Bilateral and Multilateral Donor Behavior and Division of Labor
Arrangements: A Case Study of Rwanda
Master Thesis by Gabrielle D. Espina
Universiteit van Amsterdam Master thesis in Political Science
Specialization: Political Economy of Development Finance
Supervisor: Prof. Dr. S. Lim Second Reader: Prof. Dr. F. Boussaid
Table of Contents
I Introduction 5
1 Research Question 6
2 Donor Division of Labor Arrangements 7
3 Argument 8
II Review of the Academic Literature 11
1 Leading Documents 11
2 Aid Allocation and Effectiveness 12
3 Conclusion 16
III Theory 18
1 Realist and Idealist Theory 18
2 Hypothesis 20
IV Methods 23
1 The Government of Rwanda’s Division of Labor Arrangement 23
2 Bilateral and Multilateral Data Analysis 28
V Analysis 31
1 Bilateral Donor Behavior and Analysis 31
2 Multilateral Donor Behavior and Analysis 42
3 Analysis of DoL Progress Reports 53
VI Findings 55
1 Conclusion 57
Bibliography 59
Abbreviations
GoR: Government of RwandaDoL: Division of Labor
OECD: The Organization for Economic Co-operation and Development DPs: Development Partners
ODA: Official Development Aid
EDPRS: Economic Development and Poverty Reduction Strategy CSP: Country Strategy Paper
SWAp: Sector-wide Approach
ODA: Official Development Assistance PD: Paris Declaration
AAA: Accra Agenda for Action EU: European Union
UK: United Kingdom US: United States
EC: European Commission
AfDB: African Development Bank UNDP: UN Development Project WHO: World Health Organization WB: World Bank
IMF: International Monetary Fund
FAO: the Food and Agriculture Organization ILO: the International Labor Organization UNDP: the United Nations Development Project UNEP: the United Nations Environmental Programme
UNESCO: the United Nations Educational, Scientific, and Cultural Organization UNFPA: the United Nations Population Fund
UNHCR: the United Nations Refugee Agency
UNICEF: the United Nations Children’s Rights and Emergency Relief Organization UNIDO: the United Nations Industrial Development Organization
UN Women: the United Nations Women WFP: the World Food Programme
IFAD: the International Fund for Agricultural Development WHO: the World Health Organization
UNECA: the United Nations Economic Commission for Africa UNCDF: the United Nations Capital Development Fund
HQs: Headquarters
Introduction
The United States aid program describes its mission as one “works to end extreme global poverty and enable resilient, democratic societies to realize their potential” (USAID 2016). Most donors intend for aid they provide to the developing world to alleviate poverty and promote economic development. But the motivators behind aid allocation, such as democratization in the case of USAID, create a stark disparity in aid flows that can prove detrimental to economic development. For example, the “two-gap” model elaborated by Chenery and Strough (1966) says that aid promotes development by “adding to domestic savings as well as to foreign exchange availability, thus helping to close either the savings-investment gap or the export-import gap” (Maizels et. al. 1984). But like most systems, the international aid system is imperfect and faces challenges.
These challenges are a roadblock to economic development for many developing countries. When a country or a sector experiences disparity in aid flows, the resulting consequence is referred to as ‘aid darlings’ and ‘aid orphans’ (Marysse 2006). At the sector level, ‘aid darlings’ are sectors that receive over-funding and orphans are sectors that receive under funding. Spillovers across sectors suggest that neglecting certain areas may have negative consequences on the development of a country as a whole, and even undermine progress in the targeted sectors (Pietschmann 2014). This then results in high transaction costs, dualistic efforts, and orphaned recipients and sectors. Therefore, “ensuring that aid is allocated efficiently is crucial for generating development results” (OECD 2013). There is an overwhelming consensus among the international community that examining this disparity in aid flows going into
developing countries and sectors within a developing country is pertinent to aid effectiveness. Researchers have investigated the causes of over- and under- funded sectors and a non-transparent and non-cooperative aid system. According to the OECD (2011), aid darlings and aid orphans are the direct result of a dysfunctional global development cooperation system. More specifically, when donors fail to cooperate with one another and coordinate aid allocation, some sectors receive a surplus of aid while other countries are neglected, the reasons for this
phenomenon will be expanded on later in this chapter. In addition, this thesis will demonstrate how the consequences of uncoordinated aid allocation result in ineffective or less effective aid and a burdening on the recipient country.
This is a particularly important phenomenon because regardless of the extensive research detailing the positive effects donor coordination can have on aid effectiveness, both bilateral and multilateral donors have and continue to design country aid arrangements without incorporating other donor aid arrangements or considering if sector is over or under aided (OECD 2011). On this, the OECD writes, “Aid allocation decisions are generally unilateral, meaning that in making aid allocation decisions, donors do not usually factor in information of what others are doing or planning to do, even where this information exists” (OECD 2011).
Research Question
This thesis aims to address the aforementioned puzzle by examining the variations between sector-level bilateral donor aid flows and sector-level multilateral donor aid flows using a case study of Rwanda. The question this thesis will answer is: How effective have bilateral and multilateral donor agencies, respectively, been at implementing the Government of Rwanda’s Division of Labor Arrangement (2010)? And what explains these variations? .
As mentioned above, uncoordinated aid is a problem within the international aid system that hinders overall effectiveness and can do further damage to the recipient. The motivators behind bilateral donor aid allocation and multilateral donor aid allocation has been researched and tested many times among the scholarly community. The OECD (2009a), for instance,
reported that, “donors make sovereign decisions based on the objectives, priorities, and incentive frameworks of their aid programme”. This idea implies that if aiding a particular sector is not in the interest of the donor, that sector becomes at risk of being under-funded or an ‘aid orphan’.
In recent years, the United Nations introduced the Millennium Development Goals, which set an international standard of where the least developed countries should be in terms of overall development. In order to achieve these goals, donors have had to work towards
maximizing overall aid effectiveness. The OECD reported in 2013 that correcting for under-funding in the least developed countries with high institutional capacity could allow for a faster achievement of the Millennium Development Goals. This same concept applies at the sector level within a least developed country with high institutional capacity. By freeing aid resources
from over-funded sectors and re-allocating them to under-funded sectors, it could allow for faster progress towards development results (OECD 2013).
Furthermore, the Millennium Development Goals brought in a new influx of
development support. Recent research demonstrates (e.g. OECD 2008b, 2009b 2009c, Carlsson et al. 2009) that “the ever increasing number of actors, channels and activities in the international aid architecture has been identified as a major problem for achieving aid and development effectiveness” (OECD 2010). Increasing donor support and a continued lack of coordination among these many actors, can only further amplify the under and over funding of sectors.
Therefore, in order to improve aid coordination, and therefore overall development, it is crucial to look at how effective various donors have been at coordinating aid, so that certain practices can be altered for the better. This thesis aims to do so by examining Division of Labor Arrangements (DoL) through a case study of the Government of Rwanda and its 2010 Division of Labor Arrangement. Rwanda, in particular, has been a leader amongst recipient countries, in its work to coordinate aid flows. Because of this, the Government of Rwanda (GoR), its donors, and the OECD has provided periodic reviews, supported by data, analyzing the GoR’s DoL progress. This makes Rwanda a relevant and important case study to review.
