Chapter III: NEX Performance During the Fifth Programming Cycle

Had the introduction of NEX and the Programme Approach been conceived as a UNDP Project, its Project Document would have carefully stated its overall development objective, several immediate objectives, and then specified the inputs, activities, and outputs necessary to accomplish this important objective. In the best of all worlds, a number of preparatory activities for headquarters would have been specified to take place before country offices and countries embarked upon this ambitious effort. But concepts, definitions, and instrumentalities continued to evolve at headquarters while countries went forward with the implementation of the Fifth Programming Cycle.

Therefore it is important to appreciate the extent to which the recent surge in NEX programming has been a learning-by-doing exercise with the usual positive and negative attributes of that mode. Gradually a clear set of required activities has emerged. The expansion of NEX requires:

• An information campaign regarding the NEX concept;
• A skills training programme for new procedures and regulations;
• The establishment of new procedures tailored to national regulations and local contexts while still meeting UNDP requirements;
• "Codifying" these procedures for easy reference and local guidance;
• Setting up new organizations, or transforming existing ones; and
• Carrying out national capacity assessments.

It is clear that UNDP country offices, and participating governments have taken on a large task that, optimistically, will take a number of years

to complete. Even in countries with significant previous NEX/Government Execution experience, the 1992 change from partial toward "total" NEX modality introduces new challenges. Institutional arrangements already established to support or finance partial NEX often prove inadequate as the number of NEX programmes and projects approaches 100%. It may have

been possible for the country office to handle the direct payments for a limited number of carefully selected NEX projects in the past, but as the volume of such work rises dramatically, the country offices can be overwhelmed.

As NEX becomes essentially universal, its very character changes. For the Country Office, NEX is not only a practical and strategic choice for appropriate projects, but a comprehensive goal for the entire country programme which now is dependent upon success in introducing NEX. In the view of many recipient governments, the 1992 Governing Council Resolution transforms NEX from an option to an entitlement. There are many instances where government representatives at various levels had different views as to the implications and requirements of NEX. Understandably, some interpreted "national" execution to imply simply that project work was to be carried out by national rather than international personnel. Others interpreted the policy to require a wholesale shift of all the responsibilities and prerogatives from UN specialized agencies to governments, that it required the replacement of UN agencies by government bodies. Some such misconceptions have been gradually clarified by subsequent guidelines; some remain.

The Rapid Policy Shift to NEX has Left Many Country Offices and Governments Scrambling to Respond. Given the magnitude of the institutional task and the importance of what is at stake, UNDP headquarters, regional bureaux and many country offices were unable to respond quickly enough for smooth implementation of the complex new policy during the Fifth Programming Cycle. Headquarters provided new definitions and guidelines. New guidelines pertaining to formulation were compiled fairly quickly and made available to country offices by early 1993. Yet, many country offices had already formulated major parts of their Country Programmes, using different assumptions.

As lessons are learned from the field, new guidance and enhanced definitions continue to be issued in terms of what arrangements for programme implementation are approved or not approved. At the same time, the Programme and Projects Manual (PPM) itself, which once served as the rule book for project formulation and implementation, has yet to be revised to take into account all the changes of recent years. Resident Representatives state that they often go ahead and determine arrangements with the hope that when guidance later arrives from headquarters it will not differ too much from what they have already decided.

Regarding implementation of NEX, the regional bureaux developed strategies for introducing NEX, implementing them to the extent that resources and governments permitted. These strategies included capacity assessments, training programmes, country manuals, workshops, and often the establishment of NEX support units.

In countries where early efforts to provide multiple and repeated training sessions were combined with the production of a nationally tailored NEX manual, there appear to be strong results in terms of broad understanding and confidence regarding NEX implementation. In many countries, however, the activities to support the introduction of NEX have been too little and too late. Government staff involved in NEX project implementation frequently complain, not that the required procedures are too difficult, but that they just do not know what they are. In some countries workshops were held too early (in 1992) so that by the time new programme implementation really commenced, the details were forgotten and personnel had rotated. Without clear guidance from headquarters, support units of various types were established, and some of these arrangements have turned out to be less than optimal.

Despite the problems, NEX generally received warm support from country office staff and government personnel at the country level. The switch to full national execution may have been ill prepared and rapid, but now that country office personnel have invested several years of their lives in trying to make it a success, many of them are committed to the process and to the concept, although they lament the long hours of work and have misgivings about many aspects of the process.

