The uncertain relationship between conditionality and aid effectiveness has been the source of longstanding anxiety amongst the international donor community. The 2005 Paris Declaration made by DAC countries and the multilaterals, together with its review, the 2008 Accra Agenda for Action, represents a determined attempt to rebalance the relationship between donor and recipient, to overcome the notorious duplication of aid programmes, to support sectors prioritised by the government, and to create transparent benchmarks for assessing aid performance. The Declaration stresses the need to achieve by 2010 “harmonisation” of donor programmes, “alignment” with budget and reporting systems of recipient countries, supported by principles of “country ownership” and “mutual accountability”.

Polio vaccine given to a child © United Nations Children's Fund

In practice this involves donors working together in direct budget support in which their aggregate funds are merged into government budgets, enabling governments to concentrate on domestic rather than donor accountability. Such an approach demolishes many cherished principles of bureaucracy and involves greater tolerance of political and economic risk. A joint NGO report published in 2008 by the European Network on Debt and Development concludes that donor countries are proving extremely reluctant to embrace the concept of recipient country ownership, with only about 5% of aid flowing into direct budget support. The report describes the notion of mutual accountability as “not real”, pointing to incompatibility between the African political model of patronage and western reliance on institutions.

Away from these relationship management issues, economists question whether aid can remain effective if it grows into a significant proportion of a national economy - 13% of the average African country budget is already financed by aid. Further increases might distort important parameters such as exchange rates and wage levels. Large flows associated with humanitarian and reconstruction aid are also notoriously prone to inefficient results. The outpouring of public sympathy for the victims of the 2004 tsunami has not been rewarded with cost-effective returns on donations. And the inefficiency and corruption associated with reconstruction programmes has been brutally exposed by events in Iraq and Afghanistan.

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