Donor Schizophrenia and Aid Effectiveness: The Role of Global Funds

This paper looks at what donors, who are at the same time funders and critics of global funds, can do to increase the coherence of their own policies and actions. The role of global funds – that is to say, global programmes with sectoral or sub-sectoral earmarking and with substantial operations at the country level – has become increasingly prominent in the past decade as they have accounted for much of the increase in total aid and for most of the increase in aid for health. Some of the strongest criticism has come from aid donors who have supported the call in the Paris Declaration and the Accra Agenda for Action for supporting overall country strategies and systems. Yet those donors are the founders and funders of global funds and have a major role in setting their mandates and policies. Why this apparent schizophrenia? This paper, based on a set of interviews as well as published sources and the personal experiences of its authors, aims to provide a dispassionate view of the considerable strengths and weaknesses of both the global fund and Paris-Accra approaches to aid effectiveness and, taking account of the internal incentives driving the behaviour of donors and other key stakeholders, to suggest how the two models can be used more effectively together. It calls for donor agencies to see funding of country programmes and global funds as complementary instruments in aid investment portfolios and to adjust internal policies and incentives to manage competition between sectors, including through increasing coherence of their representation on the boards of global funds. It calls for more effort at ‘thinking twice’ before starting new funds, for building the principles of Paris-Accra into new global funds, and giving stronger encouragement to the efforts of existing global funds to retrofit these principles. As part of this effort, it calls for coherent strategies, agreed with ministers, that cover broad allocations between global and country programmes, rather than treating each new initiative in health or environment one by one. And it makes recommendations on a series of selected current policy issues, including sustainability, taking a broader view of country allocations, and mutual accountability.