Moving Beyond Band Aid

“Our time to change is now, and our time to change is short,” was the message that the new USAID Administrator Rajiv Shah delivered to a Town Hall meeting of the US Global Leadership coalition on May 5th this year. To sustain the commitment to spend billions of federal dollars on aid, he was warning, means showing that the money delivers real results. The following day, the British public voted in a landmark general election that brought the first coalition government to power since the Second World War. Britain’s new International Development Secretary, Andrew Mitchell, had the same message – taxpayers need to see results. So, as Messrs Shah and Mitchell return from their summer holidays, what change should they be implementing?

“Focusing on results” is usually political speak for “I am going to make cuts” – but not in either of these cases (taken at face value, anyway). The Obama Administration wants to spend more, not less, on the soft side of American influence in the world. Britain’s Coalition has pledged not just to protect the aid budget, which ballooned under Prime Ministers Blair and Brown, but to keep increasing towards the target of 0.7% of GDP suggested by the UN. Yet whilst that is all fine and dandy, spending that extra cash wisely presents a tough challenge.

Britain’s Department for International Development (DFID) is the best case study here. In the past decade the aid budget has soared from about £2 billion in 1997 to nearly £8 billion in 2009 (from 0.26% of national income to 0.52%). To get the money out of the door, DFID has had to write large cheques to developing countries (known in the trade as budget support) and to multilateral organisations such as the World Bank. (Britain gave more than America the last time the Bank passed round the hat in 2007 . Negotiations on another ‘replenishment’ are underway now and should conclude by the end of the year.)

Yet neither of those channels really fits the results agenda. Politicians rightly worry that slabs of cash handed over to African governments will go astray and doing so has meant trusting some less than credible leaders (even darling nations like Uganda and Rwanda have skeletons in the cupboard). Likewise, international aid bureaucrats cannot claim to have a great track record for getting results (just ask Bill Easterly).

Based on leaked documents, so far it is Mr Shah who has provided a clearer sense of what the new results-oriented aid will look like, with welcome commitments to more entrepreneurial and innovative approaches. Mr Mitchell, by contrast, has taken flak from the aid lobby for what he is not going to do, as well as facing what appears to be a sustained campaign from the right of his party to discredit his department and unpick the deal that protects his budget.

In January, in anticipation of this year’s British general election, we launched our Philanthrocapitalist Manifesto. One of our proposals was that the new British government should draw on the model of Tony Blair’s Social Investment Task Force, which spawned important new ideas on leveraging private financing for social innovation (many of which are now part of the new coalition government’s domestic ‘Big Society’ programme), by creating a Development Investment Task Force to do the same for international development.

So far Mr Mitchell has not talked much about partnering with philanthrocapitalists, whereas such partnerships are a central theme of many of Mr Shah’s public announcements (perhaps unsurprisingly since Shah came to USAID from the Gates Foundation). Bob Geldof, the man behind Live Aid, seems to have realised that a new approach is needed: according to the Financial Times the veteran rock star activist is now trying to raise a $1 billion private-equity fund to invest in, not donate to, Africa. Like him, others wanting to help the world’s neediest people must now move beyond Mr Geldof’s famous (if apocryphal) demand, “just give us the fockin’ money.” It is time for Mr Mitchell to come up with a sophisticated new strategy. Creating that taskforce would be a good place to start.