It is often said that if the billions of dollars of annual international aid were spent wisely, we would no longer see the glaring forms of deprivation that remain evident in our world today. Two major reasons that explain why aid is not able to make the world a better place include the problem of corruption within recipient countries and the ineffectiveness of donor agencies themselves.
Countries like Pakistan have had a tough time with international indexes like the one by the Berlin-based watchdog, the Corruption Perception Index. The CPI became particularly controversial last year when it claimed that the PTI government was primarily focused on the accountability of its political opponents, and remained oblivious to corruption under the military rule of General Musharraf’s era.
Be that as it may, there are also serious problems with an index like CPI, which does not pay enough attention to how corruption in many post-colonial poor countries is being worsened due to problems with donor policies and programmes which further enable elite-capture of incoming aid.
The creation of an aid transparency index which turns its attention to donor agencies instead of only blaming poor countries for their own destitution was thus a welcome move. There is now growing realisation that aid accountability should not be confined to poorer countries being answerable to international donors (and taxpayers in rich countries) alone, but that donors also need to be held accountable.
After all, aid, especially in the form of concessional loans, is accompanied by many conditionalities, which require poor countries to adopt specific economic policies. When aid as loans is not well spent, then it adds to the debt burden of poorer countries, constraining future public spending, and diverting funds away from ordinary citizens to pay off external debts. An index that aims to enhance donor transparency is thus important.
The Aid Transparency Index is the only independent measure of aid transparency among the world’s major aid donors. While it was formulated in 2011, the current formulation of this index leaves much to be desired. For instance, this index does not get into the thorny issue of how aid is often allocated to cash-strapped countries to achieve geopolitical goals rather than based on need or even how well prior aid was utilised.
What the Aid Transparency Index measures or does not measure also remains an issue of serious concern.
Consider, for instance, findings of the latest (2020) version of the index is based on data gathered from 47 donors including bilateral agencies (USAID, CIDA, DFID), multilateral development finance institutions (ADB, World Bank), UN agencies (UNDP, UNICEF), intergovernmental entities (EU) and a philanthropic foundation (Gates Foundation).
The findings of this latest index highlight significant improvement in aid donors’ overall transparency given that more than half of the 47 assessed donors are now publishing more data about their activities and policies. While such information is important, these transparency efforts are limited in scope. The index currently lacks information about the actual impact of aid projects as only a handful of donors publish project results, and fewer make public the reviews and evaluations of their varied projects.
It also is worth noting that China’s Ministry of Commerce — which spearheads funding for development policy and projects — does not provide data on its aid and is thus ranked at the bottom of the Aid Transparency Index. China certainly needs to make data about its development aid more public given it has now become a prominent stakeholder for international development in our part of the world and across much of Africa.
To achieve ambitious global targets such as the UN’s Sustainable Development Goals, more information is needed to ascertain what difference aid is making, which development policies are working, and which ones aren’t. It is vital that our policymakers and civil society at large understand the need for greater donor transparency and begin demanding it.
Published in The Express Tribune, August 21st, 2020.
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