Simon Burrall, Research Fellow, ODI
Mick Moore, Director, The Centre for the Future State and Professorial Fellow, IDS
Simon Maxwell, Director, ODI
The fourth meeting in the 'Development Horizons' series was led by ODI and discussed aid architecture.
Simon Burall based his presentation on anewly-published Working Paper on aid architecture. He made four main points:
The aid scene was changing very rapidly;
The present architecture of the system was highly problematic;
A range of responses were being offered, but were inadequate; and
Some better options were available.
On the first point, aid was increasing sharply (to $US100bn in 2005, with further large increases in the pipeline), along with a proliferation of new actors (donor countries, funding windows). More new funding instruments had been created in the last decade than in the previous half century.
On the second point, there were underlying tensions about the objectives of aid and many issues related to aid partnerships. In addition, the transactions costs were very high: 80% of projects were for less than $1 - Uganda, for example, had over 1000 aid instruments over the period 2003-6, and on average countries had to receive over 200 donor missions a year. Aid was increasingly unusable in its current form.
On the third point, the technocratic response was enshrined in the Paris Declaration on Aid Effectiveness, with its emphasis on harmonisation and alignment. There was also discussion about the reform of individual institutions, for example through the work of the High Level Panel on UN System Wide Coherence.
It would be useful, however, and this was the fourth point, to think about further options. There were three of these:
'Paris Plus', involving greater country ownership, better independent monitoring, and greater accountability of donors to recipients;
A serious attempt to increase the multilateral share from 30% of the total, involving more money through the UN, the EU, the World Bank and the Regional Development Banks;
A new model, involving empowerment of recipients (either governments or communities).
In conclusion, Simon Burall noted that there were opportunities to take the debate forward, for example in ECOSOC; through the Paris Review Summit; at the OECD/DAC Global Forum on Development; or at the Review Summit of the Financing for Development Conference.
Mick Moorecommended the paper and the presentation. He agreed that the aid scene was changing very fast and that proliferation of instruments and donors was a serious problem. He noted, in addition, that aid consisted of many different kinds of activities, with a large increase in funding for consultants.
He thought the crusading ambitions of the Paris agenda and of larger reform efforts were probably unrealistic, however, and that talk of a consensus for reform over-stated the convergence of interests around aid. He argued that change would be driven largely by threats to the system. The shift we had seen from a highly individualistic system to one focusing on harmonisation and alignment could be seen as a reaction to the threat from new donors like China and the philanthropic foundations. The next step would probably involve giving more choice to countries. Better information and greater transparency would be essential if this were to happen.
In conclusion, he thought that the 'architecture' metaphor was an uneasy one and did not capture the organic nature of the evolving aid system.
Camilla Toulmin, Director of IIED, spoke briefly. She argued that the emphasis on general budget support militated against funding for decentralised operations and for priority sectors like the environment. She thought that a greater share of aid could usefully be channelled to local government and to communities.
A number of points were raised about the overall performance of the aid system and the likelihood of change. Some thought the multilateral system could be favoured; others thought this was extremely unlikely. However, the main point discussed was about the empowerment of aid recipients, through direct transfers or voucher systems. There was a good deal of support for this idea, and a good discussion about the information required to empower consumers in this way (for example, independent evaluation). There would also be value in looking at regulation issues in other sectors, for example industrial policy. It was recognised, however, that reform would raise issues about power and influence: donor countries would be reluctant to cede either.