Introduction

In Sub-Saharan Africa, The World Bank and the African Development Bank (AfDB) have been the two major players in the arena of multilateral aid. Both have been redefining aid conditionality to Sub‑Saharan Africa since the early 1980s, and into the late 1990s. This has implied a move away from an emphasis on structural adjustment, where financing was provided in return for the promise of policy reforms, to disbursement of funds conditional on reforms already achieved. The new practice is known as aid ‘selectivity’ or performance-based allocation (PBA).

Over the last few decades, the aid literature has been engaged with improving the effectiveness of aid, and finding ways of refining the allocation and lending system of major donors such as The World Bank. Whenever aid flows are allocated selectively, donors set conditions or triggers for disbursement according to the achievement of prior policies and institutions. So funds are withheld from countries until they change their policies or institutions to set benchmarks. The World Bank and AfDB base their allocations on an assessment mechanism called the Country Policy and Institutional Assessment (CPIA). This chapter argues that the use of CPIA by the multilateral banks and other donors has significant ramifications for Sub-Saharan Africa and generally for low-income countries to the extent that there is a moral, economic and political imperative for countries to conduct a self-assessment in the event that aid continues to be allocated on the basis of CPIA.

CPIA is produced confidentially by The World Bank or AfDB country economists, and is used as an indicator of the potential effectiveness of the recipients’ policies and governance structures in place. Borrowing and lending decisions are made according to the way this index ranks countries. It has been criticised by academics and activists (Kanbur, 2005; van Waeyenberge, 2008; Diarra, 2010; Nissanke, 2013) for being too subjective. Nor is it based on rigorous validation and consensus processes on the part of the aid recipients – especially governments. Thus, by design, it is partial and is not an outcome of widespread public debate and consensus. Countries committed to neoclassical thinking are often given a higher CPIA score by World Bank and AfDB economists, who are the ultimate authority for the computation of the index.