____________________________________AID MANAGEMENT:

POLICY ADVICE AND INSTITUTION BUILDING SUPPORT PROJECT

____________________________________

PROJECT COMPLETION REPORT

IMPLEMENTED BY THE UNITED NATIONS DEVELOPMENT PROGRAMME (UNDP)FUNDED BY THE SWEDISH MINISTRY OF FOREIGN AFFAIRS

DECEMBER 2009

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IraqIraq

TABLE OF CONTENTS

1. EXECUTIVE SUMMARY…………………………………………………….. p4

2. INTRODUCTION……………………………………………………………… p4

3. RELEVANCE AND NATIONAL OWNERSHIP…………………………… p6

4. PROJECT MANAGEMENT AND HUMAN RESOURCES………………. p7

5. OPERATING METHODOLOGY……………………………………………. p7

6. KEY PROJECT ACHIEVEMENTS…………………………………………. p8

7. CONSTRAINTS AND LESSONS LEARNED................................................ p13

8. LONG TERM PROJECT IMPACT AND THE WAY FORWARD………. p13

9. RISKS AND ASSUMPTIONS FOR THE FUTURE………………………… p16

10. THE NEXT PHASE: THE PARIS DECLARATION INITIATIVE……….. p18

11. EXPENDITURE SUMMARY ………………………………………………… p19

ANNEXES – RELATING TO PROJECT OUTPUTS

1. Project Document

2. The Sweden – UNDP Agreement for supporting Aid Management

3. ICD Organigram

4. ICD Communication Strategy

5. Workshop Report: Basic Management Skills

6. Workshop Agenda and Participation list: Project Screening and Appraisal

7. Training and project completion report: Monitoring and Evaluation

8. ICD Monitoring and Evaluation System

9. Aid Management Brochure

10. Cost Sharing Agreement UNDP-MoP, KRG

11. ERMU Workplan

12. ERMU Strategic Development Plan

13. Project Document: “Implementing the Paris Declaration on Aid Effectiveness”

14. Paris Declaration Task Force Terms of Reference

15. Aid Management: Comparative Case Studies

16. Financial Delivery Reports for 2006, 2007, 2008, and 2009

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LIST OF ACRONYMS

DAD Donors Assistance Database/Development Assistance Database

DCU Donor Coordination Unit

DEX Direct Execution

ERMU External Resources Management Unit (KRG)

GOI Government of Iraq

ICI International Compact with Iraq

ICD International Cooperation Directorate

ICT Information, Communication and Technology

ISRB Iraq Strategic Review Board

KRG Kurdistan Regional Government

M&E Monitoring and Evaluation

MDGs Millennium Development Goals

MoFA Ministry of Foreign Affairs

MOP Ministry of Planning (KRG)

MoPDC Ministry of Planning and Development Coordination of Iraq (central

Government)

OECD Organisation for Economic Cooperation and Development

NDS National Development Strategy

UNDP United Nations Development Programme

UNOPS United Nations Office for Project Services

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1. EXECUTIVE SUMMARY

This document present the final report of the Donor Contribution Unit in Ministry of Planning project administered by UNDP-Iraq and financed by the Government of Sweden.

The project began on 1st January 2006 and concluded on 31st March 2009. The financial closure for the project was 31st March 2010. The overall project value was $2,577,349, consisting of $2,277,349 from Sweden, $200,000 from UNDP and $100,000 from KRG government. Of this amount, $2,543,052 was actually delivered. This means a 98.7% delivery result.

The broad aim of the project was to develop a Donor Contribution Unit (DCU – which later became the International Cooperation Directorate (ICD)) at the Ministry of Planning and Development Coordination (MoPDC) in order to improve the effective coordination of aid.

During the course of the project, UNDP provided support in three key areas.

UNDP provided support to the International Cooperation Directorate (ICD) within the MoPDC in the form of organizational restructuring, capacity building through training, the development of monitoring and evaluation systems and promoting the ICD as the contact point between international donors and the Government of Iraq (GoI).

UNDP supported the establishment of the External Resource Management Unit within the Ministry of Planning in the Kurdistan Regional Government (MoP-KRG) based on the ICD in the MoPDC.

UNDP encouraged and supported the endorsement by the GoI of the Paris Declaration on Aid Effectiveness.