Donor Division of Labor Arrangements
A Division of Labor (DoL) arrangement is an arrangement, drafted by an aid-receiving country and supported by that country’s donors. The DoL arrangement aims to coordinate aid flows to sectors based on the recipient country’s needs and national interests. Division of Labor arrangements were first intended to reduce the number of donors in over-aided countries, while increasing aid engagement in under-aided countries (Pietschmann 2014).
This concept of recipient country led donor coordination arrangements were introduced to the international community in the Paris Declaration (2005). The Paris Declaration (PD) put forth a principle of harmonization of donor activities in order to address the management
problems that arose and continue to arise as the number of actors, aid channels, aid projects, and donor activities increase. Problems in the aid architecture, such as sector over-crowding, create problems such as fragmentation for the recipient country and proliferation for donors (OECD 2010).
But now there are two dimensions of DoL. One is Cross-Country DoL, which addresses aid allocation to over and under funded countries. The other is In-Country DoL, which addresses over- and under- funded sectors. The former is more developed in the scholarly community due more accessible data regarding sector aid allocation. This thesis will focus on DoL among sectors as opposed to countries. In-country DoL arrangement are designed to reduce the number of donors in over-aided sector, while increasing aid engagement in under-aided sectors. A sector would be determined under-aided if the aid volume going in did not conform with the external funding envisaged for that sector in national strategy papers (Pietschmann 2014).
DoL arrangements have many objectives (OECD 2010). The first is to, “reduce the number of donors involved in the same kind of activities” (Murle 2007:6). This is important because tackling donor duplication in sectors will lower transaction costs for donors and the recipient country. This thesis will elaborate on this later on. The second objective of DoL arrangements is to provide adequate coverage to all sectors thereby eliminating orphan sectors. Third, in the process of developing a DoL, dialogue improves between donors and the
government and between sectors themselves.
Forth, aid allocation becomes predictable. Therefore, it enables recipient governments to plan for the aid coming in and therefore use it more effectively (OECD 2010). For example, one study found that “donors are funding approximately 265 different aid projects in Sierra Leone. Many of these projects are implemented unbeknownst to the government, which struggles to capture information about the diverse and competing initiatives in the country” (EURODAD 2008).
The final goal of a well organized donor division of labor is to lower transaction costs for recipient countries so that the recipient country “will be able to spend more resources for direct poverty reduction and development purposes rather than on aid management” Stern et al. 2008), ultimately, improving aid effectiveness.
Argument
The literature on donor behavior suggests that bilateral and multilateral donors behave differently. While variations in bilateral and multilateral donor behavior are widely believed, it has never been systematically tested in terms of division of labor arrangements. Therefore, this thesis aims to deconstruct bilateral and multilateral donor behavior by analyzing how effective
they have been in implementing the Government of Rwanda’s Division of Labor Arrangement (2010). Furthermore, this thesis then aims to analyze why bilateral and multilateral donors behaved the way they did and what caused these trends in effectiveness of implementation. This thesis will do so by comparing sectorial aid flows from bilateral and multilateral donors,
respectively, to the aid allocation plan in the GoR DoL Arrangement (See annex 1) and identifying if and to what to degree the aid flows support or deviate from the GoR DoL Arrangement . The overall purpose of this thesis is to illustrate the behaviors of donors so that donor coordination can be improved and aid can be utilized most effectively.
This thesis argues that bilateral donors are less likely to coordinate aid in accordance with the GoR’s DoL Arrangement while multilateral donors are more likely to fully coordinate aid in accordance with the GoR’s DoL Arrangement. Overall, the data on bilateral donor sectorial aid flows demonstrates that bilateral donors deviated from the DoL more often than their multilateral counterpart. This thesis suggests that this is due, in part, to the political, economic, and security interests of bilateral donors whereas, given the multi-national nature of multilateral donors, multilateral donors are less likely to allocate aid based on donor interest.
To illustrate this argument, this thesis will begin by discussing the relevant literature. The literature review will survey the literature on aid allocation, bilateral donor behavior and
multilateral donor behavior. The leading documents that will be discussed in the literature review are the Paris Declaration (2005), the Accra Agenda for Action (2008), and the Government of Rwanda’s Division of Labor Arrangement (2010). Furthermore, this thesis will identify the gap in the literature and demonstrate how this thesis intends to fill it.
The Literature Review chapter will be followed by a chapter discussing theory and this thesis’ hypothesis. The hypothesis chapter will illustrate the argument for how effective this thesis thinks bilateral donors will be in implementing the GoR’s DoL Arrangement and how effective this thesis thinks multilateral donors will be in implementing the GoR’s DoL Arrangement. This chapter is supported by a discussion of realist and idealist theory.
The Theory chapter will be followed by the Methodology chapter. The Methods chapter will discuss the research methods utilized and aims to define and defend the variables and data used in this thesis. This chapter will elaborate on the GoR’s DoL Arrangement and why Rwanda was chosen as a case study and will discuss the OECD data on sectorial bilateral and multilateral aid flows from 2010 to 2014, among other important tools utilized in the Analysis chapter.
Furthermore, this chapter will conclude by outlining the strengths of this methodology as well as any limitations of the methodology or data.
The Methods chapter will be followed by the Analysis chapter. This chapter aims to identify the variations in bilateral and multilateral donors in how effective they have been, respectively, in implementing the GoR’s DoL Arrangement. After identifying the variations, this chapter will qualitatively analyze secondary literature on bilateral and multilateral donor
behavior to support the analysis.
The final chapter will conclude this thesis by discussing the findings of the analysis and its relationship with the research question, international relations theories, and the hypothesis. This thesis will assess whether the analysis of the available data on bilateral and multilateral donor sectorial aid flows supports or denies the hypothesis and relevant international relations theories. The conclusion will include a review of the strengths and weaknesses of the thesis and provide recommendations for future research. This chapter aims to conclude with a contribution to the field of international political economy and development.
Furthermore, by identifying and analyzing bilateral and multilateral donor coordination behavior, this thesis aims to illustrate how aid coordination can be improved upon. By using the case study of Rwanda, this thesis hopes that future reports will be able to utilize this information to alter Division of Labor arrangements to account for bilateral and multilateral behavior. This, in turn, would lead to a better functioning aid system that both prioritizes the recipient’s needs and accounts for the donor behavior. Lastly, the overwhelming consensus in the scholarly community regarding aid effectiveness is that “making aid less fragmented means making it more effective.” (OECD 2009b:36). The end goal of donor coordination is poverty reduction and economic development for the least developed countries. Therefore, this thesis aims to play a small role in promoting this mission.
This literature review intends to discuss the relevant academic literature regarding donor division of labor and bilateral and multilateral behavior. The leading documents this review will discuss are the Paris Declaration (2005), the Accra Agenda for Action (2008), and the
Government of Rwanda’s 2010 DoL Arrangement. This literature review intends to discuss the relationship between and position of this thesis and the relevant scholarly literature, and provide an in depth background to support the Analysis chapter later on.
