The accountability of aid

I came across an article in USA Today titled: "Audits: Afghan aid lacks accountability"

After seven years of work in Afghanistan, the U.S. government's premier development agency continues to pay hundreds of millions of dollars annually to private contractors that frequently fail to demonstrate results, according to aid workers, former diplomats and audits by the agency's [Ed: USAID] inspector general.

President Obama said last week he was "committed to refocusing attention and resources on Afghanistan and Pakistan." He named special envoy Richard Holbrooke to oversee aid and diplomacy in those countries. Secretary of State Hillary Rodham Clinton said she wants the U.S. Agency for International Development to assume development tasks ceded to the Pentagon.

Yet USAID's multibillion-dollar Afghanistan reconstruction effort continues to struggle. Of six different audits conducted in the last year by the agency's inspector general, only one found a program working largely as it was supposed to. (Full)

The article lists a summary of the different projects in USAID's $7.9 billion spending in Afghanistan since 2002 and links to the audit reports.

Apart from the fact this is rather bad news for USAID, and the beneficiaries - the people of Afghanistan-, it begs to question "what can be done to make aid more efficient"?

To me, the aid organisations function in an "aid market economy", with the same principles governing a market economy: reputation, marketing, reporting, performance, effectiveness, cost efficiency... Not -like the commercial market- with the goal to maximize profits, but the maximize aid efficiency.

You could apply the same principles from a commercial market to the "aid market": demand and supply. The demand being "aid organisations requesting funding" and supply being "the world's capacity to give".

As, the supply is limited to "the world's ability to 'give' ", say x billion USD per year, each development and aid organisation is competing for those funds, which are much more limited than the need.

What if we could instigate a bit more of the "market economy" dynamics to this equation? What if, just as a commercial company has to publish their net results at the end of the fiscal year, and has to prove its efficiency in its market to its stake holders, what if we institutionalize this better, and more transparently to the "aid business"?

What if we push more to have aid organisations concentrate on net returns: both short term and long term impacts of their programs? What if donors would push more for NGO's, UN organisations, IO's to have their operations surveyed by external auditors, and to have the reports made public (like this one from USAID)?

Would this not only ensure more efficiency of aid? Would this also not help donors assess where their 'aid funds' are better invested? And in the end, increase the net benefit to the stakeholders: the beneficiaries.

Otherwise the world can spend yet another century of aid. Ineffective aid.


Interested in aid and accountability: Check "Keeping a critical eye on aid & the UN" in the "Links: Aid Resources" header in the side column.
Picture courtesy Sabrina Quezada (WFP)