Posts Tagged ‘aid transparency’
Doug Hadden, VP Products
Original post at Publish What You Fund.
Is transparency a threat to the development status quo or an opportunity to break through the “dead aid” narrative?
The problem with transparency is that it usually refers to the other guy. Politicians want governments to be transparent. Donors want beneficiaries to be transparent.
Transparency is a threatening concept. It opens up the organizational kimono to scrutiny. And, sometimes unfair levels of scrutiny, where a single gaff can become the defining narrative in the minds of the public.
This means that aid transparency can seem dangerous to International Financial Institutions (IFIs) who are expected to support the International Aid Transparency Initiative (IATI). We need to understand this context before we condemn donors for not fully supporting transparency standards. We should not be surprised that there is a wide divergence in aid transparency commitments according to Publish What You Fund analysis. Aid transparency is fundamentally political – for larger donors, including major NGOs, it’s not about technology.
From a Culture of Expertise to Multidisciplinary Insight
IFI staff is made up of subject matter experts, many of whom have deep on-site knowledge in their chosen domain. Development is a complex undertaking. Aid transparency can enable those without sufficient understanding to opine. These opinions can be politicized and result in unfortunate changes in IFI policy, particularly in bilateral donor institutions.
Yet, one aspect of complex domains like development, is an overly narrow focus. The key to achieving optimal development results may come from analysis from another domain, or an amateur or a domain expert from a different region. This is perhaps why the World Bank, on the forefront of aid transparency, is reorganizing to achieve global insight from regional lessons learned. Aid data can tap the wisdom of crowds – or the wisdom of big data – to improve development effectiveness.
From Broadcast to Social Engagement
Institutions traditionally operate “out of network” by broadcasting messages through traditional and social media. These messages undergo significant scrutiny, particularly in the public sector. The Canadian federal government, for example, requires a 12 step approval process for official tweets. Social media and open aid data plunges IFIs into operating within existing social networks.
Organizations lose the ability to control the message in social networks. Authenticity becomes critical. Message sanitization often has the opposite effect. What is the incentive for donors to lose the control of the message?
For one thing, donors have lost control of the message. The public in many developed countries seem to believe that foreign aid spending is rampant. Aid transparency could dis-intermediate the media that is intent on sensationalizing foreign aid failures.
Aid Transparency Arms Race?
Aid transparency has become politicized (in a good way). Thanks to the Publish What You Fund Aid Transparency Index and the efforts of civil society, many donors have realized the political benefits of publishing to IATI standards. Aid transparency equates to aid credibility.
There are many observers who believe that donor aid, as currently provided, reduces development and growth. Economist Dambisa Moyo, for example, calls this “Dead Aid”. The important point about aid skepticism, in my opinion, is that foreign aid doesn’t always work as expected. And, the triumphs broadcast by some donors are resplendent in hyperbole.
It’s high time for a change. To a more advanced understanding of aid. To leverage data and analysis to determine what works in what context. This is becoming a matter of survival for aid organizations whether international IFIs, government bilateral donors or NGOs – proof of aid effectiveness.
Doug Hadden VP Products
A recent analysis by Publish What You Fund found that larger donors tend to have better aid transparency than smaller donors. This analysis was based on the aid commitment and the quality of transparency information published to the International Aid Transparency Iniatiave (IATI) standard. This generated a discussion (below) about the information technology capacity advantages of large organizations and the increased incentives for transparency for these larger donors.
My sense is tht the technology advantage will be soon negligible because smaller organizations have new technology choices and are less bound to highly rigid financial and records management software. Agility gives smaller organizations an advantage in the long run: it overcomes economies of scales enjoyed by larger entities thanks to developments like cloud computing and social collaboration. Of course, larger organizations can adopt more agile information systems, but tend to be reluctant because of sunk costs.
Transparency Incentives Also Favour the Agile?
Larger donors and NGOs are under more scrutiny, especially by the press. Social media and crowdfunding will, in the coming years, increase the pressure on all aid and development organizations to be transparent and show results. Unacceptable administration and transactions costs will be exposed through aid transparency. Smaller aid organizations are finding that crowdfunding eliminates expensive intermediaries – and, it will create a direct connection with individuals funding projects. Grant management – where aid organizations cater to the dogma of large funding organizations – will become less important than this direct connection.
This new reality is disrupting the non-profit sector.