Ownership is perhaps the most important objective of NEX, for without the sense of responsibility, the other objectives will not follow. This first and foremost objective of NEX appears to be achieved in most countries. In African countries, all government officials and national project personnel spoke with great pride and conviction about how they were finally able to control their own UNDP-assisted projects rather than wait and see what was decided and designed in Rome or Geneva. In Malawi, for instance, authorities see the benefits of ownership as the responsibility to make projects succeed, and the freedom to make their own mistakes and to learn from their mistakes, thereby generating a sense of pride. In Ethiopia, the sense of ownership of its Country Programme is so strong that a return to the previous system of agency execution is considered impossible. In Zimbabwe, officials view NEX as the right approach at the right time, when they were seeking ways to be in full control of important elements of national economic reform and needed a vehicle for intensified national capacity building.

In Latin America, the early adoption of high levels of national execution signals the acceptance of the principle and appropriateness of the modality in that region. The leadership for the introduction of NEX came largely from UNDP, but convincing national authorities to take on a sense of ownership of UNDP-assisted projects was not difficult. For Nicaragua, for example, ownership via NEX enhanced an essential need for national pride in a country emerging from a humiliating dictatorship.

In China, Thailand, and Egypt, officials also expressed their strong sense that the responsibility for programme management is rightfully and most effectively theirs.

UNDP National and Regional Programme Officers also express great pride in helping national personnel take up full responsibility for programme formulation and management, and have confirmed the increased sense of ownership and involvement on the part of national personnel in "their programmes" under national execution, despite increased UNDP Country Office workloads.

For governments, one cost of ownership is the obligation to assume the expensive and arduous administrative tasks associated with project execution. In many countries, governments either are not willing, or are not able to pay all of that cost. Another more important cost is the significant time delay required by the participatory process of programme formulation during the Fifth Programming Cycle. Countries will improve with practice, but we can expect programme formulation to be a longer process from now on, given the complex consultations inherent in promoting ownership. In some countries (see the case study of Ethiopia in Chapter IV), the elongated process of formulation puts the entire UNDP portfolio at some significant risk.

Self-Reliance includes several facets. National programme directors and coordinators are taking on management tasks and responsibilities that hitherto were handled largely by international technical advisors (CTAs). Additionally, almost everywhere NEX programming increases the volume of technical work performed by national experts, as ministry employees many of whom have been trained on previous UNDP-assisted projects as project personnel on contract, and as national consultants. According to UNDP data, the value of services contracted to national consultants on all projects doubled between 1989 and 1993, from approximately $10 million to $20 million.

In most countries, people expressed the idea that NEX allows, encourages and even requires a preponderant reliance on national personnel except in instances when it is clear that the required technical expertise is not available in country. NEX, by definition, pushes governments and national programme personnel to be more self-reliant in procurement, contracting, and recruitment. Countries vary considerably in their levels of self-reliance in these activities, and national personnel are often aided by UNDP and UN Agencies, but there is no denying that national personnel in a great many countries are moving to handle much of this work themselves. Even if, for instance, a UN specialized agency identifies and recruits a specialized international expert, national personnel are taking a stronger role in identifying the need for this person, drawing up the terms of reference, and making the final selection.

One risk of self-reliance is that country personnel proudly overestimate their national capabilities and underestimate their requirements for international inputs, jeopardizing technical quality. In this light, there is a trend toward parochialism in a number of countries.

While in many countries, past and present social, political and economic circumstances hinder the growth of self-reliance, a strong sense of ownership and an increase in self-reliance are unequivocally resulting from the broad introduction of national execution. The costs of ownership and the risks of self-reliance are basically under control in most countries.

National execution has the potential to greatly improve the capacity of individuals to manage development programmes, under the right conditions. The learning-by-doing experience of actively executing and implementing projects, rather than serving as counterparts and recipients of Agencies' projects, has been salutary. Just as international CTAs of agency executed projects learned the management skill and UNDP regulations on the job, so too must nationals. If national capacity in this area is to be enhanced, then national personnel must have the opportunity to serve in a similar fashion. The unique input to capacity building provided under NEX is this opportunity to be in charge. Other modalities provide many capacity building inputs such as fellowships for international degree training, on-the-job training as counterparts to international advisors, and so on. But NEX, for the first time, puts national professionals fully in charge of a programme, project, or component, and makes them responsible to their government and to UNDP.

