The document discusses sector budget support for natural resources and environmental governance in Ghana. It notes that internationally, there has been a shift towards general and sector budget support based on aid effectiveness principles, but this has sometimes reduced attention to natural resources and the environment. In Ghana, there was a move from project-based support to multi-donor sector budget support for natural resources and environmental governance. This required reframing the environment focus in terms of aid mechanisms and building legitimacy for the approach. The support aimed to strengthen sector governance, build capacity, and promote synergies across levels of dialogue and development objectives. Quality of engagement across partners and levels was seen as critical to ensure policy coherence and complementarity in supporting the sector's objectives.

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Ghana Sector Budget Support to Natural Resources and Environmental Governance
Quality and Aid Effectiveness in Sectoral Programmes
MinBuZa/DGIS Inter-Regional Workshop
Addis Ababa, November 2009
Seán Doolan, with Ruud van der Helm
Embassy of the Kingdom of the Netherlands, Accra
Sean.Doolan@minbuza.nl
Most significant changes in development practice and (ENR) sector over past decade
Internationally, the most significant changes have been the focus on the MDGs; recognition of poverty
reduction across development partners (not necessarily embraced by all host Governments or their
Ministries and agencies); change in the architecture of development assistance; and an emphasis on
scaling-up support to country systems and delivery under programmatic based approaches in line with
principles of aid effectiveness - particularly provision of general (and to a lesser extent, sector) budget
support (GBS and SBS). These up-stream approaches, combined with reduced capacity and sectoral
expertise, have resulted in a corresponding decline in engagement outside of capitals and diminished
capacity to interpret and interrogate information on policy implementation and sectoral delivery.
In principle, the shift towards GBS drives action by Government and partners on long-standing, cross-
sectoral challenges such as public financial management, public sector reform and accountability.
This affords an opportunity to have detailed sectoral dialogue reinforced by complementary sector
instruments. In practice, the political emphasis and weight on dialogue on the “high table” of macro
elements in GBS has sometimes reduced coherence, consistence and complementarity (the three
“C”s), and reduced space for other elements. In particular, a failure to promote the three Cs across
levels of engagement, particularly in relation to natural resources and environment, has reduced the
opportunity for a “missing middle” in delivery of sectoral and national development objectives, i.e.
synergy across central and sectoral engagements with General and Sector Budget Support and the
quality of tools, instruments and dialogue that underpin sectoral and inter-level engagement.
Why significant – for Natural Resources and Environment?
This up-stream focus has downgraded previous attention and support on natural resources and
environmental issues (partly due to a poorly measurable MDG7), marginalising this to the periphery of
development assistance, while nominally integrating environment as a cross-cutting theme in other
work and dialogue. There has been a relative decline in donor spending on the environment, and a
reduction in the use of environmental expertise in-country. (This is now partly countered by the rise of
vertical instruments on climate change – but these tend to neglect underlying environmental issues.)
The 2006 OECD Joint-Donor Evaluation of General Budget Support suggested that environmental
considerations have fared worse than other cross-cutting issues in national planning processes. The
report highlighted that a) even where environmental issues have been raised in a PRSP, there is little
or no follow-up by development partners during budget discussions, and/or b) the financial support
provided to tackle the issues is small/non-existent.
Subsequent ODI reviews for the Poverty Environment Partnership and OECD DAC EnviroNet
highlighted the relative paucity of information on what is actually happening in-country in relation to
budget dialogue, budget support agreements and national environmental actions, as well as the
absence of analytical work making the case for such support, not to mention institutional and related
analyses that could underpin any such support. This contrasts with the analytical work that is
available for more mature “SWAp-able” sectors, such as health and education. However, it must be
noted that the ability of environmental agencies to identify and address poverty or economic growth
issues is often limited to generalities (such as that women and children are the most vulnerable or that
disadvantaged groups are the most reliant on natural resources). Their infrequent application of
disaggregated analysis to target response measures lessens their ability to engage in a wider
development process, particularly in relation to equity and poverty.

