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What has Christmas shopping got to do with allocating foreign aid?

Written by Chris Hoy

​It’s that time of year again. Christmas decorations are everywhere, the carol singers are out in force and many of us find ourselves doing last-minute Christmas shopping.

The furthest thing from your mind when you are shuffling around crowded shops is what all of this has to do with the allocation of foreign aid. But you may be surprised to find that there are several things Christmas shopping can teach us about the way in which such aid is allocated.

Obviously, aid is an important issue that should be taken seriously. Nonetheless, ’tis the season to be jolly, so this blog takes a light-hearted look at aid allocation, drawing out four key lessons.

1. You have to know something about who you are buying for

Buying a present for someone you know nothing about, who may live a long way away, is a big mistake. You rarely hit the mark and will almost certainly disappoint.

The same is true of aid. If donors have little understanding of country context, we should not be surprised that the results are disappointing. At a minimum, donors need in-depth knowledge of the countries in which their aid is being spent and have some staff based in that country (or who at least make regular visits).

2. Meeting expectations matters

Avoiding the embarrassment of dramatically underspending or overspending on your loved ones is a must. It’s a relief when you meet their expectations, but getting this right can be tricky – particularly in the early stages of a romantic relationship. It can be really awkward if he buys her expensive jewellery and she buys him cheap socks.

In the aid world, meeting expectations is crucial to ensure the best possible outcomes for the beneficiaries of aid programmes. Few things are more disruptive than unreliable or inadequate funding. Yet the aid industry is plagued with this problem. For example, the Australian government has just announced the seventh cut in funding to its aid budget in just over two and a half years, which will lead to the early end or downsizing of many programmes.

3. You shouldn’t buy anything people don’t need or want

If you buy people things they don’t need or want, you are wasting your time and resources. We see how common this is after Christmas, when there are long queues of people at the returns counters trying to exchange their unwanted presents.

The same can – and sometimes does – happen in the aid and development industry. Often well-meaning initiatives spend large sums of money on things no one actually needs or wants. A classic example has been an initiative to provide t-shirts for Africa. There is little evidence to suggest that there is a massive unmet demand for t-shirts in Africa or that t-shirts actually benefit people a great deal. In response to such initiatives, ‘local ownership’ has become something of a mantra in the aid industry in recent years, whereby the beneficiaries of aid programmes actually have a say in where and how aid is spent – a welcome shift.

4. Don’t buy someone something they would have bought for themselves.

When was the last time someone bought you a loaf of bread as a Christmas present? Probably never. Why not? Because you try not to buy something that they will definitely buy for themselves. The best present is something they need, but would have been unlikely to buy for themselves.

Donors face a similar but more complicated reality. They should avoid spending aid on things that the governments of developing countries would definitely spend money on themselves, such as politicians’ wages. Not only will this have little or no impact on most of the aims of aid (such as poverty reduction); we can be sure that the recipient government would have certainly spent money on this.

Smart aid allocation focuses on areas that are crucial for lasting development but that may not be top priority for recipient country governments or the private sector, such as the provision of basic education and healthcare to those who would otherwise be left behind.

I hope these four lessons come in handy if you too are finishing your shopping in the coming days. And my biggest hope for 2015 is that the aid industry keeps these lessons in mind!

In 2015, world leaders will be meeting in Ethiopia to agree to a new consensus on aid at the Financing for Development Conference. Stay up to date with ODI’s work in this area