How can foreign aid donors help, not hinder, transparent budgeting?

Sep 29, 2009

This post was prepared by Porter McConnell of OxfamAmerica.

Development aid, used in smart ways, can save lives and help people get themselves out of poverty.  But sixty years of foreign aid have shown that donors cannot fix the problems of poor people by themselves.  Poor people themselves are demanding accountability and performance from their governments, and our aid is most effective when it invests in strengthening this relationship.

Oxfam recently released a paper calling for specific reforms that emphasize recipient ownership—making US foreign aid support the efforts of governments and citizens to lead their own development.  In particular, reforms should follow these three principles:

Information:  Let countries know what donors are doing

•             Be transparent, publishing what the US gives overall every year in a form that recipient governments can use and their citizens (and US taxpayers) can access and understand.

•             Be predictable, providing countries with regular and timely information on three-to-five-year forward expenditure and implementation plans with at least indicative resource allocations.

Capacity:  Help countries lead

•             Better align technical assistance with what governments and citizens need, including by untying aid.

•             Support local efforts to improve domestic accountability, including by using public financial management systems when appropriate and supporting efforts by citizen groups, parliaments, and auditing agencies.

Control:  Let countries lead

•             Limit earmarks and Presidential initiatives that are inconsistent with country priorities.

•             Give recipient governments and citizens incentives to manage their own development effectively and hold each other accountable, including direct budget support in appropriate contexts.

As the report is careful to point out, every country is different, and donors should view the above as a continuum.  Where governments are corrupt or non-responsive, donors can provide information and work primarily with civil society groups.  However, where governments have a record of transparency and providing services to their citizens, donors can and should let countries control the development agenda.

To subscribe to Oxfam’s Aid Reform updates,click here.

Read a related IBP paper: Improving Budget Transparency and Accountability in Aid Dependent Countries: How Can Donors Help?

3 comments:

  1. While I agree with issues raised by the author about letting the countries decide on basis of their needs and the countries should take a lead and be allowed to take the lead in decisions related to donor support,there are clear difficulties in realising this both from the donor’s end as well as from the country’s side. Donors have their mandates from their governments and civil society, their own strategic plans, priorities and these are not often decided in consultation with recipient stakeholders – donors may employ consultants to help determine country/regional strategies but more of then than not the consultants (who form a class of their own)views/perspectives are coloured by TORs which donors work out. And every few years the donors change plans and priorities too.

    From the side of the country the key players are invariably national bureaucrats, national NGOs, consultants etc.. who have a limited understanding of needs where the demands have to be met.

    The above is the reason why despite 6 decades of donor assistance significant change is not visible in wiping out poverty, disease and illiteracy.

    The answer does not lie in more responsive or accountable donor assistance but in freedom from donor assistance. This can only happend when donor countries contribute their shares as agreed at Rio decades ago and this pool of resources is collectively administered by an agency driven by recipient countries with oversight of donor countries. While the Paris Declaration may have had good intent it has led to ganging up of donors and their agendas which get dominated by the bigger players like World Bank, DFID, USAID, Gates etc..

  2. Ravi,
    Thanks for your comments. You’re right that donors and consultants come to the country with their own priorities and that can undermine local ownership. At a minimum, donors like the US can ensure that aid is driven by actual needs. The US can untie technical assistance so that countries aren’t required to hire US contracting firms, so they’ll be able to keep more value in the country.

    While this may be necessary, it’s not sufficient. As the US embraces the concept of local ownership, it needs to provide more long-term financial and political support that local institutions can rely on when they seek to hold the powerful accountable. The US needs to find more ways to nurture media and civil society groups that will hold their governments accountable for meeting basic needs, committing to transparency, and managing public finances effectively.

    Now, whether citizen groups have any political power depends on their ability to voice their interests. Here also, donors can give governments incentives to engage with citizens in the policy process, and to make sure that the citizen voices at the table actually speak on behalf of minority groups and the very poor.

    You’re right to point out that donors are not the answer. Oxfam believes that it’s the relationship between citizens and states that makes for development, not big external pushes from donors. But donors can play a role in development: at a minimum, they should not undermine that relationship of mutual accountability. At best, they can use some of the methods above to actively support it. Does that resonate with your experience?

  3. The key point is information accessibility and comprehensiveness. We can all recognize the limitations of “capacity” and “control” today.

    Foreign policy objectives from donors can override aid objectives. Recipients have political objectives. These factors can conspire to make aid ineffective. And, these factors can lead many to the conclusion that aid does not work or that aid needs to be controlled by donors through individual uncoordinated projects with high transaction costs.

    These problems persist in environments where hidden agendas remain hidden. Where the public and civil society participate at the periphery. Transparent information empowers. Hidden agendas will be exposed. This will lead to pressure for improved results in both donor and recipient countries and will herald an era of country-driven aid.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.