Unpicking the Bilateral Aid Review

1 March 2011
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Given the pressing political need to mollify critics of aid, it is little wonder that this review is based on a now-familiar emphasis on results and value for money, but lacks reference to the kind of issues that more seasoned observers of aid will be looking out for (such as an emphasis on developing country-led development strategies and donor harmonisation).

Having said that, the two fundamental pillars of this review are sound: a reduction in the geographical scope of DFID’s ambition, and a new way of allocating aid according to a projection of concrete and costed results.

Reduced number of countries
The crucial piece of news is that the number of countries DFID will focus on will reduce over the next four years by a third, from 43 to 27. This has been extensively trailed so may not seem surprising. But in a context of rising aid expenditure (set to increase by $4 billion by 2015) one might have expected the scope of the aid programme to expand to cover more countries. When aid experienced a similar rise in Spain a few years ago, the Spanish opened more country programmes, and the Australians may well do the same when their aid review closes shortly.

But Andrew Mitchell has opted to reduce the number of key country programmes and this is, in my view, a good decision. History has shown that much depends on a thorough understanding of the country context to make aid work. Spending aid in fewer countries makes it more likely that it will have a positive impact. With pressure on DFID’s “administration costs” threatening to reduce the number of professional staff overseeing the aid spend, a reduced cohort of recipient countries is a welcome rebalancing.

The reduction in country programmes is being sold as a distinctive policy of this government, particularly the much-touted shutting of the Russia and China offices. It is, in fact, a continuation of the trend adopted by DFID when it began its exit from South and Central America some years ago, and the decision to exit from Russia and China was taken by Labour in 2007.

Criteria – how were the decisions made
The decisions about which countries to phase out of and where to continue aid were based on an assessment of a) development need, b) likely effectiveness of assistance and c) strategic fit with UK government priorities. The first two elements were analysed using a Need-Effectiveness Index devised for the multilateral aid review. The third element is not discussed in detail, but we are told that the UK Strategic Defence and Security Review’s stipulation that 30% of DFID funds go to fragile and conflict-affected states has been met. “Winners” from the review include Pakistan, Yemen, Somalia, Afghanistan and the Occupied Palestinian Territories, all important for security as well as development reasons.

There is also a certain amount of schizophrenia when it comes to a focus on fragile states. The needs part of the index ensures that fragile states are favoured for DFID cash, which is new, but the effectiveness part continues to favour states with strong institutions (which are therefore, by definition, non-fragile), which “balances out the fragility part of the need index somewhat”, as the technical note to the review acknowledges. So is there a focus on fragility or not? I was left confused.

From top-down to bottom-up?
The present government has already demonstrated its predilection for presenting everything as if it is a new idea. In their foreword, David Cameron and Nick Clegg emphasise a focus on “real evidence” of progress rather than “sending money off in the hope it will do some good”, which is presumably what was happening before they came to power. While this has obvious party political motivations, it may irk the Labour party and DFID staff who thought they had been carrying out fairly profound impact assessments for many years.

Nevertheless, one genuinely new innovation is presented in this aid review. Whereas previously country programmes would be allocated money and would then come up with a strategy to spend it, this time they had to apply to head office for funds to achieve specific projected results, what is called a “results offer”. These offers were apparently reviewed anonymously by over 100 DFID experts.

According to colleagues in DFID, this is the thing that implies a genuine shift in culture, probably in a good way. I have written about the dangers of a narrow “value-for-money” focus in the past, but ultimately results for poor people are all that matters in development so an unrelenting focus on results is as welcome as ever, as long as (underline, italicise, increase font size) that doesn’t mean short-term deliverables at the expense of long-term sustainable change, and as long as value for money does not mean risk-taking will be penalised.

Country ownership and donor support

Time will tell if these changes will really constitute a “new approach to development”. One interesting counter factual question will be whether the country strategies will look significantly different because of the new process. The danger is that while it is sold as bottom-up, the impact could be the opposite. Since 2003 a huge international initiative to improve the impact of aid has been developing, known as the Paris Agenda for Aid Effectiveness. Apart from “Managing for results” (no – it wasn’t an idea made up by Mitchell!) the declaration, signed by all OECD donors and most aid recipients, emphasises the need for donors to coordinate their aid around recipient country-led priorities.

The idea is that recipient countries take the lead in developing their anti-poverty strategies, and donor governments gather to support them. In the jargon, it is called country ownership, and donor alignment and harmonisation. I could find no mention of these terms in the aid review, let alone explicit support for the Paris process. While there is a mention of other donors, the decisions do not appear to have been discussed with fellow donors, which raises the question of how much real joint working and geographical division of labour is taking place.

Even taking into account the fact that this document is written for the British public, it is hard not to conclude that the failure to mention the Paris agenda is a deliberate omission of what is now increasingly a recipient country-led push for transparency and accountability on the part of donors.

It is worth mentioning that there is no discussion of aid conditionality or aid dependency, perhaps the two most important impacts of aid as most of these countries enter their fourth or fifth decade as aid recipients. When will the aid industry begin to address these issues with the seriousness they deserve?

By continuing the push for more focus and results, this document will make the task of defending the UK’s support for international development to an increasingly sceptical public easier. But it does nothing to quell concerns over the tension between enhancing development effectiveness and gaining public trust.

At some point, it may be necessary to engage in communicating the complex reality of development to the British public, rather than pandering to simplistic understandings. It is a shame, then, that, according to what I have been told, the development education budget has been cut.

Jonathan Glennie