Leading Documents
In order to fully understand the Government of Rwanda’s 2010 Division of Labor Arrangement, it is important to review the documents leading up to its creation. The first
significant document that brought donor coordination and Division of Labor Arrangements to the spotlight of the international community was the Paris Declaration (2005). The Paris Declaration (PD) was published in 2005 and addressed the international community on aid effectiveness. The Paris Declaration (2005) gave bilateral donors and multilateral donors the opportunity to commit to improving the allocation of resources across least developed countries. Their aim was to improve allocation of resources while working to address the issue of countries that receive insufficient aid (OECD 2013). Furthermore, “the Paris Declaration (PD) commits both donors and recipient government to hold one another accountable for development results and to jointly assess progress in achieving commitments on aid effectiveness” (ODI BSI 2012).
Donor cooperation gained momentum after the introduction of the Paris Declaration and, in 2008, donors committed to improving the allocation of resources across least developed countries in The Accra Agenda for Action (AAA). Similar to the Paris Declaration, the Accra Agenda for Action aimed to “improve allocation of resources across countries” and “work to address the issue of countries that receive insufficient aid” (AAA 2008).
After the concept of division of labor rose in discussion and popularity following the PD and AAA, the Government of Rwanda drafted its own division of labor arrangement in 2010. The GoR’s DoL was endorsed by many of its bilateral and multilateral donors. The GoR and its DPs agreed to a three-year implementation period in which the DPs would adjust their aid flows to conform to the DoL arrangement.
The GoR constructed their 2010 DoL by assessing its sectors to determine if there was a gap in external funding. A sector would be determined under-aided if the aid volume going did not conform with the external funding envisaged for that sector in national strategy papers (Pietschmann 2014). The DoL was then designed to correct for the sectorial aid fragmentation.
In the case of Rwanda, the Government of Rwanda’s DoL acts as a “tool for the government and donors to hold each other accountable for development results” in addition to providing aid coordination (GoR DoL 2010).
Aid Allocation and Effectiveness
An important piece of literature that discusses donor division of labor and aid allocation trends is Pietschmann’s 2014 paper titled ‘Forgotten or Unpromising? The Elusive Phenomenon of Under-Aided Countries, Sectors and Sub-National Regions’. Pietschmann’s study analyzes aid trends in order to determine aid efficiency. The author establishes a positive correlation between the efficient allocation of aid and aid effectiveness. Pietschmann concludes that harmonization of aid flows is of crucial importance to aid effectiveness and development.
Pietschmann’s analysis covers both cross-country and in country aid fragmentation. Pietschmann writes that the phenomenon of over and under funding and its affect on aid effectiveness “not only concerns countries receiving insufficient aid, but also neglected sectors and geographical regions within recipient countries (Pietschmann 2014). The remainder of this thesis will focus on Pietschmann’s contribution to sector aid fragmentation due to the focus of the case study of Rwanda.
There is much debate in the literature about the reasons for aid allocation decisions. In order to begin the process of determining the reasons for aid allocation, it is important to look at how aid has been allocated in the past. Pietschmann’s research showed that the agriculture, productive infrastructure, and water and sanitation sectors received disproportionately low amounts of aid in many developing countries (Pietschmann 2014). Pietschmann discovered that these particular sectors produce less visible results and therefore it is difficult to measure the success of the donor’s aid contribution. Pietschmann’s analysis conveyed that one of the reasons for this is that donors are attracted to sectors that produce visible results. Donors, therefore,
chose to intervene in sectors with the highest visibility “in order to demonstrate the successes of their engagement and guarantee continued funding” (Pietschmann 2014).
Nunnenkamp et. al (2013) study supported this and found that on a global scale donors, both bilateral and multilateral donors, were decreasing their donor coordination after the implementation of the Paris Declaration. The author suggested this was because donors, particularly bilateral donors, are “accountable to domestic taxpayers, who usually do not have the information required to assess the success or failure of specific aid interventions. As a result, donors might be inclined to ‘plant their flat’ and engage in a broad range of highly visible projects in order to demonstrate their engagement and secure future funding.”
Even further, Pietschmann accredited sector aid allocation to nine different factors. The factors are (1) commercial interest, (2) quest for energy security, (3) fight against illegal
immigration, (4) attempt to avoid the spread of infectious diseases, (5) visibility, (6) institutional strength, (7) effectiveness, (8) risk-pooling, (9) herd behavior. Pietschmann argues that, in addition to need, these factors are what drive donors to over aid and under aid particular sectors. Pietschmann’s analysis falls short at examining if there are variations in bilateral and multilateral donors in how they allocated aid. This thesis will address some of these factors in the analysis in order to assess why bilateral donors and why multilateral donors varied in how effective they have been in implementing the GoR’s DoL Arrangement.
In addition to Pietschmann, Schraeder (et. al. 1998) wrote a paper titled ‘Clarifying the Foreign Aid Puzzle: A Comparison of American, Japanese, French, and Swedish Aid Flows’ which examined the drivers behind bilateral aid flows. Schraeder (et. al.1998) writes, “this study examines France, Japan, Sweden, and the United States in order to determine their motivating factors behind aid policies [1980s-90s]. Statistically tests the linkage between donor self-interest and aid flows”.
Schraeder (et. al. 2008) found that bilateral donors, specifically the United States, Japan, France, and Sweden, allocated aid based on the interests of themselves as opposed to the
recipient country. Schraeder also found that there are many variations in strategy and national interests between these bilateral donors that determined. In fact, Schraeder proclaimed that often time’s donor governments explicitly declared their interests, which was “lamented by recipients” (Schraeder et. al. 1998).
It is not only Schraeder who found this in their research, Maizels and Nissanke (1984), in their paper titled ‘Motivations for Aid to Developing Countries’, found that “many donor
governments have indicated that, in their aid allocations, they also take their own national interests into account, whether these be conceived largely in terms of maintaining spheres of influence, political or military alliances, or simply of promoting their own export trade”. Maizels (et. al. 1984) used cross-country linear multiple regressions to calculate their results. For
example, Maizels (et. al. 1984) discovered that the United States cut aid to Zimbabwe by 50% because Zimbabwe abstained from voting on the shooting down of a Korean airliner. This decision did not take into account Zimbabwe’s financial aid needs or institutional capacity to utilize the aid, at the time. Maizels (et. al. 1984) found that the United States, in particular, has “been using bilateral aid more openly as an instrument of foreign policy” (Maizels et. al. 1984). Therefore, investigating the motivations behind bilateral aid allocation can provide insight into their policies and actions in the related fields. The U.S.- Zimbabwe example demonstrates U.S. and Zimbabwe policy towards Korea during this time period. This is also true in fields such as trade policy and policy concerning foreign investment (Maizels et. al. 1984).
Within the academic literature on aid allocation, researchers have proposed two models that determine allocation. The first is donor interest model and the second is the needs based model (Maizels et. al. 1984). The donor interest model is based on five proponents: (1) maintaining a sphere of influence, (2) discouraging associations with communist powers, (3) power politics, (4) economic development and performance, (5) political stability and
democracy. McKinlay and Little in 1978 tested these two models and discovered that the needs based model was not statistically significant. On the other hand, the donor interest model was statistically significant for bilateral donors-- the US, the UK, France and Germany.
