Aid isn't just about money

The debate over the aid budget is becoming increasingly intense. In recent weeks, there has been much discussion about whether the commitment to spend 0.7 per cent of national income on aid will be enshrined in law. Reports that the bill won’t be included in May’s Queen’s Speech have led to speculation that the coalition government is planning to drop it altogether, despite vehement denials from the prime minister. Holding the coalition government to account for delivering on its aid commitments is important. But by focusing narrowly on aid volume targets, this debate risks missing the point. We should focus (and even argue) much more about how aid money is spent, and how we can reduce the need for aid in the long run.

One part of the problem is the all or nothing approach of aid’s most trenchant critics. “It doesn’t work perfectly so let’s ditch it” is a well-used refrain that distorts the debate around the UK’s aid spending. Another problem is the way that the aid target is devised. It measures only the volume of spending, not how money is spent or the results it achieves. This makes little sense. Most people would not haggle over the cost of expensive purchases without some idea of the quality of the product. Yet this is exactly what the debate around 0.7 per cent target does—it focuses on quantity over quality. Moreover, the target itself doesn’t only include things that most people would consider to be aid. Donors are allowed to include some spending on refugees and international students, which few people would consider to be “real aid.”

But even within “real aid”—the share of aid that actually ends up being targeted at poverty reduction in developing countries—we need to focus more on quality. The best aid is led and managed by people locally—where possible governments or, in countries with repressive regimes, UN agencies or NGOs. This helps governments and other actors build up the skills and capabilities to manage aid well, rather than always relying on outsiders. Putting governments in the lead enables citizens to hold their own governments accountable for achieving development, rather than looking to donors to solve their problems. Good quality aid is well co-ordinated, and because it is “owned” by local people, it is more sustainable—bringing benefits long after the original donor has packed up and left. In Nepal, this kind of aid from the UK and others has helped to reduce maternal mortality by two-thirds over just 15 years, making a dramatic difference to the lives of women and their families.

Though it may be hard to believe, in the right circumstances, good quality aid also means giving money to some (not all) governments and allowing them to spend it through their own systems. This helps to make those systems more effective, bringing benefits that far outweigh the initial investment, and reduces the need for aid in the long run.

We also know what poor quality aid looks like. It’s driven more by the priorities and interests of rich countries than poor countries. Local people are not involved in making decisions about project design, local knowledge is neglected and projects are often unsustainable, because local people don’t feel they have a stake in them. It is often tied, meaning that donors stipulate that funds must be spent on firms from their home country. This not only prevents local contractors in developing countries from winning contracts that could benefit the local economy, it also considerably increases costs. And it’s uncoordinated, placing a huge burden on already overstretched governments by making them negotiate with multiple donors.

Happily, the UK government has a strong track record of providing exactly the kind of good quality aid that is needed. Recent surveys of progress by donors towards the Paris Declaration targets on aid effectiveness, an agreed set of international benchmarks for good quality aid, have consistently shown the UK as one of the strongest performers across the donor community—ranked third out of 34 donors in a recent analysis by the UK Aid Network. The UK is also leading the way in promoting greater transparency of aid spending, allowing everyone—from UK taxpayers to beneficiaries in developing countries—to see how it is being spent and hold those responsible accountable if things go wrong.

So by all means let’s put pressure on the UK and other donors to meet longstanding commitments on aid spending. But let’s not only focus on the exact share of national income being spent. Instead, we need to ensure that aid is of good quality, and helps to build up government’s own capacities to help themselves. In the long run, this will mean an end to aid dependency—a much bigger prize.