achievement of objectives of EC supported processes and programmes. It is key to the purpose of the evaluation, i.e. to arrive at a general overall judgement of the Commission’s contribution to the progress towards good governance and to the encouragement and promotion of good governance approaches and policies. According to the TORs, the question should • be adjusted to the specific objectives and the specific focus of the support in the

different countries/regions (see sub-section a); • be focused on four of the six clusters: public administration reform; decentralisation

processes; the rule of law; and the enhancement and of the role of civil society organisations (CSOs) in governance processes and show the results of the support to each of the clusters as well as a whole. (see sub-section b)

A. In relation to region-specific objectives

The main judgment criterion was to assess the degree to which ’the Commission has provided relevant, effective and efficient support in accordance with region-specific objectives and priorities’. Four indicators have been used to further analyse this judgement criterion: • Existence of a coherent intervention strategy, based on solid governance analysis and effective dialogue

with actors in partner countries. With regard to this indicator, it is difficult to single out a particular region that would be much more advanced than others when it comes to dealing with governance in a strategic and coherent manner. Differences in quality of EC governance support are rather to be found at country level than between regions. On the whole, it appears that the EC is confronted in all regions with the challenge of further refining its overall intervention strategy (e.g. in terms of quality of governance analysis, agenda setting, multi-dialogue, mix of instruments, etc.) in order to enhance the relevance, effectiveness and efficiency of its support. The type of improvements needed, though, varies from region to region (depending on the region-specific governance objectives)79.

• Existence of adequate implementation modalities, adapted to specific regional context (i.e. adequate “policy mix”, including in the choice of actors and strategic partners, intervention methods, financing instruments, etc.). Also here, it is difficult to draw general conclusions, considering the variety of situations encountered across regions and countries. Regional agreements provide a fairly similar ‘menu’ of possible implementation modalities with regard to key

79 For instance, in the ACP region, a common challenge is to clarify the nexus between governance and the fight against poverty (i.e. the central objective of ACP-EC cooperation).

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governance instruments (e.g. all of them foresee political dialogue and cooperation with civil society) while in other areas there are important differences (e.g. the use of twinning in TACIS). In practice, some trends can be observed towards more harmonized intervention approaches across regions. For instance, the ACP region seems to have been a forerunner in moving away from a predominantly ‘project-oriented’ type of cooperation in governance (and in other policy areas) towards sector-oriented approaches (e.g. in the justice sector) and towards budget support (as a tool linked to the promotion of governance). However, the Country Notes from the TACIS and ALA region clearly suggest that ‘budget support’ is high on the agenda and increasingly perceived as the preferred future aid modality for most staff. In the MEDA, it was noted in the case of Jordan that the new Association Agreements bring along new, flexible financing instruments that are well adapted to the broader political agenda of the European Neighbourhood Policy. Another interesting aspect is the partnership approach followed in each region. While the regional agreements all claim to establish a ‘partnership relationship’, there are major differences in putting this principle into practice. In the ACP region, the partnership is clearly more elaborated, formalized and institutionalized. Several EC officials made the point that the partnership with MEDA countries was fundamentally different, not only because of the geo-political interests (as reflected in the European Neighbourhood Policy) but also in the operational modalities (e.g. at the level of the programming process). It is not possible in the scope of this evaluation to assess the comparative value of these different approaches to partnership and their adequacy for each region80.

• Evidence of effects and impact on governance processes and practice. It is particularly difficult to find aggregated evidence that would help address this indicator from a regional perspective. In many countries (across regions) the governance programmes are relatively new. It will take time before the effects and impacts become traceable, particularly in terms of systemic change. Furthermore, evaluative material is scarce, particularly at the regional level. The main source available is the overviews of the results-oriented monitoring exercises (ROM) per region. According to the Annual Report 2005, programmes reviewed in the field of ‘institutional capacity/good governance’ generally show comparable scores across regions (around 2.6), which is similar to scores obtained for projects in other policy areas.

• Overall capacity of the Commission to effectively and efficiently respond to region-specific governance challenges. As mentioned above, the issue of overall capacity is not region-specific. All regional agreements allow, in principle, for a strategic and coherent response to the specific challenges of each region. It is more a question of how individual EC Delegations actually apply governance and use (or not use) the different instruments available to them.

In the questionnaire, EC Delegations were asked to assess the contribution of regional Commission Strategies, programmes and projects to improved governance. The majority of respondents saw “some” contribution and five Delegations “non at all”. The key message is that regional programmes are in a “very early stage” and that there is often “limited feedback in the Delegation about the Regional programmes and projects”.

80 There is also no consensus on the criteria to be used for making such an assessment. For instance, in ACP-EC cooperation there has been a long-standing debate on the adequacy of the ‘partnership model’ inherited from the Lomé Conventions. There are major divergences of view on this topic between the different stakeholders

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B. In relation to the different clusters

B.1. Rule of law:

Three judgement criteria are considered here. In order to focus on essential elements, relevant for the overall evaluation, they have been assessed as ‘one package’: • improved oversight, autonomy and administrative capacity of the Ministries dealing with

legal, judicial, and law enforcement issues; • the citizens have increased access to legal and judicial services, in terms of affordable cost

(including time), better mutual understanding and non-discrimination; • the rule of law is applied in a manner which is respectful of international law, equal, fair,

and independent of undue influence EC Delegations involved in the survey are broadly positive. In their view, Commission’s strategies, programmes and projects, targeted at “rule of law and administration of justice”, have contributed to the progress towards governance in 75 % of the countries questioned, two of which (Rwanda and Bosnia-Herzegovina) report a strong contribution, even though no measurable indicators have been used. Positive influences are generally registered in the functioning of institutions designed to promote good governance (i.e. justice, legal system) and with respect to slow but steady changes of political culture. There is less evidence of a positive contribution in the Central African Republic, Congo, Eritrea and the Philippines, whereas Zambia does not have such programmes at all. Interestingly, the detailed questionnaires also recognize the complexities involved with supporting rule of law reforms, including: • the difficulty of seeing results in the short term (China) and hence the need to look very

carefully at often intangible changes (e.g. evolution in mindsets as a result of exposure to good governance concepts);

• problems of programming governance interventions with (reluctant) partner countries (Congo Brazzaville);

• insufficient funding compared to needs (Egypt); • Lack of well-established national policy frameworks on which to anchor the support

programme (Georgia); • the management challenges involved with promoting integrated, sector wide justice

reforms (Peru); • the possible gap between influencing the legal framework and achieving change at the

implementation level (Russia); • the lack of measurable indicators on governance programmes (Rwanda); • the critical importance of having a minimally conducive environment (Nicaragua) or

effective partner country political support (Colombia). The Country Notes largely confirm the tricky and complex nature of governance intervention related to the rule of law. The most prominent EC-supported governance cluster in Angola is the rule of law, and its focus was on promoting a more inclusive political

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culture. The programme to support the Parliament was first evaluated in 2002 and received a highly critical report: no link between activities and results; objectives not coherent and realistic; no performance indicators; three different sets of activities were used for the same programme. The programme was considered to have little relevance (the Parliament did not have a global reform programme that could be supported), low efficiency, a low degree of ownership and low impact. Yet, because of the historic moment at the time of evaluation (2002 peace agreement), it was considered important to continue with a new phase of the programme, albeit under an adjusted form. The second phase ended early 2005 and was evaluated again in May of this year. The quality of the products produced by the TA had improved and the permanent presence of the head of project also helped to improve results. An ad-hoc group with all stakeholders discussed progress regularly and promoted slightly higher levels of ownership. The second programme under this cluster is the PALOP programme to support the Institute for Juridical Studies (INEJ). A recent mid-term evaluation refers to a lack of consultation during the formulation, sometimes visible in a lack of commitment during the implementation (yet efficiency is rated high). The current director of INEJ has a positive appreciation of the programme because it has facilitated the training of judicial staff and it has provided learning opportunities with countries with a similar judicial tradition. A third programme that fits under access to justice is the EIDHR macro-project to support the Lawyer’s Association. There has been no evaluation on the performance of this programme and it was not possible to assess its performance during the field mission. The feed-back received during interviews was positive in that the programme allowed the Lawyer’s Association affirming its influence in the promotion and protection of human rights. There is no strategic link between the three programmes and they operate in a self-standing way. Therefore no synergies that can boost impact in this area could be identified. The field visits clearly suggest that it is in general too early for the links between outcomes and national level impact to be measured. In Jordan, for instance, EC-support to the national justice sector reform is in its first phase of implementation. Some programmes have a longer duration and there it was possible to discern recurring patterns that would indicate some impact. In Indonesia, for instance, funding to the Partnership project and its beneficiary organizations has helped, in the words of the Partnership manager, “open up the office of the Attorney General.” The EC has also been supporting training in forensic auditing in the Office of the Attorney General (with some 150 prosecutors trained). Expectations in terms of outcomes were not high during the previous governments since they were thought to have only weak commitment to improving the legal and judicial aspects of governance, but this is changing. Donors and government representative contacted by the team agreed that Partnership’s engagement with the Government was instrumental in the establishment of the Anti-corruption Commission (KPK). Partnership’s support to legal and judicial reform illustrates how it acts as an agent of change. Partnership sponsored a series of “law summits” bringing together the key players in the legal and judicial sector to discuss reform in the sector. At the third summit the Minister of Justice, Chief Justice, Attorney-General, Head of the Law Commission and Head of the Anti-Corruption Commission all signed the action plan agreed at the summit. Partnership has been instrumental in introducing transparent selection processes into the sector. For example, Partnership facilitated a selection committee for Anti-corruption Commission members. Similarly Partnership helped the Chief Justice to recruit special anti-corruption judges, and the Attorney-General to hire special prosecutors. Thus far the Commission’s support for legal and judicial reform in Indonesia has not been large scale and sector wide, although Euro 10 million support for

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Good Governance in the Judiciary is included. The project will train judges and court staff, increase the transparency of the courts and the accountability of judges, enhance public awareness of the judicial system and improve public access to justice. This project is about to start. A Rule of Law and Security Project is foreseen in the NIP for 2005-2006; and the identification mission has taken place. The environment for reform would seem to be improving. A recent newspaper survey showed that 52 per cent of people now feel comfortable with law enforcement compared with 25 per cent under the previous government. Similarly in Burkina Faso the activities of the PADEG contribute to an improvement of the effectiveness, accessibility and impartiality of justice, as well as creating the conditions of its independence. The working conditions in the penitentiary institutions have been improved since the start of this project. This is particularly visible as regards training and capacity building of the civil service and judges, reflecting the selection of highly qualified project staff with a good knowledge of the country. The civil society arm of the same project allowed for the provision of the relevant equipment of institutions which allow better access to justice, such as computer systems for local courts. However, the sustainability of these achievements is not assured. It depends overwhelmingly on the hand-over to government, whose performance in this sector has proven to be at best unpredictable. The Ministry of Justice is in particular unable to adequately fund and support the local levels of its administrative entities. Paradoxically there appears to be no link between the (unsustainable) project activities and the large amounts of budget support provided by the EC which also cover the Ministry of Justice. B.2 Civil society: Three judgement criteria are proposed and jointly assessed to facilitate a strategic analysis of the key findings and issues at stake: • Effective empowerment and improved operational capacity of Civil Society

Organisations (CSOs) to participate in social and political debates and in decision-making • The presence and interface of CSOs with the population and the government is ensured • CSOs become sustainable entities operating in all relevant policy areas and in

complementarity with the State and the private sector

The perception of results among Commission officials is largely positive. Commission strategies, programmes and projects, targeted at civil society are seen to have contributed to the progress towards governance in all of the countries covered by the survey with the exception of Zambia which knows no such programmes. While six countries (one in each regional category) report strong influences of these programmes, the vast majority of respondents (15) mention the Commission’s activities to promote civil society as being helpful and important. The active involvement of civil society in governance processes is obviously a fairly recent phenomenon. Yet it presents itself as a fascinating laboratory for engineering new state-society relations. In several countries, the EC has creatively used different instruments to strengthen civil society in its role as dialogue partner or as governance actor (e.g. in defending human rights, demanding public accountability, etc.) In the ACP regions, a growing number of innovative EDF funded civil society programmes, with a strong focus

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on governance, have been initiated or are in the pipeline. The questionnaire confirms the relevance of the EIDHR budget line to supporting civil society, particularly in difficult environments (e.g. Colombia, Egypt, Georgia, Russia). In some countries, a combination of horizontal and thematic instruments is used to engage with civil society (e.g. Philippines) in a variety of governance processes, including monitoring of the decentralisation process (Peru). These programmes undoubtedly hold potential to empower and improve the operational capacity of civil society organisations. Yet the different sources used in this evaluation also converge to qualify civil society support as a complex, uphill struggle. There is no shortage of hurdles to be overcome, including (i) the fragmented and fluid nature of civil society in many countries, with CSOs often suffering from major legitimacy, capacity and internal governance weaknesses; (ii) the predominance of urban based NGOs in policy processes, as compared to the involvement of decentralised, grassroots CSOs; (iii) political restrictions to the action of civil society, amongst others reflected in control-oriented regulatory frameworks (e.g. Eritrea, China, Jordan); and (iv) the difficulty of developing new partnership arrangements between state and its civil society (e.g. Rwanda81). Evidence was also found suggesting that EC working methods, procedures and accountability requirements are not always attuned to the capacities of non-state actors in third countries. Thus, the Country Note of Guatemala reports that the main implementation modalities used by the EC do not allow it to influence the nature of the interface between civil society and population. This is mainly due to the importance given to the financial aspects in the monitoring of projects and the emphasis given to disbursement as criteria of progress. Conformity to contracting procedures, and percentages of spending, lead to a relative neglect of the quality control mechanisms which are foreseen in other management systems of the Commission. The requirement for logical frameworks in projects, for example, brings along the need to select result indicators. However, EC Delegation staff and the technical personnel in projects and visiting missions are reportedly so absorbed in administrative verification work that they are generally unable to find the time to visit the CSOs and the field to monitor these indicators beyond the direct outputs. The organisations themselves are not equipped to carry out this monitoring. In Jordan, civil society actors argued that the system of ‘Call for Proposals’ involved high transaction costs for local organisations; tended to foster competition rather than collaboration between non-state actors; and made it difficult to have a strategic dialogue/partnership with the EC, focused on a shared, long-term governance agenda. Working with civil society, particularly on governance matters, opens up huge capacity challenges for the EC (as for other donors). In some countries, there is a lack of contextual analysis of the identity and role of civil society actors. There is often an absence of risk assessment which would allow a better targeting of the resources to achieve optimal impact. A growing amount of studies are carried out on civil society, but they are often weakened by the fact that the very notion of civil society is ill defined. The limits between traditional power structures and civil society, private sector federations and CSOs, or Parliamentary groups and civil society, not to mention religious institutions, is not always well conceptualised. There are an ever broadening number of organisations responding to the Calls for Proposals, but this would require a policy defined over and beyond the scope of the 81 According to the Rwanda questionnaire, the support given by the EC doesn’t necessarily foster civil society participation processes. Yet there are attempts to foster new partnerships between NGOs and local governments and between civil society organisations and specific offices of the Ministry of Justice.

