development politics

The Aid Transparency Index

Read the tabloids or listen to UKIP comments on the matter, and you’ll find a recurring argument against development aid: it doesn’t work, because too much of it is siphoned away to line to pockets of petty officials. We should therefore cut our aid, and drop the 0.7% pledge.

There’s half a point there. Aid money can go astray, there’s no doubt about that. But it doesn’t necessarily follow that we should cut it, unless we’re just using corruption as an excuse to cut something we don’t value. If too much aid isn’t getting through, then we need to work harder to make aid accountable.

After all, who is most let down when aid goes missing – the taxpayers who didn’t get value for money, or the poor communities who didn’t get the clinic or school that they needed? I’d argue it’s the latter, which is why just dropping the idea of aid isn’t good enough. It’s the easy and convenient thing to do, but not the right thing.

It’s also important to note that bribery works both ways. There’s the corrupt official who takes the bribe, but there’s also the corrupt agency that offers it. Or if not a corrupt agency, then one that’s being negligent with its funds.

One way to improve aid is to work on transparency. If aid agencies declare what they’re funding, then communities can hold them to account. Donor countries can look for results and see if their taxes are being well spent. And citizens in recipient countries can ask the authorities difficult questions if the funding doesn’t come through.

However sensible that sounds, it’s not actually common practice. Most official aid agencies don’t give clear accounts of what they’re funding and for whom, despite repeatedly promising to do so. That’s why the Publish What You Fund campaign exists, and why they compile the Aid Transparency Index.

ati-scoresThe Index ranks 68 big agencies across a series of criteria, assessing how much of their funding they publish, how regularly they publish it, and how accessible it is. Out of the 68, just 7 are ranked ‘very good’. Top of the class is the UNDP, which scores 90%. Second is Britain’s Department for International Development on 88%, and the Millennium Challenge Corporation third.

Britain’s aid agency is something to be proud of then. Remind people of this when you hear the usual arguments about aid being useless.

Before we get too excited though, DFID isn’t the only department of the government that disburses aid. The Foreign and Commonwealth Office (FCO) and the Ministry of Defence (MOD) are also ranked here. The FCO scores a less impressive 35%, and the MOD is 60th in the list with a ‘very poor’ 9%. (Obviously the MOD can’t declare everything they do, but they can do a whole lot better than 9% – the US military doesn’t score nearly that badly.)  DFID is by far the main source of aid, but it is concerning that the current coalition want to see more aid diverted from DFID to the MOD. That would be a backwards step for aid transparency.

What’s important here is that ordinary citizens, in both rich and poor countries, can see what is being funded and where. That allows comparisons to reality of the ground, and it makes it less likely that money will go astray. It also means that if our aid money were going to building coal power stations, we’d know about it and could voice our concerns.

As an example of how to do it properly, Publish What You Fund highlight the UK government’s Development Tracker, and Sweden’s Openaid.se.

You can browse the results of the Aid Transparency Index in interactive form here, or download a pdf.

13 comments

  1. Economic aid leads to higher rents and just ends up in the pockets land owners. Unless the recipient countries put the right reforms in place, it is giving money from the poor in first world countries to the rich in the third world countries. What’s the point? Where is the morality?

    1. You’re tarring all economic aid with the same brush there. As the Index shows, there’s good aid and bad. Studies from ActionAid reckon about 85% of Britain’s aid is on target. (more on that here)

      Where’s the morality? In not turning a blind eye to the poverty of others when it is in our power to help.

      1. It depends what is meant be “on target”. If you hand out tractors to farmers and their productivity goes up, their landlords will just put up their rents, leaving the farmers having to run faster to stay in the same spot. It is not in our power to help, if reforms are not implemented at the recipient end.

  2. Good point-however, not withstanding the need to know where the aid money is going and to what end it is being used, really Britain whose financial position is horrendous with a debt by the next general election 2015 of £ 1.36 trillion, which will carry interest payments of approx £ 70 billion per annum-I question as to whether Britain can afford to continue to support overseas aid in the way it has. If an individual wishes support certain aid ventures then that is there money to do with as they will, but it is reckless beyond sense to use tax payers money to fund to the exstent Britain does at present. It cannot afford to support at the rate it does & certainly not for the sake of looking good internationally. More should be done to encourage these African nations in particular to help themselves. I have done business in West Africa and know first hand the corruption that abounds greatly to the detrament of those nations & its people. Often morality does not exist.

    1. There does not need to be any corruption for aid benefit to be syphoned off. If 100% of the aid was efficiently spent on infrastructure and improvement to increase productivity, most of the gains would end up in land rent and be claimed by whoever owns land. Since most people everywhere pay rent and work for wages, the gain to them is minimal. It can even set off a land price bubble which will eventually burst and crash the economy.

      If aid recipients do not have an effective system of land value taxation in place, then aid is just a long-way-round hand-out to landowners. And if they put an effective system of land value taxation in place, then they only need aid for a short time and the wealth gains are properly spread around to the people whom it is intended should benefit.

  3. I disagree that Britain can’t afford it. 0.7% of the budget is not a big sum, relative to the rest of the budget, and considering how far that goes in the developing world, it’s very good value for money.

    There are also good reasons for that 0.7% target. If every developed country gave that amount, it would be enough to end extreme poverty altogether. I’m really pleased that Britain is one of the few countries to have actually delivered on that promise. We should be proud of that and the good we can do in the world.

    1. If Britain had a tax system which does not punish the poor, and if the recipient countries had tax systems which clawed back the land value increases which arise from development aid, then I would agree with you. But in practice it is a subsidy from the poor in Britain to the rich in the poor countries. That is impossible to justify. The reasons why some countries have a lot more poor people than others are internal to the countries themselves. The aid which is given should be conditional on those countries taking the necessary measures.

      1. If we’re talking about an ideal Georgist world, sure. But how do we do the best we can within the economic systems we currently have?

        There’s a long history of telling poor countries what to do in return for aid, and it really hasn’t worked. Even if it did, there are many factors in poverty which are external, such as climate change from high emission countries, refugees from warring neighbours, or unfair trade deals. Other things are matters of geography, such as countries being landlocked, which you can’t do anything about. So it’s really not quite so simple. Where there are things that can be done, that’s great, and much of our aid is already targeted in that way. (And unlike many countries, we know exactly what our aid pays for.)

        1. If people want to give their own money that is up to them. But since the UK tax system is run on the soak-the-poor principle, it is immoral for politicians to salve their conscience by handing out the pennies of the poor in the form of state aid which ends up in the pockets of the wealthy.

    2. Where do you think this 0.7% is coming from? In Britains debt situation it cannot afford 0%-the more it keeps borrowing the heavier the debt becomes and the greater the interest to pay for it-leave it to the many excellent charities to accom the funds. yes it may seem harsh, but there are many very rich Arab countries that can easily forfill the financial breach as needed. Ethiopia is on the doorstep of many Arab rich countries-don’t think the Ethiopian will care if its an Arab state that finances the facility for him to have drinking water.

      1. Where does any government spending come from? Working out what we can afford as a nation is always a matter of prioritising what we think is important.

        The UK budget is over £700 billion, of which aid spending last year was around £11 billion. If we’re in financial trouble, it’s not because of international aid.

        1. The tax systems of most countries work by squeezing those least able to pay ie those at the margins, who are thereby priced out of work. And the benefits of aid tend to be capitalised into land rental value ie official aid tends towards taking from the have-nots and giving to the haves.

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