Aid to Africa often gets bad press. Many think it is wasted by corrupt governments or spent on projects that fail. It is undeniable that over the years much foreign aid has not been used as effectively as it could have been. But when aid is given well it can make a huge difference to the lives of women and men living in poverty.
Last week’s international conference in Accra looking at the reform of aid is part of a process that began three years ago in Paris, where donors committed to making aid more effective and giving developing countries more control. What is emerging is a battle over the future direction of aid and, significantly, development.
For too long the onus for the effectiveness of aid has rested on the shoulders of those at the receiving end, rather than looking at the role aidgivers play. But how donor governments give aid matters.
Over the years aid has been used as both a political pawn on the Cold War chessboard and to peddle particular economic models. Through what is commonly known as the “Washington Consensus”, donors and the World Bank and International Monetary Fund have prescribed cuts in public spending, while at the same time encouraging governments to liberalise trade and reduce the role of the state in economic affairs, primarily through privatisation of state-owned enterprises.
The results? The imposed “privatisation” of agriculture marketing boards and food reserves by the World Bank, pushed through during international trade negotiations, has left many developing countries struggling to address the current global food and agriculture challenges.
Meanwhile, the enforced privatisation of basic services has left health, education and water across the developing world in disarray: what is available is often dauntingly expensive for the poor, and is kept afloat by an overworked, underpaid skeleton staff.
There is increasing evidence that these solutions rarely work in the interests of the poor and over the past five years there has been a growing international consensus that economic policy conditionality does not work. “Policy conditionality — is both an infringement of sovereignty and ineffective,” noted the Africa Commission in 2005.
So can aid really work?
When aid is given well, it can make a significant difference. Aid given through the Global Fund to Fight HIV/Aids, TB and Malaria has paid for HIV and Aids treatment for 1,75-million people and cured 3,9-million TB patients, while aid for education has helped get more than 40-million children into schools in recent years.
Aid can be provided in a way that helps strengthen developing country governments and helps their citizens to fight poverty and inequality, promote gender equality and realise their human rights. But this will involve a radical shift in the way that much aid is delivered now.
Currently aid is inefficient, uncoordinated, bypasses government systems or simply doesn’t reach the people it is meant to. Much aid is unpredictable, often arriving late or not at all. Less than half of the aid donors promised poor countries is recorded as having been received by recipient countries. Zambia, for instance, received nearly a third less aid than donors said they would deliver last year.
Meanwhile “technical assistance” accounts for one-fifth of all aid: a huge proportion of this is spent on high-priced consultants, chosen by donors and generally from donor countries. In Mozambique, for example, donors spend $350-million a year on 3 500 technical consultants — almost five times the total annual salaries of 100 000 Mozambican public-sector workers.
Only a fifth of aid is delivered directly to developing country governments to support their own plans. This creates huge administration costs, making it harder to plan, and failing to reinforce developing country states and their ability to deliver much-needed public services. This also means governments spend large amounts of time hosting different donor missions to look at programmes and projects and not enough of their scarce resources on delivering and planning their development policies. Vietnam alone had 752 donor “missions” last year — more than three missions per working day.
Donors need to move towards providing more of their aid on a long-term basis and should stop the current practice of attaching economic policy conditions to their aid.
The Paris Declaration on Aid Effectiveness, signed by donors and aid recipients in 2005, set 12 targets to be reached by 2010 and was a step in the right direction. It has at its heart the need to provide more aid on a long-term basis through recipient government systems, in line with these governments’ development priorities. But it does not go far enough. And three years on an Organisation for Economic Cooperation and Development survey on progress in reforming aid, to be released this week, shows that most rich countries are not even on track to meet many of the agreed targets.
Many donors do want changes that will hand a lot more power, a lot more quickly, to effective developing country governments. European donors have made greater progress towards realising the principles of the Paris Declaration than non-European donors. Some, such as many Nordic donor governments, have come a long way in giving untied aid in support of developing countries. But others are resisting — with the United States and Japanese particularly resistant to these reforms.
The outcomes of the international aid effectiveness meeting this week in Accra could have profound effects on the capacity of African governments to shape their own development agenda and to have national sovereignty over policy decisions.
Of course aid alone is not enough for development, but it is needed — and until you solve the political question of who should shape development, you cannot solve the problems of poverty and inequality. Donor governments should promise to make long-term commitments to support poor country governments and democratic, locally owned development plans. It is crucial that, they rise to this challenge, in Accra, and set an ambitious agenda for action.
Snags and broken promises
Tied aid
In some countries, one day of a consultant’s time costs as much as employing a teacher for a year or keeping 50 children in school. The Organisation for Economic Cooperation and Development estimates that an extra $750-million a year could be released if rich countries gave food aid as cash rather than in kind.
Uncoordinated aid
More than 40 donors deliver aid in Uganda. Government figures show that it had to deal with 684 different aid instruments and associated agreements between 2004 and 2007, just for aid coming into the central budget.
Conditional aid
Both the World Bank and the International Monetary Fund have made their budget aid to Mali conditional on liberalisation and privatisation of the cotton sector: cotton sector privatisation is still a condition of their lending today. Liberalisation of the cotton sector, which happened in 2005, has exposed Malian cotton farmers to the heavily distorted world cotton market price. Prices have been in severe decline as a result of huge rich country subsidies to their farmers. As a result, three million Malian farmers saw a 20% drop in the price they received for their cotton in 2005. According to an unpublished study by the World Bank, seen by Oxfam, this is likely to increase poverty by 4,6% across the country.
Undelivered aid
Donors have delivered only $15-billion of the $25-billion promised to Afghanistan in 2001. According to the Afghan government, the United States has delivered half of its commitment and the World Bank just over half, while the European Union and Germany have distributed less than two-thirds of their pledges.
Good aid
In 1990 Mozambique was the poorest country in the world. Since then the economy has grown and progress in development has been achieved. Aid has been vital in fighting poverty and making gains in health and education. In Mozambique 19 donors are committed to supporting the government’s poverty reduction strategy, through budget support. With the help of donors, the Partnership General Budget Support had grown from $30-million (3% of official aid) in 2000 to $240-million (19% of official aid) by 2004.
What has been the impact? Child (under five) mortality has reduced by 18% between 1997 and 2003. Mozambique’s target is to accelerate this reduction further, reducing rates from 178 deaths per 1 000 live births to 130.
This would put Mozambique on track to meet the 2015 Millennium Development Goal target for reducing child mortality, and mean that more than 30 000 fewer children under five would die each year.
Source: Oxfam
The Paris declaration
In 2005 donors, recipient countries and multilateral agencies signed the Paris Declaration on Aid Effectiveness. It set 12 targets, with measurable indicators, to improve the effectiveness of aid, to be met by 2010.
The targets fall into five areas:
- country ownership of policies;
- better donor alignment with recipient government priorities and processes;
- improved harmonisation between donors;
- managing aid for better results;
- mutual accountability between donors and recipients.