Friday, February 11, 2011

The old and the new reality of aid

The donor landscape is changing with more new private players—international non-governmental organizations, foundations, and corporation—joining the aid industry and increasing its size. The aid industry is US$200 billion big (as of 2008). Most of the aid (US$120 billion) comes from Development Assistance Committee (DAC), a club of 22 rich countries providing ODA. About US$65 billion comes from private NGOs, foundations, faith communities and corporations. And, over US$15 billion comes through bilateral aid from non-DAC governments.

Some 263 multilateral aid agencies give money to promote development. “Vertical” multilateral agencies that focus on a single theme (such as the Global Fund for AIDS,TB and Malaria) are now large providers of aid. There are at least 56 countries with aid agencies that provide bilateral foreign assistance, and most of these have several agencies that undertake such programs. Meanwhile, more emerging nations are opening up their own aid agencies. The multiplication of donors has led to greater fragmentation of aid into ever-smaller activities.

Fengler and Kharas (2010) sketch the old and the new reality of aid industry.