Experts Provide Insights into Aid Allocation in a Changing Africa at AfDB Seminar

24/02/2012
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A high level seminar on aid allocation systems in Africa organized by the African Development Bank (AfDB) and hosted by the Mauritian government ended on 17 February with a consensus on the principles for guiding the adaptation of AfDB’s aid allocation system to the changing financial and economic landscape of the continent.

Participants included a panel of international aid experts, practitioners and scholars led by former Burkina Faso prime minister, Tertius Zongo. The meeting was organised as a knowledge institution production by AfDB’s resource mobilization and allocation unit and its development research department.

During the diagnostic session, participants discussed the adequacy of the current resource allocation system that AfDB uses, and agreed that the performance-based allocation system adopted in 2001 has delivered a number of benefits both for donor and recipient governments. Notably, it has helped ensure a more rational and orderly distribution of scarce aid resources to the countries eligible for finance from the African Development Fund, thus increasing donor confidence and securing support during replenishment periods.

However, the panel noted that Africa saw major changes over the past decade that have direct and indirect implications for the continued relevance and appropriateness of the African Development Fund’s aid allocation methodology. These include:

  • The prospects on the concentration of low income countries in Africa during the next 10 to 15 years raise pressing questions about appropriate division of labour among development partners.
  • The composition of financial flows to Africa has changed dramatically. Foreign direct investment now exceeds official development assistance in several countries and emerging donors account for a significant portion of financial flows to the region.  
  • The remaining vulnerability of the continent despite its resilient economic growth to the unrelenting threat of the global economic downturn requires enhanced support by multilateral development institutions.
  • The constrained aid budgets of donor governments accelerate the need for greater prioritisation and demonstration of development outcomes.
  • The Arab Spring has illustrated that traditional government measures may not be capturing issues central to achieving sustainable inclusive growth in Africa.

Building on the diagnostic, participants moved to discuss the strategy the African Development Bank should adopt to support Africa’s development in the current context and aid architecture, and the implications of this strategy in terms of its resource allocation system. This session ended with a consensus on four core principles for guiding the adjustment of AfDB’s current aid allocation methodology. In the panel’s view, the institution’s resource allocation framework should be improved, so as to be aligned to the bank’s core mission; capture the different degrees of structural handicaps faced by all receiving countries; reflect AfDB programmatic outcomes and sustainability; and further enhance the current support given to regional integration.

The seminar ended with a commitment to continuous collaboration between AfDB, academics, practitioners and all stakeholders for exploring different alternatives for the operationalisation of the reforms discussed.