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Propositions
Environmental engagement needs to be framed in terms of development to gain traction
SBS requires pro-active engagement and complementary support in GBS and other instruments
Quality of engagement is critical to ensure coherence, consistence and complementarity
The Ghana case on Natural Resources and Environmental Governance
The context for engagement on natural resources and environment in Ghana was set by changes in
aid instruments, the changing nature of dialogue across government and development partners
(becoming increasingly formalised in 2006-8 around Multi-Donor Budget Support, Consultative Group
discussions and the development of the Ghana Joint Assistance Strategy), and the increasing
emphasis on budget support and decrease in development partner staffing resources and in-country
expertise. This required a reframing of environment at country level, away from generic discussion on
poverty-environment linkages (which delivered little traction with senior management within
development partners) and towards an explicit focus on aid mechanisms. In Ghana, this took the form
of a shift away from project-based support towards multi-donor sector budget support on Natural
resources and Environmental Governance (NREG). This approach drew on country analyses and
experience of environmental mainstreaming across countries, sectors and development partners, but
framed it in terms of aid effectiveness and drew on the messages emerging from the ODI analyses.
Ghana has had a long-standing series of project engagements by development partners on
environment but integration into lasting, sustainable practice has been problematical. An early effort to
provide coordinated support in the late 1990s to early 2000s failed, damaging sectoral relationships.
Dialogue in-country strongly indicated the need for sectoral engagement beyond MDBS as the
preferred option for support by "central" Government stakeholders (such as MoFEP and Ministry of
Public Sector Reform) and not just the sectoral Ministries, Departments and Agencies. Stronger
sectoral governance and accountability mechanisms, with attention to cross-sectoral mechanisms and
political oversight and commitment, were recognised as important to ensure that ENR sectors continue
to contribute responsibly to future growth. Sector analytical work, a strong ENR sector working group
dialogue and (some) dialogue at the level of MDBS created legitimacy and space for an innovative
approach on ENR issues.
Over time, the decision was made to provide multi-donor sector budget support to a Government-
articulated set of priorities. Sector Budget support requires a number of elements - clear sector policy
frameworks and strategic plans, strong PFM linked to medium term expenditure frameworks,
accountability and performance monitoring, harmonisation and alignment mechanisms, focus on
institutional mechanisms and capacity, focus on delivery of sectoral results. It was explicitly
recognised that NREG SBS did not have all of these in place at the outset and that work was required
to develop these over the course of implementation. Consultancy inputs examined, e.g. PFM,
engagement with civil society, strategic planning, priority indicators and poverty and social impact
assessment, in able to inform the dialogue and design and start-up processes. Leverage of vertical
initiatives was explicit, to enable alignment with and reinforcement of in-country processes, e.g. to
seek synergy between national and international objectives on climate change, deforestation,
transparency and accountability mechanisms and equity. This move towards SBS explicitly factored in
key elements of the MDBS dialogue (PFM, accountability and transparency mechanisms, public sector
reform) as well as MDBS processes (a Performance Assessment Framework, a framework
memorandum, alignment with the MDBS and national budget calendars). In addition, an interim
facility was established to enable dialogue with civil society.
In terms of the ODI study recommendations on environment and budget support, SBS to NREG is:
(i) assisting to clarify mandates and institutional structures on environment – it is supporting cross-
sectoral mechanisms, including high level coordination structures at the level of Cabinet;
(ii) promoting multi-stakeholder policy debate – although engagement with civil society and
Parliament has stalled since promising engagement in the design period, particularly in terms of
full involvement in the ENR sector group;
(iii) building strategic thinking and analytical capacity of environmental agencies is challenging due
to institutional capacity constraints – quality is not always to the fore but a reliance on
international inputs can undermine national processes to develop such capacity over time;

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(iv) generating political incentives for better environmental outcomes has been moderately
successful but there are indications that a number of areas now require renewed attention; and
(v) strengthening international environment processes that relate to country commitments and
country abilities to engage in such processes – this has focused in particular on addressing
illegal logging and timber trade, climate change adaptation, reducing deforestation, and
transparency initiatives in mining; however, there is a gap between stated high-level
ambition/policy and sectoral reality and implementation on the ground.
Propositions
SBS requires complementary support in GBS and other instruments
SBS has the potential to be an effective instrument in supporting sector objective delivery and help
government deliver against policy objectives. However, it is also clear that sub-optimal practices in the
delivery and implementation of SBS undermine its effectiveness. Since SBS and GBS often coexist in
practice, their coordination should be proactively addressed to increase mutual coherence and overall
development effectiveness. Complementarity of aid modalities is not automatic. Issues requiring
specific attention include PFM, architecture for sector dialogue mechanisms, conditionality,
predictability of resource flow, review and disbursement calendars, and overall harmonisation and
alignment. The GBS and SBS Memoranda of Understanding and terms of reference (and occasionally
topics for discussion) for sector groups defining common arrangements could be used to establish
synergies and genuine coordination between the two aid modalities. In addition, effort is required to
secure support from related project instruments, such as dedicated technical assistance, or at a
minimum alignment and avoidance of overlap with other substantive or influential initiatives in the
sector.
