Vietnam hosted one of the preparatory meetings for the High-Level Forum on Harmonisation in Rome ¹ and is currently one of the leading countries in the region on the road to the Rome harmonisation agenda. Like various other countries, it has developed a clear strategy for alignment and harmonisation in the form of a harmonisation action plan, which was published in May 2004. This plan assigns responsibilities to specific government agencies and donors or clusters of donors, and sets clear time limits. The effort is led and managed by government, with groups of donors playing a key support role in various sectors and/ or around common issues. The establishment in Vietnam of the Partnership Group on Aid Effectiveness (PGAE), which has seen growing government and donor participation in its monthly meetings, provides a mechanism for regular government-donor dialogue on general issues relating to aid effectiveness. By producing a harmonisation action plan and its accompanying monitoring framework, the government has created a comprehensive, yet practical and measurable framework for improving the efficiency and effectiveness of aid use in Vietnam. This mechanism, together with key government-donor Partnership Fora in areas such as public administration reform, forestry, education and legal reform, have enabled an open and constructive engagement on aid management and development effectiveness, between government and the donor community in-country.

Common frameworks for planning, reporting and assessment

The core of the coordination exercise has been to agree on a unified national planning framework, linked to plans for results-based expenditure management and performance orientation in public administration. Currently, the main framework to which future donor assistance is being pegged is the government’s Five-Year Socio-Economic Development Plan 2006-2010 (SEDP). The government has been consulting donors on the formulation of the SEDP. Budgets being powerful policy documents, there is a growing tendency to link expected outcomes in the budget with medium-term expenditure processes. In tandem with this, central and line ministries are developing more results-focused strategies accompanied by results-oriented frameworks for monitoring progress. Line ministries and provincial authorities are developing their respective plans in consultation with key stakeholders, including the donor community. The Prime Minister’s Directive 33 sets out the framework for the preparation of the SEDP and presents a firm commitment from the government to use principles and objectives, as laid down in the Comprehensive Poverty Reduction Growth Strategy (CPRGS) in formulating the plan. While some donors have already aligned their country strategies with the CPRGS, this has also paved the way for a larger number of donors to effectively align their assistance with the long-term national development plan.

Diversifying aid modalities in Vietnam Vietnam recognises that sector alignment is an important and practical means of enhancing national ownership and improving aid effectiveness. In this context, the increasing use of programme-based approaches to Official Development Assistance (ODA) delivery over the past few years has aroused interest in gaining a clearer understanding of the concept and the implementation mechanisms, as well as their added value in strengthening the effectiveness of aid delivery in Vietnam. Working on the assumption that the government requests support from donors in the form which most effectively supports Vietnam’s growth and poverty-reduction efforts, considerable progress has been made in developing an increased understanding of the options available to the government and donors. The Vietnamese government has also approved the use of budget support for Programme 135, a national targeted programme that provides support for poverty-related activities in the poorest communities, and two provincial transport plans. These pilot projects should provide valuable experience for the government and donor community to base their future support on. Support for Programme 135 will be channelled directly to the government. As a necessary complement to this, donors are providing technical assistance to support the government to strengthen the fiduciary framework for Programme 135 and also to support the strengthening of national capacities to plan, manage and implement this programme.

The facilities around which donors are coalescing programme aid and budget support are diverse and allow for both specific government ministries and donors to judge what options suit their needs and procedural requirement best. The Poverty Reduction Support Credit (PRSC) is one such facility. The current procedure is for donors to jointly discuss among themselves and with the government, prior actions and triggers in connection with PRSC cycles. Seven donors are currently participating in the PRSC facility. Like a multi-year funding framework, the PRSC adds some predictability to ODA flows – another hallmark of effective development outcomes. A pooling of assistance was also launched in 2004, specifically aimed at capacity development for ODA project management, with financing from donors supporting pooling, the so-called Like Minded Donor Group (LMDG), and a World Bank / Japan grant. The key objectives of this ‘Comprehensive Capacity Building Programme’ are to:

1. strengthen the legal and institutional framework for ODA management;
2. develop an overall strategy for ODA project management capacity-building in Vietnam;
3. provide problem-solving support for ODA projects experiencing implementation difficulties; and
4. facilitate the introduction and implementation of new aid modalities in Vietnam.

Donors have also made considerable headway in developing harmonised reporting frameworks on investment projects in Vietnam. The Ministry of Planning and Investment (MPI) and the AUSAID-funded VAMESP programme have fostered the development of common ODA project reporting formats. The draft reporting formats have followed government procedures and are aligned to meet donor requirements.

