21st Century aid: recognising success and tackling failure

Recent critics of aid programmes have argued that aid is in fact the key cause of economic dependency, lack of growth, corruption, and even laziness amongst people living in poverty. The persistence of poverty has cast doubt over the effectiveness of aid, and has lead to critics citing examples of where it is not working in order to argue that all aid is bad and should be reduced or phased out altogether.

This report examines the evidence on aid, and finds that whilst good quality 21st century aid can be indispensable in unlocking poor people’s ability to work their own way out of poverty, the quality of aid requires carefully structured improvement. Reforms must be combined with systemic measures aimed at tackling the underlying structural causes of inequality and poverty. The quantity of aid also needs to be addressed, and with five years to go to the Millennium Development Goals (MDG) deadline, donors are giving far less than is needed.

Donors are called on to:

• ensure aid is channelled to help support active citizens, build effective states as a pathway to reducing poverty and inequality, and support diverse forms of financing to contribute to development
• deliver aid through a mix of models, including increasing budget support wherever possible, and ensure that a percentage of aid flows are channelled to civil society organisations, to enable people to better hold their governments to account
• dramatically improve the predictability of aid, by increasing the proportion of aid that is general budget support where possible, and by sector support where general budget support is not an option, and limit conditions attached to aid to mutually agreed poverty indicators
• give at least 0.7 per cent of their national income in aid, and set out how this target will be reached, with legally binding timetables

Developing country governments are called on to:

• reject a culture of corruption, uphold human rights standards, and act in ways which are transparent and open to scrutiny
• provide legal environments in which civil society organisations monitoring government activities can flourish and respect the independence of non-government bodies such as audit offices and the judiciary