Intermediating Aid: Intermediating Aid ¿ Sida Seen Through the Lense of Financial Intermediation

Can the development industry learn lessons from how the finance sector intermediates huge amounts of capital (with great efficiency)? The theory of financial intermediation is applied to SIDA. It is found that the transaction cost and information asymmetry aspect of the theory does not sufficiently explain SIDA¿s role as an intermediary. Various factors justifying deviations from the theory were identified, though the sustainability of these factors in providing continued justification was an issue. Two aspects are suggested for inclusion in SIDA¿s policy, extracting greater value from know- how and research and development.