On Aid Part 2: Forget Value for Money

Value for money. Somewhere someone got this confused with aid effectiveness and the results have been disastrous. Where aid effectiveness asks if the money spent is resulting in effective, sustainable change, value for money looks at how much you can get for each dollar spent. While efficiency is important (not hiring six consultants where one will do), efficiency and value for money are not the same thing, and this is causing big problems in the world of development.

As I discussed in a previous article, donors are saying one thing (‘our focus is to reach the poorest, the most vulnerable’) and doing another (demanding value for money, restricting development work to the easy stuff), focusing on the safest, easiest-to-reach communities because it is cheaper and demonstrates quicker results. The real result? More and more people are left behind.

A good example is the MDGs. They were successful in terms of improving education and reducing poverty on the whole, but take a closer look and ask why only three of the Least Developed Countries graduated to middle income status by 2015, and why seven LDCs failed to achieve any MDGs at all. Politicians will tell you it’s because these are fragile or failed states, wracked by conflict and turmoil. And how can we achieve development outcomes when we are focused primarily on saving lives?

Well, by putting money where your mouth is, to start. Major donors, including all members of the OECD, committed to the SDGs and its motto ‘leave no one behind,’ Except they have, because aid to LDCs has fallen by 6% since 2010. While other reports argue that development assistance from OECD countries has actually increased, a lot goes to refugee assistance and integration in their own countries, and a lot to ‘safe’ middle income countries. While it is very important to sustain aid to middle income countries to safeguard development gains in the medium term, and it is a humanitarian and moral imperative to provide assistance to refugees fleeing conflict and violence, there is also a moral imperative to sustain aid to LDCs.

Many of these countries have experienced conflict, but the people there were too poor to flee. The governments barely function and locally-generated revenues are far below what is needed to provide even the most basic services, let alone invest in improved services or economic development. Development assistance is a lifeline for these countries. It is not charity, but necessity.

Which is why, traditionally, governments in LDCs have taken a back seat to deciding how aid will be used and who benefits. However, with the ‘New Deal,’ agreed to in 2011, ‘development partners committed to supporting nationally-owned and led development plans and greater aid effectiveness in fragile situations (the TRUST principles), and g7+ governments committed to inclusive planning processes, grounded in context (the FOCUS principles). Both parties committed to pursuing the five Peacebuilding and State building Goals (PSGs): legitimate politics, justice, security, revenue and services and economic foundations.’ It was a serious attempt to put aid-receiving governments in the driver’s seat while holding them to account for actually getting things ‘done’ to move beyond ‘fragile’ state status.

Five years on, the ‘value for money’ and quick results policies has done little to change the behaviour of donors in any significant way. A recent review of the New Deal noted that there was no evidence that international actors had increased allocations to the peacebuilding and state building goals; the 2008 financial crisis reduced commitment to aid effectiveness, and that a redirection of funds to the crisis in the Middle East put a further strain on commitments.

Beyond the issues of the financial crisis and the crisis in the Middle East, what else is influencing donor habits and priorities towards ‘value for money’ and quick results?

First, donor aid strategies need to pass muster with their electorates, aid is tied to national priorities or interests, like security, foreign investment, and some ‘feel good’ topics like women’s empowerment and education. In order to gloss over overt self-interest, terms like ‘conflict-sensitive’ are thrown in for good measure. The Swedish aid strategy views this as ‘knowing who is benefiting from aid and what the consequences will be.’ Fair enough. But if it’s going to benefit some members of a community (for example, a former rebel combatants), does this preclude the entire community from assistance? ‘Tied aid’ was a real problem during tsunami recovery in Aceh, Indonesia, as donors were adamant that members of the rebel ‘Free Aceh Movement’ not be recipients of tsunami recovery aid. Given that there were rebels in every community, it would have precluded thousands of tsunami victims from aid. Besides, the rebels were tsunami victims as well. It added so much bureaucracy to an already hectic process, and no love was lost between humanitarian and development organizations and the donors.

Second, when aid strategies align with national interests, countries aren’t necessarily chosen based on need, but on their strategic importance. Yemen, for example, was an LDC in desperate need of aid. But quite a lot of money flows to Egypt, a country strategically important for security reasons, but which has reasonable health care, education and, you know, the mass population isn’t starving. Yet, poor Yemen. Or rather, the people of Yemen. Perhaps if money had flowed there to begin with the crisis wouldn’t be quite so acute, or quite so expensive, as noted by Katie Peters, here. Ethiopia is also a strategic development investment for many donors, such as the UK. Ethiopia’s stability sustains regional stability, as Ethiopia is a major player in the region, particularly when it comes to conflicts in Sudan and Somalia.

Another challenge is that development aid is being slowly redefined. It has been noted by Jeffrey Sachs that there has been a significant shift in language urging a larger presence of the private sector. The issue, he notes, is that this means loans, which tend towards commercial projects and not the much needed public service delivery that underpins economic development. This trend of championing loans over grants further reflects donor priorities to increase foreign investment and future trade opportunities.

Each of the above is far from the spirit of the SDGs and leaving no one behind. In a world of 24 hour news and social media, we can’t pretend we didn’t realize over one billion people were being left behind. We can’t say we’ve forgotten about the commitments we’ve made to them. And we can’t pretend to not understand why we can’t have the best of both worlds: development that is convenient and cheap but which benefits everyone. Hard choices need to be made. Risks need to be taken. Pretending they don’t makes us all look we don’t actually care, when at the heart of it all, we really, really do.