The New International Aid Architecture: New Players, New Challenges, Old Problems? 
Author : Donald Kaberuka
Date : October 16th, 2007
Comments : 10
1. Twenty years ago, 22 members of the OECD/DAC accounted for 95% of total aid to developing countries. Today, aid to developing countries is delivered via more than 150 multilateral agencies, 33 bilateral members of the OECD/DAC, at least 10 non-DAC governments and a growing number of global Vertical Funds. The number of donors per country has multiplied threefold in two decades. Some developing countries have more than 700 active (sometimes very small) projects and receive more than 400 missions a year, each with its own specific requirements. Aid channeled through bilateral as opposed to multilateral institutions would roughly be in the proportion 70/30. To this already complex picture enters the benevolent foundations mainly in Health and Education and the emerging actors such as China deploying significant level of resources.
2. This system of institutions and rules that govern the mobilization and the deployment of aid to developing countries is euphemistically called the international aid architecture. It has evolved over time as an inter-play between geo-strategic, historical and commercial factors but also the push for the Millennium Development Goals. It is an architecture, which emerged largely after the fall of the Berlin Wall, and is characterized by a larger degree of fragmentation and proliferation without necessarily providing greater effectiveness or additionality.
3. In theory, proliferation should not in itself necessarily be negative. New players bring fresh air, resources, innovation, new tools and naturally some competition which in principle, should have driven costs down and improved delivery. It is not happening, not yet. The 2005 adoption of the Paris Agenda on harmonization and effectiveness was a major breakthrough. Its implementation is improving everyday, but the record is mixed even among traditional donors. With some of the new players there is concern about debt sustainability, incentives or rather disincentives for governance reforms and reluctance by “new actors” to be bound by “old rules”. The question that is challenging to all of us and is urgent is - how do we find the right kind of framework that accommodates the increased generosity by the foundations, the significant role likely to be increasingly played by the new official players within the context of real additionality, best practices, innovation and accountability to those who give and those who receive by ensuring we are effective and get sustainable results.
4. According to some estimates, since 2005, the breakdown of global aid composition would indicate respectively; development programs (64%), debt relief (24%), emergency aid (8%) and administrative costs incurred by the donors (4%). What is certain is that “core aid” outside debt relief, peace keeping and other emergencies has declined by 4% since that year. Very little additionality in terms of core resources, reaching beneficiaries in recipient countries.
5. A related and pertinent question is - what is the role of multilateral institutions whose share may now have declined (30%) but whose institutional knowledge, capacity, regional and global reach keep the “horizontal” concerns addressed even when more resources are raised “vertically” or bilaterally.
6. What is the optimal path to a more effective collaboration with new players? What is the risk that it will all end up again in “donor fatigue” as inability to constructively engage gives rise to disappointing outcomes. Of course, the greater the coalition around the Paris Agenda by all actors remains as relevant as ever. What is certain, the field will no longer be the same and innovation is imperative. We owe it to the ‘bottom billion”.
Anindita Dey
Date : July 3rd, 2008 02:30:54
There is an urgent need for more contribution from developed and forefront-developing countries (those in the pipeline to join developed countries in near future) to promote sustainable economic growth for the ‘super-poor’ countries and making UN’s Millennium Development Goal a success. But remember, this is an era of give-and-take. In my opinion, the easiest way is to show some concrete benefits that may be accrued by developed and forefront-developing countries in return to the benevolent gestures towards their super-poor counterpart. For example, industrially developed countries may find their food-folder from some super-poor countries through agri-investment. Pinpointed suggestions from leading economists are warranted.
Amissi Rehani Tundula
Date : April 3rd, 2008 10:30:53
L’analyse de Mr. Donald Kabaruka est fort intéressante. Elle soulève des questions que assez pertinentes de l’aide au développement en faveur des pays pauvres. Cependant, il y a lieu de se demander pourquoi y-a-t-il prolifération des nouveaux acteurs aujourd’hui dans le secteur de l’aide au développement? Est-ce que les anciens acteurs ont-ils échoué dans leurs responsabilités d’atteindre le le niveau développement souhaité ou ils n’ont tout simplement pas su s’adapter aux nouvelles exigences et réalités émergentes dans les pays bénéficiaires? Et qu’est-ce qui a changé depuis en terme d’efficacité et d’approches de travail depuis que les nouveaux acteurs ont fait leur entrée dans la scène? Aujourd’hui, en dépit de cette prolifération des nouveaux acteurs, les observateurs sont unanimes que l’état de la pauvreté dans le monde continue à augmenter et que les populations des pays bénéficiaires ressentent peu ou prou les effets positifs des aides qui leurs sont destinées. Je crois, qu’il y a une grande nécessité de repenser de fond en comble pour proposer de nouveaux paradime de l’aide au développement.
