Aid Transparency: Why it matters


Greater transparency is central to aid delivering on its promise – to empower people in the fight against poverty. Aid transparency makes aid more accountable and responsive to the needs of people. Citizens and their representatives in both recipient and donor countries must be involved in aid planning, tracking and evaluation.

While greater transparency alone will not result in more effective aid, better governance or enhanced development outcomes in recipient countries, it is fundamental to their success. Aid transparency is a necessary condition for country-led development to emerge. Without transparency, other aid effectiveness gains cannot be achieved.

Weak aid transparency is a problem of knowledge: too often neither recipients nor donors know how much aid is coming in, when and for what purpose. Neither do they know how and where it is being spent. It is also a problem of power: citizens in the South cannot hold to account large swathes of public expenditures funded by aid. Citizens in the North cannot hold their governments accountable for the promises they have made to give more and better aid.

At the mid point to the MDGs, this year is a major opportunity to make significant progress on improving the transparency of aid. The issue of transparency in aid processes has not been properly addressed at international or country level. However improved transparency is the bedrock for any progress in aid delivery. Donors and the aid sector more broadly need to ensure that serious commitments and advances are made this year at the Third High Level Forum on Aid Effectiveness in Accra (HLF3), the UN summit meeting on the MDGs in September and the Financing for Development Conference in Doha in November.

A coalition of leading Civil Society Organisations will be launching the Publish What You Fund campaign at the HLF in Accra in September. An increase in the availability and quality of information is essential to delivering on the Paris Declaration on Aid Effectiveness commitments. Aid transparency cuts across and contributes to a wide range of key elements the Paris agenda.

What does Publish What You Fund have to offer? 

Publish What You Fund has brought together leading NGOs and NGO coalitions to draft a first set of consultation materials – the Publish What You Fund principles - which were released in July 2008. These principles are designed to be signed up to by all public and private bodies engaged in funding and delivering aid including donors – (public or private), recipient governments, NGOs and contractors. The five draft principles are:
    1. Information on aid should be published proactively
    2. Everyone has the right to request and receive information about aid
    3. Information on aid should be timely, accessible and comparable
    4. The right of access to information about aid should be promoted

The principles will be reviewed in the run-up to the Accra High Level Forum, following an initial consultation period.

Different information users have different needs. For transparency initiatives to have a meaningful impact on people’s lives, they must be driven by the needs and demands of citizens and civil society, developing country governments as well as donors. Our aim is the release of the right information at the right time and in the right format to be effectively communicated to all relevant groups, and to have those groups drive the demand for transparency. Publish What You Fund acts as a catalyst for these demands.

Publish What You Fund is working to create the space to enable transparency to be prioritised as a policy issue. Limited transparency about aid is a political challenge. It is essential to understand the incentives for providers and users of aid information to increase transparency, and apply pressure on all stakeholders to act. Publish What You Fund seeks to open up debate and progress for improvements in aid transparency to take place and related aid transparency initiatives to thrive.

Drawing on Southern demand and experience, Publish What You Fund argues that aid transparency needs to be about more than just data – donors must be transparent about their policies and decision-making. Aid agreements between donors and recipients (including conditions) must also be made public. Bringing together aid effectiveness advocates, Southern government officials, freedom of information, budget monitoring groups and a growing number of supporters, Publish What You Fund is the global campaign for aid transparency.

The Need for Publish What You Fund

“Donors are funding approximately 265 different aid projects in Sierra Leone. Many of these projects are implemented unbeknownst to the government, which struggles to capture information about the diverse and competing initiatives in the country”.

Countries that receive international aid have little way of knowing how much aid is coming in to their country and how it is being spent. In Afghanistan, the government does not know how one-third of all aid since 2001 – some $5bn – has been spent. In 2005, an aid mapping exercise in Uganda discovered that double the project aid previously accounted for was actually being spent in the country.

Greater aid transparency is essential in reducing these glaring gaps in knowledge. There are three dimensions to the challenge: planning, efficiency and democratic engagement.

