Chapter V: Changing Institutional Roles

Changing the institutional roles and relationships is at the core of the effort to expand the national execution modality. Such changes do not come easily, especially when they involve a large number of diverse national and international bureaucracies. National execution, by definition, calls for a diminution and change in the role played by the U.N. specialized agencies, and an expansion and transformation of the roles of national entities. Other important institutional changes are implied by NEX, or have come about during the process of the introduction of NEX. This chapter examines the full range of these issues-the roles of specialized agencies, the variety of governmental organizational responses to NEX, the changing role of the UNDP country offices, and the implications of NEX for donor coordination and cooperation. Overall, one finds a greater diversity of organizational and executional arrangements forms than in the past under the standard tripartite arrangement. In part, the proliferation of new forms is a dynamic response to the multiplicity of opportunities that national execution presents. However, in other respects, some of the variety of execution arrangements results from a lack of clarity regarding NEX, and from opportunistic arrangements that, while addressing felt needs in the short term, present problems for the long term.

Restructuring the UN Specialized Agency Roles

Marginalized Specialized Agency Roles

The rapid transition to NEX as the norm has required extensive adjustments in relationships with particular consequences for

the UN specialized agencies. The concurrent restructuring of fiscal modes formerly enshrined in the tripartite system together with deep reductions in contributions to the UN in recent years have occasioned both dramatic reductions and retrenchment in specialized agencies' roles. The old tripartite modus operandi has dissolved, and the new relationship is still evolving.

UNDP has always relied on the UN specialized agencies to assure the quality of UNDP-supported programmes, at least in fields where these agencies have comparative advantages. While UN agencies still provide significant technical inputs to most country programmes and participate effectively in evaluations, in some countries the vast resources of the specialized agencies have been marginalized, and in others they have not participated effectively in programme formulation. Their marginal role in formulation and implementation compromises later abilities to effectively monitor and evaluate and curtails their potential contribution to national capacity building.

Diminished More than Was Intended

The Governing Council meant to reduce the management role of the UN specialized agencies, and allow them to focus on providing technical resources, especially to upstream activities including formulation, technical monitoring and quality control, and participating in evaluations. Despite the continued technical contribution of specialized agencies in many programmes, their participation is presently not optimal. This is due to several factors:

UN Agencies' Views on National Execution

What has been the organizational impact on your agency of the introduction and rapid expansion of the NEX modality?

UNIDO: "NEX meant an involuntary disengagement of project level activities. The promotion of NEX went hand in hand with the tendency to exclude the agencies from the process, regardless of what the PPM and other regulations prescribe."

FAO: "...Needed to reduce the number of staff who were directly involved in providing support to projects, and whose posts were funded from the support costs. The reduction in staff resulted in an increase of the workload of the remaining staff....Under UNDP funding, FAO expects that its involvement will further decline...especially if this modality continues to be applied in the same way so far practiced."

What actions in your view should be taken in the future...to make NEX a more effective instrument of technical cooperation?

WHO: "Establish a closer substantive dialogue between UNDP, agencies, and governments to ensure that agencies can play a supportive role...."

UNIDO: "Time has arrived for a deep reflection on NEX, rather than charging ahead with this modality."

FAO: UNDP should discuss more fully the strategy of NEX with the entire UN system and determine how the UN agencies and specialized organizations can be effectively involved."

UNESCO: "NEX should be seen in a larger context of overall UNESCO-UNDP relations."

(From: Responses to survey questionnaire sent to UN Agencies)

Agencies No Longer See Themselves as Equal Partners

As indicated above, there is the widespread opinion that the new agency support cost structure combined with national execution and the programme approach has in most instances, despite occasional UNDP professions to the contrary, put an end to the tripartite system. Agencies express the feeling that they have been sidelined by UNDP in the guise of NEX, and/or replaced by other entities which have limited and occasionally no technical capacity to deliver on programme requirements.

