Aid Effectiveness

One of the things that came out of the midyear retreat, was that a group of us wanted to find ways to more actively engage the GHC community in discussing issues of global health equity and social justice. Towards that end, we decided to choose a theme every month and provide some initial information for the community to get a conversation going. This month we chose to focus on the effectiveness, or ineffectiveness, of foreign aid. I thought I'd post this months info here in case anyone else was interested in learning about this...

The Effectiveness/Ineffectiveness of Foreign Aid

Within the international development community the debate over the effectiveness of foreign aid has been going on for decades, with supporters on one side arguing for more aid to developing countries and those on the other side who think aid is what is keeping developing countries poor. Here is just a small sampling of some of the information out there on both sides of the debate:

Good aid; Bad aid
The recent book, Dead Aid, by Dambiysa Moyo, sparked a lot of discussion around the effectiveness of foreign aid. In her book, Moyo calls for the end of foreign assistance within the next 5 years argues that foreign aid has actually hampered development by creating aid dependency among nations. Check out her website (hotlinked above) for more info on the book and her point of view, or read a review of the book by Paul Collier, author of The Bottom Billion.

Or take a look at Ghanaian economist George Ayittey on "Dead Aid" at TED. Check out his TED Talk and read an excerpt from an interview with him on Dead Aid, as well as the 6 institutions he thinks every African nation needs to develop.

In his interview, Ayittey brings up the doctrine of “odious debts”, which states that debts undertaken by corrupt regimes which ultimately are not used to not benefit the people of the state should not then be the responsibility of the citizen’s of that state to repay. This argument has been used in favor of debt relief initiatives, such as the Jubilee Network, for countries who incurred huge foreign debt that was largely embezzled by corrupt dictators.

However, not everyone thinks aid should be decreased. In a recent blog posting, Shanta Devarajan, Chief World Bank Economist for Africa, discusses why aid to Africa needs to increase, not decrease, during the global recession.

A recent article in Global Health Magazine, also brings up the difficulties NGOs face in trying to harmonize local needs with donor demands:

"In a country like Botswana where the majority of funding comes from international donors, it is challenging for organizations to keep in line with their original mandate. NGOs often shift their priorities to meet the needs of donors as opposed to the needs of the communities”

International efforts to improve aid effectiveness
Given the widely agreed upon difficulties with foreign aid, whatever side of the debate you are on, there have been international efforts to make aid more effective. The Paris Declaration and Accra Agenda for Action (AAA) are two international efforts, led by the OECD, to coordinate foreign aid and improve aid effectiveness. Specifically, the AAA, which builds on the Paris Declaration and was signed in 2008, calls for:

• Predictability – donors will provide 3-5 year forward information on their planned aid to partner countries.
• Country systems – partner country systems will be used to deliver aid as the first option, rather than donor systems.
• Conditionality – donors will switch from reliance on prescriptive conditions about how and when aid money is spent to conditions based on the developing country’s own development objectives.
• Untying – donors will relax restrictions that prevent developing countries from buying the goods and services they need from whomever and wherever they can get the best quality at the lowest price.

Monitoring the Effectiveness of Aid
There are many organizations that track the effectiveness of aid. Just a couple examples are:
• AidWatchers.com - A blog by William Easterly, author of White Man’s Burden, which monitors aid; where it goes and how it’s used. Check out this recent post for an interesting discussion on the recent disaster in Haiti and how the aid pouring in for relief efforts is being coordinated (or not).

(Plus don’t miss this hilarious post about African leaders advising Bono on reforming U2)

• The Center for Global Development - A Washington DC based think tank that has a number of resources and initiatives looking at the effectiveness of aid. Check out this interesting blog post about the Center’s Cash on Delivery program, which links funding directly to outputs by developing nation governments.

The Center also has an HIV/AIDS Monitor: Tracking Aid Effectiveness initiative which evaluates the effectiveness of funding for HIV from the three biggest donors: PEPFAR, the Global Fund and the World Bank. Check out this paper comparing the funding practices of all three.