I’m just back from the Doha Financing for Development Conference (about which more later, when I have time). One topic that occupied the negotiators for hours was whether the UN, or another body such as the G-20, should host the next meeting about the financial crisis. (“Thus guaranteeing continued good eating / By showing the need for another meeting.”) I estimated that the Financing for Development meeting cost about $60 million.

I have made myself a personal promise. I do not want to travel around the world telling poor countries what they should do and how they should change. I will concentrate on trying to persuade rich countries to change the policies and behaviours that make it difficult for the world’s poor to share that prosperity.

The Development Set
by Ross Coggins

Excuse me, friends, I must catch my jet
I’m off to join the Development Set;
My bags are packed, and I’ve had all my shots
I have traveller’s checks and pills for the trots!

The Development Set is bright and noble
Our thoughts are deep and our vision global;
Although we move with the better classes
Our thoughts are always with the masses.

In Sheraton Hotels in scattered nations
We damn multi-national corporations;
injustice seems easy to protest
In such seething hotbeds of social rest.

We discuss malnutrition over steaks
And plan hunger talks during coffee breaks.
Whether Asian floods or African drought,
We face each issue with open mouth.

We bring in consultants whose circumlocution
Raises difficulties for every solution –
Thus guaranteeing continued good eating
By showing the need for another meeting.

The language of the Development Set
Stretches the English alphabet;
We use swell words like “epigenetic”
“Micro”, “macro”, and “logarithmetic”

It pleasures us to be esoteric –
It’s so intellectually atmospheric!
And although establishments may be unmoved,
Our vocabularies are much improved.

When the talk gets deep and you’re feeling numb,
You can keep your shame to a minimum:
To show that you, too, are intelligent
Smugly ask, “Is it really development?”

Or say, “That’s fine in practice, but don’t you see:
It doesn’t work out in theory!”
A few may find this incomprehensible,
But most will admire you as deep and sensible.

Development set homes are extremely chic,
Full of carvings, curios, and draped with batik.
Eye-level photographs subtly assure
That your host is at home with the great and the poor.

Enough of these verses - on with the mission!
Our task is as broad as the human condition!
Just pray god the biblical promise is true:
The poor ye shall always have with you.

“Adult Education and Development” September 1976

Figures from the Department for International Development show that over the past five years the UK has handed £1.6 billion to 15 of the world’s poorest countries. But research from campaigning group Transparency International shows that many of these rank highly in its corruption index of 180 countries.

There are several points to make about this:

1. There is no evidence that aid has been subject to corruption
   Transparency International does not claim (pdf) to have found any evidence of corruption in the use of UK aid. The Daily Telegraph report says that that some countries to which the UK gives budget support score poorly on the TI corruption index. But it does not follow that any of that aid is being corrupted and there is no evidence in the TI report that it is.
2. Budget support is no more likely to be subject to corruption than other forms of aid
   A major, multi-donor review of budget support found

   “Corruption is a serious problem in all the study countries, but the country study teams found no clear evidence that budget support funds were, in practice, more affected by corruption than other forms of aid.

   Indeed, the Conservative Party policy review on Globalisation and Global Poverty notes:

   Many oppose Programme Support, and particularly General Budget Support, because of worries about corruption. However, other modes of delivering aid are also prone to corruption.

   The same TI report hightlights extensive corruption in conflict, reconstruction and post-conflict contexts (which are not typically the places to which the UK gives budget support). The report highlights the risk of corruption in tied aid and the risk of bidder collusion in aid tenders (both of which are reduced by budget support).  In other words, in countries in which corruption is high, all aid will be at risk of corruption.  Moving aid from budget support to other forms of aid does not reduce that risk.

3. Giving budget support enables donors to tackle corruption
   Corruption is very bad for a country, especially for the poor.  If donors are serious about corruption, they should be trying to reduce corruption as a whole, and not just protecting their own money. Experience suggests that when donors bypass a country’s budget, procument and auditing processes they are less likely to take an interest in tackling broader corruption. When they are interested, they have no basis on which to get involved, since none of their money is at stake.  If donors want to help to reduce corruption they have to engage with the country’s processes. Budget support not only forces donors to do so, it turns them into legitimate stakeholders in helping to improve those systems.  This engagement helps address corruption in the whole of the government budget, and not just that part financed by foreign aid.
4. Using other forms of aid is a less effective way to reduce corruption
   Again in the same report, Transparency International say that making aid more accountable to donors is less effective at reducing corruption than steps to increase domestic accountability:

   Upward accountability by recipient countries to donors has demonstrated its serious limitations in terms of relevance as well as in its ability to detect corruption. Rather strengthening the accountability of aid toward intended beneficiaries is the most effective way of limiting abuses.

