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Archive for the ‘Donors’ Category

On the CGD blog, Nancy Birdsall proposes “Ten Actionable Ideas … for a 21st-Century Global Development Agenda”

What are examples – some realized and some on the table but untested – for practical action in the interests of global prosperity? Where do good ideas come from? How do they get translated into action?

Nancy’s ten:

1. More AMCs for vaccines and green technology
2. Protect some aid from security and political objectives
3. Independent evaluation agency
4. More representative G-20
5. Visas for people from poor countries
6. Duty free, quote free access to all markets
7. Per capita distribution of net income from non-renewables
8. Reform of selection of heads of international agencies
9. World Bank to have a global public good window
10. Petrol tax in the US

Ever fizzing with ideas, Nancy throws in a few others: endow think tanks in low-income countries; increase capital at development banks; Climate Investment Funds to bring private investment money;  Cash On Delivery Aid; new insurance and risk management instruments at the multilateral development banks.

Well I agree with all those, of course (and not just because I’m a visiting Fellow at CGD!).   She asks for other suggestions.  Here are my ten:

1. Global standards for transparency and traceability of all aid to increase accountability and effectiveness
2. Climate justice – every person in the world to have equal, tradeable, carbon emission rights, capped overall at the level scientists tell us is safe
3. Global information sharing among tax authorities to prevent tax evasion
4. Unbundling of aid funding from aid delivery, complete untying and global standardised output and outcome indicators to enable cost comparisons
5. A global minimum income guarantee backed by cash payments to the world’s poorest people
6. Product traceability from sweatshop to supermarket using barcodes
7. A complete ban on exports of small arms
8. A standing, professional  UN peacekeeping force to be deployed by a reformed Security Council
9. Reform of intellectual property to permit free access in the lowest value markets
10. Increasing the share of aid to LDCs from 38% of global aid today to 90% by 2012.

Update 25 February: On Twitter, Nancy Birdsall (@nancymbirdsall) says: “@OwenBarder has 3 more actionable ideas (and 7 dreamy ones)”.  This is a good game: which of these does Nancy think are actionable and which are dreamy?  My guess is she thinks (1), (3) and (9) are actionable and the rest dreamy.   But what do you think?

I think they are all realistic – but then I’m with John Lennon: “You may say that I’m a dreamer, but I’m not the only one. I hope some day you’ll join us, and the wo-o-rld will live as one”.

On January 13th, a leader in The Times and Kevin Watkins in The Guardian attacked the development policies of the UK Conservative Party, from opposite sides of the political spectrum.  The Times Leader says that the Conservatives are wrong to commit themselves to increase aid to 0.7% of GNI; and Kevin Watkins says that the Conservatives are wrong to want to reform the way aid is given.   Both attacks appear to be bone-headed efforts to make political mischief by undermining not just Conservative party policies but the mainstream consensus on development. Neither attack does credit to its perpetrator.

The Times criticizes the Conservative Party for their commitment to maintain the planned increases in development spending. The leader recycles discredited assertions about the negative effects of aid rather than offering solid analysis.  There isn’t a single reputable econometric study showing that aid causes harm through  exchange rate appreciations, corruption or slowing progress to democracy.   Peter Bauer, whom the leader article quotes, was criticising Cold War foreign assistance programmes which bear little resemblance to aid programmes today. Aid today is increasingly practical, targeted and measurable, just as The Times says it should be, and it works.

Britain was one of 147 countries which pledged we would “spare no effort” to meet the Millennium Development Goals. As The Times implies, we should not be judged on what we spend but on what we achieve. On this basis we are not yet doing enough to achieve the goals to which we are committed.  That is why it is important that Britain should continue to increase its world-class development programme, and press other nations to increase their spending too.  To resist this on the grounds that 0.7% is an arbitrary figure is a clever-sounding point for a debating society, not a reasoned argument against the commitment of all the main political parties to meet Britain’s international promises, and to press other countries to do the same.

From the other end of the political spectrum, Kevin Watkins in The Guardian seems to be determined to use development to score party political points – and to do so he has had to put himself in the strange position of arguing against the country-led approach to development which is supported by all main UK political parties.

Under the Labour Government Britain has helped build an international consensus that aid works best in support of a country’s own development strategy; that policies imposed from outside rarely work; and that governments should be accountable to their own citizens for their policies and actions.  Kevin Watkins rightly supports these points in other contexts. Yet he apparently won’t entertain the idea that other countries may have different views from his (and mine) about the best way to organise and fund public services.

I’ve read the Conservative Green Paper and it does not call for state services to be rolled back in developing countries. It says that governments should guarantee access to education for all their people; and that donors should fund that guarantee and support and encourage governments to choose whatever path enables them to expand education provision fast and effectively.  It does not propose or advocate market-based solutions in education: it says explicitly that the Conservatives would work with the public, not-for-profit and private sectors.

Kevin Watkins quotes the Green Paper saying “We bring a natural scepticism about government schemes“; this is the entire basis of his claim that “the Conservatives will use aid to roll back the state in key services“.  But it is clear when you read this sentence in context that the Conservatives are questioning the role of the government in aid, not planning to tell other countries how they should manage their public services.

