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IdentifierCreatedClassificationOrigin
03ROME5195 2003-11-17 12:37:00 UNCLASSIFIED Embassy Rome
Cable title:  

The Netherlands evaluates its extra-budgetary USD

Tags:   EAID EAGR AORC PREF NL FAO UN 
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					  UNCLAS  ROME 005195 

SIPDIS


AIDAC

FROM U.S. MISSION IN ROME

USDA FOR SECRETARY VENEMAN, U/S/FAS PENN, MCHAMBLISS
USAID FOR A/NATSIOS, AA/EGAT ESIMMONS, AA/DCHA WINTER,
DAA/PPC JSIMON
STATE FOR A/S IO HOLMES, A/S PRM DEWEY, U/S GLOBAL
DOBRIANSKY, IO/EDA RBERHEND AND SKOTOK
NSC FOR JDWORKEN
USMISSION GENEVA FOR AMBASSADOR MOLEY AND USAID NKYLOH
USEU BRUSSELS FOR USAID/PLERNER
TOKYO FOR USAID REP

E.O. 12958: N/A
TAGS: EAID EAGR AORC PREF NL FAO UN
SUBJECT: The Netherlands evaluates its extra-budgetary USD
324.4 million partnership with FAO


-------
Summary
-------



1. The Netherlands has just released a comprehensive
evaluation of its extra-budgetary partnership with the UN's
Rome-based Food and Agricultural Organization - FAO. The 25-
month long study, undertaken by the Dutch Ministry of
Foreign Affairs' Policy and Operations Evaluation Department
(IOB), reviewed 168 projects valued at USD 324.5 million
spanning the decade 1990-1999 and found few signs of
positive impacts on beneficiaries from the 19 projects that
they investigated in-depth. On achievement of intended
outcomes, the sample trust fund projects reviewed scored
"fairly well," (i.e., 65 percent of the project's reviewed
achieved their objectives), but they showed severe
shortcomings with respect to economic, financial and
institutional sustainability, with only 31 percent of the
sample achieving "satisfactory" or better scores. The
evaluation concludes with the view that "the challenge to
the Netherlands now is to take a clearer look at the
mandate, capacity and strategies of FAO, and to define more
clearly how they can match up with Netherlands development
policy and resources." In draft comments for the Dutch
Parliament, the Minister of Development Co-operation
stressed the "ill defined nature of The Netherlands-FAO co-
operation" as a root cause of the trust fund's shortcomings.
The Minister noted that the reforms instituted by FAO since
2001 go in the right direction, but underlined that FAO and
donors need to focus on FAO's areas of competitive advantage
- normative and regional activities, and should at the
national level emphasize policy advice over direct project
implementation. End summary.



--------------------------


Background


--------------------------





2. Since the early 1960s, apart from its regular assessed
contributions, FAO has received extra-budgetary resources
from a number of donor countries and other agencies. Extra-
budgetary funds are mainly (but not exclusively) meant to
support operational activities.



3. At present FAO employs 3,700 people worldwide, comprising
1,400 professional and 2,300 general service staff. It
maintains five regional offices, five sub regional offices,
five liaison offices and 77 country offices.



4. The FAO Regular Budget (financed by assessed member
contributions) for the years 1991/92 and 1993/94 amounted to
USD 680 million per biennium. In the years 1996/97 and
1998/99 the Regular Budget was roughly USD 650 million per
biennium, which means that during the second half of the
1990s FAO was in fact confronted with a negative growth
budget, in real terms.



5. For many years the United Nations Development Fund (UNDP)
was by far the most important extra-budgetary "funder" to
FAO, providing almost 90 percent of these funds in the 1970s
and 40 percent on the late 1980s. After 1992, however, UNDP
withdrew almost completely (from USD 108 million in 1993 to
USD 28 million in 1998) which meant a sudden and sharp
decline in extra-budgetary funding.