Overall, the project has seen an increase in the capacity of the GoI and the Kurdistan Regional Government to manage aid effectively. While challenges still exist, the DCU project has provide a strong framework for the development of later programs aimed at developing effective aid management in Iraq.

2. INTRODUCTION

Appropriate mobilization and management of internal and external financial resources is a cornerstone of progress and development, especially in a country that is recovering from years of misrule, international conflict and continuing instability, such as Iraq. Over the past years Iraq has received huge amounts of development assistance. Efficient management of these resources has the potential to boost the socio-economic development and reconstruction of the country significantly. However, this requires the improvement of several components of the aid management process, including aid tracking, allocation, monitoring and performance evaluations, as well as internal and external collaboration.

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The Ministry of Planning and Development Cooperation (MoPDC) plays the lead role in implementing Iraqi aid management policy. An important area of support is therefore to strengthen the International Cooperation Directorate (ICD) of the MoPDC by ensuring that the ICD possesses a clear mandate, is efficiently structured, follows effective procedures, and is adequately resourced with skilled staff and modern equipment.

As a donor, Sweden has long placed its focus on building up local ownership in partner countries, coordinating with other donors, taking a results-based approach to activities it supports, and achieving better coherence between aid and non-aid policies such as trade.As a signatory and staunch supporter of the Paris and Accra agreements, Sweden is committed to improving these areas of the aid and cooperation agenda. It is against this background that the Swedish Ministry for Foreign Affairs (MoFA) committed to support the MoPDC to more effectively manage, coordinate, monitor and evaluate aid. In March 2006 MoFA released US$ 2,200,000 to be managed by UNDP Iraq in close consultation with the MoPDC1. In addition, UNDP provided US$ 200,000 to the project and the Kurdistan Regional Government contributed US$ 100,000 in cost sharing.

A project document was prepared and signed by the Senior Deputy Minister of the MoPDC and the UNDP Country Director in August 2006. Initially, the project aimed to establish an effective and well functioning ICD; support technical improvements and increased practical application of the Donor Assistance Database (DAD); and to revise, strengthen and clarify the Iraqi Strategic Review Board’s (ISRB’s) role and mandate (Project Document attached as annex 1).

However, as the project progressed, priorities changed. Ultimately, and in close consultation with the Ministers and senior management staff of the MoPDC and the Ministry of Planning (MoP) of the Kurdistan Regional Government (KRG), the project provided support in primarily three key areas, namely to:

Assist the ICD of the MoPDC to better manage aid by revamping its organizational structure, build capacity and modernize its equipment;

Support the MoP of the Kurdistan Regional Government (KRG) to develop an aid management unit, External Resource Management Unit (ERMU), specifically covering the Kurdistan Region (KR);

Support the endorsement and subsequent implementation of the Paris Declaration of Aid Effectiveness.

It needs to be emphasized that determination of project scope as well as project implementation throughout the project lifecycle has been done in very close consultation with the Directors General responsible for International Development Assistance of the MoPDC and the MoP. This enabled the project to establish a high degree of Iraqi participation and ownership, well illustrated by the MoP’s commitment of US$ 100,000 of own source for the development of the ERMU.

1 It should be noted that since the project was implemented some of the names of the Government institutions have been altered. For instance, at the time of writing there is only the Ministry of Planning that exists in the GoI.

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3. RELEVANCE AND NATIONAL OWNERSHIP

Aid management and donor coordination is a major priority for the GoI as articulated in the Iraqi National Development Strategy (NDS, 2008-2011) and International Compact With Iraq (ICI). It is of particular importance due to the unprecedented scale of international support to Iraq’s reconstruction and development. Indeed, the Project directly contributed to the overarching goals and objectives of the International Compact with Iraq (ICI), as stated in the Resolution itself:

- “The Government of Iraq and the International Community are determined to strengthen their partnership to improve the lives of the Iraqi people”2

- “4. Accept that such reforms can only be realized through substantive international engagement and cooperation and investment that bridges the gap between Iraq’s needs and its capabilities in the medium term. Such assistance may include the granting of debt relief to Iraq by creditors at least on comparable terms to the Paris Club Agreed Minutes of November 2003; the provision of grants, loans and technical assistance; the provision of assistance with capacity building; and any other forms of assistance which may be agreeable to both parties;”3

The National Development Strategy (NDS) of the GOI, 2007-2010, makes reference to some of the challenges to aid effectiveness experienced in the past in Iraq that the project sought to address:

