Participants:

• Steven Radelet, Senior Fellow, Center for Global Development, USA
• Saifur Rahman, Minister of Finance and Planning, Bangladesh
• Emmanuel Tumusiime-Mutebile, Governor, Central Bank, Uganda
• Moderator: Sebastian Mallaby, Columnist, Washington Post, USA

Radelet opened making the case for the effectiveness of aid when it is “aimed at growth”. He recommended using aid to improve export competitiveness to offset the negative exchange rate impacts. He highlighted tensions between ownership and donor priorities, systems harmonisation and the need for oversight, and predictability and effectiveness. He ended on a cautious note, wondering if, after two hurricanes and with a rising trade deficit, the era of rising ODA in the US was over.

Tumusiime-Mutebile stated defiantly that aid has worked in Uganda. He stressed three factors: government policies must be “credible and time-consistent” to the private sector; price stability and a sound financial system; and avoiding over-investment in non-tradeables.

Saifur Rahman got the crowd laughing by asking “with all the conferences on aid effectiveness over the last six months, why do we need another one here?” He extolled Bangladesh’s progress in bringing down reliance on aid from 55 per cent of its GDP to just 2 per cent, and for achieving several MDGs ahead of schedule. On ownership, Rahman said that while the World Bank says developing countries are the owners, “we are just backseat drivers”.

we are just backseat drivers

During the question and answer period, moderator Sebastian Mallaby grew exasperated trying to draw the two on why they accepted aid if it was associated with so many problems. He finally asked both Tumussime-Mutebile and Rahman if donors offered to double their aid if they would accept. Rahman said yes, “if not given to NGOs to cause problems in remote regions”. The Ugandan central bank governor also replied in the affirmative “if we set the conditions”.

Rahman decried some 250 donor missions per year. This was increasing, he said, despite commitments made to the contrary by donors as part of the Rome-Paris harmonisation process. “We told them not to come, but they come anyways.” Radelet cited Tanzania, where government has formulated a letter to donors specifying a period when governments will not be available to meet with them. He made a call for more research into how aid effectiveness varies by donor.

Radelet argued that the Bank’s new system of debt sustainability offered perverse incentives to those countries which have managed debt poorly. Instead, he said, grants should be given to the poorest countries based on need.