OECD-DAC Panel Discussion on Aid Effectiveness

Welcome Remarks by Mr. Sha Zukang, Under-Secretary-General for Economic and Social Affairs to the OECD-DAC Panel Discussion on Aid Effectiveness New York, 16 April 2008

It is a pleasure to participate in this important panel
discussion on aid effectiveness. This issue featured prominently in the
recent review session on chapter IV of the Monterrey Consensus
– on “Increasing International Financial and
Technical Cooperation for Development”. Building on that
session, this panel discussion is well positioned to contribute to the
first ECOSOC Development Cooperation Forum, to be held on 30 June and 1
July in New York, and the third High Level Forum on Aid Effectiveness,
to be held in Accra in September.

Official development assistance remains crucial for financing
the internationally agreed development goals, including the Millennium
Development Goals. While the trend of decreasing ODA was reversed in
the years following the Monterrey Conference, it is a matter of concern
that declines in ODA levels were registered in 2006 and 2007. There
continues to be an urgent need to increase the levels of development
assistance over the coming years.

At the same time, strengthening the effectiveness of aid
requires us to modify the aid architecture. The current structure is a
loose aggregation of many multilateral and bilateral agencies and
funds, including a growing number of new donors. Despite signs of
improvement in donor coordination, recipient countries, nevertheless,
have to deal with a variety of aid instruments and associated
agreements with a large number of entities.

The Monterrey Consensus was a turning point in establishing a
concerted agenda for enhancing aid effectiveness. It underscored that
coherence is needed at both national and international levels,
including among ministries of finance, development ministries and
export credit agencies of bilateral donors. It recognized the
importance of harmonizing operational procedures, so as to reduce
transaction costs. It supported initiatives, such as untying of aid. It
called for enhancing the absorptive capacity and financial management
of recipient countries. And it reaffirmed that each country needs to
determine its own priorities and development policies – as an
essential requirement for aid to be effective.

OECD-DAC Rome and the Paris High Level Forums sought to deepen
this agenda by setting forth a number of key principles and monitorable
indicators to improve aid effectiveness. The 2005 Paris Declaration on
Aid Effectiveness was an important milestone in setting out the
principles of strengthening ownership, alignment, harmonization,
results management and accountability.

As we prepare for the Accra High Level Forum on Aid
Effectiveness, a number of difficulties and weaknesses have become
apparent in the way we have addressed the aid effectiveness agenda thus

One lesson we are learning, in my view, is that aid
effectiveness cannot be separated from the discussion on development
effectiveness. Focusing primarily on procedural changes may limit the
attention given to development. At the same time, it is becoming
apparent that it is difficult to assess, precisely, the results of the
Paris Declaration – and the extent to which it has changed
the behaviour of donors for the benefit of the poor in developing

Yet another lesson is that the framework for aid effectiveness
will need to become more inclusive if genuine ownership of all
stakeholders is to be achieved. In particular, it ought to give more
space to issues of concern to developing countries, such as
predictability, conditionality, concessionality and the untying of aid.
This came out clearly in the high-level symposiums that we organized in
preparation for ECOSOC’s Development Cooperation Forum.

The United Nations is uniquely suited to make this happen. Its
new Development Cooperation Forum is well placed to promote an
inclusive discussion among all the relevant development actors on what
they expect from a strengthened framework for aid effectiveness. Such a
discussion could provide an important input into the negotiations of
the Accra Agenda for Action – and beyond, into the Review
Conference on Financing for Development, to be held at Doha later this

I hope that Accra will also be about building partnerships
– partnerships aimed to help developing countries build their
capacities to measure and monitor aid effectiveness, and to absorb and
manage additional aid flows. Accra should also be about aligning aid
with long-term development strategies, to achieve self-sustaining
growth and employment.

On all of these issues, the outcomes of the Accra High Level
Forum should feed into the discussions at the Doha Review Conference.
The Doha Conference presents an excellent opportunity to consolidate
and build on the progress made in advancing aid effectiveness, both at
the Development Cooperation Forum in New York and in Accra.

I am confident that all these related events this year will be
ideal venues for addressing the challenges of improving aid
effectiveness and implementation of aid commitments – and for
mobilizing renewed political will around the great global partnership
for development that we launched in Monterrey in 2002 and strengthened
at subsequent United Nations summits.

Thank you.