Monday, 1 August 2011

OIOS Report: Financing for Development Office (FfDO)

UN/DESA - FfDO Mandates:

12. The Financing for Development office (FfDO) was established on 24 January 2003 in DESA in accordance with GA resolution A/RES/57/273.

13. Mandate. FfDO was established to ensure periodic follow-up and continued dialogue among the participating organisations, governments and non-governmental actors in order to evaluate progress in the implementation of the overarching agenda of the Monterrey Consensus. The General Assembly expanded FfDO’s role in supporting and enabling member countries to implement their commitments, namely to:

[P]romote and support sustained follow-up to the agreements and commitments reached at the International Conference on Financing for Development, as contained in the Monterrey Consensus, the outcome of the Follow-up International Conference on Financing for Development to Review the Implementation of the Monterrey Consensus, as well as financing for development-related aspects of the outcomes of major United Nations conferences and summits in the economic and social fields, including the development goals set out in the United Nations Millennium Declaration and the 2005 World Summit Outcome.4

UN/DESA - FfDO Budget:

17. Structure and funding. Being one of the newest and smallest DESA Divisions, FfDO was conceived as a compact office which would take advantage and draw upon existing capacities within the Department.8 Besides the Office of the Director, it is organized along two branches, respectively “Policy analysis and development” and “Multi-stakeholder and outreach” as shown in the organisational chart below.

8 The first proposed programme budget that included the Financing for Development Office presents the following internal redeployment of posts for the new office: 2 D-1, 2 P-5, 3 P-4, 3 P-3 and 5 GS mainly from DPAD and DPADM, but also from SD, DSPD and the Information Support Unit (A/58/6 (Sect. 9)).

19. In the 2010-2011 biennium FfDO accounts for 2.6 per cent of total resources allotted to DESA. Its proposed budget was 7.9 million USD, out of which $7,356,200 were regular budget (RB) and $502,500 were extra-budgetary (XB) funds.

OIOS Evaluation Results:

C. FfDO has faced several constraints in adequately monitoring its performance

The Office’s work programme was negatively affected by the limited number of qualitative indicators of achievement in the Strategic Framework

36. FfDO was lacking some coherence for how to implement its mandate. Two-thirds of the staff surveyed (66 per cent) agreed that FfDO had a clear mandate, but the number dropped to 50 per cent when asked about whether it had an internally shared vision of the best way to implement it. FfDO’s mandate, as well as its roles and responsibilities, were not reflected in DESA’s current Secretary-General’s Bulletin ST/SGB/1997/9, but they were being incorporated into the new 2010 draft revision of the document shared with OIOS/ IED. The latest draft at the time of the evaluation contained the relevant and updated information about FfDO’s role and functions and fully placed its responsibilities within the realm of the DESA-wide mandate.

37. FfDO planned its work around three Expected Accomplishments (EAs) which succinctly reflect the expected results of the Monterrey Consensus follow-up process. The 2009 IED Inspection Report entitled “The Department of Economic and Social Affairs has made progress in meeting its human resource goals, but human resource management in the Department is not yet fully effective,”24 classified FfDO as one of the two highest scoring subprogrammes in DESA, and concluded that the causal relationship between its objectives, the EAs, and the Indicators of Achievement (IoAs) was an observed strength of its Strategic Results framework. Although the subprogramme earned high marks for its tight functional focus around the International Conference on Financing for Development and its successors, the FfDO’s Strategic Framework also had a few strategic planning and monitoring weaknesses.

