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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

organised by ODI

How the European Commission can take the lead in providing high-quality budget support for education and health

Source: Oxfam

Developing-country governments desperately need more long-term and predictable aid, given through their budgets, to finance the expansion of health care, education, and other vital social services. The European Commission (EC) is one of the biggest donors providing this kind of essential budget support, and has innovative plans to further improve and increase this aid. European Union (EU) member states must support these ambitious plans. The EC in turn must do more to improve on this good start, delinking this aid from harmful International Monetary Fund (IMF) prescriptions, putting an end to unnecessary bureaucratic delays, and doing more to make its aid accountable to citizens in poor countries. [Abstract]
The need for enhanced levels of budget support and other government-based approaches lies at the heart of the Paris Declaration. The challenge for the Commission is to set an example of high-quality budget support, both in Accra and beyond.
The paper finishes by highlighting the challenges faced by the EC and suggesting a set of actions that European Union member states and Developing-country governments should do in order to increase the quality of aid.

To read the full paper, click here

World Bank review could shift aid away from social sector projects

Source: Bank Information Center

President Paul Wolfowitz called on Francois Bour-guignon, the Bank's chief economist, to develop a new strategy for World Bank aid effectiveness.

Wolfowitz argues that a strategy review is necessary to deal with the ever increasing number of organizations providing aid to the developing world. He said the World Bank needs to find out "what is our comparative advantage and where can we contribute?"

The review raises concerns of where resources will be enhanced or depleted. Bank officials are cited as pushing for increased investment in economic growth operations, while moving away from health, education, and other social sector projects.

Click here to read the full article

“The Cost of Poverty”: Transaction costs and the struggle to make aid work in the education sector in Tanzania

Source: SARPN

This paper was written at the end of 2004 at a critical time in the development of the education sector in Tanzania and of rapid changes in the wider picture of government / development partner relations - characterised by rapid moves towards harmonisation, the development of a Joint Assistance Strategy for Tanzania, and ‘Mkukuta’ the first of the ‘second generation’ Poverty Reduction Strategies.

One of the most frequently quoted expectations of donor harmonisation is reduced transaction costs (TCs), as an early step towards increased aid effectiveness. This paper attempts to look at the different kinds of TC – administrative, tying and fiscal, to see how they play out through different funding instruments: projects, pooled fund support to the education sector, sector support, and what are their likely implications in the context of moves towards increased budget support.

It is argued that TCs do exist only as discreet units (missions, reports, audits etc) which can be cut down upon with consequent increases in efficiency. Rather they form the most visible part of a spectrum that should blend into sustainable partnership and commitment to doing what is necessary to eradicate poverty. In practice this is not the case. Despite dramatic improvements in the primary education sub-sector through the Primary
Education Development Programme (PEDP), and very significant increases in donor funding, relationships between government and DPs have over the past few months been very poor. Acrimony, particularly over the release of funding by the pooled fund partners and reporting of it, have led to very unpredictable financial flows to district and school level, with damaging effects on the quality of education.
It is necessary to step back and look at the bigger picture of what is going on, including from a historical perspective. Reform of the education sector is only one of a whole range of reforms, covering public service, financial management, local government, civil service, legal sector and others. They are driven by an analysis that in themselves projects and sector level reforms in the past have not generated the changes that would eradicate poverty and are not likely to do so in the future. More fundamental structural change is required, as an end itself and to mitigate some of the risk of putting more
money into Budget Support. All of this is to be supported by on-going high level dialogue to ensure that key decision makers are actively engaged. This, it is argued, may be expensive in the short term TCs, but the potential long term gains justify the cost.

To ensure that these gains in terms of aid effectiveness, government effectiveness and ultimately poverty eradication, this paper has highlighted a number of recommendations. It is central to appreciate that they have to be mutually supportive and proceed together. If DPs ‘harmonise’ without effective communication with government, for example, it can be constructed as donors ‘ganging up’. OECD DAC gives good advice about working in sector wide and more harmonised approaches. These are taken as given, and the following are additional points arising from observation of the education sector in Tanzania.

Click here to read the full report

'International Support: Making Better Use of More Aid’, chapter four, in ‘Strong Foundations: Early Childhood Care


Aid flows are rising, but the Education for All (EFA) goals cannot be met from current disbursements and domestic resources. US$11 billion of external support per year – three times the current level – is needed if early childhood and adult literacy programmes are to expand and all children are to complete primary school by 2015.

The 2007 EFA Global Monitoring Report ‘Strong foundations: early childhood care and education’, prepared by an independent team and published by UNESCO, reviews trends in education aid and warns that time is running out to meet the EFA goals set in 2000 in Dakar. Despite continued progress at the primary level, including for girls, too many children are still not in school, drop out early or do not reach minimal learning standards.

Click here to view the full report

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