16 November, 2016

Making Progress in the Use of Country Systems at Country-Level

By Neil Cole
Executive Secretary, Collaborative Africa Budget Reform Initiative

Using country systems for the delivery of development assistance has the potential pay-off of increased investments and strengthening of public financial management and related procedures. It is also argued that using country systems leads to greater overall impact, improved co-ordination, and increased predictability and sustainability of donor programmes. It can also lower transaction costs. Likewise, damage can be done to country systems when development partners manage their assistance through parallel channels.

One of the principles of the Paris Declaration (2005) was that development partners would align to the policies of the partner countries and in doing so would make use of the country systems. The Accra Action Agenda (2008) commits to “more use of country systems for aid delivery”. The Busan Partnership Agreement (2011) committed development partners to increase the use of country systems as the default position, alongside the strengthening of financial management and related systems.

The work of the Collaborative Africa Budget Reform Initiative (CABRI) on use of country systems is focused on ways that development partners can shift towards the full or partial reliance on country systems to allocate resources, disburse funds, procure goods and services, and account and report. And at the same time, recognize the fiduciary risks of using such systems.

A CABRI study in 2014 found that most development partners place more emphasis on short-term fiduciary and performance risks than on long-term developmental risks. Development partners who use country systems forfeit some degree of control over their development assistance, which can be perceived to increase the risks of activities not being implemented, or of funds not being used as intended. As a result, development partners tend to mitigate risks by not using the country systems, especially where the diagnostic assessment is not favourable, instead of managing the risks in favour of longer-term development objectives.

In our collaboration with African governments, officials acknowledge weaknesses in their systems and capability gaps. And by doing so, also provide the evidence of where systems are strong and should be used for the delivery of aid, but are not. Apart from cases of un-earmarked sector budget support and general budget support, the least used systems are those for planning and budget preparation. There is some evidence that audit systems are the first to be used by development partners that traditionally use their own systems. Similarly, the CABRI study shows that when development partners use the budget execution, accounting and reporting systems of the partner country, audit safeguard measures are often in place.

As the dialogue between development partners and partner countries improve, and trust is built alongside the improvement in country systems, development partners ‘grow into’ the use of country systems. Across the cases reviewed in the CABRI study, there is evidence of a graduation from pooled funding mechanisms managed outside of the government to government-managed pooled funds, and to budget support arrangements.

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