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existing projects. Capacity weaknesses at the level of EC Delegations may help to explain why in certain countries there is not yet a solid, strategic framework and programme to engage with non-state actors82 and mainstream their participation in all sectors of intervention. Mainstreaming of civil society participation inevitably entails a learning process. The EC has made promising steps at policy and operational level to promote civil society as ‘governance agents’ in a wide range of third countries (across regions). In several countries, innovative programmes in support of civil society are launched. An important learning curve is visible on how to engage with civil society. The challenge ahead is to (i) further refine the strategic framework for EC support to civil society83; (ii) to improve civil society participation in dialogue processes; (iii) to ensure a systematic stocktaking of good practices and lessons learnt so as to fuel institutional learning; (iv) to promote civil society participation all along the project cycle; in all relevant sectors and at different levels (local, national, regional and global); (v) to monitor and evaluate the qualitative governance outcomes of supporting civil society for better governance84 and (vi) to further analyse the strengths and weaknesses of the various actors and their possible linkages so as to optimise the management of multi-actor partnerships .

B.3. Public Administration Three main judgement criteria have been jointly considered: • Improved management and administrative capacity of key government bodies involved

in macro-economic and public policy formulation • Greater ability of public service structures to respond to the needs of the citizens and to

deliver appropriate public goods and services efficiently and impartially • Significant progress towards a culture of public transparency and accountability Public administration is the primary focus of EC support across regions (with variations)85. It is targeted at a wide range of public institutions and sectors (depending on region-specific objectives), combining support to central and decentralised levels of government. An important part is linked to improving public finance management (see EQ 3), through a variety of means (particularly TA). The questionnaire reflects the diversity of ‘entry points’ for supporting better governance through strengthening public administration. In China, the China-European Public Administration Programme (CEPA) is perceived as a performing programme. It focuses on methodologies, training of trainers, and networking and is seen to respond to actual needs. Interestingly, the success of the programme is partly attributed to “the fact that unlike human rights or civil society, public administration reform is not considered as a controversial issue”. In Bolivia, there are no specific EC projects in Bolivia dealing with public administration. However, the government’s sector programme on Water and Sanitation Programme receives EC budget support on the condition of improving public 82 There is a striking variation of EC responses across region and even within a given region. Thus in the ACP, we find EC Delegations which have embraced the new opportunities of the Cotonou Agreement to launch truly strategic governance support programmes for civil society (even in difficult partnerships); others which have confined NSA programmes to fairly traditional, project-related capacity building initiatives and still others who have only recently started to consider such programmes. This suggests that further harmonisation of EC practices towards civil society is required 83 Particularly in terms of clarifying the underlying political transformation agenda. Why does the EC want to support civil society in a particular country? What is ultimate purpose? What roles and responsibilities are to be assumed by CSOs? Who should be supported and how? 84 A most relevant indicator -form a governance perspective- would be the degree to which EC support to civil society helps to build complementary partnerships with public actors, as foreseen in the Cotonou Agreement. 85 See the DG-DEV analysis of governance programmes included in CSPs.

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finance management. As a consequence, the EC Delegation actively participates in the multi-donor budget support group that incorporates most of the donors in the country and that deals in a comprehensive manner with public finance reform and institutional improvement. In Congo Brazzaville, the EC follows a mainstreaming approach, integrating institutional development concerns in all projects. Egypt presents another interesting case, mirroring EC approaches elsewhere. Until 2004, public administration reform was not addressed as such by EC cooperation programmes86. Indirectly, budget support programmes touched upon issues such as transparency and the modernization of public administration. A new € 25 million programme on institutional twinning in relation to public administration reform is now envisaged. In Russia, two TACIS programmes are ongoing, targeting administrative reform, while two new programmes seek to support state budget support and tax reform. The questionnaires do not provide much feedback on results achieved (beyond “improving general awareness on governance issues”). This may be related to the fact that most programmes are in an early stage of implementation. A similar picture was noted in the different countries visited. In Indonesia, the Commission has not been active in public administration reform at the centre of government. The general view on the part of the donors is that it is too early to reform the public administration at central level. The World Bank, for instance, is currently focusing only on anti-corruption in the civil service. The Commission has however provided support to reforming public administration in the regions. For example, Partnership, which is supported by the EC, is helping one of the sultanates to reduce its staffing from 13,000 to 5,000. In Jordan, the EC effectively supports a programme aimed at deregulating key services (e.g. telecommunications, electricity), with a huge potential to improve governance (e.g. by redefining the role of central government agencies; reducing the scope for clientelism; enhancing transparency and customer-oriented service delivery). An important lesson, shared by other donors supporting public administration reforms and corroborated by an abundant literature on lessons learnt with public sector reform programmes, comes from the Dominican Republic. The Country Note makes the point that the outcomes of the PARME programme are often dependent on deeper reforms of the State to have a good chance of success. This makes the programme dependent on the broader political will, in relation to legal, administrative and political frameworks. For example, with regard to the decentralisation cluster, the achievement of outcomes is dependent on the application of the Laws of Civil Service. This would allow for a minimum of continuity of lower and mid-level civil servants who are the beneficiaries of training. This personnel is effectively present only three years out of four (due to the pre-election and post-election uncertainties) and has changed completely three times over the period of the project. Broader issues of political will are at stake, which touch on the political culture in the country, the perception of the role of the State within political parties, or the involvement of civil society in public governance. This can be seen in a much broader light than is currently the case through the lens of PARME, where only a small number of NGOs have access to funding, and the EC is limited to operating in a sectoral and technical manner with the State. The EC is involved in capacity building for an effective public administration at different levels. It increasingly supports local governments to assume their new roles in a decentralised environment (see below). It also invests in functioning regional organisations

86 The EC has generally refrained from getting engaged in comprehensive civil service reform programmes. Part of the reason may have been other agencies (especially the World Bank) have tended to play a lead role in this area.

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(e.g. the € 30 million programme for institutional strengthening of COMESA so as to enable it to fulfil its regional mandate) and continental initiatives (e.g. the pan African programme on capacity building for the public sector, driven by NEPAD). The EC has also been a forerunner in providing institutional development support to the African Union. The proper understanding of the ‘politics’ of reform processes is key to successful governance interventions. Donor agencies are increasingly for ways and means to better underpin their support by a solid political economy analysis. An interesting example is the ‘Drivers of Change’ process, initially developed by Dfid and now supported by the GOVNET of the DAC87. In the governance area, the EC is well-advised to also strengthen its overall capacity to think more systematically about how change occurs, about the power relationships at stake and the institutional and structural factors affecting ‘political will’.

B.4 Decentralisation and support to local governments

For this governance cluster, the evaluation focused on three judgement criteria: • Democratically accountable local governments enjoy autonomy and have the necessary

(human and financial) resources to contribute to sustainable local development and local governance.

• Public services are more able to reach the intended beneficiaries, and local ownership is increased.

• There is a greater and consistent application of the principles of subsidiarity and inter-governmental cooperation.

In recent years, decentralization and support to local government has gained momentum as a central element of governance. Several push factors explain this evolution, including (i) the high number of third countries that have initiated processes of (democratic) decentralization processes; (ii) the growing realization that local governments have a key role to play in poverty reduction strategies, in conflict prevention and peace and in the attainment of the Millennium Development Goals; (iii) the emergence of new approaches to promoting sustainable local development processes, in which local governments are expected to play a catalyst role (as a nexus between central government and the populations)88; (iv) the shift towards sector policy support and related need to integrate decentralized levels of government into the formulation and implementation of (EC-supported) sector programmes; (v) the recognition that governance reforms need to be coherently pursued at different levels, including the local level. The importance of local governance, decentralization and support to local governments is reflected in key EC policy documents89, albeit in a less comprehensive and elaborated way than for other governance clusters. In the ACP region, for instance, the legal and policy framework to support non-state actors is quite sophisticated90 while the status, roles and responsibilities and funding opportunities for local governments has long remained unclear. Yet local governments are catching up. The recent revision of the Cotonou Agreement has 87 A good overview is provided in the Summary Record of the GOVNET Informal Workshop on “Sharing approaches to understanding drivers of change and political analysis”, DCD/DAC/GOVNET (2004) 3. 88 The EC has been a forerunner in promoting new approaches to local development through its decentralised cooperation programmes. Several pilot projects have been funded which aimed at fostering partnerships between different local actors while recognising the legitimate role of local governments in local development. EC cooperation strategies with Senegal, for instance, have given a high priority to local development since the mid-1990s, as a means to promote sustainable development and embed the decentralisation process. Building on a successful micro-projects scheme (7th EDF), the Commission supported three distinct programmes targeting the three levels of local government in Senegal (8th EDF) and aimed at promoting good governance and effective decentralisation. 89 The EC Communication on Governance and Development, for instance, only marginally addresses the issue of local governance/decentralisation 90 The Cotonou Agreement specifies the roles and responsibilities of non-state actors and clarifies the modalities of support. Additional policy documents and guidelines have been produced to facilitate the effective participation of non-state actors

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uplifted the status of local governments. In the framework of the Financial Perspectives 2007-2013, the EC is rationalising its different budget lines. A new thematic instrument is envisaged, which is targeted to both “non state actors and local authorities”. The EC is providing growing support to decentralization and local governments as part of its governance strategy in different countries (across the regions). This trend is particularly noticeable in the ACP countries. A recent survey produced by the ACP Local Government Platform91, provides an insight into EC contributions to supporting local governance (see Box below). Most of the programmes funded under the 9th EDF are yet to move into implementation, so it is too early to assess their effective contribution. Yet they hold potential to foster local government autonomy; to consolidate democratic decentralization processes; to promote greater ownership of the local development process; to improve planning processes and public service delivery; to build a culture of transparency and accountability at local level; to clarify the relations and division of roles between the different levels of government. Some of the older EC support programmes have shown remarkable results in promoting local governance. A case of good practice is the strategic partnership between the Malian government and the EC in promoting decentralization that has been developed for over a decade. It had many of the ingredients of a coherent governance support strategy in that the EC : (i) sought full alignment with the national policies on decentralization; (ii) supported (participatory) reflection and dialogue processes on how best to implement decentralization; (iii) provided support to both the elaboration of a legal framework and the establishment of two key national implementing agencies (a financial agency in charge of managing a single fund for investments in the communes and a capacity building facility); (iv) helped the Malian government to ensure effective donor coordination and integration of the different forms of assistance into a unified policy framework and through the above mentioned national instruments. The programme has yielded impressive results so far in terms of supporting a key national policy aimed at transforming the institutional landscape of the country. By providing strategic support over a longer period of time, the EC has been able to provide a clear added-value in helping communes throughout the country ‘to come to existence’ and to start delivering concrete social services to their constituencies. The decentralization programme has also been efficiently managed with all committed funds ahead of schedule. In the 9th EDF, decentralization and support to public structures is a focal sector. Follow-up programmes are foreseen, involving substantial funding, to further consolidate the decentralization process (including its financial viability).

91 ‘Local government participation in ACP-EC cooperation. An initial assessment and prospective’ Study produced by the ACP Local Government Platform, January 2005.

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EC support to decentralization and local governments : some key findings

• In a significant number of countries, efforts are made to invest in decentralization processes, either as an objective in itself or as a means to achieving wider development objectives. Out of the 77 countries that signed the Cotonou Agreement, 42 foresee some kind of support to local authorities or the decentralization process

• EC support can be clustered in five main areas: (i) institutional development and capacity building; (ii) decentralization of services in the health, education, water and sanitation sectors; (iii) rural development (including capacity building for rural structures to promote participatory community planning); (iv) decentralized cooperation; and (v) good governance92.

