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What Happens When Donors Fail to Meet Their Commitments?
September 27, 2011
This is a joint post with Rita Perakis.
Has the aid industry introduced the reforms it agreed in 2005 to make aid more effective? No, according to the survey published last week by the OECD DAC. In this blog post we reflect on why this matters, and what it means for the forthcoming summit in Busan.
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The development sector is in a mess. Developing countries have to deal with a large and growing number of partners, each with separate agendas, priorities, and requirements. Meetings, reports, milestones and systems multiply. Skilled staff are hired away from governments and from business to serve in local agency offices or NGOs. Funding is fragmented and unpredictable, which means that developing countries are often unable to bring together the scale of long-term, predictable finance needed to undertake significant institutional reform and service delivery. As just one example – in Vietnam, it took 18 months and the involvement of 150 government workers to purchase just five vehicles for a donor-funded project, because of differences in procurement policies among aid agencies.
None of this is news, nor is it disputed. The donor club of industrialised countries, the DAC, says:
“poor co-ordination and unpredictable aid waste funds that should be eradicating poverty in the world’s poorest countries.”
Six years ago developed and developing countries committed themselves to fixing these problems. The Paris Declaration on aid effectiveness set out five principles to make aid more effective, and a set of thirteen measurable targets which they aimed to reach by 2010.
Last Thursday, the Development Assistance Committee of the OCED (the DAC) published the results of the monitoring survey. The DAC is not known for hard-hitting criticism of its members. But even this mild-mannered organisation feels compelled to call the results ‘sobering’.
Of thirteen measured targets to improve the effectiveness of aid, just one has been met. What was this one milestone which donors were able to reach? They lived up to their commitment to talk more to each other (“Strengthen capacity by coordinated support”).
The DAC reports that the areas of progress have been largely on the part of developing countries. These include putting in place sound national development strategies and results frameworks, and improvements in public financial management systems. According to the report, the areas of little or no progress are overwhelmingly on the part of donors: aid is still not on recipient countries’ budgets, is no more predictable, and is becoming increasingly fragmented.
When developing countries fall short of targets set for them by donors, we say they are ‘off track’ and start to talk about cutting off their aid. What happens when donors fall short of targets they have set themselves?
The DAC points out that although the overall results are disappointing, some good progress has been made in some places. That’s true, and it is interesting that there is no obvious pattern. For example, though Tanzania is highly aid dependent, it appears to have been effective at imposing more discipline on donors. Some of the results suggest that the survey leaves too much room for interpretation: for example, Japan’s relatively strong performance against the Paris indicators is difficult to reconcile with perceptions on the ground.
The Paris indicators are not a direct measure of aid effectiveness. They are measures of progress towards goals which are thought by the Paris signatories to be associated with better aid. But that connection is tenuous: for example, though Tanzania has done well at pushing donors to comply with the Paris principles, nobody seems to think that aid in Tanzania now delivers more bang for the buck than aid elsewhere (rather the opposite, if anything).
It should be no surprise that progress towards the Paris principles has been slow. The aid system represents a compromise between the interests of donors and recipients, mediated by organisations and agencies with interests of their own. For example, donors have not been willing to make aid more predictable. That’s because there is political value to them in being able to dispense or withhold aid according to the latest fad or political pressure, and aid implementing agencies enjoy having the power of day-to-day control. Though retaining this discretion is estimated to reduce the overall value of aid by 15-20 percent, the political and institutional benefits to donors apparently outweigh the disadvantages of supplying less effective aid – perhaps because the people who suffer from ineffective aid don’t have votes in donor countries. Making an international commitment to fix this could help a little, because it adds very slightly to the political cost of lack of predictability. But the political cost of failing to meet this commitment is evidently too small to make a difference to the political calculation. That’s what we see in the monitoring survey: the proportion of aid that is classified as predictable has risen from 42% in 2005 to – drum roll – 43% in 2010: some way short of the target of 71% by 2010.
Can the forthcoming summit in Busan in November change this? It is hard to see how yet another conference with yet another communiqué will change these underlying political dynamics. The latest news is that Ban Ki Moon and Hillary Clinton are both planning to attend. Does the political weight of a communiqué increase in proportion to the size of the motorcades at the summit?
The political constraints which lead to ineffective aid are genuinely difficult to overcome. This should be ‘sobering’ to donors as a measure of their inability to fix long-standing and well-documented problems. But it should also be ‘sobering’ to those same donors who travel around the world pressing developing countries to implement reforms in the face of much more substantial political constraints. If donors cannot implement something as simple and uncontroversial as coordinated country missions or common procurement rules, why do they expect developing countries to be able to implement changes in land tenure or public enterprise reform?
We should give credit to the DAC for getting an agreement to reform, putting in place a monitoring system, recording the progress that has taken place, and stimulating the debate about aid effectiveness. But it is neither desirable nor sustainable that the donor club should be responsible for tracking the donors’ performance against their commitments. A more independent watchdog would surely have reported donors’ failure to meet 12 out of 13 targets with a greater sense of outrage.
Finally, all this is becoming increasingly anachronistic. The Paris principles are most obviously relevant to countries that are low income and stable. But there are now just thirteen of those: most of the world’s poor now live in middle income countries and fragile states. The DAC represents the donors who are members of the OECD, but does not include China and other emerging powers, foundations, private giving and NGOs, many of whom do not share the DAC’s view about what makes aid effective. The challenge for Busan is to define the role of aid in helping to build a sustainable, resilient and inclusive global economy.
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7 Responses to “What Happens When Donors Fail to Meet Their Commitments?”
