Minister of International Development Anne Kristin Sydnes

Development cooperation, good governance and quality control

Intosai Development Initiative. International Symposium Oslo, 7 June 2001

Distinguished delegates,

The era of official development cooperation is not very long. Development cooperation as a new discipline of government policies did not really take hold until the early 60s, when so many new states gained their independence.

During this span of time, we have gained a lot of experience. Through reports from the field, through the auditing of inputs and the evaluations of outcomes, through academic research and a fairly intensive international cooperation to identify best practices, we know a lot more about the factors that will determine success or failures.

There are many success stories, - in Asia, Latin-America and in parts of Africa. More children have received a better education, more people have better access to health services because of deveopment cooperation. Necessary investments in infrastructure have been made to enable developing countries to accelerate national development efforts.

Some of the lessons learned have been painful. There have been bad analysis, well-intentioned but flawed policies, and failures in implementation. The results of development efforts have not always reached the poor. At the third UN Conference for the Least Develeoped Countries in Brussels three weeks ago, we were forced to admit that gaps between the rich nations and the poorest have widened, in spite of all our efforts

The task now is to use the lessons learned to better target our efforts, to ensure a more focused and coordinated programme delivery where its counts, - at the national level in developing countries.

Here is where I can bring you some good news. Never before has there been such a broad international convergence about the basic development objectives, the priorities and the means of development cooperation.

There is broad international agreement that poverty is enemy number one, and that the overriding objective of development cooperation is to halve world poverty by 2015.

There is also wide agreement that development must be based on policies that are formulated and fully owned by national authorities. Development cooperation can advice and assist national efforts. It cannot and should not replace it.

We have learned about the need for democratic and accountable governance. Countries with democratic regimes and good governance have made far better use of development assistance than so-called "poor performers".

Not surprisingly, good governance is at the heart of international development. Good governance at the national and at the global level.

Thus, good governance is essential if we are to reach the internationally agreed goal of halving poverty by 2015.

How is this relevant for us who are here today?

First, control of the use of funds

Effective development cooperation depends on sound procedures and control mechanisms. Why? To ensure that the funds we provide actually reach the target group. Let me give you some examples of our procedures:

1. We include procedures and requirements concerning reporting, monitoring, disbursements, external auditing, reviews and evaluation in all our standard project and programme agreements.

1. We have developed a manual for programme and project cycle management. It describes the procedures a task manager should follow when planning project support, preparing use of funds appraisals, dealing with the follow-up phase and finally writing a completion document on support.

1. We use a comprehensive and computerized system for planning and following up projects.

1. We focus on results, and have developed internal systems for monitoring the work we do.

1. We perform field office management assessments on a regular basis. The objective is to verify that the agreements are complied with, and to impose sanctions when they are not.

Secondly, competence-building in Norway’s aid administration

All Norwegian foreign service personnel have training in development cooperation. Our local embassy staff are given continuous in-service training. This is mainly done at the embassy level or in the region. The Foreign Service Institute is in charge of developing and conducting the training programmes.

There is so much information available, and it is so easy to gain access to it, that training courses must be chosen selectively and targeted to the specific needs of the Ministry. This means that the information must be up-to-date, of high quality and easy to understand. Independent thinking and discussions between colleagues are emphasized just as much as presentations given by experts.

With this in mind, a pilot project has been conducted for more effec-tive e-learning. The aim of the project has been to find out whether e-learning is a suitable tool for in-service training. An evaluation report will soon be available. It will give us some answers that can help us to tailor our programmes to the needs of the Foreign Service.

The project consists of several Internet-based interactive modules, one of which is called Corruption and Good Governance. The main target groups are employees in the foreign service in Norway and abroad, employees of Norwegian government institutions and NGOs working in the field of development cooperation. The objective is to train personnel to support partner countries in their fight against corruption.

Evaluation

In relation to the size of the development cooperation budget, Norway uses more resources on evaluation than any other Nordic country. Our evaluation efforts have proved to be so useful that we have expanded them to cover general foreign policy as well. Each year, the Ministry of Foreign Affairs publishes 10 to 14 evaluation reports, most of them deal with development cooperation.

Needless to say, verification is essential in any evaluation. But we are also interested in information that can be used to formulate and implement development policy objectives.

Therefore, each evaluation process includes a dialogue between the external consultants responsible for the evaluation and the other stakeholders. The stakeholders are for example the Ministry, NORAD, Norwegian and international organizations and sometimes even the authorities of other countries. Their comments serve as a basis for an overall proposal which is presented to me as Minister. We then decide which recommendations are to be followed up.

These are the measures we take to ensure the quality of our development cooperation.

What then, are the measures we take in cooperation with our partners, on which we have a dialogue?

Three of the measures we work on together are:

• fighting corruption.
• increasing the auditing capacity in developing countries, and
• implementing routines for environmental assessments.

Fighting corruption

Our position on this issue is firm: corruption and the misuse of development funds are totally unacceptable.