Phillip Huggan
Date : April 3rd, 2008 05:32:35
Debt relief is mildly inflationary for the relief-ing nation. At least in the West, a strong dollar usually results in manufacturing sector layoffs. This is often a vocal political lobby as manufacturing regions are regionalized and often have union support. It is usually in the political interest of a nation with an appreciating currency to offer some degree of relief to manufacturing regions, despite the fact that the strong currency is usually even better for insurance and other finance sectors, than it is bad for manufacturing exporters.
A counter cyclical policy that the OECD nations could perhaps agree to, is to offer some debt relief to developing nations when an individual nation’s currency becomes especially strong. Say, for every 10% a given currency appreciates, a nation forgives 1% of its developing world foreign debt, or something like that.
It takes time for manufacturing jobs to diffuse to financial service sector jobs (as much as a generation), so a mildly inflationary prescription like forgiving a little foreign debt, might even pay for itself via reducing employment sector shift shock. Kind of a win-win, or at least a win tie. You’d only want to forgive foreign aid in nations with relatively progressive instituional policies (I think Canada has pioneered some sort of Africa ranking of nations likely to use extra aid for developmental purposes, not that Canada has contributed a disproportionately large amount of cash to the endeavour).
Jean-Michel Severino
Date : November 6th, 2007 05:56:56
Dear Donald,
A few thoughts on your post, which addresses a crucial question for each of our organisations:
1. Like you, my feeling is that whether we like it or not, this proliferation of development actors is here to stay. ‘Traditional’ donors cannot wash this new trend away; we will have to adapt, even if it shakes our past practices. New sovereign donors, foundations, NGOs, local governments, and private sector will all be key players in the development business.
2. This evolution could spell good news for developing countries: no one has the monopoly of development goals and tools, and there is a real need for new resources, especially on the African continent. As you mention, new actors of development aid, public and private, can bring additional resources, a greater international commitment to the development agenda, and their own expertise to deal with the poorest countries’ problems. After all, some of the new sovereign donors have had to tackle similar challenges in the last decades. Only the development community needs to get its act together to overcome fragmentation. The key question, as you say, is how to ensure additionality of every actor’s efforts.
3. How can we build the grand development pyramid with blocks of all shapes and sizes? Here are a few things we found useful on our side:
- Multi-actor coalitions can address specific issues more efficiently than individual donors, by pooling the right type of resources and expertise on a given problem. The Critical Ecosystem Partnership Fund is an example of such a large coalition of private and public actors getting together, in this case to protect biodiversity in ways that are respectful of local populations. The idea is to provide solutions to problems, when in the past individual donors have too often proceeded by looking for problems to the solutions they could offer. On the whole, we find that coalitions are better at finding appropriate solutions than individual institutions.
- This brings me to another element of solution: enlarging our toolbox. This can be done by what I call ‘instrumental innovation’. Each actor can bring to the broader development community the new instruments it develops (such as insurance mechanisms for the poorest, contingent loans, mesofinance tools etc.). I believe in the need to permanently adapt our tools to tailor-fit the changing needs of those we seek to help.
- Finally, I think that we have been too slow in engaging new sovereign donors (China, India, Brazil but also central European states): they can learn from our experience, and we from theirs. The OECD’s Development Aid Committee members have found it important to discuss coordination issues around a specialized roundtable; we need to find the appropriate platforms to exchange with the new actors, in the interest of donor and recipient countries alike.
JMS
Francis Bacon
Date : October 30th, 2007 09:17:48
This was a very interesting article.
As Donald points out, there are now a huge number of agencies working on the same issues, often at cross-purposes.
There is no way to co-ordinate this mass of organisations and to attempt to do so is fighting a losing battle.
The way to ensure the system works well is to make sure the lessons from successful and unsuccessful projects are shared with the rest of the sector, so that organisations do not have to continually relearn what works and what doesn’t.
In line with the Paris Declaration, development orgaisations must become much more transparent about where they are spending money and how effective it has been.
For more, see: http://thatsthewaythemoneygoes.blogspot.com/
Francis Bacon
Vicki Assevero
Date : October 26th, 2007 05:47:52
The title of President Kaberuka correctly presents a critically important issue. Are we constructing a new building without a full set of architectural plans or required approvals?
