THE SCIENCE
Question long-held assumptions and confident claims about what works and what doesn’t work in development.
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Question long-held assumptions
Assumption: High quality care is not cost-effective or sustainable.
In order to effectively address global poverty and disease, the aspirations of each initiative must be based on what works: what works to keep people healthy and cure disease, what works to educate children, what works to ensure access to clean water, what works to provide basic social services to everyone. In order to do this, programs should be planned according to the highest aspirations, and then financed using a variety of approaches including partnerships such as pooled funds or trusts, innovative financing tools such as social impact bonds or taxes dedicated to social goods.
Too often the conversation begins and ends with the question of what donors are willing to pay in a certain time frame as opposed to the question of what is needed to address the problem.
When cost, or cost-effectiveness, is the main criteria for policy making, high quality evidence based care or services often are not considered.
For HIV/AIDS
By 2002, millions of people were infected with HIV, yet the dominant thinking in the development community was to focus only on prevention.
Where They Went Wrong
A cost-effectiveness analysis published in the British medical journal The Lancet that year concluded that it would be 28 times more “cost-effective” to prevent new HIV infections than it would be to treat those already infected. Using this framework, policy makers determined that providing treatment to 25 million people was unfeasible.
The problem with The Lancet’s analysis was that the authors interpreted “cost” (and therefore “cost-effectiveness”) as immutable. Within a short period of time the cost of HIV treatment was dramatically reduced from $10,000 per patient per year to less than $100 per patient per year.
For Cambodia
In Cambodia the cost of 700 international advisors was $50-70 million, almost as much as the wage bill for the country’s entire 160,000-member civil service: a 1-to-228 disparity.
For Uganda
In Uganda, the UN supplemented salaries of all staff in the Ministry of Finance for almost a decade.
What Happened
The program was phased out when a new living wage salary scheme for the entire civil service was introduced. The total cost of the initiative “was less than that of a single expatriate technical assistant,” yet it was “consistently rated one of the most effective capacity-building projects and by the end of it the ministry was considered to be one of the strongest finance ministries in Sub-Saharan Africa.”
Assumption: Investing ODA in country systems is too risky because of corruption.
Concerns about corruption are at the top of the list when donors are considering supporting governments in resource poor settings. Of course corruption is a global problem, but the relevant question is how much aid money to governments in poor countries is lost to corruption. The truth is that there is very little data to answer that question. Transparency International, a non-governmental organization that compiles the most respected corruption index in the world, bases its corruption rankings on perceptions of corruption.
In 2013, Paul Farmer’s UN office analyzed publicly available information on how much ODA was lost to corruption or fraud for the 25 donor members of the OECD’s Development Assistance Committee. Of the 25 donors, six had published data on ODA lost to corruption or fraud: Australia, Belgium, Denmark, European Commission, United Kingdom and United States. Together, they gave an estimated $47.8 billion in ODA in 2011, approximately 31.7 percent of all ODA reported to the OECD. The percentage of ODA that these donors detected either as being lost to fraud or as being an improper payment in 2011 ranged from 0.015 to 0.16 percent. While this data must be treated with caution—as it reflects only corruption that has been detected—it is much lower than figures commonly used in the discourse surrounding corruption.
How Weak Capacity is Sometimes Conflated with Corruption
There is no denying that there are many countries with weak capacity to absorb funding. Stories of ministries failing to spend funding quickly and effectively are countless. Should the solution be to find an alternative funding channel (most often through NGOs)? This is certainly the easier and quicker approach. But in working with such countries in accordance with the principles of aid effectiveness, the emphasis is on finding ways to make the situation work with local partners rather than on disbursing funding quickly (most often through international NGOs). Strengthening capacity can be accomplished in many ways depending on the circumstances: hiring staff in the ministries, buying them hardware or software, providing them more time and flexibility for implementation, helping them to identify partners and contractors, providing them support in completing required documentation, and so on. Aid effectiveness principles would suggest that the donor is just as responsible as the nation with which the donor has partnered to see that absorptive capacity increases and implementation happens over time.
“We need to reassess how we evaluate risk. All too often we worry about the risks to ourselves and our institutions when we make decisions about how to invest in fragile settings. But those notions of risk are inverted. The risk of people living in poverty and dying needlessly should come first.”
Paul Farmer, M.D., Ph. D.