Building on our peer reviews of microfinance, to: 1. Convene a meeting of ministers and agency heads to benchmark progress against commitments already made following the peer reviews; 2. Undertake short, action-oriented assessments in three countries, including tsunami-affected Sri Lanka, on how well foreign aid functions. In collaboration with the private sector, donors, civil society, and governments, we will assess donor performance in each of these countries. Then we will convene a high-level meeting of private sector, civil society and government participants to disseminate the findings of our evaluation and to provide feedback and actionable recommendations to the aid agencies; and 3. Apply lessons about aid agency effectiveness from microfinance to other areas of development.
Much foreign aid money is being wasted. Unfortunately, foreign donors share the blame for aid ineffectiveness in many of the countries and in many of the sectors where they work, including in microfinance. Fortunately, bringing financial services to billions more poor people is not about more aid, but better aid -- a widely accepted theme for which CGAP has been a champion. Still, at an estimated expenditure rate of million to billion per year, development agencies remain the most important external source of funding for financial services for the poor. Nearly all donor agencies have agreed to joint guidelines of good practices. However, they confront numerous constraints, both internal and external, to consistently applying these practices.
Through its Donor Peer Reviews, CGAP has worked with 17 aid agencies, including the United Nations Development Programme and the US Agency for International Development, to scrutinize internal systems, policies, processes, and incentives. The results, which the agencies have shared publicly, represent the most 'hard-hitting, gloves-off, actionable advice' they have ever received, in the words of former UNDP administrator Mark Malloch Brown. Our experience has been that these principles of effectiveness do not just apply to microfinance, but can be used in other areas of aid agency work.
Housed at the World Bank, CGAP is a consortium of public and private development agencies and other donors working together to expand financial services for the poor. For more on CGAP and its work, please visit www.cgap.org.