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Aid Administration


Aid Administration refers to the combined processes of negotiation, coordination, management, implementation, and evaluation of foreign aid to a recipient country. Though a recipient country has only marginal control over the type and volume of assistance it receives from the donors, the processes of aid administration are areas over which it has to play a critical role. Aid administration usually focuses on (i) the approval process and the manner in which aid is negotiated; (ii) the terms and conditions attached to it; and (iii) the implementation, monitoring and evaluation mechanism. The fact remains, however, that key government body/agencies such as the national economic council (NEC), Planning Commission, Economic Relations Division (ERD) as well as donor countries/agencies, all have their roles to play in deciding the direction of aid to different sectors of the economy.

Negotiation, coordination and proper management of foreign aid are important because aid by itself cannot enhance economic development. Rather, the utilization of aid depends mainly on how effectively and efficiently it is administered. Aid administration is particularly important in the case of Bangladesh which has been depending on foreign aid on a massive scale since its emergence in 1971.

Negotiating procedure At the end of 1999, as many as 35 donor countries and 9 multilateral agencies provided economic assistance to Bangladesh. Under the umbrella of United Nations Development Programme (UNDP) 16 agencies provided technical assistance. Economic assistance to Bangladesh provided by the United States is administered by the US Agency for International Development (USAID) based in Dhaka. USAID formulates US funded projects for different sectors of the Bangladesh economy and maintains continuous dialogue with the government. It also undertakes feasibility studies, and accepts government sponsored development projects keeping in view the nation's Five-Year Plan objectives, and reaches agreements with the ERD of the Government of Bangladesh. The negotiating process consists of review and approval, implementation, and evaluation of development projects.

Approval process Normally, requests for financing projects are made by implementing agencies to the donor agencies through ERD. Sometimes donor agencies which are willing to assist a project approach ERD. The ERD headed by a secretary is responsible for aid negotiation and programming. It was separated from the Planning Commission in 1978 and given the status of a Division of the Ministry of Finance with powers to decide development priorities and negotiate foreign aid programmes with donor countries. In August 1990, the Bangladesh government made an important change in the approval procedures of different projects to make them consistent with the principles of sound project management. Previously, the Planning Commission was primarily responsible for scrutiny and approval of development projects. Under the current arrangement, administrative ministries and executing agencies are responsible for examining a project before it is finally approved by the Executive Committee of the National Economic Council (ECNEC). After the approval of the projects, the relevant department or agency appoints a project director with the prior consent of the administrative ministry.

The ERD has several wings, branches, and sections to ensure efficient aid management. It is responsible for preparing all aid briefs in consultation with the representatives of different functional divisions of the Planning Commission, and thereafter coordinates their outcomes with donors and implementing agencies. After preliminary discussion on a proposed project with donor officials, ERD informs the relevant government agency or ministry which continues to carry on further dialogues on the project. Sometimes various government agencies informally approach donor agencies for financing a project developed by them. In some cases, the donor agency identifies and designs projects rather than the concerned agency or ministry.

The agencies or ministries asking for assistance prepare a project concept paper (PCP)/ technical assistance project proforma (TAPP) in the prescribed form of the Planning Commission with detailed description, cost rationale, and time schedule of the project. The donor agency also prepares its own documentation. After examining thoroughly the feasibility of the project, the relevant ministry sends copies of the PCP/TAPP to the Planning Commission, Ministry of Finance, and ERD. In most cases ERD completes the initial formalities and approaches the donor agency for financing the project. On receiving a formal request from ERD, the donor agency prepares the project paper in consultation with the executing agency or ministry and submits the same to the ERD as well as to the executing authority for final approval.

After final approval, the donor agency prepares a draft for loan/grant agreement and sends the draft to the ERD which in turn transmits its copies to the Ministries of Finance, Home, Foreign Affairs, Law, and in some cases to other relevant ministries for review and examination. Based on the recommendations received from these ministries ERD informs the donor agency about the final approval of the loan/grant agreement and sets a date for the signing of the agreement. However, for commodity assistance, project preparation and approval are not necessary. In case of an emergency a more direct method is adopted, ie sending requests to the donor countries directly to cope with the situation.

Implementation process On completion of the approval process, the implementation process starts. Generally, subordinate implementing agencies such as autonomous bodies, departments, and directorates are entrusted with the responsibility for implementing projects. In rare cases, relevant ministries directly implement projects. The Implementation Monitoring and Evaluation Division (IMED) in the Ministry of Planning is responsible for identification of problems and constraints in the implementation stage of the development projects.

To cope with the problems related to the implementation process, the government has introduced a number of procedures. These are: (a) simplification of fund release procedures and procurement of goods and services; (b) delegation of powers to project directors and managers; (c) strengthening of IMED and the line ministries, and (d) holding of regular project review meetings in the line ministries and ECNEC.

Evaluation process' IMED is also responsible for review and evaluation of development projects. There is also a system of annual evaluations of the progress and performance of the projects by the donors themselves. In most cases a donor relies on its own experts for evaluation of ongoing and completed projects, although local experts are available. Another important aspect of the evaluation process is the extensive auditing by the auditors of the donor agency.

Monitoring system The monitoring mechanism is an important element of aid administration in a country. The policy makers of Bangladesh believe that for improvement of project implementation, monitoring by IMED, ECNEC and the concerned ministry or agency is important. At present, monitoring of the implementation of development projects of Bangladesh is carried out both internally and externally. The individual ministries and agencies do the internal monitoring, while the external monitoring is done by IMED.

The implementing ministry or agency prepares and submits periodic reports concerning both the financial and physical aspects of the projects and suggest measures to cope with the difficulties. Individual ministries also arrange monthly review meetings where representatives from IMED, Planning Commission and the Finance Ministry share information to appraise the progress of the projects. Finally, ECNEC reviews the implementation of the projects biannually. Individual ministries/agencies are also required to submit reports to ECNEC outlining the reasons for unsatisfactory completion of development projects. [Kamal Uddin Ahmed]

Bibliography Government of the People's Republic of Bangladesh, The Fifth Five Year Plan, 1997-2002, Planning Commission, 1998; Government of the People's Republic of Bangladesh, Flow of External Resources into Bangladesh (various issues), External Resources Division, December 1980, August 1991 and April 1998; Government of the People's Republic of Bangladesh, Mobilization and Co-ordination of External Assistance: The Bangladesh Experience, External Resources Division, July 1980.