Aid is a scarce and precious resource, which, if spent well, can make a major difference to the prospects of people and countries receiving it. It can save lives, put children in school and pave the way for longer-term development. Unfortunately, aid flows are not always allocated or used as well as they could be, leading to inefficiency and overlap, waste and corruption and undermining efforts to build functional, resilient states.
The effectiveness of international aid is the focus of a key meeting taking place later this month in Busan, Korea. U.S Secretary of State, Hilary Clinton, and Britain’s’ Minister for International Development, Andrew Mitchell, will be among the 2,000 plus delegates at the 4th High Level Forum on Aid Effectiveness, which offers donors, recipients and civil society organisations the opportunity to assess progress so far and make new pledges.
One of the issues on the agenda of the event is transparency. At previous High Level Forums, donors have promised to increase the quantity and quality of information they publish about the aid they give. Increased transparency is the first step towards achieving other aid effectiveness objectives – including ‘ownership’, ‘alignment’ ‘harmonisation’ and ‘managing for results’ – because unless you know and can see what you’re doing you will struggle to improve it.
In recognition of this, in Accra in 2008 donors agreed to “make aid more transparent” and to “publicly disclose regular, detailed and timely information on volume, allocation and, when available, results of development expenditure”. They also launched the International Aid Transparency Initiative (IATI) – a common standard for publishing data which has the potential to transform the way aid is managed.
Three years on and not enough has been done. Twenty-one donors have signed up to IATI and nine have begun publishing data. But key actors remain outside the fold, and others are dragging their feet on implementation. In recent weeks, negotiations by so-called ‘sherpas’ on the draft outcome document for Busan have foundered, with some countries trying to water down commitments on transparency and others failing to insist on anything beyond the lowest common denominator. Leaders meeting in two weeks look set to have little to celebrate and much to do.
Ahead of the Busan meeting, campaign group Publish What You Fund has published its Aid Transparency Index, which reveals that the majority of donors are still not publishing information on aid spending systematically or in accessible formats. The Index ranks donors according to the amount of information they provide about the aid they give, using 37 different indicators. The key finding is that across some of the largest and most established aid donors, timely, project-level information is patchy, of inconsistent quality and – crucially – hard to compare from one aid agency to another.
Of the 58 agencies surveyed none of them made the top ranking – ‘good’ – which requires a score of 80% or above. Only nine ranked ‘fair’ with a score between 60-79% – including the World Bank, the Global Fund, the African Development Bank, the Netherlands’ Ministry of Foreign Affairs and the UK’s Department for International Development. The average score was a pitiful 34%.
While perhaps it is not surprising that the agencies in the lowest category – ‘very poor’ – are generally the newest and smallest, it is the presence in the penultimate category– ‘poor’ – of some of the largest and most established donors that is particularly significant. These include Canada, France, Germany, Ireland, Japan and three of the largest U.S. agencies –PEPFAR, USAID and the State Department.
In the course of the research, a number of countries provided worrying examples of how poor reporting can give a negative impression of whether aid is well spent:
- Almost the only information available about one of France’s biggest aid recipients, Cote d’Ivoire, related to a project commemorating 20 years of research into chimpanzees
- Greece provided no information about its current aid activities, but an annual report from 2009 included pictures of a half-built block of flats in Serbia as evidence of an ‘implemented project’
- Austria is the fourth biggest recipient of Austrian Development Agency aid according to the government’s database of “agreed contracts”
These examples are almost laughable but the lack of comprehensive, timely and comparable aid information is a serious matter. It means that donors do not know enough about where their own money is being spent and with what effect, nor can they compare and coordinate what they are doing with other agencies. Lack of transparency leads to ‘orphan’ or ‘darling’ areas – where aid flows go disproportionately to a particular region, country, sector or organisation at the expense of others.
For example, a UN assessment in the Palestinian territories found that lots of money was being given to urban areas at the expense of the rural ones and refugee camps where there were significant unmet needs. And in the education sector, donors to sub-Saharan Africa have focused their aid on primary education and neglected secondary and tertiary-levels.
This lack of transparency matters for recipient governments too because it undermines their planning and reduces fiscal autonomy. A study carried out in 2008 by EURODAD found that donors were funding 265 different aid projects in Sierra Leone, many of which were being implemented unbeknownst to the government, which struggled to keep track of the competing initiatives. More recently, Catalysing development: A new vision for aid, by the Japanese and South Korean aid agencies, found that recipient countries received an average of 263 donor missions in 2007 and their senior finance officials spend a third to half of their time meeting donors.
Citizens are also disadvantaged by the lack of available information: taxpayers cannot be sure they are getting value for money, and citizens and parliamentarians in developing countries cannot hold their governments to account. Governance reform efforts and public trust in aid would both be significantly boosted by the provision by donors of more and better information. In an era when government budgets are tight and the rationale for aid is being questioned, demonstrating that aid works has never been more important.
Donors must use the 4th High Level Forum in Busan to restate their ambition and make concrete, time-bound commitments. All donors should sign up to and implement IATI and agree to publish timely, comprehensive and comparable information on aid by 2015. France, Canada and the U.S. have yet to join IATI and should so without delay, as the absence of such major donors undermines the significant potential of the initiative.
Developing country governments should also endorse IATI, and other aid actors and agencies should support and engage with the agreed common standard for reporting aid information, ensuring flows such as climate finance, humanitarian aid and private aid are included.
This is a moment of truth for the aid movement. For too long donors have made promises both on the quantity and quality of aid that they have consistently failed to keep. If they want to continue to be taken seriously, they need to use Busan to prove their good intentions and set themselves on track to making sure this precious and increasingly scarce resource is spent in a way that can be shown to reduce poverty and inequality and drive development. Greater transparency is the place to start.