Does Merging Improve Aid Efficiency?

By Rachael Calleja

In foreign aid, ‘efficiency’ (which is distinct from ‘effectiveness’) usually refers to the costs associated with administrating aid programs, that is, the costs of running aid agencies and activities related to ODA programming and delivery. Despite being necessary for operating an aid agency, administrative costs are frequently referred to as a negative function of ODA that donors seek to reduce. In Canada, for example, the 2007 Budget listed “improving efficiency through reduced administrative costs…” as a key way to improve the effectiveness of Canadian aid.

The 2013 merger of the Canadian International Development Agency (CIDA) with the Department of Foreign Affairs and International Trade (DFAIT) to form the Department of Foreign Affairs, Trade and Development (DFATD) led some to speculate that the reorganisation would spark efficiency gains for the government by reducing the duplication of efforts and cutting administrative costs. While efficiency gains were not the main or official justification for the merger, which was said to improve the coherence of Canada’s foreign policy, some observers at the time remarked that job cuts and efficiency gains would be “hard to avoid”.

Re-focusing Canadian aid: Much ado about nothing

By Rachael Calleja and Yiagadeesen Samy

As originally posted at Embassy.

The recent Canadian government announcement to boost the number of countries of focus for its bilateral development assistance from 20 to 25 will not make a big difference to its aid program. While the proposed change is laudable and, if implemented, could improve the effectiveness of Canadian aid by reducing fragmentation, we doubt this latest announcement will have any tangible effect.

Many will debate why the Democratic Republic of Congo, Burma, Benin or Burkina Faso have been added to the list of priority countries, or why Bolivia, Pakistan and Sudan are no longer on the list. But such a discussion is at best useless, and at worst counterproductive, because it distracts us from the real issues of aid fragmentation and effectiveness.

In fact, the parameters for choosing priority countries—based on their need, their capacity to benefit from aid, and their alignment with Canadian foreign policy priorities— are so broad that it is easy for anyone to justify why the 25 countries were chosen.

Foreign Policy Coherence and Aid: More of the Same

In recent years, CIDA has been cited as one of the poorest international performers in fragmentation and policy coherence.  In 2008 Canada ranked as the second worst bilateral donor (following Germany) in terms of fragmentation in aid programming. Similar studies have shown that Canada ranks in the bottom 20^th percentile for aid fragmentation amongst the largest 40 bilateral and multilateral donors.

One of the key challenges that historically threatened the coherence of Canadian aid policy was the inability of CIDA to focus on specific priority countries and sectors.  Over the past decade, Canada has shown some improvements towards focusing aid spending, with aid concentration in priority countries (as a percentage of total bilateral aid) trending upward, peaking at 47% in 2010.  However, in 2011, that number fell to 39%, roughly half of what the target was expected to be.  With the remainder of bilateral funding spread between 126 additional bilateral recipients, efforts to reduce fragmentation through channeling more aid to fewer priority recipients appear to have been limited by CIDA’s continued allocation of a large proportion of aid funds beyond the stated priority recipients; it will be interesting to see whether these numbers change over the next few years.

Designing the post-2015 development agenda: A brief commentary on current proposals.

Last month, the UN Secretary-General’s High-Level Panel (HLP) on the Post-2015 Development Agenda released a report outlining the proposals for a new development plan following the expiration of the Millennium Development Goals (MDGs) in 2015.  The report – which by its own admission is meant to be illustrative rather than prescriptive – highlights some of the broader themes and goals to be included in the new agenda.  While much of the content included in the tentative agenda appears to be an extension of current MDG targets, the HLP’s report proposes several significant additions.

Based on the understanding that the post-2015 agenda must be universal in nature, the HLP proposes that the new plan be driven by five substantial and systemic ‘transformative shifts’:

1. Leave no one behind – In keeping with the spirit of the MDGs, this ‘shift’ aims to move from reducing to ending all forms of extreme poverty by 2030.  The basic idea is that the new agenda should include goals that focus on reaching marginalized groups, placing a greater emphasis on providing broader social protection, ensuring universal human rights, and securing widespread access to basic economic opportunities for individuals across income levels and social groups.

A Humanitarian Bailout?

The NPSIA blog post “Legal Liability and Humanitarianism” discussed the shocking but real possibility that humanitarian organizations may be held legally liable for the assistance they provide. Remarkably, an ever more shocking reality that humanitarians must deal with has been highlighted over the past couple of weeks. And, like legal liability, this issue has gone unaddressed in the academic literature. The issue being: humanitarian organizations with large aid footprints have run out of funds.

This is an issue that is largely separate from the much-discussed problem of humanitarian agencies having too little funding. The problems that result from a humanitarian organization having limited funding and the problems that arise from an organization running out of funds differ considerably. Limited funding leads to problems with project implementation. In contrast, running out of funds leads to the immediate suspension of aid as occurred with the UNRWA cash assistance program in the Gaza Strip earlier this month. Not only does it seem likely that such an action will further marginalize those on the margins but, as the Gaza case demonstrates, such an action may also lead to social instability, revolt, and the repeal of further assistance.