U.N. report recommends changes for fragmented global aid system

"A proliferation of aid agencies, donors, and projects is fragmenting the global aid system, increasing transaction costs, and weakening efforts to reduce poverty and poor health," according to the U.N.'s recent World Economic and Social Survey (.pdf), BMJ News reports.

Though official development assistance for social programs went up, the rise "has not necessarily ushered in more aid. On the contrary, over the past decade the average size of aid projects declined by two thirds while the number of projects increased sixfold globally, says the report." BMJ notes that the report acknowledges philanthropies' contributions to global health, but says that donations from private foundations, NGOs and similar institutions "are more difficult to align with national objectives ... (and) further aid fragmentation." Research has shown that this decentralization adds to transaction costs, the publication notes, adding that "donors tend to set their own conditions and prefer to do their own monitoring and evaluation." 

"The U.N. report is also critical of the proliferation of special purpose funds for specific aid objectives such as the Global Fund to Fight AIDS, Tuberculosis, and Malaria. Although such funds can improve coherence in particular areas problems occur because earmarked funds cannot be used for anything else," BMJ News reports. Andrew Hurst, a spokesperson for the Global Fund, said the organization's philosophy is "country driven, not top down ... We ask countries to make proposals to us and we validate by an independent process."

The report "concludes that aid objectives and mechanisms have created a 'highly dispersed aid architecture' which, while responsible for tangible benefits enjoyed by recipient nations in specific areas, does not appear to be supporting the system overall," BMJ News writes. It recommends that future aid donations be channeled through general budget support (Zarocostas, 7/7).