Evaluation report 2012:4: Finnish Consessional Aid Instrument

Evaluation report 2012:4: Finnish Consessional Aid Instrument (Opens New Window)

By: Iradj Alikhani
Carlos Montes
Andrew Danino
Tom von Weissenberg
Magda Barceló

ISBN  978-951-724-995-9
ISBN 978-951-724-996-6
ISSN 1235-7618

The objective of this evaluation is to assess how the Finnish Concessional Credit Scheme has contributed in 2002-2009 to poverty alleviation, achieved sustainable concrete results and also its shortcomings. Evaluation is based on project documentation; publically available documents; internal reviews and evaluations; interviews with select stakeholders and field visit to Vietnam. This information was used to analyse the strength and weaknesses of the scheme, in terms of promoting the cross-cutting themes. The following evaluation criteria, i.e. relevance, effectiveness, impact and sustainability, efficiency, complementarity, coherence and coordination and Finnish value- added, were used.

The main conclusion is that the scheme rates poorly on most the above criteria. Lack of proper monitoring and evaluation (M&E) is a major weakness and all concessional credit projects lack indicators for the determination of the baseline and the results. Information of outcomes is limited and irregular. Effectiveness is the highest rating criteria, efficiency is rated marginally unsatisfactory, relevance, impact and sustainability and Finnish value-added as unsatisfactory. Factors explaining the findings include inherent tension between the scheme’s commercial and development objectives; lack of follow-up of recommendations of earlier evaluations aimed at improving the scheme, and that the tied aid approach is increasingly at odds with best international practice and expectations of partner countries. These findings do not obscure the fact that Finnish aid is generally effective.

The report examines three options i.e. winding-down the scheme, overhauling it with implementation of past recommendations and untying of aid, or maintaining the scheme with improvements in M&E and procedures. The report argues that the first option would be optimal.

Key words: poverty reduction, sustainability, development impact, concessional credit, tied aid