Similarly, Schraeder found that one of the driving motivators behind aid was the
economic security of the donor government. For instance, donors would favor recipient countries that have powerful economies and economic influence in their region (Schraeder et. al. 1998). In terms of this thesis and sector allocation, this finding would suggest that bilateral donors would be more likely to aid sectors that would promote their fiscal interests such as the Law and Order sector or the Public Policy sector.
Schraeder (et. al. 1998) also found that strategic importance in terms of national security was a significant determinant of aid allocation. Bilateral donors would use foreign aid “as a tool
to enhance national security of aid donors” (Schraeder et. al. 1998). For instance, donors would use foreign aid to establish or maintain a security alliance between the donor and the recipient. Furthermore, Schraeder found that donors would favor developing countries that had strong militaries. This phenomenon occurred because donors would utilize the recipient country’s military as a surrogate for the donor within the recipient country’s region (Schraeder et. al. 1998).
In a more recent study, author Dollar published a paper in 2000 titled ‘Who Gives Foreign Aid to Whom and Why?’. This paper conducted a study on bilateral aid flows from the United States, Japan, France and Germany in order to explain the behavior of bilateral donors collectively. This study, similar to this thesis, was conducted used OECD data and aims to analyze the strategic interests of donors. Dollar (2000) looked at seven factors of recipient countries, (1) trade openness, (2) democracy, (3) civil liberties, (4) colonial status, (5) direct foreign investment, (6) initial income, and(7) population, in order to determine the reason behind bilateral aid allocation.
Dollar found that “the strongest relationship is with population (small countries get more per capita) and with colonial status”, there is a “slight positive relationship between initial income and aid”, and a “modest positive association of aid with openness and with democracy”. Dollar discovered that donors favored to aid countries that would have a positive financial benefit on the donor and the recipient countries politics or political association. In terms of this thesis and sector aid allocation, Dollar’s conclusion may suggest that bilateral donors would be more likely to aid sectors that benefit them financially, such as Justice and Law & Order so that investors are protected and trade remains open.
Furthermore, Dollar (2000) found that the democratic institutions of the recipient
government particularly influenced bilateral aid allocation. He exclaims that, “a non democratic colony gets about twice as much aid as a democratic non-colony” and that “countries that democratize receive more aid, ceteris paribus” (Dollar 2000). Similarly, many researchers found that donors began to place democratization and good governance high on the agenda post-cold war (Marysse 2006). In relation to this thesis, this may suggest that bilateral actors are more likely to aid sectors that directly have to do with democracy or the donor’s ideology. For instance, the U.S. may be more likely to favor allocating aid to the Decentralization sector even if it is in opposition to the agreed division of labor arrangement.
In contrast to bilateral donors, Maizels (et. al. 1984) found that “aid flows from
multilateral sources, as would be expected, are allocated essentially on recipient need criteria”. The needs based model for aid allocation suggests that aid is allocated to countries and sectors based on need and the national interest of the recipient as opposed to the interests of the donor (Maizels et. al. 1984). In terms of this thesis, this would suggest that multilateral donors will be more successful in implementing the GoR’s DoL because division of labor arrangements are designed to cater to the recipient country’s needs.
But in contrast to Maizels (et. al. 1986), Frey (et. al. 1986), in their paper titled ‘Competing Models of International Lending Activity’, found that there were four drivers of World Bank aid allocation. The first is a needs model. This model suggests that the recipient country’s needs and its indicators of poverty determine aid allocation. The second driver is the deserts model. This suggests that aid allocation is determined by a country’s capacity to utilize aid and the likelihood said country will develop. The third driver is the benevolence model and this model suggests that, similar to bilateral donor aid allocation theories, aid allocation is determined by the ideology and strategies of the World Bank. The last driver is the political-economic model. This model suggests that the World Bank is a bureaucracy which acts in the self-interest of its leaders and is subject to various economic and political constraints based on the countries that supply the majority of its funding (Frey et. al. 1986). Through an econometric study, Frey (1986) found that political-economic model performed the best. In terms of this thesis, this finding would suggest that multilateral donors might be constrained by the strategic interests of its biggest funders, which would imply that there would be little variation in how effective bilateral and multilateral donors have been in implementing the GoR’s DoL
Arrangement.
Conclusion
Many authors have highlighted the various motivations behind aid allocation. But much of the literature seems to generalize all donors and does not often differentiate between bilateral donor aid allocation motivations and multilateral donor aid allocation motivations. It begs the question how do two fundamentally different types of donors, bilateral and multilateral, vary in how they allocate their aid? Furthermore, if donors are told by a recipient country how they need
to allocate their aid, will one type of donor be more effective at implementing the arrangement than the other? If so, why? Donor division of labor is a new concept with very little research on bilateral and multilateral donor behavior in relation to it. Therefore, this thesis aims to either confirm or deny the theoretical implications put forth by these previous authors using this new approach and different data.
There is little research on the degree to which bilateral and multilateral donors have
implemented the strategies and policies specified in the division of labor arrangements. Furthermore, there is little research on how the implementation performances vary between bilateral country donors and multilateral institutional donors. Therefore, this thesis aims to test and analyze this neglected issue.
In order to achieve more efficient and effective development results, it is not only useful and necessary to examine global allocations in order to assess how they can be made more effective but also important to examine the ongoing coordination efforts so future division of labor agreements can be made more effective.
This thesis aims to assess how effective bilateral and multilateral donors, respectively, have been in implementing the Government of Rwanda’s Division of Labor Arrangement. To do so, this chapter will look at two main international relations theory to assess its applicability to this question and determine if the data analysis in the chapter that follows, supports or debunks these two theories. Second, this chapter will propose a hypothesis about how effective donors have been at implementing the GoR’s DoL Arrangement based on the literature on bilateral and multilateral donor aid allocation. The Analysis chapter that follows will assess the data and determine if the hypothesis upholds.
Realist and Idealist Theory Realism
The first theory that this chapter will examine is realism. Realist theory suggests that rational states, acting in an anarchic global system, act in their own security and power interests (Grieco 1988). In terms of this thesis and aid allocation, author Schraeder (et. al. 1998) proposes that realism suggests that “aid policies are driven primarily by the strategic interests of nation-states...international relations are conducted in a Hobbesian state of nature in which national security and self-preservation become the primary, if not the exclusive, objectives”. Realist thought in terms of aid allocation would suggest that aid flows from donors are based on the security-related interests of the donors.
Similarly, Marysse (2006), found that “During the cold war era, the aid flows modalities and motives differed along lines of importance in the East-West competition. Countries that were considered strategic in geopolitical or economic terms received substantial unconditional
amounts of aid” (Marysse 2006). This suggests that during the Cold War era, the U.S. and similar ideological actors, allocated aid based on countries that supported their position in the Cold War. Countries that did not support their ideological stance received substantially less aid. Realist theory would suggest that the U.S. behaved in the interests of their own security and strategic advancement.