“Most of projects were chosen by the Donors without considering NDS priorities and without taking the approval of MOPDC as the official entity concerned with setting the priorities of reconstruction projects… Most of Iraq reconstruction projects executed by the Donors didn't follow the national or local regulations and instructions”4

The NDS however goes on to emphasise the importance of aid effectiveness to achieve national development goals:

“Implementing the National Development Strategy effectively will require significant resource transfers from our development partners. Improving on donor coordination is essential for the effective use of foreign resources”5

The project is also aligned with the UN Assistance Strategy for 2005-2007 and for 2008-2011, specifically addressing the needs of strengthening institutional capacities, policy development and ICT capabilities of GoI, both at the federal and local levels, by establishing effective aid management framework, functioning across the line Ministries and regions. Finally, the Project directly contributes towards the 8 th Millennium Development Goal (MDG) to: “Develop a global partnership for development”. Successful implementation of the Project will also indirectly contribute to all of the MDGs in Iraq.

4. PROJECT MANAGEMENT AND HUMAN RESOURCES2 International Compact with Iraq, p5, [emphasis added]3 ibid. [emphasis added]4 National Development Strategy, 2007-2010, p19-205 ibid, p106 [emphasis added]

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4.1 National Staff & Consultants

During the first half of the project (2006-2007), one national consultant and e-government specialist were employed part-time on the project. In addition, administrative support to the project was provided by a project associate from the Governance Team.

During the second half of the project (2008-2009), one full-time national officer - an e-governance specialist - and one dedicated project associate were employed to support the project.

During a six month period in 2008, an aid effectiveness specialist was employed by the project in order to support the endorsement of the Paris Declaration on Aid Effectiveness and provide capacity development support to the project.

Consultants from contracted software providers, especially Synergy, were utilised throughout the project to ensure the capacity development of the counterparts in the GoI in technical areas such as the Donors Assistance Database system management and portal management.

4.2 International Staff

During the first half of the project (2006-2007), one international project manager was employed by the project. In March 2008, the project manager departed for a new post with UNDP Somalia prior to the recruitment of a successor in UNDP Iraq. A new project manager was successfully recruited in August 2008 five months after the initial project manager had left.

The impact of this gap was mitigated by leadership from a Programme Manager from the UNDP Governance Team, who was responsible for a similar project to build the capacity of the MoPDC, and also by the Aid Effectiveness Specialist international consultant.

The UNOPS component was managed by the international Project Manager who was not funded by the project. The UNOPS component of the project funded only one national staff in Basra and one national project assistant in Amman for the period of one year (July 2005 – July 2006).

5. OPERATING METHODOLOGY

The implementation modality used for this project was direct execution (DEX). Where possible, national contractors were used to deliver the project activities on the ground in Baghdad and Erbil. This specifically relates to hardware and software delivery, on-the-site training and creating remote access internet connectivity to enable uploading, installation and technical support of specialized DAD products from outside Iraq.

For the project components implemented in the Southern Governorates UNOPS national staff were used for collaboration with provincial councils in data collection, validation and analysis.

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The training for the provincial councils was held in Erbil where the security situation allows more flexible operation.

However, activities related to capacity building in the areas where Iraqi national expertise was not relevant were implemented outside Iraq, mainly in Jordan. Even though these implementation mechanisms were assumed and planned from the beginning of the project, the deteriorated security situation in Iraq during the course of the project caused delays in reaching overall project objectives on time.

Remote access technologies were used to monitor physical progress on DCU products development and use in Iraq. Apart from this, a number of planning and performance assessment and reporting workshops were organized in Amman, with participation of key Iraqi ministries and the donor community to review and agree upon milestones achieved and register any discrepancies or problems.

6. KEY PROJECT ACHIEVEMENTS

Below follows a summary of key achievements structured around the previously mentioned three major project areas

6.1 Assist the ICD of the MoPDC to better manage aid by revamping its organizational structure, build capacity and modernize its equipment.

- A report on aid management experiences and lessons learned from other countries was prepared to provide guidance on aid management policy formulation to decision makers in MoPDC (the report is attached as annex 15).