Therefore, agility in information systems for transparency and for crowdfunding will favour the agile.
Transparency will drive funding and the funding will demand transparency. A virtual circle that will improve aid effectiveness.
Doug Hadden, VP Products
According to the 'bastion' of British journalism, the Daily Star, Corrupt dictators funded by £11.2bn of UK taxpayers' cash from Helene Perkins This seems to be part of the aid outrage: "why is so much going to corrupt foreigners and so little spent at home?" It gives the tantalizingly misleading impression that aid spending is orders of magnitude larger than reality.
The fuel for this outrage is corruption. And, providing a tenuous link between aggregate aid and dictators. For example:
How exactly is this a shock? Does Ms. Perkins think that one should have a war in Afghanistan and not attempt rebuilding? Should the UK not provide any humanitarian assistance in Libya or Syria? Is Ms. Perkins completely ignorant of UK aid policy? (i.e. more focus on humanitarian aid and post-conflict countries).
Ms. Perkins asserts that "a study from Transparency International (TI) said the cash was being siphoned off by some brutal regimes."
What study is this? We all know that there is aid money that goes into the pockets of elites in developing countries. There is a far cry from "some" to "all" aid money. There is a difference in corruption related to the type of aid and how the aid is disbursed. That, apparently doesn't matter to the corruption narrative.
Ms. Perkins goes on to talk about Somalia as "one of the worst governed" countries in the world. Exactly how does she propose that governance in Somalia is to be improved? Magic? Or, perhaps governance assistance. Yet, the African Development Bank has found that Somalia has made significant governance progress in 2013.
The blatant editorialing continues with about the "whopping…£107m to South Sudan whose president is the fearsome General Salva Kiir Mayardit." Is Ms. Perkins afraid of a man wearing black hats?
As Aid Effectiveness Improves despite Narrative
Aid effectiveness is improving thanks to increased aid transparency and the use of big data analysis. It's exciting times for aid effectiveness where analytical tools are debunking myths like those espoused by Ms. Perkins. It's creating action such as in the World Bank reorganization to better share good aid practices around the world.
This weekly news update provides the Government Resource Planning (GRP) community with a brief overview of recent FreeBalance developments and relevant industry news.
Reducing Risk in Government Financial Management Software Implementations in Latin America
FreeBalance attended the XVIII International Congress of CLAD. The International Congress of Latin American Centre for Development Administration (CLAD) conference took place in Montevideo, Uruguay from October 29 to November 1 and it focused on state reform. FreeBalance introduced a tool to help public servants better determine risk factors of implementing custom-developed, Commercial-Off-The-Shelf (COTS) or hybrid approached to government Integrated Financial Management Information Systems (IFMIS) at the event.
Alliance with EXICTOS Extends FreeBalance Government Treasury Portfolio to Central Banks
FreeBalance has announced a new alliance with EXICTOS focused on government treasury and Central Bank solutions. EXCITOS PROMOSOFT FINANCIAL SUITE solutions for the international financial sector will augment the FreeBalance GRP software portfolio. EXICTOS, based in Lisbon Portugal, has significant international experience in the financial sector.
Aid Data & Aid Transparency have Come a Long Way
There is a persistent debate in the “development” community about whether aid works, whether it is counter-productive and whether some of it works. There is precious little data to support any of these positions. More specifically, there has been enough sparse data at different levels of aggregation to the point where correlation becomes dubious and causation is a forlorn hope. The development community has been innovating rather than pontificating.
Can Technology Enable Global Governance?
Lectures and discussions at think tanks range from bafflegab to insight. One of the interesting themes that was tantalizingly discussed in Pascal Lamy’s “Does Globalization need Global Governance” lecture at the Brookings Institution was the impact of technology. Technology is responsible for globalization: first transportation and now digital communications. Are digital communications disrupting the role of the nation state by introducing governance efficiencies?
Data-Driven Pivot for Development Effectiveness
Doug Hadden, VP Products
There is a persistent debate in the "development" community about whether aid works, whether it is counter-productive and whether some of it works. There is precious little data to support any of these positions. More specifically, there has been enough sparse data at different levels of aggregation to the point where correlation becomes dubious and causation is a forlorn hope. The deep geek recesses of the development community and academia have not been inactive in this "confirmation bias" world. They've been innovating rather than pontificating.
This is the age of big data. Of data driven decisions.
