2009 Fall Report of the Auditor General of Canada Chapter 8—Strengthening Aid Effectiveness—Canadian International Development Agency

2009 Fall Report of the Auditor General of Canada

Chapter 8—Strengthening Aid Effectiveness—Canadian International Development Agency

Main Points

Introduction

Canada’s aid agency
The Agency and aid effectiveness
Focus of the audit

Observations and Recommendations

Planning and support of country programs

Geographic aid is aligning with recipient country needs
Efforts are being made to harmonize with other donors
Targets to guide the Agency’s use of program-based approaches have not been set
A rigourous country planning process is missing
Shifting and broad priorities have prevented a meaningful sector focus
Lack of focus is impeding the identification and growth of the Agency’s relative strengths

Project selection and monitoring

Projects fit country needs
Risks are assessed but the Agency needs to standardize its approach
Project risks are monitored
Burdensome administrative processes hamper effective decision making

Corporate management processes and oversight

A comprehensive strategy for the Agency to achieve aid effectiveness is needed

Conclusion

About the Audit

Appendix—List of recommendations

Exhibits:

8.1—The Canadian International Development Agency’s organizational chart and 2008–09 fiscal year spending ($ millions) (unaudited)

8.2—The Canadian International Development Agency’s (CIDA’s) involvement in five countries selected for review

8.3—The Canadian International Development Agency uses traditional and program-based approaches to aid in selected countries

8.4—The Canadian International Development Agency’s (CIDA’s) priority sectors have shifted over time

Main Points

What we examined

The Canadian International Development Agency (CIDA) administers the bulk of Canada’s official development assistance program. Its mission is to lead Canada’s international effort to help people living in poverty. It does not have governing legislation that defines its mandate and role.

In its 2002 Policy Statement on Strengthening Aid Effectiveness, CIDA committed to align its efforts with recipient countries’ needs and priorities; harmonize its activities with those of other donors; and use new forms of aid known as program-based approaches, in which donors coordinate support to the budgets of recipient governments or local organizations for a development program delivered using local systems and procedures. Recognizing that its programming is widely dispersed, CIDA has also committed to focus its aid in fewer sectors in order to make a more meaningful contribution.

We examined how the Agency is implementing these commitments. We looked at management processes in place at its head office to guide and sustain the implementation of the commitments. In addition, we selected five countries and looked at how CIDA plans its activities there, selects projects for funding, and monitors project risks.

Audit work for this chapter was substantially completed 15 May 2009.

Why it’s important

Development assistance is a key means to help developing countries reduce poverty. It is estimated that over 1.4 billion people are living on less than US$1.25 a day—the latest international poverty line set by the World Bank. CIDA’s commitments reflect principles of aid effectiveness that international donor countries have recognized will lead to more sustainable and self-reliant development.

By its nature, international development requires a long-term effort and stable, predictable programming. CIDA has declared aid effectiveness to be its overarching priority, recognizing that this involves risks of a different nature and level and significantly changes the way it needs to work with other donors and recipient governments. Robust management processes—which include specific action plans, performance targets, assigned accountabilities, and management review—are crucial to sustain implementation of its commitments and directions over time.

What we found

The Agency has responded. The Agency agrees with all of our recommendations. Its detailed responses follow the recommendations throughout the chapter.

Introduction

Canada’s aid agency

8.1 The Canadian International Development Agency (CIDA) is Canada’s aid agency. Its mission is to lead Canada’s international efforts to help people living in poverty. Poverty remains a rampant problem throughout the world. An estimated 1.4 billion people are surviving on less than US$1.25 a day—the latest international poverty line set by the World Bank.

8.2 Recognition of such poverty provided the backdrop to one of the largest gathering of world leaders in human history—in September 2000, the Millennium Summit of the United Nations in New York. At this summit, Canada and 188 other nations adopted the United Nations Millennium Declaration and the Millennium Development Goals—eight goals that serve as the yardstick for measuring improvements in the most critical areas of human development by 2015.

8.3 Development assistance, in its many forms, is one of the means that aid donors use to help developing countries achieve the Millennium Development Goals. The Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development (OECD) reports that official development assistance disbursements by member countries (which includes Canada) rose to over US$120 billion in 2008, from around US$58 billion in 2002. Canada ranks 9th in terms of total disbursements and 16th in terms of percentage of the gross national income among the 22 member countries. In 2008, Canada disbursed a total of US$4.7 billion in official development assistance.

8.4 Although several federal departments (such as the Department of Finance Canada and Foreign Affairs and International Trade Canada) provide official development assistance, CIDA administers the bulk of Canada’s contributions. The Agency’s budget had grown to about CDN$3 billion in the 2007–08 fiscal year, from about CDN$2 billion in the 2002–03 fiscal year.

8.5 CIDA reports to Parliament through the Minister of International Cooperation. Its staff of approximately 1,800 (full-time equivalents) includes Canadians who work both at headquarters (the vast majority) or in Canadian missions abroad. Country desks within CIDA are responsible for specific country-to-country programming. They are headed by a country director and typically consist of staff located at headquarters and at missions abroad. Field staff are led by a head of aid. Country desks are supported by locally engaged personnel and technical experts on contract, including technical advisers operating within support units in the field. These contractors number in the thousands.

8.6 Three main branches in CIDA provide development assistance. Each branch has a separate internal mandate:

8.7 Currently, CIDA’s geographic (country-to-country) programming takes place in more than 60 countries. The Agency has recognized that it disperses its aid more widely than most other aid agencies, and, at the turn of the millennium, it committed to focusing its efforts on a limited number of the world’s developing countries. On 23 February 2009, the Agency formally announced—with Cabinet approval—its intention to focus its aid on 20 countries. Exhibit 8.1 illustrates CIDA’s current organizational structure, lists the 20 countries of focus, and outlines spending for the 2008–09 fiscal year.

Exhibit 8.1—The Canadian International Development Agency’s organizational chart and 2008–09 fiscal year spending ($ millions) (unaudited)

Flow chart

[text version]

Note *: Includes Human Resources, Chief Financial Officer, Chief Information Officer, Communications and Strategic Policy & Performance

Note **: Other expenditures include operating expenditures and Canada Funds for Local Initiatives

Source: The Canadian International Development Agency (CIDA)

8.8 The Agency does not usually deliver aid itself. Instead, it funds other organizations, such as Canadian “executing agencies” (volunteer and non-government aid organizations, consulting companies, and universities), and various international and United Nations’ organizations; in some cases, it funds the governments of recipient countries directly.

8.9 The Agency is considered to be a federal government department under the Financial Administration Act. The financial delegation of authorities governs project approvals. The Minister of International Cooperation has the authority to approve projects of up to $20 million, while the Treasury Board must approve projects of more than $20 million. CIDA’s president and vice-presidents have the authority to approve projects of up to $5 million. Country directors can approve projects of up to $500,000.

8.10 CIDA does not have comprehensive governing legislation that defines its mandate and role. A combination of influences affects the Agency’s programming, including how and how much to spend on development assistance, where to concentrate its efforts, what the goal of those efforts is, and what means it uses to achieve its goals. These influences include Government of Canada policy objectives, the priorities of the Minister of International Cooperation, and CIDA’s own operational policies and strategies.

8.11 Since 2000, five different ministers of International Cooperation and four different Agency presidents have led CIDA. The Agency has had to adjust its programming in response to frequent and significant changes in government and ministerial policy and direction. These changes have included Canada’s overall development objectives, the countries and regions CIDA focuses on, and the sectors and global issues Canada and CIDA have considered priorities. Funding allocations have also changed to reflect these shifts. The significant turnover of the Agency’s senior management has posed an ongoing additional challenge to providing a stable operating environment.

