In our monthly guest exploration of everything development, guest blogger Paul Ronands (former Deputy CEO of World Vision) looks at Aid Effectiveness.
Paul Ronalds says:
As Peter Versegi’s Youtube clip argues, Australia’s aid program can be assessed at three levels: the program level, the country level and the international institutional level.
At the program level, there is a real opportunity to better target Australia’s aid and leverage it through increased coordination with other regional bilateral donors and non-government aid and development actors. The MDGs provides a very useful basis for this, especially among our neighbours where so many MDG goals are unlikely to be met.
We also need to re-think how our aid is delivered. Around 65% of Australia’s aid program is delivered by for-profit contractors while only around 5% is delivered by NGOs. Is this the right balance? A number of studies suggest that for addressing basic needs, NGOs are more cost effective. And what about increased use of international organisations like the Global Fund?
A significant proportion of Australia’s aid in the Pacific has been targeted at institution building. Does there needs to be a re-balance here too? While top down institution building is important, surely it needs to be accompanied by activities that build grass roots demand for good governance.
What about the global governance of aid? There are now approximately 225 bilateral and 242 multilateral agencies funding over 35,000 activities each year. Who should lead? The UN? The Development Assistance Commission made of wealth country donors? What about the G20? And what should be the role of non-state actors like NGOs in all of this, given that in places like Afghanistan they provide 80% of services?
There are no easy answers to some of these conundrums – I look forward to your comments in the online discussion!
Paul Ronalds worked for World Vision Australia for six years. He is the author of the Change Imperative: Creating a Next Generation NGO, published earlier this year. The views expressed are the author’s personal views and should not be attributed to any other organisation.
Hi Paul, I think you make an interesting point about the balance in allocation of Australia's aid money between for-profit contractors and NGOs. What is about NGOs that make them more effective in addressing basic needs? Conventional (albeit simple) thinking would say that the private sector is more efficient at delivering cost effective outcomes.
Hi Peter, Most studies of aid effectiveness emphasise the importance of relationships with local people. This is because sustainable change only occurs when local people are actively involved in achieving the required outcomes. This, in turn, requires a long term committment to understanding the context and building trust with the local community. NGOs are more likely to be prepared to invest the time and resources to build this understanding and trust.
Hi Paul, thank you for your piece.
With regard to Australia's monetary aid, do you think it should be channelled to particular, contending NGOs working in-country? Or alternatively, would it be more effective to direct monetary aid to a central, NGO-coordinating institution (independent of the government) that could control the allocation of general monetary aid, and possibly end the 'stop-start' cycle of aid donation that plagues many aid-dependent countries today?
Hi Paul,
Firstly I would like to say thank you for making yourself available for this discussion. I am glad you raised multilateral aid and governance models. Could you please comment on state-citizen engagement and its role in good governance; and how NGOs can positively affect this?
I was in Canberra in June and Chris Elstoft (Communications and Research Branch
Assistant Director General for AUSaid) took a workshop explaining how the different aid program levels contribute to empowering state-citizen engagement. I was wondering what your perspective on this is?
Many thanks!
Hi Steph, a whole range of institutions, cultural norms and other factors contribute to good governance – which is why its such a complex issue. For example, Paul Collier (economist and author of The Bottom Billion) argues that freedom of the press is one of the the most important factors for combating corruption. Certainly, encouraging state-citizen engagement will also assist good governance. NGOs like CARE and World Vision have been engaged in these types of activities which have helped communities keep local government (and even the NGOs themsleves!) more accountable.
Hi Paul. It seems that the difficulties in measuring aid effectiveness have been by-passed by a government that seeks to deploy foreign aid in a manner that resembles any other business transaction. In this way, and by tendering out to contractors, it seeks to keep with what is familiar and comparatively 'safer' in terms of a return on its investment. I agree with you, that this thinking limits our foreign aid activities to those business familiar institution building projects, while neglecting activities that could see such institutions more broadly utilised by those who need them most. But how can NGOs compete with this economically (and politically) safer option? It's not only a question of reframing 'effectiveness' and selling it on to the government, but it also becomes a question of resources – for instance, there is a gulf between the resources available to the Grants and Tender teams in NGOs and those resources available to their corporate competitors.
