Towards more effective aid

Development Policy01 Dec 2011Axel van Trotsenburg

Axel van Trotsenburg, Vice President CFP

I have some good and some not so good news about aid. First, the good news. The aid landscape hasseen three important changes during the last decade that have had a transformative, positive effect onthe very nature of aid. One of these changes has been the increased focus on the quality of aid—especially on the resultsbeing achieved on the ground. The World Bank and IDA, the Bank’s fund for the poorest, have placed apremium on having a real impact in the work we support, and the results show. The second change has been the substantial increase in the volume of aid, including massive debt reliefto the world’s poorest and most indebted countries. Both increased aid volumes and debt relief havehelped achieve much progress on several Millennium Development Goals (MDGs). And third, support for developing countries is no longer purely OECD-centric, but is counting increasinglyon middle-income countries to shore up the assistance. Now for the not so good news. Progress on the MDGs is being made, but not enough. Results are beingproduced, but we can do better. And fragmentation of aid is still standing in the way of further progress.We still duplicate efforts, and donors still tend toward heavy earmarking of aid. The result is oftenpoorer coordination and higher transaction costs for all, especially in the form of additional burdenson developing countries. These higher costs represent an unacceptable source of waste in an alreadyfiscally stressed environment for many donor countries. We can do better. Another fear is that the resource mobilization efforts of the past decade may not be sustained andactually are at risk of being reversed. And while more and more middle-income countries are emerging as new development partners,we have yet to fully understand and exploit the potential of this partnership. We need a much moreinclusive dialog that incorporates traditional and new development partners to find the best ways towork together to support lower-income countries. This dialog could benefit from mutual listening andlearning, and sharing of information. We at the World Bank have taken a couple of concrete steps to facilitate this engagement. For example,our new open development agenda makes freely available the Bank’s vast data and knowledgestorehouse, allowing others to understand what we do and join the debate, ultimately improving ourdevelopment approach and results. In fact, the World Bank (IBRD and IDA) was recently named theglobal aid transparency leader in Publish What You Fund’s Aid Transparency Index. IDA also placedin the top ten for all measures of aid effectiveness by the Center for Global Development’s new AidEffectiveness Index. At the same time, we’re taking action to build a global coalition that links traditional donors withnew aid partners. A case in point is the latest round of the IDA replenishment, during which emergingpartners jacked up their contributions while traditional donors stretched their giving despite fiscalstress. The debate on aid effectiveness going this week in Busan needs to take a hard look at the changing aidarchitecture—the trends behind it, the challenges and the opportunities. That includes finding ways tostrengthen this new type of coalition, which not only will shape the aid architecture of the future, butalso holds the most promise for achieving lasting development results.


Related resources:

– “Finance for Development: Trends and Opportunities in a Changing Landscape” – Working Paper| Brief– Website: IDA, the World Bank’s Fund for the Poorest– Website: AidFlows