Seven recommendations for improved assistance through multilateral partnerships

An increasing share of Norwegian assistance is given through multi-donor trust fund mechanisms. A new evaluation has drawn lessons from Norway’s evolving experience to inform future participation in multilateral partnerships.

Balbir Singh is a Senior Adviser in the Evaluation Department in Norad, and has been the Team leader for the Evaluation of Norway’s Multilateral Partnerships Portfolio.

Funding multilaterals continues to be an important element in Norwegian development and foreign policy. Currently more than half of the Norwegian development assistance is channelled through multilateral organisations, and an increasing share is being allocated through multi-donor trust fund mechanisms.

A new evaluation from the Evaluation Department in Norad assesses the performance of Norway’s trust fund portfolio consisting of IBRD trust funds, Financial Intermediary Funds (FIFs) and UN inter-agency trust funds administered by the Multi-Partner Trust Fund Office (MPTFO) housed in UNDP. UK, Sweden, Netherlands, Spain, Germany, Denmark, Ireland and Canada are the key partner countries for Norway in these funds.

The focus of the evaluation is on how the partnerships contribute to systematic achievement of Norway’s priorities, as articulated in the motivations for participation in multilateral partnerships.

As a starting point, the evaluation identified the four main motives for participation in multilateral partnerships to promote multilateralism per se, to mobilise multilateral effort in areas of special interest for Norway, to draw on the competence, safeguards, and convening power of the multilateral partners, and lastly to improve operational efficiency, for itself, the multilateral partners, and the recipients.

What did we find?

Norway is among the top four contributors to MPTFO and is ranked as the fourth largest partner for IBRD trust funds and ninth for the FIFs. Most of the funds mobilise a substantial amount of development assistance from other donors.

Norway’s portfolio of trust funds has developed through regular addition of new initiatives and few exits. The current portfolio is a result of regular addition of new initiatives to accommodate shifting domestic priorities and a lack of strategic exit policies.

Funds in Norway’s trust fund portfolio represent an effective multilateral instrument to attain the dual objectives of increasing assistance to thematic and geographic areas of interest for Norway and enhancing the individual and collective capacity of the World Bank and the UN organisations in delivering on their mandate.

Trust funds give access to the Bank’s specialist staff and to safeguards for procuring and managing consultant services for supporting development of areas of interest for Norway.

The fund mechanisms have primarily catalysed development assistance funding of Norway’s likeminded donors. Catalysation of private funding at the fund level, particularly the for-profit private sector, is yet to be realised.

Norway is a flexible and predictable source of funding. Its current portfolio is concentrated around few thematic areas and regions.

The focus of Norwegian administrative inputs is on assuring quality at entry at the fund level. Attention on financial and risk management issues at the fund or portfolio level is rare.

There are cases of multiple agreements supporting a single initiative. Duplication occurs both due to the same fund receiving contributions from more than one Norwegian grant agency, and the recent practice at the World Bank to establish parallel funds, to implement the increase in overhead rates under the Bank’s new cost-recovery framework.

Implementation through trust funds is time consuming. The current arrangements for recovery of overheads is likely to reduce the share of funding for program implementation for the final recipient low-income countries.

Front-loading of contributions has in some cases led to significant accumulation of funds with the trustee.

Legal guidance for the practice of statutory exceptions approved by the parliament for transfers of contributions to the specific multilaterals or funds needs to be strengthened to mitigate build-up of unused funds at the trustee or the implementing agency level.

There is a gap in public access to information and accountability for results from World Bank managed Recipient-executed activities financed through IBRD or FIF funds.

It is seldom that individual trust funds implemented by the World Bank are evaluated by the Independent Evaluation Unit of the Bank.

Jurisdiction of the Bank’s anti-corruption sanctions regime covers Bank-financing, or financing directly administered by the Bank. For Recipient-executed activities supervised by the Bank, the responsibility primarily lies with the recipient, with the Bank providing implementation support in accordance with its policies and procedures.

Recommendations for improved assistance through multilateral partnerships

  1. The Ministries need to develop a strategic portfolio re-balancing policy. This includes development of common key portfolio performance indicators and strengthening of administrative capacity for management of Norway’s trust fund partnerships portfolio.

  2. Given the objective of leveraging private sector funding, develop incentive mechanisms for the fund administrator to catalyse for-profit private sector contributions to the fund.

  3. Revisit the practice of making multiple agreements for contributions to the same fund. Multiple agreements, where relevant, should be justified by the concerned grant making agency.

  4. In consultation with likeminded donors, trustees and aid recipients, initiate discussions for developing an overhead cost-recovery model that collects all overheads at a single point in the aid-delivery path. The current practice of charging overheads at multiple points in the delivery path reduces transparency, efficiency, and the share of assistance going to the recipient of the program implementation.

  5. Payment of donor contributions should relate to implementation mile-stones agreed with the implementing organisations. Deviations of payment plans from the milestones should be justified by the grant allocating authority.

  6. The Ministries should prepare guidance for interpretation of statutory exceptions applicable to payment of contributions to funds. Grant making units in the Norwegian administration must have regard to such guidance and justify deviations when necessary.

  7. The Ministries should, in consultation with trustees and like-minded donors, initiate efforts for development of a common standard for reporting, evaluating and public dissemination of information about the use and results of funds in trust with the World Bank and the MPTF Office.

Further reading: Evaluation of Norway’s Multilateral Partnerships Portfolio

Published 15.10.2019
Last updated 15.10.2019