8.12 CIDA does not act alone. It is part of a larger development community, globally and at a country-specific level—a community that also influences CIDA’s programming. This community includes aid agencies from other donor countries, development banks, United Nations and other multilateral institutions, civil society and non-government organizations, and the governments of recipient countries.

The Agency and aid effectiveness

8.13 Theories about what makes aid effective have evolved over time. A turning point was the 1996 publication by the OECD Development Assistance Committee, Shaping the 21st Century: The Contribution of Development Cooperation, which outlined a series of key principles for effective development, such as basing aid on the recipient country’s priorities and improving coordination among individual donors. International experience has also given rise to new ways of designing and funding aid, now commonly referred to as program-based approaches.

8.14 Against this backdrop, CIDA released its 2002 Policy Statement on Strengthening Aid Effectiveness, which identified a broad framework for geographic and sectoral allocation of the Agency’s resources, changes in the use of tied aid, and steps to be taken to strengthen CIDA as an institution. Of particular importance for this audit, the policy commits the Agency to harmonize its aid with other donors, to align its efforts with recipient countries’ development strategies, and to use program-based approaches. Elsewhere, in addition to these internationally recognized principles of aid effectiveness, CIDA has committed to focus its aid on particular sectors, recognizing that while the needs of developing countries are unlimited, its resources are not. Examples of sectors include education, health, agriculture and democratic governance. CIDA has stated and re-stated its commitments and other aspects of its aid effectiveness agenda in the successive reports on plans and priorities it has submitted to Parliament since 2001.

8.15 CIDA continues to be influenced by international developments. Through a series of international high-level meetings held in Rome, Italy (2003), Marrakech, Morocco (2004), and Paris, France (2005); Canada, recipient and donor countries, and international institutions have further elaborated and agreed on a set of principles, specific actions, and targets to guide the management of aid, articulated in the 2005 Paris Declaration on Aid Effectiveness.

8.16 While it is commonly acknowledged that the Paris Declaration is gradually taking hold in recipient countries; most recently, at a high-level meeting in Accra, Ghana (2008), Canada and other donors committed to a number of concrete steps to accelerate progress with respect to aid effectiveness. In recognition of the long-term nature of development assistance, they also committed to providing more predictable and transparent aid that would flow over multiple years.

Focus of the audit

8.17 This audit examined how CIDA has put into practice its aid effectiveness commitments concerning alignment, harmonization, program-based approaches, and focusing of its resources. We looked at three separate but related functions in the organization: planning and support of country programs, project selection and monitoring, and corporate management processes and oversight.

8.18 At the country level, we examined how CIDA develops its long-range country plans, including whether they reflect its aid effectiveness commitments. We concentrated on the Agency’s Geographic Programs Branch and chose for detailed examination five countries on its list of countries of concentration: Bangladesh, Ethiopia, Ghana, Honduras, and Vietnam. We examined five projects from each country to determine whether the selection of projects was based on a sound rationale and whether CIDA was assessing and monitoring risks as it implemented them. At the corporate level, we examined whether the Agency has put in place management processes to direct and sustain implementation of its commitments over time.

8.19 More details on the audit objectives, scope, approach, and criteria are in About the Audit at the end of this chapter.

Observations and Recommendations

Planning and support of country programs

8.20 Conditions in recipient countries have a significant impact on the Canadian International Development Agency’s (CIDA’s) programming. The Agency must take into account the unique social conditions of the people; the economic, legal, and political systems of each government; and the presence and activity of other donors and institutions when planning its work. Careful planning that reflects such conditions increases the likelihood that aid will be successful and its benefits long-lasting. Exhibit 8.2 includes selected statistics on each of the countries we selected for review as well as some indicators of CIDA’s and Canada’s development aid involvement there.

Exhibit 8.2—The Canadian International Development Agency’s (CIDA’s) involvement in five countries selected for review

Selected statistics on each of the countries selected for review as well as indicators of CIDA’s and Canada’s development aid involvement there

[text version]

Sources:

  1. World Bank
  2. United Nations Development Programme
  3. United Nations
  4. Organisation for Economic Co-operation and Development
  5. Canadian International Development Agency

8.21 Until recently, the Agency used country development programming frameworks to guide the selection of individual projects (which, when combined, make up the country program) and the spending of millions of dollars of aid over a five-year time frame. In December 2003, CIDA updated its guide for these frameworks, requiring them to reflect the major elements of its 2002 Policy Statement on Strengthening Aid Effectiveness and to be based on an analysis of the plans and priorities of recipient governments, the activities of other donors, and on the Agency’s strengths relative to other donors. The frameworks were meant to be updated if, among other things, there were significant political or economic changes in a recipient country.

8.22 We examined the way CIDA plans and supports its work (including the use of formal frameworks), specifically how it aligns its aid with the needs of recipient countries, how it coordinates and harmonizes its work with other donors, how it directs the use of program-based approaches, and how it pursues greater focus of its efforts. We examined the frameworks for Bangladesh, Ethiopia, and Vietnam (which covered programming years subsequent to the release of the 2002 Policy Statement and were prepared according to the 2003 updated guide) as well as for Ghana and Honduras (which were already in effect at the time the 2002 Policy Statement was released).

Geographic aid is aligning with recipient country needs

8.23 The principle of alignment is largely based on the premise that aid works better and its benefits last longer if donors provide it where developing countries need and want it. Alignment means that donors should be responsive, not prescriptive, in meeting a country’s needs.

8.24 Developing countries usually express their needs in a poverty reduction strategy paper. These strategy papers typically

We assessed how CIDA’s country development programming frameworks incorporated the recipient countries’ needs and priorities as expressed in their strategy papers.

8.25 We found that CIDA’s programming frameworks considered and reflected recipient countries’ needs at the time they were written; and they demonstrated high-level alignment, bearing in mind that the strategy papers tend to identify a vast range of needs. That said, conditions and priorities in recipient countries change over time, posing challenges for CIDA in its attempt to align with a country’s priorities. While Bangladesh, Ethiopia, Ghana, and Vietnam have poverty strategy papers in effect, Honduras’ paper effectively expired in 2007 and the government has not yet replaced it.

8.26 Therefore, pursuing alignment on an ongoing basis is important, and maintaining current and detailed knowledge of the country context is critical. CIDA personnel and locally engaged experts we interviewed had knowledge of each country’s context and priorities. They had established formal ways of exchanging information with recipient governments (often through joint government-donor committees), as well as informal networks to keep their knowledge current.

Efforts are being made to harmonize with other donors

8.27 Many donors are present in developing countries, leading to potential fragmentation of their efforts and placing a heavy administrative burden on the government, which must cope with the rules and expectations of multiple agencies. By sharing information and working together, harmonization can lead to simplified procedures and joint arrangements for designing, managing, and delivering aid, including the use of program-based approaches. Not only can this reduce the administrative burden for recipient countries, it can also increase the benefits to those countries, through donors’ combined and complementary efforts.

8.28 In order to intensify its efforts toward donor coordination, CIDA released an action plan to promote harmonization in 2004. The document established a range of initiatives designed to respond to challenges and needs that existed at the time. It also included a number of indicators for measuring its performance and assigned responsibility to several of its branches for taking action. However, over time, the Agency faltered in implementing the plan. We could not locate the monitoring and progress reports that it called for, so the Agency could not show its performance against planned targets and indicators. The executive committee has not followed through on an internal proposal to renew the action plan.

