William Easterly and Laura Freschi, writing for AidWatch, kick the aid anthill by claiming European aid agencies (particularly the UK’s DfID) are supporting autocratic governments instead of people by pumping money directly into national budgets, rather than development programs. A flurry of blog posts follow; we’re wading in.

Easterly and Freschi’s argument is essentially this: direct support to governments is intended to give more domestic control over how aid money is spent — a worthwhile goal. Unfortunately, the governments receiving said aid money are fundamentally unaccountable to their citizens. So much for local control.

Response 1

In the DfID camp, Owen Barder responds to Easterly et al. by arguing that:

A) The government of Ethiopia isn’t that bad.
B) DfID is giving money to local government, not the national government.

(These points were promptly shredded by a reader.)

Barder wraps up by saying the authors “need to do some proper analysis of the costs and benefits of different choices for aid delivery in different contexts, rather than simply asserting that it is wrong to give aid to and through governments of which they disapprove.”

Response 2

Our friends at Open Budget Partnerships (OBP) follow up with some actual evidence of whether the governments in question are indeed that bad.

Citing the Open Budget Index scores in Rwanda and Malawi, OBP argues that domestic accountability mechanisms are comprehensively lacking and must be enhanced if we expect foreign aid to effectively reach poor citizens.

So, which comes first: foreign budgetary aid to build institutions or the institutional mechanisms to support the aid?

In an unsigned blog post, OBP argues that money is not a cure-all:

While aid can be a useful carrot, the debate should focus on how to create domestic accountability, not on how and where to apply donor funding. In practice we know that domestic accountability institutions in poor countries are as weak as they ever were. Domestic accountability will not ‘emerge’ where budget support is provided. It must be built by the very same donors that adhere to the budget support approach.

That sounds right to us.

Our contribution: Ethiopia is indeed unaccountable.

In their 2008 index, OBP did not conduct fieldwork in Ethiopia. But we did.

The 2008 findings of the Global Integrity Report: Ethiopia solidly supports Easterly’s claims that domestic accountability is virtually non-existent in Ethiopia. This can be seen in the huge implementation gap between the legal framework and the actual implementation of anti-corruption reforms. Our researcher explains this saying: “rather than a question of regulations to promote accountability, the problem in Ethiopia is that the party and the state are virtually the same.”

In terms of the budget, our data suggests the Ethiopian legislature lacks the expertise to provide a detailed budgetary review and does not have the power to suggest changes that refute the wishes of the executive branch. In addition, substantial budget debate occurs behind closed doors. While citizens theoretically have access to itemized budgets, in actuality, access is limited. This reflects a broader trend of weak communication and information flow between government and citizens.

These realities in Ethiopia, Malawi and Rwanda prevent citizens from providing meaningful input in the allocation of aid money. As we have noted on this blog in a different context, transfer of large sums of money directly to governments with weak accountability mechanisms is unlikely to end well.

Aid donors can use their financial resources to leverage the political will needed to increase domestic budget accountability practices. Supporting these governance reforms must be a first step to any international aid program.

[Disclosure: There are some aid agencies among Global Integrity’s donors.]

— Norah Mallaney and Global Integrity