In realist thought, the humanitarian need or national interest of the recipient country comes second to the interests and well being of the donor country. In relation to this thesis, this implies that because bilateral donors are made up of a singular country with security and strategic interests, their aid flows will more likely align with their own interests as opposed to Rwanda’s. For example, Japan based its foreign policy on its business interests. Japan’s
government and its corporate actors supported industrial policy targeted at enhancing exports and did so through concessional aid (Schraeder et. al. 1998). In fact, Schraeder (et. al. 1998)
proclaims that the theory that donors allocate aid based on their own security interests has become axiomatic in the scholarly literature.
In terms of donor cooperation, realist theory also suggests that states, and therefore bilateral donors, “experience two constraints on their willingness to cooperate-- cheating and the fear that gaps in jointly produced gains favor partners” (Grieco 1988). Realism, therefore, would suggest that bilateral donors are less likely to fully support DoL if a portion of the arrangement does not support their own interests. However, realism also “asserts that states are positional, not egoistic, in character” (Grieco 1988) and this contradicts the concept of aid in the first place and therefore this aspect of realist theory is inapplicable to this thesis’s research question.
Idealism
Idealist theory proposes actors can overcome the “egoistic” motivators that drive realist thought and replace it with, “considerations beyond mere security and self-interest” (Herz 1950) through the development of conditions and solutions. In the case of this thesis, Idealism would suggest that the construction of a DoL Arrangement will supplement the need to act in self-interest, through providing conditions, and ultimately result in a donor harmonization.
In contrast to realism, this theory is based on the idea that harmony can exist. Herz writes, idealism “usually starts from a more ‘rationalistic’ assumption, namely, that a harmony exists, or may eventually be realized… further, that power is something easily to be channeled, diffused, utilized for the common good” (Herz 1950). In terms of this thesis, this would imply that the bilateral and multilateral donors are capable of channeling their
powers to support the GoR’s Division of Labor Arrangement and improve aid effectiveness for Rwanda.
Similarly, Schraeder (et. al. 1998) says, “The idealist paradigm and its neo idealist offshoots assert the overriding importance of humanitarian need as the cornerstone of many foreign aid programs. Unlike their realist counterparts, these scholars are particularly optimistic about the potential utility of foreign aid for the ameliorating Third World poverty and promoting broadly shared economic development” (Schraeder et. al. 1998). Nunnenkamp (et. al. 2013) also suggests that humanitarianism occurs in the international aid allocation process but is done so for instrumental reasons. In the case of this thesis, this implies that, for whatever reason, it is in the interest of the donor to conform to the DoL Arrangement.
In contrast to realist thought, idealist theory prioritizes humanitarian need over national security interests. For example, Schraeder (et. al. 1998) found that “in the case of Sweden, the consensus of the case study literature is that Swedish foreign aid policy was principally driven by humanitarian goals of broadly shared economic development and the provision of basic human needs”. Considering Sweden is a DP of Rwanda and has endorsed the GoR’s DoL Arrangement, this thesis will look at Sweden and determine if this conclusion upholds.
Similarly, Marysse (2006) found that aid allocation in the Great Lakes region of Africa was not based on international good governance criteria like it was for other African states. Aid to that region was based on humanitarian need. Rwanda, in particular, received an influx of aid after the genocide. But Marysse (2006) found that, while their aid flows may have been well intentioned, it was ineffective in promoting development in the region. This suggests that uncoordinated aid, regardless of intent, can harm the effectiveness. Furthermore, idealist theory would suggest that bilateral and multilateral donors will support the GoR’s DoL Arrangement to the fullest extent of their capacity if doing so is the most effective way to provide aid and meet Rwanda’s needs.
Hypothesis
The overall consensus in the academic literature is that bilateral donors, more so than multilateral donors, allocate aid based on their financial, political, and security interests. On this
Maizels (et. al. 1984) writes, “bilateral aid allocations are made largely (for some donors) or solely (for others) in support of donors perceived foreign economic, political and security interests”. Similarly, Dollar finds that there is “considerable evidence that the direction for foreign aid is dictated by political and strategic considerations, much more than by the economic needs and policy performance of the recipients” (Dollar 2000). Therefore, this thesis
hypothesizes that between 2010, when the GoR introduced its DoL Arrangement and 2014, the year after the implementation period, bilateral donors will have been less effective at changing their aid allocation to conform to the DoL Arrangement.
Multilateral donors, on the other hand, do not officially have a national interest. Furthermore, some multilaterals were created on the basis of providing targeted aid. For example, one of the leading goals of the World Health Organization is to provide aid to the Health sector in developing countries. As mentioned previously, the GoR takes into account the expertise of its DPs and created the 2010 DoL Arrangement and aid allocation based, partly, on this. Therefore, it is unlikely that specialized multilaterals would deviate from their expertise. Furthermore, the OECD suggests that multilateral institutions use more and better quality
quantitative research in order to determine aid allocation while bilateral institutions often neglect to use quantitative formulas to determine aid allocation. Given these reasons, this thesis
hypothesizes that multilateral donors will be more effective at implementing the GoR’s DoL Arrangement in the given time period.
But, because bilateral donors fund multilaterals, this thesis does not propose multilateral donors will fully support the GoR’s DoL Arrangement. There will likely be some deviations by multilaterals due to pressure from their headquarters or funders. On this Frey (et. al. 1986) writes, “the most important constraint imposed on the behavior of the World Bank top officials is the interference of the donor countries exerted through their voting rights in the governing
bodies, or by more informal channels”. Therefore, multilateral donor behavior may be more similar to bilateral donor behavior than other literature suggested. This following chapter aims to assess this.
Furthermore, this hypothesizes that there will be significant variations within the bilateral donor group and the multilateral donor group. For instance, Dollar’s (2000) analysis found that “certain donors (notably the Nordic countries) seem to respond to the “correct” incentives, namely income levels, good institutions of the receiving countries, and openness. Other countries
(notably France) give to former colonies tied by political alliances, without much regard to other factors, including poverty levels or choice of politico-economic regimes”. This conclusion may suggest that the Nordic countries involved in Rwanda and that are committed to the DoL Arrangement will be more effective in implementing the aid flow changes to conform to the DoL, whereas other bilateral donors, such as the U.S., may be less effective.
Methods
This thesis aims to answer the question, how effective have bilateral and multilateral donor agencies, respectively, been in implementing the Government of Rwanda’s Division of Labor Arrangement (2010) and what explains these variations? To do so, this thesis will utilize a mixed methods research approach. This thesis will combine a quantitative analysis of OECD data on bilateral and multilateral sectorial aid flows and a qualitative analysis of bilateral and multilateral donor behavior, in order to identify donor variations in effectiveness of DoL implementation and then explain the reason for these variations.
