The Paris Declaration of 2005, followed by the Accra Agenda for Action 2008, set the agenda for the international donor community in relation to aid harmonization. Simultaneously, the positive effects of increased aid harmonization have been almost unanimously recognised by contemporary development assistance research. The benefits are obvious: decreased transaction costs; increased transparency leading to increased identification of resource gaps; and a reduction of crowding of resources in sectors and geographical areas. It is now generally accepted that donor coordination and aid harmonization should lead to a greater impact of aid in recipient societies.
Further, the importance of aid effectiveness in fragile transition states has been widely recognised. Peace and stability are preconditions for development and aid effectiveness. Simultaneously, aid effectiveness promotes development and enhanced service delivery, which in turn have a positive impact on peace.
Levelling of aid through mechanisms of donor coherence and transparency in Nepal is crucial considering the amount of aid flowing to Nepal in different sectors and geographical areas, the state of transition, the democracy still being young and fragile, the society remaining fragmented with some communities feeling ignored and excluded from the development processes, and the overall on-going peace process.
In 2009, the UN Resident and Humanitarian Coordinator’s Office (RCHCO), in collaboration with donor-partners, launched the Donor Transparency Initiative (DTI) in six pilot districts of Nepal. The initiative is aimed at strengthening donor transparency and accountability. As the initiative will help gather information on aid flows, this will not only support donor coordination and harmonization at both the central and local level, but will also help identify areas where development partners’ intervention is needed, or, on the other hand, is overlapping.
DFID, GTZ, SDC, UNDP and UNICEF lead the initiative in six pilot districts, which were selected according to their geographical diversity and the presence of the UN, donor partners and international NGOs. The lessons learned from the pilot exercise will help identify gaps on effective coordination at the local level, and identify prioritized areas for further interventions.