8.29 The country development programming frameworks for the countries we examined mentioned the goal of improved harmonization. They included brief descriptions of other donors’ activities (such as levels of funding and sectors of programming) but lacked in-depth analysis of individual donors’ strengths. Without that analysis, it is difficult for CIDA to identify how it could make the best contribution.

8.30 The means through which CIDA achieves harmonization in the field are important. Increasingly, donors are using coordination groups as a way to harmonize their efforts, providing fora to discuss the ways each can contribute to a country’s development. These groups also allow donors to engage governments with a collective voice to discuss programming. The structure, complexity, and membership of these groups vary from country to country. Typically, a number of sector-specific or technical sub-committees support an overall coordinating committee.

8.31 These coordination groups are at different stages of development. For example, the coordination group in Honduras is struggling to maintain its effectiveness after major donors have withdrawn. In Vietnam, relationships have evolved to the point where some joint programs have been set up. In Ghana, donors, governments, and other stakeholders have signed a comprehensive formal joint cooperation strategy; whereas, in Bangladesh, they have committed to develop one. In Ethiopia, donors have started to map their respective projects and programs, working toward a goal of division of labour. A division of labour, whereby donors divide projects and responsibilities based on their areas of interest and relative strengths, is considered a long-term goal of harmonization and is increasingly being discussed in the donor coordination groups.

8.32 Ultimately, the nature and effectiveness of such groups depends on the collective will and effort of all the donors. CIDA field staff put considerable effort into supporting these groups. Canadian-based staff and locally retained experts represent the Agency on a number of committees and working groups and, at times, take a leadership role. People we met with in development communities in the countries we visited described CIDA as a valued partner and active participant.

Targets to guide the Agency’s use of program-based approaches have not been set

8.33 The introduction of program-based approaches represented a significant departure from traditional ways of doing business. In the past, traditional aid projects were often carried out in isolation rather than designed to be part of a bigger picture. For example, building a school was the end product rather than part of a comprehensive education system. Moreover, traditional projects tend to rely on the donor’s systems and procedures for delivery—rather than those of the recipient country—effectively impeding the development of national capacity. Finally, the cumulative effect of many donors implementing separate projects places a large administrative burden on recipient countries, who must cope with a myriad of rules and procedures imposed by the donors.

8.34 Program-based approaches entail new forms of funding and can involve general budget support (donors transfer money to a government treasury for it to use according to its development and poverty reduction objectives) and sector budget support (money is transferred but is targeted to selected ministries for specific programs). In some cases, donors first contribute funds into a pool or trust that is managed by an organization, such as a development bank, which subsequently transfers the money to a government or organization. We examined the extent to which CIDA supported the use of program-based approaches and the extent to which this was reflected in the Agency’s planning processes and documents.

8.35 The country development programming frameworks for Bangladesh, Ethiopia, and Vietnam include general discussions about program-based approaches, highlighting how their use may address or be affected by certain risks in the country and indicating that the Agency will seek opportunities to use them. None of the frameworks contains specific targets concerning the desired level of use or mix of traditional and program-based approaches. In fact, in the early years after the release of its 2002 Policy Statement on Strengthening Aid Effectiveness, CIDA management provided little specific direction and no quantitative targets to country desks on how and when to use program-based approaches. Without these targets, the Agency cannot assess the extent to which it is meeting its own commitment and expectations.

8.36 Nevertheless, program-based approaches are currently being used in each of the countries we examined, though the level of use varies significantly from country to country. In Ethiopia and Ghana, for example, multi-donor program-based approaches account for the large majority of CIDA’s funding; while in Honduras, CIDA funded only one such project. The extent of use of such approaches in Bangladesh and Vietnam was in between these two extremes. In part this is because of differences in the nature and capacity of recipient governments, the role other donors play, and the extent of support for their use within CIDA. Exhibit 8.3 provides an overview of the mix between traditional and program-based projects in each of the five countries we selected, as well as an example of a project from each country.

Exhibit 8.3—The Canadian International Development Agency uses traditional and program-based approaches to aid in selected countries

Bangladesh

The majority of CIDA’s spending is through program-based approaches.

Project Profile

CIDA’s “BRAC Education Program” project provides CDN$24.8 million (over four years beginning in 2005) to a phase of BRAC’s (Building Resources Across Communities)—a large non-government organization—education program valued in excess of CDN$200 million. This project represents CIDA’s participation in a multi-donor program-based approach involving joint management, monitoring, and reporting. The BRAC education program helps to provide non-formal education for 1.3 million poor and disadvantaged children in remote areas whom the government system is not currently in a position to serve.

Ethiopia

The majority of CIDA’s spending is through program-based approaches.

Project Profile

CIDA’s “Asset Protection for Food Security” project provided CDN$20 million in 2007 to the Government of Ethiopia’s Productive Safety Net Program (PSNP), to which CIDA has contributed a total of CDN$133 million since 2005. This project represents CIDA’s participation in a US$1-billion multi-donor program-based approach. CIDA’s contribution is first made to a trust fund and is subsequently disbursed to the government program. The PSNP gives food or cash to Ethiopians in return for labour building and developing community infrastructure projects, such as feeder roads and water conservation and soil preservation structures, and is expected to improve the food security of five million people per year.

Ghana

The majority of CIDA’s spending is through program-based approaches.

Project Profile

CIDA’s “Ghana Environment Management” project provides CDN$7.25 million to the selected ministries in the Government of Ghana (over five years beginning in 2007) and is characterised as a program-based approach. The goal of this project is to strengthen Ghanaian institutions and rural communities in three regions of northern Ghana to enable them to reverse land degradation and desertification trends and to adopt sustainable water and land management systems that improve food security and reduce poverty. CIDA has been supporting water projects in northern Ghana for many years.

Honduras

The majority of CIDA’s spending is through traditional projects.

Project Profile

CIDA’s “PASOS III” project is a traditional project run by a Canadian executing agency, CARE Canada. This CDN$5-million project (over five years beginning in 2006) is the third phase of a project that started in 1996. It is intended to provide safe water and sanitation services and to improve what are known as micro-watersheds in Northern Honduras. The project also includes strengthening the capacity of local communities to manage their water. By the end of the current phase in 2011, CIDA expects that up to 20,000 people will benefit from improved access to water supply and sanitation services.

Vietnam

The majority of CIDA’s spending is through traditional projects.

Project Profile

CIDA’s “Food and Agriculture Products Quality Development and Control” project is a traditional project with the University of Montreal as the key executing agency. This CDN$18-million project (over five years beginning in 2007) is intended to improve the quality and safety of food and agricultural products. Specific activities are aimed at improving food production and processing, quality control, and certification practices. These improvements would make the agricultural and food sector of the economy stronger and thus reduce poverty through increased incomes.

Source: The Canadian International Development Agency (CIDA)

8.37 The program-based approaches CIDA is using vary significantly in design and funding arrangements. The Agency is using various forms of sector budget support in all of the countries we examined; it is providing general budget support only in Ghana and Vietnam. CIDA staff in the countries we examined are looking for opportunities to maintain or increase their use of the program-based approaches, largely through the donor coordination mechanisms that exist in each country.

8.38 CIDA has now been using program-based approaches for almost a decade, and has gained considerable experience in designing and using them. We believe it is timely for the Agency to evaluate this experience to determine whether, in reality, such approaches are achieving their intended benefits and results and whether such approaches are right for CIDA.