This chapter will begin by discussing the Government of Rwanda’s Donor Division of Labor Arrangement (2010) and explain why this case study of Rwanda was selected to analyze bilateral and multilateral donor aid allocation and division of labor arrangements. This discussion will be followed by a discussion and defense of the data used to compare the real sectorial flows of bilateral donors to the sectorial aid flows proposed in the GoR’s DoL Arrangement. Following this will be a discussion and defense of the data used to compare real sectorial aid flows from multilateral donors to the sectorial aid flows proposed in the GoR’s DoL Arrangement. Lastly, this chapter will discuss the DoL surveys and monitoring reports used in the Analysis chapter to further the analysis.
The Government of Rwanda’s Donor Division of Labor Arrangement
The Government of Rwanda’s Division of Labor Arrangement was drafted in 2010 and endorsed by twelve bilateral countries and nineteen multilateral organizations. Throughout the
development of this Division of Labor Arrangement, bilateral and multilateral donors were consulted and negotiated with the Government of Rwanda and other donors in order to produce the most effective division of labor arrangement. On this the African Development Bank reports, “Donors also consult closely in the preparation of their assistance strategies, and increasingly share analytical and economic and sector work” (AfDB CSP 2008). The Government of Rwanda then allocated up to three sectors per donor in order to limit duplicative donor missions and orphaned sectors [See Appendix A].
The donor partners participating in the GoR’s DoL Arrangement and the Analysis chapter are as followed: Bilateral Donors Austria, Belgium, Canada, France, Germany, Japan, Luxembourg, Netherlands, Sweden, United Kingdom, United States, and Switzerland. Multilateral Donors
the African Development Bank (AfDB), the European Commission (EC),
the World Bank (WB),
the Food and Agriculture Organization (FAO), the International Labor Organization (ILO), the United Nations Development Project (UNDP), the United Nations Environmental Programme (UNEP),
the United Nations Educational, Scientific, and Cultural Organization (UNESCO), the United Nations Population Fund (UNFPA),
The Government of Rwanda established a four-year time period, from 2010 to 2014, to implement the Division of Labor Arrangement (2010). On this the Government of Rwanda writes, “The agreed DoL will come to an effect with the implementation of a new development
cooperation framework and various DPs. Given that many bilateral and multilateral partners have already aligned their programming cycle with the DOR’s EDPRS, which runs to 2012, significant changes may begin in 2012/2013”. Therefore, the period from 2010 to 2012 can be considered a transition period, where some development partners begin the implementation process and “others could adopt a pragmatic approach to implement the DoL as early as possible” (GoR DoL 2010). Furthermore, the African Development Bank describes the
Government of Rwanda’s aid approach as, “identifies budget support as the preferred modality of aid delivery and advocates for increased use of country systems.” (AfDB CSP 2008)
The Government of Rwanda notes that the Division of Labor Arrangement (2010) does not include private sector entities or emergency assistance sectors, and this, “DoL exercise entails redistribution across sectors, observing the neutral impact on total aid volume”, meaning that the established Division of Labor Arrangement should not “lead to the reduction of the total aid envelope to Rwanda” (GoR DoL 2010).
Cooperation among donors is an element of the Paris Declaration (2005) and Accra Agenda for Action (2008) that is emphasized to be a solution to problems, such as transaction costs for donors and recipients, associated with aid effectiveness. Furthermore, if donors are able to coordinate aid flows with one another, sectors and countries will not become over- and under- aided, transaction costs will be lowered, and aid will align with national priorities (GoR DoL 2010).
The Government of Rwanda’s Division of Labor Arrangement (2010) aims to address the problems associated with unequal distribution of aid across sectors. An internal study conducted by the Government of Rwanda in 2008, found that “donors are not equitably distributed across EDPRS sectors”. This, in turn, leads to sector over-crowding and orphaned sectors (GoR DoL 2010). For example, in 2008 the African Development Bank (CSP) reported, “there is an ongoing SWAp in the education sector, a similar arrangement in the health sector is under preparation, while a memorandum of understanding to introduce a SWAp in the energy sector was recently signed by the Government and participating development partners, including the Bank”. These arrangements were first implemented to address over and under crowded sectors. Then in 2010, the Government of Rwanda re-evaluated sectorial aid flows and reported that their Health and Governance sectors were over funded by donors and their other sectors, like the Transport and ICT and the Manufacturing and Services sectors, were being neglected (OECD
Annex 6, 2011). Orphaned sectors with limited donor engagement do not receive the funding needed to be maintained and need to be addressed in order for Rwanda to utilize aid most effectively.
In addition, the 2010 Division of Labor Arrangement aims to reduce transaction costs for the Government of Rwanda and its donors, utilize delegated cooperation and silent partnership in order to further reduce “the risks involved in the delivery of assistance in sectors in which the donor does not have a comparative advantage of significant expertise, and to control aid flows so they are more predictable and so they align with Rwanda’s national priorities” (GoR DoL 2010).
Concerning predictability, donor division of labor arrangements enable recipient countries to predict where aid is going and therefore prepare to use it to its fullest capacity. On this the OECD (2011, survey) writes, “For many countries, aid is a vital source of revenue and resources. Being able to predict aid disbursements-- both in terms of how much aid will be delivered and when-- is important to enable countries to manage public finances and undertake realistic planning for development.” But cooperation among donors is only possible when aid allocation is determined by the needs and interests of recipient countries. The Global Partnership (2014) writes, “cooperation is focused on results that meet developing countries’ priorities”. The Government of Rwanda has determined its priorities and has constructed the 2010 Division of Labor Arrangement based on this.
This Division of Labor Arrangement (2010) also discusses the role of silent partnership and delegated cooperation. The Government of Rwanda defines delegated cooperation and silent partnership as a “formal agreement in which authority for the management of an ODA
contribution (or part thereof) is delegated to another donor, thus facilitating harmonization and reducing the transaction costs faced by the GoR in managing multiple bilateral agreements”. This is a management strategy developed by the “EU Code of Conduct on Division of Labour in Development Policy” (SOURCE), which allows the European Commission, or in this case the Government of Rwanda, to delegate aid to the sectors it sees fit. This would, in turn, reduce transaction costs by limiting the number of bilateral and multilateral agreements the Government of Rwanda receives. Furthermore, it would reduce administrative transaction costs associated with project funds while improving sector aid allocation (GoR DoL 2010).
At the same time, this strategy utilizes silent partners who allocate aid to a particular sector but do not influence to how or where it is used. This will enable donors who have an
expertise in a particular sector to control how and where the aid in the sector is being allocated. For instance a donor representing another donor can disburse funds on behalf of other donors, facilitate policy dialogue on behalf of the other donor, and monitor, review and report activities on behalf of the other donor (GoR DoL 2010). Silent partnership will also be used to negate affecting any ongoing projects and will act as an “interim arrangement under the on-going development cooperation framework if appropriate and feasible” (GoR DoL 2010).
The European Commission suggests that the use of delegated cooperation and silent partnership will create reciprocity and maximize aid effectiveness (SOURCE).