6. However, support for FAO emergency activities (largely
seeds, tools and related agricultural inputs) has increased
as follows: 1996, USD 23 million; 1997, USD 23 million;
1998, USD 21 million; 1999, USD 29 million; 2000, USD 50
million; 2001, USD 54 million; and 2002 (to November 1), USD
53 million. Similarly, Oil-for-Food funding for Iraq grew asAT ESIMMONS,
AA/DCHA WINTER,
DAA/PPC JSIMON
STATE FOR A/S IO HOLMES, A/S PRM DEWEY, U/S GLOBAL
DOBRIANSKY, IO/EDA RBERHEND AND SKOTOK
NSC FOR JDWORKEN
USMISSION GENEVA FOR AMBASSADOR MOLEY AND USAID NKYLOH
USEU BRUSSELS FOR USAID/PL


follows: 1996, n.a.; 1997, USD 23 million; 1998, USD 67
million; 1999, USD 83 million; 2000, USD 120 million; 2001,
USD 130 million; and 2002 (to November 1), USD 88 million.



--------------------------


The Netherlands' evaluation


--------------------------





7. In the 1990s, the Netherlands and FAO both supported
agricultural development in Africa, Asia and Latin America.
During that decade, some USD 324.4 million of Netherlands
development funds were spent on this multi-bilateral co-
operation. For some years, the Netherlands was the largest
contributor of this type of development funding through FAO.
These resources - distinct from the country's assessed
contribution to FAO's regular budget as a member country -
were held by FAO as trust funds for use in approved
projects.



8. Between 1990 and 1999, 110 such projects were undertaken
in 50 individual countries. The Netherlands also funded 58
FAO trust fund projects that were regional or global in
scope. Despite the volume of this development spending
through FAO, the overall trust fund activity had never been
reviewed in detail. A systematic assessment of the
character and quality of this substantial joint co-
operation, and of its implications for future Netherlands co-
operation with FAO and developing countries, was (in The
Netherlands view) "long overdue."



9. The specific purpose of the Dutch Ministry of Foreign
Affairs Policy and Operations Evaluation Department (IOB)
evaluation was to undertake an assessment based on a
representative sample of projects that was financed by the
Netherlands government during the period under
consideration. Note. IOB is a unit independent in
programming, terms of reference, evaluation designs and
methods. It reports directly to the Dutch Parliament. End
note.



10. IOB was careful to clarify that "this is not an
evaluation of FAO, but rather an evaluation of Netherlands-
FAO trust fund co-operation. As such, it comments on
strengths and weaknesses in the performance of the
Netherlands, as well as FAO. It makes less direct comment on
the performance of the third party in this co-operation -
the governments of the recipient countries."



11. The IOB evaluation team consisted of two team leaders, 5
senior consultants, and four junior research assistants.
Field studies were conducted in Senegal, Bolivia, Zambia and
in south-east Asia. Note. Senegal (USD 50 million) and
Bolivia (approximately USD 27.5 million) were the two major
direct recipients of Netherlands-FAO trust funds during the
1990s. End note. The evaluation's preparatory phase lasted
seven months; the proper evaluation took 18 months.



--------------------------


IOB's Major Findings


--------------------------





12. Herewith the major findings of the IOB evaluation:



A. Ill-defined Character Of Netherlands-FAO trust fund co-
operation (Lack of coherent policy and programmatic
character) - The trust fund co-operation was basically built
on the perception of FAO as an implementing agency
facilitating the execution of parts of Netherlands aid
policy. Several efforts were made to reformulate the co-
operation with FAO on programmatic terms guided by an
explicit overall Dutch policy. However, all these efforts
USAID FOR A/NATSIOS, AA/EGAT ESIMMONS, AA/DCHA WINTER,
DAA/PPC JSIMON
STATE FOR A/S IO HOLMES, A/S PRM DEWEY, U/S GLOBAL
DOBRIANSKY, IO/EDA RBERHEND AND SKOTOK
NSC FOR JDWORKEN
USMISSION GENEVA FOR AMBASSADOR MOLEY AND USAID NKYLOH

failed.



