Smart Aid

Development advocates such as DATA have long campaigned for both increased aid quantity and improved aid quality in order to help the world’s poorest countries achieve the internationally agreed Millennium Development Goals. However, while the arguments for increased aid quantity have been heard, the arguments for improved aid quality have not caught on with policy makers sufficiently, nor have they been heard by the wider taxpaying public in the OECD donor nations. DATA therefore proposes the following as an effort to reemphasize and enhance the policies required to improve aid efficacy.

DATA is advocating for the international community to commit itself to make aid SMART:

Sufficient in scale and delivered in a predictable manner

Measurable so taxpayers and recipients can see results

Accountable to the poor for whom it is intended

Responsible management and coordination at the highest level of donor governments

Transparent in presentation to allow scrutiny by civil society

These principles would help to ensure a strong return on taxpayer investment by placing a clear focus on fighting corruption and promoting good governance.

The SMART Aid principles build upon the findings of the Commission for Africa, the Gleneagles G8 Communiqué, the Monterrey Consensus, the Publish What You Pay Campaign, the African Peer Review Mechanism, Transparency International, the OECD Paris Declaration, the principles of the “DATA Deal” (Debt, Aid and Trade in return for Democracy, Accountability and Transparency) and aid quality proposals of the Global Call for Action Against Poverty.

The aim is to encourage a more entrepreneurial and flexible aid paradigm, which above all empowers the poorest communities in the poorest countries.

Sufficient

  • Scaled to the task – Assistance flows must be of a scale commensurate with the task. There is no point giving inadequate levels of aid to achieving a specific objective, then criticizing the aid for not achieving it. The Millennium Development Goals outline the objectives of development partners. Now donors need to provide the resources necessary to achieve them. At the very least, the G8 must keep their funding commitments to increase effective aid by $50b by 2010 with half of that total ($25b) directed to Africa. These commitments were made as part of the G8 Summit and U.N. Millennium Summit in 2005 and reflect individual national commitments such as those who have committed to achieve 0.7% for development assistance by or before 2015.
  • Predictable  – To be sufficient, funds must be sustainable and predictable. Development partners should commit to a timetable for delivery and maintenance of these commitments so recipients can adequately plan their own finances and development plans. Predictable does not mean inevitable – if aid is found not to be achieving promised results through a specific program, it must be reformed or reduced – but the principles which apply to that decision must themselves be predictable.

Measurable

  • Showing results – In order to maximize effectiveness and accountability, assistance must support the achievement of specific measurable results and then must be held accountable for demonstrating those results. “Results” measured can cover both inputs (i.e. number of teachers trained) and outputs (i.e. number of literate and numerate children completing school) and must be structured so that even the more difficult to measure yet still critical interventions are prioritized and tracked. Showing objective results will renew confidence amongst taxpayers in the north and citizens in the south about the positive impact of development assistance. In addition, impact evaluations must become the norm not the exception to encourage shared knowledge about what kinds of development interventions are most effective.[1]
  • Capacity to measure and monitor – The capacity to monitor these national and district level results must be built within recipient countries so that citizens are equipped with the skills needed to hold their elected representatives to account. African Monitor is an example of an important innovation whereby one important agent of civil society – the Church – will be equipped with more tools, skills and capacity to measure whether aid and government promises are actually delivering results at the local level.