There is now a valuable cross-party consensus on the need to use aid money to support countries’ own development priorities and programmes.  The challenge today is how to bring public sector reform to the aid business – including the possibility of some market-like disciplines to make aid more effective and accountable.  There are proposals in both the Government White Paper and the Conservative Green Paper to make aid more transparent and accountable and to link it more closely to results. Kevin Watkins might have used his space to tell us what he thinks about these ideas instead of trying to score party political points on development.

(By the way, I admire Kevin Watkins, but I’m not comfortable with the fact that a UNESCO official, paid from public funds, is using his position to make highly partisan and inaccurate attacks in the newspapers on the main UK opposition party. )

I’ve got no party political axe to grind: my interest is in supporting the best possible policies to accelerate development, so that the world is a fairer, happier and safer place for everyone.  It seems odd that the Conservatives should be attacked from both left and right for articulating development policies which seem to me squarely in the mainstream of development thinking.

The cross-party consensus that the UK’s development budget should continue to increase, and that British development policy is amongst the most effective in the world but nonetheless there is room for improvement, should be a matter of shared national pride, not scorn and sniping from whichever direction.  Let’s sustain that consensus, and not allow development policy to be used as a political football even in the heat of an election campaign.

Update: see Kevin’s reply in the comments.

If you want to raise money for international development you will eventually encounter a dilemma.  You want potential donors to be interested in their fellow human beings and to feel a connection with the people they are helping.  You know that you will raise more money, and sustain a longer-term relationship with your donors if they are getting constant feedback about the people they are helping and the difference your programme is making.  Your communications team tells you that statistics are not enough: you need “human interest” stories about individual lives.  You need photographs and life stories.

The consequence is that you have to invest time and money in generating that feedback; and you have to extract that information from the communities where you work in a relationship that verges on exploitation.  At the thin end of the wedge it may be nothing more intrusive bringing your visitors to a school and expecting a welcome ceremony – perhaps some songs by the children and a shared meal under an acacia tree.  Towards the thick end of the wedge it means talking up poverty, using words like “famine” where it might not be appropriate.   And it means asking children and adults to prostitute themselves by writing letters of gratitude to their sponsors.

Here is a description of a charity “Doing a world of good” that sends money to Ethiopia

… World of Good was born six years ago.  It’s a simple concept: For $25 a month, donors sponsor children chosen by an organization Asmare runs in the city of Gondar, at the base of the Simien Mountains in the northern region of Ethiopia. It differs from programs such as Save the Children in that the money goes directly into an individual child’s supervised bank account, instead of being pooled with other sponsors’ money and used for community projects.

When I started to read about World of Good, my first impressions were favourable.  Giving money directly to children to use as they wish sounds like an empowering and progressive approach.  But as I read more I become uneasy, and then quite nauseous:

Reerslev and Gerdes made a pact not to open the letters to sponsors without each other present. When the box finally gets here, the two find a place and a time to sit together, reading each one, making sure the children are not asking for specific things or making a plea to be adopted, which is forbidden by the charity’s rules. Mostly, the two women just read, and cry. They parse through heartbreaking stories of children whose parents have died from starvation or AIDS, who have quit school so they could walk into the dangerous forests on the outskirts of their ramshackle villages to gather cow dung or timber for firewood, who have been too busy trekking miles to the nearest water well to spend time learning to read. … One girl, Tigist, lost both of her parents and, before she joined the program, was a 12-year-old trying to survive completely on her own, eating out of trash bins. She wrote letters to her sponsors that said, “You are my family,” “You are my guardian angels.” Tigist, who is now 17, just graduated from technical school.

This is poverty porn.  The children are asked to write letters, but the letters have to be censored to make sure they don’t go too far (we are happy to send you money but you must under no circumstances ask to come and live in our country).  The children write letters praising their sponsors as angels.

This is not only wasteful of time and effort, especially of the time of the poor, it is degrading to those involved.  Why should children be forced to write letters describing their lives in return for money to eat or have an education?

My indignation is not reserved for the people at “Doing a World of Good”, who doubtless mean well.  I understand why they feel they need to do this: it helps them raise money and that in turn helps them to make a difference. Their behaviour is the result of a broader problem, with the citizens of rich countries, who seem to be unwilling to sacrifice a tiny part of their income to help a fellow human being unless they feel some sort of personal connection with the recipient.   This is charity of a Dickensien sort: not a system of social justice and protection, but throwing some coins to a beggar in the street and expecting to be lavishly thanked.

Quenching the apptetite for poverty porn is rational for each charity, NGO and aid agency: that is what they need to do to survive; but it is socially harmful.  We have to work harder to convince the public to make contributions without the titillation of letters from children or logos on lorries, but based on systematic and rigorous evidence of the difference that their contributions are making.

I am grateful to Oxfam’s Duncan Green for his fair and thoughtful review of my paper about improving aid, Beyond Planning: Markets and Networks for Better Aid.