• In these programmes, local governments are increasingly seen as service delivery agents93 and a catalyst for local development94

• A total of € 265.15 million is expected to be allocated to programmes in support of local governments under the 9th EDF, which represents an increase of 76.5% in comparison with the 8th EDF (€ 150.22 million)

In other regions, decentralization is also receiving more attention. Thus, the questionnaire reports interesting EC support programmes in Egypt, Peru and Russia. According to the Indonesia Country Note, the key governance priority at national level is the decentralization of service delivery to regions and district, is to deliver appropriate goods and services efficiently and impartially to all citizens. Correspondingly one of the three pillars of the EC’s 2004 program is to strengthen decentralization by improving the monitoring of performance of local government, and strengthening village government and community policing. However, although the EC attends donor coordination meetings on decentralization, it is not supporting the 60-person Decentralisation Support Facility. In Jordan the EC is providing € 30 million for supporting an innovative programme of ‘Poverty Reduction through Local Development’ in the wave of the ongoing decentralization process. The programme seeks to promote the elaboration of multi-dimensional, participatory local development plans and to strengthen capacity at national, governorate and local level. Jordanian policy efforts are supported by a sector-wide approach channelled through the national budget in order to promote the viability of supported local development processes. Improved delivery of quality public services is one of key expected outcomes of the programme These are promising initiatives. Yet support to decentralization and local government is another governance cluster raising major strategic, operational and capacity challenges for the EC. This is partly reflected in the questionnaire, where the contribution of Commission strategies, programmes and projects, targeted at “decentralization” to the progress towards Governance and to the encouragement and promotion of Governance approaches and practices receives a less enthusiastic echo. Six countries see no contribution at all, compared to a strong contribution in three and some contribution in nine countries. However, the lack 92 According to the survey, EC interventions in this field include institutional support to local authorities, enforcement of decentralisation processes and territorial development. The support is generally part of the non-focal sectors of intervention and are coupled with a variety of other actions to promote good governance 93 In Kenya, for instance, the EC approved in 2004 a € 21 million ‘Rural Poverty Reduction and Local Government Support Programme’. It is based on a holistic approach to governance, which intends to rebuild the capacity of the local government system (including the supporting central Ministry of Local Government) and to deepen the participation of local communities in planning and pro-poor service delivery. 94 See the ‘Programme d’Appui aux Initiatives Communales et aux Associations Locales’ (PAICAL) which seeks to promote local ‘good governance’ through dialogue and joint action between local governments and the population. A new programme ‘Programme d’Appui aux Communes et Organisations Rurales pour le Développement du Sud’ will extend and deepen EC support to local governance processes linked to poverty reduction.

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of positive influences is mostly due to the fact, that genuine decentralization is often fiercely resisted by vested interests at the centre (e.g. the ongoing recentralization of power in Russia). The EC faces the challenge to further clarify its vision, intervention strategies and operational approaches in support local governance and decentralization, both as a self-standing governance cluster and as a means to achieve broader development objectives (such as poverty reduction, conflict prevention, sustainable development).

CONCLUSIONS EQ 8 Over the last decade, the EC has supported a wide range of governance related programmes and processes in third countries, either directly in specific governance clusters or indirectly in the context of sector programmes (e.g. in the transport sector) or in a variety of other programmes and projects. It has used several instruments to provide support to different categories of actors (public institutions, local governments, civil society organisations) at local, national, regional and continental level. The activities have largely been coherent with region-specific objectives and with proposed policy priorities for each of the governance clusters. Evidence from different sources suggests that positive contributions have been made to the progress towards good governance and to the encouragement and promotion of good governance approaches and practices... However, the jury is still out whether these positive outcomes will be sustained over time and lead to systemic changes in the overall governance culture at the level of a given country, institution or civil society organisation. Most governance programmes, particularly those that reflect the more sophisticated intervention strategies gradually developed by the Commission, are in a too early stage of implementation to make judgements on their impact and sustainability. Furthermore, programme documents generally lack adequate indicators for measuring progress in relation to governance while systems for an ongoing monitoring and evaluation of governance outcomes are not yet in place at the level of the Commission. In each of the four governance clusters considered in this evaluation, the Commission has made efforts to refine its intervention strategies (e.g. on how to engage with non-state actors) and operational approaches (e.g. the tools for vertical and horizontal analysis of governance provided in the EC Draft Handbook) while increasingly providing support to innovative programmes. Yet important gaps remain in the overall response capacity. In the years to come, EC will need to (i) acquire a better understanding on how to deal with the ‘politics’ of governance reform processes as well as with its role as ‘change agent’; (ii) dialogue and relate in a more strategic manner with the different governance actors in a given country so as to jointly define a home-grown, realistic, and prioritised governance agenda; (iii) strengthen local ownership of its governance programmes; (iv) create coalitions of interests with internal political initiatives in public administration reform; (v) embed governance programmes in a long-term transformation agenda; (vi) identify the right mix of instruments for implementing country-specific governance strategies; (vii) refine institutional development strategies and tools used; (viii) better articulate support provided to different levels of governance; (ix) ensure that procedures and working methods support rather than undermine the effective realisation of stated governance objectives

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4.9 Actors and levels of governance

EQ 9: To what extent and how has the Commission adopted a multi-actor and a multi-level approach to supporting good governance? This evaluation question was added to the initial list, identified by the EC in the TORs. It is coherent with the EC Communication on Governance and Development (615/2003), which explicitly recognizes (i) that a wide range of actors (other than central government) have a stake and a critical role to play in promoting governance (e.g. civil society, local governments, private sector, trade unions, media, human rights organisations); and (ii) that the challenge of governance needs to be coherently addressed at different levels (local, national, regional and global). Two judgement criteria are proposed. JC 1: The Commission has recognized the respective roles of public authorities (both central and local) and of civil society in development and governance processes The importance of a ‘multi-actor’ approach to promoting development in general and good governance in particular, is recognized in all EC policy documents, regional agreements as well as in a wide range of recent strategic evaluations at country, regional and sector level. The governance challenge involved in multi-actors partnerships is dual. First, the integration of non-state actors and local governments brings along the need to clarify the respective roles and responsibilities of the different actors. Ideally, cooperation programmes (e.g. in the water sector) are designed in such a way that they respect the legitimate role of each player in the process while promoting public-private partnerships. By doing this, cooperation programmes contribute to good governance (rather than undermining it95). The second challenge relates to the role non-state actors can play as ‘producers’ of better governance. In a multi-actor partnership, donors have the possibility to strategically support domestic drivers of change that can help to achieve governance objectives. The evaluation reveals that the importance of the ‘actors’ dimension’ in governance processes is increasingly recognised by the EC in the different regions. While CSPs generally deal in a rather superficial way with the role and added-value of different categories of actors in promoting governance, practice has gradually moved towards a support policy based on multi-actor partnerships. For example, while in Angola core governance interventions are still limited in size and quantity, the EC works with different actors at different levels: municipal governments (PAR, Education), provincial governments (health), national government (INE, INEJ), Parliament and civil society (Churches Platform, Lawyer’s Association, Rede Terra). The strategy for the EDF programmes is determined by the LRRD approach: reconstruction and improvement of service delivery in a post-conflict situation should first be done at local level and then move up via provincial to national level. In Indonesia, the Commission is supporting a wide range of actors: voters, electoral officials, village leaders, women’s’ groups, independent public agencies such as the anti-corruption commission, governors, government officials, and citizens through CSOs. While the reform environment has been weak, the EC, along with other donors, has tended to work with players outside

95 Evaluation findings, including from EC programmes, clearly suggest that this may happen when donor support to local development focuses almost exclusively on NGOs, thereby neglecting the key role of local governments in sustainable local development.

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rather than inside government. In other situations it has shown a high degree of discernment of the status and strengths and weaknesses of different Government departments, for example focusing on the Executive Secretariats rather than the Ministries in Guatemala (implying a greater focus on reform). In Jordan the EC has gradually increased its involvement with non-state actors. It started with EIDHR projects and expanded the scope and ambitions of its civil society programmes as the overall climate for participatory approaches improved. In the current NIP 2004-2006, there is a separate human rights programme for a selected group of civil society organizations. The next step is to support a programme on human rights that would reach out to both government and civil society and seek to promote complementary action between both set of actors (with due respect of the role of each player). Also the questionnaire reports a systematic involvement of civil society actors in governance programmes (19) and, to a lesser extent other actors such as the private sector (7) and institutions from the political society (e.g. Parliaments, the judiciary, etc.). A potentially important tool from a governance perspective is to support civil society ‘watchdog agencies’ in cases where EC provides budget support to central governments. This may contribute to achieving two governance objectives, i.e. to put the central governments in charge of defining overall development policies and to ensure greater public accountability by supporting adequate local monitoring systems (e.g. of pro-poor budget expenditures). This strategy of combining budget support with strengthening local demand for accountability merits to get much higher attention in EC governance strategies. In order to properly manage this growing support to civil society -as an actor in dialogue processes and a possible change agent in governance processes- the EC has done considerable efforts to clarify its strategy towards non-state actors (see also EQ 8). This holds particularly true for the ACP countries. Supported by a conducive legal framework96, and in close dialogue with the ACP Secretariat, the EC contributed to effectively open-up space for non-state actor participation in dialogue processes at different levels (local, national, regional and global) This is an ongoing process of experimentation and learning --another example of governance as a ‘moving target’. In the other regions (MEDA, ALA, TACIS, CARDS), the issue of civil society participation is also high on the political agenda. Efforts are made to associate non-state actors in policy processes and to reinforce their role as governance actors (e.g. the Partnership Programme in Indonesia). Yet on the whole, a less structured and sophisticated approach seems to prevail so far in these regions. Local governments are another key set of actors, whose importance in governance processes, particularly at local level, is increasingly recognized by the EC at policy level. Furthermore, in a growing number of countries, the EC actively supports decentralization processes or (integrated) local development programmes (see EQ 8). Yet a recent survey on the participation of local governments in ACP-EC cooperation clearly indicates that much remains to be done to properly ‘mainstream’ local government participation at all levels of ACP-EC cooperation. Evidence from different sources suggest that the status and role of institutions from the ‘political society’ (e.g. Parliaments, oversight bodies, political parties) may also need to be clarified and upgraded in EC governance strategies and programmes. This includes more

96 The Cotonou Agreement is the most advanced policy framework for non-state actors participation, It dedicates a whole chapter to the ‘Actors of Partnership’ and spells out in relative detail the roles and responsibilities of non-state actors as well as the support measures that should be envisaged

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programmatic forms of support, including capacity building to assume their new roles in policy and governance processes. The evaluation also found that further learning and experimentation is needed (i) to refine the political and institutional analysis of the role of the various players in development and governance processes (ii) to ensure that the legitimate role division between public authorities and civil society is respected in sectoral programmes; (iii) to improve the quality of dialogue processes with the different actors97; (iv) to put in place instruments and procedures that are adapted to the realities and requirements of the different actors involved in governance programmes; (v) to provide effective public information and lobbying functions to promote governance. Perhaps the most critical issue is the effective use of multi-actor dialogue approaches in setting the governance agenda in a given country and region. In most third countries, there is a growing societal debate on governance (see Chapter 2), involving governments as well as a rapidly growing set of other actors from different walks of life (civil society organizations, private sector, trade unions, media, research institutes, watchdog-agencies, etc.). This is leading to often heated debates on the nature of the governance problem in a particular place and on required reform priorities. For donor agencies involved in governance support processes, it means that governments do not longer have the monopoly in fixing the governance agenda. Other actors also demand to be part of the process. Furthermore, if governance is all about changing the ‘rules of the game’, it is obvious that the participation of all relevant stakeholders is required for sustainable and systemic change to take place. The EC, like other donors, faces the challenge to adapt its overall governance approach to these new realities. JC 2: The Commission has recognized the importance of supporting governance processes at different levels (local, national, regional and global) EC policy documents increasingly recognize the importance of intervening at different levels. The most recent example is the new Africa EU policy (November 2005), which spells out a governance agenda for the continental (i.e. the African Union), regional, national and local level. At the strategic and operational level, there is little doubt that the national level has been the preferred level of intervention for the EC, while the local level is catching up (as a result of the new wave of decentralization). The large majority of EC supported programmes have been oriented towards these levels. There has been relatively limited attention to governance at regional level, as evidenced by a review of all Regional Strategy Papers and related Regional Indicative Programmes (see Annex 13), despite their growing role (e.g. in conflict prevention)) and potential to impact on national governance processes (through demonstration effect). However, the EC focus on promoting regional cooperation and integration has led to programmes aimed at building the institutional capacity of regional organizations. The EC is clearly still developing a policy and a practice with regard to promoting governance at different levels. This helps to explain why there is limited evidence so far of

97 Critical assessments (e.g. on dialogue with NSAs) suggest that there is sometimes a tendency to equate ad hoc consultations with genuine dialogue (based on a proper circulation of information; framed in an ongoing process; with actors properly enabled to participate, etc.)

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governance strategies that properly integrate the different levels of governance in cooperation processes and programmes. CONCLUSIONS EQ 9 The EC has embraced the principle of participatory development in all regions. As a result, efforts are made to extend the partnership to a diversity of actors (other than central governments) and to provide them with the necessary support to play their role in the development process and in the search for more inclusive, effective and accountable governance systems. However, this is a recent move for the EC, both at headquarters and field levels. Experimentation and ‘learning by doing’ are taking place with regard to multi-actor and multi-level governance approaches, either in particular sectors (e.g. rural development) or in specific governance clusters (e.g. support to decentralization and local governments). In the process, the EC is confronted with a wide range of strategic and implementation challenges. These, in turn, indicate that there is a need to further invest in knowledge; in strategy development; in refining the quality of intervention approaches, dialogue modalities, working methods, tools and procedures; and in capacity building of EC staff (across the board).

