Aid effectiveness

Subtly distorted

Unless development efforts are country-owned, they do not succeed. The international community is right to emphasise this matter, but it has not taken the right approach to dealing with it. Instead of disbursing large sums to countries that lack the necessary leadership, donor governments should invest more in global public goods. They could also do more to help build country ownership by helping to broker solutions to the collective action challenges that often prevent more coordinated efforts within developing countries.

By David Booth

The 2005 Paris Declaration on Aid Effectiveness grew out of the consensus that the success of ­development efforts depends on “Country Ownership”. In other words, it recognised that aid can only be effective where a country’s leadership is really committed ­to ­development. The crucial issue is to make such Ownership happen – and this is what the international aid debate should have been about. In fact it has been focussed on something subtly different. I have put forward this argument in a longer publication (Booth 2011) and will only make the core points here. While the international community should have considered Country Ownership a desirable outcome, I argue that it simply took it for granted.


Neo-patrimonial imperatives

Most of the aid-effectiveness agenda from Paris on was about how to prevent aid from undermining Country Ownership where it already exists. The snag, however, is that such Ownership cannot be taken for granted. On the contrary, it is the exception, rather than the norm in very poor developing countries. For example, Côte d’Ivoire, Nigeria (note comment by Vladimir Antwi-Danso in this edition) and Kenya are three African countries of huge economic potential. Yet in each of them, election-related violence in recent years has underlined the way politics is dominated by short-term thinking along identity lines and clientelism.

The governments of these countries respond to neo-patrimonial imperatives leading them to serve narrowly defined interests rather than the public good. Most likely, some political leaders would like to act differently, but their countries’ institutions hardly allow them to do so. In settings like these, countries are trapped because there are no incentives that would reward leaders for orienting towards public goods and the long term.

As research has shown again and again, aid is unlikely to bring about better governance in challenged settings. Indeed, aid as such is probably on balance bad for the institutional fabric of poor developing countries. The reasons are complex, but to put it simply, the core of the matter is that aid shields leaders from the consequences of irresponsible or short-term action. In the history of the rich world, the bonds between taxpayers and governments were crucial to the gradual emergence of a sense of public responsibility. Where aid serves as a substitute for tax revenues, such bonds cannot begin to grow.

In the past decade, a guiding assumption of the international aid discourse was that developing countries lack the funding they need, so donors should step in. This assumption is flawed. Unless the governments of the poor countries concerned are serious about long term development and pursue policies geared to that goal, aid is likely to do little more than help them get an even firmer grip on irresponsible power.


Irrelevant paperwork

Unfortunately, it does not matter much whether the government of a developing country agrees to good policies on paper or not. What matters is what it ac­tually does while in office, and that is something donors find hard to handle. The joint strategies that are drafted at the instigation of donors often make little difference in practical terms. Their language is politically correct, of course, but implementation is an altogether different matter.

Sadly, donors’ insistence on technical monitoring with the use of improved statistical systems is not likely to help much either. This approach will hardly do more than add new burdens to a country’s over-stretched technical capacities if its government is not committed to achieving development results. If, on the other hand, it is committed, donor pressure for monitoring is probably superfluous.

Donor governments that really want to boost poor countries’ chances of development should refrain from disbursing large sums to countries that are unlikely to use those funds well. Instead donor governments should pay more attention to reforming their non-aid policies which are known to affect developing countries in negative ways. They should stop detrimental international practices in trade and finance for which they are directly responsible or in which they are complicit. The case for more vigorous action on the global drivers of corruption and civil war is overwhelming. Generally speaking, rich world governments should spend more on under-funded global public goods, for example public agricultural research.

The way Ownership has been dealt with in the aid-effectiveness debate so far does not do much to promote development, though it is comfortable for donor governments in several ways. For instance, it allows them to display their concern for poor countries while, at the same time, diverting attention from other policies they pursue which hamper those countries’ development. It suits them too that in the process they can make use of ideologically correct rhetoric, about good governance, democracy and perhaps human rights, all reliable crowd-pleasers with the public in donor nations.

