The incentives and informal forces of development co-operation: key challenges for South Africa to consider

Abstract

South Africa is planning to create a development assistance agency at a time of growing consensus that traditional aid practices need fundamental change. The profusion of bilateral, multilateral and private aid agencies has created an inefficient system that ensnares recipients in a complex web of regulation and time-consuming consultation that distracts the attention of recipient country staff and undermines the ability of developing countries to develop their own priorities. These faults, widely observed since the 1970s, persist because they are reinforced by powerful but perverse incentives operating at the diplomatic, organisational, staff and recipient government levels. Political pressures within donor countries prioritise diplomatic goals over developmental ones and persistently attempt to finesse rather than genuinely resolve conflicting goals. Confronted with a multiplicity of donors, each with its own complex rules, aid-dependent recipient countries frequently surrender planning initiative to donors and find themselves with an incoherent mix of disparate projects. Avoiding the mistakes of traditional donors and ensuring that South Africa becomes part of the solution rather than a new contributor to the problem will require careful attention to the design and management of South Africa's new aid agency. It needs particular attention to well-designed monitoring and evaluation systems, significant in-house research capacity, well-crafted enabling laws, systems to focus aid in a few productive areas, and efforts to identify and confront the perverse incentives that many aid agencies have preferred to ignore.