I’m glad that Duncan and Chris, his Oxfam colleague,  endorse a key argument of the paper, which is that the development industry will improve through evolutionary change rather than grand design; and that a driver of this change will be better mechanisms feedback from the citizens of developing countries about what is working. The paper points out that this kind of evolutionary change comes from variation and selection – and that the aid business does not have enough of either to ensure evolution towards more effective aid.

Duncan and Chris  have reservations about the word “beneficiary” to describe the people in developing countries whom aid is intended to support.  I think that is a good point, and I’d be happy to use a different word if we can find a suitable alternative (I don’t think that “primary stakeholder” or “rights holder” takes the trick, since neither is sufficiently specific about who we mean).

I don’t want to put words in Duncan’s mouth, but I detect from his review that he is more sceptical than me about the value of markets. He dismisses without much fanfare the  the idea of giving more choice to the, er, “intended beneficiaries” (aka primary stakeholders and rights-holders):

Where I think he is wrong is a largely market based philosophy for creating incentives based on New Public Management theories of expanding choice more than voice. … This in turn requires some quite fundamental organisational change with in aid agencies, as well as establishing more citizen to citizen links possibly using new social media.’

That is an unfair characterisation of my view: I am in favour of choice AND voice.  A large part of the paper, especially when talking about networks, is precisely about how citizens can have more voice, and I talk explicitly about citizens links through new social media.  But there are huge problems to overcome in achieving this, because the “intended beneficiaries” are geographically and politically remote from decision-makers in aid agencies, which means their voice is dimly heard, if at all.

While I agree with Duncan on the need to ensure that people have voice, I find it surprising that he (in common with many people who regard themselves as progressive) is so reluctant to give choice where possible as well.   Duncan’s (excellent) book is called From Poverty To Power – and I believe that giving people direct control of resources and allowing them to choose what services they want, and from whom, can be one of the most important ways of empowering people.  Duncan calls this a “technocratic/new labour enthusiasm for using market mechanisms” – but the idea of giving the poor more direct control of resources goes back long before New Labour:  Oxfam’s honorary President, Amartya Sen, got a Nobel prize for his 1982 book, Poverty and Famines: An Essay on Entitlement and Deprivation, which argued that it would be better to give people money than food in a famine.

I have not swallowed the New Public Management story hook, line and sinker, but I do believe that there have been positive experiences (for example, from the publication of league tables, and the distinction between purchaser and provider).  While I think we should learn from new public management, my paper describes in some detail the shortcomings of a market-only approach, especially as it relates to foreign assistance.  I hoped my paper would be an elegant synthesis of some of the best (and proven) tools of this school of thought with lessons from other approaches, especially the use of complementary mechanisms of networks, voice, regulation and planning.

The aid industry has almost entirely evaded the reform of public services over the last decade.   There is no measurement of results; no distinction between purchaser and provider; no customer choice.  Presumably the lack of reform is partly because the shortcomings of the industry are felt by people with no political power or voice in the political systems of donor countries. The incumbent service providers are politically powerful, well organised, and deeply conservative about any change that affects their interests.  The aid system has, over time, drawn to it people who are sceptical about the value of markets and choice, saddling developing countries instead with five year plans and long coordination meetings.  No politician in a donor country is enthusiastic to take on these vested interests, in order to improve services for people they will never meet and who have no vote in the election.

The Center for Global Development is working on an idea which they call Cash on Delivery aid, in which donors make a binding commitment to developing country governments to provide aid according to the outputs that the government delivers. I think this is a good idea in principle, and hope that it can be tested to see whether and how it could work in practice.  The UK Conservative party have said in their Green Paper that if they are elected they will use Cash on Delivery to link aid to results.

Linking aid more closely to results is attractive from many different perspectives.  My own view is that linking aid directly to results will help to change the politics of aid for donors. Many of the most egregiously ineffective behaviours in aid are a direct result of donors’ (very proper) need to show to their taxpayers how money has been used.  Because traditional aid is not directly linked to results, donors end up focusing on inputs and micromanaging how aid is spent instead, with all the obvious consequences for transactions costs, poor alignment with developing countries systems and priorities and lack of harmonisation.  If we could link aid more directly to results, I think donors will be freed from many of the political pressures they currently face to deliver aid badly; and it would be politically easier to defend large increases in aid budgets.

Other people support Cash on Delivery aid for other reasons.  Ministers and officials of developing country governments see it as a way to access more money without the attendant costs of conditionality and foreign interference in domestic policy.  Some people see results-based aid as a way to restore the accountability of developing country governments to their own citizens, a social contract in which aid donors too often inadvertently interfere.  Especially in the US, some people believe that linking aid to results can create stronger incentives for developing country governments to deliver high quality public services.  Others support Cash on Delivery because it will improve the allocation of aid resources, since money flows to the places where services are being delivered and away from the places where money is being wasted. With all these complementary reasons there appears to be the possibility of a broad coalition of people in favour of moving ahead with testing whether Cash on Delivery aid can work in practice.