Not surprisingly, there are many superb national programme directors and coordinators. Most often these are individuals with the appropriate professional education and previous experience. Typically over the years, he or she has been trained overseas, perhaps on a UNDP-assisted fellowship, has served in the past as technical counterpart on international development projects in his or her country, has held positions of responsibility within the ministry, or has worked as a local professional with an international aid agency. They are now assuming management responsibility and are in the process of learning from this new experience. Obviously there are cases where projects do not receive the attention they require since the nationals who are involved are not properly motivated. But those cases are the exception rather than the rule.

An important aspect of this is the more participatory style of programme preparation required by NEX and, especially, the Programme Approach. The level of involvement of national personnel, and the levels of people who are involved, varies from country to country. But it is widely agreed that nationals are participating in the process in larger numbers and in more significant roles than ever before. Mid-level ministerial technical staff, working with UNDP, and most often with selected international experts provided by the UN agencies, work through what is often a laborious process of putting together a multi-component programme that represents government's sectoral objectives, and also responds to UNDP programming areas and mandates. Not only does this experience build people's capacity to design projects, it gives them a firmer and more detailed understanding of the strategies and activities of project implementation, both in general and for the specific project on which many will then serve.

International experts and the UN agencies are usually participants in this activity, but they no longer direct it. Country office personnel play a key role, greater than in the past, but generally it is a facilitative role, albeit often a very insistent facilitative role. As mentioned above, the formulation process under NEX is usually excruciatingly slow, especially for larger programmes. But during the process, many national experts are gaining a very important skill and expanding their understanding of development and international cooperation. To the extent that the same individuals are involved in the subsequent implementation, the slow preparation time can be offset somewhat by more effective implementation.

Additionally, there is national capacity being built through the increased utilization of national technical experts as consultants. Nationals who had the training in theory, now have more opportunities to practice their skills in a variety of roles as consultants. The promise of NEX to significantly build individual capacities is probably being fulfilled.

Development is a team endeavor, not an individual task. The purpose of NEX is clearly directed at improving the ability of national institutions to plan and manage their development programmes. Institutional capacity building requires attention to such things as defining an institutional mission, improving and clarifying responsibilities among individuals holding positions within a structure, establishing effective procedures and rules, establishing mechanisms for institutional self-appraisal and dynamic feedback, and developing the capacity to assure continuity and replication of such structures and capacities.

Organizational capacity building has long been the focus for much of the UNDP development assistance, under both nationally executed and agency-executed projects and programmes. What are the unique contributions of the national execution modality to this effort? Part of the answer emerges as we turn the question around and ask how did traditional forms of development assistance impede institutional development? And does national execution address those problems?

National execution contributes to the "de-projectization" of UNDP-assisted programmes. Traditional development assistance created special, limited-time institutions, putting great and creative efforts in building project capabilities which were largely separate from on-going national institutions.

National execution, by putting the ownership, and often the management responsibility with government tends to increase the integration of UNDP-supported programmes into national institutional structures. This is not entirely nor automatically the case, however. The integration of supported activities into normal institutional modes is also a function of good programme design.

Traditional organizational capacity building endeavors have often succeeded with the selected institutions only to fail due to their narrow focus. These efforts were often in technical institutions that are not, however, central to the process of development itself. And even projects to improve the organizational capacity for economic planning, often supported the development of specific human skills and institutional systems, rather than providing sufficient attention to developing the institutional capacity to formulate policy alternatives.

National execution addresses this issue in two ways. First, by giving government the execution responsibility for almost all UNDP-assisted programmes, and making government responsible for the results, NEX should encourage the development of a higher order capacity for the analysis of broad results and impacts. Second, through the greater involvement of a range of national institutions in programme formulation, NEX and the programme approach contribute to building the capacity to formulate and analyse policy alternatives.

Under national execution, most country offices also provide more standard capacity building assistance to improve tasks such as procurement, contracting, and, especially, financial management and reporting. It is not to be expected that in every, or even any, country that national institutions will take on all the new responsibilities and fully develop the required organizational capacity in a short time. One can often question whether the correct national institution is being strengthened by NEX. (See the discussion of Programme Support Units in Chapter V.) And many lament the slow pace and partial achievement of the institutional development process. And in some instances, institutional capacity building appears, at least early in the NEX process, as merely the development of the capacity to deal with UNDP. Beyond that, however, fuller participation and, often for the first time, leadership of the programme formulation process, and handling of tasks such as contracting, recruitment, and procurement are emerging and point to ways in which national organizational capacity is bound to be strengthened.

