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More Bang for Your Buck: Making Foreign Aid More Effective
A highly contentious issue, the effectiveness of U.S. foreign aid has long been the subject of debate among congressmen and concerned citizens alike. From how much money is allocated to recipient nations to the impact that aid actually has on issues such as poverty and civil war, advocates and critics of foreign aid point to various criteria to evaluate the merits, or lack thereof, of continued U.S. aid.

The Case for Aid

Proponents of foreign aid insist programs are instrumental in fostering socioeconomic growth, reducing poverty and improving the overall quality of life. There are certainly examples that support this notion. USAID-funded programs have significantly reduced maternal and child mortality, helping at least 4.6 million children and 200,000 mothers, according to agency officials. As of 2015, more than 7.6 million people had received improved access to drinking water and more than 4.3 million people had improved sanitation. Furthermore, 41.6 million children saw improved reading instruction and safer learning environments between 2011 and 2015.

Foreign Aid Skepticism

Yet critics of aid remain steadfast in their opposition, pointing to fraud and corruption, lack of transparency, foreign aid dependency and general ineffectiveness as indicators. Around $1.17 billion in aid that was given to Malawi in 2012 was exploited by corrupt politicians and businessmen. At least $30 million was taken from the treasury and robbed from the 17 million poor and AIDS-ravaged inhabitants. In fact, these sentiments are so strong that, according to ABC News-Washington Post polls, “the only possible federal spending cut a majority favored was for foreign aid.”

Clearly, there are two sides to the story when it comes to foreign aid. When allocated and distributed properly, it can work wonders for the world’s poor and developing countries. However, corruption and misuse still stand in the way of much of its potential. These issues can be addressed by exploring various ways of making foreign aid more effective.

Making Foreign Aid More Effective

There are three important ways that countries around the globe can make foreign aid more effective.

  1. Improving Aid Quality: By dividing foreign aid into smaller projects, donor countries can control the volatility and lack of predictability of aid, thus significantly decreasing the deadweight loss of development assistance. In 2008 alone, deadweight losses from official aid amounted to $7 billion. Smaller projects, according to Brookings, can lead to further innovation and scaling up, thus offsetting deadweight losses.
  2. Linkage: In order for foreign aid to maximize its impacts in a developing country, it must be linked to other important development policies, namely trade, investment and migration. For example, in Haiti and Pakistan, countries in which the U.S. has a significant economic stake, trade restrictions on textile and garment imports prevent further growth.
  3. Mobilizing the Private Sector: It is generally accepted that in order to foster economic growth and development, countries must turn to the private sector. Unfortunately, foreign aid has yet to reflect that sentiment. In fact, much of it is still directed toward the public sector. Cities harbor the most economic growth yet receive only $1 to $2 billion in aid a year. Approximately one billion slum dwellers reside in the city centers of developing countries and represent the key to mobilizing economic growth.

At the end of the day, foreign aid aims to foster social and economic growth in developing countries by enfranchising governments, health care systems, education institutions and infrastructure. Consequently, growth in these developing nations helps developed nations by opening up new markets and increasing stability. When confronted with corruption or misuse or any of the other criticisms of foreign aid, governments should not slash foreign aid budgets, but rather should apply these three crucial ways of making foreign aid more effective.

– McAfee Sheehan
Photo: Flickr

Foreign Aid TransparencyThe success of foreign aid is often shadowed by misconceptions and myths ranging from effectiveness to large overestimates of how much money is spent on aid every year. In an effort to combat some of these myths, foreign aid transparency has become a central issue both globally and domestically. Understanding where funds are being spent is important to donors and citizens as will be explained below. Keep reading for a few facts about foreign aid transparency and where you can find more information on how your nation’s dollars are being used to provide aid to the developing world.

Why Transparency Matters

Transparency includes knowing how much money is spent, where it is spent, who spends it and the overall impact and results. Global foreign aid transparency matters because as nations try to reach the Sustainable Development Goals, this measure will act as the foundation for aid effectiveness and accountability. Aid transparency is important to donor and recipient governments as well as civil society. As citizens who pay taxes, it is reassuring to know exactly where foreign aid funds are being spent and this transparency encourages greater support for foreign aid.

In order to coordinate aid efforts and prevent donors from spending more funds in certain areas and less in others, transparency is key. When donor countries and nonprofits share what they have already spent or are planning to spend, other donors can coordinate their funding off of these numbers and reduce overlap. It is important for donors to research and discuss their funding plans with other nations to achieve greater impact with their limited resources.

Recipients of aid benefit from transparency as well because it is often difficult to know how much aid is given and where it is spent in their own countries. This, in turn, makes it more challenging for governments to decide how much of their own budget to spend on certain problems. Additionally, when aid recipients are not able to show foreign aid money in their budgets or plans for the country, it is much more challenging for citizens and parliaments to hold leaders accountable and corruption can become an issue.

