The new consensus on aid effectiveness

Alex Singleton at the Globalisation Institute writes:

Over the past couple of years there has been a growing consensus that conditionality does not work.  … It has failed because imposing good policies on countries that don’t want to do them just results in countries taking the cash and then not doing the agreed policies. … Instead of conditionality, the approach should be to set minimum levels of governance and anti-corruption that countries must attain before receiving budgetary support – those countries are likely to absorb the money well and pursue good policies, thereby not needing the conditionality.

This is exactly right. (It is also what I argued in a presentation I gave in a meeting at the Africa Centre in December 2001, what the British Government set out in its policy paper of March 2005, and which I described at greater length here in December 2005.)

Alex goes on: 

DFID currently pays lip-service to governance, but in practice just writes the cheque. In countries where money is likely to be misspent by government, that is a mistake. Instead money should be spent through local, domestic NGOs, and through other bottom-up mechanisms like aid vouchers.

I don't agree at all that DFID only pays lip-service to governance.  DFID has just published an entire White Paper about Making Governance Work for the Poor.   It has recently reallocated its aid in both Uganda and Ethiopia in response to concerns about governance.  That is why DFID refuses to give budget support in countries such as Kenya and Zimbabwe. 

1 thought on “The new consensus on aid effectiveness”

  1. Whether conditionality ‘works’ has at least two componenets as a question: whether it gets governments to fulfil the conditions, and whether this then leads to increased economic growth and poverty reduction. I am not convinced it does either particularly well in the long term, but that’s open for debate.

    My main question here is how exactly defining a minimum level of governance and anti-corruption before receiving budget support differs from conditionality? Surely it just leads to a lot more conditions, which seems to be the case in a lot of countries receiving budget support at the moment. I think it is conditionality, and what’s more that it is less effective than conditionality based around simple policy measures like liberalising trade barriers like tariffs and quotas. Much harder to monitor, easier to subvert and harder to square with domestic incentives for policy reform.

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