The Guardian development blog is running a series of end of year reflections on development, including one by me. Many of the articles are upbeat about progress in developing countries, but pessimistic about the short term economic prospects for the industrialised world and for global cooperation to tackle shared global problems.
The series so far includes:
- Duncan Green from Oxfam, who contrasts progress in developing countries over the last year with the gloom of the ‘formerly rich’ countries of the G-8.
- Calestous Juma from Harvard, who identifies regional integration and better links with the diaspora as key drivers of Africa’s growth.
- Shanta Devarajan from the World Bank, who is cautiously optimistic, especially in the light of increased demand by Africans for their governments to be accountable.
- Linda Raftree from Plan, who also emphasizes progress towards more inclusive and open societies.
- Kevin Watkins from Brookings and UNESCO, calling for “a properly financed global fund for education like those that have delivered such striking results in the health sector“.
- Jonathan Glennie from ODI and the Guardian, who is pessimistic about the prospects for international cooperation in the face of rising protectionism and nationalism as a result of poor economic prospects in the US and Europe.
- and my contribution, reproduced below, which gives a positive account of progress in many countries in Africa over the past year, and emphasizes the importance for developing countries of better global decision-making.
Busan was an expression of new geopolitical realities, but despite high level representation, it has done little to shape the future of development cooperation. I think there were perhaps four important outcomes from Busan, in addition to which I noted five other topics of discussion which may prove important in future.
The southern port city of Busan in South Korea was a fitting host for a meeting on aid effectiveness. Busan was the port through which humanitarian aid arrived sixty years ago, to help the people of a country ravaged by war. Korea’s reconstruction and development was financed in part by international aid. Beginning in 1952, American aid alone averaged about $3 billion a year (in today’s prices) and USAID had up to five hundred staff in Korea. Busan is also at one end of the Gyeongbu Expressway, the cornerstone of Korea’s first five year plan and regarded by many Koreans as one of the most important early ingredients the country’s successful industrialization. When the road linking the country’s main population centres with the port was planned 40 years ago, Korean national income was just $142 a person a year. The World Bank and other donors refused to finance the construction, regarding it as an excessively grandiose project for a country so poor. So President Park Chung-hee used a quarter of the nation’s budget, topped up with some reparations from Japan, to pay for it instead. National income quadrupled in the seven years following the construction of the road.
Today Busan is a bustling, prosperous city, home of the fifth largest port in the world; and the Gyeongbu Expressway is scheduled to become part of the Asian Highway, a planned network of routes connecting Korea with Japan, China, Southeast Asia, India, Pakistan, Iran and Turkey.
Korea exemplifies much of what we know about development: the fundamental importance of economic growth and industrialisation; the need for investment in economic infrastructure; the importance of good and effective leaders; the primary role played by the country’s own resources; the additional contribution that aid can make both to improving people’s lives and to investing in development; and the capacity of aid agencies to be wrong, especially in the poverty of their aspirations for developing countries.
Busan delegates wait for Starbucks to open at the conference centre in Busan
So Busan was a suitable place for about 3000 government officials, policy wonks, NGOs and a smattering of private sector representatives to discuss how the aid system could be made more effective. This was the fourth in a series of meetings, which have toured Rome (2003), Paris (2005) and Accra (2008).
I’ve been involved in all this since 2002, motivated by my involvement in a series of studies in Ethiopia, Rwanda and Senegal. Though we represented donor agencies ourselves, our report was outspoken in its criticisms of donor behaviour. We found that “the aspiration of a government-led process for implementing the PRS [poverty reduction strategy], with a nationally led process for monitoring, review and renewal of objectives, has yet to be realised. Instead, donors have continued to focus on their own timetables, their missions, their conditions, and have demanded information to suit their requirements.” Our reports on the experience of developing countries were part of the evidence which led to the Rome Declaration on Harmonisation the following year. Yet despite the best efforts of many good people, the problems we identified ten years ago are, if anything, even worse today.
Since 2003 these summits have grown in size and attracted increasingly senior representation. Among the roughly three thousand people in Busan were Ban Ki-moon, Hillary Clinton, Tony Blair, a brace of Presidents, a Prime Minister, and hundreds of ministers and senior officials. If this group did not have the authority to make progress on improving aid, it was difficult to know who would. Negotiations on the communique began back in July and were concluded with the publication on the last day of the meeting of the “Busan Partnership for Effective Development“.
Now that the dust has settled, and many words have been written, it seems to me that there were four significant outcomes from Busan.
The Bexco Conference Centre in Busan
First, the beginning of a new global partnership. This is the result of Busan which the OECD and traditional donors have been most keen to emphasize. It was not clear right up to the last day whether China, and perhaps other new donors, would be willing to agree to the declaration; and much of the last day was spent refining and agreeing to this key disclaimer which had to be included to persuade China to sign: “The principles, commitments and actions agreed in the outcome document in Busan shall be the reference for South-South partners on a voluntary basis.” With this disclaimer the new donors are not bound to any particular commitments to improve their aid, but it must be a step forward everyone accepts the need of these new donors to be part of the conversation. Note that there was no need to weaken the specific commitments of traditional donors as a price of China’s agreement, since China was never likely to sign up to these commitments anyway. For example, the October draft would have committed all the donors who had signed the Accra Agenda for Action to “untie all aid by 2015″ – this was taken out of the Busan agreement in the final days at the request not of China, who would not have been bound by it, but of the United States.
Second, the new deal for fragile states. A group of 19 fragile and conflict-affected countries, known as the g7+, has been working with donors on how to improve peacebuilding and statebuilding efforts in these situations, beyond the aid effectiveness agenda. The main idea has been to focus on five themes: legitimate politics, justice, security, economic foundations, and revenues and services. The resulting “New Deal for Engagement in Fragile States” was endorsed at Busan. For more information see this article by ODI’s Alasdair McKechnie, and this blog entry by Fernanda Faria at ECDPM.
Third, significant progress on transparency. Since Accra, transparency has shifted from the periphery to the centre of the discourse on aid effectiveness. Secretary of State Hillary Clinton earned a round of spontaneous applause for her announcement that the United States would be signing the International Aid Transparency Initiative, taking the membership of IATI up to 75 percent of global aid. Donors committed to draw up plans within a year, explaining how by 2015 they will publish electronically full details of all current and planned future aid projects in a common, open standard. Stephanie Majerowicz and I have written elsewhere about the contribution that the Open Government Partnership may have made to this progress. It also owes a great deal to leadership by the UK and Sweden, and the World Bank and EU, as well as civil society organisations Publish What You Fund, Development Gateway and aidinfo.
Fourth, significant changes in the international governance of the aid system. This may be one of the most important outcomes of Busan, yet it has so far attracted little comment. The Busan agreement abolishes the Working Party on Aid Effectiveness, which is technically a sub-committee of the OECD DAC but in practice has become a sprawling network of committees and meetings which had come to represent a broader group of stakeholders than the donor club in which it had been incubated. In its place will be a new “Global Partnership for Effective Development Cooperation”, to be supported by the OECD and UNDP. Though it may seem impolite to point this out, this change relegates the DAC back to the role of a caucus of traditional official donors, representing a dwindling proportion of aid, in defiance of its aspirations to lead reforms of the global governance of development cooperation. Even more significantly, Busan turns its back on the requirement of unanimity which has underpinned agreements on the aid system for the last 50 years. The DAC makes decisions by consensus, giving all its members a veto so that it moves only at the speed of the slowest ship in the convoy. But that is not how Busan envisages progress in future. The implementation of Busan will take place through a series of ‘building blocks‘ which are described as “voluntary, practical and actionable game-changers in the global dialogue on aid and development effectiveness.” This model was apparently conceived in in the light of the experience of work on transparency – the issue on which most progress has been made since Accra – which was taken forward by a coalition of the willing in the form of the International Aid Transparency Initiative. Stepping outside the DAC structures enabled a group of donors, foundations and civil society to work together without the constraint of an implicit veto of reluctant partners. Busan marks a shift in the global governance of development cooperation from consensus in the DAC to the ‘variable geometry’ of building blocks. The declaration highlights the ”opportunities presented by diverse approaches to development cooperation”. There are new commitments for all donors on transparency, and the declaration calls for “a selective and relevant set of indicators and targets through which we will monitor progress”. (It is hard to see how these targets will be agreed in the coming months given that no consensus could be reached in the run-up to Busan.) But beyond exposing their behaviour to public scrutiny, there is little else to which donors have specifically committed. This evolution of the architecture for the global governance of development cooperation towards progress by more flexible coalitions of the willing has obvious parallels with the direction in which the global governance of climate change is also moving.
