Improving aid: consensus or competition?
The aid community has undergone sweeping changes since the 1960s when the number of donors per recipient country averaged at 12. Today this figure is 33 and the number of organizations exceeds 230.
The multitude of donor-driven initiatives spurred efforts to streamline aid, such as Poverty Reduction Strategies (PRS), but with little success. Most middle-income countries, home to 80 percent of the developing world's population, opted out of PRS and new emerging donors China and India, with $2 and $1 billion contributions respectively, change the nature of global aid.
It's now easier than ever to borrow from capital markets – 90 percent of the world's developing countries accessed the syndicated loan market and 40 percent issued sovereign bonds. As a result, the World Bank revised its lending policies cutting fees and raising lending limits striving to compete with other development banks.
For the "road ahead" read a very good short study by Joseph O'Keefe, the former head of corporate relations at IFC, and now a scholar at Brookings.
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There is something seriously wrong with the mission of the World Bank if it has to make its loans more attractive to be able to compete. How about letting the private capital markets serve middle income countries if they can do it. Why does the world need an expensive international bureaucracy to make credit slightly cheaper for countries that could afford to pay market rates?
Posted by: Jeff Barnes | Sep 2, 2007 11:58:35 PM
Questions on Joseph O’Keefe’s “Aid- from Consensus to Competition?”
Is it about from Consensus to Competition in delivering aid for development?
Is it about from Consensus to Competition in receiving aid for development?
Is it about from Consensus to Competition in the business of delivering aid for development?
Is it about from Consensus to Competition in the business of receiving aid for development?
Is it about from Consensus to Competition in the fundraising for aid for development?
Is it about aid by grants, concessional loans or loans?
Some years ago though not directly a part of it I found myself in the midst of some major help efforts after a natural disaster in a poor country. From what I saw and even though I knew some were truly dedicated to assist some truly needed people, it mostly seemed to me as a Theme Park for Donors, and I had never seen so many new and shiny all terrain vehicles running around a city measuring damages. At the table next to me I overheard two European delegates congratulating and toasting themselves because it had only taken them two weeks to find a minister to whom deliver a pontoon bridge while other of their European colleagues had already been there for a month with no such luck.
With competition is Joseph O’Keefe referring to the long queues at the theme park?
As an ED or the World Bank I have witnessed the extraordinary challenges present when trying to convince governments stuffed up to the tilt with politicians with short term objectives of contracting some repayable loans stuffed up to the tilt with conditions and applying the net funds received in such a way that you could harbor hope for some long term sustainable development results.
With competition is Joseph O’Keefe referring to how the World Bank and IFC actually compete in the market… not just against other aid institutions but also against regular financial markets.
Without making clear what differences it is a bit hard to understand where really O’Keefe wants to take you… that is of course unless you read the entire document between the lines.
Posted by: Per Kurowski | Sep 6, 2007 7:21:10 AM