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Economy

Why EU is in dilemma over payment of funds for regional development

The ongoing construction work on Thika Road. The funds from the European Union are used for infrastructure projects in the EAC. Photo/WILLIAM OERI
The ongoing construction work on Thika Road. The funds from the European Union are used for infrastructure projects in the EAC. Photo/WILLIAM OERI 

Just who should we deal with?

This seems to be the latest dilemma facing the leadership of the European Union (EU) following the findings of a new audit that partly blames a crowded field of organisations for the in-effectiveness of a special fund aimed at supporting regional economic integration in East Africa.

The EU’s funding for international co-operation with Africa has over the years mainly come through three geographically-based financing instruments including the European Development Fund (EDF) that caters for African nations under African Caribbean and Pacific (ACP) group.

Huge allocations through the EDF have particularly been channelled towards financing infrastructure projects in countries such as Kenya as a way to catalysing single and flawless market fabrics in the region.

But even as the EU moves to disburse the 10th round of the EDF, an audit on the effectiveness of the previous disbursements unveiled massive hitches that would have to be addressed if such funding is to make a mark in East Africa that has four regional integration bodies working at the same time.

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They include the East African Community (EAC), the Common Market for Eastern and Southern Africa (Comesa), the Inter-governmental Authority on Development (Igad) and the Indian Ocean Commission (IOC).

“These organisations show significant overlaps in geographical coverage and membership and in mandates and policy objectives,” the European Court of Auditors says in a report titled: Effectiveness of EDF Support For Regional Economic Integration in East Africa and West Africa.

The audit points out that Comesa and EAC are primarily aiming for regional economic integration, with the EAC already having put in place a customs union and a common market while Comesa eyes to transform its current free trade area (FTA) into a fully functional customs union.

Igad on the other hand also includes regional economic integration in its mandate, but focuses more on conflict resolution and food security issues while the IOC has a mandate for economic and trade cooperation rather than for regional economic integration, and it focuses mainly on regional cooperation in natural resources management, particularly fisheries.

Nevertheless, IOC participates in the programming and implementation of the 9th and 10th EDF regional indicative programmes for the East Africa region.

This kind of overlap is causing jitters which may force the leadership of the EU to find alternative ways of managing programmes supported by the EDF in the region.

“The overlapping membership poses considerable problems , as some member countries belong to two different trade areas (Comesa and EAC). In addition, there are overlaps and incompatibilities in membership with the Southern Africa Development Community (Sadc),” the audit report states.

All the EAC countries are members of Comesa except Tanzania that maintains dealings with Sadc, a position that has in the recent times posed a headache in the region because it is not technically possible to have membership of more than one customs union.

“These overlaps in membership and mandates result in a complex institutional framework. These factors, and the current weak state of coordination between these organisations , pose serious problems for the Commission, in particular for the design and implementation of interventions in the area of regional economic integration,” the audit ruled.

According to the European Court of auditors, though the EAC integration process is making progress in terms of reaching agreements on regional objectives and policies relating to trade and transport issues such as the establishment of FTAs and customs union, it failed to work at national level.

“The implementation of such agreements by the national authorities is lagging behind and the free movement of goods, services, capital and people is not yet a reality in either of the two regions. EDF support for regional economic integration has so far been only partially effective,” they said. “Furthermore, member countries do not always give a high priority to regional integration as a policy objective in view of the many other pressing needs identified at national level,”

To stem such apathy, the auditors recommend that the EU places focus at national level and how efforts at country levelled would be replicated regionally.

“The Commission should make the continuation of its support for regional integration conditional on an early agreement on how to achieve the necessary convergence between the various regional organisations in each region within a pre-defined time frame and on the national authorities taking greater ownership of the regional integration process,” the auditors recommend.

Analysts pointed out the auditors’ recommendation for a national focus approach within EAC is in tandem with a move in September last year when the European Commission agreed to harmonise programmes under its EDF with those of countries in regional trading blocs to make them more effective.

In a new declaration between the EC and its development partners under the auspices of the inter-regional coordination committee (IRCC), it was agreed that new ventures under the EDF would have to support existing cooperation programmes that have direct impact on the ongoing integration processes.

