Aid Reform in the Real World

I get really frustrated by aid reform think-pieces which offer lofty suggestions for improving the aid system, while ignoring the dysfunctional, messy reality of how the system actually functions. Many of the things we complain about – ludicrous accountability requirements, inflexible projects, and a neglect of local knowledge – are not bugs but features, adopted because they satisfy the interests of aid stakeholders.

Duncan Green on From Poverty To Power offered some great suggestions on how to improve aid in the real world. Expanding on a twitter thread, I want to offer some quick reflections on the six suggestions he made

1. Fund individuals rather than organizations. This is my favourite suggestion – cash transfers are one of the few ‘disruptive’ innovations to hit the aid sector in the past few decades. By giving money directly to poor people, you cut out the majority of the aid chain, improving the aid system by simply removing most of it.
2. Build trust with organisations. This is critical. I’d love to see donors move from short-term projects (2-5 years) to longer term relationships (10-20 years) with trusted organisations. Well designed partnership agreements could reduce accountability requirements over time, as the donor built up more trust that the money was being well used.
3. Brokering rather than money flows. Brokering is certainly important. But I don’t think this solves the basic aid problem – which is what to do with a budget of well over $100 billion, in contexts that desperately need this money to pay for roads, education, and health (among much else), through an extremely dysfunctional system?
4. Payment by results. I don’t think payment by results works when used as a way to push risk down the aid supply chain. But it has more potential as a way to shield aid delivery from donor pressures – see the end for my final, optimistic suggestion on this.
5. Technical Assistance. Technical assistance is a decades-old solution for those who worry that infusions of cash aren’t working. But billions have been spent on technical assistance, without helping underlying dysfunction. Why is this? Partly technical assistance is subject to the same pressures as the rest of the aid system, partly you can’t absorb technical assistance withour pre-existing capacity (in which case you don’t need technical assistance) and partly capacity is only one of a huge number of problems facing aid recipients.
6. Dump money in multilaterals. I’ve never worked directly with a multilateral, but my limited exposure hasn’t impressed me with their efficiency, flexibility and effectiveness. Happy to be proved wrong, but otherwise am somewhat sceptical.

Any more positive suggestions? I think it’s time to start arguing for a cautious return to budget support. This has fallen out of favour among donors amidst legitimate concerns about corruption. Could payment by results be used as a way in which budget support could resume, addressing accountability requirements while also building developing government capacity?