How to deliver a doubling aid program?

6 April 2011

By Associate Professor Matthew Clarke, Head of School, School of International and Political Studies, Deakin University

The current aid review provides an opportunity to consider a range of innovative delivery mechanisms that will assist in ensuring that the rapidly increasing Australian aid program is effective and inefficient. Whilst the real increase in the aid program is substantial, it is necessary to remember that the funds available will still not be sufficient to address the needs of the developing countries. In this sense, aid dollars will always be scarce. It is incumbent therefore on Australia (and other donors) to ensure these scarce resources are allocated efficiently.

Aid effectiveness literature has increasingly focused attention on 'absorptive capacity' which refers to the ability of recipient donors to efficiently utilise increased levels of aid. Within fragile states, absorptive capacity may be constrained for a number of reasons, including inefficient public policies, poorly functioning public institutions, low levels of economic growth, limited export opportunities, low levels of skills and education within the workforce, and (often) civil strife. Given that humanitarian needs will remain greater than that which can be addressed by increased aid, it is necessary that donors and recipients continue to focus on the efficiency of their aid programs.

While the humanitarian needs of fragile states are significant, donors must weigh the ability of recipient governments to transform aid into improved levels of well-being within these countries with other competing demands on their aid programs. The primary focus on issues that constrain absorptive capacity relate to inadequacies of the recipient government. While this is proper and appropriate, there remains scope for donors to seek innovative delivery mechanisms for increased aid budgets outside traditional delivery mechanisms to ease absorptive capacity constraints faced by fragile states.

The aid program of the Australian Government is planned to increase to 0.5 per cent of GNI by 2015. This represents an almost doubling of aid in real terms over a five-year period. The majority of Australia’s aid program is delivered to the Asia Pacific region, including to a number of states that can be characterised as fragile. To ensure aid efficiency, it is necessary for Australia to address issues of absorptive capacity when working with these nations. In addition to addressing traditional weaknesses (listed above), the Australian Government can also assume additional responsibility by seeking innovative delivery mechanisms to ensure this aid is spent efficiently.

In addition to traditional delivery mechanisms – bilateral, multilateral – the Australian Government has more recently piloted small partnerships with churches in the Pacific (referred to here on this blog). The Church Partnership Program in PNG (and more recently Vanuatu) is premised on the realisation that in certain Pacific countries, the churches have existing, functioning and well regarded national networks and close links with local communities. Many churches have long histories of implementing a range of development activities focusing on a range of issues, including gender, sustainable livelihoods, employment training, education, health and microfinance. In this sense they are ideal partners for the delivery of effective aid. There are of course consequences for the churches and their communities from this influx of aid money and changing activities. However, AusAID is right to pursue this innovative delivery mechanism in partnership with the churches in this region as they have arguably been underutilised in the delivery of aid.

It is also unclear if this partnership could be extended to non-Christian religious faiths in other countries (such as Islamic nation-wide organisations in Australia’s largest aid receiving nation - Indonesia), and so whether it can be replicated outside of the Pacific. The aid review provides an opportunity for this innovative delivery mechanism to be more fully investigated and, if appropriate, rolled out to countries other than PNG and Vanuatu.

Image by Flickr user bigyahu.


4/7/2011 11:38:37 PM #
How refreshing and encouraging to see the role of faith organisations in development portrayed positively yet still realistically. Partnership, as usual, is key.

Thank you Michael.