NN42, June 2009
A Safari Towards Aid Effectiveness?
Enhancing Aid Impact
By Roger C. Riddell, Oxford Policy Management & The Policy Practice
Email: rriddell@waitrose.com
Keywords
Aid Impact; Effectiveness
Summary
This article notes that while aid is not the answer to development, if effectively used, it has the potential to put poor country economies faster on the road to sustainable development.
Extreme poverty, and the diseases and vulnerability which poverty spawn, kill far more people each year - probably as many as 16 million - than do the deaths caused by disasters and their aftermath which humanitarian aid is provided to help in part to reduce. Repeatedly over the past 30 years, political leaders of the rich countries have pledged to rid the world of poverty and to double the aid they give to help achieve this objective. Repeatedly, these leaders have failed to fulfil their pledges.
I am a strong supporter of development aid, and believe that far more is needed if the goal of eliminating poverty is to be achieved. However, simply providing more aid (important though this is) is no guarantee that the desired reduction in poverty will be hastened. This is, in part, because aid is not the answer to development, though, if used well, it has the potential to put poor country economies faster on the road to sustainable development.
Everyone recognises that aid?s impact has repeatedly fallen short of its goals. In some ways this is understandable because of the central dilemma of all aid for poverty reduction- namely that the countries which need aid the most tend also to be characterised by numerous factors likely to undermine the impact of the aid they receive, such as an inhospitable climates, an underdeveloped infrastructure, weak institutions and governance structures, underdeveloped civil societies, and powerful elites able to manipulate markets, the media and parliamentary structures for their own narrow ends. Development aid works best in countries that don?t need it.
However, aid impact is also reduced because of actions taken - and not taken - at the donor end. A major and continuing problem is that rich governments continue to give aid to further their own commercial and/or short-term political interests: the commercial tying of aid raises its costs to recipients by upwards of 25 percent above market prices, while the allocation of aid to further non-development objectives is a major reason why only a little over 40 percent of official aid goes to the poorest 63 countries in the world. Sometimes, individual agencies and those working provide inappropriate aid because they do not sufficiently understand the political context.
Beyond these factors, a major reason why aid?s impact continues to fall well short of its potential occurs because of systemic problems directly caused by or arising from donor action or inaction. To their credit, in the Paris Declaration on Aid Effectiveness signed in March 2005, the main donors formally acknowledged that things they do - or do not do - collectively undermine the impact of aid. This included their failure to work together more closely; their failure to provide aid insufficiently linked to the development plans of recipient countries; the increasing number of individual aid projects (up from 20,000 to over 60,000 in ten years); and the growing number of donors each recipient has to interact with (on average 25, but 30 recipients have to deal with 40 or more donors).
However effectively addressing aid?s systemic problems has not yet happened for two reasons: the main aid donors have not been fulfilling their Paris Declaration pledges: ?not enough? progress has been made as the final statement from the September 2008 Accra meeting held to review progress explicitly acknowledged; and some key systemic problems are still not yet on the donors? agenda.
If aid is to make an effective contribution to poverty reduction, it needs to be provided to each poor country that needs it, in a predictable and non-volatile manner within a long-term time horizon, and in sufficient quantities, with individual donors agreeing to make up for shortfalls (when one of their number fails to fulfil its aid pledge), and with aid allocations not driven and shaped by the commercial and short-term political interests of the major donor countries.
Further reading
Riddell, R. (2008) Does Foreign Aid Really Work? Oxford University Press (paperback)
Riddell, R. (2008) Measuring Impact: The Global and Irish Aid Programme. Advisory Board for Irish Aid (Dublin).
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