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How to spend aid money better: views from experts

Source: Thomson Reuters Foundation - Wed, 1 Dec 2010 15:33 GMT
Author: olesya-dmitracova
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LONDON (AlertNet) - Out of every dollar donated to poor countries in aid, only 30 cents end up being put to the intended use, some studies have shown.

That is a statistic quoted by former aid worker and British government official Giles Bolton at a debate about aid and accountability in London this week.

“Aid is depressingly ineffective,” he told the audience at the Frontline Club.

“If people are very poor, can they be helped with some money? Yes, absolutely... The way it’s delivered, however, is deeply shocking.”

A large chunk of the billions of dollars rich countries give to less well-off ones every year is wasted, either through corruption or inefficiency or simply bad decisions on how it should be spent, Bolton and his co-panellists said.

The million-dollar question is how to limit that waste and to ensure that more aid leads to more development and less hardship for the poorest.

The panellists came up with several suggestions for donors and agencies that spend the funds:

DITCH NATIONAL AID PROGRAMMES

Aid should not be delivered, as most of it is now, through rich countries’ national development programmes, as that often creates duplication and hampers coordination between aid projects by different nations, Bolton said.

He reached this conclusion when he ran Britain’s aid scheme in Rwanda and worked alongside aid officials from a multitude of other Western governments.

It would be better to give aid money to organisations and countries with the best track record in reducing poverty for them to spend on the ground, Bolton said.

“Get rid of Western countries and others having their own aid programmes. Spend your aid on international agencies and places with evidence of success,” Bolton urged.

PUBLISH WHAT YOU GIVE

To avoid excessive funding of some countries and issues and underfunding of others, donors must be able to find out how much their peers are donating to a particular nation and for what purpose.

At present such information is not easy to access or understand, say campaigners such as the International Aid Transparency Initiative (IATI) and Publish What You Fund.

Due to this lack of transparency, the intended recipients of aid and the broader civil society in developing countries cannot trace where aid money is going, which makes it easier to misuse the funds, campaigners add.

“The primary thing donors can do something about in terms of corruption is publishing their own data,” said Judith Randel, co-founder of Development Initiatives and part of the IATI Technical Advisory Group.

It is important to publish not only what givers of aid have donated but also what the beneficiaries of aid have received, she added.

Jonathan Glennie, researcher at Britain’s Overseas Development Institute (ODI), echoed Randel’s comment, saying: “The most important thing is ensuring that aid has an impact for poor people.”

MAKE DECISION-MAKING LOCAL

Donors should give local organisations in developing countries more freedom to decide how to spend aid funds, said Vicki Peaple of the British-based STARS Foundation who manages funding and consultancy support for such groups in Africa.

“Too often it is someone else who is deciding what has value and what doesn’t,” she told the audience, adding that charities are often wary of owning up to administration costs, such as office equipment, because that is “not sexy, it doesn’t sound as good as saying ‘we distributed 500,000 mosquito nets to people’”.

“(We need) to support those local structures because, at the end of the day, they know best, and let’s stop thinking that we have the answers.”

STOP OVER-FOCUSING ON AID

Aid is important and can have a lasting positive impact on people’s lives, as it did for example in South Korea and Botswana, panellists agreed.

But, ODI’s Glennie noted, aid is only one component of a package of measures needed to help poor countries develop.

“The role of aid in development is massively exaggerated... Development is about developing the state; it’s not just about responding to health and education problems.”

When a country receives too much aid – equal to around 30 percent of its GDP or more or a 100 percent of public spending – for 20 to 30 years, that country becomes dependent on aid, Glennie said.

“In the long term governments lose the capability to make their own decisions and especially lose accountability to their own citizens because most of the money that they need doesn’t come from their citizens.”

And in an allusion to factors that campaigners see as root causes of poverty, such as rich countries’ trade policies, Glennie added: “Let’s talk about what our government can do to actually really reduce inequality and poverty in the world … aid is a tiny part of that. Let’s hold our government to account for the politics that it engages with.”

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