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4.10 Institutional Capacity at the level of the EC EQ 10 : To what extent and how has the Commission developed its overall institutional capacity to deal effectively and efficiently with the question of governance? JC 1: The Commission has adequately adapted the staffing levels required to deal with governance The overall finding is that the EC finds itself in the initial phase of adapting its staffing levels and internal expertise to the requirements of delivering effective governance support. For instance, the questionnaire reveals that a growing number of human resources are involved in governance matters (e.g. specialist governance advisors, sections). Yet during the country visits it was clear that governance specialists are overburdened and seldom organically integrated in the overall work of the EC Delegation and across sectors of intervention. Overall knowledge on EC policies as well as on the Draft Handbook on governance is still rather low. Restrictive interpretations of governance often prevail. Regarding key constraints, EC Delegations named weak institutional capacities, absence of political will, and more significantly the limited availability of outside expertise. The last point was emphasised by the Delegations in Asian countries, stressing that the lack of permanent European experts there caused serious project setbacks, therefore insisting on the transfer of know how to the Delegations and through adequate contracting processes. Latin American countries also voiced the need for outside expertise from the EC. Over the 2003-2005 period of time the EC has gone through a process of rapid change as it increased the scope of work in governance and at the same time ‘deconcentrated’ the responsibility for project management to the Delegations. This led for example in the case of Angola to a doubling of the number of staff based in Luanda. From a professional angle the result is a highly educated and motivated workforce that, combined with large financial resources, holds the potential to turn the EC into a key actor over time. Yet training on governance issues has occurred “on the job”, and most of the workload still reflects standard financial management rather than substantive policy and political work. The Country Notes also show that the EC Delegations tend to suffer from a cleavage between technical staff involved in projects (whose work in programmes is subordinated to both the Government and the civil servants in the Delegations) and the macro-level management staff. While personnel from the latter category of functions are present at all the meetings, they are generally not in a position to provide the political steering which the projects occasionally would need. This is mainly due to the lack of time to deal with broader issues or to other constraints they face as Delegation staff. On the other, only the Head of Delegation has normally the leeway to participate in political dialogue. This takes place through Ambassadorial consultations, and does not concern project specific issues. This generally contributes to a frame of reference where the financial targets remain preponderant, improvisation is discouraged, and delays in implementation are seen as one of the main indicators of difficulties – instead of being seen in some cases as prudence in the face of an incomplete problem formulation and poor risk management.

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For the technical issues the Commission is dependent on specialists whose prime quality is to have time to investigate issues in some depth. The EC has developed access to external expertise through the Framework Contract system (specifically Lot 7: Human Rights and Democracy”), and many of the studies which underpin the programmes have been commissioned through this system. Yet this instrument is little used for context and risks analysis, or for evaluation. Moreover many informants have expressed disappointment with the consultancy work provide through framework contracts. This is mostly because the bidding process focuses primarily on formal CV based qualifications, rather than on the reliability of consultants in their delivery. Pre-employment screening of consultants is left to the contractors, who find that this is not supported: there is no time or resources in the EC to detect fraud in CV writing for example, whereas on the side of providers speedy responses and conformity to specifications are rewarded. On the consultancy side there is a disincentive for involving small and specialised companies because of the delay in payments (4 months to one year, requiring considerable cashflow), and the wide range of sectors covered by requests. The EC capacity issue also includes the management objectives which are put forward to staff. The new Financial Regulation places a large responsibility on Authorising Officers as regards good management of the quality of aid. However this mention is not, as is apparently often thought, just about financial accountability. Sections of the Financial Regulation deal with results based criteria, under the notion of “good financial management”. Efficiency and effectiveness are also mentioned, against the use of « specific, measurable, relevant and time-based objectives ». To minimise the weight of purely administrative transactions, the EC tends to give priority to financial and administrative aspects, as well as to technical specifications, to the detriment of « external » aspects of impact and the achievement of results. Exposed to the queries of the Court of Auditors concerning the procedures, the Delegations, which receive an increasing responsibility for the handling of resources, feel obliged to increase formal controls ex-ante. Efforts are done to avoid a possible blocking of the procedure for approval of decisions, but it has the perverse effect of slowing down the signing-off process, and consequently of hampering project performance. Some Delegations have created approval circuits and checklists containing more than 50 steps, supported by up to three levels of planning documents with long lists of indicators. Accountability then becomes a purely financial affair, and the notion of good financial accountability is divorced from the external context of results achieved. This, however, is contrary to the spirit of the new financial Regulation98. The reference in the text to timeliness is clear, and yet this is not reflected in the Delegation’s work. This is reinforced in the Implementation Regulation which calls for periodic evaluations, as well as the Internal Control Standards99. All this tends to create an informal hierarchy in which the financial and contracting functions are situated in a higher position than the technical advisors. Yet there is a persistent feeling that the latter are also too few. Contracting and grant funding mechanisms allow the EC to call on a wide pool of experts to work in governance. Many demonstrate a strong grasp of the issues of their sector of activity. However there would need to be more preparatory work

98 « Le principe d’économie prescrit que les moyens mis en œuvre par l’institution en vue de la réalisation de ses activités sont rendus disponibles en temps utile, dans les quantités et qualités appropriées, et au meilleur prix. Le principe d’efficience vise le meilleur rapport entre les moyens mis en œuvre et les résultats obtenus. Le principe d’efficacité vise l’atteinte des objectifs spécifiques fixés et l’obtention des résultats escomptés » (Article 27). 99 SEC (2001) 2037/4, in particular standards 17 and 20.

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at the institutional level than has been done until now to cultivate, accommodate and consolidate this pool. Private enterprise still does not represent a large institutional market (cf. for example the smaller number of companies bidding in the human rights and democracy sector as opposed to infrastructure or rural development for the ‘Lot’ Framework Contracts). The UN agencies also experience significant difficulties in recruiting personnel to appropriately manage the projects. In Indonesia, for example, EC staff complained that the support given by UNDP was inadequate. In the case of Partnership, UNDP had not sufficiently developed the capacity of the staff to make applications and manage the grants (e.g. it had allocated less than one person to manage the grant on the EC’s behalf). Project managers had to handle a very large number of sub-projects, leaving little time to develop new ideas or to interact with the government, NGOs and donors. JC 2: The overall institutional environment at the level of the Commission is suitable for effective and efficient action in the field of governance EC project management work is in essence administration. It would appear as if deconcentration has not alleviated in any noticeable way, and the burden on personnel can be overwhelming. For example, one governance project manager in Kiev is currently responsible for administering sixty activities. Her manager estimated that each takes about one day’s work per month. Accordingly, she has little time to meet her counterparts, meet other donors, and even meet with colleagues in the office dealing with related matters, let alone prepare for the future. She has neither the time nor budget to visit her projects in the field. Much of her time is spent dealing with bottlenecks in the contract and finance unit, another part of the Delegation that is highly stretched. We were told that the Commission had applied for permission to hire eight more staff to deal with the growing workload in anticipation of deconcentration, but was only granted one new position, and a very junior one at that. Some project officers contacted by the team complained that they received little training in the substance of their projects. Governance staff in the delegations expressed more frustration about their inability to respond to improved opportunities for governance in their country of residence than about any other issue. Most felt that since progress in this sector is more politically conditioned than in any other sector, delegations should be able to give early and energetic support to new reform-minded governments, such as in Ukraine and Indonesia, and should be able reasonably easily to adjust Country Strategies and National Indicative Programs when political conditions improve (or deteriorate). There is another flexibility issue: the need to be able to adjust to uncertain objectives in the partner country during the implementation of a strategy, program or project. Many delegations face fluid but potentially improving situations - making it difficult to design with confidence long term programmes knowing that it will be difficult to change those programmes. Precisely this problem is confronting the governance staff in Sudan today. Although the Comprehensive Peace Agreement and a new Interim National Constitution incorporate measures that could potentially improve public administration, promote decentralization, and generally reinforce the rule of law, resulting in better access to basic service for the poor in all parts of this diverse nation, most donors (including the EC) are

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still unsure as to the real commitment of the current Government of National Unity to good governance. Many said that they could not mobilize advisory and other services quickly enough following the electoral victories of new reform-minded governments. Such is the case in Ukraine where Delegation described a completely transformed situation under which the flow in frank communications between the Delegation and the post-Orange Revolution government was unprecedented, implying a real will to reform government. Although senior staff knows the EC had access to the kinds of advisory resources that would be of great value to the new Government, it had as yet not managed to bring those resources to Ukraine. They worried that by the time applications for these advisors had worked their way through the EC bureaucracy, taking perhaps up to 6 months or even a year, the opportunity to demonstrate the value of political dialogue between the EC and the new government would be lost. Staff felt that the framework contracts did not give them fast enough access to the kinds of advisors needed in such circumstance. Not just elections bring such opportunities and with them the need for flexibility. There are also cases where local leaders in the sector come together in a credible commitment to reform. In Indonesia, the Partnership programme promoted a series of legal and judicial summits, resulting in the leaders in the sector publicly committing to reform. Those leaders complained that their had been no return in terms of donor response to the political and other sacrifices many of them had made in order to be able announce a unified approach to reform. This lack of the ability to respond quickly to changing political circumstances not only weakens the potential impact of political dialogue but also threatens the EC’s leadership role when its leadership is expected and essential. This is the case in the current and future accession countries. The EC might be expected to have the highest leverage of any of the donors in countries aspiring to join the EU. But that leverage and leaderships risks being ceded to other bilateral and multi-lateral donors who can respond with financial support and advisors to new reform-minded government much more quickly than the EC can. This leads to an overwhelming effort by the EC to outsource responsibilities for design and implementation to external bodies, on which the Commission exercises control through detailed technical planning frameworks. The distinction between technical implementation and political steering is often an artificial one in governance, and this contributes to blurring the ownership of the activities. Related to the focus on the correct administration of inputs is the lack of any incentives to take risks. Many staff could not conceive of budget support as the right way to go because of the risks involved; the government simply could not be trusted to carry out procurement and take responsibility for the financial reporting. Since governance is a relatively new field for donors, certainly a new EC priority, incentives should be provided for staff to take risks in their engagements with government. The EC should recognize that he promotion of good governance is by its very nature a high risk activity (reformers are sometimes murdered), but one with very high returns too. A culture of taking risks, monitoring carefully and adjusting should be developed in the EC.

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JC 3: The Commission seeks to become a “learning organisation” in relation to governance Evaluation findings concur to the priority need to empower EC delegations (in terms of skills, incentives, processes) and to invest heavily in the process of transforming the EC in a knowledge-driven, learning organisation. There is a growing amount of interesting governance programmes as well as lessons of experiences, as EC increases its support to governance. Yet so far, these new sources of knowledge, experience and expertise within the Commission have not yet been properly connected to each other and to the broader EC policy and institutional framework. Most of the staff in the delegations reported that they had limited experience of the various aspects of governance when they were appointed to their positions, and complained that they had since been given very little training in the substance of governance. Training had more often been in the procedures of the EC. Training in governance typically consists of learning on the job. An outcome of this lack of formal training, and the associated lack of confidence on the part of staff, is that many donors and clients in the case study countries reported that they heard little of substance from their EC counterparts. Many instances were given of donor coordination meetings when EC staff was either silent or raised only administrative matters. More resources and time could be allocated to training staff in the delegations in the various aspects of governance, as well as on the effect of the mode of operation on the results achieved in governance. In designing training programs and hiring staff a better distinction could be made between the different sets of governance activities. Legal and judicial reform requires a different set of skills to public administration reform and decentralisation. Supporting elections and parliamentary reform requires yet other sets of skills and experience. In most instances training in reforming public administration could not be separated from decentralisation since throughout the developing world the devolution of service delivery responsibilities to local government, executive agencies or local government, is the major theme of public administration reform. One of the objectives related to training in substantive skills needed in EC Delegations (and perhaps in Brussels) is for EC staff in the field to take more responsibility for preparing and reviewing reform and capacity building programs. As mentioned earlier, many of the staff we met was uneasy about relying so much on external consultants. These staff quoted many instances of poorly qualified staff being sent to assist in the preparation and review of projects. Many examples were given of complete mission reports that had to be written off because of poor quality and insensitive consultants. The high incidence of this problem in governance may reflect the lack of experience in the consulting community of this relatively new area of governance. Many staff also said that reliance on external consultants tended to reduce the delegations’ ownership of programs, by further reducing staff merely to the role of administrators. The lack of EC governance experts on identification and formulation missions, and the apparently rather silent participation of staff in donor coordination meetings, also diminishes the EC in the eyes of governments and other donors. Other donors also bring in external consultants but many have many more experts on staff as a proportion of the volume of aid. Another multilateral, the World Bank, has well over 400 specialists in some form or other of governance, and DfID has created a large number of posts in its matrix organisational chart.

