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

Distinguished Delegates,
Ladies and Gentlemen,

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 far.

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 countries.

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 year.

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.