In practice, lack of transparency around aid flows fosters less effective planning and implementation of all donor, government and non-governmental resources and efforts. Having comprehensive information on what is being spent on what and by whom is essential for meaningful policy planning and financial management. A central component of this problem is lack of predictability. In Sierra Leone, the government received US$26 million less from donors than it had budgeted for 2007, much of which was destined for spending on poverty reduction. The problem here is two-fold - not only does it mean that plans made cannot be implemented, but it has the knock-on effect that government officials invest less and less in the planning process. At the macroeconomic level, not knowing how much external finance is flowing into a country inhibits macro planning and potentially macro stability (exchange rates, monetary supply etc). This donor ‘fickleness’ is unfortunately not an uncommon experience.

Lack of aid transparency leads to inefficiency in decision-making and implementation and heightened corruption risks. Lack of transparency makes it difficult to see and act on ‘orphan’, or ‘darling’ areas where aid disproportionately supports a particular region, sector, or ministry. The first large-scale evaluation of aid to the Palestinian territories was undertaken by UNDP in 2000, seven years after the Oslo agreement. The report concluded that most aid projects were urban. Rural areas and refugee camps, where the aid was most needed, were neglected. No one knew how much money the Palestinian Authority was receiving. Weak aid transparency undermines evaluation and learning – both at a technical and political level. It is hard to evaluate the effectiveness or even efficiency of a programme for which a significant proportion of the resources are unknown.

Fundamentally, weak aid transparency leads to limited participation and democratic engagement by citizens – in both donor and recipient countries. Lack of aid transparency undermines democracy in recipient countries and accountability within donor and recipient countries. Accessible and accurate information on aid makes it possible for citizens in recipient countries to participate in decision-making and hold governments accountable for how aid is spent on the ground.

Who needs this information?

There are three overlapping sets players in the aid relationship:

► Citizens, civil society and parliamentarians in both donor and recipient countries;
► Recipient governments – oversight as well as line ministries and semi autonomous agencies;
► Donors – governments, multilaterals and increasingly also private foundations and non-governmental organisations.

Each one of these groups of actors is user as well as provider of information. Donors are not the lone “suppliers” nor are recipients and citizens the only “demanders”.

There is a clear demand for information on aid activities and flows within recipient governments. However donor and aid agencies, including NGOs, also need information from recipient governments and each other on what they are doing. For example, mapping all resources in relation to a government’s efforts means that everyone can see their activities in context.

For recipient governments in highly aid-dependent countries to provide accurate information to their citizens as well as to donors, they need information provided by donors as well as their own citizens. For governments, citizens are an important source of monitoring, prioritisation and problem definition.

Citizens in both recipient and donor countries can use information to hold policy-makers and service providers to account. In recipient countries, citizens both use and provide information on services. In donor countries, citizens hold their governments to account on their promise to deliver more and better aid. They each have incentives to be knowledgeable actors in the aid relationship.

Why now?

MDGs mid point
The millennium summit in September 2008 is our global stocktake on where we are on achieving the Millennium Development Goals midway to 2015. But this vital international effort to increase the volumes and quality of aid is stumbling over basic information and knowledge gaps about what the commitments mean, how far we are to achieving them and what resources are going where and to what effect.

Public Support for Aid
The success of the Make Poverty History campaigns and G8 summit in 2005 saw donor public support for aid and development reach an all time high, yet the tide is in danger of turning. In recipient countries, independent studies show that public faith in foreign aid remains alarmingly low. In donor countries support is shallow, with relatively low levels of understanding of the nature of the development and aid process, leaving support for aid vulnerable to short terms scandals and shocks.

Accra HLF 3
The High Level Forum for Aid Effectiveness will be held in September 2008 and conducted at a ministerial level. It is a major gathering and opportunity to push forward improvements in aid quality. The Paris process for all its shortcomings is one of the few international processes with a recipient country level infrastructure to negotiate, implement and monitor reform. The issue of aid transparency is building in momentum and could be the one overarching achievement of the forum. Donors and recipients could commit at Accra to work to develop agreed aid transparency principles and standards and implement them by a target date.

Building Momentum
Momentum is however building amongst a range of actors. At an international level in the last year a number of major technical initiatives have been launched. Aidinfo (based within the UK NGO Development Initiatives) has launched a major work programme to make aid data more simply, comprehensively and quickly available to the public. Debt Relief International and the Overseas Development Institute are developing a series of Guide to Donor Practices, which currently covers 48 with plans to add another 30 the end of the year. A range of other initiatives to improve OECD DAC data is taking place inside the DAC – the new Country Programmable Aid dataset is particularly significant and strips out spending that is not spent or predictable at a country level. The Project-Level Aid Database (PLAID) is building on the DAC data to improve categorization of projects and keyword searching of project purposes and activities. The PLAID database currently encompasses over 700,000 multilateral and bilateral donor projects.

Related efforts include the assessment of G7 performance in terms of aid effectiveness in The DATA Report 2008 and a similar assessment of EU donors in the annual report of European AidWatch, an initiative which monitors and advocates on the performance of EU governments on quantity and quality of aid. Other closely related efforts include the Centre for Global Development work on an aid quality index while the German Marshall Fund is discussing supporting the concept of emerging principles of transparency for donors as part of its Transatlantic Taskforce on Development, for example in the form of a code of conduct for donors.

This international-level work builds on a range of national level transparency and reporting initiatives. At the country level, more than 50 different aid management systems have been implemented across the developing world, including DAC supported Aid Management Platforms (AMPs) and UNDP sponsored Development Assistance Databases (DADs) as well as numerous individual country systems.

There is extensive recognition of the importance of this issue which could result in real change. This is one area of development aid where meaningful progress can reasonably occur in the short term to achieve significant impacts by 2015. For this to happen, these related initiatives will need to be coordinated and coalitions built, and where appropriate, common standards or interoperability of approaches developed.

How does it relate to the Paris Declaration and the Higher Level Forum on Aid Effectiveness?

Without progress on aid transparency, the ambitions of the Paris Declaration cannot be realised. Without information no one can manage for results or be held accountable. Transparency is central to solving the challenges of lack of predictability and conditionality in aid, weak ownership, policy alignment and harmonization. Transparency of aid is the prerequisite for effective country-led development.

The Publish What You Fund agenda cuts across and contributes to a wide range of key elements in the Paris agenda. Transparency is an essential input and precondition for ownership by recipients (whether governmental or non-governmental) and for accountability in those relationships to emerge. Greater aid transparency can also be achieved by donors independently of the activities of recipients which means progress in this area can be achieved particularly rapidly.

Information presented in comparable national level formats and in time with national cycles is itself a form of system alignment and provides predictability. This sort of information is also an essential basis for coordination and redirection of efforts, which are involved in policy alignment, harmonisation and division of labour between donors. With this knowledge base it is possible to redirect resources for them to be better distributed. With the inputs thus mapped, management for results can become a serious venture.

Transparency on numbers, types and the nature of conditionality, bench marks and triggers is the start of efforts to reduce, coordinate and improve the nature of conditions and prior actions associated with aid. Moves toward including both non-DAC donor and even potentially non-aid or other official flows are a starting point for country level coherence of donor activities.

The importance of driving forward the aid transparency agenda is also noted in by a range of groups including the conclusions from the Accra HLF Africa Region Preparatory Consultation Workshop, the ECOSOC UN Development Cooperation Forum meetings, the International Steering Group in the run up to Accra. 

Looking ahead – the future for Publish What You Fund

The Publish What You Fund campaign sees transparency as a necessary prerequisite for effective country-led development. Accurate, reliable information on aid flows must be made available to civil society, citizens, as well as the donor community and recipient governments to ensure that all development efforts are channelled in the most effective ways. Publish What You Fund aims to provide information and strategic support to empower all aid stakeholders to move towards country-led development.