Hi Patrick, I certainly think that NGOs need to do a much better job of demonstrating their own effectiveness. Too often, NGOs have engaged in a 'race to the bottom' by competing on the basis of their administration ratios. While we certainly want NGOs to be efficient, I am sure that we are more interested in their results – what outcomes did they achieve? However, this is difficult. Often the social outcomes they are seeking to achieve are hard to measure and rely on a range of factors, many outside their control. It also requires honesty when things dont go according to plan, sometimes not easy to do in a competitive aid environment.
Thanks for your reply Paul! As you say, not everything goes according to plan, particularly in a development setting. In this sense, the idea of effectiveness is perhaps too often bound by unrealistic timeframes that when not achieved, negatively influence external conceptions regarding NGOS. I feel that it is at this site, that the honesty who have mentioned really needs to play an educating role for supporters (and funders) of our type of work.
i think i'd personally like to see much more than 5% of AusAid funding reach NGO implementers – particularly local NGOs.
On a recent trip to the Solomon Islands, i was able to visit several projects funded by Australian Aid – and it seemed that local NGOs were not only far more cost-effective, but far more immersed in the community and more effective at engaging the community and understanding their needs. Little things like using travelling drama to explain the upcoming elections just seemed so in sync with the local culture… it demonstrated an inherent understanding that I don’t think can be achieved by foreign agencies..
Paul, you mentioned the role of NGOs in delivering more cost effective and grassroots growth – what do you think is a healthy balance of involvement and funding between international and local NGOs?
Hi Sarah, your Solomon Islands experience highlights the importance of understanding the local culture in tailoring aid and development activities, something local NGOs are obviously well placed to do. On the other hand, international NGOs can bring a range of other experiences and expertise to the table and highlight an issue internationally to gain traction (such as trafficking). This is one of the reasons why local and international NGOs often partner with one another. Provided each respects the different roles they play, it can be very powerful.
Hi Paul
With regards to the Coalition announcement on establishing a junior minister for international development:
This is in response to MPH Policy Call 7, but doth a junior level minister a good aid policy maketh?
An assessment of the report card reveals the Coalition to rank well below Labor when assessed against the key indices (notably the Greens are miles ahead both major parties) The only Policy Ask on which the Coalition ranks better than ALP is, of course, number 7: 'Establish AusAID as a separate department and create a cabinet level minister for international development', an area on which they only have partial fulfilment and on which the Greens still do better. Is Policy 7 meaningless if it is not part of a comprehensive and holistic aid policy suite based on the MPH asks?
Cat, I agree. Labor's commitment to get to 0.7% is heavily qualified, but the Coalition has not even made a commitment to go that far. Deciding to appoint a Minster for Aid seems to the best they can do – frankly I think this is a cop out.
This election, the Coalition is even cutting aid – $300 million from climate change adaptation. If they were serious about aid, they would have redirected that $300 million towards other MDGs, but they haven't. That is really disappointing.
I think that the Coalition has really avoided scrutiny on their plans for foreign aid during this election. I am worried that if they are elected, what happened in 1996 (big cuts to the aid budget) will happen again this time.
If Tony Abbott becomes PM, those of us who strongly support foreign aid will have to work really hard to make sure that the commitment to get to 0.5% by 2015 does not quickly become a "non-core promise".
Hi Paul
Thank you for taking the time to answer our questions.
From an aid effectiveness perspective, is there an argument to be made for investing money in any particular part of the world? More specifically, would Australian Aid be more effectively spent in our Pacific region? Or would it be more effectively invested in the poorest regions in the world (Parts of Africa, South Asia?)
Applying economic logic would suggest that money spent in areas of most need is likely to have highest social return on investment (higher marginal return at low levels of development), but I'm not sure if this logic can be applied when measuring aid effectiveness?
