Who Owns What? – Determining When Aid ‘Works’ and When Aid Fails
Image by Christine Roy via Unsplash
The Paris Declaration on Aid Effectiveness was signed in 2005 by both governments and non-governmental organizations with the intentions of taking “far-reaching and monitorable actions to reform the ways we deliver and manage aid” (Paris Declaration, 2005, p.1). The declaration was reaffirmed in Accra, Ghana in 2008. While this non-binding agreement is often described as a global partnership between donor parties and recipient countries on how to increase the impact of aid in ‘developing’ nations, the debate around aid effectiveness remains highly contested to this day. With some of the world’s leading economists weighing in on opposite sides of this long, ongoing discussion, the debate is full of dichotomies that leave the conversation at a halt. “Aid is good, or aid is bad. Aid works, or doesn’t work. Aid promotes growth, or undermines it. More aid, or stop aid” (Whitfield, 2009, p. 5). The question of whether or not aid ‘works’ is a large and complex one. Here I address it in the context of improved economic growth. Aid works best when implemented by recipient countries themselves, and when in alignment with the desired outcomes of recipient countries, not the donor countries. In fact, when aid is not implemented this way, it can be not only ineffective, but harmful to the communities it is designed to help.
Does aid ‘work’?
The aid effectiveness debate has been a hot topic for decades. It is one of those areas where even its simplest question – What is aid? – is highly complex and vehemently disputed. Jeffrey Sachs, one of aid’s biggest proponents, wrote a book in 2005 titled The End of Poverty: Economic Possibilities for Our Time, in which he calls for an increase in aid to end poverty in ‘our’ generation, or by the year 2025. An ambitious book filled with data, graphs, maps, and pictures of impoverished communities, it is one that has set Sachs apart as one of the most formidable advocates of development aid amongst the sector. In the book, Sachs proposes the “Big Push”, a campaign urging rich nations to double their amount of foreign aid to fill a financing gap between what a country needs and what it can afford on its own. He believes that large investments of foreign aid will eradicate extreme poverty in our lifetime and rid poor countries of being stuck in what he calls the ‘poverty trap’, where the effects of poverty reinforce the causes of poverty (Sachs, 2005).
McGillivray is also a big proponent of aid, especially in the context of promoting the Millennium Development Goals (MDGs), now reformed and referred to as the Sustainable Development Goals (SDGs), for which Sachs serves as a special advisor to the UN for their implementation. He argues that aid works in terms of increasing growth and other poverty-related variables (McGillivray, 2004, abstract). Based on evidence that suggests that poverty would be higher in the absence of aid, and despite the “many valid criticisms of aspects of aid delivery”, including bad policies and corruption, McGillivray stands firm in his analysis that aid works, and argues that aid works in the sense that “per capita economic growth would have been lower in its absence” (2004, pp. 1-2).
Hulme argues that there are three main reasons why development aid from ‘rich’ countries for the ‘distant poor’ needs to be reformed: 1) the current system is not working, i.e. “the underpinning idea that a set of developed countries can help a set of developing countries to ‘catch up’ is now untenable”, 2) development through foreign aid has been discredited, and 3) the idea of ‘international development’ being a copy and paste recipe where rich countries replicate their industrialization strategies in poor countries is being recast (Hulme, 2016, pp. 7- 9). He argues that the sector needs to look ‘beyond aid’ and at the wider policies needed to support improved welfare, and that by reforming the policies and behavior of rich nations towards poor nations, greater development can be achieved (Hulme, 2016, pp. 32-33).
Fengler and Kharas argue that “aid can work, but it needs to be delivered differently to create lasting impact in the years to come” (Fengler and Kharas, 2011, p. 5). They provide three principles for developing a new model of aid delivery: 1) aid should be differentiated by country circumstance, 2) the delivery system needs to be built on the diversity of aid providers, stating that mechanisms must be found to enable all players to be well-informed, even in the field, where coordination is often lacking, and 3) aid delivery should focus on the dynamics of development involving a reform to the institutional setup and a systematic scale-up over time (Fengler and Kharas, 2011, pp. 5-6). At an institutional level, Fengler and Kharas propose two reforms for improving the delivery of development aid – “the development of one (or more) geographically based development authorities within poor countries” and the creation of an “international body of national development aid agencies to deliberate, share best practices, and hold aid agencies accountable” (2011, p. 7).
Ramalingam, an arguable aid critic whose work is inspired by William Easterly, argues that “aid works within a set of constraints: the ‘rules of the game’ that shape what can and can’t be done in aid, that shape behaviours and actions, that determine rewards and punishments” (2013, p. 16). By looking at aid through four key lenses – learning, strategies, organization, and performance – Ramalingam approaches the discussion of aid effectiveness with a critical understanding of Western communications and marketization of the aid sector and employs a colorful analysis of how the aid sector has fallen short, and how it “retains many of its old problems” by not addressing its systemic issues (2013, pp. 15-16).