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The incentive issue is one of time rather than inclination. Staff clearly believes in their mission to put governance at centre stage in the affairs of their delegations, but they simply lack the time to interact substantively to achieve that mission with governments, civil society, other donors, and even their colleagues in other sectors. It is clear to this evaluation that, despite the EC’s admonition to monitor and focus on results and outcomes, most of the administrative attention is focused on the correct acquisition and application of inputs by the clients. Where UNDP had been given the responsibility to manage the implementation of projects, in some instances staff still felt obliged to monitor the manager, and also monitor the beneficiary too; clients too found this double reporting burdensome. The time availability issue can only be addressed by lessening the administrative burden, including being more selective about reporting indicators, and allocating more staff to governance groups. This is a precondition for creating a culture of learning with regard to governance CONCLUSIONS EQ 10 The EC has done efforts in recent years to enhance the profile of its governance staff, particularly at the level of EC Delegations. Yet the evaluation clearly shows that the processes of internal capacity building on governance are at an early stage. Much remains to be done to create a corporate understanding of what governance entails and a culture of learning about ways and means to support it effectively in a variety of country contexts. The role of the new governance unit E 4 in Europe Aid is a most promising step forward. Other creative ways of linking EC staff and sources of practical knowledge will be required (e.g. thematic networks on particular governance topics). The evaluation also found evidence that the overall institutional environment and the prevailing administrative culture are not always conducive to an effective delivery of governance support. A key example is the fragmentation of the project cycle between technical and financial aspects, giving the staff dealing with the latter the pre-eminence, and outsourcing most of the work in the former. This results in an inability to monitor results and to respond to opportunities, which is an important aspect of governance. It also weakens internal capacity building and institutional learning.

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5 MAIN CONCLUSIONS AND LESSONS

5.1 Main conclusions In this chapter, an overall assessment is presented of the Commission governance support. It starts from the governance strategies, objectives and guiding principles, as defined in EC policy documents and regional agreements (Chapter 2). It incorporates key findings obtained with regard to the different evaluation questions (Chapter 4). It fully takes into account that governance is a ‘moving target’ (as the scope of the governance agenda continues to expand) and a policy framework under construction (as the EC seeks to gradually improve its overall response capacity). Six main, closely inter-related conclusions are drawn:

1. The EC has made a right choice to put governance at the top of its political agenda and cooperation priorities with third countries

In less than a decade, governance has moved to the centre stage of the partnership relations between the EC and third countries. The European Development Policy Statement (2000) identifies institutional support for governance as one of the six priority areas where EC has a comparative advantage and an added value to offer. The political support for governance is reiterated in a wide range of EU Council conclusions. The 2003 Communication on Governance and Development recognises the multi-dimensional and transformational nature of governance processes, as they touch upon the ‘rules of the game’ for exercising power; for organising the social contract between state and its citizens; and for ensuring a transparent and equitable management of a country’s resources. The EC Draft Handbook on Governance presents governance as an over-arching concept (including the promotion of human rights, democracy and civil society). The desk study shows how governance has been integrated as a key component of the partnership with different regions. The EC has increasingly translated this commitment in its political dialogue, programming processes and budget allocations towards third countries (EQ 1, EQ 8). The CSP analysis confirms that governance related issues are often at the heart of the strategies (in terms of political focus and general objectives). The statistical analysis reveals that funding (from different sources) for governance is growing. The choice to ‘upgrade’ governance at the overall political and policy levels, seems fully justified considering: • the growing societal demand in third countries (across regions) for improved

governance; • the strong linkages between governance and achieving general EC cooperation objectives

(e.g. the Millennium Development Goals; sustainable development; democracy; economic growth, etc.) as well as region-specific objectives (e.g. the successful implementation of Association agreements in MEDA);

• the nexus between governance, conflict prevention, peace and security; • the general EC move towards new aid delivery mechanisms (e.g. budget/sector support)

and the search for enhanced donor alignment and harmonisation, all of which are clearly linked to governance;

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• the growing pressure on donor agencies to also apply ‘good governance’ principles in their relations with third countries;

• the emergence of a ‘global governance’ agenda.

2. The EC has made substantial progress in dealing with governance, particularly in terms of defining what are likely to be the most effective approaches to sustainable improvements to governance

The desk and field phase clearly indicate that the EC has made efforts to ‘catch up’ with a rapidly expanding, increasingly high-profile and complex governance agenda. This process started in the mid-1990s and is still moving forward, leading to a gradual refinement of the policy framework, the intervention strategies as well as the tools and approaches used. Six major ‘positive developments’ in providing governance support have been identified at the level of the EC as a whole, albeit with important variations in the actual practice according to regions/countries. The box below presents a panoramic view on the main trends and developments (with supporting evidence). POSITIVE DEVELOPMENTS

ELEMENTS OF EVIDENCE

A strong policy framework is gradually constructed (EQ 1, EQ 5, EQ 9)

* important stream of policy documents on governance both of a general nature and region-specific * overall justification for investing in governance clearly spelled out * the EC has defined a set of guiding principles to work on governance * elaboration of a Draft Handbook on Governance bringing together the different strands of governance in six thematic clusters * growing recognition of the need to promote governance at different levels (local, national, regional and global) and through partnerships with a variety of actors * elaboration of operational guidelines for some thematic clusters (e.g. support to civil society) * efforts to devise adequate strategies for ‘difficult partnerships’

Governance is increasingly prioritised and mainstreamed (EQ 1, EQ 2,EQ 9)

* clear political mandate to work on governance (Council) * all cooperation agreements integrate governance related elements * in a growing number of CSPs governance occupies central place as a political priority * governance related commitments represent a growing share of total EC commitments (geographic and thematic instruments) * the largest absolute increase in the distribution of multi-annual resources after the mid-term reviews in all regions is in the category of government and civil society

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POSITIVE DEVELOPMENTS


* governance strongly anchored in policies formulated by the EC for different sectors or themes (e.g. transport, food security, HIV/AIDS) * EC policy documents recognise linkages between key policy areas (e.g. nexus between governance, peace, security and development) * efforts to mainstream governance in all EC aid interventions (through the use of a horizontal analysis) and in the different instruments used *efforts to ensure the mainstreaming of governance by reaching out to a diversity of actors and intervening at the various levels of governance

Strategic approaches to promoting governance are emerging (EQ 1, EQ 2, EQ 3, EQ 4, EQ 5, EQ 6, EQ 9)

* search for alignment to national governance agendas and policies * overall evolution towards multi-annual programming (facilitating an effective integration of governance objectives through an adequate ‘policy mix’) * shift from self-standing governance projects to broader programmatic and sectoral approaches * move towards a greater use of budget support (holding potential for contributing to governance) * investing in both the supply and demand side of governance * new generation of support programmes to civil society and local governments are initiated * efforts to strategically combine different instruments to promote governance (e.g. geographic programme and EIDHR) * alliances with other governance players (e.g. the African Union) * consistent policy of ‘staying engaged’ with difficult partnerships.

Political and policy dialogue are used as tools to promote governance (EQ 3, EQ 4)

* EC/EU have started to conduct dialogue on governance at different levels (national, regional and continental) * dialogue is increasingly used on a more permanent basis and not only in case of crisis (e.g. art 8 of the Cotonou Agreement) * dialogue -with potentially strong impact on governance- takes place in context of general and sector budget support *new institutional arrangements for structured dialogue on governance-related matters are put in place. * initial efforts to broaden the political dialogue to non-state actors *search for co-ordinated/coherent EU responses through the CFSP

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POSITIVE DEVELOPMENTS


Experimentation with new tools and working practices, particularly budget and sector support (EQ 3)

* EC sees budget support as a model for future development cooperation and has invested heavily in developing capacity to deliver this type of aid in a way that may impact positively on governance * recognition that budget support is not a panacea, nor an instrument than can be applied everywhere * efforts to combine budget support with other instruments (e.g. targeted projects providing technical assistance)

Capacity development takes place (EQ 10)

* increase in number of specialised staff (particularly at Delegations following de-concentration) * creation of thematic unit on Governance, Human Rights, Democracy and Gender (EuropeAid, E4) covering all regions * growing exposure of variety of geographical and sectoral units to governance matters * learning-by-doing takes place (particularly in relatively ‘new’ areas such as support to civil society or decentralisation/local governments) * active EC participation in networks and fora dealing with governance (e.g. GOVNET) and related instruments (e.g. use of indicators) * governance issues increasingly addressed in evaluations

3. The EC is contributing to achieving general and region-specific governance objectives but impact on systemic change is uncertain

Reflecting these positive developments, available evidence suggests that EC-supported programmes are generally considered (i) to be relevant; (ii) to respond to genuine needs and priorities in line with region-specific objectives; (iii) to contribute in a general way to the encouragement and promotion of good governance approaches and priorities (see chapter 4, EQ 8). However, the jury is still out whether these positive outcomes will be sustained over time and lead to effective (‘systemic’) changes in the overall governance culture at the level of a given country, institution or civil society organisation. Most governance programmes, particularly those that reflect the more sophisticated intervention strategies gradually developed by the Commission from 2000 onwards, are in a too early stage of implementation to make judgements on their impact and sustainability. Furthermore, programme documents generally lack adequate indicators for measuring progress in relation to governance while systems for an ongoing monitoring and evaluation of governance outcomes is not yet in place at the level of the Commission. The remaining part of this chapter identifies the main factors and bottlenecks that tend to dilute the impact of EC-supported governance processes and programmes.

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4. The role of the EC as a “change agent“ still needs to be clarified

According to EC policy documents, governance is all about supporting locally-driven processes of societal change (touching upon norms, values, vested interests, as well as institutions and the way they operate). External agencies intervening in this arena are not neutral players. They are “actors” themselves with a potential to act as a positive “change agent” by exerting smart forms of political pressure in the framework of agreed partnership principles (e.g. the essential elements of the Cotonou Agreement) or by supporting the effective implementation of domestic reform agendas. The risk also exists that donor (EC) agencies negatively influence progress towards governance processes. This can happen, for instance, in cases where substantial (budget) aid is provided without serious analysis and monitoring of prevailing governance conditions (e.g. as a result of disbursement pressures) or when the whole public accountabity issue is not properly addressed. Evidence collected during the evaluation process suggests that the EC is still struggling to define its place, role and added-value in the governance arena. The concept of EC playing the role of as a “change agent” transpires in policy documents but proves rather difficult to grasp in practice. At this stage, a wide range of approaches seem to co-exist. In some countries, the EC seems reluctant to trust partner governments and refrains from supporting key governance reforms. In others, it engages very timidly in the governance arena, despite the huge needs for change100. In still other countries, it tends to follow a too lenient approach with the partner country on governance matters. An EC official symbolised the cooperation and dialogue with a particular MEDA country on governance issues as “une culture de l’apparence”, reflecting the highly sensitive nature of governance and the limited scope to push such an agenda, This image could undoubtedly be applied to other countries as well. There are also countries (e.g. Ethiopia) where the EC adopts a high-profile and visible approach as a change agent, playing a diversity of political roles (e.g. brokerage; aligning EU member states; reaching out to civil society). A further significant and rather troubling indicator of the confusion pertaining to the role of the EC in governance processes is the fact that many local stakeholders interviewed in the different countries visited, perceived the EC’s primary role (and focus of interest) to be management and administration of aid programmes (rather than a ‘political’ role of supporting governance) Hence, like other donor agencies, the EC will need to further clarify some thorny strategic questions and intervention dilemmas. For instance: how can the EC promote change without throwing away the partnership principles? How can it push for reforms in countries where political elites are not commited to genuine change (yet where civil society and people expect donor agencies and the EC to adopt a bold approach)? How can EC pressure for governance reforms while avoiding to fall into the ‘conditionality trap’? How can it develop strategic alliances with domestic ‘change agents’ in order to promote governance?, etc... Recently, there are signs on the wall that some of these issues are being more forcefully addressed by the EC in actual cooperation processes. Thus, in the preparatory consultations 100 The CSP analysis as well as certain Country Strategy Evaluations reveal that the EC still faces difficulties in some countries to put governance issues ‘upfront’ in its partnership relation (e.g. in the political dialogue) or to pressure for particular type of support programmes that are disliked by the government yet highly needed from a governance perspective (e.g. civil society support programmes; democratic decentralisation, etc.)..

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surrounding the new programming exercise for the 10th EDF, the EC is clearly using a more direct language when it comes to governance and seems committed to play a more pro-active role in its promotion.

5. Major gaps still exist between centrally defined policy frameworks and actual implementation practices in the field. These gaps, in turn, tend to substantially reduce the potential contribution of EC interventions in governance-related processes

The evaluation team found evidence (across regions, countries and governance clusters) pointing to the existence of a major gap between the officially adopted EC governance policies, strategies and guiding principles, on the one hand, and their effective application in the field, on the other hand. Such a gap between policy intentions and practices is not uncommon when new topics quickly move to the forefront of the agenda. It generally takes time for the system and the actors involved to ‘digest’ the new ideas, policies and approaches. Furthermore, it is important to assess the EC performance in a dynamic way. Perceived ‘weaknesses’ to be observed at field level could also be seen as ‘future challenges to be addressed’ in the ongoing search to match the political priority given to governance and the EC overall response capacity. These gaps, however, tend to substantially reduce the potential EC contribution to governance-related processes. The following (closely inter-related) gaps have been observed: • Limited knowledge and use of existing policy frameworks, guidelines, lessons learnt and experiences.