- An improved organizational structure with a mission statement for the International Cooperation Directorate was developed in consultation with the Director General of the ICD. The new structure reflects the need for ICD to more effectively address key components of aid management. (Organizational structure attached as annex 3).Introduction of more rigorous and systematic methods for determination of project feasibility; moving away from ad hoc project approvals and implementation; ensuring that projects mutually reinforce each other and logically support the Iraqi development agenda as expressed in the National Development Strategy and the International Compact with Iraq, are key reasons behind the establishment of the Project Screening and Appraisal Unit.

- The Monitoring and Evaluation Unit would ensure that project progress regularly is analyzed and assessed to improve success rate and more effectively determine subsequent follow up actions. Improved government-donor coordination is the responsibility of the Donor Relations Unit. Enhanced internal coordination, i.e., cross ministerial and governorate level project coordination and evaluation would be addressed by ICD as well. A tentative communication strategy that could enable the ICD to better interact with

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the international donor community has also been developed. (Communication strategy attached as annex 4). Hopefully this would ensure better information flows and improve the utility of the Development Assistance Database (DAD) while strengthening its information value. A lot of the work of these three units would be based on project specific information provided by the Donor Assistance Database team.

- Significant capacity development to ensure that staff skills correspond to the needs of the new ICD structure have been conducted and below are examples of major training seminars carried out:

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NAME OF COURSE PARTICIPANTS2 Training courses on Basic Management Skills 603 Training seminars on Project Screening and Appraisal 903 Training seminars on Monitoring and Evaluation 902 Training seminars on the Donor Assistance Database 50

Further information regarding the Basic Management Skills, the Project Screening and Appraisal, and Monitoring and Evaluation workshops are available in the workshop reports in Annex. In our efforts to foster a collaborative spirit and strengthen the relationship between the MoPDC and the MoP we made a point of inviting participations from both the MoPDC and MoP to jointly attend our courses. This proved a good opportunity for the ministries to share experiences and build cross ministerial collaboration on aid management practices. (Workshop reports attached as annex 5, 6, and 7).

- To facilitate the establishment of the Monitoring and Evaluation unit, UNDP engaged a consultant who presented a revamped system for more effective Monitoring and Evaluation of development projects by the MoPDC. The consultant’s suggested monitoring and evaluation system has been submitted to the MoPDC and is under review for implementation. (Report on the M & E system attached as annex 8).

- To increase visibility and promote our work the Aid Management Team prepared an aid management brochure, which was presented at a high level OECD-UNDP meeting in Paris on the Paris Declaration on Aid Effectiveness. (Aid management brochure attached as annex 9).

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6.2 Support the Ministry of Planning (MoP) of the Kurdistan Regional Government (KRG) to develop an aid management unit, External Resource Management Unit (ERMU), specifically covering the Kurdistan Region (KR).

Based on the organizational structure we suggested for the ICD in Baghdad, the Minister of Planning of KRG expressed an interest in having a similarly structured aid management unit established under the MoP as well. To this end, a Memorandum of Understanding was signed jointly by the Minister of Planning of Kurdistan Regional government, H.E. Mr. Othman Shwani and UNDP-Iraq Director, Mr. Paolo Lembo. This MOU aimed at extending UNDP’s assistance to Northern Iraq by implementing among others, a pilot Regional version of the DAD for Kurdistan Region.

- Based on MoP guidelines, UNDP developed a proposal for the establishment of the ERMU in 2007. (Proposal attached as annex 11).

- Once the proposal had been approved by the legal department of the Council of Ministers, UNDP and the MoP signed a cost sharing agreement in which UNDP agreed to earmark US$ 400,000 for the establishment of the ERMU while the MoP agreed to contribute 20%, or US$ 100,000, from own source. This was a groundbreaking achievement as it was the first time the government (KRG in this case) agreed to cost share a UNDP Iraq managed project, i.e., contribute funds to be directly administered by UNDP. Furthermore, in the second quarter of 2008 the Minister of Planning allocated as parallel funding additional KRG resources, albeit a modest amount of US$ 20,000, for capacity development of newly recruited ERMU staff. (Cost sharing agreement attached as annex 10).

- Based on the proposal developed for the establishment of the ERMU, a Strategic Development Plan (SDP) was prepared in September 2008. The SDP clarifies the objective of the ERMU and provides a sequenced plan of action to build up a well functioning ERMU. To raise awareness about the SDP as well as obtain feedback and secure buy-in from line ministries and the donor community three conferences were held in September and November 2008 in Erbil. Representatives from almost all ministries and the donors present in Erbil attended one or more of the conferences.