An illustrative example of this is Belgium and its aid allocation in Rwanda. Prior to the implementation of the Government of Rwanda’s Division of Labor Arrangement, Belgium’s aid flows were self-directed at the Justice, Reconciliation, Law and Order and Education sectors. The Division of Labor Arrangement (2010) determined that Belgium would leave those sectors and contribute to the Health and Population, Energy, and Decentralization sectors instead. But during this transition, the Government of Rwanda and Belgium agreed that Belgium will act as a silent partner in the Education and Justice, Reconciliation, Law and Order sectors (GoR 2014). This will give the donors allocated to the Education and Justice, Reconciliation, Law and Order sectors the financial capacity needed to effectively aid these sectors.
This thesis chose Rwanda as a case study for a variety of reasons. One is that in 2010, the year the GoR’s DoL was introduced, 50% of Rwanda’s national budget depended on aid (OECD Annex 6, 2011). This implies that Rwanda is driven to maximize the effectiveness of aid due to its dependency on it. On this Marysse writes, “International aid can certainly make a difference to the development performance in countries which are highly dependent on aid, as is shown by the cases of Rwanda and Burundi” (Marysse 2006).
Second, the Government of Rwanda has taken a leadership role in the implementation of DoL Arrangements in the region (OECD 2011). On this the AfDB reported that, “aid
coordination in Rwanda is strong, with the Ministry of Finance and Economic Development (MINECOFIN) playing a central role. Several meetings are held each year to harmonize aid delivery” (AfDB CSP 2008). On the same token, the OECD (2011) reported that a “culture of delivery and accountability that is already well established in Rwanda, with GoR and DPs accustomed to being publically called to account for progress on promises”. This is particularly important for the quality of this analysis because donors are more likely to be held accountable
for deviations and, therefore, a lack of recipient country governmental strength in enforcing DoL cannot be a contributing factor donor effectiveness. Furthermore, attention Rwanda has received for its DoL initiative suggests that there is a better availability of data and monitoring reports by international actors and the GoR itself.
Third, the GoR’s DoL Arrangement is pragmatic and flexible. This makes it easier for the GoR’s DPs to support. For instance, the GoR’s DoL (2010) excludes favored aid modalities, budget support, basket funds, and emergency assistance-- making it easier for the GoR’s DP’s to provide financial assistance beyond what they are allocated in the DoL Arrangement. In addition, the GoR and its DPs agreed to a transition period. A transition period allows donors to make a gradual transition from the sectors they were previously involved in and no longer allocated to (GoR DoL 2010). This is important because the OECD (2010) reports that, “abrupt and
uncoordinated exits from sectors or countries can leave gaps not filled by other donors and thus create new problems”.
The GoR’s DoL also introduced the role of delegated cooperation and silent partnerships. This is the idea that, “in cases of DPs that are reluctant to withdraw from a sector, silent
partnerships via delegated cooperation have been accepted by GoR under the motto ‘You can be felt without being seen’” (OECD Annex 6, 2011). This benefits both the donors and the Rwanda due to fast exits from sectors resulting high costs and further problems.
Bilateral and Multilateral Data and Analysis
In addition to the GoR DoL Arrangement (2010), this thesis will utilize OECD data, from 2010 to 2014, that reports the sectorial aid flows from the bilateral donors involved in the GoR’s DoL Arrangement. The analysis chapter will then identify the variations in the DoL Arrangement and actual bilateral aid allocation by comparing the data on sectorial bilateral aid allocation from 2010-2014 and the agreed upon DoL Arrangement. In addition, this section will also utilize OECD data on net aid flows to Rwanda to adjust for aid fluctuations that are unrelated to sector aid allocation.
The next portion of the Analysis chapter will assess multilateral aid flows to sectors. In contrast to the bilateral assessment, the assessment on multilateral donor aid allocation and DoL
implementation will look specifically at the aid allocation in 2014. This is due to a lack of transparent data available on multilateral aid flows for years before 2014. It is nonetheless important to examine because transparency is an element of a successful DoL and therefore, a lack thereof, is illustrative of multilateral donor behavior (OECD 2010). Furthermore, 2014 is the year that follows the implementation period and therefore is the most important year to
determine if a donor has been effective or not in implementing the GoR’s DoL Arrangement (GoR DoL 2010).
Further on multilateral donor data, some multilateral donors were created with the intent to aid a particular area or sector. The Government of Rwanda and its donors take expertise and specialization into consideration when determining sector aid allocation. For example, the World Health Organization (WHO) was allocated to the Health and Population sector and, due to on-going projects that took place during the implementation period, between 2011to 2013. WHO acted as a silent partner in the Social Protection and Water & Sanitation sectors. While this phenomena would seemingly suggest multilateral donors would be more effective in
implementing Division of Labor Arrangements, the data illustrates deviations do exist. Because of this, multilateral organizations with a specialization still need to be included in the analysis.
The third portion of the Analysis chapter will analyze DoL progress reports published by donors, the OECD, and the GoR to further assess how effective donors have been at
implementing the DoL Arrangement. Rwanda’s DoL is based on the Common Performance Assessment Framework (CPAF), which “is a matrix of selected outcome indicators used by donors to assess the government’s performance; it is mainly used for Budget Support conditionality” and the Donor Performance Assessment Framework (DPAF) which is “the government’s framework for assessing and discussing the progress of donors relative to their commitments” (ODI BSI 2012). For example, the Government and development partners have developed a Common Performance Assessment Framework (CPAF) to monitor the EDPRS during 2008-2012” (AfDB CSP 2008). This thesis will review this CPAF to assess DP behavior.
While the data available illustrates a phenomenon, it is important to note the limitations of this analysis. One limitation is that there the data on multilateral aid flows to sectors in Rwanda is limited. In contrast to the bilateral donor analysis, the OECD only has data on multilateral donors in the year 2014. But as discussed above, this year is the most crucial due to the implementation period from 2010-2013. Furthermore, the OECD does not have data on all
multilateral donors involved in the DoL Arrangement, whereas the OECD does have data on all the bilateral donors. While this permits an analysis of variations between donors, it makes it difficult to conclude with certainty that one type of donor is more effective than the other.
Furthermore, in 2011, multilateral donors accounted for nearly 45% of total ODA to Rwanda and are, therefore, equally important to analyze if trying to get a picture of DoL success in Rwanda (AfDB CSP 2011).
The second limitation is a lack of an internationally and transparent agreed upon definitions of sectors (GoR DoL 2010). The concept of in-country donor division of labor is a new one. In the past, donors could unilaterally determine their aid packages and did not have to conform their aid packages to a particular sector. With the introduction of in country donor division of labor came strict sectorial division. But, this sectorial division has not yet been established publicly or internationally. On this the OECD (2011) writes, “different sector
definitions continued to be used by GoR and DPs; also, GoR reduced the number of sectors from 15 to 13, which made it more difficult for DPs to be present only in three”. This is important to consider when examining Rwanda’s sectorial aid flows. Therefore, this thesis will acknowledge when there is an aid package or aid trend that could be considered multisectorial or does not definitively support or deviate from the DoL Arrangement.
Analysis
The purpose of this chapter is to determine how effective bilateral donor agencies and multilateral donor agencies, respectively, have been in implementing the Government of
Rwanda’s Division of Labor Arrangement (2010). Furthermore, this chapter aims to assess why bilateral and multilateral donors behaved the way they did.