In addition to these four outcomes on which progress was made, I noted five other themes being discussed in Busan which were not translated into significant progress, but which may be issues to watch for the future. These were:
- everyone wants a shift from aid effectiveness to development effectiveness - the importance of this change in perspective was emphasized by many people, especially the delegations from Africa. It is intended to mean focusing more on non-aid policies, and talking more about development outcomes. Everybody said they were in favour of such a shift, but this does not seem to have had much effect on the Busan agreement.
- there is greater recognition of the role civil society. The Accra meeting in 2008 was notable for the involvement of civil society in the meeting. Busan went further by including a civil society representative in the drafting committee, which led to specific recognition (in para 22) of the role that civil society plays in the development process, especially in enabling people to claim their rights and in service delivery.
- everyone is talking about ‘the results agenda’. I actually think there are at least three results agendas, not wholly consistent with each other. My CGD colleagues hosted a side event on results, which in my (not unbiased) view was one of the better discussions in Busan. But overall there was not much progress on results from Busan, other than calling for developing countries to put in place specific results frameworks at country level. I anticipate that one of the most important ‘building blocks’ after Busan will be on how the development system can do a better job of identifying relevant results, and how to avoid the risk that a focus on results leads to misallocation of money, for example away from longer term and institutional changes towards short-term and easy to measure results.
- the notion of mutual accountability is evolving. As Nancy Birdsall pointed out on the CGD blog, there seems to be less focus on ‘mutual accountability’ between donors and developing countries, and more attention to accountability of donors to their taxpayers and of aid-recipient governments to their own citizens in their use of aid.
- there is more talk about the private sector. There were lots of meetings about the private sector and its role in development, but I got the impression that it was mainly discussions between governments, development finance institutions, and some government affairs and corporate social responsibility representatives of firms from industrialised countries. I saw no sign of any businesses from developing countries being part of the discussion. I wonder what anyone really involved in business would have made of Busan.
I’m glad to see more people taking development effectiveness seriously, and impressed that the UN General Secretary and US Secretary of State felt it worth their while to attend. I also agree that it is important to build broader coalitions, and to think strategically about development and not just aid. But I also regret that, as a consequence, these meetings are gradually losing the focus on more technical issues about how aid is delivered. In 2003, the signatories to the Rome Declaration committed themselves to amend their “individual institutions’ and countries’ policies, procedures and practices to facilitate harmonisation”. Yet in 2011 in Busan, the President of Rwanda, Paul Kagame, gave a masterclass in aid effectiveness, in which he observed
Developing countries spend more time and energy agreeing on procedures and accounting to donors and an ever-increasing number of related non-state actors than in actual development work, often responding to endless questioning that no answers can fully satisfy.
As Busan has shifted the discussion away from the nuts and bolts of how aid is delivered, and pushed much of the specific discussion of aid effectiveness to country level, it is not clear to me that there is any place left to address the concerns about donor agency policies which President Kagame so eloquently expressed.
In years to come, I expect that we will look back on the Busan agreement as a reflection of changing realities, including the growing range of different kinds of donors and shifting geopolitical power. I think it less likely that we will look back on Busan as having done much to shape those realities.
Further reading:
Aid Alert: China Officially Joins the Donor Club By Nancy Birdsall (President of CGD), December 5, 2011
Busan HLF4: The will and the way By Brian Atwood (Chair of DAC), December 8, 2011
Busan has been an expression of shifting geopolitical realities By Jonathan Glennie (ODI / Guardian), December 2, 2011
A View from Busan By Andris Piebalgs (EU Development Commissioner), December 5, 2011
Reflections on Busan By Judith Randel (Development Initiatives), December 9, 2011
Beyond Aid to Open Development By Alan Hudson (ONE), December 6, 2011
Moving towards open development By Sanjay Pradhan (World Bank), December 1, 2011
Busan: Yes we could By Patrick Love (OECD), November 30, 2011
An unnoticed but crucial development summit By Manuel Manrique (FRIDE), December 4, 2011
Busan: A Bang or a Whimper? By Alan Hudson (ONE), December 2, 2011
Busan: Why Aid Effectiveness Matters By Jessica Espey (Save the Children), December 1, 2011
Busan Forum: Aid promises come tumbling down By Sanda Van Damm and Jennifer Martin (Oxfam), November 29, 2011
Verdict still out on whether Busan is a good deal for poor countries By Oxfam, December 1, 2011
Two-speed aid effectiveness By Stefan Leiderer & Stephan Klingebiel, December 7, 2011
‘Value for money’ or ‘Results Obsession Disorder’? By Marcus Leroy (ex Belgian Development Cooperation), December 7, 2011
A killing embrace of diversity By Reinier van Hoffen, December 6, 2011
Towards more effective aid By Axel von Trotsenburg (World Bank), December 1, 2011
Written Ministerial Statement: Outcome of the Busan High Level Forum on Aid Effectiveness By Andrew Mitchell (UK Secretary of State), December 7, 2011
Three-way-learning. The South-South Agenda in Busan, By Han Fretters (World Bank), December 1, 2011
Aid architecture debate surfaces new ideas, appetite for dialogue By Axel van Trotsenburg (World Bank), December 2, 2011
This joint post with Stephanie Majerowicz first appeared on the Views from the Center blog at the Center for Global Development
“The defining division these days is increasingly: open or closed? Are we open to the changing world? Or do we see its menace, but not its possibilities?”
—Tony Blair, A Global Alliance for Global Values, September 2006
It is easy to be cynical about international summits and their carefully drafted communiqués. But they sometimes matter more than people expect. (If they didn’t, why would government officials put so much time and effort into negotiating the text?) Even if the text is often a bland compromise, these meetings can help to move an issue forward, by locking in a new consensus which forms the platform for further progress.
We saw how this works at this week’s High Level Forum on development effectiveness in Busan, South Korea. In a speech notable for a thinly veiled warning about aid from China, Secretary Clinton made the welcome announcement that the US would join the International Aid Transparency Initiative, which entails the publication of the details of all US aid projects. This decision has given a major impetus to the international movement for aid transparency, which has been one of the important outcomes of the Busan meeting. According to US administration insiders, this decision was in part a consequence of an earlier international initiative, which has not had as much attention as it deserves: the Open Government Partnership (OGP).
The OGP is an effort to create a club of nations committed to good governance and transparency. It was launched a few months ago in New York, at a side-event of the UN meetings, by 26 heads of state, the culmination of months of work by the White House and eight partner governments.
David Eaves (an open government enthusiast from Canada) sees the Open Government Partnership as more than just another meeting. The OGP, he says:
…is much more than a simple pact designed to make heads of state look good. I believe it has real geopolitical aims and may be the first overt, ideological salvo in the what I believe will be the geopolitical axis of Open versus Closed. This is about finding ways to compete for the hearts and minds of the world in a way that China, Russia, Iran and others simpley cannot.
The Economist blog is less convinced: in their view “this is really nothing new or major” especially because the partnership includes “such beacons of openness as Russia and Pakistan.”
We’ve warmed to the Open Government Partnership after some initial skepticism. The architects never had the grandiose ambitions that David Eaves suggests: rather they wanted to do something which might encourage small, tangible improvements in the way governments promote transparency and good governance. The idea is to provide a network of support to reformers across the world pushing for open government, to enable them to share ideas and lessons, and to strengthen their hand by demonstrating to sceptics that they are part of a broader international movement. It brings government’s domestic achievements to the international spotlight to encourage reforms and reformers. By that modest yardstick, the initiative is a step in the right direction.
