Should Donors Deliver Aid Through Developing Country Government Budgets? The Case of Ghana
By E. Gyimah-Boadi, Executive Director, Ghana Centre for Democratic Development (CDD)
OECD donor countries channel about US$ 5 billion – some 5% of their aid – directly to the budgets of developing country governments. The OECD in their report - "An Evaluation of General Budget Support (1994-2004)", showed that this system of delivering aid was an effective way to strengthen the management of public financial systems in developing countries, and also helped to improve access to services like healthcare and education.
Recently, an evaluation of Multi Donor Budget Support (MDBS)to Ghana was carried out jointly by the Overseas Development Institute in London and the Ghana Center for Democratic Development (CDD) in Accra. The main findings are presented in an ODI briefing paper. Professor Gyimah-Boadi, the Executive Director of CDD and a prominent member of the MDBS Evaluation team tells the Forum on the Future of Aid (FFA) what he thinks of MDBS in Ghana...
"I like the concept of MDBS. I support it in principle because it aims to provide much needed resources for a democratically elected government to fulfil pledges and promises made in its election campaign and which constitute part of its mandate. Moreover, MDBS has the potential to stimulate domestic accountability processes - as more resources are channelled through the budgetary process.
Indeed, there is evidence to suggest that Ghana’s MDBS has helped to reduce domestic debt stock and contributed to increased public spending in poverty-reducing sectors such as education and health. MDBS has helped to orient the “Christian democratic” NPP administration towards poverty reduction and somewhat away from its initial focus on “wealth creation.” In addition, participation of non state actors and of civil society and independent research and advocacy organizations in the budget process has begun to grow over the period of MDBS.
However, I remain concerned about other aspects of the MDBS. It is irresponsible for donors to write a cheque to a government and then look the other way. There is substantial risk that rather than empower, MDBS resources would be abused by government. This imposes a difficult-to-enforce obligation on donors to ensure that recipient governments are not only democratically elected but that that there are adequate mechanisms for domestic civil society to hold government accountable.
In the absence of official transparency and effective domestic accountability mechanisms (which remain the case in Ghana today), MDBS resources are subject to capture by personal and private networks in control of the state and resources may be allocated in partisan ways to kin/ethnic groups and cronies. Despite credible elections and given the weak involvement of parliament in the budgetary process, there is a real risk that MDBS resources would be diverted principally to serve the interests of NPP administration and the individuals that control the executive arm of the government."
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Other relevant resources
Evaluation of General Budget Support.
OECD DAC Network on Development Evaluation.
A review of Multi Donor Budget Support
How MDBS works in Ghana
Multi Donor Direct Budget Support in Ghana. The implications for Aid Delivery and Aid effectiveness
Centre for Policy Analysis, Ghana
Further GBS related resources on the Gerster Consulting homepage