Even in countries, and there are many, where agencies are invited to continue to provide considerable technical and administrative support, there is the clear sense that the UN Agency is no longer one of three equal partners. Some agencies have not adapted well to provide the quick response in recruiting and procurement to which national authorities, rightly or wrongly, now feel they are entitled. Also, the agency personnel express the opinion that it is difficult for them to make a truly significant technical contribution, either in terms of technical assistance or monitoring and backstopping, when their involvement in programme implementation is marginal, following on their limited input into formulation. The UN Agency may still participate in after-the-fact annual review sessions, but less effectively, with less information, and less authority than when it was involved in executing the project.

In other instances, agencies have participated in programme formulation, but country office staff, and government express dissatisfaction with their contribution. National execution and the programme approach make formulation more intimately tailored to local conditions. Agency personnel and consultants have not always adapted easily to the new formulation environment.

Evidence Indicates That Technical Quality of Programmes Has Not Declined to Date

Despite the obvious reduction in the level of agency involvement, there is no evidence that, as a result of the programme approach, simpler projects are being designed just because they must be executed by nationals. From a number of examples, the impression is the contrary. The programme approach, with the increased participation of national personnel, is resulting in programmes that are in some instances over-ambitious, no matter who would be executing and implementing. This over-ambitious design work

is exacerbated by the subsequent reduction in the IPF.

Also, overall, the reduction in person-months of international technical assistance on UNDP-assisted programmes is not that large (less than 10%), despite the recent surge of NEX projects. Given the compensation differentials between international and national experts, a modest reduction in international staff allows a very large corresponding increase in the use of national expertise. Resident international technical advisors on successful and well managed NEX programmes and projects are often able to function more effectively since they are freed of management duties, on the one hand, and working with more fully committed national counterparts, on the other hand.

Not surprisingly, on badly managed projects, the advisors were frustrated by their inability to just push forward and get the job done. Waiting for wheels to turn slowly in a ministry feeling its way through its first NEX experience is often viewed as wasting valuable international resources. NEX, whatever its advantages, is often slow, especially during its maiden voyage, so this problem is not uncommon and may be well worth the price.

Many Nationals Express Resentment of Agencies

UN agency experts and CTAs are often not considered up to standard, especially in view of the high proportion of programme budgets they absorb. It is also often stated that agencies generally under-utilized national capacity. Some viewed this from the cynical point of view that UN Agencies earned more money by supplying expensive international personnel. Others simply noted that, being based in Rome, New York, Vienna, and Geneva, the UN Agencies lacked the capacity for effective local recruitment. Some nationals even expressed resentment that the new system of support costs gives UN Agencies an undue advantage in the bidding process for international services.

Arrangements for Agencies' Participation Need to be Improved

If UNDP-assisted programming is to remain a truly international endeavor, and if the undoubted expertise and experience of the Specialized UN Agencies is to continue to enhance the effectiveness and prestige of IPF programming, changes are needed.

The UN Resident Coordinators have an important role to play now that their role has expanded more formally beyond their responsibility for UNDP alone. Although the Resident Coordinator cannot act as a sales person for agency services, he or she can and should lead the full consideration of how to most fully and effectively utilize these important UN resources in the country programmes.

The Agencies themselves need to change, becoming more responsive to country level requirements, and more attentive to their images with the recipient countries. The agencies themselves need to market their expertise more effectively without necessarily relying on Resident Coordinators to act on their behalf.

UNDP needs to find more effective financial means of involving the Agencies in its programming irrespective of the existing successor arrangements for agency support costs which do not seem to be making an optimal contribution to NEX.

Revised Roles for UNDP and UN Agencies

The dynamics of NEX has changed the roles and relationships of governments, the UN agencies and UNDP. Under the combined influence of NEX and the programme approach, UNDP has become more involved in the upstream policy dialogue with government and in programme formulation (Benin, Bolivia, Kuwait, Swaziland). It is also increasingly playing the role of a donor/funding agency with monitoring and evaluation responsibilities with regard to the utilization of funds and accountability (Benin, Cameroon, Colombia, India, Malaysia, Philippines). On the other hand, in the bulk of countries, UNDP is still an active "partner" in both execution and implementation of programmes and projects. UNDP's involvement ranges from operational level advice (Ecuador, Guyana) to being partially or fully in charge of operations and administration (Bangladesh, Benin, Guinea, Nepal, Guyana, Zambia). Thus, UNDP has effectively taken over some of the functions previously performed by UN agencies (Jordan, Honduras, Dominican Republic).

