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Is Dutch aid encouraging development?


By: Ruerd Ruben | 16-07-2015 | Opinion

INCLUDE shares columns written by Prof. dr Ruerd Ruben, former Director of the Policy & Operations Evaluation Department (IOB) at the Ministry of Foreign Affairs and currently professor in impact analysis and programme leader of Food Security and Value Chains researchat LEI-Wageningen University, who distinguishes between fact and fiction on hypotheses on development in OneWorld, a Dutch magazine on global issues.

The hypothesis

The business sector is allowed to take part of the development aid, but it is only relevant to the aid if it is sustainable and reliable.” – Marit Maij, PvdA website, 12 March 2013

Yes, indeed

It seems to be stating the obvious to say that ‘Development aid has to be relevant for development’. Of course, development must benefit from aid. In the policy note ‘What the world deserves’ (‘Wat de wereld verdient’), by Minister Lilianne Ploumen, Minister for Foreign Trade and Development Cooperation, the term ‘relevant ’was mentioned 23 times – 11 times in combination with ‘relevant for development’. Apparently the need for aid to be relevant has to be emphasized. Relevance is the first criterion of project appraisal by the OESO (the group of rich countries). The OESO defines relevance as the contribution of development aid to the priorities of the target group and to the national policies of the ‘development partners’ (i.e., developing countries).

No, not always

However, development relevance is not always the most important factor. Evaluations of development aid use three criteria: the ‘necessity’ of the programme; the priority of the policy for the receiving countries; and the appropriateness of the design of the programme. This means that the aid providing country has to assess if the programme will contribute something to the development opportunities of the recipient country and the opportunities for the most important target group. Not all activities of the business sector meet this criteria and are, therefore, deserving of funding. The deployment of ‘our tax money’ is only justifiable if the increase in production, trade and employment would not occur without the aid – and, of course, provided the costs are acceptable.

And there it is…

In the beginning one thinks of most development programmes as relevant – otherwise donors would not donate in the first place. More interesting is whether or not they are still relevant in retrospect. This is not always the case. The context in which a programme starts can change over time. For example, commercial funding may become possible for the programme through the emergence of a better market. There are also examples of commercially profitable investment projects that produce only limited benefits for poor population groups. The provider of aid often over-estimates the necessity of the cause, or the project design is not sufficiently tailored to the local context or cognizant of local possibilities.

The judgement

Development relevance is a concept that has to be univocally defined and assessed using concrete criteria. The activities of the new Good Growth Fund of Minister Ploumen, which is designed to stimulate economic activity in developing countries, admittedly have a destination, but the necessity is not always clear. Essential in justifying the need for funds is what we call the ‘additionality’ of the development programme: Does the programme achieve results that encourage entrepreneurs to invest? And do these results go further than what these entrepreneurs are willing to do under normal circumstances?

September 2013


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