A recently published OECD report reveals that this step has decisively enhanced the efficiency of Austrian development aid. With its 140 employees within the country and abroad, ADA allocated as much as e 74.4 million to bilateral development projects in 2004. ADA Managing Director Michael Linhart says that the restructuring has helped to reduce the period between project approval and the allocation of funds by an average of six weeks.

In 2005, ADA set up a new coordination office in Montenegro, established an external branch in Moldova and appointed a liaison to Brussels. Linhart reports that since its foundation the agency has also enormously expanded its range of services, which now include the service sectors humanitarian aid and in particular business and development. The purpose of the latter is to improve the framework conditions for investments in the partner countries. Reducing global poverty is, after all, the responsibility of all social players.

With respect to the financing schemes for future water and waste management projects, industry stakeholders have recently conjectured on a possible replacement of traditional funding schemes. Michael Linhart clarifies that these sectors will continue to see projects which are largely or entirely financed by ADC and awarded to contractors on the basis of public tenders.

The new funding scheme under debate – such as a soft loan with a debt-equity ratio of 35 : 65 – is an additional financing option in which the instruments of Österreichische Kontrollbank AG and ADA could be concentrated (for the time being only for projects in South East Europe). Linhart takes no clear stance on whether this may affect the number of project funding applications.

When looking at the modus operandi of Kreditanstalt für Wiederaufbau (KfW), it becomes evident that the Germans use their development aid (at least in the water management sector) also as a tool to promote exports of their domestic products and services. Although ADA’s mission statement makes a change of pace very unlikely, the question arises why not more of Austrian taxpayers’ money is spent on the procurement of Austrian-made products.

Michael Linhart argues that already now a part of ADA’s total budget flows into contracts awarded to Austrian companies and development organisations; but a general practice of “tied aid” is out of the question. “There is broad international agreement that, from a development policy point of view, tied aid is not desirable.

The OECD has actually urged its members to reduce their share of tied aid. Within the framework of other international organisations such as the UN, Austria has even committed itself to raise the share of untied aid so as to make greater progress towards accomplishing the Millennium Development Goals.”

When it comes to development aid in water management, a problem commonly caused by international support programmes is the use of sophisticated technologies which are totally unsuited for the simple background conditions in some countries. ADC has pioneered this area in the last two decades by focusing on the use of so-called applied technologies (= lean technologies).

Some exemplary projects have for example been launched in Albania, where Austria has earned much recognition for its waters supply reconstruction project in the city of Shkodra. Yet even with low-cost lean technologies the budget still flowing into this project is horrendous.

Once a project fits into the national programme coordinated with the foreign partner, ADA checks how much money is needed for carrying it out (which in turn affects the project budget). In the case of Shkodra, the money still needed for project execution (water and wastewater) is expected to exceed the financial capabilities of ADA by far. KfW seeks to support the city through a grant, possibly one relating to the wastewater sector.

A current feasibility study shall bring more light into the matter and help to make a final decision. ADA is in close contact with KfW. The option of a German involvement in Shkodra will be decided on the basis of a trilateral vote (involving ADA, KfW, the city authorities and the Albanian government), safeguarding the overall interest of the local population.

ADA basically still has an interest to continue its activities in Shkodra. Apart from providing technical aid, ADC projects also promote the transfer of know-how at institutional level. Therefore, the idea created by two Austrian environment clusters (independently from each other) to found a training institute for water and waste experts in South East Europe may have a real chance.
(Source: aqua press Int. 1/2006, Mag. Christof Hahn)