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September 28th, 2011 at 12:14 am
Thanks for raising some fundamental questions and also for sharing these thoughts. The situation out there is a mine-field to say the least. I work at both the policy level and implementation levels in several countries besides being advisor to the Malaysian government. I see huge gaps and disparities in the logic, approach, and interventions by donors and the recipient countries’ own stand on aid. My contention for many years has been that the donors are part of the problem for developing countries. What are often agreed upon as the right things to be done during high level meetings are not the case on the ground. Developing countries too are playing the game…so the end result is a win-win situation for both donors and recipient countries alike but the real losers are the people or the real beneficiaries on the ground who dont necessarily enjoy the full benefits of the aid programs. This is not to say that our aid programs are useless…far from it. But perhaps, the question is are we getting full value for the money spent? Why are recipient countries still not there yet with their development agenda despite millions of dollars of aid funds? So may questions and not that many answers. Hope we can see some concrete decisions at Busan. Aru Rasappan
September 28th, 2011 at 6:29 am
Thank you for pointing out what I think of as the “fixing them” vs “fixing us” attention imbalance.
You queried: “If donors cannot implement something as simple and uncontroversial as coordinated country missions or common procurement rules, why do they expect developing countries to be able to implement changes in land tenure or public enterprise reform?”.
Why indeed?
Many projects donors undertake, and programs donors support, could be significantly improved in impact if donors spent more time examining (and acting to improve) their own decision-making, management, and aid implementation processes (the Paris principles capture some such changes). Yet, these organizations and their leaders do little on these issues – about which they have relatively good information and over which they have a great deal of leverage. Instead they focus almost all their attention on examining projects and activities and policies at the country level – looking for ways to make them work better. And as you note, many of these improvements require client governments and other local development partners to change their behavior and processes in seriously challenging ways. I would add, aid agencies have much less information and understanding of the local issues and context, and less leverage over local decision-making and implementation issues. All these factors argue for focusing first on “fixing us” and second on “fixing them”. Yet, as your blog entry points out, we see too little of that.
September 28th, 2011 at 9:33 am
Great article, thanks. This makes a very good case for people to sign the Make Aid Transparent petition at http://www.makeaidtransparent.org which calls on governments to keep their promises. We’re aiming for 10,000 signatures by Busan, where we will deliver it to government representatives. Help us spread the word.
September 28th, 2011 at 10:27 am
I am surprised that this appears as news. Since when did you expect “aid” from donors–strategic exploitation through spying, employment and or wealth creation for the donors..That’s what it is all about. Destroying and then re building Libya. Except for a few Nordic countries, donor “aid” it is largely AKABLA DABLA
October 3rd, 2011 at 5:21 pm
Owen & Rita,
Your post confirms my view (see cgd blog post: http://blogs.cgdev.org/globalh.....health.php ) that donors are commitment happy and get away with making grand commitments and rarely following up on them. Even as you share your great insights about the OECD DAC survey and point out that a donor club should not be the monitoring body, we learn of a new initiative, coordinated by the PMNCH at WHO, that is lumbering along in the UN system to accelerate(!)the MDGs 4 & 5—reduce maternal and child mortality. Donors, recipient country governments, NGOs, & private sector companies made (and continue to make) commitments galore to pledge a not-so-small amount of money–$40 BILLION—and other actions (policy, program) to the Global Strategy for Women’s and Children’s Health to achieve outcomes that we all want to see. While the PMNCH is making an effort to monitor progress towards outcomes, there is little efficiency or transparency to their process and I wonder if they too, like the OECD DAC, have an awkward role in monitoring themselves and their peers. We recommend that an independent entity should create a transparent and simple reporting tool for all committers.
Of course, an entirely separate issue is that of impact. As you say, for aid effectiveness principles, it isn’t empirically shown that by following these principles, donors and countries will use aid effectively. Similarly, it isn’t clear that by meeting all their commitments for this global strategy donors and countries will significantly reduce child and maternal mortality. But, as we conduct more and better analyses of the impact of policy interventions (because that is what ultimately matters), we should at least know who has committed what and call them out if they fail to meet their commitments. But maybe I am being naïve and unrealistic, and all this is a donor and recipient country government game that won’t change because both sides have incentives to keep it as is.
See our (Rachel Silverman’s and my) blog for more on “Outing the Global Development Committers: The Case of the UN Global Strategy on Women’s & Children’s Health” on CGD’s global health policy blog.
October 5th, 2011 at 10:36 pm
Community transformation is not becoming like the USA, or Europe, or more democratic,getting more aid, or best practices. Community transformation is to become like God’s Kingdom. It’s that simple. To offer anything less is to give the world more of the world. What the world needs is more of heaven.
Community transformation begins with personal transformation. There are no shortcuts.In seeking to change the conditions of the his environment, what are the ethical values upon which to anchor sustainable development for a local community? It seems to me somewhere; somehow, something is wrong in importing Aid donors development blueprint hook, line and sinker without taking into cognizant the prevailing belief system of the local recipient people and its possible influence on the proposed development plan. For instance,just before a system works in one country does not mean it will in another country.
In a nutshell this entails the recognition and application of values and cultures of the the local people as an important part of policy development strategy both at the level of donor organization and donee; the recognition and upholding of basic normative religious theories that appeal to social justice, human rights and theological understanding of the recipient of the Aid.
November 15th, 2011 at 5:38 am
[...] If Busan succeeds in bringing about such a transformation, it will buck the trend. Despite the fine words of the declarations, the previous meetings in Rome (2003), Paris (2005) and Accra (2008) have not resulted in much real change. [...]