Why does it so often fall on the Economist to remind us of what common sense tells us already? In this case, that development aid that is given STEADILY is more important than the QUANTUM of development aid given. And in fact, widely volatile development aid (for example, the massive swings in aid that can occur before and after a country arrives on the United Nations Security Council) can actually have a deleterious effect. How can we expect a country to plan for capital investment when they don’t know whether the next dime will materialize?
A new paper, by Oya Celasun of the IMF and Jan Walliser of the World Bank, suggests that failing to honour promises can in fact be more harmful than not offering any money in the first place. The authors examined yearly aid commitments, not long-term ones of the Make Poverty History variety. They show how unpredictable such aid flows are. The paper finds that the average absolute difference between aid promised and aid given was equal to 3.4% of each sub-Saharan African nation’s GDP between 1990 and 2005. That is far greater than in any other region of the world. In countries that had experienced war, the fluctuations were particularly marked, partly because of shrinking economies: in Sierra Leone the swings were equivalent to 9% of GDP. It is also a myth, the authors show, that donors always give less than they promise: they are both capriciously generous, as well as capriciously stingy. During the same period, rich countries exceeded their yearly aid commitments to sub-Saharan Africa by an average of 1% of each recipient country’s GDP.
“Don’t worry, we’ll get to it next year:”
But more often than not, unpredictability is not the recipient’s fault but the donor’s, because of either changing governments or reallocations of aid to causes that are more fashionable than poverty relief, such as climate change. Frequently aid gets lost in a jungle of red tape. A survey of aid donors cited in the study found that 29% of delayed or lost disbursements were because of administrative problems in the donor countries.
Instead of being critical, I will try to be solutions focused here. Why not a long-term commitment mechanism for international development aid, to ensure that countries could use said development aid in capital investments? OF course, this would need to be “pre-funded” — i.e., it would require a lump sum payment up-front to fund all future commitments. Why? Because politicians are terrible at maintaining the unfunded commitments made by their elected predecessors (unless you are talking about Social Security or Medicare).
Posted by econophile 
