Reaching the marginalized: EFA global monitoring report, 2010; 2010

THE AID COMPACT: FALLING SHORT OF COMMITMENTSReforming the Fast Track InitiativeThe Catalytic Fund: slow disbursementundermines effectivenessExpansion of the Catalytic Fund’s role openedthe door for more countries to receive multilateralfinancing for longer periods (FTI Secretariat, 2007c,2009b). It has also served to highlight problemsof resource mobilization, disbursement anddonor commitments.Support channelled through the Catalytic Fundhas grown steadily. Cumulative cash receipts fromdonors had reached US$1.2 billion by March 2009.However, overall disbursements amounted to onlyUS$491 million. 32 For 2004–2007, Catalytic Fundreceipts averaged around 4% of total aidcommitments for basic education (OECD-DAC,2009d). As of the first quarter of 2009, twenty-threedeveloping countries had received Catalytic Fundfinancing, 33 but distribution was highly uneven, withKenya, Madagascar and Rwanda accounting for halfof all disbursements (FTI Secretariat, 2008e, 2009b).The financing base for the Catalytic Fund hasremained very narrow. The Fast Track Initiative wascreated to encourage and coordinate funding frombilateral donors, multilateral agencies and privatephilanthropy, but bilateral donors dominateCatalytic Fund receipts (Figure 4.18). Fourteenbilateral donors have provided support, with nearlythree-quarters of the total over 2004–2008 comingfrom just three: the Netherlands, Spain and theUnited Kingdom. In marked contrast to globalhealth financing initiatives, the FTI has not createda window for philanthropic finance.Support to the Catalytic Fund represents asignificant share of some donors’ overall aidcommitments to education, accounting for anestimated 15% for the Netherlands and 9% forthe United Kingdom, from 2004 to 2007. Thesefigures suggest that the performance of theCatalytic Fund influences the programmesof these individual donors.Poor disbursement rates under the CatalyticFund have severely compromised the FTI and thewider aid effort. There is inevitably a lag betweenallocation and disbursement in any aidprogramme, but in this case the lag has beenextremely protracted. Since 2007, some countrieshave had to wait up to two years after the decisionto allocate aid before receiving their first tranche offinance (Figure 4.19). This compares unfavourablywith an average gap between allocation anddisbursement of nine months before 2007.Figure 4.18: A small group of countries dominates donor support of the FTITotal donor allocations to the FTI Catalytic Fund, 2004–20086 donors*: US$15-30 millionNorway: US$70 millionEC: US$79 millionSpain: US$157 million7%6%14%12%7 donors**: less than US$10 million23%United Kingdom: US$261 millionWhile there is some evidence of a slight increase inthe rate of disbursement, as of April 2009 only 8%of grants allocated in 2007 had been delivered(Bermingham, 2009a).36%* Canada, Denmark, France, Ireland, Italy and Sweden, each contributing US$15–30 million.** Australia, Belgium, Germany, Japan, Romania, the Russian Federation and Switzerland,each contributing less than US$10 million.Source: FTI Secretariat (2009b).Delayed disbursement has disrupted planning inmany countries. An allocation to Senegal in 2007was still not disbursed in March 2009. Countriesincluding Cambodia, Mozambique and Sierra Leonehave experienced delays of more than a yearbetween allocation and grant agreement. Severalcountries whose FTI plans were endorsed in2002–2004 have yet to receive their full allocation.After four years, Nicaragua and Yemen hadreceived less than 60% of their Catalytic Fundallocations (Figure 4.20).The marked deterioration in disbursementperformance can be traced directly to agovernance change. Before 2007, Fast Trackfunds were treated as supplements to IDAprojects. In several countries, includingCameroon, Kenya and Rwanda, World Bank staffdemonstrated considerable flexibility in adaptingproject rules to facilitate more rapid disbursement.The experience of Kenya shows what can beachieved through a flexible multilateral financingmechanism, although even in this case supporthas been short term (Box 4.13).2%Netherlands:US$430 millionIn marked contrastto global healthfinancinginitiatives, the FTIhas not createda window forphilanthropicfinance32. By August 2009,overall disbursements hadincreased to US$580 million(FTI Secretariat, 2009c).33. The figure is projectedto climb to around thirtycountries by the end of 2009.255