Overseas aid needs more targeting, not more money

As we reported last week, a report form the Independent Commission on Aid Impact rated DfID’s strategy towards tackling corruption in recipient countries as seriously flawed.

Although the Department recognised the extent of the problem, its approach for tackling it was not, according to the Commission, “equal to the challenge”.  The report also highlighted lack of focus on alleviating its effects on the most vulnerable, and recommended a series of fundamental reforms in the Department’s handling of the issue.

Much of overseas aid passes through the hands of government officials in recipient countries.  This is especially true in the case of direct budget support. But the absence of effective market mechanisms means that the state is likely to have a much more extensive role and jurisdiction, making it even more crucial that DfID approaches this issue in a calculated way, since potentially it cannot rely on any representations made by the authorities of the recipient state. The worst case scenario paints a picture of a UK taxpayer financing palaces for corrupt officials, or worse, repression of the local population.

Unfortunately, the Government prefers to pay more attention to how many schools an amount of money could build rather than diverting more of the budget to ensuring the implementation goes smoothly.  The overseas aid budget is currently ringfenced, and the PM stands by his commitment to a fixed figure of 0.7 per cent of GDP. What this demonstrates is that the Government still does not get that when it comes to publically financed ventures, it is not about how much you spend, but how.

There are two things which be taken from the Commission’s report. First, money spent on direct anti-corruption strategies, provided that they are backed with evidence for their effectiveness, is money well spent. As the report highlights, it does not just put aid funds at risk, but also has a very significant impact on the lives of the poorest, and stifles development by putting off foreign investment, making it a legitimate aid objective in and of itself. There are examples of successful anti-corruption projects co-ordinated by the DfID, such as those in Jamaica and Bangladesh, where co-ordinated efforts aimed directly at dealing with corruption have significant claim to success.

Second, it is important that aid is administered in such a way so as to minimise the danger of maladministration by local authorities. This may involve prioritising work with independent aid agencies and NGOs, which provide their own frameworks of delivery, and so do not rely on local administration. (However, this can often be problematic too.) A good example is Nigeria, where thanks to frequent reporting of misuse of fundsby corrupt officials, aid is now mostly administered through working with third parties, as the ICoAI report reveals.

Although this presents issues of its own, such as co-ordination problems and at times unprofessionalism on part of the NGOs, this can be addressed by giving DfID a greater role in supervising and co-ordinating the efforts of UK agencies in order to channel money and manpower to where it’s most needed. The key thing to take from all this is that, just like in other areas, effectiveness more often depends on better management of the funds available, rather than how much there is.