Challenging ‘aid effectiveness’

OFFICIAL development assistance (ODA) is intended to promote the country’s development, but problems of corruption, lack of transparency, and debt have become endemic, making the whole concept of aid — its effectiveness and efficiency — the subject of many criticisms.

In a roundtable discussion last week, members of nongovernmental organizations held that aid can only be effective if it is premised on justice and managed democratically with no vested interests, upholding the rights of countries and peoples.

Necessarily, the discussion centered on a critique of the Paris Declaration on Aid Effectiveness, with the groups raising several issues and suggesting recommendations.

Agreed upon by leaders of developed and developing countries and heads of multilateral and bilateral development institutions in 2005, the Paris Declaration is aimed at reforming the ways aid is delivered and managed. It also serves as the guiding framework of the aid community.

To ODA Watch co-convener Rene Nachura though, the declaration is “quite disappointing” as it “was supposed to make aid-giving more responsive, does not address the major issues concerning donor-receiving countries.”

For one, the declaration, Nachura said, addresses only the use and management of aid, saying nothing about what the aid must be all about and what it must do. “While recognizing the need to reform the ways aid is delivered and managed, the more substantive issues that must first be addressed are: what kind of aid, what for, and for whom.”

The Paris Declaration is based on the principles of ownership, alignment, harmonization, managing for results, and mutual accountability. Donor and recipient countries made 56 commitments around these five tenets. To meet the commitments, 12 indicators and some targets for 2010 were set.

Read more about the Paris Declaration on Aid Effectiveness here.

Nachura pointed out that the true measure of aid effectiveness should not be limited to the indicators specified in the Paris Declaration.

“The only real measure of aid effectiveness is its positive impact on people’s lives, on alleviating poverty and promoting human development,” he said. “You can have a very sophisticated and efficient delivery of aid, but if it does not achieve development, then it is not effective.”

“It must be clearly demonstrated how eradication of poverty, the delivery of essential services such as water and the realization of education for all, the promotion of social equity, human rights, gender equality, sustainable jobs and livelihoods, food sovereignty, environmental security and climate justice will be effectively addressed,” said the groups in a statement.

Justice as measure of aid effectiveness

Apart from these concerns, Freedom from Debt Coalition (FDC) vice president Lidy Nacpil stressed the need to emphasize the justice framework of aid. “We can preface our intervention in justice and solidarity as the starting point of aid,” she said.

According to the groups, aid-giving takes place in the context of the big divide between a few rich nations and the many who are impoverished.

“Aid-giving should not be falsely premised on charity. Aid should begin with the acknowledgment of responsibility and with the intent of justice, reparations and restoration.”

Nachura also raised the issue of “country ownership,” which according to him does not mean government’s ownership. Rather, he said this must be translated into “people’s ownership” or “democratic ownership.”

Democratic ownership, Nachura explained, is the centrality of the citizens’ concerns in the development plans and processes. It also means the meaningful engagement of the stakeholders, especially the poor and marginalized for whom the development aid is intended, in the whole development process.

Marivic Raquiza, national coordinator of the Global Call to Action against Poverty (GCAP), pointed out that the discussion on ownership in the 2006 Development Assistance Committee (DAC) survey largely drew from the 2005 World Bank Country Development Framework (CDF) Progress Report.

Raquiza deemed this “very dangerous,” saying that aid effectiveness is undermined when it promotes recipient country ownership of development plans within a WB framework.

“Much of these World Bank-assisted country strategies resonate the approaches which the WB champions — privatization, liberalization, and deregulation,” said Raquiza, noting that these have been untouched for decades, and are therefore “definitely worth looking into.”

Undermined by one-way accountability

In a paper, Raquiza also stated that aid effectiveness is undermined when the concept of accountability flows in one direction: from recipient to donor. “I agree with CSOs (civil society organizations) that the current accountability set-up within the aid regime is skewed — donors monitor themselves, while recipients are monitored by the World Bank,” she said.

Nachura emphasized that accountability should be mutual accountability, requiring the highest standards of openness and transparency from both donor and recipient countries. “Donors and partners are ultimately accountable for the delivery and use of aid to their publics, especially those for whom the aid is intended.”

Nacpil, meanwhile, pointed out that accountability is “not simply a question of opening the books, but also being accountable for the impact and the problem the aid creates.”

No to ‘tied aid’

For his part, Isagani Serrano of the Philippine Rural Reconstruction Movement (PRRM) recommended that all donor-imposed policy conditions, of both political and economic nature, must be ended. “We disagree with tied aid, just as (much as) we disagree with other forms of covering up or conditionality.”

There has been well-documented evidence of the “harmful” impacts of many policy conditionalities that have come with loans and aid. These “harmful” conditionalities, said the groups, have destroyed local agriculture and provoked the current food crisis, have weakened domestic economies and rendered South countries more vulnerable to the vagaries of the world market.

“Aid-giving is not only exercised in the context of unequal power relations, it is being used as an instrument of power. And conditionalities are the most blatant expression of this fact.”

Nachura agreed, saying that donors must abide by the procurement systems and procedures of the partner country, and partner countries must assert their development leadership role and the use of their procurement systems.

“This is very relevant because of the amendment in our ODA law, which allows or empowers the President to waive all legal requirements on procurement instead of asserting its waiving,” noted Nachura. “This is the reason why we have the national broadband deal (anomaly).”

The groups also raised the issue of volume and predictability of aid. Donors, they said, must deliver on their commitment made in the 2002 Monterrey International Conference on Financing for Development, which was to provide aid equivalent to 0.7 percent of their gross national income (GNI).

In 2007, the average DAC countries aid delivery was only 0.28 percent of GNI. The United States and Japan, the two biggest donors, provided only 0.16 percent and 0.17 percent, respectively.

Donors should make multi-year aid commitments based on clear and transparent criteria and deliver these commitments on schedule, said the groups. This will align and harmonize aid delivery with the budgetary processes of the partner country.

Aid or indebtedness?

PRRM’s Serrano also disagreed with aid that will increase the country’s indebtedness. “We look for aid that’s really debt relief,” he said.

“Most of our resources go to debt payment. No matter how better and more you pour into, it really undermines the impact and the effectiveness of aid,” FDC’s Nacpil said. “Debt problem is a necessary element in addressing the issue of aid effectiveness.”

The final statement of the groups, which will complement the Better Aid CSO position paper, will be submitted at the Third High-Level Forum (HLF 3) on Aid Effectiveness to be held in Accra, Ghana on September 2 to 8, 2008.

The objectives of the HLF 3 are to review the progress made in implementing the Paris Declaration and broaden the dialogue on aid effectiveness by giving voice to partner countries and stakeholders, including civil society organizations and emerging donors.

Read more about the “Challenges to the Notion of Aid Effectiveness.”