Conflict and Fragility

2074-3637 (online)
2074-3645 (print)
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This series of books from OECD's Development Co-operation Directorate address the issues of violent conflict and fragile governments in developing countries, and how aid can be designed to reduce violence and strengthen governments.

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Transition Financing

Transition Financing

Building a Better Response You do not have access to this content

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27 Apr 2010
9789264083981 (PDF) ;9789264083974(print)

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More than one-third of Official Development Assistance is spent annually on fragile and conflict-affected countries. Nonetheless, aid does not always flow promptly and effectively to where it is most needed, especially in countries recovering from conflict. The Accra Agenda for Action, recent peer reviews by the OECD Development Assistance Committee (OECD DAC) and the UN Secretary-General’s report "Peacebuilding in the Immediate Aftermath of Conflict" agree: international engagement is less than optimal, especially in guiding and implementing transition financing processes.
While many determining forces in fragile and conflict-affected countries are outside donor control, decisions about which activities to finance and how to finance them influence these countries’ path out of conflict. This is because financing is about much more than the flow of resources: it affects behaviour, aid architecture, power and influence, priorities, and capacity development. And because it signals approval or disapproval, there is no neutral choice: a financing decision has consequences that go far beyond the timescale and scope of the funded activity.
This report will help OECD DAC members and partners to map out more effective, rapid and flexible transition financing. This includes improving current policies and practices in financial flows, implementing procedural and cultural changes in donor administrations, and maximising use of the instruments available for in-country transition financing. The report also addresses improving the operational effectiveness of pooled funding instruments, clarifying the link between funding instruments and national ownership, and adopting a new approach to identify and prioritise specific transition needs.
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  • Foreword
    This report has been prepared by the Financing and Aid Architecture Task Team of the OECD DAC (Development Assistance Committee) International Network on Conflict and Fragility (INCA F). The work of the task team is a result of the widespread recognition that more effective, rapid and flexible financing to conflict-affected countries is needed. The purpose is to translate previous commitments into practice in order to effectively address challenges associated with transition financing.
  • Abbreviations
  • Executive summary
    This report has been prepared by the Financing and Aid Architecture Task Team of the OECD DAC (Development Assistance Committee) International Network on Conflict and Fragility (INCA F). It aims to establish an agreed conceptual foundation that will enable OECD DAC members and implementing partners to address the challenges associated with transition financing and the current aid financing architecture. The findings presented are based on: (i) a desk review of donor policies and procedures, and existing funding instruments in specific countries; (ii) an extensive literature review and analysis of DAC and Financial Tracking System financial data; and (iii) interviews with key informants from DAC member countries and multilateral agencies.
  • Background and rationale for transition financing
    This chapter explains the background and rationale for why the OECD DAC has decided to undertake this study. It also highlights why transition financing has importance also beyond the scope and timefrmae of the funded activity.
  • Understanding transition
    This chapter outlines some of the key international efforts to date to conceptualise international assistance in support of war-to-peace transition. It also clarifies the challenges and key concepts involved and defines transition as a set of shifts and characteristics that influence international engagement.
  • Aid flows to fragile and conflict-affected states
    This chapter uses DAC data and other information sources to provide a brief overview of overall aid flows to fragile and conflict-affected states. It then moves to outline the specific challenges and bottlenecks associated with measuring and monitoring transition financing, and suggests areas where development partners need to improve their current practice.
  • Donor policies and procedures
    The analysis presented in this chapter is based on a mapping of donor policies, procedures and operational set-ups for financial allocations to conflict-affected situations, as well as interviews with key informants among DAC member states and observers. The aim is to (i) clarify how policies, structures and decisionmaking procedures impede or enable donors’ ability to ensure rapid and flexible financing for transition and (ii) analyse various funding instruments and modalities for transition financing. This chapter outlines key findings and emerging good practice around decentralised decision-making, joint responsibility and whole-ofgovernment approaches to transition challenges, as well as pooling of resources for joint purposes.
  • Funding instruments at the country level
    This chapter focuses mainly on the different multilateral pooled funding instruments that donors can use to finance transition activities but sets these in the context of bilateral funding to the extent possible. It looks at different case studies to explore the advantages and challenges related to multi-donor trust funds, and proposes areas of improvements that would increase the effectiveness and efficiency of such funding mechanisms.
  • Conclusions
  • Annex A
  • Annex B
  • Annex C
  • Annex D
  • Bibliography
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