Accountable

  • Support for pan-African accountability – African efforts to increase the transparency and accountability of governments, such as the African Peer Review Mechanism and the U.N. Convention Against Corruption, should be enhanced with a focus on additional capacity. Such capacity is also vital to the donor-recipient dynamic of mutual accountability as proposed by the U.N. Economic Commission for Africa.
  • Make “Country Ownership” real and accountable – Assistance must be accountable to the needs of the poor through country-owned poverty reduction and economic growth plans, which have been designed in consultation with national legislatures and civil society stakeholders, not just the executive branch of government. In order to make country ownership real and inclusive, governments must have the capacity to design and implement programs and the policy space and freedom to manage donor support in accordance with their strategies. External solutions and “cookie cutter” one-size-fits-all approaches designed in donor capitols and only “owned” by small ruling cliques at the national level have failed to achieve lasting results.
  • Increase direct support to accountable governments – Assistance must be accelerated to countries with a strong record of democratic, accountable and transparent governance, a track record of success and a robust civil society. These resources should be increasingly delivered in a manner that allows governments to integrate them into national priorities, such as through direct budget support. In countries that have less accountable governments, assistance should be delivered more through NGOs, international agencies and the private sector to address weaknesses in governance for the long term and to meet immediate humanitarian needs for the short term.
  • Development partners agree upon consistent and objective measures for good governance – In order to successfully target high quality aid to better-governed countries, it is crucial that donors adopt consistent and objective criteria to measure “good governance” in agreement with recipient countries as well. To achieve this, measures such as those being developed by CIVICUS, the IMF’s ROSCs, the U.S. Millennium Challenge Corporation, the U.N. Economic Commission for Africa, the World Bank’s Voice and Accountability criteria and anti-corruption strategy, the CPIA, and Robert Rotberg at Harvard University, could be synthesized and more widely adopted. Making government receipt of aid exclusively conditional upon a government’s performance on these criteria – and hence their accountability to their people – would be a radical reversal of old fashioned “top-down” methods. This will create a meaningful form of “bottom-up conditionality.”

Responsible

  • Prioritization by donor governments – Donor nations that seriously intend to lead a global effort against extreme poverty must create a position commensurate to the task. Each G8 donor should elevate a senior figure in government to a cabinet-level position with broad responsibility for development policy to ensure consistency and coordination across the donor’s entire development policy portfolio.
  • Coordination amongst donors – Donors must place a higher priority on coordinating development objectives with other donor governments. Greater harmonization across donors and institutions will allow development partners in the global south to focus on implementation, not balancing and responding to divergent donor reporting requirements. Such steps will also help minimize duplicative efforts and costs to recipients in managing various donor policies and procedures.
  • Efficiency – Assistance should be totally “untied” which means that it should not be given on the condition that it is used to purchase goods and services either from the donor or from a group of countries specified by the donor. It has been estimated that the efficiency of aid that is tied is reduced by around 30%.[2] The practice of excessive “earmarking” by donors should also be eliminated as it undermines aid efficacy by limiting the ability of effective aid agencies to fine-tune efforts to local and national priorities.

Transparent

  • Transparent budgets – All donor aid flows and all recipient government budgets, including revenues, expenditure, procurement and public concessions, must be made publicly available in a timely manner for citizens and the media.
  • Independent judicial oversight and forceful watchdog organizations – A meaningful separation of power between the judicial, executive and legislative branches of government is necessary. Judicial and police authorities must have adequate funding, independence and protection to investigate and prosecute government malfeasance wherever it exists. As a check on such a system, investments must also be made in independent anti-corruption units to perform investigative and prosecutory duties. Further, donors should fund (and encourage governments to protect) civil society anti-corruption watchdog organizations so they can vigorously hold their governments to account.
  • Publish payments – All foreign companies must transparently publish what they pay to governments and government officials in developing countries, and donors should step-up prosecution of citizens and companies engaged in bribery. Likewise, developing country governments should transparently publish what they receive and earn by implementing and expanding the Extractive Industries Transparency Initiative.
  • Recovery of assets – All donor governments should establish mechanisms to identify, freeze and recover assets stolen through corruption and return them to their rightful owners. Donors should also require international banks to perform more thorough due diligence when doing business with politically exposed persons.

[1] The Center for Global Development and the Bill and Melinda Gates Foundation have proposed a central fund for impact evaluations with results that could then be shared across all donors: www.cgdev.org/section/initiatives/_active/evalgap

[2] OECD DAC Policy Brief, Untying Aid to Least Developed Countries http://www.oecd.org/dataoecd/16/24/2002959.pdf