The world of aid is changing – shrinking, even. With governments like the UK, US, and parts of Europe stepping back from their commitments to overseas development assistance, aid funding is entering a new phase. Initially, one saw a temptation to frame this as a temporary budget reduction to address immediate challenges of war and domestic economic downturn, but in reality, this is a starker structural shift. The so-called industrialised ‘northern’ countries are retreating – and while this has been reflected in their rhetoric (from ‘global poverty reduction’ to ‘national interest’) for a while, the pace of change has suddenly accelerated.

Here are three imperatives in this new world of international development which we must recognise if we still want to pursue long-term goals of global progress and prosperity.

1. A steadfast focus on value for money

For a while now, there has been a push to shape the narrative around aid in terms of ‘value for money’ but I fear this has not gone far enough. This is evermore urgent in today’s world where aid budgets are shrinking more rapidly than before and international cooperation is being framed increasingly in transactional terms. The language of partnerships and values hold much less meaning today. The conversation needs to move more urgently towards effectiveness. What can aid achieve, where, and how quickly?

I have been wondering about the value of the work we do in the areas of government systems building/strengthening – all part of the state-building agenda in fragile countries. While it is true that there has been progress, how can one tell whether the progress that has been registered is due to the billions that have been spent by foreign donors? Do we know the counterfactual – that is, how much of the progress we see would have happened anyway, with or without us? Things are trickier if we consider the opportunity costs of the funds being spent here – where else (in which other context of dire need) could these funds have been spent? We need to ask these questions – we are not asking these questions enough and not to the right people.

The key issue here is that much of the aid industry seeks to actively avoid politics. Political pushback makes us deeply uncomfortable. We want to treat development as a technical exercise, and even when we train civil servants and irrespective of whether we design programmes that work at the community level and on the relationship between different levels of government, we want to depoliticise them as much as possible.

Coming back to value for money or effectiveness – this challenge means that we must go beyond the easy metrics and ask the harder questions – what do we need to do to deliver lasting change; to truly shift the needle? And can that ever be done without truly engaging with the politics, without being willing to take a principled position, without showing the willingness to walk away?

2. Recipient governments need to change course

This shift in the donor landscape should also be a wake-up call to the recipients of aid. Some of the doomsday messages that came out of the aid industry following the decimation of USAID also served to shed a rather unflattering light on the state of many of the recipient nations. Without aid funding, if an LMIC cannot even hold their public health system together, then it reflects in a true sense how badly the development sector has failed. While donors and aid workers may have a variety of incentives in perpetuating aid dependence, surely it are the governments in recipient countries that have to act.

Donors have been warned in the past that they should watch out for the aid version of the ‘resource curse’ – for as long as the tap is flowing, aid can disincentivise governments from providing core services that governments ought to provide. This, combined with poor governance where large sections of the population do not have a voice are reasons why development outcomes continue to be as poor as they are in spite of several decades of aid.

Many countries, individually and collectively, have made the argument that centuries of colonisation and extraction that they suffered is responsible for their state of development and the humungous challenges they face in terms of infrastructure, both physical and human. This is certainly the case when one considers the impacts of climate change that are disproportionately affecting the poorest regions of the world. Nevertheless, it would be impossible to argue that developing countries (and their governments) cannot do more to take charge of their own destinies. The recipes for growth are easily available, along with instructions for how they can be used, and which ingredient can be substituted for another in order to suit one’s specific context.

Developing countries do not need to get caught in economic, political or ideological dogma. They need to find their own way, and they need to get going. Donors are not going to tell them how. This is not a call for recipients of aid to reject all foreign assistance. It is about really facing up to the momentous challenge facing them – the need to deepen citizen engagement and being accountable, and building up a state that is self-reliant.

3. Donors must live by the rules they claim to promote

To be sure, the call for recipient country governments to step up will not be possible as long as there isn’t a global fair playing field. While no one expects global institutions to reform overnight, one must step up pressure demanding that the rich nations of the world do more. When one talks of rule of law, transparent use of public finances, anti-corruption and fair business practices, donors need to examine their own backyards.

Advocates for a fairer global system need to keep emphasising that the flow of aid is minuscule compared to the financial flows that emanate from business activity around the world. While protectionist trade may be official American policy for the foreseeable future, most of the rest of the world still seems keen to pursue a more integrated global trading system. While doing so, they must drop barriers to entry for developing country products, and stop subsidising their own producers.

And then there are the illicit financial flows – much of the wealth flowing out of the developing world into tax havens would not be possible without the collusion of developed country legal systems and financial institutions. These outflows regularly outdo aid inflows in volume as well as obviously impoverish countries where citizens are already struggling to achieve a basic level of sustenance. Donors can shut off the aid tap, but as they do that, can they not (be forced to, if needed) step up and close the loopholes in their systems that allow this to continue unchecked?

The underlying hypocrisy is an ethical failure. It also undercuts every moral claim that the industrialised northern world makes regarding good governance and development. It is high time that rich countries walked the talk.

So, what next?

The world of aid is has changed. The developing world, as well as the fragile states, will each have to craft their individual and joint responses to these rapid shifts.

For those of us working in the sector, that means rethinking long-held assumptions, questioning existing models of state-building, and being willing to try new approaches that are rooted in local priorities and political realities.

But the real challenge is deeper: how do we go about building political systems that really answer to citizens? Will we continue to fight political problems with technical tools? If we are to have any hope of meaningful impact, we will need to be venture further – to engage with power and politics both at home and abroad.

And what will the new era of global cooperation look like? The answer will depend not only on governments and donors, but on civil society, movements, and citizens everywhere.

Suvojit Chattopadhyay
Head of Africa

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The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of Adam Smith International.