Aid Transparency: It's About Time

On November 28, CIDA announced that Canada was joining the International Aid Transparency Initiative (IATI). This is a welcome move.

In recent years there has been a growing demand for greater transparency in foreign aid: how much is being spent, where, on what and for whom. And of course, taxpayers want to know what effect it is having. The problem is that while governments do publish annual statistics on aid-giving, data is often general, incomplete, out of date and it cannot be readily compared with that of other countries. Many donor countries, Canada included, count things in their “aid envelope” that do not meet the OECD definition of official development assistance. “Aid” is frequently used to advance the commercial, strategic and military priorities of the giver. Pledges are announced with much fanfare, often more than once, but they are not always redeemed. Finding out precisely what Canada pledged in response to the Haiti earthquake, for example, is virtually impossible. Getting trustworthy data on what has actually been spent cannot be obtained, it seems, without applying to Access to Information.

The problem is bigger than that, however. Most donors do not have timely information about what others are spending. The result is a badly coordinated mish-mash, with donors crowding into some sectors and some countries, while completely ignoring others. Recipient countries cannot plan or balance their own spending with any accuracy or predictability, and while all donors speak about their desire for results, monitoring and evaluation remain as patchy as the delivery. After 50 years of what many critics call “failed aid”, taxpayers and the citizens of recipient countries have a right to know how these very large aid budgets are being spent.

The multi-government 2005 Paris Declaration on Aid Effectiveness and the 2008 Accra Agenda for Action called, inter alia, for greater aid coordination, transparency and predictability. But on these issues there has been little or no progress and aid has actually become more fragmented than ever. Now, at last, there is a solution: the International Aid Transparency Initiative (IATI) that CIDA has just joined. It calls on donors to put their money where their mouth is, or more precisely, to put their reporting where their money is.

IATI has developed a common, international standard that sets guidelines for publishing information about aid spending. This is not a new database, and it doesn’t replace existing systems like the one managed by the OECD. It complements and supplements standards and definitions that have already been agreed.

Donors that become members of IATI – and the term “donor” includes governments, foundations, multilateral institutions and NGOs -- agree to make public, in a detailed and timely fashion, information on aid volumes, aid allocations and the results of development expenditure when they are available.

In addition, participating donors and developing countries will make public all conditions linked to disbursements. Donors will provide full and timely information on annual commitments and actual disbursements, allowing recipients to accurately record aid flows in their budget estimates and accounting systems. And donors will provide full and timely information on their rolling three- to five-year forward expenditure and implementation plans, allowing recipient countries to integrate them into their medium-term planning.

This idea is long overdue. Britain and the World Bank have signed on and have indicated starting dates. Australia, Denmark, Switzerland and half a dozen others, including the European Union and Germany, are on the road to implementation. Two dozen developing countries have endorsed IATI, including almost half of those designated as countries of focus by CIDA.

Having announced its intention to join the IATI, Canada now has some work to do. The international “Publish What You Fund” coalition, which campaigns for greater transparency in foreign aid, ranks Canada in 28th place out of 58 donors – “poor” but not dismal, and better than France, Germany and theUnited States. With some effort, we could go from a B-minus to something considerably better.

The proof, of course will be in the pudding. Canada passed an “Aid Accountability Act” in 2008, requiring a central focus on poverty reduction. Aid watchers are still awaiting meaningful implementation by the government.