Questions and Answers about CDF in Vietnam

1- What is the CDF?
2- What is the orign of the CDF?
3- Why is a new approach needed?
4- What is the progress of the CDF to date?
5- What challenges lie ahead?

BACKGROUND

1. WHAT IS THE CDF?
Fundamentally, the CDF is a means of achieving greater effectiveness in reducing poverty. It is based on the following principles:

Ownership by the country. The country, not assistance agencies, determines the goals and the phasing, timing, and sequencing of the country's development programs.

• Partnership with government, civil society, assistance agencies, and the private sector in defining development needs and implementing programs.
• A long-term vision of needs and solutions, built on national consultations, which can engender sustained national support.
• A transparent focus on development results to ensure better practical success in reducing poverty

The CDF is essentially a process: it is not a blueprint to be applied to all countries in a uniform manner. It is a new way of doing business, a tool to achieve greater development effectiveness. In the short run, the CDF establishes mechanisms to bring people together and build consensus, forges stronger partnerships that allow for strategic selectivity, reduces wasteful competition, and emphasizes the achievement of concrete results. It will help donors become more selective in what they do. In the long run, the CDF enhances development effectiveness and contributes toward the central goal of poverty reduction and reaching agreed targets such as the Millennium Development Goals. In many countries, including in Vietnam, the CDF principles are primarily put into practice through the Poverty Reduction Strategy process – in Vietnam’s case, the Comprehensive Poverty Reduction and Growth Strategy.

2. WHAT IS THE ORIGIN OF THE CDF?

The ideas in the CDF reflect direct observation of development experience, well documented in evaluations from across the development community. They stem from evidence that the pursuit of economic growth may too often have been at the expense of social development - and that open, transparent, participatory processes are important for sustainable development. These are ideas that NGOs, the UN, members of the Development Assistance Committee of the OECD, and others in the development community have been championing for many years.

The president of the World Bank, James Wolfensohn, contributed to the thinking on partnerships to promote aid effectiveness and poverty reduction with a discussion paper entitled "A Proposal for a Comprehensive Development Framework,” (World Bank, January 1999). The CDF aims to bring many of these ideas together in a single place. The CDF also involves a commitment to expanded partnerships, transparency, and accountability under the leadership of the government. The CDF recognizes that there is no substitute for national leadership or national consensus for development.

3. WHY IS A NEW APPROACH NEEDED?

Development is about much more than the balance of payments, or reserves or trade figures or GDP growth. Development is about transforming whole societies. Experience shows that unless we look at both sides of the balance sheet of a country - macroeconomic and financial aspects on the one side and structural, social, and human considerations on the other - we run a grave risk of misjudging a country's performance as well as inadequately supporting its future development.

Experience also shows the need to identify and plan projects and programs within a comprehensive or holistic approach to development. Otherwise, the projects and programs may not match the greatest needs, they may lead to duplication of efforts, and their prospects for success will be weakened considerably by a lack of parallel development of other supportive programs. Also, in a world of diminishing overseas assistance and limited human resources to meet the global development challenge, we must be ready to contribute to constructive partnerships that bring together government, multilaterals and bilaterals, civil society, and the private sector, in a transparent and interactive process - with agreed long-term goals and the right cooperative spirit to achieve them.

4. WHAT IS THE PROGRESS OF THE CDF TO DATE?

• The CDF principles have been widely and explicitly accepted by the international community, as a basis for achieving greater poverty reduction and sustainable development.
• The CDF principles have become the basis for the way World Bank staff work.
• The introduction of PRSPs has significantly increased the number of countries adopting the CDF approach.
• All major bilateral donors, the UN and the Regional Development Banks contribute to learning and sharing about the implementation of CDF principles.
• Overall, progress has varied widely among the 50 or so countries implementing the CDF principles
• Many more governments are beginning actively to lead the setting of the policy agenda—and this is likely to be reinforced further as full PRSPs are put in place.
• In some countries, this leadership is being complemented by more active roles for Parliament, civil society and, in some cases, the private sector in policy discussions. However those discussions need better flows of information.
• Governments are also taking a more active role in aid coordination at all levels. An increasing number of discussions are held in-country, allowing for much broader participation by domestic stakeholders, including sectoral Ministries, which helps to build ownership.
• The PRSP process is significantly increasing the number of countries embarked on comprehensive poverty reduction strategies, although with varying degrees of depth, comprehensiveness and balance between macroeconomic and other factors.
• Some key development partners are already taking steps to achieve better alignment of their assistance strategies with national strategies.

5. WHAT CHALLENGES LIE AHEAD?

• Harmonization, at both the institutional and country level, of operational strategies, policies and procedures, is the most important priority for action by external partners. While the World Bank and other MDBs, and the OECD/DAC, have working groups to look at these issues, much remains to be done.
• The limits to country capacity are proving critically important for the whole range of government activity, including strategy formulation and implementation, building partnership and poverty diagnostics. This also includes monitoring progress on development results—with the Millennium Development Goals providing a frame of reference—and for which setting realistic targets for progress and developing effective monitoring mechanisms is proving a considerable challenge.
• Strengthening participatory processes, making them a regular, institutionalized feature, is proving crucial to building country ownership of national strategies. This includes much better engagement with the poor or marginalized groups and with the private sector; a difficult task in all these cases for many countries. It is important that such participation should be conducted under country leadership in a way that promotes the more effective functioning of existing, sometimes fragile, democratic institutions.
• The application of CDF has profound implications for how the World Bank and other development organizations work, their instruments, processes, internal culture, and the behavior of all staff.