By Mariam Kennedy | 13 June 2012

International development is at its most effective when aid is provided to governments that have a relationship with their citizens based on transparency and accountability, and so legitimately own the development agenda, suggests Maryam Kennedy

A majority of the world’s poorest countries today are in Africa, and yet a trillion dollars of development assistance has been deployed to the continent over the past 50 years. So goes the story that “aid is not effective.”

And that’s just for starters. In recent years, the impact of high unemployment levels and low economic growth across much of the developed world has added a further layer of complexity. Critics have increasingly questioned why cash-strapped governments should continue to fund overseas programs at a time when public services are reduced and domestic spending cut back.

There is little doubt, however, that such assistance continues to be needed. While changing demographics and shifts in capital from North to South and West to East are transforming the economic and social welfare of billions of people, even in the most rapidly growing economies the scourge of poverty remains.

Perhaps as a result of these persistent challenges, the implicit assumption that money spent on development would inevitably yield results has evaporated. Drawing on the lessons of past successes and failures, the approach to development assistance has undergone a number of shifts of direction. But while a repeatable and catch-all formula for successful development intervention remains elusive, it has become increasingly clear that country ownership of the development agenda is critical.

Building and sustaining cross-government development bodies is an important starting point. Clear lines of responsibility within government departments and with development agencies need to be identified before being coordinated through a central body. Building capacity within these elements must be planned and actively supported. Effective policy-making and prioritization also requires accurate data. Processes need to be put in place to gather information and an analytical framework developed to drive country prioritization and untying aid to match country priorities: According to the 2012 report from the European Network on Debt and Development at least 20% of all bilateral aid remains formally tied.

Once development policies and priorities are understood, appropriate governance and transparency need to be embedded in order to counter the ongoing challenge of corruption.

While the perception is very often graver than the reality, it is clear that bribery and illicit financial flows remain major issues. For example, a recent report from the International Commission for Aid Impact concluded that DFID’s program in Afghanistan places too much reliance on partners to take appropriate action in detecting fraud and corruption. DFID should strengthen managing agent agreements and specify levels of control and assurance that it expects, according to the report.

Public reporting of aid by country, sector and outcomes is essential for an informed civil society.

Open, honest and timely reporting through public accounts, which includes progress against development priorities, is therefore essential. Donors’ compliance with International Aid Transparency Initiative standards will significantly help by making all payment transactions, contract data and results information publically available for scrutiny.

Such reporting needs to be done more than once a year, alongside national budget statements, to foster open and inclusive development. However, it is important to note that corruption cannot be eradicated by signing conventions or agreements alone; strict implementation enforced by all the relevant parties is vital.

With this in mind, development assistance programs must engage at the right level with the right people. Clear consultative forums for discussion and agreement on national priorities need to be developed because stakeholders need to be accountable to citizens of donor and recipient countries. Electoral, stakeholder and community support will assist the implementation of

practical programs that address local needs — “effective aid” from the citizens’ perspective. And as part of this push for consensus and transparency, national plans and priorities should be presented and reported. These should set out clear reporting approaches and timetables and include clear statements for review and updating.

Ultimately, it is effective government that has the biggest role to play in improving aid effectiveness. Governments must be supported to build the systems and institutions they need to make sustainable progress. Developing government capacity and commitment is the best route toward achieving the development outcomes that we all desire.

Maryam Kennedy is a partner with Ernst & Young LLP (UK) and leads the Government & Public Sector Investigation team.

This article first appeared in the May edition of Dynamics Magazine