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Foreign aid is now a $100bn business
and is expanding more rapidly today than it has for a generation.
But does it work? Indeed, is it needed at all?
Other attempts to answer this important question have been dominated
by a focus on the impact of official aid provided by governments.
But today, possibly as much as 30 percent of aid is provided by Non-Governmental
Organizations (NGOs), and over 10 percent is provided as emergency
assistance.
In the first-ever attempt to provide an overall assessment of
aid, Roger Riddell presents a rigorous but highly
readable account of aid, warts and all. Does Foreign Aid Really
Work? sets out the evidence and exposes the instances where aid
has failed and explains why. The book also examines the way that
short-term political interests distort aid, and disentangles the
moral and ethical assumptions that lie behind the belief that aid
does good. The book concludes by detailing the practical ways that
aid needs to change if it is to be the effective force for good
that its providers claim it is.
At this ODI and Oxford University Press event, Roger Riddell
presented his findings and Sir Michael Aaronson,
former Director of the Save the Children Fund and Simon Maxwell,
Director, ODI offered their comments.
About the book
Contents
1. A Good Thing?
Part A: The Complex Worlds of Foreign Aid
2. The Origins and Early Decades of Aid-Giving
3. Aid-giving from the 1970s to the Present
4. The Growing Web of Aid Donors
5. The Complexities of Multilateral Aid
Part B: Does Aid Really Work?
6. Assessing and Measuring the Impact of Aid
7. The Impact of Official Development Aid Projectsce,
8. The Impact of Programme Aid, Technical Assistance, and Aid for
Capacity Development
9. The Impact of Aid at the Country and Cross-country Level
10. Assessing the Impact of Conditionality
11. Does Official Development Aid Really Work: A Summing Up
12. The Role of NGOs
13. The Wider Impact of Non Governmental and Civil Society Organisations
14. The Growth of Emergencies and the Humanitarian Response
15. The Impact of Emergency and Humanitarian Aid
Part C: Why is Aid Given?
16. The Political and Commercial Dimensions of Aid
17. Public Support for Aid
18. Charity or Duty? The Moral Case for Aid
19. The Moral Case for Governments and Individuals to Provide Aid
Part D: Towards a Different Future for Aid
20. Why Aid isnt Working
21. Enhancing Aid's Effectiveness
22. Changing aid relationships
For more information about the book, and to purchase a copy, please
visit the OUP website.
Meeting Report
Roger Riddell
Roger Riddell started his presentation by stating that his book
is rather long because it is trying to do something very challenging.
He began by explaining (slide 1)
that the aid debate is dominated by the issue of ‘impact’,
i.e. whether or not it works. Over the last 25 years, humanitarian
aid has also become important. It is important to examine the history
of aid because the main donors give aid for different reasons. It
is notable, for example, that 40% of bilateral aid donors give aid
with no reference to the MDGs. The book therefore looks at the constraints
of aid and offers some recommendations.
Cassen wrote ‘Does Aid Work?’ twenty years ago (slide
2), which concluded that much aid does work, but much of it
doesn’t, and more importantly most of the aid given to the
poorest countries in the world doesn’t work. Is this an important
question? Roger asserted yes, because all aid agencies need to show
that they are effective and aid’s defence is that it does,
in fact, work.
Evidence about the impact of aid (slide
3) examines the inputs to and outputs from aid. The quality
of many aid evaluations however, is questionable. Broader development
outcomes, such as health, education and growth are often not taken
into account, although for some, they have now become crystallised
in the MDGs. In addition, there are multiple problems with data
– in many cases there is no data available, even if were possible
to define poverty in a quantifiable way. Methods of comparing situations
‘before’ and ‘after’ aid has been delivered
are still very inexact. There are a growing number of scholars who
say it is fruitless to try to even do this, suggesting instead that
in-depth country studies might be more useful. The impact (or not)
of aid therefore remains at the heart of the debate.
Regarding NGOs and humanitarian aid (slide
4), Roger asserted that although humanitarian aid is effective
at saving lives, there is both a shortage of funds and a number
of questions about the way it is allocated. There is also a lack
of attention paid to disaster preparedness. Most humanitarian NGOs
do achieve their objectives but still know very little about their
actual impact. Under new charity legislation, to come in shortly,
charities will have to prove that they make a difference to poverty.
Key factors acting to limit the impact of aid (slide
5) include the fact that there is no ‘aid system’
as such. Individual donors make individual decisions. Also, the
fact that, by its very nature, aid giving is voluntary.
