Vietnam was an international aid magnet in 2007, attracting 752 donor missions—more than three per working day.
Around the world, a growing number (230 and counting) of aid organizations, funds and programs are operating 70,000 “aid activities” averaging to only about US$1.7 million each, with each country hosting 260 missions on average.
While the funds are welcome, the plethora of projects is taxing low income governments with limited capacity and hurting countries’ ability to take control of their own development, say development experts.
Ministers from over 100 countries, heads of bilateral and multilateral development agencies, donor organizations, and civil society organizations from around the world will discuss that issue and others at the Accra High-Level Forum on Aid Effectiveness, September 2-4 in Accra, Ghana. The World Bank, the Organization for Economic Cooperation and Development (OECD) and the government of Ghana are organizing the event.
Participants will take stock of how much progress has been made since a 2005 aid effectiveness forum in Paris that tried to get donors to work together and support developing countries’ efforts to manage their own development.
Three years later, there has been progress, but “there is still too much inadequate coordination, fragmentation, and too much money flowing outside the budget,” says R. Kyle Peters, Director of Country Services of the World Bank. “The question is how can we work together more efficiently to support developing countries’ capacity to plan and direct their own development as well as lower the transaction costs on them.”
Aid efficiency has become more urgent as the price of food and fuel has skyrocketed, adds Peters.
“We need to act more quickly, because the food crisis is happening now. We want to make sure we’re agile and fast as well as coordinated.”
Channeling Aid Through Country Budgets
A critical step is increasing the amount of aid channeled through country budgets, says World Bank Managing Director Ngozi Okonjo-Iweala.
In countries like Afghanistan, where two-thirds of aid goes outside the country budget, the aid does not enable strengthening of the use of the country's own institutions and instruments.
“We need ... to support the countries to build institutions by using their own budgetary mechanisms,” she says.
More and more donors are willing to provide countries with general budget support, allowing them to take ownership of their own development strategies.
Of almost 60 countries analyzed last year, all made progress on this front, and eight achieved an operational development strategy: Burkina Faso, Ethiopia, Ghana, Rwanda, Tanzania, Uganda, Vietnam and Zambia.
Not long ago, a country like Tanzania would be faced with outside consultants telling government ministries what to do.
“These days, it has completely changed and we sit down, we discuss, and there is greater understanding,” President Jakaya Mrisho Kikwete said in an interview last year. “We also know what we want…What I have seen is not only good for us, but I have also seen donors now increasingly appreciating that it is a better way of working together.”
Bank’s Progress
The World Bank supports country ownership of development through its results-based country assistance strategies, which are aligned with the country’s strategies. About 70% of the Bank’s aid to 33 countries surveyed in 2007 was aligned on national priorities, up from 62% in 2005.
The Bank is also working more closely with that of other development partners. Nearly 60% of the Bank’s analytic work is done jointly, up from 49% in 2005, and 85% of technical assistance is coordinated; 54% of aid is disbursed through common arrangements or procedures.
Need to Accelerate Progress
But development partners need to strengthen their partnerships and “work better with new donors that are coming in,” such as private and emerging market donors, says Okonjo-Iweala.
In Accra, the goal is to accelerate progress in hope of achieving the eight Millennium Development Goals(MDGs) by 2015, including eradicating extreme poverty and hunger and achieving universal education.
That will require donors to honor the commitments made at the 2005 G8 Gleneagles Summit—currently some US$39 billion short (in 2004 dollars), says Okonjo-Iweala.
“Growth, poverty reduction, and the MDGs are the ultimate goals,” adds Peters.
