28/11/2011 17:55 GMT | Updated 28/01/2012 05:12 GMT

Transparency Will Help the Aid Debate Grow Up - And Help it Grow Old and Die

A life and death debate will rage this week over the crucial - but excruciatingly technical - issue of aid effectiveness.

This issue is too important for the public not to know what's at stake, because after all it's how their money is being used to save lives that is being discussed. But beyond the policy details, the politics of aid requires some attention too.

Some critics of aid peddle the myths that aid accounts for both a vast portion of national budgets (untrue) and that it achieves nothing (also untrue).

In fact, it averages around 1% of national budgets and saves millions of lives a year. For example, vaccines alone have saved at least 5.4m lives over the last decade.

But the critiques survive and thrive in part because there's a weakness at the heart of the pro-aid argument. This squishiness is largely the product of insufficient transparency.

So the central challenge, and the central opportunity, is around the need for a radical aid transparency agenda.

Transparency is the vaccine against corruption and waste, and new technology enables us to dig deeper into aid accounts in real time, and follow national budgets all the way from the top level decisions right the way through to how each penny, cent or shilling is delivered.

But conventional wisdom says the aid community should not embrace transparency too much because it reveals problems which its critics will shout about from the rooftops. It also says that governments in developing countries don't like too much transparency either. Put these factors together and the aid world gets downright shy and sheepish.

Both fears may have some validity, but this logic needs to be turned on its head.

Two trends define our time: on the one hand, the demands for transparency and accountability emanating from the Arab streets; and on the other, the fears over deficits and spending cuts. By doing more to embrace transparency and accountability, the aid community will make a much better case for why it should be sustained and increased, not cut.

So here's a three part plan to improve the policy and politics around aid:

First, all aid budgets must be made transparent and as soon as possible. To be crystal clear, I don't mean simply reporting top-line spending each year. That's just not good enough. We need to see real information about specific projects and programmes - including what's been spent, who received it, what impact it has had, and what's in the pipeline.

Secondly, all national budgets, including payments from extractive companies, should be transparent all the way through.

It's a bit of a scandal that all of this isn't happening already. That's a first order priority. If it doesn't happen soon, progressive nations should stop aid to developing country governments that hide or obscure their budgets from their people. But all this data needs to be crunched for citizens so that they can really hold their leaders accountable.

It's no good just rocketing reams of statistics into the ether if there isn't the capacity to analyse and digest it.

That's why we also need much more investment in think tanks, universities, and civil society groups in developing countries to play this critical role. And we need to make the information accessible to the poorest people in the street or village - those citizens in whose name we busy ourselves.

To achieve this, we need a major new catalytic fund to make dry aid and budget statistics come alive in ways that drive action and accountability. In many places, this also will require stepping up smart aid investments in developing country governments' ability to better collect and deliver data. For those that demonstrate an unwavering commitment to openness and accountability, this is something that we should do with vigour and haste.

Thirdly, we need those players in the debate about aid to grow up and acknowledge the reality of risk. Sometimes the best uses of aid are the most risky - like when it is directed to projects in fragile states or seed investment for innovative pilot programmes. While we should design programs to minimise risk, this must be balanced with the need to design them to maximise returns for the poorest.

Let me explain by analogy: ONE's board is a colourful cast with characters like John Doerr, one of Silicon Valley's most distinguished venture capitalists.

Many of his investments don't deliver. He's proud of this because these investments were part of a broader portfolio strategy that wasn't frightened of risk, but instead embraced it. Each decision is based upon extensive due diligence, the establishment of appropriate governance controls, and a careful analysis of upside and downside potential.

With the occasional losers, John has also made calculated investments in fabulously successful start-ups like Google.

These are the ones that have changed the world. If development aid is to support innovative solutions for our common future, it needs to constantly test new and different approaches. In other words, it needs to be highly entrepreneurial. That shouldn't make us scared. It should make us bold. And, while we should have zero tolerance of fraud and abuse, we will have to admit that sometimes things will go awry, with lacklustre results or even some of the money going missing.

But over time, you learn lessons, scale up what works, and continuously search for solutions for under-performing approaches. If the people who are in charge of aid budgets are no longer scared of being open, then ultimately they can collectively minimize the amount that misses the target over time because enhanced transparency improves the feedback loops which improve policy outcomes.

Smart aid investments have delivered fantastic returns in the last decade, and this should be grounds for the aid industry to be more confident and open about admitting mistakes.

Fear of admitting failures makes the great stories and statistics of success, when they are told, appear like mere PR. The sooner we embrace this radical transparency agenda, the sooner the politics around aid can grow up, the sooner the policy can improve to such a point that the poorest really will be able to drive and determine their own fate with dignity, and the sooner developing countries will be able to graduate from aid altogether.