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Fair aid PDF Print E-mail
Written by Alex Singleton   
Sunday, 13 August 2006

Much of the debate on aid conditionality was oversimplified. Critics of conditionality had a point that old-style aid conditionality was too inflexible and prescriptive (even though a lot of the criticism was more motivated by ideological opposition to good economic housekeeping rather than a sensible contribution to the debate).

Free market critics like Prof. Jagdish Bhagwati were right too to say that ultimately it was a weak instrument that often did not produce the desired effects. If a government really wanted to do what was set as conditions - if they believed in the vision - then they would actively pursue the conditions. If it wasn’t their vision, they’d tend ignore the conditionality, and shrug their shoulders when donors came to visit them, simply saying that it wasn’t politically possible to do x, but we did y instead.

But despite this, there is no reason to believe that simply writing blank cheques to poorly governed countries is going to deliver the results we all desire. The American idea with the Millennium Challenge Account has much to commend it: giving government-to-government aid not with conditionality attached but by only picking recipients who meet certain minimum criteria. Yet clearly the MCA does not provide all the answers. After all, the most needy recipients are not in the countries with good governments, but the ones who are held back by bad governments. Here there is significant scope for bottom-up approaches to aid.

Making aid fair means ensuring that aid really gets to the people who need it most. British taxpayers who have to pick up the tab and the poor in developing countries deserve better than the status quo.

Requiring certain things when giving government-to-government aid (or debt cancellation), despite the drawbacks of old-style conditionality, is still of merit. As the BBC reports today, it seems that an anti-corruption requirement on debt cancellation in Cameroon is leading to a bit of a clean up:

The authorities in Cameroon have discovered that they are paying civil service salaries to 45,000 employees who do not actually exist.

The "ghost workers" were uncovered by a census of public servants as part of a drive to stamp out corruption.

Finance Minister Polycarpe Abah Abah said the fake employees were costing nearly $10m (£5m) a month.

Earlier this year foreign donors made tackling corruption a condition for cancelling billions of dollars of debt.

"These people have been robbing the state," said Mr Abah Abah, adding that further cases could emerge as the census continued.

In other words, let’s not throw away the baby with the bathwater.

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