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Introduction
Just because you’re doing good, doesn’t mean you’re doing it well.
What would you do with 50 years and 1,5 trillion euros?
Aid is…
Helping the poor, to some extent: “a voluntary transfer of resources from one country to another, at least partly given to benefit the recipient country” “acting as a signal of diplomatic approval, strengthening a military ally, acting as a reward for good behaviour desired, to extend cultural influence, or to provide commercial access.”
Helping the poor: “flows of official financing administered with the promotion of the economic development and welfare of developing countries as the main objective.”
Harming the poor: “the billions that have hampered, stifled and retarded Africa’s development.”
Not helping the poor: “when you take money from the poor people in a rich country and give it to the rich people in a poor country.”
What is aid?
Bilateral ODA from DAC donors to all recipients (OECD QWIDS, 2012)
0
5000
10000
15000
20000
25000
30000
35000
How much aid?
Bilateral = 77%, Multilateral = 23%
EC - $17.5 bnUN - $3.3 bnEU - $64.7 bn
Gates - $2.6bnGlobal Fund - $3.3 bn
How much aid?
GreeceItaly
KoreaSpainJapan
United StatesPortugal
AustriaNew Zealand
CanadaAustraliaGermany
SwitzerlandFrance
BelgiumIrelandFinland
United KingdomNetherlands
DenmarkNorwaySweden
Luxembourg
0 0.7
0.130.130.140.15
0.170.19
0.270.280.28
0.320.36
0.380.450.460.470.48
0.530.56
0.710.84
0.930.991
ODA/GNI
Bilateral ODA from DAC donors to all recipients (2012, OECD QWIDS)
How much aid?
GreeceItaly
KoreaSpainJapan
United StatesPortugal
AustriaNew Zealand
CanadaAustraliaGermany
SwitzerlandFrance
BelgiumIrelandFinland
United KingdomNetherlands
DenmarkNorwaySweden
Luxembourg
0 0.7
0.130.130.140.15
0.170.19
0.270.280.28
0.320.36
0.380.450.460.470.48
0.530.56
0.710.84
0.930.991
ODA/GNI
Bilateral ODA from DAC donors to all recipients (2012, OECD QWIDS)
UN General Assembly: each economically advanced country will progressively increase its official development assistance to the developing countries and will exert its best efforts to reach a minimum of 0.7% of its gross national product by the middle of the decade.
1970
After the War: What works for Europe…World Bank, IMF, Marshall Plan (‘48-’52: $13bn). Aid to fix the ex-colonies (and maintain influence). Modernise & industrialise…
The Sixties: All we need is industry.State-led. Roads, railways, dams = growth = development but too big and long-term for Gov’s. Plus help the agri sector in the meantime.We’ll be done in a decade.
A very briefhistory of aid
The Nineties: It’s the Government, stupidGreed is only good in the private sector. corruption, rule of law, capacity. Aid if you have good policies (Burnside & Dollar). Aid fatigue = volumes
The Noughties: More is Better, Better is Better $50bn by 2010?) MDGs, AE (ownership, budget support), Celebrity Aid, Military Aid.
The Eighties: Greed is good Bring on the market, less Big Government, liberalise don’t subsidise, follow the Asian Tigers. Structural Adjustment in return for a loan to help with your loan. $15bn a year from poor to rich. The lost decade for development?
Today: The Backlash?First on the cuts list, “Africa’s future is up to Africans”, The White Man’s Burden, Why Foreign Aid Isn’t Working, Dead Aid…
A very briefhistory of aid
Does aid work?
Yes it works! Botswana, Indonesia, Korea, Tanzania…
No it doesn’t!! DRC, Haiti, Papua New Guinea, Somalia…
Let’s ask the economists… • Does aid lead to growth?
Yes, no, maybe.
• And what about growth & poverty? It depends… (Burnside & Dollar)
So, no real consensus as to what does work Rather, agreement on what does not work &
identification of micro-macro paradox
Does aid work?Dambisa Moyo
Problem: Aid harms: dependency, corruption, poor growth, more poverty. “the billions that have hampered, stifled, and retarded Africa’s development.”
Solution: • Stop aid in 5 years • Raise money from capital markets• Attract FDI• Cut trade restrictions• Up financial services to the poor
Does aid work?Paul Collier
Problem: 4 traps: conflictnatural resource reliancebeing landlocked and having bad neighboursbad governance in small countries
Solution: Cheap but tricky. Concentrate aid and take more risks; add to aid with: military interventions, international charters on good governance, free trade. Learn from the Marshall Plan
Does aid work?William Easterly
Problem: Fumbling in the dark on growth and poverty reduction. Too many variables, too much information, no one solution. Big Soviet-style plans don’t work.
