Saturday, April 30

Best and Worst Practises in Foreign Aid

This was shocking. The authors measured best practises of an aid firm measured thusly.

 Perhaps the foremost best practice is transparency, since without transparency, all other evaluations of best practice are impossible. We then consider four dimensions of best practice: Specialization measures the degree to which aid is not fragmented among too many donors, too many countries, and too many sectors for each donor. Selectivity measures the extent to which aid avoids corrupt autocrats and goes to the poorest countries. Ineffective aid channels measures the extent to which aid is tied to political objectives or consists of food aid or technical assistance. Overhead costs measures an agency’s administrative costs relative to the amount of aid it gives

Pretty fair points, no? What worries me is that we are saying that 0.7% of GDP should be spent on aid. In the UK, the foreign aid budget was not slashed (along with the NHS) while all other sectors of government spending including education, security, police, you name it were slashed. So its very crucial that the aid sector be effective and efficient. The authors come up with the following list of aid agencies to be analysed.

Bilateral agencies
ADA Austrian Development Agency
AECI Spanish Agency for International Cooperation
AFD French Development Agency
AUSAID The Australian government’s overseas aid program
BTC Belgian Technical Cooperation
BMZ German Federal Ministry for Economic Cooperation and Development
CIDA Canadian International Development Agency
DANIDA Development Cooperation Agency of the Danish Ministry of Foreign Affairs
DFID UK Department for International Development
DgCiD French Directorate General for International Development Cooperation
DGDC Belgian Directorate General for Development Cooperation
EC Co-operation Office for International Aid of the European Commission
Global.Finland Development Cooperation Agency of the Finish Ministry of Foreign Affairs
GTZ German Agency for Technical Cooperation
Hellenic Aid Development Cooperation Agency of the Greece Ministry of Foreign Affairs
IPAD Portuguese Institute for Development Aid
Irish Aid Irish Development Agency
JBIC Japanese Bank for International Cooperation
JICA Japan International Cooperation Agency
KfW German Development Bank
Luxemburg Development Agency
MCC Millennium Challenge Cooperation
MOFA Italy Italian Ministry of Foreign Affairs
MOFA Japan Japanese Ministry of Foreign Affairs
Dutch Ministry of Foreign Affairs
NORAD Norwegian Agency for Development Cooperation
NZAid New Zealand’s development agency
SDC Swiss Agency for Development and Cooperation
SECO Swiss State Secretariat for Economic Affairs
SIDA Swedish International Development Cooperation Agency
USAID U.S. Agency for International Development

Multilateral agencies
African Dev. Bank African Development Bank
Asian Dev. Bank Asian Development Bank
CariBank Caribbean Development Bank
EBRD European Bank for Reconstruction and Development
GEF Global Environment Facility
IMF International Monetary Fund
IBRD (World
International Bank for Reconstruction and Development (World Bank)
IDA (World Bank) International Development Association (World Bank)
IDB Inter-American Development Bank
IFAD (UN) International Fund for Agricultural Development (UN)
Nordic DF Nordic Development Fund
UNDP United Nations Development Program
UNFPA United National Population Fund
UNHCR United Nations High Commissioner for Refugees
UNICEF United Nations Children’s Fund
UNRWA United Nations Relief and Work Agency for Palestine Refugees in the Near East
WFP (UN) World Food Program (UN)

The researchers find that they are not transparent, they are fragmented, money is spent unwisely with money going to corrupt buggers and spent through ineffective channels. These people will be spending literally billions and billions of dollars each year and its frankly useless. So what is the ranking of these aid agencies?


I am gratified to note that the UK is doing quite well on all counts. Leads me to have faith. Secondly, what really pisses me off is the last agency, the UNHCR. Or even the WEP. Two of the biggest baddest institutions who are supposed to be helping millions of people around the world, who are the refugees and the hungry. Both are the worst. Absolutely horrible. Let me quote their conclusion:

Our findings on aid best practice tend to confirm a number of long-standing complaints about foreign aid, notwithstanding the aid agencies’ perpetual claims that they are fixing past problems. The aid effort is remarkably splintered into many small efforts across all dimensions—number of donors giving aid, number of countries receiving aid from each donor, and number of sectors in which each donor operates. A lot of aid still goes to corrupt and autocratic countries and to countries other than those with the lowest incomes. Aid tying, the use of food
aid-in-kind, and the heavy use of technical assistance persist in many aid agencies, despite decades of complaints about these channels being ineffective. In addition, some agencies have remarkably high overhead costs. The broad pattern that emerges from our evidence is that development banks tend to be closest to best
practices for aid, the UN agencies perform worst along each dimension, and the bilaterals are spread out all along in between. Explaining why each of these patterns persists over time raises an interesting agenda for research in political economy.

The aid business now spends $100 billion dollars a year of money each year, seeking to help the world’s poorest people. It is a sad reflection on the aid establishment that knowing where the money goes is still so difficult and that the picture available from partial knowledge remains so disturbing

This is indeed shocking and one has to look at this with a deeply jaundiced eye. The bigger problem is with the multilaterals. You and I, as the tax payer, have just no say in how they are run. At all. They are twice removed and three times as useless. Who are you going to complain to if the UNHCR is working like a dog? Nobody, the responsibility is fragmented and nobody owns the problem. So billions of your tax monies go to waste. And then these buggers want more money from a Robin Hood Tax. Bah. Blood sucking parasites. These are a bunch of muppets.

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