Foreign Aid

 

 

Instead of continuing to promote one-size-fits-all prescriptions, Western aid agencies and governments should make much more use of nonfinancial aid, put more emphasis on institutional reengineering, devote greater effort to reinforcing local processes in a bottom-up fashion, and work harder to ensure that the assistance provided actually helps local efforts to spur development.

For a start, aid agencies need to broaden their missions beyond dispensers of aid and advice into comprehensive facilitators of development, with access to a wider set of policy instruments. Shortages of money in fragile states need to be seen as rooted in the dysfunctional institutional environments that discourage investment of any kind, not as mere shortfalls in financial plans.

Assistance should be seen primarily as a way to reinforce a process that is firmly rooted in local society and, ideally, in local institutions. Aiding states in this way requires far greater sensitivity to local sociopolitical climates and much deeper analysis of how aid affects the state-society relationship. Any project should be evaluated in terms of how it impacts relationships, especially between state and society and between members of a single national or local community, and how it improves local capacities, rather than being judged purely on whether it improves some quantitative measure of well-being. Financial assistance, the most fungible of all aid, must be disbursed with special care to ensure that it does not distort institutions that must remain firmly embedded in, dependent upon, and accountable to local societies to be effective. Except where there is a dire humanitarian crisis, aid to governments should be given only in a reasonable proportion to a state’s own revenue-generation capability, so as to minimize disruption to the state-society relationship, even if this means sacrificing some of the effectiveness of programs in the short-term. Matching funds, for example, would encourage governments to increase public services to local companies and citizens. Fostering self-reliance and self-help initiatives by aiding community-initiated projects, where modest assistance could prove decisive, should be a greater priority than now, when top-down initiatives dominate the agendas of most NGOs and donors.

Technical assistance should focus on the systematic transfer of knowledge to local officials such that it builds local capacities that should in time reduce the need for outside help. Implanting foreign nationals in key positions in fragile state administration (especially in revenue management functions, where corruption is notorious), offering many more opportunities for government ministers and managers to take lengthy training courses in developed countries, and investing in the creation of regionally based academies that could train thousands of administrators in the arts of governance are all examples of this approach. Regional organizations—which have a better understanding of local conditions than do Western organizations—could certainly play a major role in the process of transferring governance know-how downward to state governments.

In the more dire circumstances, outside assistance might be more helpful if it was directed at supplementing capacity rather than providing more cash or technical assistance. A country with a highly developed legal system could provide a “judicial blanket” for a fragile state in the form of a series of courts to adjudicate major cases and supervise lower courts. Natural resource revenue could be placed into an international escrow account comanaged by a foreign country or international body. Monetary policy might be delegated to an outside authority, as already happens in the fourteen African states that use the CFA franc. All of these measures would be much more cost-effective means to help fragile states than simply disbursing aid, even if the arrangements were meant to continue indefinitely, which might be necessary in many instances.

 

For more information, see:

Aid, Institutions and Governance: What Have We Learned?

By David Booth

 

Societies, States and Citizens. A Policymaker’s Guide to the Research

By Sue Unsworth and Mick Moore

 

An Upside-down View of Governance

By Sue Unsworth

 

Less Pretension, More Ambition: Development Aid that Makes a Difference

By Peter van Lieshout, Robert Went and Monique Kremer

 

The Clash of the Counter-bureaucracy and Development

By Andrew Natsios

 

Reframing the Aid Debate

By Lindsay Whitfield

 

Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty

By Abhijit Banerjee and Esther Duflo

 

Helping Self-Help: The Fundamental Conundrum Of Development Assistance

By David Ellerman

 

Development, Security and Transitions in Fragile States

By Samir Elhawary, Marta Foresti and Sara Pantuliano

 

Principles for Good International Engagement in Fragile States

By the OECD DAC

 

Working Effectively in Conflict-affected and Fragile Situations:  A Summary Note

By the Department for International Development (DFID)

 

Building Peaceful States and Societies: A DFID Practice Paper

By the Department for International Development (DFID)