In conclusion, Roger asserted that improving the effectiveness
of aid will involve a huge change, away from reform based on the
lowest common denominator (slide 6),
and the pace of reform will only be at the speed of the slowest
donor. Roger’s new
international aid model involves a move from voluntary to compulsory
giving; pooling aid funds; and divorcing aid from short-term political
objectives by establishing an international aid commission to think
through how aid can be provided more effectively. Roger explained
that this model
is not contained within the book itself because it is still very
much a distant objective, and it is also the result of thinking
by a large number of scholars.
Sir Mike Aaronson
Sir Mike Aaronson opened his presentation by congratulating Roger
on his comprehensive, yet readable book. He stated that three areas
in particular resonated with him:
1. There is no difference anymore between humanitarian and donor
assistance. Human rights are as much at risk as ever.
2. Outsiders are limited in what they can achieve inside other countries.
They are also capable of doing harm.
3. Donors’ responses to the shortcomings of aid which are
often exposed in evaluations.
He went on to say that his commentary would explore three particular
areas in more detail:
1. The links between development and humanitarian assistance in
a foreign policy context.
2. Realism about the role of aid.
3. How to engender a more appropriate form of understanding about
aid, including how to separate it from political goals.
On the first point, Sir Mike stated that it was no less imperative
to act in either case, except that humanitarian situations tend
to require a more urgent response. In a list of humanitarian interventions
he had examined, Sir Mike explained that no account had been taken
in any of the programmes for education. This is an obvious example
of why it is hard to draw distinctions between these two types of
assistance, however there are obvious reasons for doing so, namely:
- Humanitarian assistance tends to be underfunded.
- Humanitarian aid is motivated by human goals.
- There will always be political reasons for humanitarian assistance
to be provided.
- Humanitarian assistance actually delivers what people need.
- The military can act as humanitarians.
Sir Mike explained that with regard to aid, he was more concerned
with short-termism than with self-interest, as we all have a mutual
self-interest: common humanity. The logical conclusion therefore
would be to have one single external relations policy which links
foreign affairs, development, humanitarianism, environmental policy,
etc.
In this regard, Sir Mike posed the question of whether it was really
necessary to have a separate DFID anymore. He asked whether DFID
should take over the FCO and explained that the downsides of not
having a joined-up approach, and of having two separate foreign
ministries operating in much of the globe made this suggestion at
least worthy of consideration, though he did state that the 2005
DAC Swedish Peer Review quoted by Riddell concluded that bringing
Swedish aid under foreign policy control would not act to make it
more effective.
On the second point, realism with regard to the role of aid, Sir
Mike stated that it was ironic that the success of aid lies with
the recipients but that only 20% of sub-Saharan African budgets
include aid. There is therefore a need to be realistic in terms
of what aid can achieve and to think more generally about external
inputs as ‘venture capital’. There is also a need to
stand alongside struggling recipient governments and to make sure
that their voices are heard. As external agents in Southern economies,
donors and governments should operate qualitatively differently
to the ways that they might act with regard to their own economies.
On the final point, Sir Mike explained that Roger’s model
for the future of international aid separates the purchaser
from the provider, as is the case with the current NHS. The current
aid model has donors acting in both roles, whereas recipients need
to be enabled as purchasers. He also explained that it is essential
to rethink the term ‘intervention’ and that the present
approach fails to adequately take account of: how little can actually
be achieved with aid; the lack of understanding/knowledge about
aid that we currently have; and the misguided ideologies which inform
aid, for example, about democracy.
In conclusion, Sir Mike reiterated his belief in a need for a single
external relations framework, under which foreign policymakers understand
development and take foreign policy decisions in that context.
Simon Maxwell
Simon Maxwell began his commentary by referring the audience to
his book review.
He stated that Riddell’s examination of project and programme
aid was both cautious and judicious and congratulated him on this.
He set his comments in context by referring to the publication of
an Africa Progress Panel report which claims that aid flows are
not keeping up with the G8 aid commitments made at Gleneagles.
He posed the questions: Do we really need to do more in terms of
aid? If so, how should the political dilemmas surrounding aid be
resolved? And how should we organise ourselves better to deliver
a bigger aid programme?
Simon asserted that Roger’s recommendations are not that different
from Cassen’s. With 20 years between these two publications,
why is aid still such a problem and why are we experiencing the
same problems in delivering good aid?
In terms of substance, he observed that some ODI researchers working
on aid are quite hostile to it, for reasons of: absorptive capacity;
because it decapitates domestic politics; and because the Paris
agenda is making only very slow progress.
Simon asserted that the MDGs paradigm of 1996 is now not enough
– the issue is not just poverty reduction because the world
has changed. There are big, new issues such as: the impact of China
on aid and on the world economy; the fact that security now dominates
any discussion of development; and the fact that attention is now
shifting to global public goods, financial stability, etc. These
all present very big challenges to the concept of aid, including
to the commitment of the EU and the UN.