But there is one group of people for whom these ideas seem to be quite unsettling: development professionals in aid agencies and NGOs.

I recently wrote a response to a brief by CAFOD about some possible concerns about Cash on Delivery aid.  As I was doing so I realised that the questions asked by some development professionals reveal some discomfort about the possible impact of results-based aid on the quality and content of their jobs.  The “risks” identified in the CAFOD brief are not primarily about the consequences for development but rather risks to the privileged position enjoyed by professional staff in aid agencies and NGOs.

You can judge for yourself whether I am caricaturing the risks set out in the CAFOD paper, but they essentially amount to this: under Cash on Delivery aid money would flow to those governments best able to make use of it; governments would have freedom to decide which services to provide and to whom; governments would be able to decide how to use resources; governments would be accountable for their choices and the results; and progress would be measured according to internationally-agreed targets for impact rather than inputs and intermediate targets negotiated behind closed doors.

All these are necessary steps towards the internationally-agreed agenda for more effective aid set out in Paris and Accra, and necessary for the emergence of capable, accountable and responsive states.  Yet when a mechanism is proposed that tries to organise the aid system in a way that means these things could start to come about, these consequences are described as “risks”.

At the heart of these anxieties, it seems to me, is a question about what sectoral advisers in aid agencies are meant to be doing.  Take education advisers, for example (I am not picking on this group in particular, but it happens that the current proposals for Cash on Delivery aid are being developed looking specifically at education.)  Many people who work for aid agencies managing aid programmes for education are themselves education professionals, often former teachers.  Deep down (sometimes also on the surface) many of them want to be educators, not managers of aid programmes.  They want to be involved designing the curriculum, reforming the pedagogic approach, training the teachers, buying textbooks, or improving the education management information systems.  But it is the job of a community to educate its young, not foreigners.  As managers of aid programmes the staff of aid agencies should be ensuring that aid is delivered in ways that increase the accountability of central and local government to the nation’s citizens, keeping transactions costs to a minimum, delivering aid in ways which support the evolution of country systems and priorities, ensuring that the money is used for the purposes intended by the funders, and showing what results have been achieved.

In short, managers of aid programmes should be focusing on the effectiveness of aid, not education policy.  If governments need technical advice on education, they can procure that separately, and get advice from people who are more trained to build capacity and who are properly accountable for doing so, not get it as a bundled free offer-that-they-cannot-refuse from the people managing their aid.  If it works as intended, Cash on Delivery aid would change the relationship between donors and governments and would turn development professionals back into aid managers instead of would-be educators.  And it is this consequence which, I believe, some people find unsettling.

Many of my best friends are development professionals, and I know that everyone who works in development (well, nearly everyone) has the interests of the poor at heart. They often genuinely believe that they need to retain a degree of  influence to ensure that developing countries make the kind of progress towards development that they (and I) want to see.  There is quite a close parallel with the evolution of the attitudes of politicians, some of whom I also know well and have known since they were young, idealistic students.  Nearly all politicians enter politics for the noblest of motives: to contribute to the improvement of the society in which they live.  To a very large extent they retain those values through their political career. But over time there can be a gradual erosion of the distinction in their minds between their own interests and the service they give to others: some politicians gradually come to think that increasing their own power is the service of others, because they believe that they will exercise that power better than anyone else.

Politicians are, of course, at their most dangerous when they can no longer distinguish their own interests from the interests of the people they are meant to serve.  Similarly we should be concerned when we hear development professionals identifying themselves as speaking for the poor, and arguing that they must retain influence (i.e. power) – purchased by the relative wealth of their country – to promote strategies which the country would not pursue on its own.

To be fair, I also know some development advisers who are focused on improving the effectiveness of aid, who are rightly aghast when they are asked to double up by providing advice on how to manage an education or health system.   If I may be permitted a partisan aside, my observation is that DFID sectoral advisers tend to be more respectful of the need to promote effective country systems for policy-making and accountability than professionals from some other donor organisations (both NGOs and official aid agencies), and they are less likely to interfere in the country’s policies and strategies.

This may seem like an elaborate point to build from an innocuous and fairly sensible CAFOD brief about Cash on Delivery aid.  But the risks identified by CAFOD, and the questions that have been raised elsewhere, would apply to any system of results-based aid that makes substantive progress towards giving governments more freedom to choose how to deliver their development programmes and making them more accountable to their own citizens for their own success and failure.   I think these concerns actually reveal a deep-seated tension between the internationally-agreed agenda for improving aid effectiveness, and the views and interests of development professionals charged with designing and implementing those reforms in practice.

A few years ago, Nancy Birdsall and I proposed that donors might consider a scheme to give aid to developing countries based on the services they actually deliver. For example, donors could promise to pay $100 for each additional child who completes primary school and takes a standardized competency test. The Center for Global Development has worked further on this idea, and rebranded it as “Cash on Delivery aid“.  CGD will soon be publishing a book setting out how the idea might work in practice.

