Intern blog: On fungibility of aid

Laura Freschi at Aid Watch blogged about a recent study showing that health aid was correlated to lower government expenditures in the sector. Fungibility of aid is an issue that policymakers and aid workers have debated for years. Studies have shown that ownership makes aid more effective, but how do donors address the fact that sometimes their aid is adding to the country's coffers and not necessarily towards its stated objective, such as improvements in health and education? Since impact evaluations and other methods of measuring results from aid are already difficult to conduct and access, it is sometimes nearly impossible to trace aid flows from donors to impacts.

Tools like Aid Management Platform can help countries track where the money is coming from and what the aid is meant for—primarily by assisting in the management of funds. While where the aid should go and how funds should be allocated is of course left entirely in the hands of the donors and partner countries, AMP can help both parties keep track of and classify the aid money coming into the country.

The tension between donor and recipient needs is without a doubt an extremely important issue in development aid. However, establishing donor-recipient partnerships and improving transparency on both fronts can help with these issues. The important thing to keep in mind is that in most cases the donor and recipients do have common interests—development.