Aid-providing community is increasingly becoming wary of the implementation capacity of the recipient country. The concern for fiduciary risk is raised to the extent of directly influencing the policy formulation and how the individual agencies within the government are manned and managed. Donors express frustration when they see poor implementation marred by inefficiency and corruption. Their woes are further aggravated when parliamentarians and taxpayers in their country seek clarification about the outcomes of aid given to a particular country. Therefore, even after three rounds of discussion on aid effectiveness in the past, donor agencies still push for alternative mechanism for aid delivery. Some agencies even challenge the development policy of the recipient country and seek to impose their own agenda through alternative mechanism.
There is the third group that apparently shows greater concern toward the poor and the downtrodden and is very vocal about the inefficiency of both the donors and the recipients. This group is loosely known as civil society. But the inherent objective of this group, organized in the form of non-governmental organization, is strengthening their own role as the aid delivery agencies. In the recipient countries, this group competes with the government system successfully branding the government as the corrupt system. In the aid providing countries, this group snatches much of the resources away from the official development agencies.
There is a debate whether in these 60 years of development cooperation through aid, there has been visible improvement in the situation of aid-recipient countries. Some argue that foreign aid has only increased external dependency, corruption and inefficiency. Others argue that all that comes in goes back to where it came from in the form of consulting fees or price of goods and associated services. Few countries have extricated themselves from poverty and elevated their status to aid-providing country in the past 60 years, partly also because of the contribution of foreign aid.
Such countries mainly had an aggressive economic reform early on that helped them achieve higher growth rate. Many others are still in the quagmire. Several African countries found themselves inextricably debt-trapped, which gave rise to Heavily-Indebted Poor Countries Initiative. This alone was not sufficient. There was, therefore, another mechanism by the name of Multilateral Debt Relief Initiative.
Busan Forum should also be an occasion to forge a definitive consensus on aid predictability. The Outcome Document mentions this but this should not just be in words. The donor community should substantiate this through their deeds.
In spite of the flaws and frustrations, the demand for raising the quantum of foreign aid is getting stronger each day, but few advanced countries have actually met the normative target of 0.7 percent of GNP set long time ago in 1970. While the aid volume is not increasing in the relative terms, the economic and development agenda has diversified and changed substantially in these years. Issues that were least talked about and did not claim any share of foreign aid in the past have come in the forefront and are diverting much of the resources away from traditional development thrust. Climate change, sustainable development, humanitarian support, etc, have emerged as new themes for foreign aid thereby adversely affecting the volume of aid to physical infrastructures, poverty reduction and social sectors.
While world leaders meet in Busan, South Korea, later this year for the fourth time after Rome, Paris and Accra, the issues remain more or less the same. In spite of the promises made in the past for enhanced ownership and alignment with national priorities of the recipient countries, the achievements thus far have not been all that encouraging. There are tendencies of reversal by classifying countries as either fragile or failed. The Development Assistance Committee (DAC) Chair of the Organization for Economic Cooperation and Development (OECD) Brian Atwood announces in preparation for Busan High-Level Forum, "Our highest aspirations for Busan will only be achieved if all come to the table with a sense of urgency and a genuine drive to push development forward in the spirit of true and equal partnership."
The first draft of the Busan Outcome Document is already under circulation, which underscores the significance of using developing countries’ own systems as a means of financing and implementing activities. Is there a sense of urgency and genuine drive to push this? It doesn’t seem so. The same document allows an escape route in the name of conflict, fragility and vulnerability. Developing countries are assigned with these adjectives because their governments are weak and alternative aid-delivery mechanism further weakens the government system making such countries really fragile and vulnerable.
As the discussion progresses to finalize and agree on the Outcome Document, one must bear in mind that the risk that so-called fragile states pose is not only for the aid money. Every developing country has its own resources collected from the taxpayers and domestic lenders. As a proportion, the share of domestic resources far exceeds the foreign aid money used for development. If there is a risk, then it equally applies to domestic money. The risk of misuse of domestic resources should be of greater concern as these are the resources collected from poor people. This concern can be addressed by strengthening developing countries’ accountability mechanism. We need to talk about protecting the entire resources and not just the foreign aid money. Therefore, the alternative modality in the name of fragility is not the real solution. The better solution is full belief in the government system for development delivery. The aid-providing countries, the development partners, should at the same time assist in building capacity strengthening of the accountability institutions in the recipient countries. This can be supplemented by joint monitoring of the development effectiveness.
There is a tendency of direct delivery by donor or using services of the civil society organizations for the aid delivery. This must stop. The immediate results may be appealing, but there are dangerous long-term consequences. People lose confidence in their own government when aid delivered through alternative mechanism brings immediate and visible results. This leads to fragility and when the project that delivered aid is gone there is no sustainability of the achievements because the government will not carry it forward.
Yes, civil society organizations are important partners in development delivery. But their engagement should be through the recipient country governments. In areas where civil society organizations have comparative advantages and effectiveness, government should be encouraged and may be sometimes required to take their services. Donors should not directly hire them.
Busan Forum should also be an occasion to forge a definitive consensus on aid predictability. The Outcome Document mentions this but this should not just be in words. The donor community should substantiate this through their deeds. There is an inward-looking tendency of the advanced countries in the pretext of financial crisis or other such business cycles. This is not good and, in Busan, clear guidelines should be agreed upon for the predictability of the aid flow. This is a necessary pre-condition for better alignment of aid with national priorities. World leaders should also look beyond aid while they meet. The effectiveness of aid will be enhanced if it is supplemented by better trade and investment regime.
rameshorek@gmail.com
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