FRONTESPIZIO - Cooperazione Italiana allo Sviluppo

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28 Augusto Cosulich, Vincenzo RacalbutoAn explanation of Fungibility 2Fungibility is the idea that aid pays not for the items against which itis accounted, but for the extra expenditure it makes possible. Considerthe example of a government with $100 million to spend. There aretwo projects to choose between: rehabilitating rural health clinics orbuying a new fleet of tanks. Both cost $100 million. After much deliberationthe government decides to rehabilitate the clinics. But before itdoes so a donor comes along offering $100 million for some suitablyworthy project. The government cannot ask the donor to buy the tanksso it says to the donor “our rural health clinics are in desperate need ofrehabilitation, but we cannot afford to do it”. So the donor pays for thehealth clinics. The government can now use its money to buy the tanksafter all...aid has in effect paid for the tanks even though it is accountedagainst health clinics.Programme approachesGiven these doubts about budget support, a large variety of programme approacheshave developed as half-way measures between budget support andprojects. These programme approaches pool resources and systems, and worktowards one agreed plan. The plan may only be for part of a sector – e.g. healthposts and their outreach work. The pooling may not be through governmentsystems, but does involve donors to some extent using shared systems.The sector-wide approach is explained in some detail here, as it raises issuescommon to all programme approaches.The sector wide approach (SWAp) is a method of working between governmentsand donors which aims to improve the capacity of government to delivereffective public services. The impetus for the development of the SectorWide Approach came from increasing disillusionment about the failure ofproject based instruments to make significant in-roads into poverty, especiallyin countries which were very aid dependent and which relied on a plethoraof donors to ensure even basic services.2 Alba, A and Lavergue, R. (2003). LENPA Glossary of Frequently-Used Terms UnderProgram-Based Approaches. CIDA. Alba and Lavergue sourced this quotation from White,H. (1999). Budget Support as an Emerging Aid Modality: The Experience of the ZambianHealth SIP and its Relevance for Japanese Aid. Institute of Development Studies.
3. The ethiopian health sector and the italian contribution to HSDP 29There is no ‘official’ definition of what a SWAp is, but it is usually defined asan approach in which:• All significant funding (including both government’s and donors’) supportsa shared, sector wide policy, strategy and implementation planwhich have clear sector targets and are focused on results.• A medium term expenditure framework or budget supports this policy,strategy and plan.• Government provides leadership in a sustained partnership with donorsand other contributors, including the non-governmental sector.• Shared processes and approaches for implementing and managing the sectorstrategy and work programme are agreed, including reviewing sectoralperformance against jointly agreed milestones and targets.• There is commitment to move to greater reliance on Government financialmanagement and accountability systems as well as implementationsystems.Funding modalities for SWAps vary according to the donors that participate,their own internal rules, the way that they wish to apply conditionality, andthe capacity of government to manage more flexible forms of funding. In orderto meet the objectives of improving co-ordination and government ownershipand reducing transaction costs however, SWAps generally aim to haveat least some element of ‘pooled’ or ‘basket’ funds (see Box 2) and/or sectorlevel budget support.Box 2 Pooled fundingPooled funding involves donors putting money into a common fundor “basket”. These funds are then used for agreed activities accordingto agreed procedures. Different approaches can be taken:• The pool can be earmarked to fund certain activities at different levelsor be completely un-earmarked.• The funding pool may use Government procedures and be integratedinto the budget or may use a single set of donor procedures - e.g.World Bank. Or it may be somewhere in between, with money heldin a separate account at the Ministry of Health.Different donors have different attitudes towards pooling. Pooledfunding often takes place alongside project funding.
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independent information centres. Ta
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