Why were we skeptical at first? Partly for the reasons set out by the Economist: the standards for joining the OGP (and the implicit endorsement that it confers) are not very exacting. What kind of transparency club has Russia and Azerbaijan as members? More importantly, we felt that an international initiative would have most value if it focused on transparency of cross border flows such as payments by companies for minerals, cross-border transactions between multinational companies and their subsidiaries, aid transparency, and cooperation between tax authorities. It is in tackling transnational problems that an international coalition makes most sense. But there was little political appetite for starting with these difficult international problems, and the OGP has focused mainly on encouraging its members to implement policies which promote transparency domestically.
But although the OGP has not focused on improving the transparency of international flows, there are already signs of how it can work to put pressure on its members to be more open. It has apparently contributed to the announcement this week that the US would join the International Aid Transparency Initiative, bringing the US into line with other OGP members. Furthermore there is now a debate bubbling up in the UK about the Extractive Industries Transparency Initiative which requires governments publicly to disclose their revenues from oil, gas, and mining assets, and for companies to disclose the payments they make. President Obama announced at the launch of the OGP that the US would itself become a member of the EITI. As a result, the UK is now under pressure to follow suit. Although the UK was a supporter of EITI from its inception, it has never joined itself (partly because of opposition from the Business Department): a position which will be more difficult to sustain if and when the US fulfills President Obama’s commitment to join. That is exactly the kind of international peer pressure which OGP is designed to generate.
So the OGP is, to misquote Churchill, a modest initiative with much to be modest about. It was not conceived as the opening salvo of a new battle, but as a small step to encourage and support those countries round the world who want to move towards greater openness and transparency. There are some welcome signs that it is already making a difference. It may eventually lose momentum, especially as the politicians who put it together move on, and it may become too diluted by the undemanding criteria for membership. We hope not.
This blog post first appeared on the aidinfo site.
More than two thousand delegates have gathered today in Busan, South Korea, for the fourth installment of a succession of meetings aimed at making aid more effective.
There has been significant progress since the meeting in Accra in 2008 towards improving transparency of aid. This is important because it’s a pre-requisite for achieving all the aid effectiveness principles. Jamie Drummond from the ONE campaign explains this very well in the Huffington Post.
The challenge is to provide information to people at country level. Our existing aid information systems are mainly designed to enable donors to share information with each other, not to meet the needs of people in developing countries.
But the information needs at country level are hugely diverse, both between and within developing countries. Within governments, the information needs of the finance ministry are different from the needs of line ministries. The needs of parliamentarians, civil society, media and citizens are all different again. It is impractical for donors to try to meet the needs of every niche interest with their own subset of the data in a particular format.
뜻이 있는 곳에 길이 있다 (where there’s a will there’s a way)
Here’s the technical bit: the way to serve all these different needs for information without massive duplication and bureaucracy is to separate the data from the interface. An open, standardised, detailed, shared data layer can support a whole range of different applications, tailored to specific users.
That is why it is so exciting that the open data revolution is coming to aid. In 2008, in a side-meeting in Accra, a coalition of willing donors, developing countries, foundations and NGOs made a declaration which launched the International Aid Transparency Initiative. A lot of that data is now being published – countries accounting for nearly half of global aid are now publishing through IATI, and that proportion will grow in the coming months.
If you are in Busan this week, and you want to know how IATI works, the IATI secretariat will be doing a briefing at 5pm on Wednesday, in room KW202 (I’m making a guest appearance to show off some beta software, so do come along and laugh at me when it doesn’t work).
천릿길은 한 걸음부터 (A 1000-li journey starts with one step)
Transparency by itself does not lead to more accountability, less waste, or better coordination. That happens when people are able to use the information. The extent to which they are able to do so depends on their context, including the political and administrative climate. Open data won’t automatically make organisations responsive, but will greatly reduce the difficulty and cost for citizens of taking the data and turning it into something meaningful and useful.
With an open aid data platform now in place, huge opportunities are being opened. We can use the standard to introduce traceability of aid as it passes from organisation to organisation. We can improve the quality and detail of the data that is collected and publish it through these systems.
Reporting of aid data should be not just by donors but by NGOs, private sector implementing agencies and foundations. The mechanisms for sharing information can be extended beyond aid to other kinds of resources for poverty reduction. We can add detailed geo-coding, to enable aid projects and programmes to be mapped, and better coordinated. We can begin to compare across aid programmes and across countries. We can mix aid information with other data from other sources.
The twenty four donors who have signed IATI should be congratulated for their efforts to make data available. The payoff from that effort will come when we all start to use the data to understand aid better: to see what is working and what is not, and to hold the aid system to account, so leading to improvements in the effectiveness of aid. IATI removes the most significant barriers to entry for a wide range of diverse applications.
The next step is to nurture and encourage an ecosystem of civil society groups, parliamentarians, researchers, think tanks, academics, governments, private sector organisation, media and hackers, all accessing and using the information in different ways, and using this as a platform to push for improvements in how resources for poverty reduction are used. The new Open Aid Partnership is an example of an initiative of this kind: the door is now open for many more.
We can now look forward to the day when we take for granted the ubiquitous availability of aid data. We will soon forget that it was ever a struggle to find out about aid projects in a developing country, or to follow the money through NGOs and implementing partners. Having laid these important foundations, we will be able to move on to much more important and exciting innovations which support people in developing countries to use and repurpose this information and use it to change their world.
Will the largest aid donors hide behind China to excuse their inability to make substantial improvements in foreign aid? How can Busan balance the desire to be more universal with the pressing need for real changes in the way aid is given?
Much of the development policy world converges on Busan this week for the High Level Forum on Aid Effectiveness. This is the fourth in the series after Rome (2003), Paris (2005) and Accra (2008). The Guardian has a good ‘explainer’ about the issues being discussed.
Behind the scenes here in Busan, the trade-off is between getting everybody on board, including new providers of south-south cooperation such as China, India and Brazil, and pushing the boundaries towards more effective aid from existing donors.
Liberian children hold Chinese flags before the arrival of China's President Hu Jintao
Busan offers the possibility of a globally inclusive agreement, especially bringing in the important providers of south-south cooperation such as China and India, and non-traditional donors such as foundations and the private sector. But a broad consensus may only be possible if the text is sufficiently watered down. New donors are unlikely to sign up to an agreement which seeks faster improvements in development assistance by setting more explicit and demanding targets than were agreed in Paris and Accra. Most would not be willing to sign up even to long-established effectiveness principles such as untying aid, more predictability, and greater transparency and accountability. Nor are they likely to agree to be bound by any kind of monitoring or enforcement regime.
Many of the organisations involved in Busan have a strong institutional interest in emphasizing the benefits of a ‘big tent’ agreement:
- Individual DAC donors will be glad to talk up the importance of drawing new players into the process. They can trumpet this as a big step forward, especially to domestic audiences which feel threatened by China’s growing global role. They can pretend to be disappointed that it has required them to accept a rather bland communique which steps back from their existing commitments, while being privately relieved to have been let them off the hook for the improvements in aid to which they have agreed in the past and which they have shown themselves unwilling to make.
- A dialogue with new donors could give a new raison d’être to the DAC, an OECD body which is otherwise staring into the abyss of obsolescence. The DAC is a club of traditional government donors which constitute a dwindling proportion of global aid; nobody any more believes that an exclusive group of donors should set the rules of the aid system; and anyway DAC members themselves have failed to implement the principles they have agreed. It is not lost on the 150 staff of the DAC that hosting a dialogue between traditional and emerging donors could give the DAC a new lease of life.
- The Korean hosts will be looking ahead to how the Busan conference will be remembered. Building the bridge to new Asian donors would be a natural legacy. Korea has itself only recently joined the DAC and they would be very glad to shift the discussion away from compliance with a (largely European inspired) aid effectiveness agenda towards the value of a broader dialogue with emerging donors and the private sector.