38. The IoAs were formulated to capture quantity, e.g., number of inputs, agreements, consultations and workshops, etc., but did not contain enough measurements regarding the qualitative character of FfDO achievements sought out in the EAs. Except for IoA(b) which attempted to capture the “scope of agreements reached and commitments made by Member States,” the rest failed to capture the quality of the progress made towards sought out goals such as the “effectiveness of multi-stakeholder monitoring” or “the quality of engagement and cooperation with governments among all institutional and non-institutional stakeholders” (See Annex 1 for a complete list of IoAs and corresponding EAs). Additionally, the broader concept of financing for development, an underlying principle for the Office, was not spelled out as an objective in the Strategic Framework.

and management [in FfDO] reported that current human resource levels did not effectively and efficiently support performance monitoring and reporting.”27

39. Stakeholders responded that in certain areas FfDO’s potential was not fully realized because of its lack of mechanisms and tools to monitor and capture qualitative information.25 According to the OIOS 2009 Inspection Report, for example, FfDO had not performed well in the evaluation function.26 In the recent report, “Inspection of Programme Level Monitoring and Evaluation of the Department of Economic and Social Affairs (DESA)” the executive direction

D. A gender perspective was integrated in the consultations and reflected in the Monterrey and Doha outcome documents, yet effective monitoring of gender commitments was lacking

FfDO supported the inclusion of a gender perspective in the Monterrey Consensus, and more fully in the Doha Declaration

40. While the Monterrey Consensus affirmed the link between gender equality and development, the Doha Declaration went further in promoting women’s economic empowerment for equitable and sustainable development. The Declaration explicitly spelled out commitments for the elimination of gender-based economic discrimination and the promotion of a gender- sensitive public administration as stated in paragraph 19 of the Declaration.28 This achievement was partially attributed to FfDO’s preparatory work for the Doha Review Conference. According to the testimony of staff and stakeholders, the gender focus was partly the result of the active participation of the NGOs enabled through the consultative process directed by FfDO in the preparation of, and during the conference. Another contributing element was the synchronisation achieved by the Office with the Commission on the Status of Women (CSW) after the former selected FfD as a priority theme for its fifty-second meeting. Following the decision, FfDO quickly appointed a high-level focal point to assist in the preparatory work of the CSW, providing concrete inputs for the debate that were later incorporated into the Doha Review.

41. Within the United Nations system, the Doha Declaration language on gender has increasingly become a normative point of reference. The Deputy Secretary-General at the 2010 High-Level meeting, for example, specifically recalled and quoted the commitments in the Doha Declaration, and urged that the promotion of gender-responsive public management of resources and budgeting be placed high on the development agenda.29

An effective follow-up and monitoring process of gender commitments by FfDO was lacking at the time of the evaluation

42. Despite these achievements, the follow-up and monitoring mechanisms established for incorporating gender-related perspectives and equality goals in the financing for development agenda were insufficient. The stakeholder survey results demonstrated a mixed perception of FfDO’s achievements in sustained gender mainstreaming.30 Internally, FfDO staff members acknowledged that the analysis on gender was still insufficient for appraising the degree of implementation of these particular commitments. An analysis of the Secretary-General’s reports on the “Follow-up to and implementation of the outcome of the International Conference on Financing for Development” between 2006 and 2010 confirmed that both reports did not include any reference to the status of the gender commitments.31 The 2010 report attributed this shortcoming to the fact that none of the seven countries that established mutual accountability monitoring systems had a systematic focus on gender themes. Nevertheless this possible monitoring function should be considered in conjunction with the mandate of UN Women in order to maximise efficiencies and avoid duplication of tasks.

E. FfDO’s effectiveness was challenged by limited resources and expanding mandates

FfDO’s expanding mandates have not always been matched by commensurate increases in human and financial resources

43. Historically, FfDO was created as a compact office from the redeployment and re- assignment of staff, budget lines, and thematic mandates from several divisions of DESA including DPAD, Department for Public Administration and Development Management (DPADM) and Sustainable Development Division (DSD). Several staff members expressed frustration that the bulk of the FfDO programme and human resources were still affected by this ‘patchwork approach’ which was initially employed to create the Office. In addition, staff and external stakeholders interviewed held very strong perceptions that the financial and human resource levels available to FfDO were not adequate to sustain its level of work. A comparison made by numerous stakeholders highlighted that the OECD Centre for Tax Policy and Administration, which had a senior management team of five and worked on similar issues, dwarfed FfDO’s total human resources in the Tax Unit, which was comprised of a total of five individuals working on supporting CEICTM on tax issues, two of whom were recent additions from the JPO programme.

