Ad Melkert to the UNDP/UNFPA Executive Board

26 May 2009

Statement by Ad Melkert, Associate Administrator to the UNDP/UNFPA Executive Board (Annual Session)

Mr. President
Distinguished Delegates
Ladies and Gentlemen

I would like to thank the Administrator for the opportunity to highlight some of the key initiatives that have been put in place over the past half year or so in order to prepare UNDP for the coming years.  Allow me also on this occasion to thank all of my colleagues for the loyal and professional way they have supported the organization in the transition to a new Administrator.  To lead UNDP is to lead a truly dedicated community of diversity and drive for a global cause – it is a privilege and enriching experience for me to be part of that community.

Let me first update you on important processes that require your attention and further endorsement.

The General Assembly decided in December 2008 to modify the comprehensive policy review of operational activities from a triennial to a quadrennial cycle. The resolution in question urged UN funds and programmes to align their strategic planning cycles accordingly. It also outlined the General Assembly’s intention to hold the next comprehensive policy review in 2012.  Therefore, the Executive Board may wish to extend the UNDP strategic plan 2008-2011 by two years, until the end of 2013. In order to align with our sister agencies, we are also requesting the Board to consider postponing the midterm review of the Strategic Plan from the 2010 annual session to the 2011 annual session.

Furthermore, pursuant to decision 2008/24, I would like to refer to the implementation of the pilot policy on UNDP engagement in direct budget support and pooled funds. Since the presentation and approval of the papers DP/2008/36 and DP/2008/53, UNDP has prepared guidance for country offices responding to government requests to participate in sector budget support or a pooled fund. For your information, we have circulated a one-page brief on this issue, which I hope delegations will find useful, and we will post it on the Executive Board website for your reference. We are working very closely with country offices expressing interest in participating in the policy and, now that the guidelines and procedures have been released, will dedicate time to pursue harmonized approaches across the United Nations development system as well as to elaborate on the criteria to assess the effectiveness of this type of development support.

As a last point of this small checklist I would like to mention our progress in strengthening the practice and culture of results based management.   Amongst different other initiatives, I would like to refer to a revised Planning, Monitoring and Evaluation Handbook that will provide all our staff with ‘how-to’ guidance, examples, and best practices on results based management.  This revised handbook is a companion document to our policy documents which outline the ‘what’ that staff needs to do.  A draft copy is being made available at this session of the Board for those interested.  It should be noted that in developing the revised Handbook our staff undertook an extensive review of similar RBM guidance and training material in quite a few other agencies, including bilateral organizations, to see current practices and approaches.

Returning now to the bigger picture I would like to specify four challenges that will require management’s special attention in the coming years in order to keep UNDP on track with a view to maximizing our effective contribution to development results and maintaining a support infrastructure essential for leveraging the presence of the UN in member states.

1)    Staff excellence

First and foremost the challenge of maximally investing in human resources.  It is the quality of our staff that makes or breaks the organization’s impact.  Recruiting the best and the brightest; offering facilities matching often burdensome conditions of international employment; and keeping mobility at levels that at the same time serve the institutional memory and prevent entitlement-driven individual behaviour require a maximum of creativity to have the right workforce available at the right time and place.  Importantly, the General Assembly by adopting a wide ranging resolution on contractual reform last year recognized the need for streamlining contractual arrangements for UN staff in order to meet staff concerns on the wide variety of contract situations and to keep the UN an attractive employer.  It should be pointed out that within the UN family UNDP’s reality, based on the patchwork of resource modalities on which it is dependent, is a particularly complex one.   In 1994 the then UNDP Administrator froze the granting of permanent appointments to staff serving for a long time on fixed term contracts in view of, as it was called “the changing nature and composition of our financial resource basis”.  At the time, 78% of posts in UNDP were funded from core resources. Since, this share has further decreased to 60% in the current biennium support budget.  Yet, on the basis of the UN Staff Regulations and Rules, and as confirmed by the recent GA resolution, the principle has been established that makes a one-time review necessary to consider the granting of a permanent appointment for those long serving fixed-term staff under the 100-series of the current Staff Rules, who meet the relevant eligibility requirements by 30 June 2009.  This might involve up to around 2,100 staff members.

Furthermore a substantial number of current short term contracts will have to be converted into fixed-term appointments, thus increasing the number of core positions that UNDP will have to ask the Board to support.  At the same time we will have to keep space to facilitate the influx of young talent at many levels of the organization in order to better balance the demographic profile of the organization – which could be a hard call with tightened resources and more permanent contracts.  

Whilst supporting the contractual reform UNDP at the same time needs to keep the balance with the expectations from stakeholders that it can adjust its workforce to the quantity, quality and timeliness required under very different circumstances across the world.  We trust that the Board will help us to translate the GA decisions into a sustainable financial and human resources framework in support of UNDP’s mission.