A number of generic considerations arise from the Ghana experience and from the 2008 and 2009
reviews of SBS experience across countries and sectors for the Strategic Partnership for Africa1
:
 Sector budget support needs to be provided on a scale that both addresses the needs of the
sector and promotes a shift in incentives towards strengthening of country systems. Other
sector resources, such as internally generated funds and access to projectised or vertical
funds, can undermine the rationale for SBS among both implementing and funding partners.
A retreat to projectised funding mechanisms reinforces incentives to rely on off-budget
resources, impedes overall progress and reduces the case for allocation of adequate
resources to support delivery of sectoral priorities.
 The overall functioning and level of development of the public sector (PFM / decentralisation
or deconcentration / strategic planning / public sector reform / human resources management
/ M&E capacity, etc.) is an important determining factor for the definition and implementation
of sector policy and strategy, and should be systematically recognised in the design,
implementation, monitoring and evaluation of the elements supported by the SBS.
 The level and timing of annual SBS allocations and disbursements have an important impact
on the processes of budget planning and execution at sector level. Predictability is key for
both the sector ministries and agencies and the Ministry of Finance and Economic Planning.
SBS needs to be aligned as much as possible with the national budget cycle – failure to do so
creates tension and undermines confidence in the instrument. Equally, dialogue needs to
address overall sector resource allocation – including national resources, internally generated
funds, and off-budget instruments such as projects – and the relationship of resource
allocations to sectoral priorities and strategies. (In Ghana, dialogue on sectoral budgetary
allocation is at an early stage.)
 The diagnosis of institutional capacity and the dedicated measures and technical assistance
support to strengthen that capacity, both at general and at sector level, need to be prominent
in the dialogue. Capacity development is needed, in sector ministries and agencies, in order
to manage the financial flows and to meet the requirements for budgeting, strategic planning,
implementation, and monitoring and evaluation. Again, securing a clear articulation of
capacity-building and technical assistance needs is challenging and needs to maintain
continuity with previous sectoral diagnoses.
1
EcoRys (2008) Sector Budget Support in Practice: African experiences. AFD, MinBuza
ODI & Mokoro (2009) Sector Budget Support in Practice: Synthesis report. DFID

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 Non-financial SBS and complementary inputs need to address downstream systems for policy
implementation and service delivery, not just the development of plans and systems at a high
level. These include the budgetary link to policies and plans; the processes for technical
service delivery; progress outside the capital; and internal and external reporting and
accountability for service delivery. Strengthening incentives to improve performance is
extremely challenging and requires dedicated attention.
 The comprehensiveness of the dialogue needs to be maintained and enhanced over time.
The dialogue should include all stakeholders and all financing modalities and focus on the
overall strategic engagement in relation to institutional, sectoral and national priorities – but it
can be challenging to secure a coherent expression of these priorities. Channels for
engagement with civil society and other non-state actors are key, especially in triangulating
evidence for dialogue from outside the capital.
 The SBS processes should not monopolise the sector dialogue. Sector dialogue should offer
a platform for coordination and focus in dialogue, and should avoid marginalising other
support and actors within the sector. An over-focus on mechanistic discussion of sector
budget support targets and means of verification rather than content and strategy can lead to
weakening of the overall sector group and reduce the space for other partners, whose
contribution (and pipelines) may be undiscussed or discussed bilaterally.
Quality of engagement is critical to ensure coherence, consistency and complementarity
Quality of engagement and synergy across instruments and initiatives are key to a “missing middle” in
implementation. These need to evolve in line with changing contexts that afford different opportunities
and challenges. They also require a focus on communication, to ensure consistency and
complementary in messaging at different levels and across processes and initiatives, to promote
progress. Synergy across levels of dialogue and across national and sectoral development objectives
are essential. These provide sectoral perspectives to inform progress and dialogue at GBS level and
vice versa, and promote coherence and consistency in approach in developing a critical mass of
partners, evidence and momentum behind sector reform and delivery of sector objectives.
 Quality of dialogue and sector group processes to service multi-stakeholder dialogue and
maintain oversight on sector-relevant initiatives, including the ability to promote harmonisation
and alignment around shared and complementary objectives, and ability to maintain oversight
on developments on strategic issues, (including allocation of sector resources). Serious
Government engagement is important as failure to secure this results in fragmentation.
