Harmonisation dangers and incentive problems

Workshop during the Copenhagen Nordic Africa Days discussed reforms of development aid.
 

• The harmonisation of donors has its dangers in so far that it creates a cartel of donors and reduces the different possible supports that recipient countries may solicit. The Paris Declaration with its emphasis on harmonisation is likely to die a quiet death since recipient countries prefer to choose among different possible aid partners (no strong recipient country has ever asked for a better coordination of donor countries) and because donor countries are not willing to abandon their special concerns.
• There are substantial incentive problems at both sides of the aid relationship. Donors suffer from disbursement pressure and tend to reward plans and promises of recipient governments instead of actually implemented policies. Donor staff is constituted by generalists with little knowledge of the countries in which they work and they are generally rewarded for pushing projects and money through the system. All in all, this detracts attention from achieving long-term development results. On the recipient side, the maximisation of aid is generally the major concern regardless of its impact.
• The aid relationship is basically one of inequality. To make aid more effective, the inequality has to be weakened and this requires structural change of the aid system. One possibility is to change the source of aid from voluntary to obligatory contributions through international taxes of some sort. Other possibilities include the creation of various intermediate funds disbursing money for development activities either before or after their implementation, but according to clear rules emphasising development objectives. In this way, there will be less political interference by donors. Yet another possibility is that no donor must prescribe policies for recipient countries that it does not want to adopt itself.