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Not to be melodramatic, but the official system for counting foreign aid is in crisis. The longstanding mathematical rule determining whether a loan’s interest rate is low enough to qualify it as aid has gone out of sync with the times. The rule’s benchmark interest rate of 10% per year was reasonable when adopted in 1972, but not now. Today, wealthy governments can borrow below 3%, lend a couple percent higher, come in well under the 10% bar, and count the potentially profitable lending as aid.
The government of Washington DC recently announced plans to launch its first Social Impact Bond (SIB), an innovative finance approach that in this case will be aimed at reducing teen pregnancy and improving educational outcomes for teenagers.
Proponents of the use of randomized controlled trials (RCTs) in impact evaluation and development research often point out the close link between these trials and their clinical counterparts in the world of medical research.
With the Sustainable Development Goals Working Group busy in New York trying to whittle down its areas of interest into a plausible list of targets, two issues of ‘goal ownership’ have come to the fore. First, everyone seems very keen the goals should be universal but ‘country-owned’ — this is the excuse for all of the Xs in the High Level Panel Report (“Cover X% of people who are poor and vulnerable with social protection systems,” for example). Such Xs should be decided at the country level, they suggest.
If one thing was clear at the first High Level Meeting of the Global Partnership for Effective Development Cooperation, it’s that the 1500 people in attendance— representing the governments of developing, emerging and rich countries, multilateral institutions, business, philanthropy, and civil society—were not interested in how aid can be delivered more effectively from rich to poor countries but how the wide and growing range of actors who contribute to development can work together more effectively.
At a recent book launch, I was on a panel on which we were asked whether we can show that aid is a good use of public money, if the problems it aims to tackle are complex. I replied with a half-remembered statistic, which (now that I have had a chance to look at the numbers) turns out to have been right. It was this: