The recent Lancet article on allocation of funding to the health sector by aid recipient countries has got a lot of play the past week. Findings were that, in brief and on average, for every aid dollar allocated to the health sector, allocations from domestic resources fell by 0.43 dollars.
Cue outrage. Thoughtful, if not fully aligned, responses came from Laura Freschi and Owen Barder. But we can thank Ranil at Aid Thoughts for getting to the nub of the problem. As he helpfully reminds us (after a good primer on the logic of budget allocations), recipient government incentives are driven by a mix of political priorities: maintaining patronage networks; funding headline grabbing prestige projects; as well as developmental objectives.
Donor agencies, while knowing this, are driven a different set of incentives: HIV and AIDS, public health, education are an easier sell to the domestic aid lobby, head offices and interested electorates. Particularly so when headine indicators can be produced (children in school!) that keep the spigot open.
We saw the confusion this leads to this week with Germany’s Minister for Development Cooperation clearly dissatisfied with pouring money into the sieve that is the Tanzanian government’s budget, but somehow feeling compelled to maintain that support while simultaneously wanting to stress earmarked support to – you guessed it – HIV and AIDS. Meanwhile his host, with a straight face, assured his benefactor that every cent would be accounted for. We’ve been here before.
Aligning incentives is unlikely to happen. And Aid Thoughts rightly points out that the politics of patronage does not emerge from thin air and that a noisy opposition is no bellwether of change:
Electorates captured in a web of patronage won’t want a more rational resource allocation procedure, they will wish to continue to reap the rewards they get. The ones in opposition search not for fairness, but their time in the sun.
So what is to be done about it? For starters, re-engage. Donor agencies and international funding NGOs need to better understand the political and social context in which they operate. Individual staffers often have this – but it needs to be institutionalised and realistic. One donor country in Tanzania has identified “corruption, fraud and lack of transparency in the government system” as the principal risk to their support. That’s not a risk – that’s the reality; one expression of how political power is gained and wielded.
And by being realistic, we would have less of a focus on “corruption and fraud” and a greater focus on understanding the interplay between motivations, relationships and resources and whether or not that may make people’s lives better and if so, how exactly?
Donor agencies and international funding NGOs could also be a little more explicit about their motivations and ideologies – love them or loathe them, but the US is quite good at this – and a lot more robust when things go awry. There is a fear that if issues of bad faith – promises not kept, political corruption ignored – are openly acknowledged, discussed and condemned that popular support back home for aid budgets will be undermined. That may be so, but it would also lead to real political consequences in recipient countries. Not pretty, but realistic.