   In other words, Transparency International itself does not believe that replacing aid that is locally accountable with aid that is accountable to donors is a good way to reduce corruption.

5. Budget support improves local accountability and so tackles the broader problem of corruption and financial management
   The Conservative Party policy review observes:

   “if aid is channelled through the government budget and is accompanied by steps to strengthen public financial management, the handling not only of donor funds but of tax revenues is improved. In addition, Budget and Programme Support make it easier for parliaments, the media and electorates to hold government accountable for how aid money alongside tax revenues are spent.”

   Because budget support provides donors with an opportunity to engage in reform of the public finances as a whole, and because it increases rather than reduces local accountability, it is likely that  budget support will result in less corruption in the long run than alternative forms of aid.

6. There is a cost to switching away from budget support
   Switching aid away from budget support to other forms of aid comes at a cost: on balance it reduces the effectiveness of that aid, so reducing the the overall impact on development; and it may reduce the ability of the country concerned to tackle the very problem of corruption that we profess to be concerned about.  The Conservative Party policy review said that:

When donors create parallel structures to deliver aid they can undermine both government ownership of policy and its ability to deliver (by recruiting scarce talent). So where aid can be effectively delivered through government or departmental budgets that is desirable.

In conclusion: donors are right to be concerned about corruption, but there is no reason to think that corruption is reduced, either in aid or in the country as a whole, if donors switch their aid from budget support to other forms of aid. On the other hand there are costs to doing so - in the form of reduced aid effectiveness, which means more people dying, as well as slower progress towards systems that are more accountable and less susceptible to corruption in the future.

So it does not follow that because some countries perform badly on the TI corruption perceptions index, that it is a bad idea to give those countries aid in the form of budget support.  Perhaps that is why the TI report itself explicitly counsels against that kind of reasoning:

Some governments have sought to use corruption scores to determine which countries receive aid and which do not. TI does not encourage the use of the Corruption Perceptions Index (CPI) in this way.

What is at stake with the MDGs is the creation on a global scale of the same sort of public redistribution mechanisms that were progressively established in the world’s richest societies over the course of the twentieth century. As most of today’s financial, environmental, or sanitary crises are unpredictable and ignore borders, it is in everyone’s interest to create a global “social safety net” that will span an indefinite period of time.  If we accept the logic behind the more pragmatic and ambitious philosophy of international aid that underpins the United Nations’ “Millennium Declaration,” we must quickly adapt our instruments to ensure more sustainable and predictable modes of financing.

As I argued the other day,it has become conventional to say that aid is temporary and transformational. There is political resistance to saying that transfers from rich countries to poor will be, and should be, a permanent part of a global society.

Foreign assistance is the modern equivalent of Victorian charity, as documented by Charles Dickens. It is given at the discretion of the rich to causes they consider worthy, surrounded by rhetoric about giving a helping hand.  Over time, it must evolve into a framework for global social justice and solidarity - provided as of right from those that hath, to those who hath not.

Severino’s view, which I agree with, has profound implications for how we conceive of foreign assistance, in terms of how we think about success, how we design activities and, as he says, how we make arrangements to pay for it.

… You’re a bureaucrat. An awful lot of every expat’s job involves paperwork. Most people picture international work as feeding hungry people, providing health care to refugees, or building schools. In reality, it makes no sense to pay an expatriate to do that. Instead, we do what cannot be hired locally: English-language paperwork. We write reports to HQ and donors, proposals, and program guidelines. We write even more reports. We can go days without seeing anybody who is helped by our work.

This is a very acute observation, and it is confirmed by what I see here in Addis every day.

It seems to me that we must de-escalate the amount of paperwork involved in international development.

There has to be some record-keeping to enable us to account to the people whose money we are spending.  But the bureaucracy involved in designing and getting funding for projects, for hiring people, and for monitoring and reporting, has become an industry in itself. 

Akvo is promoting “Really Simple Reporting (RSR)” which is intended to simplify reporting.

The Skoll Foundation is also apparently working on a common reporting format to simplify the paperwork for grantees of US foundations. (I can’t find anything about this project online.)

I think the time has come for all donors - government agencies, international organisations, private foundations, and NGOs - to adopt a common reporting format for their grantees, so that each organisation can provide information about finances and performance in a single report - possibly provided online - on which all their funders can rely. 

The people whose money we are spending - taxpayers and individual givers - don’t want to pay people to fill in forms; and the people who work in development don’t want to do it either.  A common reporting format would also make the information more comparable and useful.