The serious deficiencies and structural problems of the public sector in many developing countries and transitional economies are well known. The NEX modality itself provides very little to overcome the larger problems of weak public sector management. The opportunities of learning-by-doing and improving-through-practice government procedures for contracting, procurement, and recruitment are necessary but insufficient to transform and renew some very archaic, unstable, or under-resourced bureaucracies. Although there is a great deal of discussion of the important capacity building objective of NEX, it is not reasonable to expect NEX to transform deeply troubled public sector management structures. High levels of staff rotation, poor staff compensation, low motivation, narrow and vertical reporting structures, outmoded laws, and problems of corruption will remain despite the fact that the ministry has now the feeling of ownership of the project and the international CTA has been replaced by a national project coordinator.

Working within a flawed environment. This creates a risk for UNDP programming under national execution since NEX implementation is plagued by the very incapacities it is supposed to help overcome. From a practical point of view, NEX can and does work within these deficient systems to provide partial solutions and partial improvements for the sake of delivering the UNDP-assisted programmes, and to make at least a contribution toward overall improvements. One cannot, for instance, solve the problem of frequent staff rotation, but UNDP and government minimize its negative effects on programme implementation by creating NEX manuals and setting up a permanent government capacity to provide annual NEX training workshops.

UNDP is often forced to make compromises regarding salary support to government officials. Higher salaries to people in programme support units (who are sometimes government officials "on leave"), subsistence allowances for government officials travelling in country on UNDP-assisted projects, and other kinds of incentives are often necessary compromises that must be made for the shorter term purpose of timely programme implementation and delivery. And they all reduce the full value of NEX regarding sustainability and capacity building. Working in a flawed environment involves messy trade-offs that are negotiated in each country.

By-passing a flawed environment. In some situations, especially in Latin America, NEX is used, not to enhance the capacity of normal government institutions, but to by-pass them so that programme activities, often with a high level of cost sharing, can be completed on time and in a fashion that provides assurance that funds are properly utilized. In this sense, NEX contributes to creating a parallel bureaucracy of development experts at higher than normal government remuneration rates. A national capacity for programme management is thus utilized and supported, but this does nothing to strengthen governmental capacity. It may even weaken permanent governmental capacity by providing temporary subsidized alternatives, and relieving some pressure for reform.

Technical Personnel comprise a substantial component in most project budgets. These include the cost of international expertise, especially the cost of long-term advisors with their associated travel and other allowances. Under NEX, most governments have adopted the policy that international expertise is to be utilized only when the expertise does not reside locally. Making this determination presents an opportunity for considerable cost savings, provided that the result is the right mix of international and national expertise. NEX clearly presents the potential for significant cost effectiveness gains in this area. A review of individual NEX project budgets in comparison to predecessor projects shows a modest decline in the numbers of work months assigned to international experts, and a large increase in work months being delivered by national experts. The reduction of one person month of international expertise allows an additional five to ten person months of national expertise.

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The cost savings are being taken in this area, but one cannot demonstrate that improved cost effectiveness is achieved, unless one can show that the much greater utilization of national experts improves performance. The evidence from the OESP evaluation database and responses to recent surveys indicates only that performance on NEX projects is not inferior to that on agency-executed projects. It may be that activities have been shifted from international providers to national providers with neither a gain or a loss in cost effectiveness, or in overall costs. This subject would require a more detailed analysis than the present evaluation was authorized to perform.

A related issue is whether NEX leads to more parochial technical assistance that over the years may harm countries' abilities to tap into international scientific developments. Many countries and programmes do not appear to be making the optimal determination in this regard, patriotically overestimating the skills of their national experts, "saving money" but reducing project productivity and increasing introversion. However, a majority of NEX projects, in Africa and Asia especially, maintain their international emphasis and continue to utilize international experts in key roles.

In addition to the reduction of the volume of international experts, NEX provides the potential for their improved utilization. Project "ownership" appears to encourage national technical staff who are attentive to learning from the experts whose visits are less frequent. Older forms of technical assistance often provided too many international experts chasing too few and frequently reluctant national counterparts, thereby impeding technology transfer and on-the-job learning.

