Foreign Aid

Governments struggle to assess aid effectively

Prof Daniel D. Bradlow
Financial Times
June 2, 2009

Sir, After the heated rhetoric on FT.com from such eminent experts as Jeffrey Sachs and William Easterley about Dambiso Moyo’s book , Dead Aid , Mo Ibrahim is to be congratulated for restoring sober thought and analysis to the debate about the value of aid (“Good governance will bolster African aid”, May 28.)

His points that Ms Moyo’s proposed solutions may not be realistic and that aid alone cannot be either the solution to or the cause of Africa’s problems are well-taken.

However, like Ms Moyo and Messrs Sachs and Easterley, he seems to treat aid as fundamentally different from the other sources of development finance that African countries utilise. It is not. Like these other sources – for example international capital markets, foreign direct investors, remittances etc – it entails both costs and benefits.

This means that, like them, there will be some occasions when aid, despite its costs, will be the best source of finance for the particular purpose, and some situations in which it will be an inappropriate source. Identifying the most desirable times for utilising aid requires governments to dispassionately assess both the explicit and implicit costs and benefits associated with the offers of aid that they have received, and of the alternatives to those offers. It also requires negotiating the best possible deal with the chosen source of funds.

Unfortunately, some governments do not do this, either because of governance problems, as Mr Ibrahim suggests, or because they lack the resources required to make the necessary assessment and to negotiate effectively with their counterparts. This failure can be remedied if the relevant government officials are provided with the technical knowledge and resources needed to undertake this analysis and negotiation exercise, and are reminded that it is possible, and sometimes desirable, to decline offers of aid – just as they might decline offers from the private sector or from non-governmental organisations.

It would be a fortunate result of the debate on aid, which Ms Moyo’s book has stimulated and your newspaper has promoted, if Mr Ibrahim and all the experts who have participated in this debate were to contribute to assisting African governments to become more discriminating in their assessment of aid proposals, and more effective in their negotiations with their aid donors.

Daniel D. Bradlow,
University of Pretoria,
South Africa

Read the original story on the Financial Times website

Categories: Foreign Aid

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