Aid Conditionality

Donors have for decades provided aid on the condition that certain policies and practices are implemented and outcomes achieved (a later and more encouraging development). There has been widespread criticism of many of these types of conditions, because they impose policies on countries with little regard for democratic processes or country needs. Some conditions have also been harmful to the economic interests of countries, especially structural adjustment conditions – privatisation, trade liberalisation and public sector reforms – demanded by the World Bank and the IMF since the 1980s, which many say have contributed to economic decline in regions such as sub-Saharan Africa.

Despite significant criticism from civil society in the South and North and others, donor practice of conditionality has changed little. The World Bank and IMF still closely control economic policy and impose economic reforms and most other donors make their support conditional on WB/IMF satisfaction with country performance. It is not uncommon for developing countries to be required to implement scores of conditions by groups of donors each with their own priorities.

There has to date been only limited effort made at the international level to address the problems around conditionality and processes such as the Paris Declaration have neglected conditionality completely.

The UK’s practice of conditionality

Following years of lobbying and campaigning by UK NGOs, in 2005 the Department for International Development (DFID) put in place a conditionality policy that committed it not to apply sensitive policy conditions to its aid, ensure that conditions are country owned and base conditions around areas such as financial accountability, poverty reduction and human rights, with governance included in 2006.

Since the 2005 policy was agreed, DFID has published guidance on its application (in the form of “How to Notes (HTN)” in 2006 and 2009. The 2009 HTN set even more progressive guidance around ownership, requiring conditions be country owned not just government owned. It also raised the standard around conditions being made public and engagement with civil society when conditions are negotiated.

However UKAN continues to have concerns with the new guidance and current UK practice around conditionality, including:

  • Continued use of (supposedly) non-binding policy benchmarks, which evidence shows do not work significantly differently from policy conditions are often in sensitive areas.
  • The 2009 HTN has narrowed the 2005 policy commitment to not apply sensitive conditions to only privatisation and trade liberalisation.
  • Implementation of the policy and HTNs remains uncertain, as conditions have not been made public within the timeframe suggested – transparency of conditions has been long awaited.
  • The UK government still commonly aligns itself with the policy frameworks of the World Bank and the IMF, who continue to routinely apply economic conditionality.

For further information see:
UKAN response to the 2009 HTN on conditionality policy

Revised Guidance on Implementing the UK’s conditionality policy – May 2009

UKAN comments on DFID’s conditionality guidelines, July 2006