There are clear indications that key Commission documents, policies, guidelines and lessons learnt on governance-related matters are not properly known to many officials let alone internalized and consistently applied in the different stages of the cooperation process (see EQ 1). This may contribute to a situation whereby the potential of the governance approach, as promoted in centrally produced EC policy documents, is diluted at the level of country programmes and narrowed down to technocratic, project-related approaches (particularly in non-ACP countries). There are important risks attached to this state of affairs, including; (i) the use of governance as a ‘catch-all phrase’ of limited operational relevance; (ii) limited ‘contanination’ of EC officials dealing with other sectors than those directly concerned with governance; (iii) possible conflicts with third countries, particularly when the consensus on broad principles is brought forward into political dialogue processes, into concrete action (program design, implementation) and into performance-based review processes; (iv) a reduced capacity to make the best use of the panoply of instruments available for promoting governance; (v) the difficulty for the EC to properly evaluate and account (even in quantitative terms) for its efforts in promoting governance in third countries. This is compounded by a lack of structured opportunities to share experiences, lessons learnt and good practices. The potential for internal learning and cross-fertilisation remains largely untapped.

• Ownership deficit. The EC Communication on Governance and Development attaches a

central importance to ownership of governance processes. To this end, the EC generally seeks to align its governance support to national agendas and programmes. Yet this is a necessary but not sufficient step to ensure ownership. Several country notes observe an “ownership deficit” of EC-supported governance programmes, despite an apparent agreement among parties on reform priorities. This deficit can be primarily attributed to

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flaws in the design and implementation process of governance interventions, including (i) a lack of a genuine, multi-actor dialogue on the precise content and priorities of the governance agenda; (ii) limited political, institutional and risk analysis, including on the existence of sufficient commitment and incentives for change.; (iii) linked to this, an unrealistic programming which may lead to a relative neglect of the broader reforms required for the success of EC-supported governance programmes; (iv) the relative under-utilisation by the EC of multi-donor, long-term sector approaches to promoting country-led governance reforms (especially with regard to public sector or justice reforms); (v) a too heavy reliance on external consultants for identifying and managing programmes instead of enabling government or other local actors to design and implement their own governance programmes; (vi) the choice for project-related implementation arrangements outside normal government structures; (vii) the lack of alliances/strategic partnerships with key government departments, institutions of political society and other stakeholders (e.g. civil society groups) that are properly informed about the programme and are willing to support it; (viii) the need for EC-visibility. Failure to properly address the ownership question generally leads to delays in programme execution and slower disbursements (as illustrated by the Angola case)

• Lack of integrated approaches to promoting governance. This is another major gap, found in all country studies and in most CSPs101. EC policy documents recommend a long-term, holistic approach to governance, as the purpose is to support processes of political and societal transformation from within. Yet the EC is still struggling to effectively apply this guiding principle. Initial steps have been taken and promising innovations, indicating a more strategic approach, can increasingly been noticed. Yet on the whole, much homework remains by the EC in terms of adopting a truly integrated strategy and implementation approach required for meaningful and sustainable support to governance processes. At this stage, an overall strategy on how the EC could best support governance, as a cross-cutting issue, in a given country is generally missing. There is generally no detailed analysis of the added value of the different existing instruments (regional or thematic budget lines) or approaches (project, programme, sector or budget support). The majority of CSPs and related NIPs do not provide a clearly spelled out, comprehensive ‘governance package’, embedded in solid political analysis; translated into the right ‘policy mix’ for a given country/region; permeating all sectors of intervention; reaching out to a variety of actors; implemented at different governance levels and articulated in a long-term perspective.

• Limited progress with the effective application of the 3 Cs. EC policy documents recognise the critical importance of donor coordination, complementarity and coherence in promoting governance. However, evidence collected during the evaluation process provides a mixed track record. The questionnaire, the CSP-analysis and the country notes reveal that the EC systematically participates in donor coordination fora. Yet many questions arise on the quality of these coordination processes beyond sharing of information. Their impact seems rather limited in terms of (i) sharing political analysis on governance; ((ii) jointly exercising positive forms of leverage; (iii) facilitating the establishment of multi-donor support programmes and pooling of resources in support of home-grown reform agendas; (iv) promoting joint evaluations and collective learning. The presentation of a donor intervention matrix in many CSPs (especially ACP countries) is an encouraging element underlining the attention being put on complementarity. But there is often a

101 It was observed, for instance, that CSPs tend to give a central importance to governance issues. Yet they generally do not define an overall strategy tackling the various clusters and linking them to the central objective of poverty reduction (in the case of ACP countries). It is also illustrated by the prevalence of self-standing projects as preferred channels for EC support to governance (despite their well-documented possible limitations in terms of ensuring local ownership, sustainability and impact).

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lack of information on practical mechanisms and modalities that may ensure effective implementation. Achieving coherence is even a more challenging task, both within the Commission (due to the institutional fragmentation between DG-DEV, EuropeAid and Relex) and with the EU Member States. While some progress is being made in the framework of the CFSP, the role of the EC as a political player in promoting governance processes is not always recognised by EU Member States. This tends to dilute the EC’s capacity to intervene as a ‘neutral broker’.

• Lack of clarity on the institutional development strategy underpinning governance programmes (EQ 2). A large share of EC resources spent on governance is used for capacity-building initiatives. Yet it was difficult to find indications that these activities were underpinned, right from the start, by a coherent institutional development strategy. In a similar vein, the EC does not yet dispose of an appropriate ‘toolkit’ to perform key functions in governance-related support programmes (e.g. tools to properly assess governance situations; to induce organizational change; to intervene in difficult partnerships; to design and implement programmes in a process-oriented way; to make the best possible use of political dialogue; etc.).

• The knowledge base and in-house capacity is not adapted to the scope and complexity of the governance agenda. The EC has invested in learning on governance, yet the evaluation findings suggest that the conditions are not yet in place to turn the EC into a ‘learning organisation’. There are promising attempts to pull together existing knowledge and experiences (e.g. through thematic networks). The EC has also invested in the enhancement of its evaluation capacity, both in terms of issues covered and methodologies used. Yet it appears that too many factors and ‘missing links’ prevent the EC to function as a learning organization, including (i) the fragmentation of the institutional framework and the different cultures prevailing in each setting; (ii) the limited opportunities for an effective exchange between different units, officials, technical assistance staff, local actors; (iii) the lack of a solid institutional memory. Another factor that seriously weakens the overall response capacity of the EC is the still limited availability (both in quantity and quality) of specialised staff (with relevant training and years of experience), particularly at the level of EC Delegations.

• Good governance on the donor (EC) side? Much remains also to be done for ensuring proper ‘good governance’ from the donor side (e.g. in terms of policy coherence, predictability of policies and funding; bureaucratic performance and accountability on results). The concept of ‘mutual accountability’ is yet to be further clarified and operationalised in EC cooperation with third countries.

All this points to the need for the EC to revisit some of the fundamental premises of its intervention strategy, such as: how does political and societal change occur and how to better understand the local context? How can external agencies contribute to complex processes of political transformation, including the consolidation of legitimate and capable states? Who sets the governance agenda? Who are the actors that should be involved and through what type of process? How to ensure genuine ownership (beyond formal commitments)? What approaches and instruments help to build genuine ownership and local accountability? How can EC provide better capacity support for actors to develop and implement their own (governance) reform programmes? What does it mean to play the role of a pro-active ‘change agent’?

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6. Systemic (institutional) constraints hamper effective and efficient EC action

in governance Evidence collected during the desk and field phase clearly links the gap between policy intentions and actual practices to the prevailing organisational culture within the EC (and in the wider EU context). In essence, this points to a mismatch between key strategic objectives (i.e. the priority given by the EC to support governance as a long-term process of societal transformation) and the available instruments, procedures and institutional incentives to effectively implement this commitment. This, in turn, suggests that the EC has not yet adapted its institutional framework to the specific requirements of governance programmes and approaches102. Systemic constraints at the level of the Commission are one of the most important impediments to quality and performance in relation to governance. Thus, a majority of Delegations have singled out the inadequacy of procedures as the main obstacle to an increased role of the EC in governance (14 out of the 23 replies to the questionnaire). In a similar vein, 18 Delegations consider a change in procedures as the key priority for moving forward. All country visits have confirmed the limits imposed on effective governance work by the prevailing management and administrative culture. One example is the tendency for staff to spend a disproportionate amount of time to detailed demands of project management so that limited time is left for dealing with strategy and content103. The overall EC/EU institutional environment is also perceived to be a bottleneck for efficiency and effectiveness in governance work. A broad range of disincentives is seen to exist for deliver effective governance support, including disbursement pressures (governance programmes are no ‘big spenders’) and the prevailing climate of ’risk-avoidance’. The institutional fragmentation of the Commission further limits the scope for truly strategic and integrated responses to governance as well as for learning. The net result of these gaps, flaws and systemic constraints is that EC contributions to governance-related processes have not been as effective and efficient as could have been expected (considering the political priority attached to governance and the potential of supported reform programmes). A major problem is also the perceived lack of capacity to respond quickly to changing circumstances, which not only weakens the potential impact of political dialogue but also threatens the EC’s ability to play a leadership role when expected and needed. It would appear that these systemic constraints are related to the three identities that the EC displays in its external action, i.e. that of (i) a political player; (ii) a development agency ; (iii) and (iii) a major donor administration, managing large sums of aid resources and subjected to very stringent financial accountability rules. As the figure below illustrates, the effective delivery of governance support to third countries depends, to a large extent, of the harmonious co-existence and cross-fertilisation 102 This also holds true for EC support to civil society. In policy documents (e.g. the Cotonou Agreement), the stated strategic objective is to provide institutional support to the emergence of a strong and viable civil society (as a key governance player). Yet prevailing procedures (e.g. call for proposals) and complex administrative requirements (not attuned to capacities of local actors) generally do not allow the EC to provide a truly strategic support to civil society (e.g. by supporting change agents, building civil society coalitions or investing in long-term institutional development). In some cases, they can foster competition rather than co-operation among civil society actors. 103 These roles are often externalised to consultants, thus further diluting internal capacity building and learning

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between these identities (and related set of competencies and working cultures). As governance is all about politics, development staff need a solid political back-up to be effective. In a similar vein, development methodologies need to find ways to better integrate the political dimensions in aid interventions. Both are dependent on the existence of coherent set of institutional incentives and procedures that facilitate effective implementation. However, there are strong indications that the convergence between these three identities is not evident at this stage. In recent years, the EC has made major efforts to better play its political role and to adopt new development methodologies and tools and approaches that help to support governance processes (e.g. budget support for country-led reforms). Yet the dominant administrative culture seems increasingly at odds with the requirements of delivering effective and efficient governance support, as reflected in the responses of EC Delegations mentioned above. EC efforts aimed at enhancing governance support will need to take into account this (growing) disconnect between politics, development methodologies and administrative rules and procedures (see overall recommendation in Chapter 6).

THREE IDENTITIES OF THE EC

Delivering effective

governance Development

agency

Donor administration

Politicalactor

European Institutions (EP, Council, Court of Auditors)

EU

EU Member States

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5.2 Main lessons We have already mentioned that the EC has made substantial progress in dealing with governance, six major ‘positive developments’ in providing governance support have been presented in this Chapter. The box below presents the main lessons that seem to have been learnt by the EC, and the consequences it could have on governance. Main lessons learnt

Overall EC policy Implication for governance Increased focus on the 3 Cs (Coherence, Complementarity and coordination): The 3Cs has become a key issue to analyse in all strategy or project document.

Given the various clusters of governance, the 3Cs issue is especially important. It means working with a broad variety of actors in many country situations.

Increasing focus on national coherence (CSP and PRSP) It stresses the importance of improving coordination with the other donors and to embed intervention within a national framework.

We have seen that governance situation highly depends on country specificity as well as the stage of development process. The role of governance in the development strategy and its linkages to the other sectors has to be further developed.

Importance of integrating cross-cutting issues in EC interventions. Many checklists have been developed to integrate these issues in all EC interventions

Governance is also being seen as a cross cutting issue. But it has also to be linked to the other cross-cutting issues, such as gender, capacity building or LRRD.

Increasing importance of the nature of process in development. The discussion on the LRRD process as well as on disaster preparedness strategies has gained in importance in the last years.

The discussion on LRRD is of utmost importance for governance, as it embraces many situations in which things are not going well. The role of governance at the various stages of development process as well as in different political situations is a key issue, in order to tailor governance strategy.

Importance of actors’ participation in development process, especially as regard to the ownership of development process.

Given the high variety of actors, and the conflicting relations that they could have with each other, it is important to assess the institutional landscape, to assess actors’ capabilities and dispatch functions according to actors’ skills. Transparency of decision processes is also important.

Need to support the implementation of policies and strategies. This support refers to the development of many handbooks, guidelines and training programmes.

Capacity building strategy is a key issue for governance. Beside the need to produce tools or practical guidelines to facilitate smooth and relevant implementation of governance strategies, other means are also of importance (improved sharing of experience, development of specific training programmes,…).

Increased focus on budget support. Beside the need to analyse the specific added value of the various existing instruments (including budget support), it is important to improve the link between governance and budget support.

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6 MAIN RECOMMENDATIONS In this final chapter, a set of recommendations are proposed, based on the findings related to the different evaluative questions (chapter 4) and on the main conclusions and lessons learnt that could be drawn (chapter 5). As requested in the TORs, the recommendations are presented in a logical order and with cross-references back to the appropriate findings, lessons and conclusions. A three-tier structure is proposed: • Overall recommendation • Strategic and operational recommendations • Process recommendations

6.1 Overall recommendation The EC should consolidate the framework put in place for supporting governance in third countries with a view to improve its overall response capacity (at the political, development and institutional levels). As the EC gets more deeply involved in the governance arena, it is increasingly confronted, much alike other donor agencies104, with major strategic and implementation challenges that require more sophisticated responses. The EC should therefore make a qualitative jump forward by consolidating and deepening its policy and institutional framework for supporting governance. This is a key condition for ensuring that its overall policy response and implementation capacity matches the political priority rightly given to governance as a central objective of EU/EC external action. This, in turn, should help to reduce the perceived gap between policies and actual implementation practice (see Chapter 5). This consolidation and deepening process implies the synergetic reinforcement of three closely inter-related pillars of the existing EC framework for supporting governance in third countries:

• the political response capacity; • the development response capacity ; • the institutional response capacity.