 Quality of understanding of objectives, approach and requirements across all partners -
understanding political, institutional and individual incentives (and instruments, processes and
ways of working) is key in terms of seizing opportunities and making progress. Development
partner and Government institutions have different perceptions of how SBS works, and the
implementation of SBS in practice can end up being different to the spirit of the design - failure
to recognise and allow for this undermines progress.
 Quality of analyses - to make the case for engagement, to inform appraisal and dialogue, to
set and change strategic direction, and to validate/triangulate progress (including progress
outside the capital)
 Quality of relationships and political support – understanding skills, developing trust,
understanding obstacles, starting points and perspectives, and interpreting the political,
institutional and political dynamics that underpin behaviour are all essential. And this requires
patience – to develop networks, to establish new structures and procedures, and to overcome
setbacks
 Quality of tools - the level of maturity of tools and instruments (sector MTEFs, work plans,
institutional assessments) and monitoring tools (performance assessment frameworks, M&E
systems) can derail progress if all partners do not share a view that progress can be slow for a
variety of reasons. The design and use of these instruments as well as the coordination and
management structures of these processes required dedicated attention. Perfection is the
enemy of the good (or even the adequate) in this regard.

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Annex 1 Background: NREG sector budget support in Ghana
Design of NREG SBS
The Environment and Natural Resources (ENR) sector group evolved from an initial information
exchange platform in 2001, to one that focused more on collaboration on joint environmental analytical
work from 2005. Environmental mainstreaming through the national Poverty Reduction Strategy was
limited. The 2006-7 Country Environmental Analysis pointed towards costs of environmental
degradation of almost 10% of GDP annually. This constraint to growth attracted the attention of the
Ministry of Finance and Economic Planning (MoFEP). Institutional analyses highlighted systemic
weaknesses in forestry, mining and environment agencies. Lobbying across the relevant development
partners involved in the ENR sector group, resulted in a stronger emphasis on ENR in the high-level
Consultative Group meeting and recognition of environment elements in the Multi-Donor Budget
Support Performance Assessment Framework.
As the ENR sectoral focus evolved in Ghana, it brought together a coalition of development partners in
a joint design process. This leveraged vertical initiatives and complementary inputs from different DP
headquarters, many aware of developments in Ghana through the Poverty Environment Partnership
and other networks. This was rooted in long-term sectoral knowledge at national and international
levels, institutional memories, personal relationships and an appreciation of the political economy in
Ghana. Emphasis on coordination mechanisms and political commitment to manage the
environmental resource base were a primary focus of dialogue. This process was driven by the
combination of factors. Key was the presence of a committed in-country specialist adviser as the ENR
sector group lead or co-lead at a time that the ENR sector could have collapsed under pressures
imposed by division of labour and increasing focus in development partner assistance. This was
initially matched by flexibility in inputs by supporting development partners, mobilising considerable
technical expertise and supporting consultants.
Reflections on Progress of SBS for NREG
Support to SBS on NREG in Ghana has not always been an easy process in implementation. It is a
very different way of working, with a major shift in dialogue mechanisms and funding relationships
between MDAs and MoFEP, between Government and DPs, and among and within DPs, for sub-
sectors that have not previously been heavily involved with - or even exposed to - new aid
mechanisms and that have been rooted in fragmented projects and isolated from much of the
machinery of Government. It has resulted in stronger engagement across sectors, while engagement
and understanding between MDAs and MoFEP have increased, helping to establish accountability
back towards central Government mechanisms and away from development partners providing funds.
However, strategic planning, monitoring and evaluation, PFM and linkage of stated policies with
financial allocations and budgetary mechanisms remain weak. This is not unusual for SBS,
particularly in the early stages of its establishment in a sector. However, pressure for progress can
render national ownership fragile. Paris or Accra harmonisation and alignment are not easy to
achieve. There is also the question as to what constitutes Government ownership. Is it at the sectoral
technical level? Senior management? Ministers? MoFEP? And to what extent can engagement by
the management of development partners promote or impede such ownership?
In principle, a major area of SBS focus is that it can promote greater efficiency in the use of public
resources, through facilitating improvements in the planning, budgeting cycle, financial management
and accountability. It can bring about a focus on sectoral policy and strategy at a high level – while
equally neglecting underlying implementation issues. It is also intended to reduce transaction costs,
for Government and for development partners. In practice, in Ghana, this has been slow to progress.