Still, in most countries, UN agencies continue to provide technical inputs and advice in their areas of competence, but often at a reduced scale as their role has shifted from project execution to technical support in the execution and implementation of projects, and to monitoring and evaluation (Bhutan, Dem. Korea (DPRK), Gambia, Guinea-Bissau, Malaysia, Morocco, Niger, Peru, Syria, Thailand). The relationship between governments and UN agencies has been turned upside down. Governments are now in a very strong contractual position relative to the UN agencies which can no longer impose their own views and agenda (Bhutan, Bolivia, CAR, DPRK, Swaziland, Tunisia). They now report to and take directives from national project coordinators (Gambia, Tunisia).

In terms of relationships, NEX has forged a closer and improved link between government and UNDP, whereas interaction between UNDP and the other UN agencies has become more infrequent and more distant (Bhutan, Brazil, Chile, Guyana, Honduras, Iran, Morocco, Nicaragua, Paraguay, Yemen) as have contacts between governments and UN agencies (Argentina, Guatemala, Nicaragua, Venezuela).

(From the survey questionnaire for governments and country offices)

The UN specialized agencies themselves acknowledge NEX as not only desirable but inevitable for long term sustainable development to be achieved. Despite the negative factors affecting their roles and relationships, they have mounted a serious effort to adapt to these and accommodate the NEX modality as one which they in fact favour. Their response may be summarized in four areas:

While these changes have helped reshape and realign agencies to the emerging needs of technical cooperation in the context of NEX and the Programme Approach, they have not in themselves completed the required transition. The imperative for UNDP, its Country Offices, Resident Representatives and the Specialized Agencies in the Sixth Cycle is to carefully consider where to include the specialized agencies' expertise throughout any Government's NEX process-strategy planning, needs assessment, programme formulation and review, delivery and evaluation-without falling back into the agency execution modes of the past.

What was lost and must be regained is the spirit of cooperation. What must be discovered and created are effective mechanisms for agency participation in both the upstream and downstream development process in nationally executed programmes.

Agency Support Costs

TSS-1 has been marred by too meager resources earmarked for it and by inappropriate procedures for its planning and approval. TSS-1 activities should be used to help define the total requirement of technical cooperation without necessarily focusing on the funding sources....

TSS-2 facility has had a slow start...but it is gathering momentum....Backstopping is financed more abundantly than evaluation. In coming years, relatively more emphasis should be given to the use of TSS-2 facility to draw on the specialized expertise of the agencies....

By now AOS appears to function well and problems arising are readily handled .... The AOS system should be reviewed after further experience is gained to see if it can be simplified.

(From: Report of the Administrator (DP/1994/23) - Conclusions and Recommendations)

Diversity of Modes of National Execution Arrangements

The variety of executing agency arrangements under national execution continues to increase as more countries take advantage of the policy's flexibility. Many of these arrangements reflect the patterns of authority already established in the recipient governments for carefully tailored and appropriate agreements. In other instances, the variety of arrangements represent power grabs, radical innovations, or weak and foolish compromises. Among the alternatives of executing arrangements one finds:

Clearly, National Execution is a learning process for country offices and countries alike. With guidance from headquarters and through experience in the field, country offices are developing a sense of what is and is not appropriate or effective. One arrangement that has proven problematic is the Single Government Agency Mode where all of the UNDP-assisted programmes in the country are carried out by a single body. Usually this body is either too weak to effectively carry out its execution obligations, or becomes too strong, thus monopolizing the capacity building aspects of NEX. A related problematical arrangement is the Centralized Power Mode where a single body serves in the multiple roles of government, executing agency and implementing agency, in which the functions of oversight and the duties of implementation are held closely by one institution.

The most effective modes embody two important principles-the separation of roles, and a diversity of executing agencies: Separation of Roles. Instances where the roles of government, executing agency, and implementing agencies were defined and separated to a certain extent provide a modicum of checks and balances in the system. Diversity of Executing Agencies. Instances where there are several executing agencies rather than one, which execute the country programme components. It is in UNDP's interest to have its portfolio diversified and to work more broadly with Government bureaucracies, flawed or otherwise; and in the country's interest to have the broader opportunity for capacity building in all aspects of programme planning, management, and evaluation.