- Based on the inputs received at the three conferences the Strategic Development Plan was expanded and finalized in January 2009. (Finalized Strategic Development Plan attached as annex 12).

- Recruitment of five local staff to work within the ERMU, i.e., two Donor Relations Experts, one Information Technology Experts; one Research Assistant; and one Administrative Assistant was completed in December 2008.

- Information technological development support has also been carried out under the project. Noteworthy is the development of a web portal to improve the Development Assistance Database (DAD) accessibility, the dissemination of information to internal and external stakeholders, as well as the integration of the MoP based DAD and the DAD

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Baghdad in March 2008. Provisions of IT equipment and internet connectivity were provided staff of the Development Coordination and Cooperation Department of the MoP in November 2008. Several training sessions to improve the management of the DAD have also been conducted under this project.

On February 2008 a workshop was conducted in Erbil to launch DAD-KRG, and to train end users of this system in the KRG on the main tools and functions of DAD.

In addition to establishing and handing over the management of the DAD, this assistance has expanded to cover new software applications and integrated systems with the objective to apply the latest concept and practices for portal development technologies, and to strengthen the Directorate capacities in information and communications technologies, as well as to establish the necessary infrastructure for the development and expansion of Directorate e-government services.

The DCC portal (http://www.krgmopdcc.com/dcc/) has defined outputs that it is mandated to achieve. Part of this portal output depends directly on the units’ involvement and contribution in managing their own data and updating their portal sections in a timely manner to achieve the following:

- Consolidating all donors’ assistance, investment projects and other relevant data into a dynamic and interactive web portal.

- Strengthening the directorate capacity in information and communications technologies, boasting the latest concept and practice of the information management tools and communication technologies and establishing the necessary infrastructure for the future development and expansion of directorate e-government services

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- Facilitating easy and low cost access to the directorate information and services, and providing well-structured information to the web users and ministry business clients (government agencies, businesses, donors, citizens).

- Providing an interface for information sharing between directorate units.

The portal developments activities stared with conducted a workshop to discuss and firmly agree upon strategy, key issues and DCC portal structure to be provided in line with the Directorate mandate and its services provisions.

The portal development efforts could be illustrated as follows: Develop and agree on the portal’s concept strategy, key issues and scope, Portal architecture and specifications Design options Portal integration and testing Portal contents categorization and web writing Hosting and maintenance Portal training for directorate staff in key areas

6.3 Support the endorsement and subsequent implementation of the Paris Declaration of Aid Effectiveness.

- The Paris Declaration on Aid effectiveness provides a clear practical framework for countries to systematically identify and set development targets with quantifiable indicators that can be monitored. The Paris Declaration is a tool for increased quality, transparency and accountability of aid. When this project was initiated Iraq had not endorsed the Paris Declaration. In January 2008 we managed to secure the Ministry of Planning and Development Cooperation’s support to liaise with OECD to explore possibilities for Iraq to become an endorsing partner of the Declaration. UNDP and OECD jointly organized a high level meeting on the Paris Declaration on Aid Effectiveness 26-27 May 2008 in Paris. A strong Iraqi delegation comprising representatives from the Parliament, Ministry of Finance, Ministry of Planning and Development Cooperation and the Office of the Deputy Prime Minister participated. The above meeting paved the way for the subsequent formal Iraqi endorsement of the Paris Declaration on Aid Effectiveness at the 3rd International Compact with Iraq meeting, held in Stockholm 29th May 2008. Thereafter, representatives from the Ministry of Finance, MoPDC and Office of the Deputy PM met with UNDP representatives in June and approved the terms of reference for a Paris Declaration implementation Task Force. (Task Force terms of reference is attached as annex 14).

- In order for the Government to implement the Paris Declaration a project proposal on “Implementing the Paris Declaration on Aid Effectiveness” was developed by UNDP. With minor amendments the project concept was approved by the Secretary of the Task

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Force and is in the process of being submitted to the United Nations Trust Fund for financial support. (Project document is attached as annex 13).

- A second meeting on “Economic and Governance Policy Reforms in Iraq” was held in Paris 8-10 July. The three day meeting ended with an OECD/UNDP Cooperation Agreement on joint collaboration in three areas of which Aid Management is one. This is the first such detailed collaborative agreement concluded between UNDP and OECD and paves the way for high level policy support to be provided to Iraq by OECD. (Cooperation agreement attached as annex 16).

