Aid Effectiveness

The Challenge

For development assistance to achieve its full impact, it should be transparent, predictable and delivered in partnership with recipient countries. There have been some improvements in the way donors deliver and recipient countries process and manage development assistance in recent years, but progress needs to be accelerated. 

First, donor and recipient countries need to account to their parliaments and citizens for how external and domestic resources are used for development. This will allow donors and recipient countries to hold each other mutually accountable for improving aid quality.  Secondly, for better management of external and domestic resources, further improving recipient country systems to encourage their use by donors is important.  Strengthening these systems requires the efforts of both donors and recipient countries.  Finally, the transaction costs of providing development assistance must be reduced.  Managing aid is expensive for donors and recipient countries and will only get more expensive as aid volumes increase.  When donors utilize similar approaches for delivering development assistance and use country systems, transaction costs can be reduced and the impact of aid is increased.

The Opportunity

Development assistance has facilitated tremendous results over the past decade, proving that it can work, especially when donors and recipient countries each do their part to improve the quality of resources provided for development.  However, more must be done to stretch precious development assistance dollars even further.  In 2005, more than 150 countries, multilateral organizations, and non-governmental organizations (NGOs) agreed to a common set of principles to guide the provision of development assistance to poor countries.  By signing the Paris Declaration on Aid Effectiveness in 2005, signatories agreed to monitor their progress in improving the quality of aid provided against specific indicators, most of which have targets for 2010.  At the Gleneagles G8 Summit, the G8 committed to 'implement and be monitored on all commitments we made in the Paris Declaration on aid effectiveness, including enhancing efforts to untie aid; disbursing aid in a timely and predictable fashion, through partner country systems where possible'. In September 2008 these commitments were reiterated and reinforced at the High Level Forum on Aid Effectiveness held in Accra, Ghana. 

Learn more, read the full Aid Effectiveness Issue Brief...