- China would be happy to have a declaration which validates their approach to development cooperation, but they do not regard this as important. They are apparently sending a small, low-key, delegation of about six people to Busan, and it is rumoured that they will either not sign the outcome document at all, or that they will sign as a developing country but not as a donor. China believes that different rules should apply to ‘south south cooperation’, so in principle they do not regard any of this discussion as applicable to the aid they give. In any case, China gives very little actual aid (as defined by the DAC) – probably less in total than Switzerland. The vast majority of China’s involvement in developing countries takes the form of quasi-commercial trade credits which are not included within the scope of these aid effectiveness discussions.
Given these strong institutional interests which favour getting China on board, it is no surprise that the latest (5th) draft of the Busan Outcome Document is a largely anodyne document with few additional commitments by donors. The UK Aid Network has a concise update about this here. Unless this changes in the next few days, Busan will be remembered as the conference at which traditional donors retreated from the explicit, time-bound commitments and monitoring arrangements which they agreed in Paris in 2005.
There is one group of stakeholders with something to lose from this: the people of developing countries who are the intended beneficiaries of aid, whose voice is not strongly heard in the discussions. They are the people who lose out when aid is wasted because it is unpredictable, untransparent and unaccountable. It is their services, not the aid bureaucracies, which suffer when there is duplication and burgeoning bureaucracy. It is their businesses which are damaged by tied aid. It is their governments which become answerable not to their citizens but to an unaccountable group of donors. A decision to accept a weaker, more universal agreement in Busan will satisfy the donors, but the poorest, most vulnerable people in the world will pay the price.
As Gideon Rabinowitz of the UK Aid Network pointed out last week, the Accra communique was similarly disappointing at a similar stage before the 2008 conference. That time round, a group of European development ministers arrived in Accra and insisted on significant improvements, causing outrage among other participants, not least the bureaucrats who had sat through endless drafting meetings over the preceding months only to find their work had been nugatory. But this year, those donors seem to be much less inclined to use any of their economic or political capital pushing for improvements in aid. So it will suit them to emphasize the importance of a new agreement which includes China, and hide behind this as an excuse for their own inability to summon the political will to make aid more effective.
There is, however, another approach which could both and secure broad international agreement and still lead to substantive improvements in aid effectiveness. We should learn from what has happened since the Accra High Level Forum in 2008, in particular on transparency which is the issue on which there has been most progress. Donors accounting for half of global aid are now publishing their aid data through the new International Aid Transparency Initiative, IATI. But this has not been achieved by the official DAC processes which are limited to moving at the speed of the slowest ship in the convoy. Instead, a coalition of willing donors has worked alongside the official process to agree and implement an international aid transparency standard.
There is a lesson here as we consider how to move forward from Busan. A possible approach is to accept an outcome document setting out principles which represent the ‘highest common factor’ among all the participants, which is buttressed by (and which could endorse and launch) various coalitions which are willing to move forward more quickly on particular issues (e.g. predictability, using country systems, and so on). These coalitions can then be pathfinders, leading by example and exerting peer pressure on other donors. Taxpayers in donor countries can put pressure on their governments to join these coalitions, so that their aid also benefits from the improvements which the coalitions are bringing about (in the way, for example, that the Canadian NGO Engineers Without Borders has put pressure on the Canadian government to join IATI.) There is more hope of achieving real progress through a series of path-finding coalitions than by investing all our energy in a universal agreement which is acceptable to everyone and satisfies nobody.
In two weeks there will be a huge international meeting on aid effectiveness in Busan, South Korea. Ban Ki-moon and Hillary Clinton will be among the two thousand delegates who gather together to discuss improvements in how aid is delivered. Though David Cameron and Barack Obama said (in a joint statement) that they would ensure that Busan “transforms the way bilateral aid is delivered around the world”, it looks increasingly as if the meeting will, as Simon Maxwell notes on his blog, produce “a bark but no bite.” Though it is full of worthy intent, there is little in the latest (fourth) draft of the Busan Outcome Document which suggests that it will result in more changes in donor behaviour than did the communiques from previous summits in Rome (2003), Paris (2005) and Accra (2008).
Two key pieces of background evidence have just been published which provide the backdrop to the discussions in Busan. First, the Broookings Institution and my colleagues at the Center for Global Development have published an updated Quality of Official Development Assistance index (QuODA), which scores donors on the effectiveness of their aid. Second, Publish What You Fund has published an Aid Transparency Index ranking donors according to how much information they make available about the aid they give.
CGD and Brookings Quality of Aid Index (QuODA)
QuODA is an assessment of the quality of aid provided by 23 donor countries and more than 100 aid agencies. It uses 31 indicators grouped in four dimensions that reflect the international consensus of what constitutes high-quality aid:
- Maximizing Efficiency
- Fostering Institutions
- Reducing Burden
- Transparency and Learning
QuODA itself does not provide an overall ranking of donors. The reason is that your view about the overall effectiveness of a donor will depend on how much weight you place on each indicator. But for what it is worth, here is how the ranking of donors looks if you give equal weight to each of the four QuODA dimensions:
Donors may quibble about which of the indicators are important, though all the indicators reflect solid academic research and experience about what makes aid effective, embedded in the international consensus about aid effectiveness to which they have signed up. For anyone wanting to focus on particular indicator and dimensions of effectiveness, the data are published online in an interactive web tool.
My two observations about this are:
- almost every donor has something to be proud of (nearly every donor is in the top half in at least one dimension) but all donors have considerable room for improvement;
- the multilateral agencies do better, on the whole, than the bilateral agencies; this may be because they are less susceptible to pressures from national donor politics; the World Bank, in particular, scores extremely well across the board
The Publish What You Fund Pilot Aid Transparency Index
The PWYF Aid Transparency Index, published today, dives deeper into whether donors publish adequate information about the aid they give. They analyze 58 organisations on 37 dimensions of transparency, mainly relating to whether information is available about particular projects and activities.
The World Bank tops the transparency index too. Indeed, there appears to be a strong correlation between aid transparency and aid effectiveness more generally. The chart below plots the PWYF transparency scores against the average of the three dimensions of QuODA which do not relate to transparency.
This correlation between aid effectiveness and transparency could come about for three reasons:
a. common causes: well-governed and well-managed aid agencies are likely to be both more effective and more transparent;
b. effectiveness causes transparency: aid agencies that are ineffective and know it are likely to want to be secretive; agencies that are effective are likely to want to tell the world more about what they do;
c. transparency causes effectiveness: agencies that are open and transparent are less likely to make decisions to use aid ineffectively because they will be held to account by politicians and the public.
Conclusions
The good news from both the QuODA index of aid quality and the PWYF Aid Transparency index is that it is possible for donors to live up to the goals they have set themselves to make aid more effective and more transparent. Most donors do well on some indicators, and yet are a long way behind the best on others. The bad news is that there is a long way to go before donors overall live up to the pledges they have given.
Time will tell whether yet another conference, and yet another communique, will make any more difference to donor behaviour than have the last three. However, there does now seem to be welcome momentum towards putting more information about aid into the public domain, and we may hope that this will, over time, provide both the information and political pressure needed to make aid more effective. If Busan succeeds in giving a big push to aid transparency, that may be the biggest contribution it can make towards the ambitious goal of ‘transforming’ aid.
Here is a useful graphic from the International Aid Transparency Initiative about which donors are implementing it, and when.
This post first appeared on the CGD Rethinking US Foreign Assistance blog.
Information, not coordination, is the key to aid effectiveness. Some donors such as USAID are becoming interested in a more decentralized ‘Google Maps’ approach to aid coordination, to facilitate well-informed decisions by people on the ground. For this to work, donors need to do two things: publish more detailed project level information, and do so in an open, reusable, internationally consistent data format. Transparency aimed at a domestic audience is not sufficient.
We now know that the development system has met just one of the 13 targets it set in 2005 for making aid more effective. That is not surprising: the problems diagnosed in the Paris Declaration are real and important, but the solutions that have been pursued in its name have not been practical. There are better ways to achieve the aid effectiveness which the Paris Declaration envisages.
Here is an example of the problem, from Indonesia after the 2004 tsunami:
“Last February in Riga [close to Calang in Indonesia], we had a case of measles. The epidemiologists from Banda Aceh gathered, fearing that the measles would spread among displaced people, but the girl was cured in two days. Eventually we discovered that this child had been vaccinated three times by different organizations, each without a vaccination card or any type of control. The symptoms were the result of these measles vaccines”.