First, this chapter will thoroughly examine the 2010 Division of Labor Arrangement put forth by the Government of Rwanda. This document was drafted in response to the Paris
Declaration (2005) and the Accra Agenda for Action (2008). This arrangement was then
reviewed and endorsed by Rwanda’s donors. The Government of Rwanda then gave its donors a period of three to four years to implement the arrangement.
This discussion will be followed by an analysis of bilateral and multilateral donor
behavior from 2010, when the arrangement was drafted and endorsed, to 2014. This chapter will first examine the variations in sectorial aid flows from bilateral donors from 2010 to 2014. The purpose of this examination is to determine if and how bilateral donors changed their behavior to match the agreed Division of Labor Arrangement. This analysis will be followed by an analysis of multilateral donor behavior. This chapter will look at data from multilateral donors in 2014 to assess if the multilateral donors have adapted to the agreed Division of Labor Agreement within the determined time period.
After identifying the variations in bilateral and multilateral donor behavior, this chapter will conclude by utilizing the secondary literature on bilateral and multilateral donor aid flows to determine why the donors behaved the way they did.
Bilateral Donor Behavior and Analysis Belgium
Belgium and the Government of Rwanda allocated Belgium sectors Health and
Belgium having on-going projects during the implementation period, Belgium was made a silent partner in the Education and Justice, Reconciliation, Law and Order sectors (GoR DoL 2010).
Belgium’s overall net ODA (OECD 2015) to Rwanda steadily decreased during the implementation period. Belgium’s aid package in the fiscal year following the introduction of the Government of Rwanda’s Division of Labor Arrangement stood at USD 76.52 million. In 2014, Belgium’s aid package stood at USD 42.19 million (OECD 2016). This is the point of reference used to determine the proportional sectorial aid fluctuations from 2011 to 2014.
Prior to the Division of Labor Arrangement (2010), Belgium committed USD 40.52 million to the social infrastructure and services sectors, which includes Justice, Reconciliation, Law & Order and Health & Population. During the agreed Division of Labor Arrangement implementation period (2011-2014), aid flows to the Social Infrastructure and Services sector steadily increased. Belgium’s aid package to the Energy sector, on the other hand, experienced a sharp decrease in aid from 2011 to 2012, was maintained from 2012 to 2013, and increased substantially from 2013 to 2014.
The data would suggest that Belgium gave increased support to the Health & Population sector and the Justice, Reconciliation, Law & order sector, therefore complying with the Division of Labor Arrangement (2010). Furthermore, the data demonstrates that Belgium decreased the portion of aid, from the total aid package, to the Energy sector. This directly contradicts with the Division of Labor Arrangement and its sector aid allocation. Regarding sectors that Belgium was not allocated in the Division of Labor Arrangement, the data demonstrates Belgium complied with the Division of Labor Arrangement and steadily decreased aid going into these sectors (OECD 2015).
In addition to the data provided by the OECD, the Government of Rwanda provided four documents in 2014 to aid the Division of Labor Arrangement based on aid allocation for
Belgium, Germany, Japan and the Netherlands. These documents further demonstrate the behavior of these four countries (GoR DP 2014).
The Division of Labor Arrangement (2010) requires Belgium to concentrate its aid allocation to the EDPRS sectors of Health, Energy, and Decentralisation. Further on the Health Sector, the Government of Rwanda reports an evolution in the last three year indicative of reaching health-related targets and policy actions. Four out of six CPAF [Capacity Development Pooled Fund] indicators are fully achieved and the other two are partially met. This demonstrates
a positive trend for Belgium and their effort to meet the goals set forth in the Division of Labor Arrangement (GoR DP 2014).
Furthermore, the Government of Rwanda highlights the importance of the Energy Sector and Belgium's contribution. On this the Government of Rwanda writes, “Energy is a key
strategic sector for Rwanda. Adequate provision of energy is essential for the development of industries and businesses, especially for the development of energy intensive industries such as agro-processing and mining, and for ensuring a high quality of service delivery from social institutions such as health facilities, schools and local administrative offices to the Rwandan population, as well as directly to the Rwandan population, especially in rural areas” (GoR DP 2014).
The Government of Rwanda (DP 2014) goes on to say that women are disproportionately affected due to their role of maintaining the house including cooking and heating. The
Government of Rwanda has put forth four goals within this sector that need to be achieved in order to see poverty reduction and development. These four goals are as follows:
“Increasing access to electricity, by raising the number of subscriptions; Introduction of cost reflective tariffs and reduction of tariff;
Diversification of energy sources and ensuring energy security of supply;
Establishment of favourable institutional, legal and regulatory framework and capacity building;” (GoR DP 2014)
Four years after the introduction of the Division of Labor Arrangement and the
Government of Rwanda continues to push these four objectives and does not acknowledge any progress made within this sector. This suggests that the Energy sector is an under aided sector. The OECD data further supports that this is an unattractive sector to bilateral donors as no donor allocated any additional aid to energy beyond what was agreed in the Division of Labor
Arrangement (GoR DP 2014).
Canada
The Government of Rwanda in the Division of Labor Arrangement (2010) allocated Canada the Agriculture sector. Due to Canada having on-going projects during the
Canada’s overall net ODA to Rwanda increased from 2011 to 2012 and decreased from 2012 to 2014. Canada’s aid package in the fiscal year following the introduction of the
Government of Rwanda’s Division of Labor Arrangement stood at USD 11.85 million. In 2014, Canada’s aid package stood at USD 5.19 million (OECD 2016). This is the point of reference used to determine the proportional sectorial aid fluctuations from 2011 to 2014.
In 2010, the aid package from Canada to Rwanda’s Agriculture sector stood at USD 29.28 million. During the implementation period, Canada’s aid package to the Agriculture sector experienced a significant decrease from USD 29.28 million to USD 1.86 million in 2013. This decrease coincides with an overall decrease in net aid and is therefore not illustrative of Division of Labor deviation. Furthermore, Canada allocated more to the Agriculture sector than any other sector during the implementation period. The Production sector and the Social Infrastructure and Services sector also saw a large portion of Canada’s aid package. There is no significant trend in the Education sector, where Canada was acting as a silent partner from 2010 to 2013 (OECD 2015).
Germany
The Government of Rwanda in the Division of Labor Arrangement (2010) allocated Germany the Education, Employment, and Decentralization sectors. Due to Germany having on-going projects during the implementation period (2011-2013), Germany was made a silent partner in the Health and Population sector.
Germany’s overall net ODA to Rwanda steadily decreased from 2010 to 2011 and increased from 2013 to 2014. Germany’s aid package in the fiscal year following the introduction of the Government of Rwanda’s Division of Labor Arrangement stood at USD 47.35 million. In 2014, Germany’s aid package stood at USD 35.37 million (OECD 2016). This is the point of reference used to determine the proportional sectorial aid fluctuations from 2011 to 2014.
During the implementation period, the Social Infrastructure and Services, Education, and Energy sectors received the majority of Germany’s aid package. The Economic Infrastructure and Services sectors were the fourth most heavily funded sector. The Education sector
