“A huge weight of analysis that in turn drives a large volume of money for the world’s poorest people rests on a flimsy, uncertain, patchy body of data.”
That is the damning conclusion of a new report from Development Initiatives. The boldly titled Investments to End Poverty stands out from the crowd of ever-more-ambitious development programs by starting with a brutally honest appraisal of the problem.
We don’t yet have enough reliable information to make difficult decisions.
That also means we didn’t have it when past decisions were made – and we often don’t even know what those decisions were. For example, the report reveals that the total aid donors say they have spent is typically far higher than what recipient governments say they’ve received. Startlingly, the report writers confess that this simple equation can’t be solved: ‘we don’t know exactly how much aid is actually transferred to developing countries’.
This is not for the want of trying. Development Initiatives should be congratulated for their achievement in pulling together a wealth of information related to aid – and other financial flows that could be used to end poverty. While bemoaning the availability and quality of pertinent data, the report pulls together the most comprehensive analysis ever of what gets spent where and on what. Chapters 7-10 contain extremely detailed country- and resource-specific data for recipients and donors that will be of enormous use to any policy maker or development professional attempting to understand the current development-spending landscape and improve the way they allocate resources to end poverty.
Having opened so honestly – and then started to address the data problem themselves – Development Initiatives have earned the right to set out a grand claim: ending extreme poverty by 2030 is possible. The report sets out many obstacles to achieving it – or, from a ‘glass-half full’ perspective, many reforms needed to make it possible – but the goal always remains in sight.
Three key questions are identified that should be asked about all aid spending:
- Who will benefit and are they poor?
- When will the benefit be felt?
- And what is the evidence of the probability of impact?
Debates around aid are very polarized, but Development Initiatives help to clarify the terms of the debate – no mean feat, given the decades-long fudge over the very definition of ‘aid.’ Cash transfers, food aid, technical assistance, debt relief, and support for students and refugees in donor countries are all counted as aid. Almost a quarter of aid from rich countries is not even intended to cross borders, being spent on ‘upstream investments’, such as research into tropical diseases.
The fact that so many different things are lumped together under the ‘aid’ banner makes it possible for critics to bandy around huge figures. It also impedes effective measurement of impact, and makes it harder for recipients to plan their spending, and citizens to hold governments to account.
The Development Initiatives report makes a big contribution by disaggregating the different parts of the ‘aid bundle.’ It shows that different types of spending have different impacts and are suitable for different contexts. Can we be confident that donors always ask themselves which type of aid will be most effective? There remains much in this report that will be grist to the mill of aid sceptics. But there is also ammunition for those who believe aid has a key role to play in ending poverty, as well as for those, like Publish What You Fund, that campaign for better data and increased transparency to make aid more effective.
The other uniquely helpful aspect of the Investments to End Poverty report is its insistence on looking at aid in the context of other resources. It specifically challenges donors to consider where aid can be used to catalyze other resources. The scale and diversity of finance flowing into (and out of) developing countries has increased significantly in the past decade. Understanding how domestic revenues, foreign investment, remittances, and private finance can work alongside aid to drive poverty reduction will be critical if the 2030 goal of ending extreme poverty is to be met. And accessible, transparent information about all of them will be every bit as important as it is about aid.
This report is a call for greater transparency, and for more and better information about aid and associated resources to end poverty. To that end, it aligns squarely with the work of Publish What You Fund. Of course, more and better data does not remove the need for difficult judgment calls, but it will help to make decisions better informed and more transparent. On a question as vital as the investments most likely to help end poverty, getting the facts right could not be more important.
Let the development data revolution begin!