44. The Office has seen an increase in mandates and emerging topics under the existing mandates, such as the financial crisis, which has changed the multi-stakeholder and institutional dynamics since the Monterrey Consensus. In 2008-2009, the GA convened the Conference on the World Financial and Economic Crisis and Its Impact on Development and its substantive support was added to FfDO’s responsibilities. FfDO assisted during the thematic sessions, and serviced the substantive aspects by conducting tasks like assisting in the negotiations to the outcome document. Despite this being a large undertaking, the GA resolution did not include a provision for additional resources. Of the $ 1,186,000 extra-budgetary resources requested for the 2008-2009 biennium, only half, or $ 567,000 were received and spent (see Table 2 in background section). Furthermore, following the Conference, an ad hoc open-ended working group was established to follow-up on the issues contained in the outcome, and FfDO was tasked to service it.

45. Similarly, GA resolution 65/94 which had over 102 co-sponsors, requested the Secretary- General to submit to the sixty-sixth session of the GA an analytical report focusing on global economic governance and development. FfDO was then tasked with leading DESA in preparation of this report. Human resource and additional financial considerations to date had not accompanied the added responsibility.

46. One hundred per cent of all staff and over 65 per cent of stakeholders interviewed expressed concern over the low funding levels and observed how at times it affected FfDO’s outputs and effectiveness. The interviewees presented a shared view on the effect of the funding constraints, describing it as responsible for creating seasonal workloads and developing staff capacity around servicing large events. For example, although FfDO had regular contact with BWIs, WTO and UNCTAD at the High-Level Meetings of ECOSOC, its contact with other key stakeholders was often driven by large events or publications.32 FfDO had a strong presence when hosting large conferences that brought the multi-stakeholders in contact with the United Nations, but its current level of staff may pose a challenge for sustained and rigorous follow-up beyond the large events.

FfDO’s extra-budgetary funding has been characterized by low or empty trust funds

47. In the 2006-2007 Strategic Framework, FfDO’s role included the “mobilization of additional financial resources for attaining internationally agreed development goals and objectives.” This role was not carried over into the SF in the past two biennia because according to FfDO senior management, the role of the Secretariat was meant to promote and support international efforts in mobilising additional financial resources for development, rather than direct fundraising for the FfD trust fund.

48. To date, FfDO has relied almost exclusively on fundraising requests made to Member States by the Secretary-General and the executive leadership of the Office during the High Level meetings and during the annual sessions of CEICTM. These efforts have not resulted in significant contributions. As shown in Table 2 above, there was an actual decrease in the level of XB funding for the 2008-2009 biennium, compared to the previous cycle.

49. The Secretary-General has taken the issue of resource constraints to ECOSOC, highlighting financial constraints as a factor limiting FfDO’s ability to support the Committee in fulfilling its mandate of provision of technical assistance to developing countries. The “Trust Fund for International Cooperation in Tax Matters” established for this purpose by CEITM, had not received any contributions since its inception in 2006.33 According to FfDO’s budget, extra- budgetary funding had been tagged to support technical cooperation activities including: advisory services and technical assistance to countries requesting capacity building in financial sector development, tax cooperation, and fiscal management, training courses, seminars and workshops with regional commissions and regional development banks, and field projects including needs assessments and impact evaluations. The lack of XB funding has limited the ability of FfDO to provide advice to the members of the Committee on tax matters, as well as limited the engagement of FfDO in the arena of technical assistance to repeated requests from Member States.

50. The subprogramme also suffered set backs when several Member State governments reiterated offers to host regional capacity-building training workshops, because the costs of ensuring sufficient participation from developing countries was not secured for such events.34

51. As of 2010, the only active FfDO technical assistance project was the “South-South Sharing of Successful Tax Practices (S4TP)”, carried out in partnership with the Special Unit on South-South Cooperation of the United Nations Development Programme (UNDP), FfDO/DESA, and two non-governmental organisations, namely, the New Rules for Global Finance coalition and the Tax Justice Network. S4TP applied innovative approaches to enhance cooperation and knowledge sharing among developing countries on successful practices for mobilising domestic resources. FfDO’s usage of UNDP and NGO networks to disseminate its expertise and share successful experiences in areas where international tax cooperation among developing countries needed to be enhanced was a good example of collaboration. Specific areas of intervention of S4TP included tax administration organisational challenges, transfer pricing documentation and audit, taxation of natural resource exploitation, and the structure and operations of specialist tax judiciaries - mainly issues related to public finance management.

