Profligate spending?

Global partnership“There are few more confused policies than this Government’s on foreign aid, which has seen the budget soar by a staggering 28 per cent in the past year, to £10.6 billion. This figure, revealed by the OECD, represents probably the biggest percentage increase in a single year ever enjoyed by any department in British peacetime history. And it has happened for no obvious reason. […] The fact that the overseas aid budget is one of the few to be ringfenced often feels more like a public relations exercise than an act of good governance. Rather than boasting of their compassion, ministers should provide more concrete evidence of what our spending has achieved.” That’s the UK Daily Telegraph’s reaction to what it calls “Profligate spending on foreign aid” after seeing the latest figures published by the OECD Development Assistance Committee (DAC).

Today and tomorrow, over 1500 “development leaders” will join Enrique Peña Nieto, President of Mexico, UN Secretary-General Ban Ki-moon and OECD Secretary-General Angel Gurría in Mexico City to discuss the kind of evidence The Telegraph is asking for. The first High-Level Meeting of the Global Partnership for Effective Development Co-operation will review global progress in making development co-operation more effective; agree on actions to boost progress; and “anchor effective development co-operation in the post-2015 global development agenda” – the set of goals and policies that will take over from the UN’s Millennium Development Goals after their 2015 target date.

The UN and OECD will be presenting Making development co-operation more effective: 2014 progress report. The OECD DAC’s data show that aid rose by 6.1% in real terms in 2013 to reach the highest level ever recorded, despite continued pressure on budgets in OECD countries since the global economic crisis. Donors provided a total of $134.8 billion in net official development assistance (ODA), marking a rebound after two years of falling volumes. In all, 17 of the DAC’s 28 member countries increased their ODA in 2013, while 11 reported a decrease. Net ODA from DAC countries stood at 0.3% of gross national income (GNI.) Five countries, including the UK, met a longstanding UN target for an ODA/GNI ratio of 0.7%. At the same time, the fall in the share of aid going to the neediest sub-Saharan African countries looks likely to continue in the years to come.

The 2014 progress report looks at whether this money was well spent, based on data provided by 46 countries that receive aid, or “development co-operation” as the book sometimes calls it. This isn’t the only piece of jargon you’ll need to know to be able to understand the report. The assessment starts by looking at “country ownership”. The case of Korea, where the Global Partnership was created in 2011 at a conference in Busan, illustrates what this refers to. It means that countries receiving aid take charge of the process. Korea wanted non-military aid rather than the guns, tanks and planes it was being offered, and it insisted on focusing on large enterprises rather than the small and medium-sized businesses foreign development experts told it were the key to success. History shows that the Koreans knew better than anybody else what they needed.

Like many aspects of international cooperation, this sounds like common sense, but people involved in actual projects can often tell of money wasted because the experts didn’t know enough about local conditions – building industrial plants without bothering about where the energy to power them would come from for instance. Country ownership appears to be strengthening, but it’s too early to say whether this is translating into increased use of developing countries’ own ways of assessing results to guide cooperation.

Country ownership should reduce the number of useless projects, especially when it is combined with another Busan indicator – untying aid. Many projects that failed in their stated objectives, or contributed little to helping most people in a country improve their lives, were financed to help businesses in the donor country. The money was given on condition that it was spent in a certain way, on certain suppliers, even if the same goods or services could have been obtained more cheaply elsewhere or the funds spent on something more useful. In 2012, 79% of ODA was untied, compared with only 50% at the start of the millennium.

A common criticism of aid is that it ends up in the offshore bank accounts of kleptocrats. And the critics aren’t just in donor countries complaining that income from taxes should be spent at home. Writing in The Nigerian Voice, Gambian journalist Matthew K. Jallow argues that “… a major debilitating by-product of foreign aid to Africa is the culture of corruption that has taken root at every level of every government. Today, corruption has become the way of life in every country in Sub-Saharan Africa”. Jallow’s strategy for fighting this is transparency, accountability, and good governance. Making development co-operation more effective takes a similar view, stating that the “drive for transparency is starting to show results”, although the report also warns that there’s still a lot to be done by donors and recipients alike. “Inclusiveness” is one way to boost transparency. In other words, include non-state actors in national systems and accountability processes. Unfortunately, a government-centred, North-South perspective is still common.

Overall, the report concludes that there are some encouraging signs that “longstanding efforts to change the way development co-operation is delivered are paying off”, and that the quality of this co-operation is improving, but we still haven’t met the targets that the Global Partnership set for 2015, and we won’t meet them without more effort.

Useful links

OECD work on aid effectiveness

Patrick Love

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