Strengthening the political response capacity is needed to deal properly with the ‘politics’ of EC/EU governance support. It calls upon the EC:

(i) to build capacity to better understand the nature and dynamics of political and

societal transformation processes in different country/regional contexts; (ii) to effectively assume the role of a positive ‘change agent’ in governance processes; (iii) to engage in multi-actor political dialogue processes on governance priorities;

104 For an excellent overview see ‘Increased Aid : Minimising Problems, Maximising Gains’, IDS Bulletin, Vol 36, Nr 3, September 2005. with particular reference to the article by D. Conyers and R. Mellors: ‘Aid Ineffectiveness in Sub-Saharan Africa: The Problem of Donor Capacity’, pp. 83-89

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(iv) to pro-actively support a diversity of ‘governance actors’ in the framework a comprehensive long-term governance strategy;

(v) to exercise, when appropriate, relevant forms of leverage in support of reform processes;

(vi) to strengthen the capacity of EC Delegation to engage with EU Member States on how best to improve the coordination and complementarity of governance support;

(vii) to ensure that the Union uses all resources at its disposal in its external relations in a coherent and effective way.

Enhancing the development response capacity should help the EC to better address the ‘what’ and the ‘how’ of delivering relevant, effective and efficient governance support in a wide variety of country/regional contexts. It includes:

(i) recognising the limits of current approaches in terms of ensuring the ownership of

governance programmes by the different actors concerned (state and non-state actors);

(ii) reversing the way of formulating and implementing governance strategies, by giving priority to the elaboration, negotiation, adoption and implementation of home-grown governance agendas, owned by the different stakeholders (through an enlarged political dialogue) and properly articulated with the various levels of governance (local, national, regional);

(iii) defining, on this basis, a truly coherent, country (or region) -specific, long-term governance strategy (for specific governance interventions and mainstreaming across sectors and themes);

(iv) moving beyond a primarily technical approach to capacity building (focused on structures, systems and processes) to a much more solid institutional development approach (that also looks at issues of culture, leadership, incentives, organizational behaviour and incentives for change);

(v) accepting that governance is best supported through multi-donor sector wide approaches;f

(vi) further investing in donor harmonisation and coherence.

Improving the institutional response capacity by creating a conducive institutional environment to deliver effective governance support. This is the third wing of the triptych for effective action in the field of governance. The overall management and administrative culture should be aligned to the needs of an effective delivery of governance support. This requires action in terms of:

(i) enhancing the capacity of the EC to function as a ‘learning organisation’ at all

levels (including capacity to monitor, evaluate and review support to governance processes);

(ii) ensuring that the right procedures, financial tools and incentives are in place for flexible and effective responses adapted to field realities (e.g. rapid response capacity) or to the nature of governance processes (e.g. the capacity for the EC to engage over a longer period of time);

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(iii) empowering EC Delegations to fully assume their role and comparative advantage in providing governance support (linked to the proximity to the field);

(iv) promoting more effective and efficient collaboration between DG-DEV, Aidco and Relex as well as with EU Member States on how best to deliver governance support;

(v) increasing the quantity and quality of staff with the required specialisation or training on governance in the different (sectoral and thematic) units at headquarters and in the field;

6.2 Strategic and operational recommendations The strategic recommendations have been clustered around the overall recommendation and the three types of response capacities that need to be reinforced. However, there are obvious linkages between the strategic recommendations of each cluster. While they are presented here in separate categories for analytical purposes, they should be fully articulated in practice (as the proposed consolidation process of EC governance approaches rests on a better integration of its three identities and competencies). As governance is a relatively ‘new theme’, the choice has been made in this draft final report to present the strategic and operational recommendations together. This may help to build a common understanding on required changes. Strategic and operational recommendations with regard to strengthening the EC’s political response capacity 1. Give a much higher political profile to governance in the programming process.

This is needed to reduce the gap between the political priority given to governance in policy declarations and the often rather loose and inconsistent way in which governance issues are addressed in CSPs/NIPs as well as in RSPs/RIPs. A clear signal from the top, accompanied with a new set of programming guidelines, conceived in a participatory manner (see below), should ensure a more solid and systematic integration of governance, as a cross-cutting issue, in future EC strategies, programmes and projects. This would also help to create a stronger baseline to monitor, including at a political level (e.g. during mid-term review processes), the degree and quality of mainstreaming governance (as proposed in EC policy documents).

2. Provide EC Delegations with a clear political mandate to pro-actively promote governance (as a key priority of EC cooperation). In order to prevent the (often observed) dilution of governance objectives at programming and implementation levels (see EQ 1, EQ 5, conclusion nr 5) it is important to give a much more explicit mandate to EC Delegations to effectively integrate governance as a cross-cutting issue. This mandate should result from a dialogue process (involving all relevant stakeholders) and seek to reconcile domestic governance agendas with EC/EU political objectives. It will also be necessary to ensure that the mandate is accompanied by the necessary resources (human, financial, technical) so as to ensure effective implementation (see below).

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3. Enhance the capacity of the EC to engage in enlarged multi-actor dialogue processes on governance. Political and policy dialogue are key instruments in the promotion of governance. Building on good practices (which should be documented and widely disseminated), the EC should further enhance its capacity to effectively use this tool. In operational terms. The political and policy dialogue should therefore: • be made fully inclusive so as to provide genuine opportunities to all relevant

‘governance’ actors (including local governments, civil society, organisations from the political society) to influence the process all along the way (formulation, implementation, monitoring and evaluation);

• be organised in an ongoing, structured manner; • cover all relevant governance matters, including the nexus between governance and

poverty reduction; sector-level governance issues, rights-based approaches, gender); • be driven by the partner country (region) while ensuring alignment with existing

dialogue processes (e.g. PRSP) end effective donor coordination (so as to reduce transaction costs).

4. Improve the quality of governance assessments and develop the capacity for

political analysis. The EC should rethink the nature of country- and regional governance assessments, undertaken as part of the programming process, as well as the ways for carrying them out. In operational terms, the quality of governance assessments can be improved by: • paying much more attention to analysing the ‘political economy’ of governance

processes at country and regional level; • a better understanding of behavioural norms and deeply-seated constraints to

effective change; • identifying windows of opportunities and ‘drivers of change’; and to define, on that

basis, the most realistic intervention strategies • reviewing the processes used for the elaboration of governance assessments: the task

at hand is not only to increase the level of political skills internally, but also to closely collaborate with other donor agencies (e.g. to share political analysis work at country level); with relevant donor fora (e.g. the DAC programme on the ‘Drivers of Change’) and above all, with local networks and sources of expertise on governance. Supporting regional or national dialogue fora on governance may prove a powerful strategic instrument for refining governance assessments.

5. Improve the governance of EU external action. If governance is to be a two-way

process, based on mutual accountability, there should be more clarity and transparency on how the EC/EU institutions themselves respect the principles of ‘good governance’ in their dealings with third countries. To this end, the EC should define, in concrete and operational terms, the notion of ‘mutual accountability, and spell out the resulting principles and practices of ‘good governance’ to which the EC commits itself. The DAC provides a possible framework for such an exercise (including through the mechanisms of donor peer review). In operational terms, this mutual accountability should be reflected in: • the different component elements of its external action (e.g. development

cooperation; trade, CFSP, migration, etc.); • the efforts made to ensure policy coherence between these different policies; • the overall EC governance strategy towards a particular country or region;

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• actual cooperation practices (e.g. the degree of alignment and harmonisation to domestically negotiated priorities; the predictability and speedy delivery of EC funding, etc.).

Strategic and operational recommendations with regard to the EC’s development response capacity These strategic recommendations are primarily addressed at the EC ‘development professionals’, particularly EC Delegation staff, engaged in supporting governance in third countries. They seek to improve the effective application of the relevant guiding principles included in key EC policy documents (see chapter 2). Hence, they are mainly concerned with the approaches to designing and implementing governance strategies and programmes. 6. Consistently apply key principles of good practice The evaluation process has reconfirmed the relevance of the guiding principles for governance support, included in 2003 Communication on Governance and Development (see Chapter 2, Box 3). However, in order to make a successful ‘jump forward’ on delivering governance support, these principles of good practice need to be more consistently applied across countries, regions and sectors of intervention. Four guiding principles are particularly key in operational terms:

• Country ownership of reform agendas (as a precondition for sustainable impact on political and societal change processes);

• Multi-actor dialogue processes at different levels of governance (or the need to ensure that governance agendas are owned not only by governments but also by society);

• Multi-donor support (the EC cannot do the job alone; a multi-donor approach is key for long-term support to country-owned governance reforms);

• Flexibility (in order to have a rapid response capacity when windows of opportunities for influencing governance present themselves all along the process).

7. Refine the EC approaches to ensuring ownership. National ownership is an

important basis for donor support in all sectors. But even greater care has to be taken to ensure that governance agendas, strategies (across sectors) and programs emerge from locally-driven processes, involving all relevant stakeholders. The EC has increasingly sought to align its governance support to national agendas, yet experience clearly suggests the need for a much more sophisticated approach to promoting ownership (see EQ 5 and Conclusion nr. 5). This requirement, in turn, invites the EC to further refine its intervention strategies on ownership along the following operational lines: • Promote the elaboration of national governance agendas through multi-actor

dialogue processes (preferably in the framework of existing dialogue processes such as the PRSP or through national/regional governance fora105);

• Encourage the government to prepare its own reform programmes with regard to public administration, public financial management, decentralisation through the provision of capacity building support;

105 This was a key recommendation of the recently held ‘Forum on Governance’, organised by the African Union Commission and the ‘Réseau pour la refondation de la gouvernance en Afrique’ (November 2005)

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• Encourage the government to take full responsibility for implementing reforms as well for monitoring the achievement of governance policy objectives;

• Ensure that governments control the funding related to the reform process; where public financial management systems and capacity are not strong enough, give support through a trust fund managed by donors only as a temporary measure as capacity is developed;

• Ensure that all actors that have a legitimate role to play in the reform process are involved in the design and implementation of support programmes (e.g. local governments in decentralisation reforms);

• Focus governance efforts on creating the conditions for democratically-controlled policy processes and domestic forms of political accountability;

• Provide incentives for reform by combining budget support linked to policy reforms with program and project support to build capacity of governments and other actors to design and implement reforms (see below);

• Enhance the use of national/regional knowledge and expertise on governance; • Review the role of external consultants in the design and implementation of

governance related programmes, so as to reduce lengthy design processes and ensure ownership (e.g. of the government, other local actors, the EC).

8. Support the ‘demand-side’ for good governance. There is no shortage of new

governance initiatives that are propping up in most countries. Local actors at different levels are demanding better governance. The EC should pro-actively seek to provide strategic forms of support to these actors, including for building alliances, so to better mobilise this existing societal ‘demand’ for change. This type of support should be included in EC-funded civil society programmes. The EC should also consider entering into strategic partnerships with key domestic governance institutions (e.g. from the political society) and actors (e.g. watchdog agencies; human rights organisations; media) and provide them with institutional support to effectively assume their role.

9. Promote the elaboration and effective implementation of comprehensive and

coherent governance strategies at country and regional level. The EC should provide incentives for improving the quality of governance strategies and approaches in CSPs/RSPs and related NIPs and RIPs. With due respect for region-specific programming processes and modalities, it should technically prepare the ground for a better integration of governance in future CSPs, RSPs. From an operational point of view, future CSPs and RSPs should be qualitatively improved by including:

• more sophisticated country and regional governance assessments, including a political

and institutional analysis of the role of different actors in development and governance;

• the (dialogue) processes followed to set the governance agenda, agree on priorities, design and implement governance programmes;

• the overall intervention strategy, with clear indications on how the EC will promote mainstreaming across sectors, programmes and projects and ensure respect for the legitimate role division between state and civil society in development and governance processes;

• the ‘right mix’ of actors and levels of governance to be supported in order to achieve the different governance objectives;

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• a clear justification for the selection of support instruments and their possible evolution over time);

• the institutional development strategy for the different set of actors; • the analysis of pre-conditions, assumptions and risk specific to governance and their

specific follow-up-monitoring; • a realistic set of governance indicators and that can be monitored through joint

dialogue processes. 10. Mainstream the use of long-term multi-donor, sector wide approaches to support

sustainable governance reforms. Whenever possible, the EC should generalise sector support to governance with a view to facilitate country ownership; ensure a broad-based coverage of the many parts of the sector; mobilise sufficient levels of funding for the reform and embed the programme in a long-term perspective. This holds particularly true for governance reforms in the public sector (e.g. justice, decentralisation). The use of programme and project approaches can be valid for other parts of the governance agenda, for instance to support civil society (see chapter 4, EQ 2) or justified in the framework of an overall governance strategy (e.g. governance projects to prepare the ground for sector approaches).

