There has been a resurgence in calls to reconsider the cross-party consensus in the UK on foreign aid and development. The main political parties are all committed to spending 0.7 percent of gross national income on aid, to using the internationally agreed definition of aid, and to maintaining a separate government department to administer the majority of this aid, led by a Cabinet Minister. In their recent report, Global Britain: A Twenty-first Century Vision, Bob Seely MP and James Rogers lay challenge to these long-established pillars of UK development policy. In this note, we consider some of the questions they raise and suggest alternative answers.
Millions of people face hazards like cyclones and drought every day. International aid to deal with disasters after they strike is generous, but it is unpredictable and fragmented, and it often fails to arrive when it would do the most good. We must stop treating disasters like surprises. Matching finance to planning today will save lives, money, and time tomorrow.
What if taxpayers could decide for themselves how some of the UK’s aid budget is spent? Allocating funding would let taxpayers engage meaningfully with development issues, potentially reinforcing support for tackling poverty and deprivation overseas. Competition for funding would give international development organisations an incentive to offer an explicit value proposition. This could catalyse a race to the top in becoming transparent, measuring impact, and delivering value-for-money. AidChoice, as set out below, would be revenue neutral, would not lower the UK’s overall spending on foreign aid (or the amount scored as ODA), and might generate modest but meaningful savings, all while increasing public support for development spending and improving accountability.
Disaster aid is often too little, too late. Pressure on aid budgets is prompting donors to find ways to handle more crises with less funding. But the current model of discretionary, ex-post disaster aid is increasingly insufficient for these growing needs, and does little to create incentives for governments in affected countries and donors to invest in risk reduction and resilience. This framing paper sets out how the global community can do better.
The Commitment to Development Index ranks 27 of the richest countries on their dedication to policies that benefit poorer nations. Denmark takes first in 2015. The UK is tied for sixth while the United States is 21st. Japan takes last of 27.
The Report of the High Level Panel on Humanitarian Cash Transfers shows why giving aid directly in the form of cash is often a highly effective way to reduce suffering and to make limited humanitarian aid budgets go further. We urge the humanitarian community to give more aid as cash, and to make cash central to future emergency response planning.
The development landscape between now and 2030 will be look completely different from the last fifteen years. The Sustainable Development Goals which look likely to be agreed in September, including a commitment to eradicate absolute poverty by 2030, will be addressed against a very different backdrop to the relatively successful period of the Millennium Development Goals. There are three challenges we are going to have to address.
When Sir Tim Lankester defends the aid programme against charges that it can sometimes be misused for other things, he knows what he is talking about. He was the most senior civil servant in Britain’s aid ministry (then called ODA, now known as DFID), and in 1991 he bravely blew the whistle on a project to finance a dam in Malaysia because it was not a good use of development money (and indeed turned out to be connected to agreements to buy British arms).
The Commitment to Development Index ranks 27 of the world’s richest countries on their dedication to policies that benefit the 5.5 billion people living in poorer nations.
The Commitment to Development Index ranks 27 of the world’s richest countries on policies that affect the more than five billion people living in poorer nations.
This report explains how Development Impact Bonds (DIBs) can increase the efficiency and effectiveness of development funding. Based on Social Impact Bonds in industrialized countries, a DIB creates a contract between private investors and donors or governments who have agreed upon a shared development goal. The investors pay in advance for interventions to reach the goals and are remunerated if the interventions succeed. Returns on the investment are linked to verified progress.
The main body of this short essay comprises written testimony that Owen Barder submitted to Britain’s House of Lords in response to a question about the effectiveness of foreign aid. In a brief introduction Barder draws upon his recent experience living in Ethiopia for three years to shed light on how he thinks about the question of aid effectiveness.
International aid works, but it could work much better. Reform efforts focused on better planning often ignore what constrains aid agencies and takes the bite out of their commitments. In this working paper, Owen Barder shows how forming a "collaborative market" around aid—one marked by transparency and collective regulation—would pave the way for more effective aid.
In this working paper, Owen Barder raises fundamental questions about the purpose of aid transfers. For many donors the purpose is "poverty reduction" in the narrow sense of growth that reduces poverty. Barder argues that such a focus ignores key trade-offs, such as between reducing current and future poverty and between addressing the causes and symptoms of poverty, and results in less effective aid. This is an important paper for practitioners as well as students of how the aid system works.
The aid business has long grappled with the trade-off between showing results and supporting a country's own institution-building. Donors want to be sure that their money makes a difference, and often quickly. But close monitoring raises costs and pushing for quick results leads to projects that bypass or even undermine domestic institutions that are crucial to development. In Payments for Progress: A Hands-Off Approach to Foreign Aid, Owen Barder, now director of Global Development Effectiveness at the United Kingdom Department for International Development, and CGD president Nancy Birdsall propose solving this problem by having donors pay for proven progress towards such agreed goals as additional children completing school and additional kilometers of roads built. How to achieve these goals would be left to the aid recipient government. They suggest this approach may be particularly useful in fragile states. Learn more
It is sometimes claimed that big surges in aid might cause Dutch Disease--an appreciation of the real exchange rate which can slow the growth of a country's exports--and that aid increases might thereby harm a country's long-term growth prospects. In this new working paper CGD senior program associate Owen Barder argues that it is unlikely that a long-term, sustained and predictable increase in aid would, through the impact on the real exchange rate, do more harm than good. Learn more