I. International Development Co-operation
In recent years ideas and approaches to development co-operation have changed substantially. The majority of larger international development agencies and international donor organisations have increasingly taken up sector-wide approache or direct budget support to the governments of partner countries. The sector-wide approach means that the agencies concentrate on comprehensive support in a small number of sectors in partner countries, e.g. in the education or health sectors, instead of a large number of delimited projects in many sectors. The advantage of this type of approach is that it simplifies the agencies’ operations, reduces their administrative needs, puts more financial and management responsibility into the hands of partner countries and is thereby seen to enhance the ownership by the partner country government authorities. These methods, however, make the monitoring of the use of development funds by the development agencies and experience shows that this can create considerable tension between the agencies and partner country governments with weak administrations and problems with corruption. In such cases the assistance may become compromised and it has in many instances proved to be ineffective.
ICEIDA has always worked on the basis of a project-wide approach, which means that the assistance provided by the Agency has been directed at delimited projects within certain sectors where it has been active. In the 1980s this approach was subjected to considerable criticism, particularly because insufficient consideration was being given to the overall circumstances in the partner countries and their government policies. At the same time there was also insufficient co-ordination between development agencies providing assistance to individual projects within the same sector. The project-wide approach, as it was applied at the time, was not considered effective enough, nor were its results considered satisfactory or sufficiently permanent. Notwithstanding this criticism, ICEIDA will continue to focus on the project-wide approach in its work. The principal reason for this is the smallness of the Agency, as its funds are too limited to make any sort of impact on an entire sector. However, ICEIDA will take full note of the criticism that has been levelled at the project-wide approach and adapt to the extent possible to altered circumstances and procedures in international development co-operation. This means, inter alia that the Agency will continue to be active in a small number of project areas. It will examine closely the development strategies and policies of each partner country and prepare its co-operation projects accordingly. Moreover, ICEIDA’s participation in co-operation with development agencies and international donor organisations, both in the partner countries and on an institutional level, will be systematically increased during the next few years. Thus, the Agency will monitor with greater attention the international debate and exchange of ideas on development issues. The membership of DAC and increased co-operation with international donor organisations will enable ICEIDA to respond further to what other development agencies are doing in their sector-wide assistance in the Agency’s partner countries and avoid the risk of selecting projects that would overlap with the programmes of other agencies.
Increased co-operation with other international development agencies, research institutes and international organisations will enable ICEIDA to keep up with changes in the procedure and implementation of development assistance. The so-called participatory approach has enjoyed increased support in international development work over the past decade and ICEIDA has integrated this approach into some of its projects, particularly in grassroots projects where the support is intended to serve a large section of the public. Over the next few years the Agency will monitor the international debate on the participatory approach and seek to increase its use in its projects.
II. Preparation, Implementation and Monitoring of Projects
ICEIDA is engaged in bilateral development co-operation, particularly on the basis of international agreements between the Government of Iceland and the governments of partner countries. The Agency’s policy in this co-operation is that the development assistance provided is based on the requirements of the partner countries and is fully in accordance with the development policies formulated by the government authorities of these countries. In accordance with this policy, ICEIDA´s development projects usually originate with requests made by the government authorities of partner countries for assistance to particular projects in sectors within which the Agency operates. The employees of ICEIDA subsequently work in close co-operation with representatives of authorities in partner countries on the formulation and implementation of the projects. In this way an attempt is made to promote joint responsibility for the strategic planning and progress of projects, to ensure that they are carried out in accordance with the policies of the authorities in the country in question and to make sure that their ownership rests, for the most part, with the partner countries. When ICEIDA is engaged in projects with parties other than the authorities, e.g. NGOs, the Agency will require the projects to be implemented with the acceptance and support, and even participation, of the government.
Project Identification Document. Once a request has been received and projects have been selected in consultation between ICEIDA and the partner country government authorities, their preparation begins. In the course of preparations various preliminary studies are carried out in order to obtain an indication of the need for the project, its sustainability, its potential impact on the environment, and its possible effects on different social groups in the society, e.g. the gender implication. Such studies are especially necessary when comparatively large projects are being planned. The nature and scope of these studies depends on the size of the planned project and this forms the basis of a Project Identification Document, which is then prepared and provides a detailed description of the project and the environment in which it will be carried out. Quite often the Project Identification Document, at least in part, may be based on studies or research that other parties have carried out in the area where the proposed project is to take place. The Project Identification Document describes the project, spells out that its objectives are in accordance with official policies in the sector in question and makes sure that the project in question is placed in the context of other projects in which the authorities and other development agencies are involved in the same or related fields. Great care must be taken in the preparation of the Project Identification Document to ensure that both co-operating parties gain a good understanding of the scope of the project. The decision of the partners on whether to embark on the project rests on the Project Identification Document.
Project Document. A formal Project Document must be prepared before embarking on the implementation of a new project. The Project Document is prepared by the representatives of the co-operating parties, i.e. ICEIDA and the partner country government authorities, and it is based on the Project Identification Document. The agreement must be approved by the Board of Directors of ICEIDA and the government authorities of the partner country in question and the document only enters into effect when formally signed. The Project Document applies only to the project described in the document and covers the obligations described therein. If either or both parties consider it necessary to deviate from the Project Document to any extent after it has been signed, this can only be done with the full agreement of both parties. In such an event the Project Document is formally amended with the signature of both parties. The Project Document shall always take account of the following:
- Development objectives. The Project Document shall set general objectives, i.e. whether and how the project is intended to reduce poverty, promote democracy, gender equality and environmental sustainability.
