Why does so little aid seem to go to basic needs? – part two

Can it be true that basic needs have low priority? Is it a conscious choice? Difficult to implement? Down to reliance on private contractors? And if true, how can aid be delivered more effectively so these needs are met?

David Satterthwaite's picture
Senior associate in IIED's Human Settlements research group
24 January 2023
The transition to a predominantly urban world
A series of insights and interviews designed to share the experiences of community leaders, professionals, researchers and government from the global South
A cow and two goats eat grass surrounded by waste. There are houses and people in the background.

Mathare slum in Nairobi, Kenya (Photo: Ninara, via FlickrCC BY 2.0)

My previous blog discussed the low priority given by most bilateral aid programmes to ‘basic’ education, ‘basic’ health, and water and sanitation. In urban areas, support for upgrading informal settlements could by rights be part of an additional category called ‘basic housing,’ but this gets even less explicit attention.

It also described the detail in the statistics monitoring commitments by aid agencies produced by the Organisation for Economic Co-operation and Development’s Development Assistance Committee (OECD DAC) – reporting on over 300 categories (what it terms project codes). But there is no project code for slum upgrading. And because its data does not distinguish between rural and urban areas, some key urban projects aren’t allocated codes.

This low priority to basic needs (whether clearly reflected in codes or not) is surprising given the vast numbers of both rural and urban dwellers still lacking these basics. It is especially surprising given that the very governments whose aid programmes give these a low priority have, since the 1970s, repeatedly endorsed UN commitments to give high priority to these issues to achieve universal provision.

Is this a conscious choice, or could it be that the OECD DAC database, with all its project classification codes, may obscure much of what goes to basic needs?

Classification blurring

It is possible that donors are doing better than the figures suggest, and that the level of attention to basic needs is simply not well reflected in the way this assistance is classified.

According to OECD DAC: “Some contributions are not susceptible to allocation by sector and are reported as non-sector allocatable aid. Examples are aid for general development purposes, general budget support, emergency assistance and internal transactions in the donor country.”

In 2020, as was pointed out in the previous blog, 28% of aid commitments from DAC nations were ‘non-sector allocatable’. But it’s possible that some of this included support to basic needs projects.

Some might also be classified under ‘other sector allocatable’ categories. The OECD stipulates that: “Within each sector, care should be taken to allocate supplies, equipment, and infrastructure to the most specific code available.”

‘Government and civil society’, part of the larger ‘Social infrastructure and services’ category, receives 16.3% of total allocatable aid. A significant part of this might well go to addressing basic needs. Similarly, OECD DAC has a project code for ‘Informal/semi-formal financial intermediaries’ – providing micro credit, savings and credit co-operatives. This is classified under ‘Banking and financial services’.

Improvements to basic water and sanitation could be happening under upgrading initiatives in slums/informal settlements (for which, as pointed out, there no available codes or figures). Indeed in many countries, upgrading initiatives may actually reach more urban dwellers with better water and sanitation than many explicitly water and sanitation initiatives.

Benefit of the doubt?

These explanations of the low priority to basic needs because of classification blurring give the benefit of the doubt to the aid agencies. But it’s also possible that this is a very conscious choice, whether it reflects ideology or more practical concerns.

For instance, it might be responding to erroneous claims that most urban dwellers have their needs met and that there is little poverty. We have no way of knowing.

Practical issues

The low priority for basic needs projects could be the result of agencies preferring not to commit themselves to recurrent expenditures, such as teachers and health workers, schoolbooks and medicines – often what are most needed.

Agencies may also be under pressure to avoid more staff-intensive initiatives. This issue has constantly cropped up in discussions with aid agency staff during my 45 years’ working in this area. Many consider that keeping down staff costs in aid agencies is a measure of aid efficiency.

Yet it is ridiculous to require all projects to have similarly low staff/project costs ratios. A hundred community-driven water and sanitation initiatives with an average cost of US$1 million each clearly need far more staff time to manage than one $100 million water abstraction plant.

To manage basic needs initiatives, an aid agency might need more staff ‘in country’, resulting in much higher costs, unless this is achieved by hiring locally. Is social credit seen as ‘meeting basic needs’ rather than one component of basic needs favoured because it’s easier to implement?

To lower staff costs, some agencies invent new database categories. In addition, many (or most?) bilateral agencies hire consultants for work that should be done by aid agency staff because their costs do not appear in staff costs accounting.

In the USA, a high proportion of aid going to US businesses is seen as a good thing – perhaps in other DAC countries too? Do these have their own ‘Beltway Bandits’ – private companies located around their capital cities to get government contracts?

This has been going on for decades. More recently it has taken the form of increasing engagement with large international firms. All aid-funded projects involve intermediary institutions in implementation. Aid agency staff don’t implement projects, they fund intermediaries to do so. These may include local governments, international, national or local NGOs and private enterprises/contractors/consultants – and in some – grassroots organisations.

So the success of any aid project is only as good as the intermediaries used. But have we paid enough attention to these? More is needed here, especially when there are so many grassroots organisations and federations working in partnerships with local governments, demonstrating innovative ways of dramatically improving basic needs.

Ideological issues

Governments can also give higher priority to projects and countries that serve their foreign policy goals.

The statistics tell us little about some larger issues – the political influences that not only influence bilateral agencies’ sectoral priorities and choice of nations to favour, but also what is done, the approach taken (for instance the role of privatisation), and the choice of intermediary (from community organisations to multinational consultants).

When ideology and bookkeeping intersect

Sometimes accounting classifications reflect ideological considerations. The OECD DAC database, for instance, seemingly approves of ‘slum clearance’ because this has a code while there is no code for ‘slum/informal settlement upgrading’.

Yet upgrading initiatives, when done well, reach low-income groups with much improved provision for basic needs. So our concern for relevant sector statistics needs to include a consideration for those that are not there (and the reasons why not).

And a large part of what is not there is data disaggregated into rural and urban areas.

All in the wording

The availability and relevance of data also shapes how problems are conceived and what gets attention. The OECD DAC database contains remarkably little on improving housing conditions, whether through upgrading or not.

Project code headings are unclear where slum/informal settlements are mentioned – frequently under ‘other’ categories – and never in terms of slum ‘upgrading’, but always ‘clearance’. As well as steering funding priorities, this can also have the effect of overlooking resource allocation to urban-specific projects.

All in all it’s a highly confused picture with explicit attention to urban issues relegated to one small part of a catch-all category. So it’s hard to tell whether DAC member governments’ aid priorities have changed for the good, even with so many more project codes than in the past.

The net result is vast numbers of rural and urban dwellers with unmet or inadequately met basic needs. Why is this so poorly reflected in the sectoral priorities of most bilateral aid programmes?

  • Read the first part of this blog discussing how most bilateral aid programmes give low priority to basic needs such as ‘basic’ education, health, water and sanitation, and (in urban areas) upgrading informal settlements