Should we care about aid transparency?

The Asian Development Bank (ADB) is the world’s most honest development agency, according to the 2018 Aid Transparency Index, released in June.

It’s the first time the ADB has topped the list, which uses 35 indicators to assess how open the world’s top 45 development agencies are about their aid. Organisation planning and commitments to aid transparency account for 15% of the overall weight.

Finance and budgets account for 25%. Project attributes, joining up development data and performance are equally split and each account for 20% of the overall weight.

There is good news for Africa, with the African Development Bank ranked fourth overall, beaten only by the UK’s Department for International Development (DFID) and the UN Development Programme. This should be encouraging given the lender’s strategic importance to the continent. Last year it disbursed a record $7.7bn to projects across Africa.

The news is not so good for China, with China’s Ministry of Commerce at the bottom of the table. On the surface this could be cause for concern given Beijing’s emergence as a leading global donor in recent years.

It is estimated that between 2000 and 2014 China committed more than $350bn in official finance to over 4,300 projects in 140 countries, slightly less than the US with $394bn.

The findings are interesting, but what does the index really tell us?

Out of step

There are obvious benefits to tracking aid disbursements, including better donor coordination and awareness. But the ranking feels a bit out of step.

Development assistance has generally fallen out of favour in recent years – for good reason. The OECD estimates that a total of $2.6 trillion in aid has been disbursed since 1960, much of it to Africa. Even proponents of aid now concede that this vast amount of money has made very little impact, and at worst it has actually made things worse.

In Africa as elsewhere the focus is very much on trade before aid these days. This is reflected in volumes for both. Aid to the continent from official donors stood at $29bn last year, compared to $42bn in foreign direct investment.

It’s also not obvious that less transparency is necessarily a bad sign. Japan’s Ministry of Foreign Affairs and its development agency JICA, both well established donors, are ranked in the bottom 10. The UK’s Foreign Office is sixth from bottom despite DFID being in third place. Even the World Bank, perhaps the biggest donor of them all, falls into the lower half of the table.

This is not to dismiss the index. Like it or not, aid is still an important source of financing for development in many African countries, and will be for some time to come. The problem is that we need a much more robust understanding of the role of aid in a modern Africa.