2)    “Surge” readiness

The second challenge that I would like to highlight is the need for “surge” in providing and strengthening staff capacity in areas that require or will require UNDP to go the extra mile.  This is both a matter of structural adjustment and of providing flexibility in responding to urgent, unanticipated demand.  Over the past year particularly three areas come to mind that require extra emphasis on the organization’s capability to adjust and to be maximally responsive.  

Firstly, the heavy extra workload starting with the food crisis, then the short lived oil price explosion and finally and still the economic crisis of developing countries after the financial centres’ meltdown.  The poor have been hit hardest; historic analysis shows that recovery lead times will be longer in poorer countries; and as a result MDG achievement will be off track or further off track in many places.  Yet extra resources to support governments and societies are not – or not yet -- there.

The second key area of additional demands put to UNDP is our task to lead the UN system in the “early recovery” stage after conflict or disaster – following up on the recommendations in the report by the Secretary-General on “Peace Building in the immediate aftermath of conflict” that will be presented shortly.  UNDP has been intensely involved in its preparation.  We do subscribe to the high ambitions and stand ready to play our part – provided that the necessary resources will be made available.  On that score, however, the report will probably be more inviting than guiding to the member states.  Hence the reason to make specific mention of this to you today.

The third area of extraordinary demand is the action addressing climate change as part of the promotion of sustainable development and access to energy for the poor.  The preparation of Copenhagen and the mandate for implementation that hopefully will follow a successful outcome will guide our work – with no doubt the need for substantial extra capacity to support in particular the least developed countries and small island developing states.

All these surge requirements demand an organizational response that, I have to state in all frankness, to some extent runs counter to the unpredictability of our funding structure; the proliferation of global and local funding mechanisms and their transaction costs; as well as the increasing emphasis in overall donor relations on detailed planning and reporting processes.  What would be needed in the interaction with the Board is a next step building on the implementation of the approved accountability framework.  Sound custodianship has to remain the name of the game at all levels of the organization.  Taxpayers ought to be assured how their money is handled.  At the same time all stakeholders share a deep interest in making sure that all the efforts and resources show development impact.  Therefore, we should work towards a next stage in which a sound accountability practice would helps to reduce managerial transaction costs in favour of more rapid delivery and responsiveness.  Programmatic “surge” requires bureaucratic “trim”.

3)    Organizational readjustments

This necessity to enhance responsiveness as well as the expectation that UNDP’s policy advice remains relevant under different circumstances and levels of economic development have led us internally to explore a gradual renovation of the organizational model distinguishing between two “pillars” that should carry a UNDP adjusted to the future.

One is the “financial model” pillar – that should enable UNDP more than now is the case to put our money where our mouth is, that is to say to where unmet development needs direct us.  Essentially it would mean that Strategic Plan priorities and upcoming new demand can be met by allocation or reallocation of resources as part of the total financial envelope made available to UNDP at all levels – rather than being constrained by the straightjackets that right now make our budgetary management highly inflexible.  The ongoing cost classification exercise could serve as an important step in this direction.  Also a more systemic way of financing our conflict prevention and recovery activities should be part of the deal for the future in order to ensure continuity and to reduce direct dependence from earmarked donor contributions.  It is essential that the Board will create space for programmatic dialogue and effective change.

The second “capacity model” pillar stands for a review of the capacity and strength of UNDP Country Offices, that should remain the backbone of UNDP’s presence and added value at country level.  However, in wanting to meet higher standards of accountability and increasing demand for high level policy advice we should recognize the need to be more cost effective with higher impact through capacity clustering, geographically or thematically, whilst maintaining universal representation.  Thus UNDP would adjust its organizational model to the specific location and qualification of demand.  This is closely connected with suggested changes in the financial model, requiring an intensive dialogue with the Board that is already in an initial stage.

4)    Budget efficiency
Finally, reconsideration of our management structure is also needed in order to address short term efficiency improvements, both in view of current budget scenarios and in order to create maximum space for more program activity and impact.  This should go hand in hand with bringing the cost recovery up to the level authorized by the Board; we are making progress but consistent application of the 7% third party and 3% government cost sharing principles still requires more effort.  Also more realistic reimbursement of costs for services rendered by UNDP to partner organizations in the system should help us to keep the financial basis sound.

In conclusion, facing these four challenges (staff excellence; surge readiness; organizational readjustments; and budget efficiency) is a painstaking exercise, indispensable though for managing the complex UNDP organization in a way that will reaffirm the trust of all stakeholders in our collective ability to be effective in our mission.  We count on your understanding and support in this endeavour.