- Immediate objectives. Description of the specific objectives to be reached through the implementation of the project, with as many measurable objectives as possible. The document shall state whether the project is intended to be sustainable following the withdrawal of ICEIDA’s support, or whether it is only intended for a specified time and in order to return specific, agreed results.
- Ownership. The Project Document shall provide for the direct participation of the representatives of the government authorities of the partner country, both in the overall supervision of the project and in the day-to-day management. Wherever possible, the day-to-day management shall be in the hands of the government authorities in the partner country in question or in the hands of local staff specifically employed by ICEIDA to work on the implementation of the project. The Document shall specify in detail the arrangements for the supervision and day-to-day management of the project.
- Time frame. A specific time frame shall be included for the implementation of all project components over the project period.
- Budget. The Project Document shall include itemised cost, financing and cash flow estimates for all components of the project from the time of its inception until its completion. Budgets shall be prepared in USD.
- Contractual obligations. Project Documents shall invariably contain provisions on the obligations of the contracting parties with respect to management and monitoring obligations, funding, facilities, resource contributions, reporting, access to information, tax issues relating to the purchase of resources and any other matters relating the rights and obligations of the parties with regard to the project.
- Input-output. In so far as possible, the Project Document shall attempt to analyse, on the one hand, all input into the project, and on the other hand, the output anticipated from each input. This procedure facilitates the assessment of projects, both over the course of their progress and during their final evaluation, and helps to analyse the output deriving from individual input components.
- Progress reporting. The Project Document shall provide for progress reports to be prepared for each project every six months.
- Internal evaluation. The Project Document shall provide that the parties to the contract may, at their own expense, carry out an internal evaluation of the project.
- External evaluation. An agreement shall be laid down in all project documents that an evaluation by independent parties shall be carried out regularly at the expense of the project, and always before a project is completed.
Project Progress. Reports on the progress of all ICEIDA development projects shall be prepared by the project managers of each project at six-month intervals. Progress reports shall account for the progress of the projects in accordance with Project Document specifications. The purpose of the progress reports is to provide the contracting parties with a regular status review of the projects. The reports shall be sent both to ICEIDA headquarters and to the authorities of the partner countries in question. The reports shall be discussed at the regular meetings of the supervisory project committee of each project, which shall consist of representatives of both contracting parties.
Project Evaluation. All ICEIDA development projects are evaluated regularly and all Project Documents shall contain provisions to that effect. Either party to the Document may, at their own expense, carry out an internal evaluation of the project. If either contracting party is of the opinion that an evaluation is necessary, the other party shall be notified and is thereby placed under obligation to provide all information on the project necessary for the evaluation. If such evaluation reveals shortcomings in the project in question, or non-performance by either party, these conclusions shall be addressed at a formal meeting of the supervisory project committee and corrective measures sought. External evaluations by independent parties shall be carried out at the expense of the project at regular, agreed intervals (e.g. every third year) and always at the end of a project. Such evaluations are intended to reveal whether the project objectives have been reached and whether specifications have been met. If such evaluations reveal that the planned objectives have not been achieved or that other Project Document specifications have not been met, the evaluators shall prepare a report on the causes of such failure and submit proposals regarding whether the situation may be rectified and if so, how. There must be at least two independent evaluators, one appointed by ICEIDA and the other appointed by the appropriate authorities in the partner country. As a rule, the evaluators appointed shall be individuals or companies with expert knowledge of the field in question, in addition to knowledge or working experience from countries comparable to the country where the project is being carried out.
Financial Management of Projects. All ICEIDA Project Documents shall contain unequivocal provisions on the management of funds allocated to the project. This provision shall describe in detail the arrangement of the accounts, settlement, control and custody of funds. ICEIDA shall always require the financial management of all projects funded by the Agency to fulfil the requirements of an independent party qualified in financial management and handling of funds, e.g. the Auditor General.
Reporting on Projects. Iceland’s membership of DAC will not only provide access to information, guidelines and consultation, but will also impose various obligations on ICEIDA, such as the requirement to provide information on its activities and submit reports required by DAC membership. ICEIDA intends to emphasise these tasks, to comply with the decisions of DAC in the implementation of development assistance and to take account of DAC Guidelines and DAC Good Practice Papers in the preparation and implementation of its projects.
III. Periodic Reviews of Development Co-operation
It is important that regular reviews be carried out of all ICEIDA projects over the course of their implementation, and in the coming years the Agency will strive to strengthen its system of evaluation and reviewing still further. When choosing new partner countries the Agency’s criteria and policies will be observed, and every few years ICEIDA will use the same criteria to review its position in each partner country. These reviews are intended to assess, to the extent possible, the overall results of the Agency’s activities in the countries in question, in which project areas the best results have been achieved and where results are poor. Decisions on the continuation of development co-operation will be made in light of the results of such reviews. Furthermore, ICEIDA plans to carry out a comprehensive review of its entire operation on a regular basis. In such reviews the policies, criteria and rules of procedure of the Agency as a whole will be re-evaluated in light of current circumstances in international development co-operation. The reviews will also assess the nature and scope of ICEIDA’s co-operation with other development co-operation agencies and international organisations.
 The Development Assistance Committee of the Organisation for Economic Co-operation and Development (OECD).