8.39 Recommendation. To support the use of program-based approaches, the Canadian International Development Agency should set clear performance targets regarding how much of its aid should be delivered through these approaches.

The Agency’s response. Agreed. The Agency finalized an Aid Effectiveness Action Plan in July 2009, which identifies measurable actions with accompanying targets for aid effectiveness commitments, including program-based approaches. As committed in the Action Plan, the Agency will strive to meet its program-based approach target of 50 percent when appropriate conditions are met, as defined in the policy on program-based approaches.

8.40 Recommendation. The Canadian International Development Agency should undertake a comprehensive evaluation of its use of program-based approaches with a view to determining whether they are achieving the Agency’s goals.

The Agency’s response. Agreed. As mandated by the Treasury Board, the Agency will provide a review of program-based approaches by 31 March 2010 that assesses the effectiveness of these approaches. In preparation for this review, it is completing evaluations of country programs with a significant program-based approach component.

A rigourous country planning process is missing

8.41 In our view, the country development programming frameworks we examined served as useful planning documents at the time they were written. Analyses of recipient countries’ needs and extensive consultation with external stakeholders and within CIDA underpinned programming direction. The frameworks influenced the selection of Agency-funded projects, including the use of program-based approaches. These public documents communicated CIDA’s plans and were the basis of alignment and harmonization discussions with governments and other donors.

8.42 However, the framework process was never sustained as envisioned. For example, the frameworks for Ghana and Honduras (which were developed before the 2002 Policy Statement on Strengthening Aid Effectiveness) expired in 2004 and 2007, respectively. In both cases, CIDA staff assigned to these countries undertook renewed analyses and consultation, wrote new draft plans, and presented those plans internally for approval. They were never approved. Ethiopia’s framework was not updated to take into account significant changes that occurred in that country in 2005, changes that substantially altered CIDA’s programming there. The result was that stakeholders in Ghana, Honduras, and Ethiopia lacked formal plans that officially communicated the Agency’s direction.

8.43 By the end of our audit, all of the frameworks for the five countries we examined had expired and none had been replaced with a comparable document. Some senior government officials and donor representatives that we met in the countries we visited remarked on the absence of a long-term CIDA plan for those countries. In effect, use of the country development programming frameworks was discontinued only a few years after they were put in place.

8.44 In addition, although prepared by the Geographic Programs Branch, country development programming frameworks were intended to be corporate documents, reflecting the combined programming of CIDA’s Geographic Programs, Multilateral and Global Programs, and Canadian Partnership branches. In the countries we examined, CIDA is providing support through all three branches. In our view, harmonization with external parties demands internal coordination and cohesion. The frameworks we examined include a summary description of the activities of these other branches, but do not demonstrate a cohesive and coordinated approach to respective branch programming. Furthermore, the Agency has not developed the tools that could provide its managers—or its stakeholders—with an overview of all the Agency-funded projects and programs under way in any given country at any given time. Instead, CIDA country desks are left to piece together an integrated view of the Agency’s overall aid from various internal sources.

8.45 Mid-2008 saw the emergence of a new planning process and a new type of country planning document, now referred to as Country Strategies. During our audit, the Agency was still developing this new process and we observed confusion and frustration about it among staff. The purpose, format, required content, and even the title of these planning documents have been changed often. Staff were given little time to undertake meaningful consultation or robust sectoral analysis to support the strategic orientation of the new plans. By the end of this audit, the status of the new plans was unclear because none had received formal approval nor had been communicated broadly within CIDA. None had been made public. In the interim, project proposals submitted for corporate approval took into account factors such as previous strategic direction and Agency priorities, as well as conditions, needs, and emerging opportunities in the recipient country.

8.46 The absence of a well-defined and transparent planning process and formally approved and public plans impedes communication with donors and recipient governments, leaving them unclear about the Agency’s direction and long-term commitment in individual countries or regions. This makes it difficult for the Agency to harmonize its efforts with other donors or to provide any level of predictability to its government partners. Furthermore, it does not provide staff with clear direction to propose projects strategically.

8.47 Recommendation. To ensure transparent and predictable long-term planning, the Canadian International Development Agency should

The Agency’s response. Agreed. A new planning process for geographic programs has been finalized. Country Strategies for each of the 20 countries of focus, which provide the strategic direction for programs, have received ministerial direction. Summaries of these strategies will be posted on the Agency’s website by the end of 2009.

These documents contain an analysis of the recipient country needs as identified in their Poverty Reduction Strategy and National Development Plan. Canada’s value-added in addressing these needs is based on such factors as the Agency’s past experience in the country and its relative programming strengths compared to other donors and partners. The whole-of-Agency approach is also reflected, where appropriate.

The direction identified in country strategies is implemented by the responsible program through five-year programming and planning frameworks, or Country Development Programming Frameworks (CDPFs), which will be completed by March 2010. They will be based on revised CDPF guidelines that will be put in place by the end of October 2009.

Country strategies will be reviewed annually to assess any significant changes to the country’s development context and program performance. If required, adjustments will be made and reflected in changes to CDPFs, and the country strategies posted on the Agency’s website.

Shifting and broad priorities have prevented a meaningful sector focus

8.48 The Agency has recognized that its programming is widely dispersed. Over the years, it has tried to bring more focus to its programming by clearly defining sectors of priority. Canada’s 1995 foreign policy statement set out six priority sectors for CIDA’s development program. The 2002 Policy Statement on Strengthening Aid Effectiveness noted that these priorities had served more as a broad menu of thematic options than as a focused agenda. This policy statement attempted to target CIDA’s investments more strategically. Also, in its reports on plans and priorities to Parliament, the Agency has set out to concentrate its resources on a smaller number of sectors to make a more meaningful contribution in the countries where it operates, given the size of its aid budget. We examined the extent to which the Agency has achieved this corporately and in its country-specific programs. Over time, CIDA has used a variety of terms to describe these priorities, including words like sectors, themes, and focus areas. For the purposes of this chapter, we are using the term “priority sectors.”

8.49 As Exhibit 8.4 illustrates, CIDA’s sector-based policies and priority sectors shifted many times between 2001 and 2009. Often, the Agency announced new policies and priorities but did not rescind old ones. In some cases, these shifts represented a completely new direction for the Agency (such as the shift to agriculture as a funding priority in 2003). In other cases, these shifts were more of an elaboration or restatement of previously announced priorities. Since it can take years to design and carry out projects properly and even longer for changes in direction to take hold, over time these frequent changes have hampered the ability of CIDA’s country desks to plan for the long term. Soon after the organization starts to adjust the nature of its programming, a change in direction or a new initiative begins, and staff must begin adjusting again.

Exhibit 8.4—The Canadian International Development Agency’s (CIDA’s) priority sectors have shifted over time

Year Source document Priority sectors

1995

Canada in the World—Government Statement

  • Basic human needs: primary health care, basic education, family planning, nutrition, water and sanitation, and shelter
  • Women in development
  • Infrastructure services
  • Human rights, democracy, good governance
  • Private sector development
  • Environment

2001

CIDA’s Social Development Priorities: A Framework for Action

  • Health and nutrition
  • Basic education
  • HIV/AIDS
  • Child protection

2002

Canada Making a Difference in the World: CIDA’s Policy Statement on Strengthening Aid Effectiveness

  • Four social development priorities: health and nutrition, HIV/AIDS, basic education and child protection, with cross-cutting theme of gender equality
  • Agriculture and rural development
  • Private sector development

2003

CIDA’s Policy on Promoting Sustainable Rural Development Through Agriculture

  • National capacity
  • Knowledge for development
  • Food security, agricultural productivity, and income
  • Agricultural sustainability and natural resource management
  • Well-functioning markets

2005

Canada’s International Policy Statement—A Role of Pride and Influence in the World: Development

  • Governance
  • Health (focus on HIV/AIDS)
  • Basic education
  • Private sector development
  • Environmental sustainability
  • Cross-cutting theme: gender equity

2009

CIDA news release: Canada Introduces a New Effective Approach to Canadian Aid to its International Assistance

  • Food security
  • Sustainable economic growth
  • Children and youth

8.50 CIDA’s priority sectors have always been broadly defined, which further complicated its attempts to focus. Identified priorities such as health, governance, or private sector development can encompass a wide range of and overlapping programming areas (sometimes called sub-sectors or activities). For example, the priority sector of private sector development encompasses more than 100 different potential programming areas. It is difficult to see how any greater focus can result from sectors as broadly defined as these.

