An evaluation led by the International Development Department (IDD) at the University of Birmingham will have a major effect on international aid policy.
The study, which was carried out over two years, was commissioned by 24 OECD donor governments and international agencies to evaluate the effects of ‘general budget support’, where aid is channelled directly into government treasuries.
At a press conference on 9 May, Hilary Benn, the UK’s international development secretary, said that Britain, which already gives about 25% of its aid in this form, was now likely to scale up its aid programme partly by extending budget support.
Donors now channel about 5% of all aid directly to the budgets of developing country governments, and up to 25 or 30% in some countries. IDD found that this is an effective way of delivering aid which can strengthen the government systems of developing countries and help improve access to services like healthcare and education. Donors are now likely to give an increasing proportion of their aid in this form, as long as they have confidence in partner governments’ commitment to reducing poverty.
IDD led a Pan-European team of evaluators, and worked with local partners to undertake studies of the experience of seven countries over the previous ten years – Burkina, Faso, Malawi, Mozambique, Rwanda, Uganda, Nicaragua and Vietnam.
General budget support has been controversial in some donor countries. It raises concerns about corruption and the diversion or mishandling of funds by comparison with directly funding projects. However, the evaluation found that there was no evidence that budget support was any more affected by corruption than other forms of aid.
It has also brought important benefits. It has increased coordination between donors and strengthened relationships with developing country governments. It has helped to build government systems of finance, planning and service management, making them more transparent and therefore more accountable to their own citizens. It has broadly positive effects in improving service delivery to poor people.
At the OECD meeting, the team’s report was widely acclaimed as a model for future aid evaluations because of the rigour of its approach, and as a forerunner of collaboration between OECD countries in undertaking joint evaluations.
Professor Richard Batley of the International Development Department, and a member of the evaluation team, concludes: "I have been working in development since the 1960s. I can say that, in all that time, very few studies will have affected the structure and future course of aid so profoundly as this one."
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