Channeling aid through Multilaterals

27 April 2011

By Andrei Xydas, former Intern, World Bank

Admittedly, for many of us in the development sector, we eagerly await the release of the Australian Aid Review to see the future role of our organisations in Australia’s aid program. With the release of the UK’s Multilateral Aid Review, a discourse has emerged on the proportion of government aid that should be channeled through multilateral organisations.

A key message from the UK’s review is that the multilateral system remains a critical component of the UK aid program. The review highlights that the traditional benefits of multilateral organisations persist; multilaterals have technical expertise, they pool together large funds, encourage innovation, play pivotal leadership roles with donors, have legitimacy and competence in conflict situations and work in every country in the world. The report did, however, find that the performance of multilaterals varies greatly and many are not “value for money”.

Like any organisation, for multilateral organisations to remain effective they continually need to be finding ways to do things better. This is a central value at The World Bank and underpins why the International Development Association (IDA) was given the highest rating of "very good value for money” in the UK review. In particular, the Bank has been applauded for its increased transparency, through a shift in its Access to Information Policy to a presumption of full disclosure, even by one of its harshest critics, William Easterly. In my brief time here at the World Bank, I too have felt this culture with exposure to these reforms and also to World Bank innovations in disaster management.

Ultimately, actions speak louder than words; the UK has announced it will increase funding to the IDA by 25% (Taking-Forward the Multilateral Aid Review) and this is consistent with the Bank’s receiving a growing share of multilateral development aid over the last decade (2010 DAC Report).

'Energizing the Pacific' aims to provide sustainable energy to the Pacific Islands

The UK review also repeated the commonly complained of weakness of the multilateral system, that poor coordination between organisations is undermining the effectiveness of programs. This has been recognised in the Pacific, and the Pacific Region Infrastructure Facility, a joint initiative of several multilateral and government agencies, including AusAID and the Bank, was established to overcome this problem. As yet, the initiative has been a great success, with projects such as Energizing the Pacific in operation.

Australia already allocates over 30% of its aid budget to multilateral organisations. Despite this, in light of the fast-growing aid budget and the value-add of multilateral organisations to government aid programs, it is appropriate for multilateral organisations to play a more significant role in Australia’s aid program.

Image by Flickr user Snurb.

Comments

4/27/2011 10:13:46 PM #
Andrei,

Thanks for making a case for more multilateral aid. On the 30% number for Australian contributions, it is worth noting that only about a third of this is for core contributions to multilaterals, most is for trust funds and projects--in other words it is bilateral aid delivered through a multilateral channel. The big opportunity for Australia is to scale up through increased core contributions to multilaterals, such as ADB, IDA or  or joining AfDB. Each of these MDBs receieved good ratings in the recent CGD QuODA report and the latter two would increase Australia's aid to Africa and South Asia--regions where most of the World's poor people live. Thanks again for highlighting the multilateral option for scaling up.