7. CONSTRAINTS AND LESSONS LEARNED

Considerable security constraints have been encountered. These constraints particularly impeded the access of project staff into Iraq and also limited the availability of counterparts outside of Iraq, causing substantial delays to capacity development.

The implementation of training programmes outside Iraq (mainly in Jordan) led to substantial increases in costs that also posed significant constraints on implementation. An analysis of costs shows that, for instance, the training costs for one person/day in Jordan for short term training courses (5-10 days) varied from US$ 500-600 an increase of at least 20% compared to 2005. The Internet connectivity contracted in early 2006 for US$ 3,500/month, now costs US$ 4,500-5,000/month, which is an increase of almost 30%. The professional services (technical assistance, monitoring, performance assessment and training) of Iraqi based companies prorated for one consultant, cost US$ 15,000/person/month: it was for this very reason that UNDP particularly refrained from contracting such companies in Iraq and, instead, local consultants were hired in Jordan, which deliver the required services on-line. These actions were successful to minimise added expenditure however the implementation time was also increased as a result.

The high turnover of staff within the Government of Iraq was an initial impediment to the momentum of the project. Capacity building activities in general management and aid management domains were carried out in accordance with the plan and more staff were trained than actually required in order to mitigate this issue. This approach has proved to be effective as the staff eventually designated in the ministries were selected from the people that had undergone extensive capacity building on the basis of aptitude and long term commitment.

8. LONG TERM PROJECT IMPACT AND THE WAY FORWARD

Through this project, UNDP has successfully strengthened the Government of Iraq’s capability to manage external assistance through institutional and capacity development of the Ministry of Planning & Development Cooperation (MoPDC), including through the establishment of the specialised ICD. The MoPDC is mandated to promote, coordinate & oversee international assistance to ensure the optimal allocation of resources.

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The support provided here, in conjunction with the support provided under the Donors Assistance Database Iraq was widely used to demonstrate the unprecedented contributions made to Iraq with donor pledges in excess of $28 billon since 2003. Donors have committed $19.6bn to fund development projects and have to date disbursed $15.2bn with the largest proportion allocated between 2004 and 2006. Despite this, translating funds rapidly into tangible benefits for the Iraqi people remains an uphill struggle due to severe security constraints, insufficient information sharing and limited alignment with the NDS and ICI. A significant result of the project intervention has been to renew focus on the difficulties to aid effectiveness in Iraq in particular to ensure that resources are targeted effectively according to needs:

i) Sector balance: The project helped show that a significant proportion of aid has focused on infrastructure ($7.4bn),6 such as rebuilding power stations. However health ($1bn) and education ($1.1bn) have not received anywhere near as much despite the huge needs in these areas (e.g. 85% of Iraq’s schools needed repair in 2004 according to the Ministry of Education). Less than $300m has been allocated to economic development despite this being one of the three central pillars of the NDS.

ii) Harmonisation: The project helped show that the US is by far the largest donor with total pledges of $18bn and almost $16bn already committed to specific projects. Japan is the second largest with total pledges of $5bn, followed by the UK ($1.1bn) and the European Community ($0.7bn). Harmonisation between donors has been limited with over 92% of projects funded bilaterally (the US channels all of its funds this way). The EC is the notable exception with 99% of its assistance channelled through the UN and World Bank administered Trust Funds.

iii) Complexity: The project helped demonstrate the enormous complexity of the aid architecture with over 40 donors funding 19,835 grant assistance projects in Iraq with an average project size of just $1m each. In addition to the significant transaction costs that this entails, it also imposes a heavy administrative burden on the GoI to manage aid and unduly strains already weak implementation capabilities in Iraq.

iv) Geographic balance: Many projects operate nationwide ($1.9bn) however, where a breakdown of project cost is possible, there is a significant variance between governorates. Baghdad receives a fifth of total project expenditure which is in line with population density. However outside the capital, funds appear to be disproportionately allocated. Combined project costs for Salahuddin and Dhi Qar, for example, are greater than the allocation for Nineve although the latter is more densely populated.

In light of these challenges to aid effectiveness in Iraq, a significant impact of the project has been support leading to the endorsement of the Paris Declaration on Aid Effectiveness by the Government of Iraq in May 2008. The Paris Declaration provides a detailed road map for increasing development effectiveness by enhancing national ownership and partnership commitments; aligning donor support to GoI development strategies; harmonizing donor actions; managing and implementing aid with a focus on development results; and improving mutual accountability.