8.51 In the years immediately following the release of its 2002 Policy Statement on Strengthening Aid Effectiveness, the Agency did not develop a specific action plan to help it focus its aid in specific sectors. Nor did it set precise and measurable targets for country desks to achieve. In 2005, the Agency began an initiative to assess its intervention in a number of sectors, beginning with a stock-taking exercise. By the end of March 2006, the Agency had produced draft strategic direction papers intended to provide clear and consistent policy guidance for six priority sectors. The initiative as a whole was never completed. We note that yet another stock-taking exercise was taking place at the time of this audit.

8.52 Our analysis of data the Agency provided us did not reveal any meaningful trends that would indicate that the Agency as a whole has been achieving a narrower focus since 2002. In addition, our analysis of individual portfolios in the countries we selected during this audit found that in four out of the five countries there was no significant narrowing of focus since 2002 in priority sectors. The portfolios of operational projects under way continue to cover a broad range of topics. The Agency has not provided us with its own analysis that would demonstrate otherwise.

8.53 The lack of clear direction and action plans, coupled with broadly defined and shifting priorities, has led the Agency to a situation where, in our view, it is not realizing the benefit of its intended goal to focus its aid more narrowly. That goal is to create a more meaningful Canadian contribution to a country or region. Instead, the lack of direction has confused CIDA staff, recipient governments, and other donors, effectively undermining the Agency’s long-term predictability. Changes in priorities have little impact on projects that are already under way and have often meant that project wording, but not project design, is changed to fit the priorities of the day.

8.54 Recommendation. To achieve greater sectoral focus, the Canadian International Development Agency should

The Agency’s response. Agreed. To achieve greater sectoral focus, the Minister of International Cooperation announced new thematic priorities in May 2009. These thematic priorities are: increasing food security, stimulating sustainable economic growth, and securing the future of children and youth.

The 2009 country strategies reflect greater programming focus on, and within, these thematic priorities. Following consultations in Canada and in focus countries, the Agency will complete Agency-wide strategies for each of these thematic priorities by early 2010.

Measurable expectations and performance benchmarks will be set in comprehensive development programming frameworks as appropriate. The Agency will monitor and report on these expected results. Annual program performance reports will examine the extent to which key expected results have been achieved. These results will contribute to the formulation of corporate plans and reports, such as the Report on Plans and Priorities and the Departmental Performance Report.

Lack of focus is impeding the identification and growth of the Agency’s relative strengths

8.55 In our view, this situation has also affected the Agency’s ability to determine and build on its strengths relative to other donors and to identify and foster the sectoral expertise it needs for decision making and project design. Country desk staff typically operate as project managers and development generalists rather than sector specialists. Those who are specialists in a particular sector are not necessarily assigned to country programs where their expertise is directly relevant to those countries’ priorities. When necessary, CIDA relies on other in-house experts or international, Canadian, and local experts. While the 2002 Policy Statement on Strengthening Aid Effectiveness set out to help renew the Agency’s cadre of scientific and technical personnel, CIDA has made limited progress in deciding what type of expertise it requires to support its priority sectors, or how to provide it. This, in turn, has implications for the Agency’s ability to define its areas of relative strengths and thereby support division of labour among donors.

8.56 Recommendation. To support achieving sector focus and building its relative strengths, the Canadian International Development Agency should

The Agency’s response. Agreed. The Agency is in the process of defining the necessary skills and expertise required to support programming and delivery of initiatives within these thematic priorities. The Agency will ensure that a robust cadre of specialists is in place through recruitment, training and ongoing professional development. This work will be completed by March 2010.

Project selection and monitoring

8.57 The benefits of Canada’s aid to developing countries depend on the projects that the Canadian International Development Agency (CIDA) funds. Agency-funded projects cover a wide range of programming areas. Although they can be one-time, short-term projects, they usually take place over several years. At any point in time, the Agency’s portfolio of projects in a country includes some that are just starting, some that are midway through implementation, and others that are nearing their completion. In order to maintain a targeted level of investment in a country, CIDA is always planning new projects.

8.58 We looked at whether the Agency chose projects on the basis of a sound rationale; that is, whether its choices reflected the principles of alignment and harmonization, were consistent with the country development programming framework, and were based on CIDA’s strengths relative to other donors. We chose 5 projects from each of the 5 countries, for a total of 25 projects (about half of which were categorized by CIDA as using program-based approaches).

Projects fit country needs

8.59 The Agency’s rationale for choosing the projects we included in our selection varies widely. All of the projects contribute to needs the country has expressed; however, as noted earlier in this chapter, the needs are vast. In most cases, the projects align with the priorities expressed in CIDA’s country development programming frameworks at the time that it decided to fund them. Several projects are extensions of previous ones that CIDA considered successful, often using trusted partners. The Agency chose other projects in response to explicit country requests. Still others resulted from invitations from other donors to join harmonized efforts. And while projects that are carried out through program-based approaches are—by their very nature—harmonized with other donors, we found that CIDA is also making efforts to harmonize with one or more donors and to promote some degree of local ownership for traditional projects as well.

8.60 That said, the project documentation we reviewed does not generally show that CIDA chooses its projects on the basis of an assessment of its—or Canada’s—relative strengths in a particular field. It is not always clear what particular advantage (other than money) the Agency brings to the table. In our view, until sector focus is more clearly defined, choosing projects on the basis of CIDA’s relative strengths will be a challenge. Moreover, since the Agency’s country development programming frameworks have expired, and with shifting priorities and no up-to-date country plans, we are concerned about what CIDA’s basis will be for selecting future projects.

Risks are assessed but the Agency needs to standardize its approach

8.61 For both traditional projects and program-based approaches, CIDA’s decision-making and approval processes require that it identify project risks up front and put actions in place to monitor and, if necessary, mitigate those risks. We examined whether CIDA identified and assessed project risks before and monitored them after the project was under way. We emphasized projects that are carried out using program-based approaches because of the risks involved in relying on national systems and in providing budget support to recipient governments. In such cases, special analyses are warranted, some of which are described in the guide on program-based approaches the Agency produced in 2005 (and updated in 2007) and in its 2007 policy on the assessment of fiduciary risks.

8.62 For the projects we reviewed (most of which were initiated before 2007), the participating donors worked together to identify the types of assessment they needed. They carried out various types of analysis by examining public financial management and procurement systems, the level of corruption in a country, and the country’s capacity to carry out the program. The specific analyses undertaken and the analytic tools used varied from project to project. In some cases, the Agency hired its own contractors to assess the projects, but, for the most part, it relied on third-party assessments that other organizations (such as development banks) conducted. CIDA used the information from these assessments to support its project decisions. Within the Agency, it also established an informal team of functional experts whose role was to assist staff responsible for particular countries in designing and implementing this approach to programming in Africa. At the time, most of the program-based approaches were taking place there.