Hi Sahil, there are a number of competing arguments and I dont think there is an easy answer. Focusing Australia's aid on our neighbours may be more efficient – it allows us to develop greater expertise and to take a leadership role in coordinating other donors. On the other hand, investment in other countries might yield high social returns and there may be some countries where Australia's competitive advantages can really help – our expertise in dry land agriculture can be very useful in Africa for example.
Hi Concerned Citizen, I certainly agree that aid is only a part of the solution. Promoting a pro-poor outcome to the Doha Round of international trade negotiations, for example, would certainly make a huge difference. Nonetheless, I do think that well targeted aid is important too. Many countries simply dont have the infrastructure or the human capital to take advantage of trade opportunities. And even if you dont think we have a moral obligation to help the poor, there are strong national interest grounds for helping our neighbours address poverty.
Hi Nina, I do think that NGOs can face a 'Rumpelstiltskin dilemma' – they are sometimes expected to turn straw into gold! However, I think NGOs need to take the lead here – they should work harder to provide the public with alternative ways of measuring their performance. This would allow them to better justify investments in their organisational capacity. For example, NGOs like World Vision spend a fraction of what comparable companies spend on IT. Linking their organisational capacity to results on the ground would allow them to address this.
"Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime."
In regards to your experience in the development sector how do we "teach" developing countries to "fish"? ie what are the best things we can do to assist the development of sustainable and adequately provided for societies?
Hi Paul,
I have just been to a dinner with Andrew MacLeod Senior Advisor at the United Nations Mission and he argued that AID Effectiveness and the Paris Principles have done very little to remove the 'welfare state attitude' and decrease the dependency of underdeveloped countries on AID having little long term impact on poverty.
Instead he was an advocate for private business 'development investment'. Using the example of BHP in Mozambique where BHP introduced Malarial vaccine centres to ensure the local community was protected against malaria in order to have staff taking less sick days and ultimately leading to a more productive company and higher income average for the community.
Similarly, BHP's 'social responsibility' fund is the 3rd largest donor in Australia after AusAID and World Vision and globally 5 companies investing at the same level as BHP would equal if not surpass the amount of funding the UNDP invests.
I have always been an advocate for 'community participatory development' as has been mentioned above however, tonight Andrew had a solid argument for changing the way AID is viewed through a 'return on investment' lens which removes government to government AID and changes the game by working through private for-profit donors. I would appreciate any thoughts or rebuttal as I was quite convinced.
Hi Jess, Andrew and I have had many conversations along similar lines. I do believe that business can play a very significant role – it was one of the reasons why I helped to establish Business for Millennium Development (www.b4md.org). However, it has limits. In the same way as some countries are too poor to take advantage of fair trade agreements, their physical and human capital can be inadequate to attract or sustain sufficient investment from the private sector. Companies will also not normally undertake true community development work because at its heart, it asks awkward questions about how and who gets to make decisions in a community (political questions that can place the company at risk). Improving a country's institutions, fighting corruption and helping communities have greater participation in political decision making are all critical to long term, sustainable change – but I cant recall any circumstances where even the most enlightened corporate citizen would fund them!
Thanks Paul. I can see the need for a mix of both. I suppose the answer lies in creating incentives for failed states and/or corrupt governments to improve and become self-sufficient rather than remaining dependent on Aid income. It is incredibly complex!
Hi Nick, I think most commentators would agree that 0.7% right now would be a step too far. It takes time to develop the organisational infrastructure to effectively support such a significant increase. And it could certainly undermine the public's confidence in the aid program if aid was scalled up beyond the absortive capacity of our institutions. If you are interested, the Australian National Audit Office identified a number of these types of organisational issues which AusAID is undoubtedly working through. Of course, it also depends on how you spend the money. Large INGOs and some other international organisations (such as WFP) could undoubtedly effectively use larger donations from Australia. Large infrastrucure projects could also be an option, although they too still need significant planning and community consultation if they are to be effective.
Do you have any sense of how long it will take AusAID to develop that capacity? For example – could it be developed by 2015? DIFID in the UK seems to have scaled their program incredibly quickly, and will reach 0.7% by 2013 – do you think they have suffered from a quality point of view because of this?