During the past four years (1990-93), personnel costs have been relatively lower for NEX than for agency executed projects, and lower than they were on NEX projects between 1987-89. An inference could be drawn that, at least regarding personnel costs, NEX tends to be cheaper. When one considers the rising percentage of subcontract lines in the project budgets, the picture is much less clear, since this budget line includes personnel costs, subcontract management fees and overheads, and other items. The combined personnel and subcontract lines for NEX are just slightly less than for agency-projects, but are rising steeply between earlier and more recent NEX projects. An analysis of the costs and cost effectiveness of personnel components will require better data.

The management and coordination of most project activities can be accomplished by national personnel. The replacement of the international CTA with a national coordinator is generally cost effective since the international advisor does not use his or her valuable time on administrative issues, but focusses directly on technical issues for which there is no local expertise. In 35 selected projects there were very few instances where the national project coordinator was not performing well. There were, on the other hand, in certain countries a number of instances in which there was a considerable delay in appointing the national coordinator. This problem rarely seemed the result of a lack of suitable candidates, but the result of the government's lack of capacity to determine appropriate compensation levels, perform recruitment tasks, or to resolve political or ethnic affiliation issues.

Reduced Overheads

Saving the old 13% agency overhead was often mentioned as an indicator of NEX's cost effectiveness. However, there are many indirect costs in NEX which must be borne by one institution or another. Coordination and management have costs; recruitment, contracting, and procurement have costs. In some non-LDC countries, the government appears willing and able to assume these direct and indirect costs of project management. In most LDC countries, although it is reasonable to require government to cover the costs of its normal functions, it is proving difficult to require them to also bear all of the direct and indirect costs specifically related to the management of UNDP-assisted projects. It is in this light that in many countries the national project coordinator and project accountant are contracted from project funds, rather than being on the government's normal budget. A full analysis of NEX cost effectiveness would also need to carefully separate normal government costs and responsibilities from those that pertain only to project management.

There are also the hidden (and not-so-hidden) costs of the increased workload of UNDP country office staff, and the costs of the characteristic delays in NEX project formulation and start-up. A full cost effectiveness analysis would need to separate the investment costs of introducing NEX from the recurrent operating costs of NEX itself once established.

Project assessments in the UNDP/OESP evaluation database show that nationally-executed projects experienced indeed slightly fewer delays than agency-executed projects.

There are instances where NEX slows down implementation due to lack of government capacity or involved procedures. Least developed countries report relatively more difficulties of that type and remain split as to the cost-effectiveness of NEX.

The 1995 UN Triennial Policy Review data tell a similar story.

• NEX programmes (combined with the Programme Approach) are often more fully integrated into normal government activities than earlier programming modes;
• The greater utilization of national personnel reduces the technical discontinuity at the time of project completion; and
• The sense of ownership from the beginning enhances the likelihood that governments may continue supporting some project activities in the future.

In some countries, the reliance on various kinds of programme support units compromises sustainability by isolating the basic support functions from normal government operations, and by making the functions heavily dependent on direct UNDP support. There are efforts in most countries to see these units as transitional and to have governments gradually replace them. But once set up, they are proving hard to disband or to transfer to the government budget. National execution provides positive elements for sustainability, but it does not automatically assure sustainability.

NEX aims to create a higher mode of sustainability with its intention to encourage the improved capacity to plan and formulate programmes and analyze alternatives. The sustainability is not simply a matter of units continuing to perform the skill learned from technical advisors, but of having the ability to adapt to changing circumstances, for organizations and capabilities to survive the inevitable shifts in policy and circumstances.

This aspect of NEX requires a different set of questions regarding sustainability in assessing nationally executed projects in the future. One needs to look for evidence of the development of systems of adaptability, not merely the continued flow of benefits set in motion by a donor-assisted project. This will require a long term ongoing analysis.

Therefore it is equally important to keep in mind that sustainability is not merely a function of modality, but also of the technical quality of project documents, quality of outputs, continuation of government policies and priorities, as well as financial resources that are made available to the government after the project is completed.

It is in this sense that it is important conceptually to separate dynamic sustainability from static sustainability.