Solution: Innovation and trial and error.More of what works. Seekers not Planners. Flexible, Fast, Feedback. E.g. http://www.givewell.net
Does aid work?Jeffrey Sachs
Problem: Poor countries can’t reach the bottom rung, stuck due to: geography, infrastructure, healthcare, corruption.
Solution: More aid (0.7%), diagnosis and prescription = end of extreme poverty by 2025. Bed nets, debt cancellation…Millennium Villages. Once on the bottom rung, will be able to pull themselves up into the global market economy.
Does aid work?Owen Barder
Problem: Aid could work better: multiple & competing aims, weak incentives, incomplete info., poor feedback & learning, poor results-focus, long delivery chains. Solution: planning, markets & networks. • Planning: systems & standards not details. • Markets: for delivery (unbundle funding from design, CoD, Vouchers) • Networks: feedback, transparency, incentives
Spending aid on the right things and through the most effective channel
Ensuring that all aid has the maximum possible impact on poverty reduction
Ensuring that the financial resources provided by rich countries to poor nations improve the daily lives of millions of people and move the world closer to achieving the MDGs
How? The AE agenda focuses on aid management and delivery practises
What is AidEffectiveness?
Government Driving
Predictability, Transparency
Results, Accountability
Donors Joined-up
What is Aid Effectiveness?
• 1. Ownership: Developing countries set their own strategies for poverty reduction, improve their institutions and tackle corruption.
•2. Alignment: Donor countries align behind these objectives and use local systems.
•3. Harmonisation: Donor countries coordinate, simplify procedures and share information to avoid duplication.
•4. Results: Developing countries and donors shift focus to development results and results get measured.
•5. Mutual accountability: Donors and partners are accountable for development results.
Paris principles on aid effectiveness:
1. Ownership
What? You can drive and we won’t tell you where to go. Not just Government.
Why? Democracy, Legitimacy, Knowledge, Capacity. Fragile States.
How? Strategy, Sectors, Systems.
In Practice… Donors: back-seat driving (PRSP, CSP), pay for policy. Govt: we know what you really want, capacity & information constraints.
2. Alignment
What? Go through the Government.
Why? Costs less, delivers more. Better systems. How? National strategy, national systems, capacity build, untie, use budget support.
In Practice… less control & more risk, selective use of strategy, systems: just a bit more capacity building…
3. Harmonisation
What? Holding hands, not stepping on toes. Study, plan, implement, evaluate and talk together. Specialise.
Why? Gaps, Overlaps, Synergies, Track, Manage. How? Not automatic! Joint Analysis then Programmes, Govt-led Specialisation, Silent Partnerships, National Indicators. First change procedures.In Practice… Government: leadership – will, capacity? Donors: will, power, procedures, time?
4. Managing for results
What? Delivering and accounting for results
Why? To justify aid to taxpayers, To manage aid agencies, To optimise the allocation of aid, To learn about what works
How? Result-oriented project design, country –level results frameworks, EU-level results frameworkRisks… Bureaucratic overload, Questionable quality of results information, Short-term focus, Neglect of equity considerations, Perverse incentives,
5. Mutual accountability
What? The process by which parties hold one another accountable for the commitments they have voluntarily made to one another
Why? To develop a mutually beneficial relationship between donors and partners
In Practice… • Imbalances of power• Complex chains of accountability
How? Aid Effectiveness Reviews, Common Results Frameworks
No. of indicators the island of St Vincent has been asked to monitor on HIV/AIDS? 191
No. of donor missions to Ethiopia in 2007?221
Percentage of aid projects that are for less than $1m?80
No. of NGOs working on health in the west coast of Aceh? 22
No. of bank accounts the Mozambique Govt has to have to meet donor requirements? 1,000
Number of aid coordination forums in Senegal? 82
What is NOT AE
What is Development Effectiveness?
• the level of achievement of overall development goals which are affected by a host of different factors
• the assessment of aid against official, long term and quantifiable development goals (e.g. the MDGs or national goals)
Thus development effectiveness is not solely the level of goal achievement of aid/development interventions.
Have the immediate goals of assistance been achieved?
And have those goals enhanced the development process?
International commitments
2000MDGs
2002 F4D
2005PCs
2008AAA
2005G8
2008 F4D
2008 MDGs
2003Rome HLF
2011Busan HLF
2014GPEDC
HLM
EU Commitments
2005 - EU Consensus for Development2006 - More, Better, Faster
- Joint Framework for Country Strategies- Financing for Development
2007 - Strategy for Africa- Code of Conduct on Division of Labour
2008 - Backbone Strategy on Technical Cooperation- Toolkit for Capacity Development
2009 - Operational Framework for Aid Effectiveness2011 - The Future Approach to EU Budget Support
- Increasing the impact of EU Development Policy: an Agenda for Change- EU Common Position for the 4th HLF on AE: Council Conclusions
2014 - EU Common Position for the 1st HLM of the GPEDC