And to what extent should those of us advocating for the worlds' poor accept departmental capacity as a reason for not giving more aid?
Hi Nick, I think the best activists, while ambitious (in policy terms), are highly tactical and have a strong appreciation for the politcal reality that they face. Factors such as the organisational cpacity of departments, electoral and economic cycles all need to be taken into account when framing your strategies.
Paul,
Above you briefly discuss the issue of NGO v private sector programs. I was wondering, what is your view on technical assistance? In particular I'm referring to the media attention from Steven Lewis and others earlier this year and the issues raised by Stephen Howes and others in this year's 'Review of the Aust-PNG Development Cooperation Treaty'.
thanks.
Hi Adam, I think technical assistance has a place but rather than arguing about the proportion of aid that should be devoted to it, I would prefer to approach the issue from the question of what is most effective in addressing poverty. Is spending aid dollars on technical assistance what will make the greatest difference in a particular situation? If it is, what is the best way to acquire this assistance, taking into account the positive flow on effects to the developing country of using their experts?
Do you see external trade as the best mechanism for which countries can hope to develop, I understand the point that you make with the example, but I would love something broader (and if that is not possible, as I know aid must be tailored to individual circumstances) then some examples of alternative situations within the asia pacific region would be helpful, thanks.
Hi Alex, external trade can be a very useful mechanism – it has certainly worked to pull millions out of poverty in China. However, returning to the saying that you started with, it recognises that at the end of the day its people themselves that must ultimately take responsibility for their own development. Where aid has a role is in helping overcome some acute problems (Paul Collier describes them as 'traps' and they include things like disease burden etc) and in helping to create the institutions (defined broadly) that allow people to 'flourish'. These institutions are traditional ones such as police and court systems that promote the rule of law but also social and cultural norms that mean local officials are responsive to the needs of citizens. Indonesia is an interesting example. Prior to the Asian economic crisis it was growing very fast economically but its institutions were weak. When the crisis hit, the poor in Indonesia were hit particularly hard – the system was not responsive to their plight
The Lowy Institute has recently published an interesting paper on the Australian aid program. If you are interested, you can download a copy at http://www.lowyinstitute.org/Publication.asp?pid=…
Hi Paul
A few weeks ago when AusAID was getting media attention regarding expenditure and effectiveness, at least one reporter highlighted the advantages of the strong return on investment with volunteer programs (i.e. Australian Youth Ambassadors for Development program and Volunteering for International Development from Australia).
What do you perceive the disadvantages to Australia (socially, politically, etc) could be of dedicating more funds to mobilising Australian volunteers to build capacity in developing countries?
Hey Paul,
The push for more and better aid to combat poverty overseas is fantastic to see, however I feel that such requests should also focus on poverty within Australia, particularly Indigenous poverty. The UN has stated that Australia's Indigenous population have some of the worst living conditions in the world, worse than parts of Sub-Saharan Africa in some cases. These issues are easily swept under the rug because Australia is not considered a developing nation.
How do you feel these issues could be brought into the spotlight just as much as poverty in Africa/Asia is? Perhaps an MDG-style program to tackle the poverty within our borders?
Hi Madeline, a number of NGOs took on this issue and their campaign was so successful that the government not only took on the agenda, it adopted the name of the campaign – closing the gap. The agenda, agreed to by the Commonwealth and all state and territory governments includes six Closing the Gap targets, relating to Indigenous life expectancy, infant mortality, early childhood development, education and employment.
If you are interested, take a look at http://www.fahcsia.gov.au/sa/indigenous/progserv/ctg/Pag...
Paul
Australian Aid is good (although still too little $) but I am "sick to death" (pardon the pun) of the reports that often come out later of aid funds to foreign countries being misappropriated for other purposes (Arms etc or into Dictators pockets etc) or that their local bureacratic set-up means very little of our aid actually is effective. Surely there is a better way to ensure our aid reaches more of the people its meant to help.
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