A stark contrarian to Sachs is the aforementioned Easterly, who challenges Sachs in quite a polemic way. Author of The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good, Easterly approaches aid from a more skeptical point of view by using a metaphor of ‘Planners versus Searchers’, arguing that the aid sector, or the Planners, is too rigid and over-planned and is in need of Searchers, or change agents who take responsibility for their actions (Easterly, 2006, p. 5). He does not argue completely against aid, but he does argue that it needs to be reformed to provide feedback from the communities receiving the aid, as well as accountability of the agencies delivering the aid (Easterly, 2006, pp.13-14). He emphasizes that the aid sector is focused heavily on aid agencies, rather than the actual projects occurring on the ground. “Aid agencies could do much more...if they were not diverting their energies to utopian Plans and were accountable for tasks such as getting food, roads, water, sanitation, and medicines to the poor” (Easterly, 2006, p.19).
Perhaps the scholar most outrightly against aid is Dambisa Moyo, author of Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa. Moyo rejects the notion that aid works, specifically in the context of Africa, and explains how an overreliance on aid can inhibit ‘developing’ nations from advancing. She argues that aid dependency can trap poor countries into a cycle of poverty and the ‘need’ for more aid, the exact thing Sachs argues aid addresses (Moyo, 2009).
Aid Effectiveness in Context – Ghana vs. Tanzania
One of the primary issues with aid is that “donor-funded projects are still largely designed by donors, and often in donor head-quarters as opposed to recipient country offices” (Whitfield, 2009, pp.13-14). Major donor institutions like the World Bank and the International Monetary Fund are located in Washington D.C., or other Western countries, where the decision-makers for aid-funded development projects are thousands of miles away from where the aid is being implemented. The power dynamics at play with this being the case often result in bad aid practice. When aid ownership is given to the recipient country, however, results or ‘successes’ are more likely to occur.
Ghana – the World Bank and its empty promises
In 1999, Ghana rejected taking on a loan from the World Bank to support its agricultural sector because the loan did not invest directly in increasing production (Whitfield, 2009, p. 14). When a new Ghanaian government came to power in 2001, the World Bank encouraged Ghana to reconsider taking on the loan, insisting that the ‘content’ of the loan would be edited during the implementation process. Ghana did indeed sign the loan, but it ended up taking several years to redesign the content, and little of the aid given by the World Bank ended up going to agriculture (Whitfield, 2009, p. 14). This is a clear example of how when the agency and ownership over aid policy is taken out of the recipient countries’ hands, aid often fails to promote growth or meet its original objectives.
Tanzania – taking aid into its own hands
Historically, DAC donors always had a heavy presence in Tanzania with a focus on a poverty-reduction regime under the MDGs. In order to keep up with this aid, the Tanzanian government formulated a joint assistance strategy (JAS) to manage the aid they were receiving. While this JAS was successful, it locked Tanzania into concentrating its aid on poverty reduction, rather than economic growth (Furukawa, 2018, p. O275). In order to confront this, the Tanzanian government developed the Tanzania Five Year Development Plan in 2011 on its own accord, in which it excluded DAC donors. Tanzania did, however, begin to channel aid from China to support this Five Year Development Plan, as China’s already expanding presence in the country aligned with the aims of Tanzania’s economic growth (Furukawa, 2018, p. O279). This initiative saw a maximization of resources and a proactive approach to the development Tanzania desired, versus being trapped into using the aid for something the country did not align itself with (Furukawa, 2018, p. O282). “Tanzania is a country with significant ability to manage aid and the receipt of development aid resources, despite being considered a passive donor-driven recipient” (Furukawa, 2018, p. O282).
Does aid ownership mean aid effectiveness?
Examining the cases of Ghana and Tanzania is important when discussing whether or not aid ‘works’ because they illustrate how when a recipient country has a voice over how the aid they receive is implemented, increased economic growth is observed. The initiative taken by Tanzania in order to align the aid it was receiving with its own desired outcomes for economic development should be the model by which the aid sector moves forward.
Given the literature and the examples of aid implementation in Ghana and Tanzania, it can be determined that aid ‘works’ best when recipient countries have ownership over the aid they receive. While this conclusion is certainly based on case-by-case analyses, the evidence examined here suggests that top-down approaches to aid and development do more harm than good by neglecting the input and desires of recipient countries. The implication that aid agencies and rich, Western countries know best how to implement resources in countries they do not know enough about, and the assumption that all ‘developing’ countries are corrupt and incapable of resource management, is rooted in white saviorism. The question still remains as to whether or not the aid sector should be overhauled completely, but while it is still in place, the least that can be done is to give recipient countries ownership over policies and projects surrounding the aid they receive.
