Introduction

Just because you’re doing good, doesn’t mean you’re doing it well.

What would you do with 50 years and 1,5 trillion euros?

Aid is…

Helping the poor, to some extent: “a voluntary transfer of resources from one country to another, at least partly given to benefit the recipient country” “acting as a signal of diplomatic approval, strengthening a military ally, acting as a reward for good behaviour desired, to extend cultural influence, or to provide commercial access.”

Helping the poor: “flows of official financing administered with the promotion of the economic development and welfare of developing countries as the main objective.”

Harming the poor: “the billions that have hampered, stifled and retarded Africa’s development.”

Not helping the poor: “when you take money from the poor people in a rich country and give it to the rich people in a poor country.”

What is aid?

Bilateral ODA from DAC donors to all recipients (OECD QWIDS, 2012)

0

5000

10000

15000

20000

25000

30000

35000

How much aid?

Bilateral = 77%, Multilateral = 23%

EC - $17.5 bnUN - $3.3 bnEU - $64.7 bn

Gates - $2.6bnGlobal Fund - $3.3 bn

How much aid?

GreeceItaly

KoreaSpainJapan

United StatesPortugal

AustriaNew Zealand

CanadaAustraliaGermany

SwitzerlandFrance

BelgiumIrelandFinland

United KingdomNetherlands

DenmarkNorwaySweden

Luxembourg

0 0.7

0.130.130.140.15

0.170.19

0.270.280.28

0.320.36

0.380.450.460.470.48

0.530.56

0.710.84

0.930.991

ODA/GNI

Bilateral ODA from DAC donors to all recipients (2012, OECD QWIDS)

How much aid?

GreeceItaly

KoreaSpainJapan

United StatesPortugal

AustriaNew Zealand

CanadaAustraliaGermany

SwitzerlandFrance

BelgiumIrelandFinland

United KingdomNetherlands

DenmarkNorwaySweden

Luxembourg

0 0.7

0.130.130.140.15

0.170.19

0.270.280.28

0.320.36

0.380.450.460.470.48

0.530.56

0.710.84

0.930.991

ODA/GNI

Bilateral ODA from DAC donors to all recipients (2012, OECD QWIDS)

UN General Assembly: each economically advanced country will progressively increase its official development assistance to the developing countries and will exert its best efforts to reach a minimum of 0.7% of its gross national product by the middle of the decade.

1970

After the War: What works for Europe…World Bank, IMF, Marshall Plan (‘48-’52: $13bn). Aid to fix the ex-colonies (and maintain influence). Modernise & industrialise…

The Sixties: All we need is industry.State-led. Roads, railways, dams = growth = development but too big and long-term for Gov’s. Plus help the agri sector in the meantime.We’ll be done in a decade.

 

A very briefhistory of aid

The Nineties: It’s the Government, stupidGreed is only good in the private sector. corruption, rule of law, capacity. Aid if you have good policies (Burnside & Dollar). Aid fatigue = volumes

The Noughties: More is Better, Better is Better $50bn by 2010?) MDGs, AE (ownership, budget support), Celebrity Aid, Military Aid.

The Eighties: Greed is good Bring on the market, less Big Government, liberalise don’t subsidise, follow the Asian Tigers. Structural Adjustment in return for a loan to help with your loan. $15bn a year from poor to rich. The lost decade for development?

Today: The Backlash?First on the cuts list, “Africa’s future is up to Africans”, The White Man’s Burden, Why Foreign Aid Isn’t Working, Dead Aid…

A very briefhistory of aid

Does aid work?

Yes it works! Botswana, Indonesia, Korea, Tanzania…

No it doesn’t!! DRC, Haiti, Papua New Guinea, Somalia…

Let’s ask the economists… • Does aid lead to growth?

Yes, no, maybe.

• And what about growth & poverty? It depends… (Burnside & Dollar)

So, no real consensus as to what does work Rather, agreement on what does not work &

identification of micro-macro paradox

Does aid work?Dambisa Moyo

Problem: Aid harms: dependency, corruption, poor growth, more poverty. “the billions that have hampered, stifled, and retarded Africa’s development.”

Solution: • Stop aid in 5 years • Raise money from capital markets• Attract FDI• Cut trade restrictions• Up financial services to the poor

Does aid work?Paul Collier

Problem: 4 traps: conflictnatural resource reliancebeing landlocked and having bad neighboursbad governance in small countries

Solution: Cheap but tricky. Concentrate aid and take more risks; add to aid with: military interventions, international charters on good governance, free trade. Learn from the Marshall Plan

Does aid work?William Easterly

Problem: Fumbling in the dark on growth and poverty reduction. Too many variables, too much information, no one solution. Big Soviet-style plans don’t work.