The Conservative Party have said in their Green Paper on international development that they will pursue this approach if they form the next government in the UK. They say:

We will link aid directly to independently-audited evidence of real progress on the ground. Increasingly, we will pay ‘cash on delivery’: giving an agreed amount to a recipient government for every extra child they get into school or every extra person who receives decent healthcare. This will give British taxpayers confidence that their aid money is buying specific successful outcomes.

In October, CAFOD published a briefing note about Cash on Delivery aid which is a helpful summary of the proposal, and is also a useful compilation of some questions that have been raised about the idea.  It lists nine “risks” of Cash on Delivery aid which it says should be addressed.

I have written a response to the CAFOD brief which addresses each of the nine risks in turn.  I regard nearly all of the issues raised by CAFOD as features, rather than risks, of Cash on Delivery aid.

You can download my response to CAFOD here (pdf).

My article on OpenDemocracy today discusses whether aid works.

Some supporters of aid have made what seem to me to be extravagant claims that aid should aim to bring about economic and social transformation of developing countries, so accelerating economic growth and industrialisation.  But this is a very high bar to set.  Aid may well help to increase the probability of economic take-off but there are lots of other conditions that need to be in place for the transition to an industrialised market economy to happen, and aid is not a sufficient condition (nor, probably, a necessary condition) for it to occur.   Even if aid does play an important contributory role, it would be statistically very hard to demonstrate a link between aid and economic growth.

Although the effect of aid on economic growth is uncertain, there can be no doubt that aid makes a huge difference to people’s lives.  Aid provides food, health care, education, clean water, financial services, and modest incomes which transform the lives of the people who receive them.   You can see this both in individual families – like the girl I met in northern Amhara, pictured here, who has health care and education because of aid – and in the overall statistics, which show that there has been a vast improvement in the quality of life on almost every measure other than income.

Aid may not always transform societies, but it does enable people to live much better lives while those transformations are taking place.  And that represents a huge increase in the sum of human welfare.

I believe aid could and should work much better.  Living in a developing country, I see all kinds of waste and inefficiency in the aid system that makes me angry. But it makes me angry because I also see how much difference aid makes when it is used well.  I would like to see aid becoming much more transparent and accountable, so that it becomes subject to evolutionary pressures to improve.

This means, by the way, that I do not subscribe to the view that the aid system should be regarded as temporary.  In the UK we hope that people will be on unemployment benefit temporarily before they are able to get back to work, but we don’t expect the system as a whole to come to an end.  So I think that we should expect that at least for our lifetimes, it will be right and necessary that we transfer income from the richest people in the world to the poorest people in the world.  I do not know which countries will be rich, on average, in fifty years time, and which will be poor; but I expect that the world will still need, and I hope it will still have, a permanent system to help those temporarily in need wherever they happen to be.

Aid would work better in future if we accept that we will need a permanent system to provide temporary help to those who need it, and set about designing a better system to do that.

Read the full article here.

Related reading:

• Phil Vernon at openDemocracy (to which my article was a reply)
• Roger Riddell at openDemocracy
• Ranil at AidThoughts
• Chris Blattman – Could Aid Slow Growth

Here is a new paper by Channing Arndt, Sam Jones, and Finn Tarp on whether aid leads to economic growth. The econometrics are done carefully, and it finds that aid inflows of about 10 per cent of GDP lead to an increase in economic growth of about 1 percentage point. (Reassuringly, this is also broadly consistent with a common sense calculation of the sort of effect that aid ought to have.)   They also find evidence of bigger, more positive effects of aid, consistent with positive effects of aid on productivity.

I’m not a fan of these aid-growth regressions, because they are technically difficult to do well (see David Roodman’s article on the problems.)  But they are important for one reason: they are a more systematic way of doing the popular “folk regression” offered by authors such as Dambisa Moyo and Bill Easterly.  When Moyo and Easterly point out that countries that have had high levels of aid have also suffered from slow growth, they are implicitly pronouncing on whether there is a statistical relationship between aid and growth.  But of course you would expect to see a lot of aid going to poor countries (rather as ambulances tend to be present at the scene of road accidents)  so these simplistic comparisons do not tell us very much about the effect of aid on growth. The more careful question to ask is whether, other things being equal, aid leads to higher or lower growth, and that is what this kind of statistical analysis investigates.  It is good to have confirmation that the folk regressions are wrong and that aid does, as best we can tell, lead to economic growth.

There are a few other interesting things about this paper:

• the paper uses the same data as the infamous and oft-cited Rajan and Subramanian paper which claimed that there was no effect on growth (which I criticised at the time here) and finds that, if the regressions are done more carefully, those findings were not correct;
• the effect of development aid on growth is probably understated by this analysis because it includes all aid (unlike the paper by Clemens, Radelet, and Bhavnani, which subtracts humanitarian aid and other aid which is not intended to lead to economic development and finds – as you would anticipate – much larger effects of aid on growth from the subset of aid that is actually intended to promote development);
• there is no sign of diminishing returns to aid in this analysis. (This is an unusual finding – generally studies have needed to include a diminishing returns term to generate a statistically significant relationship between aid and growth).
• the study uses donor-specific fixed effects (the only study to do so, as far as I am aware). I’m looking forward to looking at these in detail, as the estimates will give us an insight into which donors are the most effective.