The headline - “A heart rending dispatch from Ethiopia” - seemed promising.  Could it be that the Daily Mail is taking an interest in the challenges being faced by 80 million people here in Ethiopia?   Heaven knows, it would be about time.  About 5 million people here need emergency assistance, and about 75,000 children are suffering with severe acute malnutrition.  Approximately 73% of the female population undergoes female genital mutilation. Only 22% of the population has access to an improved water supply, and only 13% of the population has access to adequate sanitation services (less in rural areas).  Only 46% of girls in Ethiopia go to primary school, and fewer than 25% go to secondary school (these numbers are a huge improvement on the figures only a few years ago).

And the situation today is dire. Less than a year ago, a quintal of teff (a type of grain from which people make injera, a staple food) cost about 350 birr; today it has spiralled to to over 1,100 birr for the same amount, which is about what you need to feed a family for a month.

But none of that worries Liz Jones of the Daily Mail:

What I will remember most about my trip to Ethiopia is the sight of the grain market, held just outside the small town of Hossana - human population 70,000; equine population 91,040.  Mules - half donkey, half horse - are used for the terrible task of carrying grain because they are bigger and stronger than donkeys.

She is in a country in which children are dying of malnutrition and what she will remember most is the mules?

I’ve been vegetarian since I was a teenager,  so I count myself as someone who takes the rights of animals seriously, but I cannot begin to understand how Ms Jones can think that, of all the insults to dignity and humanity facing this country, the plight of donkeys could feature anywhere in the top ten.  But Ms Jones ranks donkeys right up there with Ethiopian children:

I tried to imagine how I would treat a donkey if I had seven mouths to feed, and I hope I would still have a vestige of compassion. But if my children were starving, I cannot be sure that that would be the case. No one can.

I don’t have children or a mule, but I am pretty sure that if I did, I’d put my children first. And I’d be keen to prosecute anyone who took a different view.

Almost every day here, I see women hauling huge loads of firewood on their backs from the outskirts of the city, to bring fuel for their family. A few are lucky enough to have a donkey to bear the load.  Ms Jones of the Daily Mail does not approve:

The owner explains that she has been walking with her donkey since 7am; it is nearly 5pm, and the sun is still beating down relentlessly. I ask why she has not taken the load from her donkey’s back, and she replies that she would not have the strength to lift the sacks back on to her donkey again.  Can she not let the donkey rest? The woman shakes her head. She has to hurry, to be home before 6.30pm, so that she can take part in a religious feast.

Ms Jones suggests you might want to give money to a charity to help the mules (and, almost unbelievably, to “educate owners in better animal care,
preventing problems from reoccurring”).

Alternatively, you might want to give money to a charity to help the people. You can donate to Médecins Sans Frontières (MSF) here, or Save the Children here.

To reduce violence in Colombia and other commodities-rich countries, care has to be taken to recognize how fluctuating prices actually affect the situation on the ground. If lower coffee prices drive poor farmers to desperation, we need to do something to cushion the blow to their incomes. One recent suggestion from University of California, Berkeley, economist Edward Miguel and myself is to shift some amount of international development assistance away from long-term investment and toward short-term emergency aid for countries hard-hit by a collapse in prices of labor-intensive commodities. (Countries would similarly get aid if pummeled by weather shocks like drought.) This aid would kick in as soon as prices headed south, before famine or war broke out. So we’d channel aid to Colombia’s farmers when coffee prices fell (or if the Colombian rain gods failed to nurture their crops). These emergency funds would be scaled back when prices stabilized—as they did in 2001—or the rains returned.

I must say, I’m now a bit confused about whether we think the main problem facing developing countries is rising commodity prices or falling commodity prices. Of course part of the answer is that both rising and falling commodity prices can hit people in poor countries hard (namely different people in different countries), and either way, these are people least able to cushion the effect through savings, insurance, borrowing or changing jobs.

As Fisman and Miguel say in Economic Gangsters, we need a more flexible channel of large scale development assistance which can be deployed quickly to smooth the impact of the financial crisis on developing countries. Preventing the outbreak of conflict or famine will be much cheaper than coping with the consequences, quite aside from the human tragedy that will follow from failure to act quickly.

Core Principles for Modernizing U.S. Foreign Assistance:

• Elevate global development as a national interest priority in actions as well as in rhetoric;
• Align foreign assistance policies, operations, budgets and statutory authorities;
• Rebuild and rationalize organizational structures;
• Commit sufficient and flexible resources with accountability for results; and,
• Partner with others to produce results.

Priority Actions for Modernizing U.S. Foreign Assistance:

• Develop a national strategy for global development;
• Reach a “grand bargain” between the Executive branch and Congress on management authorities and plan, design and enact a new Foreign Assistance Act;
• Streamline the organizational structure and improve organizational capacity by creating a Cabinet-level Department for Global Development, by rebuilding human resource capacity and by strengthening monitoring and evaluation; and,
• Increase funding for and accountability of foreign assistance.