The problem is indeed old-poverty alleviation and how to promote sustainable economic growth for the planet’s poorest countries and populations. And there are indeed many new players in the so-called developement space, particularly since the Millennium Development Goals have become the global framework for addressing and measuring progress.
Many of these new players are not accountable to anyone but their boards and their donor/funders and because of this there is an anti-democratic undercurrent at play in this emerging “architecture”.
Perhaps now is the moment to recognize that in order to promote the human solidarity, which is the motivation for global poverty alleviation efforts, we need to forge truly “global” (not inter-national)accountability rules which can apply equally to state and non-state actors.
Thank you for this blog. It is a good idea to continue to promote multi-disciplinary and cross border dialogue among all of us who are working for coherence and effectiveness in helping the poorest of our co-citizens out of their poverty.
Dany Ayida
Date : October 25th, 2007 03:29:40
Je salue d’abord le lancement de ce blog et les nouvelles orientations de la BAD que je trouve globalement innovantes et encourageantes. L’analyse du président Kaberuka est pertinente dans ce sens qu’elle soulève des questions de principe sur les choix stratégiques de l’aide internationale. Le rôle des “nouveaux acteurs” auxquels il fait référence n’est pas cependant assez développé et je présume que c’est fait à dessein pour inciter au débat.
Je crois que le nouvel environnement de la dualité des interventions internationales - aide au développement et nouveaux mécanimes du commerce international- appelle de la part des institutions africaines tout comme de celle des Gouvernements une mise à jour des stratégies. En effet il est apparu à la lumière de diverses études que la plupart des acteurs africains, notamment les Etats et les organisations régionales, sont trop peu outillés pour faire face avec efficacité aux donnes de ce challenge. Ces questions se posent aussi du point de vue de la qualité des ressources humaines que de celui de l’adéquation entre les politiques relatives à la coopération au développement et celles relatives aux échanges internationaux. Des mécanismes idoines existent mais l’encadrement stratégique, le suivi et les capacités endogènes de mesure des résultats sont généralement défaillants.
L’aide internationale considérée sur le double plan latéral et multilatéral met en oeuvre des processus qui échappent presque entièrement au microcosme institutionnel de nos pays. Le déploiement des programmes ne répondent pas toujours aux besoins et aux priorités internes. De plus l’accompagnement technique devrait permettre de mettre en valeur l’expertise locale tout en favorisant une circulation optimale des informations.
Je suis d’avis avec le Président de la BAD que “la prolifération ne devrait pas être en soit négative, en théorie”. Mais le paradoxe de la réduction de l’aide internationale par rapport au flux des donateurs est frappant. En même temps, la capacité d’absorption de cette aide par nos pays est une question poignante. Que de grands décideurs sur le continent abordent la question est une démarche salutaire.
Merci
Dany Ayida
Administrateur général
Africa Label Group SA
Ouagadougou, Burkina Faso
www.africalabel.com
Franck Kaboré
Date : October 23rd, 2007 04:42:03
De nombreuses études ont montré que l’aide était inefficace. Des sondages auprès de contribuables des pays donateurs laissent à penser que ces derniers, en majorité, croient que l’aide n’est pas efficace. Cela n’est pas sans susciter des débats, d’aucuns préconisant une rupture avec l’approche traditionnelle donateurs/bénéficiaires au profit d’un financement des biens publics mondiaux (BPM) par l’APD. Pourtant, cette événtualité est perçue comme un détournement de l’APD au détriment des pays en développement. Elle pourrait surtout conduire à une certaine re-légitimation de l’APD si celle-ci peine à démontrer son efficacité.
James Teered
Date : October 22nd, 2007 03:27:32
Your text raises a number of interesting questions, but we would like to hear more about proposals. Or are you telling us that donors are doing their best to harmonize and it’s just a matter of time ?
My belief is that new donors like China will help shake up old habits and put pressure on traditionnal actors that feel they know their job so well, because of they have “so much experience”.
mohammed elalami
Date : October 21st, 2007 02:15:51
merci pour cet article.selon ma vision,je pense que l’aide fourni pour developper les pays pauvres doit etre envisagé non par les sommes versées,mais par les objectifs realises.si un nbailleur de fond verse 1 million de dollars dans un projet qui sera réussi,alors la l’objectif a étééxocé.si un autre verse 10million de dollarsqui seraient éparpillés,engloutis en l’abscence d’une planification,d’une préparation minutieuse du projet,alors on parlerait de perte de temps precieux,d’efforts,et de fonds.le suivi des débouchés des fonds est vital pour les organisations aidant au developpement.