Aid budgets have a double bind. Here's how to tackle it

Key takeaways:

• Donor countries often have to balance competing imperatives: the need to ensure local ownership, vs the need to ensure accountability
• One scheme bridges the gap by co-designing projects with receiving countries
• One impediment to such flexible thinking is the vast sums of money involved

International aid budgets are mind-blowingly large: $153 billion was given through official donors to the OECD’s development assistance committee in 2018, for example. With such large outlay and at a time when every penny counts, the countries who are offering international aid are keen to make sure that money is spent wisely. But money flows between developed and developing nations can be complicated, not least because of the issues on the ground in countries where waste, corruption and confusion are rife.

As a result, the oversight and caveats that come with funding can often stymie the sharing of any cash — at the expense of real development and support. The question facing public servants as they spend aid budgets is difficult: do you provide hands-off autonomy to the recipients and risk some of that money going to waste, or apply stringent requirements and limitations that means nothing is done to actually support people on the ground?

Competing objectives

“Assistance is often driven by multiple competing objectives,” said Conor Savoy, executive director of the Modernising Foreign Assistance Network, a coalition of practitioners, policy advocates and organisations advocating for more effective and accountable foreign assistance in the United States. “You have a policy overlay, a national security overlay, and an economic overlay. The system is not designed really to generate the best results from a country ownership perspective.”

But just because there are challenges, it doesn’t mean organisations shouldn’t try to support countries through development aid. The Millennium Challenge Corporation (MCC), a bilateral US foreign aid agency set up in 2004, has managed to develop aid packages that help people on the ground in a way that makes them accountable and traceable while also making an impact.

The MCC conducts an analysis with the country they’re seeking to support, then designs a specific project to tackle those problems in collaboration with the country. It’s done with the receiving country’s goals in mind, rather than the processes and procedures of the global north. And that’s a model that many are following, according to those on the ground.

“The development landscape is changing,” said Mma Amara Ekeruche, a research associate of the Abuja-based Centre for the Study of the Economies of Africa (CSEA). “The global north dole out more conditions than the global south. China, for instance, give you the money but for a lot of projects they don’t need to dole out so many conditions. For the US, they do.”

In part, changes are occurring because of a recognition that the people on the ground know better how to spend money on critical health projects than the people several thousand miles away, but Ekeruche’s acknowledgement that the changing source of different funding streams is also moving everyone else. China’s more hands-off support is causing the rest of the world to have to adapt to meet what becomes the new norm.

"Bring in local partners that can be trusted and know the problems"

“The system in general has recognised this is a challenge, and we’re starting to look at how do we change the way things are progressing,” said Savoy. “So I think a lot of the large NGOs and a lot of the large for-profit companies want to build and engage local partners, whether it’s a local subsidiary, a local NGO they’ve partnered with, in a more intense way.”

The MCC have done that and found success. A recent project across sub-Saharan Africa using data to develop country-led responses to HIV/AIDS led to a 13% reduction in antiretroviral therapy patient dropout in Tanzania, improving treatment and survivability from the illness.

Savoy seems certain that we’ll see a progression towards greater local delivery based on local demand, but admits it’s a process that in part driven by the vast sums involved. “The global health supply chain contract that the US Agency for International Development puts out is like a billion dollar a year contract,” he said. “There aren’t that many people out there that can manage that. Certainly not in accordance with the rules and regulations of federal contracting and acquisition.”

Such fundamental changes to empower those nearer the need to take action will take time. But in the interim, there are short-term solutions to ensure aid becomes more efficient and effective. “Bring in local partners that can be trusted and know the problems, so that money is targeted to the sectors that need it the most,” advises Ekeruche. “And also maybe accept a bit more flexibility – because these things change. If this year, this sector may need it more, next year it may be a bit different or may need to be targeted to another programme.” — Chris Stokel-Walker

Further reading:

Delivering data where it counts to improve lives and catalyse economic growth