Solution: Innovation and trial and error.More of what works. Seekers not Planners. Flexible, Fast, Feedback. E.g. http://www.givewell.net

Does aid work?Jeffrey Sachs

Problem: Poor countries can’t reach the bottom rung, stuck due to: geography, infrastructure, healthcare, corruption.

Solution: More aid (0.7%), diagnosis and prescription = end of extreme poverty by 2025. Bed nets, debt cancellation…Millennium Villages. Once on the bottom rung, will be able to pull themselves up into the global market economy.

Does aid work?Owen Barder

Problem: Aid could work better: multiple & competing aims, weak incentives, incomplete info., poor feedback & learning, poor results-focus, long delivery chains. Solution: planning, markets & networks. • Planning: systems & standards not details. • Markets: for delivery (unbundle funding from design, CoD, Vouchers) • Networks: feedback, transparency, incentives

Spending aid on the right things and through the most effective channel

Ensuring that all aid has the maximum possible impact on poverty reduction

Ensuring that the financial resources provided by rich countries to poor nations improve the daily lives of millions of people and move the world closer to achieving the MDGs

How? The AE agenda focuses on aid management and delivery practises

What is AidEffectiveness?

Government Driving

Predictability, Transparency

Results, Accountability

Donors Joined-up

What is Aid Effectiveness?

• 1. Ownership: Developing countries set their own strategies for poverty reduction, improve their institutions and tackle corruption.

•2. Alignment: Donor countries align behind these objectives and use local systems.

•3. Harmonisation: Donor countries coordinate, simplify procedures and share information to avoid duplication.

•4. Results: Developing countries and donors shift focus to development results and results get measured.

•5. Mutual accountability: Donors and partners are accountable for development results.

Paris principles on aid effectiveness:

1. Ownership

What? You can drive and we won’t tell you where to go. Not just Government.

Why? Democracy, Legitimacy, Knowledge, Capacity. Fragile States.

How? Strategy, Sectors, Systems.

In Practice… Donors: back-seat driving (PRSP, CSP), pay for policy. Govt: we know what you really want, capacity & information constraints.

2. Alignment

What? Go through the Government.

Why? Costs less, delivers more. Better systems. How? National strategy, national systems, capacity build, untie, use budget support.

In Practice… less control & more risk, selective use of strategy, systems: just a bit more capacity building…

3. Harmonisation

What? Holding hands, not stepping on toes. Study, plan, implement, evaluate and talk together. Specialise.

Why? Gaps, Overlaps, Synergies, Track, Manage. How? Not automatic! Joint Analysis then Programmes, Govt-led Specialisation, Silent Partnerships, National Indicators. First change procedures.In Practice… Government: leadership – will, capacity? Donors: will, power, procedures, time?

4. Managing for results

What? Delivering and accounting for results

Why? To justify aid to taxpayers, To manage aid agencies, To optimise the allocation of aid, To learn about what works

How? Result-oriented project design, country –level results frameworks, EU-level results frameworkRisks… Bureaucratic overload, Questionable quality of results information, Short-term focus, Neglect of equity considerations, Perverse incentives,

5. Mutual accountability

What? The process by which parties hold one another accountable for the commitments they have voluntarily made to one another

Why? To develop a mutually beneficial relationship between donors and partners

In Practice… • Imbalances of power• Complex chains of accountability

How? Aid Effectiveness Reviews, Common Results Frameworks

No. of indicators the island of St Vincent has been asked to monitor on HIV/AIDS? 191

No. of donor missions to Ethiopia in 2007?221

Percentage of aid projects that are for less than $1m?80

No. of NGOs working on health in the west coast of Aceh? 22

No. of bank accounts the Mozambique Govt has to have to meet donor requirements? 1,000

Number of aid coordination forums in Senegal? 82

What is NOT AE

What is Development Effectiveness?

• the level of achievement of overall development goals which are affected by a host of different factors

• the assessment of aid against official, long term and quantifiable development goals (e.g. the MDGs or national goals)

Thus development effectiveness is not solely the level of goal achievement of aid/development interventions.

Have the immediate goals of assistance been achieved?

And have those goals enhanced the development process?

International commitments

2000MDGs

2002 F4D

2005PCs

2008AAA

2005G8

2008 F4D

2008 MDGs

2003Rome HLF

2011Busan HLF

2014GPEDC

HLM

EU Commitments

2005 - EU Consensus for Development2006 - More, Better, Faster

- Joint Framework for Country Strategies- Financing for Development

2007 - Strategy for Africa- Code of Conduct on Division of Labour

2008 - Backbone Strategy on Technical Cooperation- Toolkit for Capacity Development

2009 - Operational Framework for Aid Effectiveness2011 - The Future Approach to EU Budget Support

- Increasing the impact of EU Development Policy: an Agenda for Change- EU Common Position for the 4th HLF on AE: Council Conclusions

2014 - EU Common Position for the 1st HLM of the GPEDC