Improving foreign aid accountability, especially through transparency, monitoring and evaluation, has been the hallmark of The Lugar Center’s (TLC) work in Foreign Aid Effectiveness and in partnership with the Modernizing Foreign Assistance Network (MFAN). Knowing–and publicizing–just how much assistance is going where, and gaining honest measurements of its impact are vital to making foreign aid more effective.
Transparency stretches aid dollars, cuts down on “leakage” through corruption, enables greater country ownership and provides the publics, in both the donor but especially the recipient countries, the means to monitor whether the money is going to the right projects in the right amounts. Simple as this sounds, one thing we’ve learned at The Lugar Center is how difficult it is for the various government agencies that dispense aid to collect and collate this basic data so it can be published in a timely and useful way.
For example, the U.S. government’s foreignassistance.gov database has as its goal the collection and sharing of all U.S. foreign assistance spending across the more than 20 agencies that administer it. Despite its progress and even a recent revamp, the data it provides is only as good as the data it is able to collect. Outdated financial systems that were never designed to provide information on spending at the individual project level have proved to be hurdles for some agencies in posting accurate, timely data. As challenging as this situation is, it is even more problematic because this is the very data that moves from the U.S. to the global aid data platform, the International Aid Transparency Initiative Registry, where aid figures from donors across the globe are shared in the interest of transparency. We are encouraged that steady progress is being made, though, with the U.S. Agency for International Development having committed earlier this year to a four-phase cost management plan toward full implementation of the U.S. commitment to IATI.
A parallel transparency effort is underway, on a global basis, to promote accountability of another source of funds for many developing countries, namely, the revenues from oil, gas, coal and other minerals. Many mineral-rich countries are actually worse off because of corruption and mismanagement of the sometimes huge payments they get from international oil and mining companies. This so-called “resource curse” led to the creation of the Extractive Industries Transparency Initiative (EITI), an Oslo-based international organization that works with petroleum and mining companies, civil society, and participating (mostly developing) countries to disclose systematically just how much money each government gets annually from mineral royalties, taxes, bonuses, etc.
Acting on a bipartisan proposal first made by Sen. Lugar and Sen. Ben Cardin (D, Md.), a few years ago the United States joined EITI as an implementing country. That is, the U.S. agreed to collect and publish under EITI’s rules all the income the government gets from oil, gas, coal and other extractive activities, just like developing countries. The Lugar Center’s Neil Brown sits on the board of the Multi-Stakeholder Group of USEITI, which has just issued its first report. Coincidentally, the report came just a few days after the federal Securities and Exchange Commission issued a new version of a rule, called for in legislation sponsored by Sen. Lugar and Sen. Cardin, that requires all U.S.-listed petroleum and mining companies to report to shareholders and investors annually how much money they pay to foreign governments.
This global effort to improve resource revenue transparency is an important complement to TLC’s work on aid transparency. For one, it helps promote a culture of openness and disclosure in developing countries that are too often closed and secretive. It encourages the implementation of country accounting systems for tracking and monitoring fund flows in and out of government coffers. And it helps in developing and educating civil society watchdogs who can make sense of the sometimes overwhelming mounds of data and use it to hold their governments accountable.
At another level of course, knowing how much money a poor country is getting from its oil fields or its copper mines should be important in determining how much foreign assistance it needs. In the past, these extractive revenue figures were often closely guarded state secrets. The hope of EITI is that by disclosing how much oil money is coming in, rulers of developing countries will spend less of it on self-aggrandizing palaces or London real estate and more on roads and clean water in their own countries. The U.S. and other donor countries could help in this effort by making accession to EITI a condition for aid in resource-rich countries.
Finally, the USEITI folks have found some of the same problems that MFAN and we have encountered—data that is jumbled up on different accounting systems, that comes in at different times, that measures the same things in different ways, that double-counts some things and undercounts others, etc. There are no doubt lessons learned from one group that could be applied to the other. Earlier this month, the Interior Department launched a new interactive data portal for USEITI data that aims to be highly user-friendly. The government hopes other agencies will adopt the same concept.
EITI grew out of the Publish What You Pay movement, which in turn led to the Publish What You Fund campaign. So it is not surprising that these two transparency initiatives are important complements to one another. We continue to support full implementation of these transparency programs as important steps in supporting people across the developing world move out of poverty and into becoming productive participants in the global economy.
This is a guest post from Lori Rowley, Co-Chair of MFAN’s Accountability Working Group and Director of Global Food Security and Aid Effectiveness at The Lugar Center and Jay Branegan, Senior Fellow at The Lugar Center. This post originally appeared on The Lugar Center blog on 12/22.