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Late this month representatives of donor and developing country governments, civil society organizations, think tanks, and the private sector will meet in Busan, South Korea, to review progress since the signing of the Paris Declaration of Aid Effectiveness in 2005. Rita and I will be among them and we hope, along with many others, that the Busan High Level Forum on Aid Effectiveness will mark a milestone of sorts, where the aid effectiveness movement, drawing on the consensus forged at previous meetings in Rome, Paris, and Accra, turns from words to action.
This is a joint post with William Savedoff and Ayah Mahgoub.
Shout-out to Duncan Green and Oxfam for commenting on our new book and calling, like Nicholas Kristof, for pilots of COD Aid. Best of all, Duncan noted (as have several others such as Owen Barder in this note among others) that many of the usual concerns about COD Aid (see our FAQs for some) apply as much or more to other forms of aid.
But on one big point we disagree: It’s not true that COD Aid has been tried before.
I am pleased to share with our readers at Owen’s request this discussion of Cash on Delivery Aid, which appeared yesterday on his blog, Owen Abroad.
Linking Aid to Results: Why Are Some Development Workers Anxious?
By Owen Barder
The Center for Global Development is working on an idea which they call Cash on Delivery aid, in which donors make a binding commitment to developing country governments to provide aid according to the outputs that the government delivers. I think this is a good idea in principle, and hope that it can be tested to see whether and how it could work in practice. The UK Conservative party have said in their Green Paper that if they are elected they will use Cash on Delivery to link aid to results.
Linking aid more closely to results is attractive from many different perspectives. My own view is that linking aid directly to results will help to change the politics of aid for donors. Many of the most egregiously ineffective behaviours in aid are a direct result of donors’ (very proper) need to show to their taxpayers how money has been used. Because traditional aid is not directly linked to results, donors end up focusing on inputs and micromanaging how aid is spent instead, with all the obvious consequences for transactions costs, poor alignment with developing countries systems and priorities and lack of harmonisation. If we could link aid more directly to results, I think donors will be freed from many of the political pressures they currently face to deliver aid badly; and it would be politically easier to defend large increases in aid budgets.
Just after the 2006 midterm elections, I blogged about CGD research that suggested the new split between a Republican president and Democratic Congress would increase pressure on the foreign aid budget. CGD Senior Fellow Todd Moss, author of "The Surprise Party: An Analysis of ODA Flows to Africa" to which I referred, has now updated his data. His new note,"U.S.