• Recommended readings

Recommended readings

This paper by the UK Department for International Development (DFID) describes the limitations of current approaches to aid instruments and discusses the emerging understanding of their use within fragile states. In addition, a selection of aid instruments that may be more effective in achieving objectives in difficult environments is highlighted.

Donors need to work more effectively in fragile states to meet immediate needs, support pro poor political reform and develop sustainable systems for delivering services. The current approach to the selection of aid instruments emphasises: less money, disbursing through projects, shorter time commitments and a shift away from projects towards budget support as performance increases. However, this approach does not fit with the variety of situations in fragile states and there are examples of successful use of different aid instruments in such cases. Furthermore, it does not reflect the research and understanding of aid effectiveness, specifically aid as a cost-effective means of preventing conflict.

Donors should use an improved approach to the selection of aid instruments, acknowledging that:

• There is no single approach and a'one-size fits all' mentality should be avoided. Working in fragile states requires experimentation and flexibility based on local knowledge.
• Risk can be reduced but not eliminated. Concerns over state legitimation and fiduciary risk will be a determinant of the choice and use of aid instruments. An approach is needed that acknowledges both high risk and high returns.
• There is a need to think and plan programmatically from the outset and then to work out implementation methodologies. Such programmes should involve partnerships between the state, UN, civil society and the private sector.
• Better frameworks are needed for improved coherence between security, development and diplomatic interventions.
• General principles of aid effectiveness should also be applied to fragile states. Aid should be coordinated to be harmonised and aligned. Where there is no commitment to poverty reduction, aid actors should seek to 'shadow align.'
• Supporting political reform is difficult but possible. The choice of aid instruments should be based on broader political strategies and a political economy analysis of potential winners and losers.

Aid should be used appropriately to the context. There have been some promising uses of aid instruments in fragile states so far. Overall:

• Budget support has been effective via trust funds in early stages of formation and direct to government in more established post-conflict countries. Social funds can strengthen local accountability and contribute to political reform.
• Pooled funding can promote a more programmatic and long term approach and reduce the tendency for projectisation. However, projects within a strategic framework can demonstrate aid effectiveness.
• Where there is state capacity but no commitment to poverty reduction off-budget joint, national or regional programmes should be considered. Key reformers in government should be supported.
• Where there is both little capacity and commitment the focus should be on local government, communities, civil society and the private sector.
• Where there is commitment but little capacity a strategic framework should be in place between government and donors covering political, security and development aspects.

[summary by the Governance Resource Centre]

• Full text of document
• Publisher details
• Send to a friend