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Forum for the Future of Aid

Southern Voices for Change in the International Aid System Project

The Forum on the Future of Aid is an online community dedicated to research and opinions about how the international aid system currently works and where it should go next

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Multi-Donor Direct Budget Support in Ghana: The Implications for Aid Delivery and Aid Effectiveness

Source: Centre for Policy Analysis (CEPA)

This paper reviews the following:
• the mechanisms of aid delivery, their potential effects on economic governance,
• and the emerging mechanism—the multi-donor budget support (MDBS)—for direct budget support in Ghana.

It also provides:
i. a brief background to aid flows in Ghana and the regime of aid coordination;
ii. The trends in aid delivery mechanisms to Ghana
iii. and the potential impact on government systems;
iv. the direct budget support arrangement and the key elements that may be used as a lever of reform and to accelerate desirable change in government systems.

Lastly the paper reviews the results of a field survey of donors and government stakeholders and an assessment of the experience to date and the lessons learned.

The argument of the paper is that the MDBS is likely to prove superior to other aid delivery mechanism such as:
• project aid,
• food aid,
• Sector Wide Approaches (SWAps)
• and District Wide Aproaches (DWAps)

Rather, multi-donor direct budget support (MDBS) may dominate for a number of reasons. It has the potential of reducing transaction cost, makes for better internal coordination of resource use, builds recipient’s capacity to design and implement desired strategies, and provides an avenue for high level policy dialogue that can focus attention on and, in discrete steps, accelerate desired improvements in government systems.

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