Fighting corruption is critical since corruption undermines the whole process of development. Corruption leads to inefficiency and lack of results.

However, it is often difficult to define corruption clearly. Governance practices that seem illegitimate or undesirable to foreigners may in fact be acceptable locally. There is a risk that the international donor community, in its eagerness to promote good governance and fight corruption, may become ethnocentric. It may force third world countries to adopt systems and practices that are appropriate for western societies, but less well suited to conditions in other parts of the world. We therefore need to develop internationally accepted concepts of corruption that define the types of conduct that should be criminalized.

Norway is intensifying its efforts to fight corruption in its partner countries. Our main objectives are:

• first, to raise the level of knowledge about corruption in our aid administration and make them more aware of how to prevent corruption,
• second, to establish mechanisms for the systematic collection, analysis and dissemination of information gained from efforts to prevent and combat corruption.

Reducing the level of corruption will do more than anything else to promote good governance.

We base our efforts on two principles:

First, the principle of coordination. Strategies and approaches to fighting corruption need to be coordinated at the international level, and the donor community needs to share experience and information. At the national level, in the partner countries, there is an urgent need for coordination between donors, governments and other key stakeholders. In Norway itself, we are coordinating the efforts of all the development actors, the Ministry of Foreign Affairs, NORAD, NGOs and the private sector.

Second, the principle of selectivity and concentration. Anti-corruption efforts should be concentrated on areas where we are most likely to achieve results. Experience has clearly shown that political commitment at the top is essential, and our support for specific anti-corruption activities is, in principle, concentrated on countries where the government has demonstrated a strong commitment. Efforts are also concentrated on the partner countries where Norway is a large bilateral donor.

These principles do not exclude support to other countries, for example through non-governmental channels.

Increasing the auditing capacity in developing countries

Sound financial management is absolutely essential for promoting good governance and reducing poverty.

This means, as the Director General of NORAD, Ms. Tove Strand, mentioned in her speech earlier this week, that we emphasise capacity- and competence-building in the field of financial management in our partner countries.

In the field of auditing, Norway cooperates with developing countries in a number of ways:

• We provide direct support for increasing the capacity of the auditor general, as in the case of Nicaragua.
• The auditor general in Norway cooperates with his counterpart in developing countries, as in the case of Zambia.
• We support training and competence-building efforts organized by INTOSAI or its regional sister organizations, as we have done in Latin America.

As you know, good auditing practices and sound financial management are not simply a question of having the appropriate expertise and institutions. They are just as much about legal frameworks and high-level political commitment. If financial management and auditing practices are to be improved, the issues need to be dealt with both at the policy level and at the more technical level. This is shown by the example of Zambia.

The office of the auditor general in Zambia has improved its competence and capacity by cooperating directly with the Norwegian auditor general. This has been very successful. As a result the Zambian auditor general has published a number of critical reports concerning the use of funds in many important Zambian institutions. These reports are useful reference points in Norway’s dialogue with Zambia on government priorities, spending and the need to strengthen public financial management.

The third measure on which we have a dialogue with our partner countries is:

Routines for environmental assessments

Poverty reduction is closely linked with solving environmental problems.

This is why we make use of environmental impact assessments.

All Norwegian development cooperation activities are subject to environmental impact assessments. However, unlike the World Bank, for example, we haven’t established any detailed guidelines for such assessments that the governments receiving financial support have to abide by.

Instead, our approach is to integrate the responsibility for environmental issues into each sector. This is done by requiring that comprehensive studies be carried out on all relevant issues, including economic, technical, environmental and socio-economic issues. The results must be satisfactory in order for the developing country’s government to decide whether development should take place, and in order to incorporate appropriate conditions into the licence issued to the developer.

Another area of assessment is environmental "auditing". This has been done sporadically, for example to assess the degree to which environmental impact assessments have been carried out. However, so far we have not established auditing routines. The reason is that such auditing is considered to be the responsibility of other public institutions, in particular the one you represent.

Distinguished participants,

Good governance, fighting corruption, and a sustained commitment to build competence and capacity are essential if we are to succeed in eradicating poverty.

This is a formidable, yet necessary task. The approach must be broad, continuing investments in infrastructure and in public sector capacity building, but also in the social sector – in education, health, and through a new commitment to fight HIV/AIDS.

We know the basic ingredients for success in development even if these must be adapted to each individual country.

In development cooperation, we must always be willing to take risks. But we must always also be willing to let our efforts be measured and evaluated - to continue our progress along the learning curve. Transparency and accountability remain essential, both at the national and international levels

This symposium has helped us single out measures on which we can focus our efforts.

I hope that after this symposium you will continue the discussion and the dialogue on your important part of the governance agenda, bringing with you back home new information, new tools and new inspiration.

We will certainly do our best to bring your experiences into the continuous process of learning in the very important field of development cooperation.

Thank you.