The facility model: the most effective means of managing aid?

November 13, 2014

James Turley/Aid

Support what works and deliver help when it’s wanted and needed. It’s not rocket science but unfortunately much aid fails these simple tests.

In 2013, Britain’s Department for International Development (DfID) spent £11.4bn in overseas development assistance, and in doing so became the first G7 country to meet a pledge to spend 0.7% of its gross national income (GNI) on aid. The attainment of this objective was a historic moment, but it was also a moment for reflection: with the British taxpayer committing a higher share of income to foreign aid than ever before, the need to ensure that British aid continues to transform lives in poorer nations, and to demonstrate this pound-by-pound, has never been greater. 

In practice, how can development professionals guarantee that British aid is getting bang for its buck? The answer is twofold: by linking expenditure to results, and identifying where interventions can leverage transformational change which significantly outweighs the financial input. Thus the returns to aid can be maximised. Underpinning this approach are effective financial and management systems which allow decisions to be taken without unnecessary delay and help identify underperforming interventions early on. 

How does the facility model deliver aid effectively?

 

The DfID-funded Nigeria Infrastructure Advisory Facility (NIAF), delivered by implementing partner Adam Smith International, adopts a facility model. This management approach is relatively new to development but highly effective for a number of reasons. The key difference is that the facility model is flexible and demand-driven: interventions are not pre-programmed and only initiated in response to direct requests for support, and where intervention is highly effective it can be quickly scaled up or alternatively, rapidly shut down where it is ineffective. 

Given this flexibility, the facility model requires a large resource base of international and local specialists ready to respond to new requests to support differing objectives. Managing this changing resource base and ensuring that hundreds of small, complementary interventions simultaneously deliver on time and on budget requires a robust mechanism to provide oversight. NIAF is therefore led by a small, dedicated programme management unit (PMU) which ensures that the facility functions efficiently and that the constantly changing size and scope of support has minimal impact on the effective delivery of interventions. This deliberately mirrors the approach of a private sector organisation and therefore aims to capture the associated benefits such as operational efficiencies, improved planning and a strong focus on delivery. 

What are the financial systems needed to support this approach?

 

In order to deliver effective programme-wide impact, the financial systems developed by NIAF allow the programme management unit to monitor expenditure on an intervention by intervention, item by item basis. This also offers a consistent, auditable record of all decision making which ensures that the programme is transparent to external scrutiny and that strategic oversight by donors can be executed very easily. 

Budgeting, financial reporting, monthly forecasting and provisions for external audit, all pre-requisites within the typical corporate structure are replicated to provide a similar level of control across the project cycle. Efficiency is drawn from continual monitoring of where funds are being spent and the quality of deliverables this produces. This financial trail can be extended to the actual results achieved for the client. Using the logframe, the framework for measuring the programme’s success, the NIAF model allocates an individual cost code to each output indicator, linking expenditure to the achievement of project goals. In this way, the NIAF PMU has access to management information which provides a quick assessment of where excellent value for money is being achieved and support should be scaled up. The steady expansion of an intervention can subsequently be executed and monitored through the management tools available, the internal systems acting as a counterbalance to NIAF’s flexibility.

Speed is of course a key attribute of the model. It is a truism that aid interventions are most effective when they are backed by strong political will and delivered when they are needed, not six months or a year later. Unfortunately most aid interventions take far too long to be delivered. That’s not the case with an effective facility. As one senior Nigerian official commented “NIAF has made it possible for many to get timely and valuable specialist support without having to go through the unnecessary procedures which experience has shown are normally responsible for delay in programme implementation; leading to non-achievement of the intended objectives.”

The NIAF model continues to challenge conventional approaches to the delivery of development aid. Its approach is underpinned by a pursuit of operating efficiencies and delivers outsized returns in terms of value for money for the donor and impact delivered to Nigeria. It’s an approach that should be utilised much more widely.

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