Participation Beyond Government Agencies

Is NEX still Government Execution?

It appears that few governments share UNDP's concerns for broadening participation in national development. The change from the title "government" execution to "national" execution was intended to signal the importance of broad and varied participation in UNDP-assisted programmes, including NGOs, private sector, and community groups, as well as traditionally disenfranchised categories such as women.

Role of NGOs

Regarding NGOs, there is as yet no legislation that allows a non-governmental organization to execute a programme. There are instances in which country offices would find it appropriate to utilize an NGO as executing agency. There are a number of examples where international and national NGOs have served or are serving as implementing agencies of programme components of nationally executed programmes. However, it is unlikely that national execution, being in the hands of government, will naturally lead to an increased role for NGOs without pressure from the Country Office. Certainly there is little in the mechanism of national execution that automatically amplifies the broader participation other than the name change from "government" to "national" execution. One aspect of NEX does magnify the role of those NGOs who do serve, and that is that they now participate as "implementing agencies" on the same level with government implementing agencies and international UN specialized agencies.

Participation of Community Groups

Additionally, there were examples of increased involvement of local and community groups in programme formulation and implementation, especially in countries, such as Ethiopia and Malawi embarking on strong efforts to decentralize government functions and personnel. Examples also exist in China and Thailand where the UNDP country programme is addressing the problems of the disadvantaged regions in countries showing rapid overall economic progress.

Women's Participation and NEX

Another area where "National" execution implies a broader participation is regarding women. Although many NEX programmes address important women-in-development issues, the NEX modality does not necessarily enhance the broader participation of women in positions of project and programme responsibility. Countries with strongly masculine traditions in government, do not, as executing agencies of UNDP-assisted projects, feel the need to introduce more women into the mix. NEX tends to support the status quo with this special issue.

Country Office Workload

"In late 1994, UNDP office involvement in detailed support of NEX is less than might have been anticipated bearing in mind the fairly recent introduction of NEX and some understandable initial caution in taking NEX concepts at their face value. So far, there has been no recourse to the guidelines for UNDP office support to NEX circulated at the end of 1993."

"Nevertheless, even at the current level of NEX, the chores it involves are an important part of the UNDP office workload; an average of 60 payments a month are made in support of NEX projects. If NEX were to increase to 100% of the programme without changes in the intensity of UNDP office's involvement or procedures, the related workload would increase two-or three-fold, and on the basis of experience elsewhere it could easily become the defining component of office workload." (p. 12)

(From: "Assessment of Needs and Capacities for National Execution of UNDP-Assisted Projects in Uganda". Mission Report by Timothy Painter. November 1994)

NEX and Regional Programmes

Nationally executed regional programmes are very rare. As a practical matter, most governments lack the required mechanisms for transferring funds to organizations in neighboring countries, and few governments are willing to have a neighboring government execute a project within its borders. The ability to have an NGO serve as executing agency would provide an effective means to utilize NEX in regional programmes. The Asian Institute of Technology, and the International Union for the Conservation of Nature (IUCN) were cited as worthy examples of NGOs that could appropriately serve as executing agencies for regional programmes.

Country Office Workload and NEX Support Units

Are Country Offices over-burdened by the management tasks required by NEX. Yes, but they are managing. The burden is due partly to the fact that many country offices have assumed the management tasks formerly fulfilled by specialized agencies and OPS. The burden is also due to the huge task of introducing NEX and the Programme Approach for the first time. The multiplicity of tasks this represents include: running NEX information workshops; helping and encouraging government to join in designing or improving procedures for programme management; providing on-the-job training to a wide range of government personnel who have never before formulated an international assistance programme; assuming some temporary management and reporting tasks while governments get their new regulations and personnel in place; explaining diplomatically why UNDP-provided funds must be accounted for by line item in relation to work plan activities; and carrying out too much of the direct payments, recruitment, and procurement responsibilities which should eventually be handled by the Governments.

While some observers suggest cynically that country offices are in favor of carrying out these many new activities as a means of self-justification in an era of budget cuts, the trend in many countries is the attempt to disengage from at least the more detailed and time consuming tasks pertaining to financial reporting and implementation.

