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Waste, overlap and inefficiency still plague foreign aid programmes - report

Source: Thomson Reuters Foundation - Fri, 18 Jul 2014 00:38 GMT
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Damaged cowpea seedlings grow in a field at Heshan village, in Shimen county, central China's Hunan Province, June 4, 2014. REUTERS/Jason Lee
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WASHINGTON (Thomson Reuters Foundation) – How effective is development aid provided by foreign governments?  The question has grown more pressing since the financial crisis, when donors and lenders started demanding more bang for their buck.  

Despite this drive for results, a new report by top Washington think tanks finds no measurable advance in reducing waste and duplication in foreign aid programmes, nor any improvement in how aid was distributed in the years from 2008 through 2012, the most recent period for which data were available.

“On the one hand there are visible and significant gains in fostering institutions and in transparency and learning.  However, there has been almost no change in maximizing efficiency or reducing the burden on recipient countries,” authors Nancy Birdsall, president of the Centre for Global Development, and Homi Kharas, senior fellow at Brookings Institution, said in the report.

Official development aid, or ODA, reached a new world record of $135 billion last year up from $122 billion the year before. The World Bank’s aid programme is the largest, followed by the U.S. Agency for International Development (USAID).

Erik Solheim, chair of the Organization for Economic Cooperation and Development’s (OECD) Development Assistance Committee which monitors its 31 member countries for aid effectiveness, said the study shows more work is needed to eradicate poverty and spur development.

“Much has been done, but donors must be better at aligning development assistance behind the priorities of recipient governments and use the existing country systems. The best way to build a state is to let it work!” Solheim said in an email to Thomson Reuters Foundation.

The study evaluated the quality of aid for 31 countries that are members of the OECD’s Development Assistance Committee, using four criteria commonly relied upon by international organizations – how efficiently aid is disbursed; whether aid programmes build institutions and skills within the recipient country; whether overlap and waste are reduced to lessen the burden on the recipient; and are evidence-based decisions made to  assess whether programmes work, or not, and to draw lessons from them.

Ireland received the highest scores overall among the donor countries.  Among the agencies the Global Fund, which targets AIDS, tuberculosis and malaria, scored the best for maximizing efficiency but got low scores on fostering institutions.

The report also examined some donors that are not members of the OECD committee, including the Bill and Melinda Gates Foundation, and found that they performed worse on the four measures, suggesting that private organizations are no substitute for official development aid in terms of the effectiveness.

(Editing by Maria Caspani: maria.caspani@thomsonreuters.com) 

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