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

THE AID COMPACT: FALLING SHORT OF COMMITMENTSReforming the Fast Track Initiativeministries, they seem not to have consideredthe impact of the decision on aid to education– an extreme case of failure to ‘join up’ thinkingon development policy.Figure 4.20: Full disbursement of Catalytic Fund grants can take yearsShare of country allocation from the Catalytic Fund disbursed as of the end of 2008100Timor-LesteMauritaniaKenya GambiaGuyanaThe oversight proved very costly. Implementationof full IDA financial rules entails thirty-fourseparate procedures with an average completiontime of around eighteen months (Bermingham,2009a). The change was especially problematicfor countries without a major World Bank presence,which had to carry out new appraisals before theycould receive Catalytic Fund allocations, causingsubstantial delay and adding to transaction costs.In some cases, the requirement to follow IDAprocedures damaged donor efforts to work throughnational systems – a central objective of the Parisagenda on aid effectiveness (Buse, 2007). Theprotracted delay in aid delivery to Mozambiqueillustrates the problem (Box 4.14).Share of allocation disbursed (%)80DjiboutiMadagascarRwanda60Lesotho Tajikistan NigerGhana NicaraguaR. MoldovaYemenCameroonMongolia40KyrgyzstanMali20Cambodia00 12 24 36 48 60 72Number of months since grant agreement signingDelays in disbursement deter aid recipientsfrom adopting more ambitious reform agendas.They also weaken donor support of the FTI.In 2008, the Netherlands had to reprogrammeUS$135 million committed to the FTI becauseof internal rules linking transfers to disbursement.These resources were effectively lost to theeducation financing effort.Efforts have been made to improve Catalytic Funddisbursement. In December 2008, the CatalyticFund committee agreed for the first time tochannel a grant through national budget support,using a World Bank mechanism to deliverUS$102 million in FTI funds to Burkina Faso(FTI Secretariat, 2008d). This is expected to resultin faster disbursement and allow the governmentto use its own financial management systems,reducing transaction costs.A second innovation involves delegation of authorityfrom the World Bank to an in-country donor.In Zambia, the local donor group determinedthat the Netherlands would be better placed to actas the supervising entity for Catalytic Fund aid.The use of an alternative supervising entity showssome flexibility – but does not address the systemicproblem. In countries where the World Bank isthe FTI supervising body, the theoretical choicefor governments is whether to opt for Fast Tracksupport provided on a project basis or to seekdirect budget support. Lack of clarity in the criteriafor budget support has prompted most countriesto choose project support since the rule change.Countries having receiveda two-year allocationSource: FTI Secretariat (2008e).Countries having receiveda three-year allocationBox 4.13: Kenya — FTI support for school fee abolitionThe experience of Kenya highlights the potential of the FTI to supportnational reform.After the abolition of school fees in early 2003, primary schoolenrolment increased by around a million pupils in the following schoolyear. Per capita grants to schools were designed to replace the lostfee revenue. Even so, classroom overcrowding and textbook shortagesthreatened to undermine the quality of education. Donors recognizedthe urgent need for additional resources, while at the same timeexpressing concern over corruption in procurement.Under a new donor-supported programme, procurement rules wereamended to deliver funds to school committees through the privatebanking system. These committees of parents and teachers wereresponsible for purchasing textbooks from an approved list. They alsoassumed responsibility for verifying and publicizing the receipt of schoolgrants. Despite pervasive corruption in national procurement systemsreported at the time, audits found the programme to be effective.Quick decision-making and rapid disbursement characterized FTI supportto Kenya during this critical period. Catalytic Fund grants to Kenyaamounted to US$121 million from 2005 to 2008. Administered by theWorld Bank, these grants were combined with IDA financing and a grantfrom the United Kingdom Department for International Development toincrease support to school committees for the country’s 18,000 primaryschools. The challenge now is to sustain such support through follow-upCatalytic Fund financing or increased bilateral aid.Sources: Bermingham (2009a); Thomson et al. (2009).257