Focusing on Aid Agency Effectiveness
Almost 1 billion people in the world still live on less than $1 per day. There is overwhelming support across the world for a system of international aid that would improve living standards and give hope to children born into poor families. Over $100 billion was disbursed by rich country governments in each of the last two years. Along with pledges made at the G8 summits in Gleneagles and Heiligendamm to increase total foreign aid by 62 percent and double aid to Africa from 2004 levels by 2010, observers might get the impression that the foreign aid system is well-funded and effective. Yet of the $100+ billion of official development assistance reported in 2005 by DAC donors, only $38 billion was designated for tangible projects and programs. The reality of official aid is that most of it gets tied up in things like emergency relief, debt relief, technical assistance and administrative costs. Some is also lost to corruption. Maybe only half of project aid, or $19 billion, actually reaches intended beneficiaries. Atop all of this are anecdotes of poor information sharing, planning and implementation that result in overlapping and uncoordinated efforts.
No wonder questions about "aid effectiveness" remain.
The world is changing rapidly, but official aid agencies have been slower to change. Surprisingly, there have been few efforts to study how the impact of aid agencies can be improved. The Wolfensohn Center for Development is filling this niche by asking what official agencies need to do in a world where
- There are more democratic governments with vibrant civil societies in developing countries;
- Fund raising is easier for single-issue and specialized purposes;
- There are huge opportunities to channel aid through private philanthropies, corporations and NGOs;
- Non-DAC official donors including China, India and the Middle East provide competition to official aid.
These trends pose fresh challenges. The mechanisms for information sharing, coordination, planning and administration are weakening. Donor allocation rules are becoming strained as the number of aid organizations swells. And how to effectively scale up is becoming more complicated.
Fortunately, the new aid architecture might also lead to exciting new ways to incentivize and shape donor behaviors. The Wolfensohn Center’s aid effectiveness project focuses on three imperatives: demonstrating how information technology and rapid data collection can strengthen coordination mechanisms; using new measures of agency results to build a market for aid allocation; and encouraging exchanges between the public and private sector that foster innovation and experimentation in scaling up.
The Wolfensohn Center’s outputs are multi-faceted, including scholarly research pieces, advisory partnerships with aid practioners, forums for sharing best practices and high-level dialogue with world leaders.
Research and Commentary
Competition, Not Coordination: Making European Foreign Aid More Effective
Development & Cooperation, No. 02 2008, Volume 49
Joshua Hermias & Homi Kharas
Trends and Issues in Development Aid
The Brookings Institution
Homi Kharas
The New Reality of Aid
The Brookings Institution
Homi Kharas
Short Term Fixes for Development Assistance
The Brookings Institution
Homi Kharas & Abdul Malik
The New Philanthropy and Development Aid
The Brookings Institution
Raj M. Desai & Homi Kharas