To consider merely the results achieved from a project at a given time and examine the sustainability of the project's output in isolation

from the development process underestimates the dynamic elements embodied in the sustainability concept. Project results have both direct and indirect effects on the development process. To the extent that NEX succeeds in incorporating specific project results into the larger development process, enhanced with self-confidence, a sense of ownership, and successively better-built projects sustainability acquires a dynamic dimension.

Has NEX Provided Adequate Financial Accountability?

In 1989 and early 1990, UNDP's Division of Audit and Management Review (DAMR) and the Division of Finance (DOF) undertook missions to country offices to sensitize the field staff with respect to audit requirements and to ensure that Resident Representatives and governments understood that the latter were fully accountable to the Administrator irrespective of the disbursement modality of NEX projects. UNDP's audit requirements stipulate that the latter that are executing agencies must follow the UN's audit principles and that each project must be audited at least once in its lifetime. Previously, annual audits were required, but this was reduced to the once in project lifetime level in 1992.

With a growth of 420% in NEX expenditures between 1990 and 1994 (from 140,513,000 to 591,174,000), and a commensurate growth in the number of projects, the planned audit demand dropped from 100% in 1990 to 34% in 1993. However, the actual percentage of planned audits that were actually performed ranged from a low of 64% in 1991 to a high of 75% in 1993. The percentage of audit coverage of total NEX expenditures has declined as the overall level of expenditures has increased. Coverage has therefore declined from 72% in 1991 to 56% in 1993.

Many projects which were in the evaluation plans were not audited, and others which were not in the plan were audited. Many country offices and/or governments insist that all or most projects receive annual audits, regardless of the 1992 change of requirement. However as mentioned above, taking this into account, overall compliance somewhat decreased. Furthermore, the non-financial aspects of audit requirements such as an assessment of the adequacy of project management were ignored in 68% of the audits.

There is considerable room for improvement in the correlation between planned and actual audits, and in beginning to audit the non-financial aspects of performance.

The issue which has yet to be resolved fully at the present is who carries the financial management responsibility, and how this responsibility is discharged. UNDP's Governing Council in its decision 88/18 stated that governments in due course can assume, to the fullest extent possible, the entire responsibility for the custody, use, and reporting of financial outcomes of government-executed projects.

The practice, however, shows different modalities. In a number of countries governments shy away from financial management and the Country Office assumes this responsibility. The accounts are kept by the Country Office and funds are disbursed directly. In 1994, for example, close to 60% of funds were disbursed through this modality. Requests for payments for inputs are submitted to the Country Office whose programme officers first, and finance officers subsequently, ensure that the requests are compatible both with the Project Document requirements and UNDP's financial rules and regulations. This modality increases the country office workload (dealt with below), but ensures accuracy and transparency.

Given the speed with which NEX was adopted in countries where financial management capabilities of the executing agencies are rudimentary, the direct payment modality was a necessary bridge-gap measure for the short-term only. Since one aim of NEX is capacity building, measures should be taken to assist governments to build in-house capacity and assume financial management and, with it, financial accountability.

The issue, however, is much more complex in other countries, notably in Latin America and Asia, where legal requirements and financial rules and regulations and accounting procedures of the governments are such that financial management cannot be transferred to executing agencies, although there is no lack of management capacity. The reasons vary from over-legalistic institutional arrangements to inherent difficulties in complying with UN procedures. The executing agencies, therefore, simply refuse to accept this responsibility. The issue is not so much accountability, but the mechanics of financial management. In such countries the issue of financial management remains to be resolved and should be reviewed within the overall public sector reform, since the question is not one of capacity or capacity building, but of enabling environment. If the UNDP/CO remains as an accountant-cum-paymaster, then one cannot really speak of a full NEX. If the governments are forced to assume such responsibility without due preparation, financial accountability may be difficult to maintain operationally.

The quarterly advance system has given rise to another kind of issue which does not have direct relations to accountability, but creates friction between the executing agency and the UNDP/CO, since at least in some countries quarterly advances are seen as a "paternalistic" way of conducting financial management. Comparing themselves to UN specialized agencies and reasoning that the UNDP gives full financial responsibility to the agencies when they act as executing agencies, the government executing units feel that they are deprived of the full rights of carrying out the NEX projects. At least in one country there are frictions between the government executing agency and the UNDP/CO. This relationship is far from being healthy.

