The failed promise of multi-donor trust funds: aid financing as an impediment to effective state-building in post-conflict contexts

Abstract

Multi-donor trust funds (MDTFs) have quickly become one of the most prominent aid modalities. Viewed as a reliable long-term funding source, they are hailed for facilitating donor coordination and ceding unprecedented control of post-conflict reconstruction and development to recipient governments. The advent of the MDTF also highlighted the growing understanding that aid modalities, the form and manner in which assistance is given to developing nations, are themselves a key intervention in war-torn societies and not a passive administrative arrangement. The implementation of MDTFs has, however, frequently nullified their conceptual benefits, particularly in regard to strengthening and legitimating recipient states. Complicated implementation arrangements, donor-dominated coordination and oversight bodies, short timeframes and high expectations pertaining to disbursement have subsumed trust funds to donors’ pre-existing modes of operating and made them contravene state building objectives and weaken aid effectiveness. Modalities can, like any other intervention, cause harmful effects. These are discussed in the context of Afghanistan's largest and highest profile reconstruction intervention, the National Solidarity Programme (NSP). This article examines one prominent MDTF, the Afghanistan Reconstruction Trust Fund (ARTF), and its impact upon the NSP and its governance objectives. This critical case study shows the MDTF concept to be fundamentally and theoretically sound but at odds with donor countries’ primary attachment to the strategic rather than development impact of post-conflict reconstruction assistance. Such priorities limit aid effectiveness, hamper coordination and sideline the recipient state in the post-conflict reconstruction process.

Keywords:

• aid financing
• post-conflict reconstruction
• trust funds
• state-building
• governance
• Afghanistan

Acknowledgements

I am grateful for the assistance of Steven A. Zyck as well as the feedback provided by anonymous referees during the drafting of this article.

Notes

1. A third ‘window’ exists under the ARTF but administered by UNDP for security-sector expenses, the Law and Order Trust Fund for Afghanistan (LOTFA). This is separately managed and distanced from the core activities of the ARTF given the World Bank's global prohibition on involvement with the security sector.

2. Australia, Bahrain, Canada, Denmark, EC, Finland, Germany, India, Iran, Ireland, Italy, Japan, Korea, Kuwait, Luxemburg, Netherlands, Norway, Portugal, Saudi Arabia, Sweden, Switzerland, Turkey, UK, USA, UNDP.

3. This motto may be found at the NSP website. Available from: http://www.nspafghanistan.org.

4. As of 2006, according to the mid-term evaluation of the NSP, the most popular projects were: drinking-water supply systems (2933 implemented), irrigation (2419 implemented), transportation-related projects such as bridge and road rehabilitation (2319 implemented), energy production systems such as generators or solar panels (2094 implemented), livelihood-oriented projects such as the creation of flour mills (1235) and education-related improvements such as books, desks or rehabilitation of buildings (548 implemented).

5. It should be noted, however, that at least two women rose to power in the National Assembly after first having won leadership positions in their CDCs.

6. Much of the content from within this section is derived from dozens of interviews with Afghan and international development professionals across Afghanistan and based on the author's own observation.

7. The Hague Conference on Post-Conflict Multi-Donor Trust Funds in December 2006 highlights the need for increased ownership of MDTFs by recipient states though, in contrast, provides a resounding endorsement of this modality as a ‘speedy’ vehicle for demonstrating a peace dividend. These aspirations are largely contradictory except where the post-crisis country remains politically intact and highly capable.

8. It should be noted, however, that this refers to the costs of all external technical assistance and not only those related to an MDTF and that Cambodia is not a recently post-conflict country.

Notes on contributor

Sultan Barakat is a Professor of Politics and the Director of the Post-war Reconstruction and Development Unit at the University of York. His research interests include state-building, governance, post-conflict recovery, aid financing and theories of intervention and reconstruction. He regularly advises major international organisations, and much of the information for this article was gathered while he led the 2005–2006 mid-term evaluation of the National Solidarity Programme in Afghanistan.