6 All figures from August 2009

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Launch of DAD in KRG, Feb 2008 [UNDP Iraq]

e-Government and ICT policy training, Tallinn, September 2007 [UNDP Iraq]

8.1 Impact on institution building and capacity development

Institution Building: A direct and sustainable impact of the project is the establishment of the ICD, responsible for coordination, planning, monitoring and evaluation of grant supported development projects. The ICD is comprised of four units, the Project Analysis Unit, responsible for screening and appraisal of development projects, a Monitoring and Evaluation Unit, responsible for tracking project progress, a Donor Relations Unit, responsible for communication with the donor community, and a Development Assistance Database (DAD) Unit, responsible for information management and maintenance of the DAD system. With this project’s support, a regional equivalent institutional structure, the External Resource Management Unit (ERMU), has also been developed for the MoP of KRG.

Capacity Development: A large number of training sessions have been delivered, including computer and IT skills, aid management core skills, strategic planning, and project appraisal and screening. The skills acquired from these sessions have been put into practice by the MoPDC through initiatives such as the Iraqi Strategic Review Board (ISRB), the successful transfer of ownership and management of the DAD Iraq system and the launch and

maintenance of the MoPDC web portal. The most recent training initiative on aid management led to a number of recommendations to continue progress and ensure long term sustainability.

8.2 Technical Impact on institution building and capacity development

Supporting DAD Implementation: A key component of this project support has been accompanying the successful implementation of the Development Assistance Database (DAD) (accessible via www.mop-iraq.org), an aid management system owned by the MoPDC that currently tracks almost 20,000 development projects inside Iraq. A recent notable achievement was the launch of a subset of DAD Iraq in the KRG in February 2008. The DADs are managed independently by the MoPDC and the MoP KRG with technical support from Synergy, the contracted partner supplying the

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MoPDC portal homepage [UNDP Iraq]

technical assistance required for the DAD. The sustainability of the DAD management is therefore ensured at least in the medium term.

The utility of DAD Iraq as an aid information management system is reliant on the completeness and timeliness of the data provided by donors. There are three stages during the project lifecycle when DAD Iraq should be updated:

1. Start project: all projects should be appraised and approved by the Government of Iraq prior to commencement and core details entered into DAD Iraq.

2. Quarterly progress update: donors should update the progress of each project on a quarterly basis to ensure output indicators and financial disbursements are accurate.

3. Finish project: donors should agree satisfactory project completion with the Government of Iraq, update final details and set project status to closed in DAD Iraq.

A fruitful collaboration in this respect has been established among MoPDC, UNDP, and major donors in data exchange, including the UN, US, UK and Sweden. In support, the UNDP team has supported the development of a number of technical guides and manuals providing information on how to use DAD and how to update projects. In addition, a support team at the MoPDC has also been established to support donor data entry. However despite significant progress to date, this area remains a key challenge for the GoI and continued support to improve compliance would be beneficial to ensure data quality.

e-Government: UNDP’s aid management support also included provision of infrastructure and internet connectivity for the MoPDC and MoP KRG. A UNDP e-government specialist has helped the MoPDC to design and implement a state of the art web portal. Technical support and training has enabled the MoPDC to harness the features of the content management system to display data and analysis on aid management and development in a transparent and easily accessible format. The portal is accessible at www.mop-iraq.org. The successful

implementation of these e-government initiatives has paved the way for more sophisticated e-governance interventions in the future, in particular through the new programme to reform the public sector.

9. RISKS AND ASSUMPTIONS FOR THE FUTURE

With its concrete partnership commitments and measurable time-bound indicators on aid effectiveness the Iraqi endorsement of the Paris Declaration on Aid Effectiveness is an important step to improve the outcome of aid. With inputs from the Office of the Deputy PM and the Ministry of Finance, UNDP and the MoPDC have developed a project to start the implementation of the Paris Declaration (see below). The Iraqi endorsement and the subsequent formulation of the Paris Declaration Implementation Project are very important direct results of

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this project. But several contextual factors need to be addressed if the future Paris Declaration initiative is to genuinely improve aid management in Iraq.

