February 8, 2006
Original report by the UK Department for International Development (DFID)
Researchers from the UK Department for International Development (DFID) address how aid can be increased and improved in fragile state environments, in a working paper intended to stimulate discussion and not present DFID policy. They identify a number of aid instruments currently used by donors: budget support; technical cooperation; projects; social funds; pooling of funds; global funds and partnerships; and humanitarian aid. Three objectives for aid in fragile states are: meeting immediate needs and delivering basic services; building sustainable systems within and outside government to formulate policy and deliver services; and supporting pro-poor domestic political reform.
The current approach to the selection of aid instruments in fragile states emphasises restricted expenditure, usually on projects outside government control, often humanitarian. Although this approach has some value it does not meet the policy challenges of working more effectively in fragile states. A number of other approaches have been more effective to these objectives in fragile states. The report finds that:
• There is no single instrument: a range of instruments with different levels of risk are needed and planning long-term and programmatically from the outset is better.
• Partnerships for programme implementation that involve all parties, including the state, United Nations, civil society and the private sector could be beneficial.
• Frameworks that prioritise and plan interventions that offer greater coherence between security, development and diplomatic interventions are needed.
• Donors opt for temporary solutions: applying general principles to fragile states could be better. • Resources to help experimentation and flexibility based on local knowledge, with a long-term commitment to monitoring and evaluation, finance and dedicated employees are important.
A focus on context and policy objectives, combined with a flexible use of various aid instruments can have a significant impact on poverty reduction. There is no single perfect approach and risk can be reduced but not eliminated. However, the researchers offer some general suggestions:
• Where the state has the capacity to govern (in terms of a functioning political, bureaucratic and judicial system) but no commitment to poverty reduction, donors should consider off-budget, joint, national or regional programmes with pooled funding and should use humanitarian projects only in response to need. • Where there is both little capacity and little commitment, donors should follow a similar pattern, but also with a focus on relationships with civil society and strengthening the vulnerable communities though appropriate resources and training and transfers.
• Where there is commitment, but little capacity, donors should establish an arrangement between national governments and donors which would cover political, security and development strategies; create multi-donor trust funds for budget support and investment; and provide technical cooperation for developing local skills and capacity.
Contributor(s): Nicholas Leader and Peter Colenso