G. The division of labour between FfDO and other DESA subprogrammes with regard to some intergovernmental tasks was not always clear

56. While there was general agreement that FfDO played a unique role with regard to financing for development, there was some lack of clarity between the division of labour between the Office with other United Nations entities regarding their general roles in contributing to the Organisation’s work in global economic and financial matters. A review of FfDO’s activities revealed that there was some overlap and lack of clarity between the division of tasks between FfDO and the work of other DESA divisions.

57. A few examples illustrated these overlaps. Both DPAD and FfDO for instance, engage in some analytical and intergovernmental tasks related to financing, macroeconomic analysis and global economic governance. A senior staff member at DPAD suggested that FfDO’s mandate was limited to providing the macroeconomic analysis to the governmental process. In practice however, FfDO was active beyond the intergovernmental level since it has been systematically involved in analytical tasks, such as writing a chapter for the WESP, working on debt issues in the MDG gap task force and publication, and in drafting parts of the WESS. FfDO and DPAD were also both expected to work on several reports of the Secretary-General, and to conduct joint preparations leading up to meetings of BWIs, and to undertake joint visits to IMF during the annual Spring – Fall meetings. The relationship between the two divisions was not fully clear even to senior staff members. Yet, interviewees confirmed that they strongly benefited from a practical level of collaboration in establishing how each should carry out their responsibilities for analytical and intergovernmental tasks without discord. Additionally, FfDO and the Division for Social Policy and Development (DSPD) were both partly responsible for inclusive finance, while FfDO and the Office for Economic and Social Council Support and Coordination (OESC) both addressed themes of development cooperation and global economic governance through the FfD and the Development Cooperation Forum (DCF) process. The direct consequences of this overlap was a lack of clarity in managing meetings of ECOSOC and BWIs, mapping out the work responsibilities, and tasking contributions of each division/ office to FfD themed reports.

58. There was also some overlap between the division of mandates between DPADM and FfDO. As the Monterrey Consensus touched upon the importance of international tax cooperation, this field was reinterpreted under the Strategic Framework of FfDO. Since 2003 the mandate for taxes was separated between the two DESA divisions, with DPADM continuing oversight of public finance management and FfDO taking the lead on international tax issues. DPADM continued to work on the expenditure side of budgeting or public finance matters, and FfDO focused on the revenue side.35 Technical cooperation, including a dedicated IRA post, which was initially supposed to stay under DPADM, has now also been undertaken by FfDO, especially since the Tax Committee has made renewed calls for increased efforts in capacity development and technical assistance.36

59. This fragmentation and inconsistency created some operational inefficiencies and challenges in ensuring harmonization and coherence for work related to financing for development. Acknowledging these challenges, a senior manager in FfDO noted that his staff “has had to negotiate tasks, because mandates have not given easy answers.” In addressing this concern, FfDO worked with the Directors of various DESA divisions to establish a network of designated focal points to facilitate cross-divisional information sharing and collaboration on financing issues. More concretely, the network will be organised around a few discrete tasks including: developing internal departmental guidelines on using and quoting data on financing for development; formulating a departmental guideline on organising the debate on FfD topics during the ECOSOC meetings; and mapping out the division of labour between divisions and offices to contribute to FfD publications and reports to other intergovernmental bodies. Thus far, FfDO has managed the process quite capably by practicing collaboration at a higher level. The newly established network was a strong step forward, but this collaboration and cooperation cannot be taken for granted.37 The forthcoming review of mandates, update of the ST/SGB on DESA and revising the strategic framework and Programme Budget for future biennia should address this issue.

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