Informal translation of an article in El Pais (April 13, 2005)
This is a graphic example of a widespread problem in development and humanitarian aid: a coordination failure leading to a substantial waste of money.
Following Paris, a conventional wisdom has grown up on how this kind of problem should be tackled. The regional health department should call a big meeting of all the donors and NGOs who might be interesting in running an immunization programme. They should share information with each other about their plans: which vaccines they intended to administer, and where. Under the leadership of the ministry, the donors should agree a division of labour to eliminate overlaps and ensure that aid is used efficiently.
Similar committees would have met to plan and coordinate every other kind of intervention to avoid overlap and make the best use of limited resources.
You don’t have to have a degree in Political Science to be able to see why this committee approach does not work. A country director for a large government aid agency recently told me that he spent more than half his time in donor coordination meetings. Most of each meeting is taken up by donors listing what they are doing. (Not surprisingly, he has now quit.)
So what is the alternative?
Once an aid agency has been licensed by the health ministry to provide vaccinations, it could simply publish online, in an accessible format, details of its plans and activities. Another organization planning its own programme could then easily check how they can best fit with what other agencies are doing. With open information sharing, no child would be vaccinated against the same disease twice; and under-reached populations could be easily identified and served.
This is an example of an important general point about improving aid effectiveness. Aid staff on the ground should not be stuck in endless coordination meetings: they should have the information they need to make good decisions about how to have the biggest impact, within a regulatory framework established by government, without being constrained by inappropriate rules and incentives imposed on them from far away.
A Google Maps approach to development?
There is growing interest in a ‘Google Maps’ approach to development coordination. We have seen welcome moves towards mapping of aid projects, for example by the World Bank, USAID, and Canadian CIDA. But as the example of vaccination in Banda Aceh illustrates, the key to making this information useful is that sufficiently detailed data from many different organisations is available in one place.
Some of the momentum towards greater aid transparency is driven by the need for increased accountability to taxpayers in donor countries. This is a laudable goal, but if data publication is targeted on this purpose alone it misses even bigger potential benefits from transparency. The US Government is making gradual progress on its Foreign Assistance Dashboard and a geographical coding system: but on current plans the data will not contain enough substantive detail. It will record information which is good enough to get a broad sense of where aid is being spent (‘top level administrative region’) but will not record specific locations (‘street corner’). This approach may be enough to meet the needs of a US accountability agenda, but it will miss the opportunity to use robust project level data and geo-coding to track and coordinate aid, to close down the space for corruption and waste, and to link feedback from project beneficiaries to specific aid funders.
It is also important that aid information is published in a reusable open data format, which has been agreed by a large group of donors in the IATI standard. Several donors – including the World Bank, the European Union, DFID, Australia and the Netherlands – are now publishing their data this way. Other donors have plans to do so. While it is welcome that Canada is publishing more detail about its aid projects, as the website makes clear the target audience for this information is “all Canadians”. The information published by CIDA is of almost no use to people in developing countries because it is not published in a form which is compatible with data from other all the other donors. Open data – in the sense of being genuinely accessible and comparable – enables civil society, parliamentarians and citizens of developing countries to be part of the coordination and accountability from which they are presently excluded.
In contrast to Canada, the United States has said it will ‘cross-walk’ its aid data to the IATI standard, which is extremely welcome. But so far they have not done so. While the implementation of a Foreign Assistance Dashboard is an important step towards domestic US accountability, all this data will only be of use internationally to make aid more effective and accountable when it is also published according to the international data standard.
Of course, USAID and State Department have limited resources and should be spending their money as much as possible on aid rather than administration. But as the World Bank has found out with its Mapping for Results project, it is not tremendously complicated or expensive to geo-code aid projects – and it will be even easier if that is done at the outset by front line staff who have detailed knowledge of the projects, rather than retrofitted afterwards in Washington. Nor has it proved difficult or expensive to organize data into the IATI format: I am told it took UNOPS just four weeks to implement IATI, from start to finish. There are many other donors, and organisations such as the Development Gateway, AidData and aidinfo, who have experience in geo-coding projects and publishing information in IATI format, who would be glad to help to design procedures, set up systems, and even to share their computer code. Furthermore, the administrative savings from reducing duplication by publishing open data are estimated rapidly to outpace these modest implementation costs. This is not primarily a question of money, but of leadership, recognition of the value of transparency which serves international as well as domestic audiences, and a willingness to reach out to work with others.
We can – and must – make aid more effective. This means making sure that decisions on the ground are likely to yield the biggest possible impact, and for that we need not more coordination meetings but better information, greater decentralization, simplified systems, fewer perverse incentives and more accountability.
If you have comments please put them on the CGD website.
This joint post with David Roodman first appeared on the Guardian Poverty Matters blog.
Does Britain’s remarkable political consensus supporting foreign aid obscure a more ambiguous overall footprint in the developing world?Though by no means unanimous, Britain’s cross-party agreement to protect the aid programme from budget cuts is admirable. It reflects an understanding that it is ultimately in the national interest to support development, as well as being the right thing to do.
But there is more to helping poor nations to develop than giving aid. Rich and poor nations are linked in many ways: through trade and investment flows, migration, the environment, military affairs and technology. Governments influence all these channels, for good and ill. They subsidise their own agriculture, undercutting poor farmers overseas. They send peacekeepers to nations that are healing after civil war. They tax petrol, slowing global warming. They promote technological change, but limit its spread through patents.
Poor countries do not want to depend on aid: they want the opportunity to trade and grow and play their full part in the world economy. Their ability to do so depends in part on how the rich and powerful behave. That’s why the Centre for Global Development produces the annual Commitment to Development Index (CDI) to assess rich nations on their overall impact on the developing world.
Interactive: the Commitment to Development Index
In the latest index, published on Tuesday, Britain ranks 12th out of 22 countries. As you would expect, Britain scores well on foreign aid (ranking 8th). British aid is respectable for both its quantity, now at 0.51% of national income, and for its quality — the Department for International Development (DfID) tends to avoid parcelling aid out in penny packets, which impose an administrative burden on understaffed recipient governments.
Britain’s place in the CDI, however, is hurt by weaknesses elsewhere. Along with France and the US, it is a major exporter of weapons to undemocratic nations such as Saudi Arabia, which this year deployed its military to put down pro-democracy protesters in Bahrain. That’s why the UK ranks 19th out of 22 on security.
Once again the Nordic countries and the Netherlands come top of the league. Generosity with aid plays a part, but so do progressive policies on the environment (especially, limiting greenhouse gas emissions) and migration (welcoming legal immigrants from developing countries). Japan and South Korea are the least development-friendly, with high barriers to goods and workers from poorer nations and low contributions to foreign aid and peacekeeping operations.
Given the Blair government’s high-profile commitment to Africa, it is interesting to ask whether Britain does well by that continent. In fact it does, which one can see by selecting “sub-Saharan Africa” in the interactive. Doing so zeros in on aid to Africa, barriers to African imports, secondments of troops to peacekeeping in Africa, and so on. The UK comes fourth, behind only Ireland, Portugal and Sweden.
As you can sense, we have packed a lot into the CDI. The interactive lets you explore the details. The index is based on publically available data, and on the Centre for Global Development site you can find all our calculations so you can see how the scores are produced. You can also browse through performance reports for each country, and background papers. For the technically savvy, there are online spreadsheets and databases.
The Centre for Global Development has worked hard to improve the CDI. But it is not an infallible measure of development impact and intent. You can argue about almost every indicator. Are big aid projects always better? What if carbon emissions fall for reasons that have nothing to do with government policy? And should it include economic policies, such as bank regulation and interest rate settings, which also have huge effects overseas?
We welcome such discussion. For us, the real goal is not an infallible index, but more awareness of, and readiness to improve, the full range of policies that affect the lives of the global poor. Aid alone is not the way to measure our footprint in the developing world. The CDI shows that every country can improve on many fronts.