The US is the world’s largest donor, in absolute terms (though not as a share of US income) and it would be a huge step forward if these changes were made by the incoming US administration following the election.

Barack Obama and John McCain have both given commitments to reform of foreign assistance.  There is a risk, however, that this will not be given the priority it deserves following an election, so it is very valuable to have a bipartisan campaign of this kind.

The UK wants donor countries to provide full and detailed information of all the financial assistance provided to each country; details of individual projects and their aims; and reliable information on future aid flows so that developing countries can plan ahead.

This political pressure is a very welcome boost for our work on the need for greater transparency for aid, with strong civil society backing, and the UK Government deserves great credit for pushing it. It

The next stage for us is an intensive period of listening to people in developing countries - parliaments, finance ministries, civil society, the private sector - as well as in donor countries, to understand exactly what information should be published, and how.

And that’s what we’ll be doing for the next couple of years.

The Health Impact Fund, our flagship proposal, is a new way of stimulating research and development of life-saving pharmaceuticals. To provide wide access, medicines need to be affordable-but low prices don’t create strong incentives for innovators to invest in research and development. The Health Impact Fund is an optional mechanism that offers pharmaceutical innovators a supplementary reward based on the health impact of their products, if they agree to sell those products at cost. The proposed Fund is to be financed mainly by governments.

I personally find this idea attractive. It shares a lot of characteristics and thinking with the Advance Market Commitment idea that I have worked on in the past. The main difference is that the AMC leaves patents in place; under the IGH they are signed away. If the pharmaceutical industry is willing to participate, this would be very attractive; my guess is that many firms will find this too challenging to their existing business model.

2. The National Gallery of Scotland wants the tax-payer to buy some paintings from the Duke of Sutherland. Why don’t we apply Nice-style cost-benefit analysis here? Would £100m spent on art really produce £100m worth of increases in quality-adjusted life years (by improving the quality of life, not length of course)? And if we don’t apply such reasoning, why not? Why is the restrictive CBA of Nice only applied to drugs, rather than to all public spending?

Exactly right. And, in particular, why don’t we apply this form of cost-benefit analysis to international development spending?

The wisdom of Buzkashi riders, passed on from generation to generation in Afghanistan, says that ‘when you discover that you are riding a dead horse, the best strategy is to dismount’. However, in the UN and NGO community a range of far more advanced strategies are often employed, such as:

• Changing riders;
• Appointing a committee to study the horse;
• Arranging to visit other countries to see how others ride dead horses;
• Lowering the standards so that dead horses can be included;
• Reclassifying the dead horse as ‘living impaired’;
• Hiring outside contractors to ride the dead horse;
• Harnessing several dead horses together to increase the speed;
• Providing additional funding and/or training to increase the dead horse’s performance;
• Doing a productivity study to see if lighter riders would improve the dead horse’s performance;
• Declaring that as the dead horse does not have to be fed, it is less costly, carries lower overhead, and therefore contributes substantially more to the mission of the organization than do some other horses;
• Rewriting the expected performance requirements for all horses;
• Preparing a workshop with paid attendants on the subject of Experience gaining in riding dead horses in post war setting;
• Preparing a second workshop on environmental hazards caused by horse shit, and the advantage on using dead horses since they do not shit therefore are of no hazard to the environment.

• Untie all aid, including technical assistance, and publish information on which providers get contracts in practice.
• Tell recipients what donors are spending through a concrete set of standards for transparency.
• Make all evaluations public, regardless of their results, by entering them into a prospective registry.
• Pay for outcomes not inputs, by piloting a Cash on Delivery aid contract with interested recipients.
• Let recipients use technical assistance to buy what they need by piloting with interested recipient(s) an arrangement giving recipients full flexibility in what consulting and training to buy, and financing a platform for recipients to give and see each other’s feedback on the services offered by multiple providers.
• Give recipients ironclad predictability of the future aid flows to which they commit by allowing recipients to arrange with an intermediary to receive a guaranteed cash flow, and sign over the donor’s actual flows over some agreed period to the intermediary.

I like these suggestions partly because they are each sensible in themselves. But the main reason I like them is that too much of the discussion about Accra has focused on rather narrow and technocratic measures to address particular items in the Paris Declaration. These ideas from CGD are more far-reaching: proposals such as greater aid transparency (which is what I spend most of my time working on) or on paying for outcomes (instead of micromanaging how money is spent) are ways to change the whole nature of the relationship between donor and recipient in the way that Paris envisages.

My only complaint is that they should have called the paper “a little less conversation”. After all, as Elvis said:

A little less conversation, a little more action please
All this aggravation ain’t satisfactioning me
A little more bite and a little less bark
A little less fight and a little more spark
Close your mouth and open up your heart and baby satisfy me
Satisfy me baby