In this light, it is a positive development that the GoI is likely to finalise its 5 year National Development Plan soon after the 7th March 2010 national elections. Fortuitously, this time frame also corresponds to the United Nations system finalizing its Development Assistance framework (UNDAF) that has a llowed for a broad and intensive consultation process on both documents and the real possibility of aligning them to the maximum extent possible – in the true spirit of the Paris Declaration itself.

However, it is important to be mindful of the specific challenges to aid effectiveness that apply to the Iraqi context i.e., continued violence and insecurity; lack of national and international capacity; multiple and often incompatible agendas; unclear goals; blurred lines between military, humanitarian and development interventions; widespread corruption; and lack of coordination.Making sure that these aspects are addressed in the Paris Declaration implementation project is critical if it is to have a true impact.Other considerations that need to be addressed when implementing the Paris Declaration Implementation Project:

- The MoP of the KRG put in $100,000 from own source for the establishment of the ERMU. The high commitment by MoP to develop ERMU is not only the consequence of a genuine interest but also explained by the healthy pressure on MoP to report back to the KRG, Council of Ministers on the prudent and effective use of funds. These reporting requirements hardly apply when projects are 100% donor funded, leading to less pressure to perform and a lower success rate. To increase the likelihood of the Paris Declaration Implementation Project to really be effective UNDP should demand the government to co-finance the project.

- The division of responsibilities between the ICD and the ERMU need to be clarified further before becoming a potential source of tension.

- To facilitate MoPDC’s overall planning ability, projects need to follow the official approval procedure (through ISRB), instead of donors going straight to the governorates and NGOs. This generates a myriad of uncoordinated project activities with suboptimal impact and a highly incomplete understanding of what happens on the ground.

- The role of ICD and ERMU in the new national development plan, and vis a vis the ICI implementation process, thematic working groups, sector working groups etc., need to be clarified and formalized.

- Integration of donor resources and investment budget is another hugely important issue which needs to be made a priority in the Paris Declaration Implementation Project.

- Improved line ministry and MoPDC collaboration and information sharing for advanced planning needs to be improved.

Creating a strong central aid coordination authority would be a starting point to ensure that the Paris Declaration Implementation Project is successful and that the contextual aspects affecting aid management are addressed. This authority needs to be strong enough to enforce internal discipline in adhering to an Iraqi development plan that has been developed after extensive consultations and enjoys a broad stakeholder buy-in. Furthermore, the authority needs to prevent

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donors from concluding ad hoc project agreements without them being properly recorded and supportive of the national development plan.

The mandate of the International Cooperation Directorate (ICD) and the support that this project has provided it in terms of a revamped organizational structure, strengthened capacity with regards to project screening and appraisal, project monitoring and evaluation, and donor interaction and communication as well as database management, makes ICD well positioned to take on the role of such a coordinating authority. In close coordination with the ICD the ERMU could play the same role for the Kurdistan Region.

10. THE NEXT PHASE: THE PARIS DECLARATION INITIATIVE

This project and the development of the DAD has allowed Iraq to be a credible signatory to the Paris declaration on Aid Effectiveness. Consequently, the “Support to the GoI in Implementing the Paris Declaration on Aid Effectiveness” project (hereafter “The Project”) has been developed at the request of the Government of Iraq (GoI) in order to adapt and localize the Paris Declaration for Iraq following its endorsement by the GoI on 29 May 2008.

The Project will seek to maximise the potential of aid in achieving development results in Iraq through the generation of a mutually reinforcing partnership between the GoI, donors and other actors. The Project will predominantly provide upstream policy advice and capacity development support to the GoI to enhance the delivery and effectiveness of aid to Iraq structured around each of the five principles of the Paris Declaration. The main project counterparts will be the Prime Minister’s Office (PMO), the Ministry of Planning and Development Cooperation (MoPDC) and the Ministry of Finance (MoF). The initiative will be initially funded by the ITF for $1 million and will be for an initial 18 months duration.

Project Outcome:

GoI has institutionalized mechanisms for managing international assistance in line with Paris principles on aid effectiveness.

Project Outputs: Output 1: Establish ownership of the aid effectiveness agenda in Iraq through support to core mechanisms and policiesOutput 2: Ensure that donors base their overall support on GoI's national development strategies, institutions and proceduresOutput 3. Ensure that donors' actions are more harmonised, transparent and collectively effectiveOutput 4. Strengthen effective results based management systems to monitor and evaluate the impact of aidOutput 5. Strengthen accountability mechanism for development results.

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