8.63 Notwithstanding the various assessments of risk that CIDA and others undertook, the Agency’s internal processes did not clearly stipulate the types of assessments that needed to be performed systematically before it agreed to become involved in a given program-based approach, nor did they clearly stipulate the criteria or conditions under which it would or would not participate in a program-based approach. At the outset of our audit, we were told that a new policy for program-based approaches—which would address these gaps—had been under development for several years. By the end of our audit, it had still not been approved. In our view, the Agency now needs to clarify its decision criteria and expectations for assessing risks and country capacities.

8.64 Recommendation. To support the use of program-based approaches, the Canadian International Development Agency should

The Agency’s response. Agreed. The Agency finalized a Policy on Program-Based Approaches (PBAs) in July 2009. The policy articulates the circumstances under which it is appropriate to use PBAs. It is supported by the Agency’s Policy on Fiduciary Risk Assessment (Part 1), and Operational Guide on PBAs. These documents provide guidance to assess the capacity of national systems and identify assessment tools, such as the Public Expenditures and Financial Accountability diagnostic assessment. These tools enable the Agency to better identify and manage project-related risks. The Agency recently further clarified the approach and tools to assess and mitigate project-related risks in PBAs, by introducing updates in the Business Process Roadmap and Risk Management Strategy Guide for Treasury Board submissions. The Agency will also institute a process to ensure the systematic and uniform application of the assessment tools by the end of 2009.

Project risks are monitored

8.65 In the planning documents for the projects we selected, CIDA had identified potential risks to the project as well as the means it would use to monitor them (and the implementation of the project overall) and measures it would take to mitigate them should they be realized. We found that the Agency carried out activities to monitor identified risks. Its monitoring can take various forms:

Executing agencies are generally required to complete periodic reviews at project milestones. CIDA may also conduct audits on projects to assess their compliance with the authorizing terms and conditions.

8.66 Monitoring projects delivered through program-based approaches is particularly important, given the risks involved in relying on host country systems. In these cases, CIDA monitors jointly with other donors and the host government. In addition to reports from the executing agencies, donors rely on reports from the relevant government organization. We noted situations where CIDA contributed to designing ways to monitor the projects that were delivered through program-based approaches, and participated in harmonized monitoring efforts.

8.67 At the end of each fiscal year, CIDA project officers must complete an annual project performance report for each project. These reports provide information about amounts disbursed, the expected and actual results, risk management, and lessons learned. In many cases however, the reports simply reproduce the list of risks and mitigating measures identified in the planning documents. In our view, reporting could be improved by more systematically including information about the current status of each potential risk and associated mitigating measures identified at the outset of the project.

Burdensome administrative processes hamper effective decision making

8.68 Agency-funded projects are subject to a complex administrative and decision-making process. For traditional projects that are carried out through an executing agency, the process usually starts with a proposal or concept paper. This is followed by a project approval document and a logic framework analysis that describe the development context, the project and expected results, an estimated project budget, and anticipated risks and mitigating strategies. Both CIDA and the executing agency must then sign a contribution agreement or grant arrangement. CIDA and the recipient government also sign a memorandum of understanding. Once this document is signed, one of the partners or the group of those collaborating draws up a project implementation plan, which provides greater detail about how the project will be implemented. Then disbursements to the project can begin.

8.69 The Agency’s decision-making processes have been widely criticized, and the Agency has acknowledged problems. The 2002 Policy Statement on Strengthening Aid Effectiveness recognized that “over time, CIDA’s business processes have become unnecessarily complex and an inordinate amount of staff time has been taken up with managing the processes rather than making optimum use of development knowledge.” The Agency believed it would solve this problem by consolidating its business processes and applying new knowledge toward the delivery of development aid. However, this long-standing issue remains unresolved.

8.70 In 2007, the Agency undertook an internal study to improve the efficiency of its business processes. The study confirmed that the administrative burden remains serious and frustrating. It found that, on average, a project needed 28 different documents to take it from conception to the completion of final project implementation plan, and staff at times created their own tools to navigate through the process. They spent considerable effort on a process that took, on average, 43 months to get project approval. During this time, staff changes would occur and the same project officers would not see the majority of the projects through the process. Managers and sector specialists would also have moved, policy shifts would have occurred, and plans could have changed. The Agency advised us that, in response to the study, it has developed a new pilot project approval process, which it is currently evaluating. We strongly encourage the Agency to complete this evaluation on a timely basis and to implement appropriate actions to streamline its business processes.

8.71 According to responses to the 2008 Public Service Employee Survey, 88 percent of the staff in the Agency’s Geographic Programs Branch reported that the quality of their work often or almost always suffers because of “too many approval stages.” The survey indicated that 62 percent of staff reported “unreasonable deadlines” had the same effect. These figures are more than double the average overall for the public service, which were 41 percent and 27 percent, respectively.

8.72 The large majority of CIDA staff we interviewed and various members of the external development community also told us that administrative processes continue to burden the Agency. Many also commented on the lack of authority delegated to staff in the field. Levels of delegated authority have essentially remained unchanged for decades. They stated that CIDA staff in the field cannot commit to projects or actions before consulting with headquarters, which causes delays. Indeed, from a project approval standpoint, we note that all the planned projects included in the 2008 country strategies for the countries we selected required a higher level of authority than those currently delegated to the country directors. In fact, most of the projects required the Minister of International Cooperation or the Treasury Board to approve them. We have not assessed the extent to which these requirements contribute to lengthy decision making, but we appreciate that they need to be taken into account when planning large projects. Lengthy decision making can affect harmonization efforts in the field.

Corporate management processes and oversight

8.73 The Canadian International Development Agency (CIDA) has been operating in an ever-shifting environment for many years, with changes to government policy objectives, emphasis on geographic orientation, priority sectors, and budget allocations. According to responses to the 2008 Public Service Employee Survey, staff in the Agency’s Geographic Programs Branch reported that “constantly changing priorities” (74 percent) and “lack of stability” (75 percent) often or almost always affect the quality of their work. These figures are substantially higher than the average for the public service overall, which reported 41 percent and 34 percent, respectively. In addition, CIDA also experiences significant changes in its senior managers from year to year. In its Geographic Programs Branch, since 2002, the average has been about 30 percent per year, and, in the Policy Branch (which develops policy for the Agency), it has been about 45 percent.

8.74 In light of this, management processes that can sustain implementation of commitments and directions over time are especially important. We examined whether management had

A comprehensive strategy for the Agency to achieve aid effectiveness is needed

8.75 As described in previous sections of this chapter, CIDA has embraced the principles of alignment, donor harmonization, and the use of program-based approaches in its programs in the countries we examined. In our view, the release of the 2002 Policy Statement on Strengthening Aid Effectiveness has influenced this, bearing in mind that CIDA is working in an environment where the donor community at large is embracing these same ideas.

8.76 After it put this statement in place, CIDA initiated some actions to align its geographic programming with aid effectiveness principles. However, these actions were selective and the Agency undertook them without a comprehensive strategy. In some cases, CIDA began initiatives but never tracked them to their completion. In other cases, the Agency never developed action plans at all. Much of the direction staff received from management was qualitative in nature. The Agency did not develop quantitative targets or measures even for areas where it made sense to do so, such as for the degree of sector focus it wanted to achieve or the level of projects it should fund through program-based approaches. There is little evidence that senior managers reviewed the implementation of the 2002 Policy Statement on a systematic basis.