(h/t Chandan)

Update: David Roodman, whom I regard as an authority on these matters, thinks that I am wrong and Bill Easterly is right.

One of my favourite scorecards is the Commitment to Development Index produced each year by the Center for Global Development.  The 2009 index was published on Thursday.

What I especially like is that this analysis does not focus only on aid.  Too often, we measure the extent of our international solidarity by the amount of aid we give, and not by all the other important things that rich countries do (or don’t do) which affect developing countries at least as much as – probably much more than – giving them money.

Apologies for parochialism, but I was struck that the UK has fallen this year from 6th place to 12th place, out of 22 countries.   David Roodman, the uber-geek (and I mean that in a good way) who designed and runs the index, said this:

“The U.K.’s aid giving slowed in 2007, the latest year for which complete data are available, while its exports of arms to undemocratic regimes such as Pakistan and Saudi Arabia ticked upward.”

The UK scores in the Commitment to Development Index are depressed by the index’s judgement that there is insufficient rigor in tackling corruption by UK firms operating overseas, a high level of arms exports to undemocratic and poor countries, high agricultural subsidies, tight controls on immigration from the poorest countries, and restrictive intellectual property laws on plant types and data.

Officials from other  countries sometimes think the UK is a little too pleased with itself about development.  I wonder if they will think that, now that UK finds itself in the bottom half of the league table, having been overtaken by six countries (New Zealand, Spain, Australia, Austria, Finland and Canada), the UK should focus a little more on how its own policies affect the developing world.

Tim Harford at the FT has an article in today’s FT weekend magazine which endorses the ideas in my recent working paper, Beyond Planning: Markets and Networks for Better Aid.

I’m envious of Tim’s ability to  express the ideas so much more succinctly and clearly than me.  He writes:

it might be easier to change the rules of the game to encourage real competition than to change behaviour

That’s my argument in a nutshell.

Tim also writes:

if you imagine a Howard Schultz of Starbucks attempting to “harmonise” the world coffee-bar industry, you can see how idiosyncratic the harmonisation agenda actually is.

My new working paper, Beyond Planning: Markets and Networks for Better Aid is on the Center for Global Development website in the innovations in aid series.

In the paper I argue that more planning and coordiation among donors will not overcome the political constraints that prevent better aid.  The aid system is in a political equilibrium which we need to try to change; we won’t solve aid’s problems by trying to move away from the equilibrium.  This means making more use of market and network mechanisms to change incentives within the aid system. We need to stop thinking of grand new designs of the aid system and start putting in place mechanisms that force evolution in the right direction.

I’ve listed a set of measures, from the commonplace (untying aid, for example) to the unusual (tradable missions permits, or a tax on proliferation pollution) to illustrate the ideas.

I’ll be discussing the paper at the Overseas Development Institute (ODI) on Friday, and on a forthcoming episode of Development Drums.

I’m looking forward to comments and feedback.

I was on the BBC World Business Report yesterday, talking about proposals for a Tobin Tax (a tax on financial market transactions with the revenues allocated to poverty reduction).  David Hillman from Stamp Out Poverty discussed the issue with me.  I said I could not see the logic of linking measures to reduce capital market volatility with financing aid.

The World Business Report podcast is here.  The discussion about the Tobin Tax was in the edition for October 7th, 2009 – it will be there for a few days.  Alternatively you can download just the relevant part of the programme here.

The presenter, Mike Johnson, introduces the discussion by saying that James Tobin (a Nobel prize winning economist) proposed the tax as a way to finance efforts to combat poverty and disease. That isn’t true: James Tobin proposed the tax as a possible way to reduce speculative transactions.  The idea of linking the tax to development spending is a subsequent embellishment by campaigners against global poverty.  James Tobin said in an interview in Der Spiegel in 2001:

Ich habe nicht das Geringste gemein mit diesen Anti-Globalisierungs-Revoluzzern.

(My translation: “I have nothing at all in common with these anti-globalisation revolutionaries.”)

The UK Department for International Development is to be commended for encouraging some of its staff to maintain a blog to explain to the public what they do.

In Bangladesh, Adam Jackson has posted some interesting reflections on his visit to a health programme (in which DFID supports the government) and a Chars Livelihood Progamme.

Our health review team visited a District hospital where mothers who would never normally have access to safe delivery facilities had very recently given birth thanks to a voucher scheme funded by DFID and a number of other donors. Fifty miles away in the Chars I and the other workshop participants visited a village and met a number of women – some of the most vulnerable people on the planet – who had been given assets of their choice (typically a pair of cows) and had their homes raised on clay plinths above the seasonal flood level, as well as a range of other support to enable them to become self-sufficient. … Both of these programmes contribute to the Millennium Development Goals, and produce results that few people interested in the welfare of the poorest would argue with.