There are high transaction costs in designing and servicing a new approach, one that is unfamiliar to
most of the Government partners (and indeed to many of the development partner sectoral experts).
This is probably a particular feature of the natural resources and environment sector, which has been
long neglected from the mainstream development debate and architecture.
Recognition of the need for evolution of NREG SBS elements by DPs has changed with HQ
involvement and rotation among the individuals working on the support and dialogue. This has
changed the dynamics among partners and undermined progress on some elements. At the same

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time, institutional weaknesses within the Government institutions, reshuffles of Ministerial locations,
the overload on key individuals involved, and over-attention to mechanistic discussion of processes,
have all served to constrain progress. A major stumbling block has been that four partners view their
support as multi-year against a rolling set of sectoral policy matrices, whereas another partner
prepares annual documents. This is labour-intensive and divisive, resulting in major tensions over this
focus on documents and matrix revision as opposed to content for dialogue. There is a real risk of
matrix/PAF fatigue and a sense of “guided ownership” by Government parties, particularly when efforts
to heavily reduce the number of sectoral indicators in the SBS PAF were not undertaken smoothly.
Sector ministries and agencies, with MoFEP, earmarked the SBS for specific budgets and allocations
in the first years to ensure that funds were adequate, due to scepticism of MDAs that they would
receive adequate funding for their activities. Additionality of funds was not addressed as a major issue
– it remains to be seen if budgetary and resource allocations overall are adequate, increased or
decreased above the previous project modalities. In part, this is due to inconsistencies in financial
management and reporting at different levels. A critical factor however, is that as long as government
agencies are able to secure additional funds outside the budget there will continue to be a
countervailing force limiting the interest of these agencies to make their case during the annual budget
cycle. This is a major criticism, particularly with the increase of projectised funding now available in
Ghana, e.g. linked to aspects of climate change and the development of oil resources. This is also
combined with suspicion by participating Ministries and Agencies of central MoFEP budget allocation
processes, particularly in a time of fiscal stringency and challenges to national cash flows.
SBS dialogue risks tying up key actors (from government, development partners and civil society) in
offices and meetings in the capital. If it focuses too intensively on policies, plans, PFM systems and
monitoring systems they can become disconnected from district and local realities, with little practical
relevance. Dealing with complexity by constructing an overly elaborate system with precise indicators
and systems driven by aspirations of outcomes monitoring and responding to HQ desire for focus and
precision is not always the best way forward. However, this can be hard to argue, particularly when all
development partners are seeking to justify their expenditure and internal incentives are to deliver on
this agenda.

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Annex 2 Sector Fact sheet (Quick and Dirty)
Country + Sector name +
Year(s)
Ghana
Natural Resources & Environment
2005+ analysis and design
2008+ operational
Has your sector been
organized using a SWAp?2
Yes – but not elements firmly in place
Main Sector outcome for
partner country
Main Sector outputs for
partner country (select 3-4)
Improved law enforcement in the Forestry Sector
Data on revenue collection and distribution fully and actively
disclosed to local communities
Climate change integrated into national budget and planning
processes
National environmental assessment system institutionalized and
consolidated
Sector outputs embassy
(select 3-4)
….
…..
Main organizations involved
in sector strategy
Government: …Ministries of Finance & Economic
Planning, Lands & Natural Resoureces, Environment,
Science & Technology
Environment Protection Agency, Forestry Commission,
Minerals Commission
Private sector: Industry associations (indirectly via sector
institutions)
Civil society: A range of supporting actors and coalitions,
e.g. Forest Watch Ghana, with intermediary INGOs
Donors: …EKN, World Bank, EC, DFID, AFD
Lead donor: All partners equivalent but WB largest
financier
Dutch support and financing
modalities
Financial contribution through
(joint) Sector budget support: yes
(joint) Programme support :
(joint) Project support :
Other: …Related TA support for PFM and an interim civil
society support facility
Other relevant information
………………………………………………………………..
………………………………………………………………..
………………………………………………………………..
………………………………………………………………..
2
A sector is defined as a coherent set of activities at micro, meso and macro levels within clearly defined
institutional and budgetary frameworks for which the government has formulated a specific policy. Key
elements of the SWAp include: Macro-micro perspective; Partnership and ownership; Multi-actor roles; Good
governance, Institutional development and capacity building; Donor coordination and harmonization; Multi-
annual perspective
(read more in DGIS SWAp Groeidocument section 2.4)