8.77 CIDA’s support for program-based approaches, in particular, has been neither uniform nor timely. While the Agency put some initiatives in place to guide the increased use of these approaches, at the time of this audit, other building blocks that we consider fundamental to the effective rollout of this new direction in delivering aid remained in draft form or had never been developed. Administrative and project approval requirements for this new way of delivering aid have not been updated.

8.78 In our view, many of the weaknesses described in this chapter can be traced to the absence of a master plan for achieving the Agency’s aid effectiveness commitments and the absence of management processes needed to sustain implementation over time. At the time of this audit, CIDA advised us of another renewed management effort toward policy implementation that was under way and that included an early draft of an aid effectiveness implementation plan. The Agency will have to ensure that it sustains any established management practices, and that the new effort can withstand some of the challenges we observed in this audit.

8.79 Recommendation. The Canadian International Development Agency should establish and implement a comprehensive strategy for achieving its aid effectiveness commitments. To ensure that such a strategy can withstand changes in personnel and the passage of time, the Agency should

The Agency’s response. Agreed. The Agency’s Aid Effectiveness Action Plan, approved in July 2009, consolidates guidance for meeting the Agency’s commitments to aid effectiveness. It is applicable to all of the Agency’s programs, as well as corporate and policy functions. It is accompanied by “Accountability and Monitoring Guidelines” that clarify accountabilities and tracking methodology for each action and target of the plan. Accordingly, monitoring will be performed annually, as a component of the Agency’s regular program monitoring process. Key elements of the plan and related progress will be communicated to Canadians through the Agency’s annual performance reports and its website.

Conclusion

8.80 The Canadian International Development Agency (CIDA) has not put in place the required management processes to implement and monitor its aid effectiveness commitments concerning alignment, harmonization, the use of program-based approaches, and sector focus in the countries it focuses on. The Agency initiated some actions to align its geographic programming with aid effectiveness principles, but these actions were selective and the Agency undertook them without a comprehensive strategy. The Agency has not established benchmarks and performance targets that would allow it to assess the extent to which it is meeting its commitments. There is little evidence that senior managers reviewed the implementation of the 2002 Policy Statement on Strengthening Aid Effectiveness on a systematic basis.

8.81 CIDA’s main documents for planning geographic programming—country programming development frameworks—reflected the principles of aid effectiveness when they were written. However, the frameworks for the countries we examined have expired and the process of preparing and maintaining them has been discontinued. The Agency is struggling to develop a new planning process. We were unable to conclude whether the new process will meet CIDA’s aid effectiveness commitments because the process is in transition and the status of interim plans is uncertain.

8.82 CIDA’s project selection and delivery in the field has addressed recipient countries’ needs, and Agency personnel are actively promoting donor harmonization. The mix between traditional and newer programming approaches varies from county to country. CIDA field staff are looking for opportunities to maintain or increase their use of newer programming approaches, as appropriate. While the Agency can demonstrate a rationale for the projects it funds, its choices are not based on an understanding of its strengths relative to other donors. CIDA identified potential risks and mitigating measures in its project planning documents and carried out various monitoring activities for these risks.

8.83 The long-term nature of international development requires stability and predictability of programming. In our view, in recent years, frequent changes in policy direction and substantial turnover of senior managers have posed significant challenges to CIDA in achieving its aid effectiveness agenda.

About the Audit

All of the audit work in this chapter was conducted in accordance with the standards for assurance engagements set by The Canadian Institute of Chartered Accountants. While the Office adopts these standards as the minimum requirement for our audits, we also draw upon the standards and practices of other disciplines.

Objectives

The objective of the audit was to determine whether the Canadian International Development Agency (CIDA) applied the major principles and programming approaches of aid effectiveness it committed to when delivering assistance in selected countries of concentration. We expected that CIDA had

Scope and approach

The major principles and programming approaches we selected for audit were drawn from the Agency’s 2002 Policy Statement on Strengthening Aid Effectiveness and the its reports on plans and priorities and included

The audit was conducted at both CIDA headquarters in Gatineau, Canada and at missions abroad.

For individual country planning and project audit inquiries, we concentrated our audit primarily on the Geographic Programs Branch country desks of Bangladesh, Ethiopia, Ghana, Honduras, and Vietnam. These 5 countries are on CIDA’s list of 20 countries of concentration. In comparison to that provided in fragile states or countries in crisis such as Afghanistan, Sudan, and Haiti, the aid that the Agency delivered in these countries was considered by us to be typical of the context in which it operates. We also considered geographic dispersion, the size of the aid program, and the use of a variety of programming instruments when we selected countries. We audited all 5 country programs at CIDA headquarters in Canada and, in addition, we visited Bangladesh, Ethiopia, and Honduras missions abroad. We examined how the Agency develops its long-term plans, taking into account the unique and specific context of the countries in which it operates. We examined various planning and project documentation. We conducted interviews with heads of aid and country program managers, various CIDA senior managers and staff, members of the program support units, recipient governments, other donors, and other stakeholders.

We selected 5 projects from each of the 5 countries to audit individually for a total of 25 projects. We selected the projects from information CIDA provided, with the criteria of having the first project disbursement in calendar year 2003 or afterward—subsequent to the 2002 Policy Statement on Strengthening Aid Effectiveness. We selected different sizes of projects, and those delivered by traditional and program-based approaches, across different sectors. Our project examination included review and analysis of documents; discussions with project officers; and, for those projects we visited, observations and discussions with project stakeholders, including executing agencies, government officials, other donors, and recipients.

We excluded some aspects of the Agency’s aid effectiveness agenda from the scope of this audit, including, for example, the Agency’s commitments to enhancing its field presence (decentralization), to untying aid, and to concentrating on fewer countries.

We did not audit project results because it takes a long time for benefits to emerge and because of measurement challenges and difficulties in attributing results to specific initiatives. These challenges are typical of the nature of development aid and not necessarily specific to CIDA.

Criteria

Listed below are the criteria that were used to conduct this audit and their sources.

Criteria Sources
Implementation of the Agency’s 2002 Policy Statement on Strengthening Aid Effectiveness
  • We expected that the Canadian International Development Agency (CIDA) would have established actions, targets, and indicators of performance for the 2002 policy statement commitments.
  • We expected that the Agency would have assigned clear responsibilities and accountabilities.
  • We expected that CIDA would have put in place practices to monitor progress and implementation.
  • We expected that the Agency would have made appropriate adjustments to its implementation approach as needed.
  • The Treasury Board of Canada Secretariat Management Accountability Framework
  • CIDA’s 2002 Policy Statement on Strengthening Aid Effectiveness
Country planning

We expected that the Agency’s country plans would have taken into account key aid effectiveness principles and commitments:

  • alignment
  • harmonization
  • newer programming approaches
  • greater sector focus
  • CIDA’s 2002 Policy Statement on Strengthening Aid Effectiveness
  • CIDA’s Guide for Preparing a Country Development Programming Framework
Project selection and oversight

We expected that the Agency’s project selection would be consistent with country strategies and aid effectiveness principles.

  • CIDA’s 2002 Policy Statement on Strengthening Aid Effectiveness
  • Country Development Programming Frameworks

We expected that CIDA would have performed appropriate and timely monitoring and made adjustments, as required.

Performance measurement frameworks, including project agreements

Management reviewed and accepted the suitability of the criteria used in the audit.