One of the main means of coping with this burden is to arrange for help from the government through establishing NEX support units, or strengthening the government's focal unit for UNDP assistance. Many countries use the add-on funds to support such institutional development projects that provide the resources to help prepare manuals, train government procurement officers, review quarterly advance requests and financial reports, run workshops, and so on. In many instances, it is the effective and timely efforts of these programme support units, that make it possible for the Country Office to cope with the burden of introducing NEX on top of its normal activities.

In many countries, support units have been established to assume the bulk of the burdens mentioned above. The role of various types of programme support units is one of the more problematic and controversial aspects of the implementation of NEX. In some cases, UNDP has utilized a project to set up and operate a NEX support unit that provides all the necessary services to the programmes in the country. This raises several red flags. One is sustainability, for the programmes and the country programme become dependent on the unit which in turn is dependent on direct budgetary support from UNDP. The capacity building aspects are also questioned. Some comment that the capacity building is largely limited to the special unit, limiting what might be the positive institutional development in other ministries. It is generally intended that the programme support units will be absorbed in one way or another into the normal operations of government, but this good intention has a way of retreating into the future.

Cost Sharing Under NEX

UNDP's move to supplement its limited

funds with additional inputs coming largely from multilateral financial institutions and from bilateral donors, i.e., act as an "investment banker", may be viewed prima facie as a fruitful one. This modality is prevalent in Latin America, but not exclusive to it. In Latin America, as of November 1994, considering only NEX projects, $1 of UNDP funds was matched by $4 of cost sharing funds. In the other regions cost sharing is much less significant. In Africa it was 10% of UNDP funds, in Asia and the Pacific Region about 14%, and in the Arab States slightly less than 35%.

Because of cost-sharing's great significance in the UNDP technical assistance activities in Latin America, its effect on NEX, and in turn NEX's implications on cost sharing, attention is focused on the Latin American experience.

In Latin America NEX is seen as a convenient method to execute/implement cost-shared projects, especially since the emphasis is on national capacity building and giving preference to the employment of qualified professionals. In some cases the Governments themselves share in the cost of the projects out of their own resources, whenever they feel that the execution of a given project is of vital importance to the country, but the implementation of it within the regular government bureaucracy is a near impossibility. The reasons for either multilaterals' or bilaterals' willingness to cost-share projects are multi-faceted. One reason is that UNDP is viewed as a neutral entity free of any political bias that may be associated with bilateral technical assistance. Another reason is to minimize the bilateral donors' transaction cost, in other words their cost of doing business and hence maximize the use of their funds for technical assistance purposes. The International Financial Institutions, especially the World Bank and the Inter-American Development Bank, concur with the UNDP's stand and involvement in substantive "upstream" dialogue with recipient governments and its "advocacy" role in areas of public sector reform, economic restructuring and private sector development, sustainable human resource development, and global environmental issues, and view its capacity to carry out projects to be basically neutral, transparent, flexible, and efficient.

Support Units: Three Cases

Malawi's NESU: UNDP funds a National Execution Support Unit to perform the dual function of reviewing and standardizing NEX programmes' quarterly financial reporting, and providing capacity-building training to government staff in procurement and contracting. NESU is supposed to be housed in the Ministry of Finance, the executing agency for all Malawi programmes. But the ministry lacks space and the project office was first set up in the UNDP office. It has now been moved to a government building across the street from UNDP, but still not in the Ministry. UNDP stresses NESU is a government unit, but most in government see it as a UNDP project. The NESU project was originally executed by OPS, but Phase II is under national execution, with the three project staff now under annual government contracts, paid from project funds. The excellent project coordinator receives a high salary, but the two assistants are compensated at a level that could be absorbed by government. UNDP hopes that NESU will be finally absorbed by government, or partially absorbed, or perhaps no longer necessary. Meanwhile, NESU makes the introduction of NEX possible.