Increasing Accountability with the Aid Transparency Index

One way transparency has improved in recent years is through Publish What You Fund’s Aid Transparency Index. This organization uses research and advocacy to improve transparency mainly through the International Aid Transparency Initiative (IATI). The IATI commits donors to publish all foreign aid data under a common standard that can be compared and accessed easily.

The 2018 Aid Transparency Index was recently launched on June 20. It is the only independent measure of aid transparency among major development agencies and governments making it a valuable tool for foreign aid. This year’s index evaluates 45 countries on a scale from very good to very poor transparency.

This organization uses a relatively complex and detailed methodology for monitoring transparency and scoring agencies. For the most recent Index, 35 indicators were selected that drew upon IATI standards and whether they were upheld. These indicators were then weighted and split into five categories. Organization planning and commitments to transparency are 15 percent of the score, finance and budgets are 25 percent, project attributes, development data and performance are equally split into 20 percent of the score as well. The website also includes a comparison chart on how agencies have improved or declined and extensive reports explaining the Index’s findings.

How to Evaluate a Country’s Transparency

The Index is one very detailed way citizens of major donor countries can easily check their country’s score and whether or not their aid agencies are being transparent. One must simply click on the agency they are interested in to view scores in each category, how they have changed in recent years and recommendations for years to come.

Besides the Index, for individuals in the U.S., there are currently two separate dashboards for USAID and the State Department to share where aid dollars are spent. These can be found at ForeingAssistance.gov and Foreign Aid Explorer. This year, the U.S. was included in the “good” category on the Aid Transparency Index meaning there is still room for improvement.

In 2016, Congress passed the Foreign Aid Transparency and Accountability Act (FATAA) that established requirements for these agencies to publish foreign assistance data. One final provision suggested that USAID and the State Department combine their data into one dashboard by the end of the fiscal year 2018. It is yet to be seen whether this will happen or not but it could be one way of boosting U.S. foreign aid into the very good category for next year’s index.

These are some of the ways that aid transparency has improved in recent years and why it is such a crucial issue for donors, recipients and civil society.

– Alexandra Eppenauer
Photo: Flickr

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There are many television and internet advertisements that call for help to reduce global poverty. Even though people make their donations to charity groups, they often do not get feedback about the progress of eradicating global poverty. Therefore, people sometimes wonder, “Where did my money go? What did my money get spent on?” and “Did I really make a difference?” It is essential for people to know that their money is well-spent and they are indeed making a difference in the world. The good news is that everyone is making a difference and global poverty has been decreasing due to advocacy and financial support.

In Bono’s TED talk on 26 February 2013, he shared his data on global poverty. The results shows that humanity is moving to a brighter future. “Forget the rock opera, forget the bombast, my usual tricks. The only sings today will be the facts,” said Bono. In his speech, statistics show decreases in malaria deaths by almost 75% and decreases in people living in extreme poverty from 43% in 2000 to 21% in 2010. In addition, more than eight million AIDS patients have received medicine. His study indicates that global poverty will be eradicated by 2018 if the support remains the same.

In another TED talk with Hans Rosling, Mr. Rosling also shows progress in decreasing mortality in both developed and developing countries. In his interactive graphs, the age expectancies are increasing yearly and developing countries’ age expectancies are catching up to developed nations’ age expectancies.

The war between humanity and global poverty has been an intense and drawn out battle. However, humanity is winning this battle when global poverty is in a sharp decline. Together, the people who support the cause should give themselves a pat on the back for the job well done. Even though global poverty still exists today, with the support of people from different nations, the world is gradually becoming a better and happier place.

Phong Pham

Sources: Ted, One
Sources: Ted

rubio_cardin_aid_transparency.jpg
On November 14, the U.S. Foreign Relations Committee approved the Foreign Aid Transparency and Accountability Act introduced by Senators Cardin (D-MD) and Rubio (R-FL). The bill aims to promote foreign aid transparency by monitoring and disclosing program data to the government. This effort has been widely supported among Congress, but some government agencies are worried that the evaluation process will harm security sensitive sector assistance programs.

The Foreign Relations Committee has addressed this issue by revising the bill to allow sensitive programs to be exempt as long as the government is still making an effort to increase foreign aid transparency. Now that the bill has passed the committee, it will be brought onto the floor of the Senate for a vote.

Congressman Ted Poe (R-TX) has introduced a similar bill, H.R. 2638, in the House Foreign Relations Committee. This bill is expected to pass as well as Representative Poe has proposed a similar bill in the past that passed unanimously.

This bill has received support from various organizations including The Borgen Project and U.S. Global Leadership Coalition (USGLC). Liz Schrayer, executive director of the USGLC, praised Senators Cardin and Rubio for proposing a bill that “builds on the important reforms being undertaken by USAID and those modeled by the Millennium Challenge Corporation to ensure the highest standards for transparency and results from international affairs programs.” The Senate bill will be brought to the floor soon and is expected to pass.

Lienna Feleke-Eshete

Sources: Devex, USGLC
Photo: Fox