In conclusion, Simon observed that Riddell’s book can help
us to make more informed decisions because of the evidence it provides
us with, the mere compilation of which is, in itself, a huge achievement
and a hugely valuable contribution to the aid debate.
Discussion
Questions and comments raised during the discussion included:
- How would conditionality operate under Roger’s new
international aid system?
- There are actually aid 2 models: pooling aid into one basket or
the bilateral model. The first is not viable – see chapter
6 of Riddell’s book. Even if this was possible, would it be
desirable? Developing countries would have to deal with a huge monolith
of an aid fund.
- Does budget support work better than project funding?
- What effect does the process of decentralisation have on aid?
- Coffee growers earn just £5bn of the £65bn coffee
market – who is aiding who?
- Governments cannot be accountable to their own people when so
much of their funding comes from bilateral donors.
- The 2 models represent 2 different perspectives – donor
and bureaucratic. Looking at this from the recipient’s point
of view would give a different model, as would taking a business
point of view, which would encourage the buying-in of professional
advice. Why don’t countries lay claim to the rules of the
system themselves?
- Donors can be seen as venture capitalists. This is demonstrated
by the donor discourse on corruption and regarding unrealistic public
perceptions about what aid can achieve.
- There is an inevitable overlap between the issues raised by Cassen
and by Riddell, but Riddell has definitely moved the debate forward.
There definitely does need to be more and effective aid.
- It is easy to identify what is wrong with aid, but not so easy
to know how to fix it. The first problem that has been identified
is that there are many, often political, reasons for aid to be given.
To overcome this, a separate source of funding for development could
be established in order to keep the political goals of donors separate.
There are also many more donors than before. The solution could
be to consolidate the aid system but that would entail huge issues
of political visibility. How can we empower recipient countries
to do that and how can external actors work with countries to enable
them to do it themselves? Doubling aid will also affect aid dependency.
- Riddell’s
model is driven by the paradigm of poverty reduction. Isn’t
this part of the problem? Are there any other relevant paradigms
which are more progressive and take account of more factors than
just wealth creation?
- Less than 10% of aid is currently provided via budget support.
DFID sees fragile states as ones where the quickest gains can be
made. How best can donors operate in such situations?
- Critics of aid are not necessarily anti-aid. The public debate
centres mostly around corrupt dictators – more public awareness
is needed about donor problems.
Responses
Roger Riddell replied that:
Cassen’s recommendations do remain highly relevant today.
Many issues around aid relate to ownership. There are huge problems
with the current way of giving aid. Most recipients have to deal
with multiple donors which is very inefficient and incorporates
huge costs relating to donor management by recipients. Recipients
need to own their own development programmes.
On conditionality, there are a whole series of conditionalities
which recipients have to deal with.
On the aid ‘blip’, Roger said that aid has revived and
survived before. A few years ago, much of the literature argued
that it wouldn’t survive, and yet it is set to expand much
faster over the next 10 years than in much of its 60 year history.
On R2P, Roger stated that there are huge problems and yet a public
opinion survey a few weeks ago found that the majority of voters
believe that countries should intervene.
On budget support vs. projects, the World Bank’s Global Monitoring
Report 2007 found that the amount given for budget support was less
than 10% of aid. But the dominant mode remains project aid. Budget
support (if there is the capacity to use it well), is the direction
we should be moving in, but DFID seems to be moving away from this.
There are a number of opportunities for the continuation of OECD
DAC work on aid, and pleas for a debate outside the DAC too, which
is both influential and visible.
The bulk of development aid is used for the purpose which it was
intended and corruption is probably not restricted to developing
countries.
The 0.7% campaign is important because it does offer a clear end-point,
but it may have meant that other issues have been lost. But campaigning
is important and politicians who are prepared to do things want
solutions.
Donors have realised that trying to understand, enhance and monitor
aid and all government expenditure is important.
Policy coherence is absolutely essential – i.e. on development,
aid, trade, exchange rates, etc. A recent Irish government paper
on policy coherence is to be recommended. Also Thomas Pogge’s
paper and ‘Development and the Law’ by Philip Alston
which explores ideas of international obligation with regard to
aid.
The political leverage of aid (as with oil) is also addressed in
the book and donors have just started to address these issues.
Sir Mike Aaronson replied that:
He agreed that the impact of 9/11 on the world has meant that aid
has been framed very differently in the wake of the war on terror.
He agreed that local capacity-building was important. There are
many local NGOs in the South who see their role as helping local
authorities to occupy the driving seat and to set the right policy
framework. There is real merit to the system
Roger has proposed but we must find a way of forcing more multilaterals
to let the recipients occupy the driving seat.
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