Improve Aid Effectiveness

United Nations Organization Mission in Democratic Republic of Congo

By Homi Kharas, Brookings Institution

The multiple stakeholders gathered at the first high-level meeting of the Global Partnership for Effective Development Co-operation have clearly stated their intention to engineer “a paradigm shift from aid effectiveness to effective development co-operation”. By this, they mean that there are many ways to support development other than official development assistance (ODA), and that aid has different characteristics depending on its source and destination. Philanthropists, emerging market economies, and private business groups are now delivering substantial amounts of aid across the world, and are delivering this aid to support local governments and businesses and poor households as well as the national governments of developing countries. With more actors in development co-operation, there are more risks that programmes can become fragmented, unevenly implemented or otherwise incoherent with each other. The difficulties in achieving effective co-ordination and co-operation across aid providers can rise exponentially as the number and scope of activities goes up.

This is why it is so important to have multi-stakeholder meetings to agree on principles and modalities of delivering aid so that their actions are at a minimum co-ordinated, meaning they do not interfere with or jeopardize others’ activities, and at best co-operative, meaning jointly planned and implemented in a coherent programme. The Global Partnership seeks to promote both co-ordination and co-operation.

There is good news to report. Most importantly, despite the massive budgetary and financial pressures caused by the Great Recession, aid appears to be at record levels. The group of developed country members of the Development Assistance Committee (DAC) have raised gross ODA to over $150 billion in 2013, and, while statistics are less reliable, there are indications that aid from other countries has also increased. Private philanthropy, foundation giving and business development co-operation also appear robust.

There is further good news on the consensus among development partners that recipient governments should take the lead in the co-ordination and co-operation of aid activities, and that all providers of development assistance should participate in country-led co-ordination mechanisms and mutual accountability reviews.

But there is less good news on how this agreement in theory is playing out in practice. The Brookings Institution and the Center for Global Development have been jointly monitoring the quality of official development assistance through QuODA since 2008. We are just completing our third review, based on new data released as part of the monitoring exercise undertaken for this first Global Partnership meeting. In this review, we compare donor aid practices in 2008 with those in 2012 across four dimensions of aid effectiveness. Maximising efficiency is about how aid is disbursed across countries, and the division of labour among donors on their support to specific countries and sectors. Fostering institutions is about the degree to which donors are really prepared to put partners in the driver’s seat, by using country systems and respecting country priorities. Reducing burden is about lowering fragmentation and co-ordinating better across donors. Transparency and learning is about making available details on aid activities and harnessing the power of evaluation to improve impact.

Adult Education Programmes in IndiaWhile it is encouraging to see the Global Partnership adapting its mandate to an evolving world, it is also important not to lose sight of very practical targets that the aid effectiveness agenda has promoted and where considerable work remains to be done.

We find a mixed track record of improvements. There has been good progress on fostering institutions. The share of aid going to areas identified as priorities for development by residents of developing countries has doubled. The use of parallel project implementation units has halved. Aid is being recorded on budgets and operational strategies of recipients have improved. But there is very little change in the use of country financial and procurement management systems.

There is also far more transparency and learning today about the nature and scope of aid activities. For example, 230 organisations have published on the International Aid Transparency Initiative’s registry and there is more detailed and comprehensive reporting to the Creditor Reporting System of the DAC. But there is less evidence that this more widely available data is being used to improve the effectiveness of aid or to build stronger accountability. Published information should be useable for average citizens, not only for data experts.

More disappointing is the lack of progress on maximizing efficiency or reducing burden. Over the four-year time frame we studied, there has been no shift in reallocating aid to poor countries, or to better governed countries. The share of aid going to sub-Saharan Africa has not gone up despite the improved absorptive capacity in many countries there. Administrative costs of delivering aid are going up, not down. There is no evidence of a better division of labour across donors, despite a strong commitment to do so. The predictability of aid has declined in tandem with unpredictability in budget environments in developed countries. There has been no progress in untying the last remnants of aid. The average size of aid activities continues to fall, and there has been no increase in the use of the multilateral system, which has the potential to bring donors together in more co-operative and co-ordinated programmes.

In other words, while it is encouraging to see the Global Partnership adapting its mandate to an evolving world, it is also important not to lose sight of very practical targets that the aid effectiveness agenda has promoted and where considerable work remains to be done. Donor rhetoric has improved considerably, but donor practices lag behind. The underlying values of keeping true to commitments, implementing as well as articulating, and co-ordination to help national development strategies, are the core of effective development co-operation.

kharash_bioHomi Kharas is Deputy Director for the Global Economy and Development programme at the Brookings Institution. His books include “Getting to Scale: How to Bring Development Solutions to Millions of Poor People” and “Catalyzing Development: A New Vision for Aid.”

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