David Roodman is a senior fellow at the Centre for Global Development and the architect of the Commitment to Development Index. Owen Barder is a senior fellow and the Europe director of the Centre for Global Development
There was an interesting programme on BBC Radio 4 on Monday night, Analysis, which looked at the following question:
The government is committed to protecting the aid budget. Frances Cairncross asks whether a more relaxed policy on economic migration might help the developing world more.
I was interviewed for the programme, and there were three points I wanted to make, which I didn’t entirely get across. So here they are:
a. It is too narrow to think of the benefits of migration mainly in terms of remittances. The benefits are much broader than that. Michael Clemens used an excellent analogy in a CGD podcast: it is as if we were determined to talk about the impact of the increase in women’s participation in the workforce by the money that they contribute to the housekeeping.
b. We should think about the impact of migration more in terms of the impact on people and less in terms of the impact on countries. In particular, there is a substantial benefit to the migrants themselves which should be at the front of our minds. (I sort of managed to make this point in the clip they used of me in the programme); and
c. there is not a trade-off between providing aid and supporting people from developing countries who want to live and work abroad: we can do both.
The programme will be broadcast again on Radio 4 on Sunday night at 21h30. You can also download the programme from the BBC website. (Mirrored here.) Here is the transcript.
This joint post with Rita Perakis first appeared on the CGD blog.
Has the aid industry introduced the reforms it agreed in 2005 to make aid more effective? No, according to the survey published last week by the OECD DAC. In this blog post we reflect on why this matters, and what it means for the forthcoming summit in Busan.
The development sector is in a mess. Developing countries have to deal with a large and growing number of partners, each with separate agendas, priorities, and requirements. Meetings, reports, milestones and systems multiply. Skilled staff are hired away from governments and from business to serve in local agency offices or NGOs. Funding is fragmented and unpredictable, which means that developing countries are often unable to bring together the scale of long-term, predictable finance needed to undertake significant institutional reform and service delivery. As just one example – in Vietnam, it took 18 months and the involvement of 150 government workers to purchase just five vehicles for a donor-funded project, because of differences in procurement policies among aid agencies.
None of this is news, nor is it disputed. The donor club of industrialised countries, the DAC, says:
“poor co-ordination and unpredictable aid waste funds that should be eradicating poverty in the world’s poorest countries.”
Six years ago developed and developing countries committed themselves to fixing these problems. The Paris Declaration on aid effectiveness set out five principles to make aid more effective, and a set of thirteen measurable targets which they aimed to reach by 2010.
Last Thursday, the Development Assistance Committee of the OCED (the DAC) published the results of the monitoring survey. The DAC is not known for hard-hitting criticism of its members. But even this mild-mannered organisation feels compelled to call the results ‘sobering’.
Of thirteen measured targets to improve the effectiveness of aid, just one has been met. What was this one milestone which donors were able to reach? They lived up to their commitment to talk more to each other (“Strengthen capacity by coordinated support”).
The DAC reports that the areas of progress have been largely on the part of developing countries. These include putting in place sound national development strategies and results frameworks, and improvements in public financial management systems. According to the report, the areas of little or no progress are overwhelmingly on the part of donors: aid is still not on recipient countries’ budgets, is no more predictable, and is becoming increasingly fragmented.
When developing countries fall short of targets set for them by donors, we say they are ‘off track’ and start to talk about cutting off their aid. What happens when donors fall short of targets they have set themselves?
The DAC points out that although the overall results are disappointing, some good progress has been made in some places. That’s true, and it is interesting that there is no obvious pattern. For example, though Tanzania is highly aid dependent, it appears to have been effective at imposing more discipline on donors. Some of the results suggest that the survey leaves too much room for interpretation: for example, Japan’s relatively strong performance against the Paris indicators is difficult to reconcile with perceptions on the ground.
The Paris indicators are not a direct measure of aid effectiveness. They are measures of progress towards goals which are thought by the Paris signatories to be associated with better aid. But that connection is tenuous: for example, though Tanzania has done well at pushing donors to comply with the Paris principles, nobody seems to think that aid in Tanzania now delivers more bang for the buck than aid elsewhere (rather the opposite, if anything).
It should be no surprise that progress towards the Paris principles has been slow. The aid system represents a compromise between the interests of donors and recipients, mediated by organisations and agencies with interests of their own. For example, donors have not been willing to make aid more predictable. That’s because there is political value to them in being able to dispense or withhold aid according to the latest fad or political pressure, and aid implementing agencies enjoy having the power of day-to-day control. Though retaining this discretion is estimated to reduce the overall value of aid by 15-20 percent, the political and institutional benefits to donors apparently outweigh the disadvantages of supplying less effective aid – perhaps because the people who suffer from ineffective aid don’t have votes in donor countries. Making an international commitment to fix this could help a little, because it adds very slightly to the political cost of lack of predictability. But the political cost of failing to meet this commitment is evidently too small to make a difference to the political calculation. That’s what we see in the monitoring survey: the proportion of aid that is classified as predictable has risen from 42% in 2005 to – drum roll – 43% in 2010: some way short of the target of 71% by 2010.
Can the forthcoming summit in Busan in November change this? It is hard to see how yet another conference with yet another communiqué will change these underlying political dynamics. The latest news is that Ban Ki Moon and Hillary Clinton are both planning to attend. Does the political weight of a communiqué increase in proportion to the size of the motorcades at the summit?
The political constraints which lead to ineffective aid are genuinely difficult to overcome. This should be ‘sobering’ to donors as a measure of their inability to fix long-standing and well-documented problems. But it should also be ‘sobering’ to those same donors who travel around the world pressing developing countries to implement reforms in the face of much more substantial political constraints. If donors cannot implement something as simple and uncontroversial as coordinated country missions or common procurement rules, why do they expect developing countries to be able to implement changes in land tenure or public enterprise reform?
We should give credit to the DAC for getting an agreement to reform, putting in place a monitoring system, recording the progress that has taken place, and stimulating the debate about aid effectiveness. But it is neither desirable nor sustainable that the donor club should be responsible for tracking the donors’ performance against their commitments. A more independent watchdog would surely have reported donors’ failure to meet 12 out of 13 targets with a greater sense of outrage.
Finally, all this is becoming increasingly anachronistic. The Paris principles are most obviously relevant to countries that are low income and stable. But there are now just thirteen of those: most of the world’s poor now live in middle income countries and fragile states. The DAC represents the donors who are members of the OECD, but does not include China and other emerging powers, foundations, private giving and NGOs, many of whom do not share the DAC’s view about what makes aid effective. The challenge for Busan is to define the role of aid in helping to build a sustainable, resilient and inclusive global economy.
Here is my talk at the Power of Information Conference about open aid data.
On Friday the World Bank London office had a meeting on ‘the Future of Aid’. The meeting was, according to the tortuous language of the invitation, “conducted in an informal manner with interested stakeholders from governments, civil society, private sector, media and academia with a view to explore new ideas on how best to explore cooperation between European actors and the World Bank Group in addressing these challenges.”
Annoyingly the meeting was held under The Chatham House Rule which means I am not allowed to report who said what. (Tangential thought: I am considering ignoring this in future if the invitation does not make it clear that this is the basis on which the meeting is being held.) I am allowed to tell you that the group included people from ODI (Simon Maxwell & Andrew Rogerson), a co-author of Philanthrocapitalism (Mike Green), DFID (Paul Healy Healey & Laura Kelly), the EBRD (Erik Berglöf, Gaspard Koenig & Hans Peter Lankes), and representatives from KPMG (John Burton), ActionAid (Lucia Fry), Save the Children UK (Jessica Espey & Kate Dooley) and BOND (Joanna Rey).
It turned out to be an interesting discussion.
First, there was considerable pessimism about the public’s appetite for aid. Opinion polls depend heavily on how you ask the question, but a common theme seems to be that the public’s concern for poverty and development is stable and quite high; while the public’s confidence in government aid is falling rapidly. There are several reasons why these may be diverging, which are not mutually exclusive. Declining support for aid spending may be the effect of the economic downturn; it may reflect a trend towards public distrust of bureaucracies; it may be the long term consequence of aid’s failure to live up to its supporters’ excessively grandiose claims of what it can achieve. There was some debate about whether a greater focus on ‘results’ could reverse this. Hardly anyone seriously argued that declining public support is merely a temporary consequence of the economic downturn which will reverse automatically when incomes start to grow again.