Period covered by the audit

The period audited for this chapter spans from September 2002, when the Agency’s Policy Statement on Strengthening Aid Effectiveness came into effect, to 15 May 2009. Review of individual projects was based on a selection of projects that were operational between January 2003 and December 2008.

Audit work for this chapter was substantially completed 15 May 2009.

Audit team

Assistant Auditor General: Richard Flageole
Principal: John Reed
Lead Director: Dusan Duvnjak
Director: Sharon Clark

Robert Anderson
Anthony Levita
Catherine Martin
Charlotte Stange

For information, please contact Communications at 613-995-3708 or 1-888-761-5953 (toll-free).

Appendix—List of recommendations

The following is a list of recommendations found in Chapter 8. The number in front of the recommendation indicates the paragraph where it appears in the chapter. The numbers in parentheses indicate the paragraphs where the topic is discussed.

Recommendation Response
Planning and support of country programs

8.39 To support the use of program-based approaches, the Canadian International Development Agency should set clear performance targets regarding how much of its aid should be delivered through these approaches. (8.33–8.38)

Agreed. The Agency finalized an Aid Effectiveness Action Plan in July 2009, which identifies measurable actions with accompanying targets for aid effectiveness commitments, including program-based approaches. As committed in the Action Plan, the Agency will strive to meet its program-based approach target of 50 percent when appropriate conditions are met, as defined in the policy on program-based approaches.

8.40 The Canadian International Development Agency should undertake a comprehensive evaluation of its use of program-based approaches with a view to determining whether they are achieving the Agency’s goals. (8.33–8.38)

Agreed. As mandated by the Treasury Board, the Agency will provide a review of program-based approaches by 31 March 2010 that assesses the effectiveness of these approaches. In preparation for this review, it is completing evaluations of country programs with a significant program-based approach component.

8.47 To ensure transparent and predictable long-term planning, the Canadian International Development Agency should

  • finalize the new planning process for all countries included within its Geographic Programs Branch;
  • ensure that future planning is based on sound analysis, taking into account recipient country needs and capacities and CIDA’s relative strengths, and reflects an integrated whole-of-Agency perspective;
  • provide ongoing oversight of the process’s application and renew country plans, under defined and monitored conditions; and
  • communicate approved country plans to development partners, including recipient governments, as appropriate. (8.41–8.46)

Agreed. A new planning process for geographic programs has been finalized. Country Strategies for each of the 20 countries of focus, which provide the strategic direction for programs, have received ministerial direction. Summaries of these strategies will be posted on the Agency’s website by the end of 2009.

These documents contain an analysis of the recipient country needs as identified in their Poverty Reduction Strategy and National Development Plan. Canada’s value-added in addressing these needs is based on such factors as the Agency’s past experience in the country and its relative programming strengths compared to other donors and partners. The whole-of-Agency approach is also reflected, where appropriate.

The direction identified in country strategies is implemented by the responsible program through five-year programming and planning frameworks, or Country Development Programming Frameworks (CDPFs), which will be completed by March 2010. They will be based on revised CDPF guidelines that will be put in place by the end of October 2009.

Country strategies will be reviewed annually to assess any significant changes to the country’s development context and program performance. If required, adjustments will be made and reflected in changes to CDPFs, and the country strategies posted on the Agency’s website.

8.54 To achieve greater sectoral focus, the Canadian International Development Agency should

  • clarify, for each of its priority sectors, the specific programming areas that it will support in the future as well as those that it will not;
  • set measurable expectations and targets for country programs to achieve; and
  • monitor and report on progress against these expectations and targets. (8.48–8.53)

Agreed. To achieve greater sectoral focus, the Minister of International Cooperation announced new thematic priorities in May 2009. These thematic priorities are: increasing food security, stimulating sustainable economic growth, and securing the future of children and youth.

The 2009 country strategies reflect greater programming focus on, and within, these thematic priorities. Following consultations in Canada and in focus countries, the Agency will complete Agency-wide strategies for each of these thematic priorities by early 2010.

Measurable expectations and performance benchmarks will be set in comprehensive development programming frameworks as appropriate. The Agency will monitor and report on these expected results. Annual program performance reports will examine the extent to which key expected results have been achieved. These results will contribute to the formulation of corporate plans and reports, such as the Report on Plans and Priorities and the Departmental Performance Report.

8.56 To support achieving sector focus and building its relative strengths, the Canadian International Development Agency should

  • define the skills and expertise it requires to support its priority sectors and specific programming areas; and
  • determine and implement the means it will use to provide those skills and expertise. (8.55)

Agreed. The Agency is in the process of defining the necessary skills and expertise required to support programming and delivery of initiatives within these thematic priorities. The Agency will ensure that a robust cadre of specialists is in place through recruitment, training and ongoing professional development. This work will be completed by March 2010.

Project selection and monitoring

8.64 To support the use of program-based approaches, the Canadian International Development Agency should

  • define the specific conditions under which it will or will not participate in such approaches;
  • clarify the types of assessments of national systems and capacities, as well as of project-related risks, it requires to have undertaken, alone or in collaboration with other donors, prior to agreeing to use a program-based approach; and
  • institute processes to ensure the systematic and uniform application of such assessments. (8.59–8.63)

Agreed. The Agency finalized a Policy on Program-Based Approaches (PBAs) in July 2009. The policy articulates the circumstances under which it is appropriate to use PBAs. It is supported by the Agency’s Policy on Fiduciary Risk Assessment (Part 1), and Operational Guide on PBAs. These documents provide guidance to assess the capacity of national systems and identify assessment tools for national systems, such as the Public Expenditures and Financial Accountability diagnostic assessment. These tools enable the Agency to better identify and manage project-related risks. The Agency recently further clarified the approach and tools to assess and mitigate project-related risks in PBAs, by introducing updates in the Business Process Roadmap and Risk Management Strategy Guide for Treasury Board submissions. The Agency will also institute a process to ensure the systematic and uniform application of the assessment tools by the end of 2009.

Corporate management processes and oversight

8.79 The Canadian International Development Agency should establish and implement a comprehensive strategy for achieving its aid effectiveness commitments. To ensure that such a strategy can withstand changes in personnel and the passage of time, the Agency should

  • clearly document action plans, targets, and performance indicators;
  • assign clear accountability for their implementation;
  • evaluate and monitor progress against targets and performance indicators on an annual basis; and
  • communicate its strategy publicly and report on its implementation externally, as appropriate. (8.75–8.78)

Agreed. The Agency’s Aid Effectiveness Action Plan, approved in July 2009, consolidates guidance for meeting the Agency’s commitments to aid effectiveness. It is applicable to all of the Agency’s programs, as well as corporate and policy functions. It is accompanied by “Accountability and Monitoring Guidelines” that clarify accountabilities and tracking methodology for each action and target of the plan. Accordingly, monitoring will be performed annually, as a component of the Agency’s regular program monitoring process. Key elements of the plan and related progress will be communicated to Canadians through the Agency’s annual performance reports and its website.

 


Definitions:

Millennium Development Goals

  1. Eradicate extreme poverty and hunger
  2. Achieve universal primary education
  3. Promote gender equality and empower women
  4. Reduce child mortality
  5. Improve maternal health
  6. Combat HIV/AIDS, malaria, and other diseases
  7. Ensure environmental sustainability
  8. Develop a Global Partnership for Development (Return)

In contrast to the traditional approach to aid, which is characterized by individual stand-alone projects, a program-based approach is based on coordinated support from donors for a development program of the recipient government or of a local organization. This approach is intended to result in more sustainable and self-reliant development and includes four main elements:

 

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