Thus, NEX has given rise to a number of issues which both UNDP/HQ and UNDP/COs are coping with at present and will have to address in the near future. If NEX is to be accepted as a universal but country-specific concept, financial management will have to be resolved somehow between the country office and the government concerned in accordance with the general rules, regulations and requirements of UNDP/HQ. It is futile to think that UNDP/HQ can assure accountability by fiat universally. Despite the divergent conditions of the countries and despite the variety of financial management modalities, there is no evidence that NEX impairs UNDP's financial accountability.6

With the continued growth of NEX, however, the increasing workload-at HQ, COs, and national ministries-involved in maintaining financial accountability raises questions regarding continued accountability in the future.

Has NEX Compromised Substantive Accountability?

The root of the concern is in distinguishing an oversight function from the direct implementation function. Many critics of NEX express concern that government is now responsible for both the oversight of programmes and their direct implementation. With these two hats seemingly on one institutional head, substantive accountability may be jeopardized. It appears, however, that this concern is overstated, for it underestimates the different roles played by different levels of government ministries. The criticism assumes automatically that Government is a unitary entity, devoid of internal checks and balances. In many instances (see Chapter V) the government has separated the line activity of "implementation" from the more general responsibility of "execution". In other instances where the programme is entirely the responsibility of a single ministry, a steering committee led by the minister or deputy minister oversees and reviews the implementation activities directed by department heads.

Substantive accountability does not appear to have been compromised so far. In global terms, the monitoring function is usually carried out by the programme officers, periodic project review meetings are held, and mid-term and final evaluations have been carried out. It should be noted, however, that in some countries these activities are delayed, or even postponed indefinitely. Nonetheless, the incidence is not frequent enough to invalidate the above stated conclusion. There are, however, a number of related issues that will have to be kept in mind.

In some cases "executing" entities are weak and do not have sufficient technical capability and experience to assure that project outputs are achieved as specified in the Project Document. In some exceptional cases there are misconceptions that the "executing" entity is a mere UNDP counterpart that signs the Project Document, its function being basically ceremonial thus not extending to monitoring and evaluating; or monitoring and evaluating capabilities are not built into their systems.

The divergence in the perception of NEX, therefore, rightly creates some concern about substantive accountability, not because the tripartite relationship is lost, but because NEX is not fully understood and/or the executing agencies are not fully equipped to cope with their responsibilities. Recognizing the circumstances, UNDP/COs strive to comply with substantive accountability. However, where programme officers are seriously involved in financial accountability, they have relatively less time to monitor the projects as they feel they should. To the extent that financial management is shifted onto the UNDP/CO, substantive accountability may be in danger of being tarnished. An added problem is that in countries where there are sometimes over one hundred projects, it does not seem to be humanly possible to perform all the evaluations prescribed. In those cases cluster evaluations or programme component evaluations will have to suffice. Needless to say that the multiplicity of the projects is unrelated to the implementation modality.

Another misunderstanding that may jeopardize substantive accountability is the perception of some governments that evaluations (not necessarily TPRs) are intrusive. In their opinion evaluations are equated to inspections; hence they tend to be reluctant to encourage mid-term evaluations, to say the least. If NEX is to succeed, the governments must be made fully aware of the meaning and need of substantive accountability and of their sharing the responsibility to see it through.

Even if the governments were fully conversant with the requirements of NEX for UNDP as well as for the executing/implementing units, the disappearance of the "old" tripartite relationship raises yet another issue that needs resolution. While TA was being provided by the UN agencies, programme officers as well as project directors could count on the technical expertise that such agencies provided. Today the role of these agencies has waned almost completely in many countries, and in some countries NEX is interpreted as all project personnel consisting of nationals. This practice deprives project coordinators and personnel of international expertise, experience and technical advice which may be essential to project success.

Many country offices have expressed the desirability of building into projects the services of independent expertise to monitor them. This would provide support to the programme officers and enable them to carry out their substantive responsibilities, and give additional assistance to project directors/coordinators who may need international expertise from time to time. This could be a useful mechanism to keep substantive accountability intact.

UNDP/COs have experimented with several ways and means to ensure that substantive accountability is addressed properly, including the preparation of NEX procedure manuals for their staff and for the governments. While financial accountability attracts greater attention, substantive accountability is at least as important an issue which needs both better understanding by governments and better operational procedures from the UNDP. Monitoring and evaluation arrangements ought to receive more detailed attention in project documents.