The fine rhetoric is misleading nonetheless. The polities of poor countries are unlike those which now prevail in the rich world. They typically lack the type of civil society organisations which emerged along with capitalist social relationships in the advanced economies. Political party systems do not work to put checks on governments or build consensus in pursuit of the public good. If the political systems of the countries concerned were more like the representative democracies western nations are accustomed to, there probably would be little need for aid to begin with. It is an illusion to think that such political systems can be rapidly transformed, with a bit of financial pressure, into models of “good governance”.


A more relevant way to help

That said, donor agencies probably can – and should – play a positive role in fostering responsible country ownership. Many developing countries would be better placed to take charge of their development if their institutions at various levels functioned a little better. Badly functioning institutions are often the result of unresolved, but resolvable, collective-action problems. And in places where various social forces do not manage to forge consensus in the public interest, outsiders can make a difference. At least in principle, they can broker alliances to bring about change.

Identifying and solving collective-action obstacles is an idea with a wide range of applications at micro, meso, macro and even international levels. Official aid agencies and development NGOs already have substantial experience of helping to unlock logjams of this sort. The best examples are to be found at the micro and meso levels.

Britain’s Department for International Development (DfID) and other official donors have extensive experience with projects of the type Making Markets Work for the Poor. The central technique is to broker missing relationships and revealing hidden potentialities for more efficient and profitable market interactions between different economic and social players. A current project in Nigeria (http://www.propcom.org), for example, increased the number of farmers who were able to buy Indian tractors by renegotiating supply relationships in this way. In the governance of service-providing sectors, the German agency GIZ, the former GTZ, also has a long and relevant track record of brokering meaningful change.

It would of course be challenging to achieve something similar at the level of nation states – but Country Ownership conceived as a problem of collective action at the national level is surely an idea that deserves to be brought closer to the top of the international development policy agenda.

Answering the wrong question

If responsible Country Ownership is the precondition for successful development, the most important question is whether countries are governed by people for whom national development is a central objective. Accordingly, the most important question about aid is whether it is helping to bring about such a state of affairs. In principle, that is what the Paris Declaration on Aid Effectiveness is about. However, its concept of “Aid Alignment” does not answer that question, but a significantly different one: how can aid avoid weakening Country Ownership where it already exists?

Historically, the concept of Aid Alignment is a response to proven negative effects of two previously dominant aid modalities: free-standing projects and structural-adjustment lending. To tackle these issues, the concept makes sense. There is still a good deal of large-scale project aid that carries on in spite of the vast literature that assesses its negative impacts on the institutional fabric of host countries. Similarly, donor practice in budget support continues to feature quite a bit of ex-ante conditionality in the face of all the evidence pointing to the ineffectiveness of such conditionality.

However, the existing Alignment concepts are valid guidelines only on what donors should stop doing. They do not tell us what donors should do instead with a view to helping to build country-owned development.

The most plausible affirmative advice is: wherever possible, use country systems, and thereby contribute to strengthening them. This advice is good. But the trouble with it is that it does not say anything about what to do where country systems are subverted systematically by the political leadership for non- or anti-developmental purposes. Depressingly, this tends to be the norm, not the exception.

The other positive injunction central to the Paris Declaration is to align aid programming with “country policies”. It is even less helpful in the typical situation of low-income countries, where the prevailing real policies are not geared to development, but to short-term political needs. What tends to happen is that donor portfolios are married to the contents of some policy document or other which was generated in formal dialogue. Unfortunately, it is quite common that the actual policies pursued by the politicians and the relevant authorities bear little relation to formally agreed agendas.

Perhaps the worst part is that donors’ commitment to this understanding of Aid Alignment has become an obstacle to clear thinking on what remains the most rele­vant question in most poor countries: how to get the developmental leadership that is currently lacking, and what role aid might possibly have in that. (db)

D+C, 2012/02, Focus, Page 70-73