Why is aid transparency important?
It’s important that donors provide information about the aid they give. More important is that this information is publicly available in a way that people can easily understand.
Aid transparency means that everyone can see how much aid is being provided. They can see what it’s being spent on, and what it aims to achieve. This helps to ensure that aid is used in the most effective ways. This means that every bit of aid goes as far as possible in fighting poverty.
Being transparent about aid flows help:
- Governments to better plan and manage the aid they receive.
- Citizens of developing countries to better understand what aid their country is receiving, so they can hold their governments to account.
- Citizens of donor countries to better understand how their taxes are being used to fight poverty in the developing world.
- Donors and development agencies to better co-ordinate their efforts.
- Parliaments and non-governmental organisations in developing countries to track aid flows and ensure that aid is spent wisely.
Improving transparency is a strong demand of partner countries and CSOs
Consultations undertaken by IATI indicate that partner countries want aid flows to be:
- reliable; information is needed about current and future aid flows
For governments to make decisions, they need more detailed information about how aid in sectors is spent, such as:
- where it is spent,
- when it is spent,
- how it is spent,
- on what it is spent and,
- in which sector it is spent.
Partner countries also want better information that shows them the impact of aid in their countries. Another priority is better coverage of aid flows from a wider range of donors, including non-DAC donors, multilateral agencies, NGOs and foundations.
Meanwhile, a summary of IATI’s consultations with CSOs showed the need for information on:
- aid commitments and actual disbursements
- project impact
- complete project documentation
Statistics on past aid flows are published by OECD-DAC through the Creditor Reporting System (CRS). However, this does not meet the needs of stakeholders in developing countries and was never designed to do so.
The CRS is intended as a platform for sharing information about total aid spending between donors. It holds donors to account for the commitments they make. It is not intended or designed to provide information for developing country aid management systems. Neither is it designed for stakeholders to use for improving accountability in developing countries.
An example can be found in the way the CRS arranges its data by calendar year and according to DAC classifications. These data do not match fiscal years or budget definitions in some partner countries. The CRS only covers past aid flows, and statistics are only published with a considerable time lag. Developing countries and other stakeholders need information on current and future aid flows.
Consistency and comparability
Some information is published by donors individually, but it is not consistent or comparable.
When reporting domestically (e.g. through Annual Reports), donors do not share common definitions. This even extends to basic and frequently-used terms, such as ‘commitment’ or ‘project’. This makes it difficult for users to compare aid commitments between donors. It’s impossible to add up what various donors have promised in aid to a particular country.
Inadequacies of Aid Management Databases
Some information is published in country-level aid management databases, but this is costly to provide.
Country level aid databases are often populated manually. They are maintained by staff of developing countries and donor agencies. This means they require substantial and sustained effort to remain current and comprehensive.
Information in country-level aid management databases is often not publicly available.
This hampers efforts by citizens and parliamentarians to hold governments and donors to account. Even when information is published, it is often not accessible to stakeholders. This is particularly the case for developing country citizens and civil society organisations (CSOs).
Information not published at all
Qualitative information is rarely published centrally and often not published at all. This includes:
- background analysis and evidence
- conditions attached to aid
- expected outputs and outcomes
- project evaluation reports
Evidence suggests that the lack of transparency over aid flows is hampering aid effectiveness and accountability.