11. Intensify the use budget support as a tool to promote good governance practices

and approaches. Positive experiences with improving public financial management have been achieved through budget support (see EQ 3).The challenge for the EC now is to also fully tap the other potentials of budget support as a tool for promoting governance, i.e. in terms of improving political dialogue; strengthening domestic accountability; promoting Parliamentary scrutiny; ensuring a proper monitoring of public action by NSAs, etc. In this context, the EC should: • carry out a systematic survey of how EC budget support impacts on good

governance practices; • ensure an ongoing flow of public information on budget support, its objectives and

achievements; • promote the active involvement of key local stakeholders in the process (particularly

the Parliament, oversight bodies, NSAs); • ensure coherence between the provision of budget support and the process of

decentralisation and related roles of local governments; • complement budget aid with support to targeted civil society actors (particularly

watchdog agencies involved in monitoring government performance and public accountability);

• support other flanking measures (e.g. observatories on public finances); • stimulate a public debate and action on the revenue side of public finances (so as to

promote stronger linkages between budget support, taxation and governance). 12. Further refine support strategies towards non-state actors and local governments.

The EC has made promising steps (see EQ 8) at policy and operational level to promote civil society as ‘governance agents’ in a wide range of third countries (across regions). It is catching up with the mainstreaming of local governments as another key actor to be included in an overall governance strategy (i.e. to help achieving the MDGs; to promote local democracy; to strengthen a governance culture at local level, etc.). Future operational challenges include::

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• to further elaborate the strategic framework for EC support to civil society and local governments;

• to improve civil society and local government participation in political/policy dialogue processes as well as in all relevant sectors;

• to consistently apply this ‘mutli-actor partnership’ approach by engaging in dialogue with the various families of ‘governance actors’ at different levels (local, national, regional and global);

• to ensure a systematic stocktaking of good practices and lessons learnt so as to fuel institutional learning;

• to monitor and evaluate the qualitative governance outcomes of supporting civil society and local governments for better governance.

13. Further develop knowledge on how best to deliver governance support. Building

on a stock-taking of lessons learnt at field level and in close collaboration with staff, the EC should further invest in the development of (practical) knowledge that helps to translate and customize governance interventions in different situations. In this context, it would be particularly helpful to provide over time more specific operational guidance on implementation challenges such as: • how to conduct a constructive, effective and efficient political and policy dialogue

with the different local actors; • how to analyse the comparative added-value of existing instruments and arrive a the

‘right mix’ to be used (e.g. budget, sector, programme or project approaches) in different country contexts (i.e. situations of emergency, rehabilitation or development);

• how to identify the most effective and efficient ways and means to pursue region-specific governance objectives;

• how to ensure links between the various clusters of governance in the framework of an overall strategy.

14. Invest in more sophisticated approaches to institutional development. This

recommendation is closely linked to the above mentioned list of areas where further knowledge development is needed. It is singled out as a specific recommendation considering its crucial importance in governance-related processes. The EC is recommended to pursue and deepen ongoing efforts to enhance both its knowledge base and implementation capacity on how best to provide sustainable institutional/organisational support to different actors (central and local governments, civil society) in the context of governance processes. This is a perceived priority at the level of EC practitioners (see chapter 4, EQ 2). One concrete way of addressing this is to launch regular impact assessments on how capacity building activities have contributed to trigger broader organisational or institutional change processes (e.g. new mechanisms for public-private dialogue; enhanced inter-organisational collaboration; a reduction of patrimonial behaviour; a stronger culture of accountability towards citizens, etc.).

15. Define a realistic set of governance indicators through a multi-actor dialogue

process and ensure a country-led monitoring process. The EC has made efforts to address the thorny issue of governance indicators (see desk study). Yet in practice, major challenges remain in terms of defining and agreeing upon a realistic and manageable set

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of governance indicators and ensuring their a application (e.g. in mid-term review processes). In operational terms, it is therefore recommended that the EC should: • refine its overall approach to using governance indicators, giving a priority to

assessing progress through a limited set of governance indicators, agreed upon with partner countries;

• attach primary importance to ‘process indicators’ as the preferred way to assess governance progress;

• support, preferably in the framework of a multi-donor approach, the establishment of domestic systems for monitoring and evaluating progress achieved;

• associate the different key domestic players in the assessment of governance progress (e.g. in the framework of MTR processes);

• support regional mechanisms for monitoring governance (such as the African Peer Review Mechanism).

16. Invest in evaluations on governance processes, approaches and tools. This would

help in better assessing governance outcomes (in different clusters) as well as main problems encountered; to promote institutional learning; and to feed the ongoing consolidation process of EC governance approaches. It is strongly recommended that these evaluations should be conceived and implemented in a participatory manner, ideally as a joint exercise (with other donors or with partner countries).

Strategic and operational recommendations with regard to the EC’s institutional response capacity 17. Create a corporate understanding and culture of learning on governance. This is

key to ensuring that the political priority given to supporting governance is effectively internalised by staff at all levels (not only those directly involved with particular governance clusters). Priority actions include: • communicating consistently on the primary importance of governance in EC

cooperation with third countries; • translating this political commitment into clear instructions and guidelines for

programming process and review processes; • getting the EC Draft Handbook approved as an official document and promote the

use of it as a reference document; • putting in place a users-friendly knowledge management system on governance that

would make it possible for staff (across countries and regions) to access relevant information; learn from good practices elsewhere; link up with other sources of knowledge, etc.

• developing a strategy to ‘feed’ Delegation staff with concise and practical information on key governance challenges and ways to address them so as to promote a permanent and dynamic process of learning at all levels.

• targeting in particular sector specialists in EC Delegations so to build a more explicit understanding of the governance dimension of their work as this entails all aspects of improving the management of public affairs;

• providing institutional incentives to staff to deal properly with governance (e.g. sufficient time to get involve in content matters; to engage with domestic governance players).

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18. Ensure the effective functioning of the newly created Unit dealing with

Governance, Human Rights, Democracy and Gender. This unit has been created to improve the overall quality of governance strategies and programmes. It is expected to provide services to Delegations and centralised units through a variety of means (e.g. production of manuals and concept papers; acting as a ‘help-desk’; facilitating thematic networks, etc.). Considering the political priority given to governance, this strategic unit should be enabled to function effectively, both in terms of human and financial capacities. It should be in a position to attract relevant expertise from the outside in a smooth and efficient manner, through appropriate facilities and procedures. This is a pre-requisite for it to be able to respond in a flexible and targeted way to pressing demands from the field or to deliver on its other services.

19. Provide training and enhance professionalism. Another short-term priority is to

provide training opportunities on governance to different categories of staff (including from sector or finance and administrative departments). In addition to this, there is a need to train selected staff to become specialists in governance, including context analysis/monitoring; mainstreaming of governance concepts/principles in the programming process; and formulation of specific governance programmes. It is also recommended to open-up the training opportunities on governance to local stakeholders (e.g. government officials).

20. Promote the mobilisation of local capacity. Developing stronger in-house capacity is

a necessary but not sufficient condition to deliver better governance support. It is equally crucial to invest more in an adequate mobilisation of existing capacities at the country/regional level so as to allow local actors to participate in the delivery of governance outputs and outcomes. This can be done, amongst others, by integrating a detailed institutional analysis in the launching phase of programmes (i.e. with a view to assess the actors capacity; agree on a division of roles according to capacity and set up complementary capacity building programmes, including training of local actors).

21. Empower the EC Delegations. Five operational measures could be considered in

order to ‘empower’ EC Delegations as ‘frontline actors’ in delivering better governance support : • make an overall assessment of the impact of the deconcentration process -as applied

at this stage- with a view to understand its impact on the capacity of EC Delegations to deliver effective governance support and take the remedial measures that may be required;

• promote effective ‘team-work’ on governance so as to ensure that all staff is positively ‘contaminated’ by the cross-cutting importance of governance. Avoid the tendency to confine ‘governance’ to a specialised section or advisor, disconnected from the rest of the staff;

• allocate more staff time to working directly with local stakeholders and other donors to help in the elaboration of ‘home-grown’ governance agendas, strategies, programmes and projects (with a view to enhance internal capacity building/learning and reduce the excessive ‘externalisation’ of design processes).

• provide EC Delegations with a flexible financial instrument that allows them to quickly and efficiently call upon a core team of experts for regular support in developing the future generation of governance programmes

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• organise well-prepared and properly facilitated regional exchange seminars between EC Delegation staff and HQ on how best to support governance processes.

22. Streamline effective collaboration between DG-DEV, AIDCO and Relex, as well

as with EU Member States. This recommendation seeks to overcome the distance or lack of effective collaboration that often can be noticed at the level of the EC and between the EC and EU Member States. It is clearly a politically sensitive topic, as it is linked to both the ‘fragmentation’ of the EC (as perceived by many interviewees) and the often difficult relations between the EC and EU Member States in dealing with political issues such as governance. In this context, optimal use should be made of the new opportunities for improved coordination, complementarity and coherence, resulting from the Paris declaration on harmonisation and from recent EC Communications aimed at delivering better and faster EU aid106

23. Improve the overall institutional environment for delivering effective, efficient

and sustainable governance support. This final strategic/operational recommendation seeks to address some of the key ‘disincentives’ that hamper the effective delivery of governance support, as they were identified during the evaluation process (see chapter 4, EQ 10), particularly by EC Delegation staff.

Three main actions are proposed: • Make a detailed analysis on the compatibility of procedures and the objectives

of governance, i.e. the extent to which the procedures under which the Commission has to operate allow for (i) a strategic, pro-active and flexible approach to promoting governance in different partnership contexts; (ii) rapid responses to windows of opportunities; (iii) a long-term process support to governance; or (iv) the identification and selection of adequate strategic partners and/or implementing agencies. This assessment should also look at the institutional incentives (e.g. space for risk-taking) or disincentives to effective and efficient action in the field of governance (e.g. the possible negative effect of disbursement pressures).

• Reinforce practical modalities of coordination at country level by setting-up or promoting the effective functioning of specific coordination groups in country (e.g. at thematic level or in relation to governance conditions for budget support; harmonization of procedures and approaches,…).

• Invest in becoming a learning organization on governance, amongst others through the establishment of/support to thematic networks at country level, between EC Delegations; with other donors, and above all, with other actors through regular reviews of experiences, drafting of tools and guidelines or best practices, develop joint learning systems (across sectors, themes, countries and regions) on governance and build an institutional memory (e.g. exchange of information, working groups, issues papers,…).

106 Beginning of March, three new Coomunications were approved. They follow from the “European Consensus” adopted last year and deal respectively with “Delivering more faster and better”; “Joint Multi-Annual Programming” and “Financing for Development and EU Aid Effectiiveness”

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6.3 Process recommendations It is recognised that the proposed consolidation process opens a huge agenda for the EC, embracing complex reforms at different levels. Clearly, this agenda cannot be realised overnight. Some proposals can be addressed in the short-term, others will need more time. The degree of (political) feasibility of the desirable changes will vary. For some proposals, effective implementation may largely depend on the goodwill of other actors (e.g. EU Member States). Furthermore, the relevance of particular recommendations may differ from region to region. It again confirms that governance is ‘a moving target’. There are no magic recipes. The way forward is to combine an integrated strategic approach with dynamic, flexible implementation approaches. In order to gradually make this consolidation a reality, the EC should fully mobilise and engage the staff in the change process. After all, the EC has already been embracing parts of this change agenda over the last few years. The findings of the evaluation clearly suggest that the EC has been experiencing a learning curve (see chapter 5, conclusion 2). In several areas, it has introduced promising innovations and expanded its response capacity (e.g. in political dialogue, in budget support modalities, in supporting civil society as governance actors, in working with local governments, etc.) .Hence, there is no need to start from scratch. The way forward does not seem to lie with handing down more (centrally produced) policy but to make the change process a ‘living thing’, a networking experience at different levels that mobilises and harnesses existing knowledge, experiences, good practices and capacities across the institution. It means bringing the three above mentioned identities together to talk to each other, learn from current practices and jointly explore ways to better reconcile the political, developmental and administrative roles in delivering effective governance support. The table below presents an overview of the linkages between findings, conclusions and recommendations.107 .

107 For more information on how findings are linked to conclusions and conclusions to recommendations, see annex 20

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Strengths and weaknesses – General conclusions - general recommendations

Strengths General conclusions General recommendations

Governance has been put at the top of EC political agenda

→

The EC has made substantial progress in dealing with governance - Six major ‘positive developments’

→

• A strong policy framework is gradually constructed

→

• Governance is increasingly prioritised and mainstreamed

→ High or increasing →

• Improving the political response capacity

• Strategic approaches to promoting governance are emerging

→ potential of EC aid

• Political and policy dialogue are used as tools to promote governance

→

• Experimentation with new tools and working practices, particularly budget and sector support

→

Limited impact of governance interventions

• Capacity development takes place →

→ and strategies → • improving the development response capacity

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Weaknesses Lack of clarity of EC role as “change agent” → Major gaps still exist between centrally defined policy frameworks and actual implementation practices in the field (Limited knowledge and use of existing policy frameworks, guidelines, lessons learnt and experiences; Ownership deficit; Lack of integrated approaches to promoting governance; Limited progress with the effective application of the 3 Cs; Lack of clarity on the institutional development strategy underpinning governance programmes; The knowledge base and in-house capacity is not adapted to the scope and complexity of the governance agenda; Good governance on the donor (EC) side)

→

Limited effectiveness and efficiency

→

• improving the institutional response capacity

Systemic (institutional) constraints hamper effective and efficient EC action in governance – including disbursement pressure, long procedures,...

→

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