How does accountability affect foreign aid effectiveness? Does increased participation lead to more accountability in the design of aid programmes? Foreign aid involves a chain of accountability relationships stretching from international donors through to end users. This paper summarises evidence that accountability increases aid effectiveness, specifies mechanisms that increase accountability, and examines the effects of participation on accountability. While enthusiasm for participatory design and delivery is warranted, participation is not a panacea for all aid accountability problems.
Accountability has several benefits in international development. It creates incentives for agents to fulfill their responsibilities and reassures principals that agents will fulfill them. It also assists in the study of whether policies work, facilitates transparency, and helps principals to correct rewards to agents.
There are five accountability relationships that may impact the overall success of foreign aid for international development: those of implementing agencies to end users; implementing agencies to governments; governments to end users; governments to donors; and donors to governments and end users.
Foreign aid in the context of accountable institutions is better aid. Similarly, foreign aid projects with built-in mechanisms of accountability are better projects. In particular:
- A number of studies have found that aid effectiveness (in terms of economic growth) is conditional on institutional quality. This finding is supported by evidence that the quality of national governance institutions has had an impact on individual project performance.
- A commonly suggested way of improving accountability in aid programmes where governance institutions are weak is to make them more participatory.
- There is significant evidence that water and irrigation systems run better with greater participation.
- However, evidence with regard to participation in social funds is more mixed and indicates that participation is not a panacea for development planning.
- Importantly, there also has been significant evidence collected at the cross-country level suggesting that aid can decrease institutional quality.
There are two main ways in which project beneficiaries can make their voices heard and create useful accountability relationships. These are via access to information, and by being able to represent themselves through their own contribution to the project. Studies show that giving beneficiaries access to information about the performance of services improves service quality, as does providing information on how to complain. However, evidence on the effects of participation is mixed. An important study compared the effects of grassroots participation to the effects of hierarchical monitoring in a project in Indonesia. It found that hierarchical monitoring had a significant anti-corruption effect whereas grassroots monitoring had an impact only under limited circumstances.
This raises the question of how to proceed in situations where there is no reputable auditor. In such situations, policies to improve government function should not primarily focus on criminal laws against corruption, but must deal with institutions and habits of behaviour.
The issue of how to make programme design accountable to end users has not been effectively addressed by Poverty Reduction Strategy Papers. Recipient governments have often presented documents that reflect what donors want to hear. There has been no fundamental departure from the policy advice provided under structural adjustment programmes. Donors themselves need to work harder on being more accountable to end users and to aid-receiving governments.
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