25 February 2013

Aid to Rwanda: "Best value for money in the world"

Tony Blair has an article in Foreign Policy backing aid to Rwanda, and Laura Seay responds here. I'm not going to get into that debate, beyond to say that on balance I think we probably should be restoring aid to Rwanda, but I was intrigued by this quote from TB:
"[Rwanda] is frequently cited for its aid effectiveness by the World Bank and Britain's Bilateral Aid Review acknowledged that aid to Rwanda "offers the best value for taxpayers' money in the world."
How are they measuring that value for money? I took a look at the DFID Bilateral Aid Review technical report. This constructs a Need-Effectiveness Index, which combines measures of poverty and state fragility (need) with a measure of governance (effectiveness). Rwanda comes in the top 25% on this index but not the top 10%. So that can't be the measure of "best value for money."

Maybe "value for money" is just referring to the effectiveness part of the index? This is captured entirely by the World Bank CPIA (Country Policy and Institutional Assessment). So I looked up the index (now renamed to IRAI which contains a nested acronym within an acronym - meta - "IDA Resource Allocation Index" - where IDA = International Development Association, the part of the World Bank which does grants and interest-free loans). The data is available here, and Rwanda scores very highly but not quite "the best" - stable at a score of 3.8 between 2009 and 2011 (where 1 is the lowest and 6 is the highest). The top country in 2011 (the latest publicly available ranking, remembering this is only "developing countries", I'm not going to get into how that is defined) is Georgia on 4.4. The top African country is Cape Verde (4.0) followed by Ghana (3.9).

So there you have it, Rwanda "offers the best value for taxpayers' money in the world" where "best" is defined as "amongst the best but not necessarily actually number 1" and "value for money" is measured exclusively by score on the World Bank Country Policy and Institutional Assessment (which to be fair is probably as reasonable a measure as actually exists).

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