Design of aid modalities and policies

With a growing body of evidence to indicate their effectiveness, aid modalities such as budget support - which give partner countries greater control over the aid they receive - are the operational embodiment of the Paris principles of ownership and alignment. But in implementing them, a balance must be struck between donors’ desire for accountability and the country government’s priorities. This requires a process of careful design to ensure the right controls and measures are put in place.

The large-scale evaluations of budget support conducted by the likes of the UK National Audit Office, the OECD-DAC and various academic researchers all point to a similar conclusion: budget support has the potential to be more effective - especially in terms of long-term development - than project and programme-based aid. However, the evaluations also share the same caveat: this potential can only be realised if the support is well designed.

It is therefore clearly in the interests of both donors and recipient governments to plan budget support initiatives thoroughly - from the way the funding is provided to the way it is allocated, managed and accounted for. New processes and systems may be required; specific barriers in terms of financial controls must be identified and addressed. In our work on budget support in countries such as Zambia and Kenya. OPM has been extensively involved in precisely these tasks, helping develop the case for budget support, pinpointing issues to be resolved and applying our experience to contribute directly to the way the budget support programme is designed. In Mozambique we are also currently supporting donor dialogue and coordination around the development of budget support.

One of the consequences of the Paris Declaration has been the desire amongst some recipient governments to take greater ownership by devising their own aid policies that set out the criteria under which they will accept and use aid. In Yemen, OPM consultants helped the government develop a work plan for improving the effectiveness of the aid it receives - looking at key issues such as harmonisation.