|Alternative aid channels|
The Democratic Republic of Congo is in the headlines again. This time it’s not about rape and escalating violence in the eastern provinces but because donors are threatening to withhold aid as fears grow about governance, particularly in the mining and energy sectors where many foreign companies compete for concessions.
For most donors, turning the aid tap on and off is a standard response to what they perceive to be poor performance or bad behavior on the part of recipient governments.
Given the pressures from their stakeholders back home, it’s no surprise. Cutting foreign assistance to errant governments is a blunt instrument but it sends a clear message.
In some places it may work. In fragile states, however, it can set things way back.
The risk of violent conflict correlates closely with poor governance and weak institutions. Tampering with the aid spigot can make matters worse for countries that need external support to restore confidence and create institutions that are better able to manage violence.
Research for the WDR shows that the volatility of aid to fragile states is far greater than flows to countries whose situation is less precarious. For example, aid from the World Bank and other donors to Burundi, Central African Republic, Guinea Bissau and Haiti has seen major swings, with donor allocations reflecting competing priorities and short-term deteriorations or improvements in governance.
It is not uncommon for total aid to these countries to drop by 20 or 30 percent one year and to increase by up to 50 percent the next.
These stop-go aid patterns are disruptive. Too often they halt development efforts in their tracks and dash ordinary people’s hopes that things may change for the better.
How to square the circle? One way is to find alternative ways to channel the same level of aid so it achieves its broader developmental goals while guarding against the governance shortcomings, poor security conditions and other characteristics of fragility that may have negative consequences for the way the aid is used.
As the riskiness of the environment increases, the international community could design a range of options to put increasing distance between the recipient government and aid money.
Under normal circumstances, aid would support regular government programs. As risks increase, assistance could be diverted to programs with independent oversight or to local government and community-driven efforts. At the extreme end of the risk spectrum, donors could consider giving full responsibility for execution of programs to non-governmental groups with local staff.
This kind of ‘a la carte’ approach would avoid the vagaries of the present system, balancing the dangers of inaction with the political and fiduciary risks of action. Inevitably some programs will fail in the kind of dodgy environments we are looking at. But the model allows for rapid changes of both channels and modalities to match conditions on the ground.
This week’s kerfuffle over the DRC shows how donors use aid as one way to send signals to recipient governments—in this instance, signaling displeasure. It would be better for the long-term resilience of institutions in fragile states to send the same message by diverting assistance to those in the wider community who can make good use of it rather than cutting back on overall flows.