A second interesting theme was the tension between more effective aid, and aid which donors are willing to provide. It is possible that as the system shifts towards greater recipient country control of how aid is used (as envisaged under the Paris Declaration), so support for aid in donor countries declines. If you can’t use aid to promote your economic, commercial, security and strategic interests, then you might not want to give it at all. Bertin Martens memorably pointed out that the end of structural adjustment programmes in the 1980s (under which donors attempted to impose various policies on recipient countries) was followed by sharp decline in aid in the early 1990s. If you see the aid relationship as an equilibrium between the interests of the donors and the interests of the recipients, and if the Paris Declaration is an effort to move away from this equilibrium by reducing the power of donors and increasing the power of recipient countries, then perhaps declining aid budgets today are a consequence these modest moves away from the equilibrium. There is almost no public support for budget support (a form of aid which embodies many of the Paris principles) and budget support may now in retreat – so perhaps the aid system was temporarily pulled from its equilibrium by Paris, and may now be heading back to it again. In other words, there may be a choice between an abundance of somewhat ineffective aid which balances the interests of recipients and donors, and aid which is less conducive to the interests of donors, more effective at reducing poverty, but much less abundant. Aid agencies have a stronger internal interest in abundance than in effectiveness, and so will tend to support a return to the equilibrium in which aid is popular and plentiful, but not tremendously effective.
The third theme was the most interesting. Mike Green recalled an idea from Empire, a ghastly book published in 2000 by Antonio Negri and Michael Hardt, which suggested that activists may organize themselves as a ” post-modern posse”. Mike suggested that, in the absence of effective mechanisms for global governance to provide public goods in a rules-based system, we are left tackling these problems in temporary coalitions, or posses, which come together outside formal structures and without formal legitimacy. Examples range from the coalitions of the willing which come together to support military intervention, to the vertical funds which have proliferated in the aid industry. (Mike was not suggesting that this was desirable, but pointing out that this may be what happens in a second-best world without effective global institutions). This idea clearly resonated with the group, which recognised the applicability of the metaphor as a description of today’s development system. (Update: more on the ‘posse’ idea from Mike Green and Matt Bishop here.)
My own view, for what it is worth, is that:
- we should consciously reposition aid as support to those who are most marginalised to provide them with access to key services such as food, water, health and education, and move away from the idea that the purpose of aid is to accelerate economic development;
- that’s not because economic development isn’t an important objective; but it may not be the best use of aid;
- the main things that industrialised countries can do to promote economic development in the developing world may be changes in other policies ‘beyond aid’ such as trade, climate change, migration, climate change, cooperation on tax, tackling corruption and illicit financial flows; and arms sales;
- some organisations which profess to be interested in development are too heavily focused on aid and not enough on how we can improve these other policies.
This blog post was first published on the CGAP Microfinance blog.
It seems extraordinary that after 50 years of international aid, there is still no consensus on whether it works. Zambian economist Dambisa Moyo (Dead Aid) has argued that aid is not only ineffective, but is actually detrimental to development. Bill Easterly (The Elusive Quest for Growth) says that ‘trillions of dollars’ of aid have had little effect. Others, notably Jeff Sachs (The End of Poverty) and Roger Riddel (Does Foreign Aid Work?), have argued that there is plenty of evidence of the success of individual aid projects, and that it has brought about substantial improvements in people’s lives. If we cannot even agree on whether aid works at all, how can we address the more important and nuanced questions such as how to make that aid more effective?
At the heart of this disagreement is not a dispute about the impact of aid but about what we mean when we ask whether ‘aid works.’
Microfinance is an example which mirrors the issues in the wider aid industry. Microfinance has often been touted as a bottom up solution to poverty. The Nobel Peace Prize 2006 was awarded jointly to Muhammad Yunus and Grameen Bank “for their efforts to create economic and social development from below.” Give people access to credit, the story went, and they will be able to invest in businesses of their own. Instead of needing long-term support, the poor will be able to stand on their own two feet. The Acumen Fund promises “Dignity not Dependence. Choice not charity.” This attractive prospect is one reason that microfinance has been so successful in raising donor funding, especially from foundations and private giving.
Following dozens of studies of microcredit and microfinance, there is little credible evidence that microcredit itself lifts people out of poverty. The two good randomized controlled trials find no impact of microcredit on poverty (though to be fair they have not yet been running for very long). As the evidence has challenged these grandiose claims, some in the microfinance industry have chosen to defend aspirations which are both more humble and more plausible. First, there is growing recognition that much else besides access to credit is needed to enable poor people to run a successful business, and so microfinance can at best make a contribution to a wider set of circumstances needed for development. Second, there is recognition that, even if microfinance is often used for consumption rather than investment, it is still a significant improvement in people’s lives if they have more control over their finances and are better able to deal with uncertainty and volatility in their incomes. Third, microfinance may lubricate the process of experimentation and failure whichmay help successful firms and enterprises to emerge.
The rest of the aid industry would also benefit from a more nuanced account of its objectives. We often talk about aid as if it falls into two categories: humanitarian aid and development aid. But in reality this is a false dichotomy: most aid falls into neither category. More than 60 percent of aid is a long-term contribution to the provision of key services such as education, health, water and sanitation, and an investment in the institutions needed to provide them in the future. Improving people’s lives is a realistic and laudable goal. Measured against this more humble (but still very important) objective, there is plenty of evidence of the success of aid. Aid has helped to abolish smallpox, to increase the number of children in primary school, and to give families access to clean water and improved sanitation. Charles Kenny (‘Getting Better’) has convincingly argued that when measured by almost every standard other than income, the quality of life has improved substantially in developing countries. Foreign aid has made a significant contribution to these improvements.
It is tempting to make the bolder claim that investments in education and health also improve growth and development in the long run. Perhaps they do – but, as with microcredit, the evidence for this relationship is weak. Why is it not sufficient to say that people everywhere should have access to these services – including financial services – whether or not this leads to long-term transformation of their economy and society?
Everyone wants developing countries to escape aid dependency, and most people recognized that this requires sustainable growth and jobs. Because this is such a compelling objective, the development industry has been tempted to justify aid on these grounds. But the evidence from opinion polls and focus groups suggests that the public is willing to support aid which demonstrably meets immediate human needs irrespective of whether this contributes to long-run growth. By setting excessively ambitious objectives for aid, the industry risks alienating the public from their emotional connection with what aid can achieve, and asks to be measured by standards that it is unlikely ever to be able to show that it meets.
There are many flows of finance to developing countries which will contribute to investment and growth, including direct investment, portfolio capital flows and remittances. The main drivers of growth will come from the country itself through private and public investment. Aid is a small proportion of the finance for developing countries. But it is a precious resource because, unlike other sources of finance, it can help meet the needs of the most marginalized communities, women and girls, and people living in long-term chronic poverty. If we want to see aid used effectively, we should demand that it is used for these purposes for which it has a unique contribution to make. Just because growth is a priority does not mean it is a priority for aid.
Measured against reasonable claims about what aid can achieve, it is demonstrably effective. As we have seen with microfinance, the industry damages rather than enhances its case by overstating what aid can achieve. By setting realistic objectives, we can both make aid more effective, and demonstrate the difference it makes.
I really believe that this is how some organisations and government departments view knowledge sharing:
(h/t Ian Thorpe)
The Center for Global Development, where I work, has a shiny new transparency policy. From now on, our presumption is that when authors post publications on cgdev.org that involves quantitative analysis, they will also post the data and computer code needed to reproduce their results in full. That way, any visitor to the web site can check our work.
In his blog post explaining the new policy, David Roodman explains why this is important. It is intended to increase both the quality and credibility of our research, and to enable other researchers to use the data and the code.
