The psychology of giving and the corruption double whammy

An excellent post by William Savedoff and Nancy Birdsall over at GCD on Cash on Delivery aid got me thinking. Talking about proposed preconditions to successful COD aid they say:

“Similarly, conditioning a contract on adequate financial controls assumes that it is better to control the use of funds by tracking where they go than to control the use of funds by verifying what they yield. … Any further eligibility conditions are likely to undermine the restructuring of the accountability relationships or to simply delay implementation.”

They are absolutely right. Proposing such pre-conditions struck me as the classic aid mistake of focusing far too much on process, which able bureaucrats can spin out ad infinitum, as opposed to outcome, which is what we all want to see. Essentially donors are suggesting that they’d prefer to see none of their money stolen through local corruption than any particular outcome achieved, although given that money leaks even from the best aid projects, really all they are doing is prioritising the enforcement of controls – so that they cannot be accused of lax oversight – over effective implementation.

A good example of this which filters down even to small NGOs is procurement policies. A friend of mine experienced actual cost increases (never mind all the wasted staff time) when the NGO where he works was forced to implement a comprehensive procurement policy, and we have recently come under pressure to put one in place. Yet we all know the simple truth: trusting – and being able to trust! – your staff is easily the best, most cost-effective solution to dodgy procurement. I also have heard of big NGOs with dedicated procurement officers nonetheless paying suspiciously high prices for certain items.

What this highlights to me is one of the most pernicious effects of corruption: the layers of red tape that are imposed in an attempt to stamp it out; what I call the corruption double whammy. Unfortunately they rarely stop the leaks.

Donors ought to be capable of realising this and rising above it, but for their paranoia about best practices and being caught with their pants down. For most donors, I assume, this is basically a fear of the political process: tolerating a certain amount of corruption tends not to go down to well, and it is likely that the cacophony of condemnation will drown out more level-headed arguments. Indeed it is something we can all relate to: if you give some money to a good cause you’d prefer they suffered a glorious failure than that they’d achieved something with some of your cash, and then stolen the rest.

Is there a way forward? Perhaps some donors could set aside at least some of their funds for perceived riskier projects in which outcomes were prioritised over process? At least if the potential problems, but also potential gains, are acknowledged up front that might help draw some of the sting from the almost inevitable damning exposé when it comes.

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Donor befuddlement: half measures & contradictory aims

Two posts recently have brought to my attention how far donors still have to go in designing a more adaptable and hence effective and efficient aid system.

Half Measures

First, Lindsay Morgan (of Dispatches) wrote a piece about performance-based contracting for health services in Southern Sudan.  Those with a serious interest should read the whole piece yourself, but in essence it appears that a coalition of donors is trying to inject a little discipline of the market into healthcare provision in one of the most under-developed soon-to-be-countries of the world. Except that they still don’t seem to entirely get some of the most important aspects of how the private sector works. So NGOs are getting performance-based contracts, but have to work with GOSS staff, over whom, presumably, they have pretty low influence (no hire or fire, no disciplinary measures), which to my mind rather diminishes the level of achievement you can expect from management. The NGOs also had to work through some kind of central procurement system, which apparently caused no end of problems.

Whilst the GOSS health ministry staff may perhaps have learned something from this kind of system (NGO working practices and the like), I fail to see how just putting in a team of technical advisers couldn’t have just achieved the same thing. On the other hand if the donors want to get private sector / market-based practices embedded in healthcare provision in Southern Sudan, then they need to act a bit more like ordinary customers and stop making silly restrictions as to how their contractors work.

Contradictory Aims

Then Madeleine Bunting wrote about DfID’s new contradictory policies (HT: Matt @ Aid Thoughts). I am with many of the commenters in having little sympathy for the worries of DfID staff about Daily Mail journalists digging through the data and trashing one or more aid projects. The Daily Mail may be more than a little bit biased, but a good dose of daylight is the best prescription in my opinion, and, very probably, there are one or two aid projects which deserve a good trashing.

But I do think that the plan to axe up to half the work force is crazy, and even crazier when one considers the anticipated large increases in DfID’s budget. (Disclosure: I have a friend who works there.) Openness and transparency requires more effort to put documents into the necessary formats, especially if the data is to be made available in a manner actually useful for general analysis. These kinds of overheads cannot be just wished away. Moreover the relentless focus on minimising transaction costs is, in my opinion, mostly illusory: someone is bearing these costs, if not DfID then someone they are funding. I know of at least two international consulting firms currently doing very well out of managing DfID grants round where I work.

Not a good week

If anybody out there reading this works for DfID and/or with healthcare in Southern Sudan can correct me or at least give a better picture, then please do. But, unless I’m completely barking up the wrong tree, all in all it doesn’t look a good week for donors.