The conundrum of achieving “value for money” in fragile states

When the fourth high-level forum on aid effectiveness holds its next session in the South Korean port town of Busan in November, the issue of how successfully development aid can, and should, be assessed will be high on the agenda. Aid measurements cannot be “dumbed down”, say analysts, particularly in fragile states.

The aid effectiveness debate is high on many donor radar and is particularly lively in the UK where the government promised to maintain its level of development aid, despite the economic recession.

At a meeting on aid effectiveness in London on 25 July, Sarah Cliffe, World Bank director responsible for the World Development Report, said that on recent visits to the rest of Europe she had found what she called “a sense of amazement” that the UK had maintained its commitment to aid levels through the financial crisis.

Aid budgets of the Netherlands, Austria, Denmark, Greece, Korea, Portugal and Ireland all shrunk for the second year running in 2011.

Value for money

The UK government’s answer has been to stress how determined it is to get “Value for Money” from the assistance it gives, making this the main criterion for judging aid programmes.

It is a demand that weighs heavily on developing country partners, which are constantly under pressure to demonstrate that the donor is getting full value from every penny spent, however difficult the circumstances.

John Morlu, until recently Liberia’s auditor general, is despairing about the “Value for Money” agenda when it is applied to countries like his. “I am the auditor general of a fragile state and you are asking me to do `Value for Money’? There are no criteria. South Africa can do `Value for Money’; they have national accounts. We don’t. It all comes down to understanding local realities.”

Sue Unsworth, formerly with the UK Department for International Development, now a principal with advisory group The Policy Practice, talks of the fundamental dishonesty of presenting everything in terms of measurable results and the inherent assumption that development challenges are simply about lack of finance and skill and so something which external donors can deal with.

“Dumbed down” aid?

She was particularly scathing about a June 2011 speech by Andrew Mitchell, the UK development minister, and his examples of effective aid. “One of them was about vaccination, which is a case with an unusually strong causal link between specific monitorable actions and outcomes,” said Unsworth. “And the other examples were about specific projects, and as we all know, you can get great results in the micro-environment of a project. The problem is how you sustain them over time and how you scale them up.”

Her sentiments were echoed by UK Overseas Development Institute researcher Alina Rocha Menocal, who condemned what she called the “dumbing down” of aid, including the much praised campaign to Make Poverty History, with its suggestion that all people in countries like Britain need to do is give money, and they will be able to solve poverty.

The real world is complicated and things take time, especially in fragile states and states emerging from conflict. Providing aid to such countries can often be more expensive, technically giving less “value for money” if viewed that way, but this does not negate the importance of helping them, Karin Christiansin, head of Publish What You Fund, told IRIN at an aid transparency conference last year.

Corruption - a 30-year battle

A 2011 study of countries which had successfully brought corruption down to a tolerable level showed that it had taken 20-30 years, according to the World Bank’s Cliffe. “This contrasts markedly with the expectations of taxpayers, or the press or the policy debate in donor countries, where the expectation is of zero tolerance for corruption, and they expect it straight away.”

Although there is currently a lot of talk about the need for developing countries to `own’ the aid agenda, Morlu (Liberia’s auditor general) says there are times when the imposition of strict spending criteria by donors can strengthen the hand of those within the country [government].

“I think we have to be very careful. We talk about countries taking ownership, but do they want to take ownership? I can think of cases in Liberia where it’s much easier to say, `This is UN driven, this is IMF [International Monetary Fund] driven’ because that gives you the political cover you need.”

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But most Liberian ministries lack the human resources to absorb, process, spend and account for large amounts of bilateral funding, meaning donors work through intermediaries, Koen Henckaerts, head of European Union humanitarian aid fund ECHO, told IRIN in Monrovia this week.

Differing priorities

In many fragile states, politicians, press and voters in donor countries often demand greater transparency and less corruption as part of their aid criteria. But local citizens may prioritize other things: jobs for instance, or better health services.

Cliffe sees the Busan meeting as a chance to look at new ways of measuring results in countries affected by conflict and fragility, using criteria more relevant to the populations of the countries concerned.

One of the most highly-valued outcomes in such countries is peace and security, she stressed.

She cited the example of Timor-Leste, which succeeded in restoring peace after several years of conflict in the 1990s - resettling most of its displaced population and holding a successful election - but was judged not to have qualified for US Millennium Challenge funding because all this progress was in areas which the MCC did not measure. 

Arab states, India, China

She also sees an opportunity in the presence at the meeting of some of the increasingly important `non-traditional’ donors of development assistance, such as China, India and the Arab states which may have different criteria of effectiveness from the traditional aid-givers.

She looks to a more fruitful division of labour. “There are some donors where their own constituencies of taxpayers are prepared to see them be fast, even when that means taking some risks with corruption and wastage, and there are other donors where their political environment is such that that would be a disaster.”

“I would hazard a guess that it’s easier for China to invest in job creation on a very large scale in developing countries, than it is for some OECD [Organisation for Economic Co-operation and Development] donors to do that.”