The last ten years has been a remarkable experiment in using official development assistance (ODA) as a motor for development in Africa (and other developing countries too). It has been a bonanza for the aid industry and especially the favoured elements such as HIV/AIDS, which have often found themselves in the remarkable situation in which resource availability is not a binding constraint.
Jonathan Glennie’s book, coming in the wake of a growing number of critiques of the international aid, shows just how flimsy are the intellectual foundations of the aid-for-development experiment. Even before the financial crash, the promises of huge increases in ODA to reduce world poverty were becoming increasingly doubtful.
One of many ironies of this situation is that most of the proponents of aid””including its most ardent advocates such as Jeff Sachs””have all along promoted ODA as part of a wider package that includes debt relief, trade reform and improved economic governance in developing countries so as to generate improved investment and growth. Aid has been seen as just one of the instruments for economic growth, and arguably the least important one. But, aid seems to displace the other parts of the development debate. Of the other pillars, only debt relief has seen any significant progress in the last ten years. Trade reform and economic governance are much harder, and far less progress has been made.
Aid donors and recipients alike have good reason for preferring to focus on aid rather than trade or governance. Industrialized countries don’t want to liberalize trade in agricultural products, while making new commitments to aid targets provides popular headlines. African governments like aid because most of it comes to them, and while they are strongly in favour of trade reform they are understandably resistant to governance reform. Therefore we see that NEPAD began with a focus on governance, trade, and debt, with aid at the margins, but was reduced very rapidly to an aid disbursement mechanism.
Even before the financial crisis hit last year, the limits of the ODA-driven response to global development needs were becoming apparent. The system is geared far too much to vertical systems which can generate short-term monitorable results. It is inefficient, with dozens of parallel aid missions in recipient countries all doing much the same thing. It is open to manipulation and abuse to support other policy objectives of donors and lenders, which as Glennie explains, undermines the stated objective.
All these shortcomings are politically tolerable in donor countries. What will make the existing system unmanageable is that cannot generate or disburse the scale of funding needed to respond to mitigate the impacts of climate change, let alone finance the transition to a low-carbon energy system. However, for so long as nobody has a practicable idea for what can replace the current system, ODA seems set to continue. At the moment, that serves the purpose of pretending to get to grips with these momentous challenges.