Thailand's DTEC: No special unit has been set up to support NEX; however, UNDP has provided several grants to the Department of International Technical and Economic Cooperation (DTEC), the government unit responsible for coordinating all donor activities. The UNDP funding is used for running NEX workshops, preparing NEX a manual (planned), and other activities. It is not used to pay salaries nor to support the normal functions of this powerful government department. The support to DTEC poses little or no sustainability issue. If there is a problem it is that it enhances the department's already considerable power, increasing its role in detailed programme implementation at the expense of the line ministries that serve as executing agencies. However, Thailand's DTEC deserves much of the credit for the very effective introduction of NEX.

Egypt's OUDA: The Operational Unit for Development Assistance is a large unit employing a professional staff of over twenty persons. OUDA, established under a UNDP project, provides administrative and financial backstopping services for almost the entire UNDP country portfolio. It is intended to become a "centre of excellence" with broad expertise in all aspects of project management and assistance. At present it is supported almost entirely by UNDP, but it is hoped that it will diversify and provide services to a range of UN and other multilateral and bilateral donors. OUDA has relieved the country office in Cairo from the extra burden of NEX management. However, the country programme is in a sense hostage to OUDA, which is in turn financially unsustainable and dependent on UNDP.

(From: Observations from country visits)

Cost sharing is not an exclusive concern of the NEX modality. But, since most cost-shared projects are being, and will be, implemented through this modality, the issues surrounding them are intertwined and require special attention.

UNDP's success in its advocacy role and in its upstream dialogue on the one hand, the fading of military regimes and their replacement with pluralistic democracies on the other, have brought together a new set of conditions. Yielding to external pressures and complying with political campaign promises, political leaders began to steer their countries towards open market models, a streamlined public sector, and an expanded private sector within a democratic framework. These sweeping policy changes, combined with UNDP's stand on human rights, private sector development, human rights and human resource development, create unique conditions, especially in Latin America, for multilateral and bilateral assistance. While UNDP's own financial resources have remained modest, cost sharing technical assistance projects and the modality to execute them through NEX have gained primary importance.

The study does not pretend to enter into the details of cost sharing, since it is the subject of a separate forthcoming OESP evaluation. The following paragraphs merely call attention to certain specific areas where special care needs to be taken in its relation to NEX. No doubt, cost sharing has been a blessing for many a Latin American country, but problematic issues, such as creating parallel bureaucracies and neglecting capacity building, await solution.

Parallel Bureaucracies

In certain cases NEX projects that are heavily cost-shared by the government tend to create an almost parallel bureaucracy when the government is faced with the impossibility of conducting programmes with the existing cadre. The reasons may vary: cost considerations, lack of capacity in the existing civil service, built-in slowness in the government machinery to carry out reforms due to legal-administrative anachronisms. The solution to any one or a combination of these obstacles was found in many instances in UNDP technical assistance projects utilizing the NEX modality.

Neglecting Capacity Building

This modality circumvents the above difficulties, but it tends to fall short of one of its objectives, namely, capacity building. The projects, in more cases than not, tend to use national personnel who already have professional skills, and as a result capacity building in the public sector, where it is most needed, is in fact by-passed.8

Dependency and Inefficiency

In projects where cost sharing is through multilateral and bilateral donors two problems may arise: The substantive issue is the danger of the foreign assistance dependency syndrome. Creating a parallel bureaucracy may deprive the leaders and officials of the public sector of the sense of ownership of the project and make them view NEX projects like many other projects of the past. Hence, sustainability is endangered and additional technical assistance projects may become necessary, resulting in the prolongation of dependency. The administrative issue refers to the differences in administrative and financialprocedures and reporting systems among the governments, UNDP, and cost sharers. This divergence of procedures results in additional requirements for manpower and time that tend to undermine cost effectiveness. Cost sharing as a financial modality has yielded undeniable positive results. The problems of cost sharing within the NEX modality are not exclusive to those described in the previous paragraphs. This section merely highlights some of the problems that must be solved prior to the next cycle.

Pending the forthcoming more definitive analysis and recommendations, the imperative for UNDP in the Sixth Cycle is to work toward addressing the NEX capacity building priority as paramount and to find ways to make cost-sharing serve this priority rather than circumvent it.

 

8 These concerns are not valid in cases where the project is transitory by its very nature, as in privatization projects in Peru and Nicaragua.