Let’s zoom in a little to the south of the Horn of Africa, to Kenya. In 2013, Kenya received $66 million in development assistance from Canada. While planning your budget, you might ask yourself how that amount of money was divided up between the many stakeholders operating in the region. And why?
There is no shortage of available data when you’d like to know how much aid Canada donates and the themes of the various development programs that Canada is focusing on. However, there is a severe lack of sources which describe the breakdown of aid allotted to different players such as NGOs, CBOs, and the Kenyan government. That being said, Canada is not the only guilty donor; lack of information on aid allocation is a multinational problem. One source which does make this data available is The Center for Global Development’s Commitment to Development Index (CDI). It “ranks wealthy governments on how well they are living up to their potential to help poor countries” based on policy areas including aid. Currently, Canada ranks 5.2 out of 10, resting in the middle of the donor pack. However, this measurement is still based mostly on quantity of the aid, and not on how it is being spent.
One measurement captured by the CDI is “project non-proliferation”, which ranks the number and breadth of projects a donor takes on. Some of the large donor agencies take on thousands of on-going projects planned by a myriad of stakeholders, each one with its own mandate and objectives. As a result, the aid money is spread very quickly to meet many disconnected goals, even if the overall end goal is the same. For example, a donor agency could provide funding to two different NGOs focused on education. Each NGO most likely has different ideas about how to educate children, as well as completely different metrics by which they measure progress. One NGO might allocate most of its funds to student lunches while the other NGO might choose to focus on providing school supplies. While these goals are both important aspects of a child’s education, they are fulfilling two different NGO objectives and the progress is being tracked in two disconnected ways. If you take this example and apply it to the hundreds of NGOs working on education in Kenya it becomes a logistical nightmare attempting to align their objectives and ensure that the money is being spent in the most cost efficient way.
Intuitively, it makes the most sense to support large projects that have the capacity to solve countrywide problems. Who would be better equipped to ensure an entire nation is literate than the federal government? A reason that CIDA (and now the Department of Foreign Affairs, Development and Trade - DFATD) may be fragmenting aid is their ongoing skepticism of the corruption riddling the Kenyan government. On Transparency International’s Corruption Perceptions Index (CPI), Kenya ranks 136 out of 177 countries. In the past, $2 million dollars of aid money spent by the Canadian government to Kenya disappeared. As a result of such incidents, Canada may be more willing to finance smaller, more transparent projects where is it easier to keep tabs on progress. One such approach has been donating aid to Canadian NGOs operating in the region, which usually have at least one Canadian staff member. This allows the Canadian government to hold at least one staff member accountable without breaching international politics. Another approach has been to fund CBOs, which have a very nuanced understanding of the cultural intricacies needed to develop successful programs. An example of how this is being implemented is the Canada Fund for Local Initiatives (CFLI).
So how can we make aid more effective? Possible solutions include:
- Kenya’s government designs a project, plans the budget, and then finances the implementation upfront. Donors would then reimburse the government after the project is completed and the final costs have been accounted for.
- Another solution would be to provide non-aid support to governments and agencies in the form of policies or legal frameworks to improve programs already in place.
- A final option would be to use foreign direct investment (FDI) to invest in Kenya’s growing private sector. This option is increasingly becoming DFATD’s preferred approach.
After taking all of these factors into account, effective aid allocation may seem like an insurmountable problem compounded by corruption and fragmentation. It’s up to the next wave of economists and development workers to propose a better solution. But as they say: how do you eat an elephant? One bite at a time.