B. Marginal Impact - Few systematic data or studies were
found on which to base an assessment of the impact of the
sample projects. The four field missions undertaken as part
of this review focused on this aspect of the assessment but
found few signs of positive impacts on beneficiaries from
the 19 projects that they investigated.



C. Sustainability - Overall, the sample trust fund projects
showed severe shortcomings with respect to economic,
financial and institutional sustainability.



D. Achievement of objectives - A crude measure of
effectiveness is whether intended outcomes - that is, the
project objectives as designed - were achieved. On this
measure, the sample projects score fairly well. Performance
on gender is adequate, and on environment it is good, with
65 percent assessed as "satisfactory or better." Project
characteristics found to be strongly linked with overall
effectiveness included good design, good management, and
strong participation in design and execution by host
authorities and target groups. Overall, the study found
that there is wide variation in effectiveness between
projects of similar types, and between projects undertaken
in the same regions and countries.



E. Efficiency - In the mid 1990s, growing pressure from its
member countries and the deteriorating financial position
led FAO to embark on a substantial reform program covering
decentralization, planning, programming and budgeting.
Although the recent decentralization has not yet achieved an
optimal use of all FAO's human resources, the organization
can no longer (in IOB's view) be accused of being a wasteful
bureaucracy.



F. FAO's comparative advantages - The special value of FAO
is rooted in its global, multilateral scope and character,
which means that one notable field of FAO's comparative
advantage is in activities that cover more than one country.
Projects that operated at regional or global scale did
significantly better in terms of outcomes and likely impact
than those undertaken at national or sub-national levels.



--------------------------


Evaluation Conclusions


--------------------------





13. Overall, the evaluation concludes, one can perceive a
trend in FAO back towards the normative activities that are
at the heart of its mandate. After decades when extra-
budgetary funding overshadowed members' assessed
contributions and operational activities such as trust fund
projects seemed to eclipse the largely normative work of the
Regular Program, FAO is now slimming back down towards a
greater focus on normative work and the Regular Program.



14. Nevertheless, the Dutch report emphasizes the necessary
interaction between FAO's normative and operational
activities. Too much emphasis on them as separate
categories of work is unhelpful. FAO support is still often
called for at field level, and FAO will always need exposure
to field realities. But it is clear that operational work
will not continue on the scale of earlier decades.



15. The evaluation concludes: "The challenge to the
Netherlands is to take a clearer look at the mandate,
capacity and strategies of FAO, and to define more clearly
how they can match up with Netherlands development policy
and resources. This evaluation aims to support that
assessment. Perhaps, some 20 years after trust fund


projects started, it can contribute to a first clear policy
statement on how co-operation with FAO can help achieve
Netherlands development policy objectives. Any new policy
statement should acknowledge and plan to exploit the
comparative advantages that FAO offers, notably in
supranational work, normative activities and regional
projects. Regional projects have been a particularly
successful field of Netherlands-FAO co-operation that
current Netherlands policy makes it particularly difficult
to fund. There is scope for the Netherlands and FAO to work
together in tackling some of the Millennium Development
Goals. In all their joint endeavors, the two partners need
to do more to achieve accurate and feasible planning and to
ensure effective monitoring and evaluation."



--------------------------


Comment


--------------------------





16. We applaud The Netherlands for conducting such a
sweeping review of their relationship with FAO. The
development of a clear policy framework for co-operation,
focusing on FAO's "comparative advantages," seeking a proper
balance between the organization's operational and normative
work, and strongly supporting FAO's efforts to develop a
transparent and flexible monitoring and evaluation system -
are valuable issues for all of FAO's donors. We are
disappointed that FAO has not thus far responded in writing
to the many policy issues raised here, and will strongly
encourage FAO to give this quality evaluation the highest
level of senior management attention. Finally, it is clear
that this evaluation could lessen donor enthusiasm for extra-
budgetary support to FAO (excluding emergency funding),
which in turn will heighten the focus (and the pressure) on
the FAO Regular Budget (financed by assessed member
contributions). Hall


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2003ROME05195 - Classification: UNCLASSIFIED