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A sector approach to working with developing countries

The European Commission uses the sector approach as a way of working with partner governments, donors and other stakeholders. It ensures partner governments’ ownership of development policy, strategy and spending. What is more, the sector approach offers increased coherence between national policies, sectoral policies, resource allocation and spending practices. And, by actively implementing the Paris Declaration on Aid Effectiveness, it acts to minimise transaction costs incurred by partner governments.

As a result of following a sector approach, governments in consultation with partner donors and other stakeholders may develop a sector programme. A sector programme will include:

  • An approved sector policy document and an agreed strategic framework with clear measurable outcomes, a timeframe and an institutional framework to ensure efficient implementation
  • A medium-term financing framework that is set within realistic medium-term budget expectations sourced from all funds
  • A coordination process amongst the donors in the sector, led by government and a harmonisation and alignment of coordination processes, also led by the government
  • An agreed performance monitoring system which includes a systematic client consultation mechanism.

The Sector Policy Support Programme (SPSP) is a term used to identify European Commission programmes designed to support a partner government’s sector programme. An SPSP may use the following forms of financing:

  • Sector budget support is the modality of choice, wherever appropriate, and consists of a transfer of funds to the partner government national treasury to be used in pursuit of an agreed set of sector outputs and outcomes.
  • Common pooled funds or common basket funding (resources from a number of donors pooled using one agreed set of procedures) in support of a specific set of activities in the sector programme. Usually one donor will take responsibility for coordinating and managing the pooled funds. Funds are released by the donor to government according to agreed criteria.
  • Commission procedures that follow contracting and procurement rules.

The programme-based approach (PBA) is another concept widely used among partner countries and donors. PBA is defined in the DAC guidelines as a way of engaging in development cooperation based on the principle of coordinated support for a locally owned programme of development. It should involve leadership by the host country, a single comprehensive programme and budget framework, as well as a formalised process of donor coordination and harmonisation of donor procedures for reporting, budgeting, financial management and procurement. Another important feature are efforts to increase the use of local systems for programme design and implementation, financial management, monitoring and evaluation.

In this perspective, a sector approach is a PBA at the level of an entire sector. The PBA is a loose and flexible concept covering different types of programmes including those at sub-sectoral level or in new areas where classical sector terminology and features do not apply.

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Last update: 17/02/2012 | Top