The Tenth Recipient Test

One of the things that makes development assistance less effective than it might be is fragmentation: many donors providing small amount of assistance to a country, each mission head demanding their photo with a minister, many demanding different reports and procedures and providing overlapping or contradictory assistance, all while busy attending aid coordination meetings where they promise not to do that kind of thing. Fragmentation is also a considerable drain on donor bureaucracies, who have to report to ministers, parliaments, partners and the public on tiny programs. It is simply a recipe for low impact: all else equal, ten donor agencies providing $100 million each will be considerably less effective than one donor institution providing $1 billion (especially if it is one that follows pretty much all the principles on effective aid). 

Which brings us to the question: how many bilateral aid programs (direct donor to recipient country) are actually that small? The answer: nearly all of them. Of the 2,665 bilateral aid relationships reported by the OECD Development Assistance Committee (DAC), 1,567 were larger than $1 million in 2021, but only 186, or seven percent, were larger than $100 million.  

Before arguing “but $100 million is a lot!”—it would be if someone gave it to you, but it isn’t if someone gives it to a country. It’s the cost of a (single) high school renovation project in Indianola, Indiana. It is less than the cost of a bat shed over rail lines in the woodlands of Buckinghamshire in the UK.  It is also less than one twenty-sixth the GNI of the world’s poorest economy, Burundi. It is not the kind of sum that deserves an individual country program. 

Which brings us to the whole bilateral country program model: it simply doesn’t make sense for most donors, most places. The largest bilateral aid relationship for fifteen of the thirty-two donors in the DAC is less than $100 million. Across all DAC donors the median size of the largest relationship is $90 million, worth a little less than 0.1 percent of recipient GNI and accounts for less than ten percent of total recipient official development assistance (ODA). Get down to the tenth-largest bilateral aid relationship and the median size is $21 million, worth 0.03 percent of GNI and accounts for less than three percent of total recipient ODA. Only five DAC donors had a tenth-largest recipient program worth more than $100 million.

Iceland’s largest aid program is with Uganda. It was worth $8m in 2021. Uganda’s GNI is about $48,300m. Iceland’s aid country strategy for Uganda has objectives including “enhanced inclusive access to quality basic services and strengthened institutions to reduce poverty and inequality, improve living standards and increase opportunities for those who live in poverty and those affected by conflict through a triple nexus approach,” alongside “increased resilience of poor and vulnerable societies and enhanced economic growth through sustainable use of natural resources and supporting climate change adaptation/mitigation” all while tackling cross-cutting issues including “gender equality, human rights, environment, and climate.” 

New Zealand’s tenth largest program in 2021 was with Indonesia. It was worth $16m. Indonesia’s GNI is in the region of $1,335,866m. And yet, there is a negotiated development partnership agreement covering energy, agriculture, risk management, knowledge, and skills, with pages of commitments from both sides. 

Bilateral aid relationships are about a lot more than resource transfer. The money is often a tool to get the invitation to talk to the minister during the photoshoot. It helps with diplomacy. But it isn’t clear how effective a tool it is in that regard. There is some evidence that when the world’s largest donor (the US) increases  general budget support to a country, it can swing a vote or two at the UN General Assembly. That doesn’t apply to other donors. And with a UN General Assembly vote on the International Day of the Markhor and $5, you can buy a Frappuccino at Starbucks. (The Markhor is an amazing Asian goat, I wish it well.) Surely embassies need some resources to grease the wheels of local relationships, but a tiny aid program with an overweening strategy overseen by a bureaucracy designed (supposedly) to foster long term development is very gritty grease. 

Large donors should take the tenth recipient test: is it really plausible to imagine having a noticeable difference at the country level with the resources you provide to your tenth-largest recipient? If not, is the country program model the right one for you in the vast majority of countries? Perhaps there is also the tenth donor test for smaller donors: is the country program model the right one for you anywhere?  

It is worth noting the median size of an individual ODA project is less than $100,000. The problem isn’t just small aid programs, it is teeny aid projects. But fixing the small program problem should at least help with the teeny project problem. If your goal for aid is actually about trying to improve development outcomes, limit bilateral aid programs to countries where you have minimum viable scale. Give ambassadors a couple of million discretionary dollars to fund something —anything—that will bring goodwill. Take the rest of your aid resources and pass them to an effective international agency which has scale, like the World Bank’s International Development Association. Because whatever you're doing with small country programs and strategies, it isn't effectively investing in development.