It has always seemed to me that the big problem about increasing aid to “fragile states” was that it would be very hard to square with value for money. These are places that, by definition, have poor governance and high levels of corruption. So the National Audit Office’s warnings to the Department for International Development (DfID) that it must do more to minimise the risks of fraud and corruption in its aid programme was very timely.
But I’m not convinced that DfID quite grasps the extent of the risks here. Andy Sumner does a good job in laying it out in his blogpost. Put briefly, Sumner and colleagues at the Institute of Development Studies have crunched the figures from the bilateral aid review and found that more than 80% of bilateral aid to Africa and Asia by 2014-15 will be going to countries defined as “very corrupt” by Transparency International. The risks are twofold, as Sumner points out. It could make the cost of poverty reduction in such challenging environments higher as money seeps into the wrong hands, and secondly, it could make it harder to convince the British public that aid paid for out of their taxes is making a difference.
To give a recent concrete example, the UK has delayed aid payments to Afghanistan after it was discovered that the Kabul bank has $900m in unaccounted loans after a pattern of fraudulent loans. Given that one of the first things the coalition government did last summer was to increase dramatically aid to Afghanistan, you can see the kind of headaches ahead.
It feels to me as if the two big ideas of Andrew Mitchell are destined for collision: value for money is not compatible with increasing aid to fragile states.
No one denies many poor people live in fragile states, but the problem is how do you ensure the aid reaches them? Alan Davis emailed me about an interesting initiative he has set up in the Philippines, one of the most corrupt countries in the world (it hovers around the 138 to 141 placing in Transparency International’s index). Perd Natin To! – It’s our money! – or the Philippine Public Transparency Reporting Project, is all about ensuring that journalists, civil society groups and faith communities have access to the information they need to track and monitor government expenditure.
The project runs a website collecting all the relevant information, particularly in key areas such as customs (smuggling in many developing countries is endemic) and tax – who pays it and how much. The site is then used by the groups they are building around the country to track local expenditure.
Corruption is embedded in the Philippines. It has been estimated that 20% to 30% of public expenditure goes astray. But the work of challenging this kind of fraud is dangerous. In some parts of the Philippines there is effectively a form of warlordism. So the country is a good place to test out what citizens armed with new technologies can do to challenge poor governance.
It has similarities to the model used by Twaweza in eastern Africa, which I blogged on recently. The organisation is tracking school and water budgets. Interestingly, both projects use the web but not exclusively. Radio in many rural areas is still probably the most effective mass media, but radio plays a great role in picking up what’s on the web and spreading it beyond those who have access to it.
The Philippines project is funded by USAid. Davis argues that this kind of transparency within beneficiary countries is crucial to the transparency and aid effectiveness agenda. So far donors have put the focus on ensuring they are transparent, for example, Dfid is putting its donations online, but he argues that they also need to fund civil society to track what happens to the aid when it arrives in a country. There are two sides to the equation here, but DfID in its response to the National Audit Office report seemed only to talk about a top down approach based in London – through its independent watchdog, the Independent Commision for Aid Impact. Davis’ point is that aid effectiveness in the end can only be tackled from the ground up by empowering citizens.