Do we need more Aid?

Lots of hand-wringing this week in New York about poor progress towards the benighted Millennium Development Goals. (Texas in Africa has an excellent post about exactly who is doing the hand-wringing.) It is good to see top level acknowledgement (from the very top!) that business as usual in the aid industry is not going to solve the problem. However, the old 0.7% of GDP argument is rearing its head again, with the UK promising to up its donations to that figure by 2013 at the same time as implementing a whole raft of reforms about how it provides aid. Do I think this is sensible? No I do not, and here’s why.

There is a huge gap between a successful pilot project and a wide scale programme of intervention. When an intervention is scaled up in this way a savvy donor will lean on upon the government of the beneficiary country to ensure that someone good is put in charge of the new programme. This person may well be very able and impressive, and sitting in comfy aircon offices in the capital, it can be easy to be beguiled by these people – after all, they’re our chosen partners. But, the person in charge is not the person on the ground implementing the programme. They will likely be of much lower calibre, and working in a management system that is mildly dysfunctional at best. In actual fact all the donor’s hopes are vested in a bunch of pretty junior employees who are a long way from the supervision of the donor’s chosen champion. Even if the beneficiary government wanted to overhaul their civil service, they would be greatly constrained by the talent pool available.

In my experience the closer one is to a project, the more one sees the problems, when from the outside it may appear all is well (and this applies as much to our projects as any others). Some of the biggest problems are at the sharp end, in actual service delivery; here capacity is at its lowest (development speak for incompetence is at its highest) and management skills almost non-existent. Yet the donors by and large trust these local government officials to deliver key projects and services, and just suck up the all the reports of ‘success’ which are sent to them.

It is true that part of the blame lies with recipient governments. Donors can do little to clean up corruption and improve management practices – these things need to come from within. A lot of responsibility lies with donors who are maddeningly inconsistent both between themselves and over time (witness DFID’s back-tracking on general budget support) with conditions upon grants and loans often subsequently relaxed. They ignore basic issues like sustainability.

However, the rest of the aid industry (especially aid advocates) are also often guilty of mistaking local success stories with the next silver bullet and making wild extrapolations. Take, for example, the Guttmacher Institute’s estimate of $180 million for the annual cost of providing effective maternal health care to every Ethiopian women who wants it. (HT: Owen Barder) Now I’ve never worked in women’s health issues in Ethiopia; maybe there really is that capacity in the health system (Ethiopia does have a reputation for more efficient implementation of aid projects), and maybe the Guttmacher Institute have really researched the issue to its utmost limits, but I hope they will excuse me if I am just a little bit sceptical because I don’t see any capacity like that where I am.

The development sector is not just a pipe into which if you pour more money one day, more impact will come out the other end the next day. Where ‘absorptive capacity’ does not exist the additional funds will either go unspent, be wasted on unnecessary overheads, or be stolen. NGOs such as the one where I work continually have to battle to convince donors as to our absorptive capacity (not entirely unreasonably), and yet donors appear happy to continue to pour in more money into government systems which manifestly have considerably lower management capacity.

Few people would disagree that the aid system needs serious reform. Many say we need both more and better aid. I think that’s too much to deal with at one time. First make it better, much better, then add more if the absorptive capacity really is there.

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7 responses to this post.

  1. You are right, of course, that in some countries, in some sectors, more money is not the answer. There are often other obstacles to scaling up service delivery, and in those circumstances putting in more money is just pushing on a string. I also agree with you that a lot of so-called “pilots” tell us little about whether and how a programme can be scaled up.

    But just as you accuse others of making wild extrapolations from local success stories, you should not make the mistake of generalising wildly on the basis of particular examples of failure. It is true that, in some case, more money is not the answer; but it would be wrong to conclude that more money is never the answer. Ethiopia is a case in point. There is enormous capacity here to spend more money effectively, and turn money into better services, both within government and outside it. In this case, lack of money is the main constraint. I can tell you with a good deal of confidence that more money would lead to better access to family planning in Ethiopia. I don’t know if Guttmacher is right that with $180m the country could achieve universal coverage, but I do know that increases in money right now would make a huge difference to people’s lives.

    I am one of those who calls for more and better aid. I understand why you say that we should deal with them one at a time; but I think this is both excessively simplistic and immoral. Are we really to tell countries which can absorb more aid, and use it to transform people’s lives, that they’ll have to wait until we’ve sorted out the aid system before we are willing to give them more? Why should children die of curable diseases, or be denied an education, because we prefer to reach blanket conclusions about the aid system rather than be specific and nuanced about where and how it works?

    One reason I am in favour of testing the idea of Cash on Delivery aid is that I think it rmay help to resolve this debate. In a system in which aid is linked directly to results, you won’t need to work on the basis of generalisations about whether aid will work or not. Where countries do have the capacity to deliver services, aid will flow to provide the finance they need. Where countries do not, they, and we, will have to look for other ways to overcome the obstacles. Then we won’t need to work from my hunches, or yours, about whether a country can make progress with additional resources.

    all the best
    Owen

    Reply

    • Hi Owen,

      I guess it would be glib to suggest that by attempting to get a better handle on things before increasing the funds there would not be any losers; at the margin presumably some people would be deprived of medical care or an education, and indeed that would be sad. But reforming the systems which deliver these services will ultimately ensure many more are able to benefit. Also, it is reasonable to ask what is the quality of that medical care or education? Education, in particular, is a sector that really fails to quantify impact (at the human level) when advocates focus on simplistic statistics like primary school enrolment.

      As for the situation with maternal health care in Ethiopia, you are right to call me out for my ignorance of the context. But I still think there are important questions to ask as regards that figure of $180 million. Can the system really absorb that much? What proportion of rural clinics have they visited to assess for capacity? If funds are the greatest constraint then add another $20-30M (or whatever figure seems reasonable as an increment) and re-evaluate next year. Most people would agree that is sensible, and it might even be the desired outcome of Guttmacher (sorry – no time no read the full report), but in practice I don’t see donors (under pressure to get money out of the door) following this route. Even if the $180M figure is just an advocacy tool I think it is potentially dangerous in the implications it contains, and that a dysfunctional aid system will effectively take it at face value even if many of the people involved know the reality is more complex. If Marie Stopes can play a role taking up some of the slack, then that would be great too.

      I also like the idea of Cash on Delivery (see here) for precisely the same reasons that you do. In theory it should provide exactly the amount of funds that a recipient country can handle – because they’ve already handled it! I say “in theory” simply because, to my knowledge, COD hasn’t been greatly tested yet, and there’ll be a lot of devil in the detail to get right. But getting that detail right is going to take time on both sides (donors and beneficiaries). Trying to shovel in more money at the same time as promoting COD seems to me counter-productive.

      MJ

      Reply

  2. […] ps. Beyond REDD, am I skeptical about how effective will be those huge sums being bandied around to help developing countries adapt to climate change? You betcha! But that’s just the same old story. […]

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  3. […] the inputs leads to a doubling of the outputs, there are serious problems of diminishing returns; simply turning on the tap is not the solution.  In particular I really question to what extent DFID has considered absorptive capacity of […]

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  4. […] conclusion from two years ago still stands: “Few people would disagree that the aid system needs serious reform. Many say we […]

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