Adam makes the excellent point that both programmes work, albeit to achieve different kinds of objectives.  Working through Government may be slower and more uncertain, but in the long run it is an investment in Government systems which, in the end, Bangladesh will need as it becomes more prosperous and no long relies on foreign aid.  The Chars programme reaches people more quickly, but does not contribute to building lasting institutions.  Clearly, both programmes have an important place, and donors need to be better at understanding that we are working towards multiple objectives and need many different types of instrument.

We need to understand better than we do: (a) how much immediate development benefit do we give up, if any, and how much institutional improvement do we gain, by working through governments? and (b) can providing services through parallel channels such as NGOs actually do harm to the long-run evolution of national institutions, for example by hiring away skilled staff, or by reducing the focus on and accountability of government institutions which should, in the long run, be playing those roles?

Adam’s call for rigorous, transparent evaluation is welcome. I would add that it should be independent and more focused on impact and less on process than current evaluation.

We predicted a “quadruple whammy” for developing countries in the financial crisis. The value of existing aid commitments will fall; donors are less likely to meet those commitments; financing needs of developing countries have increased; and non-aid finance (such as investment and remittances) will fall.

The Irish Government is first up with aid cuts:

Taoiseeach Brian Cowen announced the cuts in the Dáil today as part of a plan to secure €2 billion in savings to the Exchequer. The Overseas Development Aid budget will be cut from €891 million to €796 million.

…  Minister for Foreign Affairs Micheál Martin and Minister of State for Overseas Development Peter Power defended the “difficult” decision. They said that despite the cuts, Ireland remains the sixth most generous donor internationally in per capita terms.

“The size of our aid programme is linked to our own economy, and specifically to GNP growth,” the ministers said in a joint statement.

The only thing that can be said in favour of Ireland’s announcement is that they are at least being open about their failure to meet their obligations. Other countries – namely:  Italy, Germany, Portugal, Greece and France – will not meet their international commitments either but have not had the guts to say so.

And CAFOD have estimated that the financial crisis will reduce UK aid by $41bn over 7 years. (There is no sign of the paper on their website, so here is a copy.)

Here is a very interesting article by Minouche Shafik, the Permanent Secretary at the UK Department for International Development. (For our cousins elsewhere, a Permanent Secretary is the most senior civil servant in a government department, ranking somewhere just below a Minister).

Minouche makes two key points: first, social protection schemes seem to be working quite well; and second, that poor people suffer much more from volatility and shocks than others – and there is growing evidence of the permanent harm that they suffer following a temporary shock. That makes a pretty compelling case for widespread use of social protection to put a safety net under people so that temporary shocks do not reduce a family to poverty for not just one but sometimes two generations.

There is a new paper by John Page and Jorge Saba Arbache (here) which finds that child mortality, for instance, goes up when growth is low, but doesn’t come back down when growth accelerates agan. Primary school completion rates and life expectancy similarly go down when growth is low but don’t recover in periods of high growth.  The paper also finds that aid goes down during decelerations, adding to the volatility.

Minouche also says something I agree with and something I don’t agree with.

Here is what I think is dead right:

… attempts to orchestrate a tailored response to protect the most vulnerable will almost always lag behind the need.

This suggests the need for an automatic safety net response so that social protection kicks in automatically in the face of a shock.  I would like to see social protection schemes become “demand led” – that is, donors would agree the entitlement criteria with governments, and if, in the face of an economic shock, there are more people who fall below that threshold, then the amount of funding from donors should automatically increase. This would help to make aid counter-cyclical, instead of pro-cyclical.

Here is what I don’t agree with:

DFID does not see the money we have committed to social protection as a welfare programme, although clearly for some households it will provide this function.

Why not? I think there is a strong case for having a permanent welfare programme, which transfers money from the rich to the poor.  We should see aid not as a matter of temporary charity but the beginnings of a global system of social justice.   (I wonder if Minouche’s choice of words – attributing this view to “DFID” rather than herself, suggests that she secretly agrees?)

Last month the OECD published aid data from donors for the period up to and including 2007.  With my colleagues at Development Initiatives, we have done an analysis of the figures for the House of Commons International Development Committee. The full memorandum (as .pdf) is here.

Here are some key points:

• Donors promised to increase aid by 2010.  Half way to that target, if donors had been increasing aid at a constant rate to meet their commitments:
  - Global aid in 2007 would have been $18.4 billion higher
  - Over the last three years donors would have spent an additional $29.5 billion
  - This would have lifted approximately an extra 15 million people permanently out of poverty.
• The G7 also promised in 2005 to double aid to Africa. Half way to that target:
  - G7 aid to Africa has increased by only $3.3 billion, less than a sixth of the promised increase.
  - If aid had been increased at a constant rate towards the target, aid to Africa would have been more than $6 billion higher in 2007.
• It is becoming clear that Italy, Germany, Portugal, Greece and France are not going to meet their promises
• The financial crisis is a potential “quadruple whammy” for developing countries. The value of the existing aid commitments has fallen (because they are expressed as a share of GDP), donors are increasingly unikely to meet those commitments, the financing needs of developing countries have been increased by the downturn, and there will be be substantial declines in non-aid flows to developing countries such as foreign direct investment, remittances, and equity investment.