“Regional organisations will intensify the development and harmonisation of their aid for trade strategies, ensure coherence and alignment at national and regional levels to cover the wider aid for trade agenda,” the new pact reached reads in part.

The IRCC brings together various regional economic communities including the Comesa, EAC, Sadc, Igad and the Indian Ocean Commission (IOC).

This, the parties agreed, would transform the implementation of projects and programmes under the EDF that have over the years been dogged by controversy over their effectiveness.

Kenya is a major beneficiary of the EDF, especially in the financing of infrastructure projects, mainly after the devastating effects of the destructive El-Nino rains of the mid-1990.

During a meeting between the IRCC and the EC in Kenya, in early 2009, the blame-game over the effectiveness of the donor support played out with officials from recipient nations warning that bureaucracy in the management of the fund risked to stagnate the realisation of its goals.

Contributing during a session of the joint forum in Nairobi, Foreign Affairs assistant minister Richard Onyonka claimed that EDF funding rules and procedures often changed mysteriously leaving the intended beneficiaries disadvantaged.

“This has led to the delay in preparation of project documents. I must also state that whereas the EDF rules stipulate strict time lines from the regional economic communities, the EC does not seem to comply with the same strict rules.”

Mr Onyonka said it took a lot of time to get project approvals from the commission, thus impacting negatively on implementation schedules.

“At the end of the day we are evaluated poorly and told we have no capacity to absorb the funds when the fault actually lies elsewhere,” he said. The new arrangement is, however, expected to address most of the concerns with focus being ensuring food security and taming the effects of the global financial crisis.”

Regional co-ordination

Besides the lack of synergy between the EDF programmes and priority areas by the respective governments, the audit further pointed out that most of the regional organisations lacked the capacity to effectively absorb funds disbursed under the programme.

“The doubling of the financial allocation to regional programmes under the 10th EDF does not take into account the limited absorption capacity of the regional organisations.” the audit says.

It instead recommends that such disbursements be subject to strict follow-ups to lock out any potential forms of wastage that may occur.

“The Commission should, from the 2010 mid-term review of the 10th EDF strategies onwards, improve the coherence between its regional strategy and national strategies, by ‘main streaming’ regional integration in all its support activities at national level and by seeking more systematic complementarity between its support activities at the two different levels,” it further says.

The EU, however, does not escape blemish in the East African EDF dilemma with the audit revealing massive disjointedness in the way it managed and coordinated programmes under the fund.

“The Commission’s management of its regional programmes has lacked specific management and co-ordination instruments to adequately deal with the preparation, implementation, reporting and co-ordination of regional activities : the roles and responsibilities of the different delegations in the region are not clearly established, nor has a coordination mechanism between these delegations been set up,” it pointed out.

Tall order

It further says at the level of the regional organisations, co-ordination is also inadequate and a monitoring system to track the overall progress of the regional integration process in the individual countries is lacking.

“In relation to its management of regional programmes the Commission should clearly define the responsibilities of the different delegations in the regions concerned, establish an appropriate coordination mechanism between delegations in a region, review the resources allocated to delegations for the programming and implementation of its regional programmes,” it says.

The auditors also want the commission to use contribution agreement with regional organisations only where the financial management is found to comply with international standards.

Overall the audit says it has had to endure a tall order in trying to find specific results for most programmes initiated in the region under the EDF kitty.

“It has been difficult for the Court, and in some cases impossible, to assess the effectiveness of individual interventions, because their objectives are often not well defined and the necessary information is frequently lacking due to inadequate quality and frequency of project reporting, monitoring and evaluation,” it admits.

The auditors say recent, ongoing projects mostly have a wide scope and ambitious objectives; however, their implementation has so far been slow.

“Overall, for the 18 regional projects examined, the results, or likely results, are, at best, only partially satisfactory” they said and recommend that the Commission increases its efforts aimed at helping regional organisations improved coordination between themselves as well as between them and their member states besides establishing monitoring systems which will support implementation of programmes and provide comprehensive information on the progress of the overall regional integration process, including progress in individual countries.

“The Commission should formulate project objectives which are specific, measurable, achievable, relevant and subject to a realistic time frame, pay more attention to regular, good —quality progress reporting, and systematic monitoring and evaluation of project results,” the auditors recommend.

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