Of course this is a little daunting for us too. As David says:
Fundamentally, then, the new data and code transparency policy is about putting the pursuit of truth first. We believe that this step is both right in itself and strategically smart. In statistical analysis, as in software, bugs are the norm. So placing more of CGD’s work in the public domain will inevitably expose mistakes. That can be a daunting prospect for an organization that prizes its reputation for high-quality analysis. But transparency serves the public good. And serving the public good is what CGD, as a charity, should do.
Our full policy is here (pdf).
Primary school close to our house in Addis Ababa
Living in Ethiopia for the last three years, I saw aid working every day. I saw children going to school, health workers in rural villages, and food or cash preventing hunger for the poorest people. The academic debates about aid effectiveness seem surreal when you are surrounded by tangible, visible evidence of the huge difference aid makes to people’s lives.
But on the whole the sceptics are not disputing that kids are going to school because of aid. They are asking what effect that has on the country as a whole. Does it lead to economic growth? Does it drive up the exchange rate and so damage competitiveness? Do governments become dependent on donors and so less accountable to their own citizens? Does aid keep the bad guys in power?
It is possible that aid is effective in terms providing people with basic services, and at the same time that it is not effective at increasing economic growth. It is even possible that aid simultaneously does short-run good (better services) and long-run harm (worse institutions).
It was this difference between perspectives which made me want to respond to the call for evidence in an investigation into aid by the Economic Affairs Select Committee of the British House of Lords. This committee, which includes some well-known economists and other public figures, is examining the ‘Economic Impact and Effectiveness of Development Aid’.
My written submission is here. It is just six pages long. ( I’m very grateful to Stephanie Majerowicz for her help putting this together.)
The submission begins by trying to address the question of what aid is for, which seems to be the source of much of the confusion about whether aid works. Aid is often regarded as having two purposes: humanitarian aid to alleviate suffering usually in an emergency, and development aid to promote economic growth and sustained prosperity. But this is a false dichotomy: most aid falls into neither category. About two thirds of British bilateral aid is spent on improving services such as education, health, water and sanitation. This aid is not a temporary humanitarian response to an emergency, but a long-term contribution to the provision of key services and an investment in the institutions needed to provide them in the future. The success of this aid is not best measured by whether it leads to growth in the short or medium term, but by the improvements it brings about in the quality of people’s lives.
The submission then reviews the evidence about whether aid leads to economic growth (answer: we don’t know) and whether aid improves people’s lives (answer: yes it often does). The more interesting question is not whether aid works, but which aid works.
But there are also possible adverse effects of aid, and these are potentially serious. The submission suggests that these may be mainly a consequence of how aid is given and that they can largely be eliminated if donors give better aid. But that requires donors to overcome domestic political obstacles to reform of aid.
The evidence finishes with ten suggestions for how to make aid work better. They are:
- Spend more through the multilateral system
- Make aid more predictable
- Make aid transparent, accountable and traceable
- Build the accountability of governments to their parliaments and citizens
- Focus on results and use this to simplify aid
- Invest more in global public goods, especially new technologies
- Focus aid on people in chronic poverty, and on women and girls
- Leverage the private sector
- Use innovative finance to increase the productivity of aid
- Learn more and fail safely
It is a good discipline to be concise, but it is not possible to do full justice in six pages to the nuances of these issues. I have tried address the big questions with what I hope are balanced and dispassionate judgments. I hope you will let me know in the comments if you think I’ve got these right.
Read the full submission here.
This blog post was also published on CGD Views from the Center.
George Bush famously asked, ‘Is our children learning?’. That’s also the question by Uwezo, a coalition of NGOs working in Kenya, Uganda and Tanzania. Their report published today makes dismal reading about the quality of schools.
First, a word about the report. This is not a study by the World Bank, or a group of donors. It is a study by Uwezo, an East African initiative hosted by three NGO networks: TEN/MET in Tanzania, WERK in Kenya and UNNGOF in Uganda, with overall quality assurance and management support from Twaweza. They conducted their own survey (standardized across the countries) to test the literacy and numeracy of more than 100,000 children, the largest ever survey of its kind in the region. When citizens themselves are telling us about whether their public services work, we should be paying attention.
There has been a remarkable increase in the number of children in school in East Africa since Uganda reintroduced free primary education in 1997 (followed a few years later by Tanzania and Kenya). Over the ten years from 1999 to 2009 net primary school enrolment has risen in Kenya from 62% to 83%, and in Tanzania from 49% to 96%.
But the Uwezo report finds that the quality of education that those children receive is ‘very poor’. According to the Uwezo tests, most of the children in Standard 3 had not reached the Standard 2 levels of literacy and numeracy. Only by the time they reach Standard 7 are most children able to read and write at the levels expected in Standard 2.
Kenya’s pupils did best, followed by Tanzania and then Uganda, and there are large variations within as well as between countries. The report has interesting things to say about the apparent reasons for the differences:
an important finding given the enormous resources invested in recent years in improving school infrastructure, was that school quality was weakly associated with literacy and numeracy levels. Children in areas with better school infrastructure did not perform better than in lower quality schools or more crowded classrooms.
The report finds grounds for optimism in the variations within countries; the fact that some places do better than others suggests that improvements are possible within those contexts. The report speculates that quality is driven by non-observed factors such as the quality of teaching, practical accountability and teacher motivation.
The poor quality of education, despite considerable investment in school infrastructure, may perhaps be the result of what Lant Pritchett, Michael Woolcock and Matt Andrews call “isomporphic mimicry”. The idea is borrowed from sociologists of organisations, and it describes the way in which organisations can sustain their legitimacy by the adoption of the forms of effective organisations in a way which camouflages a persistent lack of functionality. This behavour may be partly a consequence of the way that donors work to increase service delivery in developing countries. Pritchett et al observe:
Development agencies, both multi-lateral and bi-lateral, have very strong tendencies towards promoting isomorphic mimicry— encouraging governments to adopt the right policies and organization charts and to pursue best practice reforms—without actually creating the conditions in which true novelty can emerge, be evaluated, and scaled.
What can be done to improve education in Kenya, Tanzania and Uganda? The Uwezo report says:
Differences in performance among districts within each of the three countries, and between public and private schools, suggest that certain schools have ‘figured out’ how to achieve better results within existing constraints. Investigating why certain districts, and within districts certain schools, do so much better than others could provide important clues about what matters most for improved learning.
The report also suggests that Cash on Delivery aid may be a good way to create the incentives to improve quality:
One such approach, which is still untested but whose design has been informed by careful review of the evidence of what works, is called Cash on Delivery. The core idea here is that instead of funding inputs, a mechanism is created by which payments are made against the achievement of a specified and independently verified outcome, such as $50 per student who completes Standard 2 with 80% literacy and numeracy competencies. This approach has been original designed for improving the effectiveness of aid given to national governments, but the approach may be even more useful for how national governments create incentives to improve performance at district and school levels.
(By the way, I’m on the board of Twaweza, though I can claim no credit for this report.)
Tony Blair is my guest on the latest Development Drums. He talks about his Africa Governance Initiative, and more broadly about democracy, leadership, globalization, DFID, and his own future.
You can listen to Development Drums on the website, or you can download it from the website or subscribe (free of charge) in iTunes.
The interesting question in development is not whether aid works or does not work. Not surprisingly, the answer is that some aid works and some doesn’t. A more interesting question is: what kind of aid works best?
Nick Kristof has a good article (if a little simplified) in the New York Times today about randomized trials, which he describes as ‘the hottest thing in the fight against poverty’. This new wave of rigorous evidence about impact is helping us to understand which policies and programmes in developing countries work well (whoever pays for them) and which do not.
I especially enjoyed his digression about the importance of economists:
When I was in college, I majored in political science. But if I were going through college today, I’d major in economics. It possesses a rigor that other fields in the social sciences don’t — and often greater relevance as well. That’s why economists are shaping national debates about everything from health care to poverty, while political scientists often seem increasingly theoretical and irrelevant.
Economists are successful imperialists of other disciplines because they have better tools. Educators know far more about schools, but economists have used rigorous statistical methods to answer basic questions: Does having a graduate degree make one a better teacher? (Probably not.) Is money better spent on smaller classes or on better teachers? (Probably better teachers.)
I suspect not everybody will agree with this.
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