Why 21st Century Aid needs to be bigger AND better

May 20, 2010

     By Duncan Green     

The arguments on aid over the last few years seem to have fallen into three camps:

1. Aid is bad (Dambisa Moyo, Bill Easterly)
2. Aid is great (Jeff Sachs, various aid donors, and to some extent, Oxfam and other NGOs)
3. Hey, I’ve just had this great idea for making aid much better (CGD, Owen Barder, Paul Collier)

The first two focus almost exclusively on quantity (although pushing it in opposite directions). The third takes quantity for granted, and tries to improve quality.

But I have seen relatively few attempts to take on quantity and quality simultaneously. From the quantity people, that is probably because people who write about aid are usually either fiercely pro or anti. Anti-aid advocates don’t want to muddy the waters by devoting too much attention to how it could be improved; the pro-aid camp is fearful of giving fuel to the enemy if it acknowledges the failings of aid.

As for the quality people, they have one good motive for skimming over the need to increase the quantity of aid, and one not so good. The good motive is that unless we improve the quality of aid, it will be that much harder to justify increasing quantity in a time of acute fiscal stress. The not so good motive is that arguing for more aid makes you sound a bit naff/naïve/not clever.

But aid is going to come under even greater scrutiny and attack over the next few years, driven by the looming fiscal crunch hitting virtually every donor country. Anyone who cares about aid is going to have to start talking about quality and quantity, including the warped motives for which aid is often given.

Oxfam, which I would say has in the past paid too little attention to quality issues in its public messaging, has a new paper out today in the UK which tries to get the balance right. ‘21st century aid: recognizing success and tackling failure’, by Jasmine Burnley, is aimed at public opinion, rather than the more arcane aid debates within the aid industry. So not much wonkery on cash transfers or cash on delivery. Instead, the paper combines a good primer on the basic case for aid and some of its achievements, with a look at some of the ways aid needs to be improved, and some handy myth-busting (or at least myth-qualifying) on the standard anti-aid arguments (aid fuels corruption, hampers growth, squeezes out foreign investment or domestic taxation).

What does good aid look like?

“Twenty-first century aid is liberated from rich countries’ political incentives and is targeted at delivering outcomes in poverty reduction. Twenty-first century aid innovates and catalyses developing country economies, and is given in increasing amounts directly to government budgets to help them support small-holder farmers, build vital infrastructure, and provide essential public services for all, such as health care and education. Twenty-first century aid is transparent and predictable. It empowers citizens to hold governments to account, and helps them take part in decisions that affect their lives.”

Much of this has been said before, but against the backdrop of increasing levels of anti-aid rhetoric, a grown up discussion recognising that aid doesn’t always work one hundred per cent of the time, but when it does is more than worth it, is important to have honestly, and in the open.

What does the report recommend? Donors should:

“• Ensure aid is channelled to help support active citizens, build effective states as a pathway to reducing poverty and inequality, and support diverse forms of financing to contribute to development.

• Deliver aid through a mix of models, including increasing budget support wherever possible, and ensure that a percentage of aid flows are channelled to civil society organisations, to enable people to better hold their governments to account.

• Dramatically improve the predictability of aid, by increasing the proportion of aid that is general budget support where possible and by sector support where general budget support is not an option, and limit conditions attached to aid to mutually agreed poverty indicators.

• Give at least 0.7 per cent of their national income in aid, and set out how this target will be reached, with legally binding timetables.

Developing country governments are urged to:

• Reject a culture of corruption, uphold human rights standards, and act in ways which are transparent and open to scrutiny.

• Provide legal environments in which civil society organisations monitoring government activities can flourish and respect the independence of non-government bodies like audit offices and the judiciary.”

Somewhere, we seem to have lost the ability to simultaneously celebrate aid’s many achievements (at its best, it is an extraordinary act of international solidarity) and think critically about how to improve it. We need to do more of both.

and here’s a nice animation on the aid quality arguments

May 20, 2010
Duncan Green