The work accomplished through the partnership that is "aiddata.org" is remarkable. I attended a 2010 conference showing preliminary results from researchers where it was clear that there wasn't enough information to answer critical questions. Data quality was also suspect. Data was too high level to make good conclusions. It was a tantalizing look at what could be.
That conference was preceded by an International Aid Transparency Imitative (IATI) "technical advisory group" meeting. I was not optimistic that donors were motivated to provide development information in a transparent, standard, machine-readable and timely manner.
Donors seem to be competing for transparency, which is a good thing. There is still a way to go. My view on what I saw today with the launch of Aid Data 3.0 is that development practitioners everyway can see the value of transparency and accessible tools.
IATI: the little transparency index that could
Doug Hadden, VP Products
Publish What You Fund launched the 2013 Aid Transparency Index at the Brookings Institution last week. The index was based on the extent to which donors supported practice elements of the International Aid Transparency Initiative (IATI). This might seem like one of those glass half full/half empty stories. My sense, having taken part is some IATI technical sessions, is that donor transparency is on the rise. There were many donors over the past few years who claimed that IATI support was expensive, could not be supported by current information systems and would not provide sufficient benefit.
The good thing about the Aid Transparency Index is that it creates disincentives for those donors that are not transparent. It creates motivation for donors to join IATI and implement more functions – for example, move from static PDF documents to machine-readable XML. Here are my notes from the event:
Doug Hadden, VP Products
Michael Clemens, a Senior Fellow at the Center for Global Development has an interesting article: The New Transparency in Aid Evaluation: The Millennium Villages Debacle Is a Good Sign of What We’re Learning. I made a few comments on the blog that I'm expanding here. Clemens describes recent advances in development economics that are helping to answer some questions about aid effectiveness.This "new transparency" involves new media like blogs and social media. The promise of transparency is better evidence about what works while eliminating "confirmation bias."
Confirmation Bias and Dogma
The razor's edge on aid transparency is the challenge to dogma. We're at this exciting inflection point thanks to the International Aid Transparency Initiative (IATI), AidInfo and others that increase accessible data. There is a real promise that this information will generate insights. Aid interventions will become comparable. Contextual factors will be better understood. Yet, the aid debate within politics seems to have become even more dogmatic and polarized where the notion that 'aid doesn't work' has become a troubling meme. Where confirmation bias plays a dominant role.
Could this "information overload" enhance confirmation bias? Generate even more 'facts' to support dogma? Much like the health care / climate change / gun control debates in the United States.
There is a world of difference between the politics of aid and the reality of aid. Transparency will inform decision-makers and be leveraged by implementers.
The difficulty with the aid / health care / climate change / gun control debates in the U.S. is about narrative, not facts. (For example, blaming aid recipients as if they deserve to be poor and sick.) It's emotional. It's based on views of what motivates people to act in different ways and what ought to be priorities. And, fear.
Micro and Macro Problem
Much of the evidence that aid works is at a micro level where smaller interventions are easy to manage and measure. There are few expected outcomes and few unexpected outcomes. Much of the evidence that aid doesn't work or does work is at a very high macro level. Economies that receive aid improve or do not improve. Theories abound. It is virtually impossible to prove that aid was materially responsible for every country meeting MDG objectives (or, that those objectives represent effective outcomes.) And, it is similarly almost impossible to prove that aid created perverse incentives so that MDG objectives were not met.
The data at the micro level can not be extrapolated, today, to broad conclusions. That's where big data comes in.
Big Data and the End of Narrative?
There is a "big data" backlash. (From experts of the pre-big data world. Much like the horse industry objecting the the automobile industry.) The primary criticism of big data is that it is no different than typically business intelligence and size of the data doesn't change effects. And, many argue that there is simply no way for big data to find unexpected insight because only experts can ask the right question. (The notion of "data scientist" is rejected because you can't get insight without specialist knowledge.)
My sense is that the big data will generate insight because specialists often filter out relevant information from other specializations.
The key behind big data is not that the data is big. It's that the data comes from multiple sources including reports, social media, and electronic monitoring devices. It is possible to understand the context coming from these sources. This will slowly cut through false and misleading narratives. Slowly because media remains dominated by narrative – especially cable news in the United States.
And, there seems to be a mad rush to lower aid or privatize aid or pontificate about aid during this window before we gain the next generation of insight. It's almost as if the dogmatic are trying to fill us with noise to drown out the potential problem when transparency demonstrates that they were wrong.