In industrialised countries the fiscal “automatic stabilisers” tend to increase spending in recession, which both dampens the macroeconomic effects of the downturn and channels additional funding to services that face additional costs. By contrast the institutional arrangements for providing finance to developing countries tend to mean that finance is reduced just as needs are increasing, which amplifies the economic downturn, increases economic instability and jeopardises poverty reduction and service delivery.

There is still no news of Robert Fowler, the UN special envoy to Niger:

The Niger government is still without news of the top UN official in the country, Canadian Robert Fowler, who disappeared three days ago west of the capital, the government spokesman said Wednesday.

I met Bob Fowler when he was the representative of Canda’s Prime Minister preparing for G-8 summits (the so-called “Sherpa”); and subsequently the personal representative for Africa (“APR” in the jargon).  The Kananaskis G-8 summit, which he helped to prepare (in which I was much more marginally involved) adopted the G-8 Africa Action Plan, which was a breakthrough in raising the commitment of the richest countries to doing more for Africa.

Bob Fowler is a remarkable man with a profound commitment to the people of Africa.  He is always willing to push the boundaries – he played a pivotal role in negotiating the end of “blood diamond” sales which financed the civil war in Angola, and so helped bring about the end of that war.

I don’t know who is holding Bob now, or what they want.  But he deserves to be a hero in Africa, not a kidnap victim.   Fingers crossed for his early and safe release.

Jean Michel Severino likes the idea of “Cash on Delivery Aid“.

I think it could be the basis of a new consensus – linking a (broadly European) agenda of giving governments in developing countries more freedom to choose their own approaches to development with a (broadly North American) agenda of ensuring that aid is more firmly linked to results.

There are, as JMS rightly says, some issues that need to be resolved: how to define the outputs exactly, and what to do about countries that are unable to make progress towards results.  As he says, the first can be solved. The second is of course a problem common with any system of payment by results: it defeats the point of results-based-aid if you get the aid irrespective of whether you deliver the results.  My answer is that if (and when) we want to give aid to countries that are not able to produce results (and there will be occasions when we do) then we should devise a separate mechanism for doing so, with its own criteria. That is not a critique of Cash on Delivery Aid, but a case for ensuring that it is not the only system for providing aid.

Ross Coggins wrote about The Development Set back in 1976 (poem below). More than thirty years later, his critique still feels very contemporary (though were he writing today, I am sure that white landcruisers, satellite phones and blackberries would feature somewhere).

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

In a very thought-provoking post, Alanna Shaikh lists four ways that an NGO can unintentionally do harm to the community it’s trying to serve.

1) You can waste the time and effort of a community by initiating projects which have little chance of success. It’s hard to identify a good project for a small community. Community buy-in is no guarantee of success; possessing deep local knowledge doesn’t make a person omniscient. Projects that have little chance of success include vocational training in sewing and handicrafts, beekeeping, and raising chickens. If you waste a year of the community’s time on a broiler chicken project that never makes a profit, that’s a year of time and effort which could have gone to real income generation or looking after children.

2) You can leave communities convinced that they need outsiders to solve their problems. If you raise $3000 for a backhoe to clear irrigation ditches, then what happens next time the ditches silt up? The farmers’ cooperative will never realize they could have cleared it with hand shovels, or raised the money by charging a membership fee.

3) You can damage beneficial community structures, or solidify harmful structures. Your choice of community intermediary elevates that person or group, by putting them in control (real or perceived control) of valuable assets. If you work with existing power structures, you can support and entrench inequalities, such as sexism or racism, which are already present. If you chose partners who are not part of the current elite, you can destabilize delicate community balances, and erode resilience.

4) You can construct a building and then not provide funds for maintenance or staffing. A school needs a teacher. A clinic needs a doctor or nurse. All buildings need upkeep – painting and repairs at the very least. A building with not funds for maintenance is a drain on community resources in perpetuity, or an eyesore.

Those are all serious risks.  I can think of two more:

5)  You hire good people to deliver the best service you can. But those people would otherwise have been working for government or another local organisation.  The good they could have done in government might far exceed the good they can do in your organisation.  There are donors here in Addis Ababa who pay their drivers more than twice what an experienced doctor will get paid in a government hospital. Where do you think the doctors want to work?  Reckless hiring by donors can create skills shortages in key institutions and drive up wages so that provision of services becomes less affordable.

6)  You establish yourself as an influential player in the sector you work in; you become friendly with Ministers and senior officials; you are invited to key meetings.  This is good: you can help to push things in the right direction. But the people you are influencing should be accountable to their own citizens, not to you.  And there are three more like you, all pushing in slightly different directions, making it very difficult for any government to maintain a common sense of purpose.  And who are you accountable to?  With the aim of doing the right thing, you are undermining the legitimate accountability of the system you are influencing.

These risks apply to official government donors and multilateral organistions as much as they do to NGOs.