In every other business, an investment is expected to make economic sense.
According to the Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development (OECD), in 2006 some 104 billion US dollars were spent by the main donor countries on development cooperation. This is a massive investment, and any project or activity in those same countries which cost as much would be subject to very close scrutiny in terms of – at the very least – a cost-benefit analysis.
In the last few years, many people in the “development community” (and outside) have become increasingly critical of the sometimes very disappointing contribution of development cooperation despite years of investment and effort. Increasingly sophisticated monitoring and evaluation systems are regularly being introduced in an effort to measure the impact of individual programmes and projects. While these efforts are good, they don’t go far enough toward addressing the central issue of improving the overall performance of the development cooperation sector.
What is required is a paradigm change. The development cooperation sector needs to become part of the economy, and be subjected (subject itself?) to some of the basic operating principles that govern economic performance.
|If a government invests, say, 20 million US dollars in building a bridge, it has calculated the return prior to starting, and will recalculate once the bridge is in place. How can it then turn around and spend 1 billion US dollars on development cooperation without calculating the returns on those monies? The first place to start is with the goals. If these are not specific enough, (what exactly is “good governance”?) then no before and|
after measurements can possibly be established. If however, one clarifies exactly what good governance means and then measures the negative impacts and costs of the current governance in the country, one can begin to quantify the minimum returns an intervention would need to achieve in order to be viable.
I hear squeals: “But you can’t measure the improvement in the quality of life for disadvantaged peoples!” I disagree. Anything and everything can be measured; it is merely a matter of finding the right metrics, with quality data that can be backtested. And once the Return on Investment (ROI) is established for the recipient country, an ROI should be calculated for the donor country.
Depending on the sectors addressed, the benefit could be (for example) the reduction in costs for policing borders (outward migration reduced through economic improvements). The sums “freed up” and available for other purposes are amount to a direct return to the donor on the investment.
These arguments do not discuss the complexities, but the message is: for an investment to make sense, its return must be calculable.