Doug Hadden, VP Products
If we could only harness the hot air coming from the foreign aid debate as a new renewable energy source. There’s a school of thought that aid is ineffective – as encapsulated (poorly) by Dambiso Moyo in Dead Aid, There is little agreement among experts. And, the pantheon of development experts, the House of Lords in the UK want to scrap the foreign aid target. (Stick that in your wig, so to speak.) Not to say that the aid debate doesn’t have moments of levity – as recently supplied by New York University professor William Easterly.
Narrative vs Data
The aid effectiveness debate thrives on narrative. Facts are used to support points of view or confirmation bias. Data is powerful. Data disrupts the “truthiness” of an argument .You only need to look at Hans Rosling’s gapminder.org to see the power of data in action. There have been huge strides to liberate data from documents thanks to Aid Data.
The data provides insight. Helps to determine what works and what doesn’t. But, the depth and breadth of aid and economic data is limited. But that’s all going to change.
Towards Big Data and Transparency
It’s rather ironic that so many politicians are prepared to abandon foreign aid just at the point of the aid data explosion. The effects of aid are difficult to measure (except at the micro level) because of factors like remittances, foreign direct investment, protective tariffs in developed countries, government spending, and governance. Thanks to the International Aid Transparency Initiative (IATI) and the opening of more public data – led by the World Bank, it seems that we’ll soon learn how to make aid effective (or definitive proof that aid is a waste of money.)
This is very much a “big data” problem:
- Structured and unstructured data including open data and documents
- Multiple data sources at different levels of information abstraction
- Complex semantics requiring taxonomies and perhaps linked data
- Multi-variate information (remittances, FDI etc.)
- Social networking information and activity streams
- Information-sensing mobile devices and crowdsourced information
- Geographic-based information
- Potential for petabytes of data
- Need for visualization and data exploration
Foreign aid is an easy target for politicians. Many want a level of certainty about aid effectiveness well beyond standard government programs. For example, the No Child Left Behind funding for 2012 is expected to be over $14B. That’s 1/3 of the entire 2013 State Department and USAID budget request which could be cut down to $38B by Congress. Is there the same scrutiny in developed countries for domestic programs as there is for foreign?
Doug Hadden, VP Products
As a participant in the International Aid Transparency Initiative (IATI) Technical Advisory Group, I have heard that fully supporting IATI is technically difficult. My sense is that the problem isn’t transparency: it’s traceability.
[Technically, the majority of IATI can be supported through any decent financial management system, assuming that donors follow good practices that are imposed on developing nation governments. See: Public Expenditure and Financial Accountability (PEFA) requirements around program budgeting and budget classifications.]
The Smoking Gun
As Richard Allen pointed out in the IMF PFM blog, using “country systems” is a “courageous policy.” The same goes with full aid transparency.
- Aid transparency could reduce inefficiencies by an order of magnitude by revealing administrative costs and reducing the transaction costs for donor reporting
- Aid transparency could reduce corruption by an order of magnitude by revealing transaction and by reducing the use of cash
- Aid transparency could improve effectiveness by an order of magnitude by analyzing “apples to apples” across aid programs and through improved coordination
We know that foreign aid programs are less efficient and effective that could be. We also know that there is a lot of corruption opportunities. Therefore, IATI seems to be a no-brainer.
Here’s the deal: today we know the problems. We just can’t easily trace it to the donor. There is deniability. So, we could be almost certain that 20%, 40% or 60% of a program budget is wasted. With IATI, we know for sure. And, it traces back to the donor.
Let’s not shoot the Messenger
Please, let’s all agree that we won’t criticize donors for corruption, inefficiencies and ineffectiveness if there is a commitment to improve. “Accountability” should not mean front-page stories about money gone astray – it should mean analyzing what donors are doing about it.
My sense is that some of the backtracking on transparency at the Busan High Level Forum is about getting shot in the press. (And blogs.)
Some Odd Moments
In the course of discussions around IATI, I have had some odd points made:
- IATI is pointless because aid if fungible [that's what IATI plans to solve]
- Bi-lateral donors proud of transparency leadership [that score under 30%]
- Program budgeting is a bad practice [no, it's a good practice]
- IATI support is technically difficult [yet small organizations are able to support it]
- Certain financial software applications are difficult to adapt to support new standards [tell you software vendor to smarten up]