Photo: Radhika Chalasani / UNDP

Environmental impact assessments of infrastructural projects is an issue where effective harmonisation among donors enhances efficiency. Clearly, aid is used less effectively if the various actors involved in supporting a project have very different procedures and requirements related to environmental assessment. In Vietnam, significant steps have been taken in this direction and donor procedures have been mutually harmonised and aligned with government procedures. This is now supported through a multi-donor effort around the Poverty-Environment Initiative (PEI), supported by UNDP, DFID and SIDA.

Harmonising environmental safeguards in Vietnam In Vietnam, a rapidly growing economy with a growing proportion of aid flows in the funding of infrastructural projects, five major donors -the Asian Development Bank, France’s Agence Française de Développement, the Japan Bank for International Cooperation, Germany’s Kreditantalt für Wiederaufbau and the World Bank- reviewed their environmental safeguard practices and those of the government of Vietnam with a view to identifying potential problems and devising potential solutions. The review found the environmental safeguard procedures and practices of all five donors and of the Vietnamese government to be strikingly well harmonised, notably with respect to such critical issues as the choice of activities to which environmental safeguards are applied, the scope of environmental safeguards, and general responsibilities for carrying out environmental safeguard activities. The review also identified differences among these sets of procedures that will need to be addressed - particularly in the requirements for public consultation (i.e. how the views of people affected by the project are sought and taken into account) and information disclosure (i.e. what information should be disclosed to the public, in what way, and how the resulting comments need to be taken into account in decision-making). The parties are currently discussing how to resolve these differences.

Other areas where harmonisation efforts are being made include procurement processes, financial management, portfolio management and the issue of the number of donor missions. As discussed in the lead article and as in Cambodia, the government of Vietnam has been talking to donors about possible ways of reducing these and planning more joint missions.

Enhancing leverage through nationally-led aid coordination

Interestingly, Vietnam’s growing stake in donor coordination appears to have been catalysed by multilateral agencies like the UN and the World Bank. The UN takes the lead in many programmatic areas, with activities financed through pooled funding mechanisms. The LMDG members take lead responsibility for different fields; for example, the UK is the lead agency for public-sector financial reform and Switzerland is the lead agency for public administration reform. Given the strong directions established by the government, and its adherence to a nationally defined and directed development plan, donors are able to align in a clear and consistent manner with the government’s own agenda for development effectiveness. The global discourse of Rome and Monterrey is being increasingly heard and applied in Vietnam with a government and donor community willing and ready to act.

UNDP – a neutral broker on aid coordination UNDP has been a precursor in early efforts at donor coordination and management in Vietnam. Building on a basis of long-term trust with the government, the organisation established strong relationships and credibility with senior officials, providing valued advice on the economic transition and opening up of relations with the international donor community. UNDP’s strategy of support for aid coordination involved action on a number of different fronts, including national and sectoral policies and strategies and public administration reform. UNDP also brought NGOs into the donor coordination and policy dialogue process, and helped facilitate dialogue between the government and civil society. The UNDP programme has become relatively smaller over the years but the organisation continues to be seen as a neutral broker on aid coordination issues. Together with the international financial institutions, UNDP worked out a mutually agreeable division of responsibility, thus facilitating further coordination.

The Vietnamese experience demonstrates the growing importance of nationally-led aid coordination and management and shows how a country that positively and proactively oversees its aid agenda is well-placed to enhance the leverage drawn from its development effectiveness. While the experience is rich and holds considerable promise, there are areas where more needs to happen, particularly in the arena of moving from intent to action. Clearly, national ownership exists and is being asserted. However, the capacities to deliver on the ground are not in place yet and international agencies are stepping in to fill these gaps. A phased plan needs to be put in place where capacities to coordinate, implement and monitor the public budget, including aid are developed not only at central level, but also at provincial and district levels.

Information compiled by Niloy Banerjee, Capacity Development Advisor/ Regional Coordinator Capacity 2015, UNDP Regional Centre in Bangkok serving Asia and the Pacific (niloy.banerjee@undp.org). Inputs were provided by Subinay Nandy, Deputy Resident Representative, UNDP, Vietnam and his team (subinay.nandy@undp.org) and Kanni Wignaraja, Capacity Development Policy Advisor, Bureau for Development Policy, UNDP (kanni.wignaraja@undp.org) based on documents presented by the Government of Vietnam ² .

---

1) Ministers, Heads of Aid Agencies and other Senior Officials representing 28 aid recipient countries and more than 40 multilateral and bilateral development institutions endorsed the Rome Declaration on Harmonisation in February 2003 (http://www.oecd.org/dataoecd/54/50/31451637.pdf).

2)
The author gratefully acknowledges the submissions of the DAC Working Party on Aid Effectiveness and Donor Practices to the Second High-Level Forum, especially the ‘Review of Progress, Challenges and Opportunities’ submitted to the DAC Senior Level Meeting in December 2004 and the presentations by the Government of Vietnam at the Regional Workshop on Harmonisation and Alignment and Managing for Development Results in Bangkok, October 2004.