Reengineering Aid: A Bold Agenda for the 21 Century

Reengineering Aid: A Bold Agenda

for the 21st Century

Professor Sir Richard Feachem (With Solomon Lee, Sam Manning, and Hyun Woo)

Director, Global Health Group

University of California, San Francisco

The Aid Industry

Multilaterals Bilaterals

3

George C. Marshall Secretary of State: 1947-1949

Reported Cases

The Colonies: 1946

Official Development Assistance (ODA)

Source: OECD International Development Statistics

Total $4.03 trillion from 1960-2016

0

0.1

0.2

0.3

0.4

0.5

0.6

0

20

40

60

80

100

120

140

160

1960 1970 1980 1990 2000 2010 2020

OD

A (

% G

NI)

OD

A (

USD

Co

nst

ant

20

14

bill

ion

s)

Year

ODA (USD)

ODA (% GNI)

Source: OECD International Development Statistics

% GNI Spent on ODA

Total $142.6 billion in 2016

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1960 1970 1980 1990 2000 2010 2020

OD

A (

% G

NI)

Year

Australia Denmark Germany Japan Netherlands Sweden United Kingdom USA

Sweden Denmark UK Germany Netherlands Australia Japan USA

The Conventional Wisdom

“Aid is a vital investment with big returns for the world as a whole.”

Ángel Gurría OECD Secretary General, 2010

The Conventional Wisdom

Spectacular Successes in Recent Decades

Poverty Life Expectancy Fertility

Mortality & Fertility

Irrespective of aid? Despite aid?

Because of aid?

High Low

The Aid Debate

Aid doesn’t work.

Aid does harm.

The Umpires

Aid is good.

More aid is better.

Steven Radelet

Paul Collier

Jeffrey Sachs William Easterly

The Voices of Africa Dambisa Moyo John Githongo

“Extreme poverty is a trap that can be released through targeted investments”

Jeffrey Sachs The End of Poverty, 2005

“The cause of poverty is the

absence of political and

economic rights.”

William Easterly The Tyranny of Experts, 2014

“Aid has been, an unmitigated political, economic, and humanitarian disaster for most parts of the developing world”

Dambisa Moyo Dead Aid, 2009

“Worried westerners, who so often seem to fall prey to a benign form of

megalomania when it comes to Africa, would do

well to accept that salvation is simply not

theirs to bestow.” John Githongo

It’s Our Turn to Eat, 2009

“We need to narrow the target and broaden the instruments.”

Paul Collier The Bottom Billion, 2007

“We find little robust evidence of a positive (or negative) relationship between aid inflows and economic growth.

We also find no evidence that aid works better in better policy or geographical environments, or that certain forms of aid work better than others.

Our findings suggest that the aid apparatus will have to be rethought.”

The Econometric Evidence

Inconvenient Truth: 1

Rajan and Subramanian Review of Economics and Statistics

90(4), 643-665, 2008

The Global Health Supermarket Fallacy


Rajan and Subramanian Review of Economics and Statistics

90(4), 643-665, 2008

Source: Howmuch.net

Below are the top 5 recipients of economic aid in 2014 – Total $35 billion

Israel: $3.15 billion Egypt: $1.5 billion

Afghanistan: $1.1 billion Jordan: $1.0billion

Pakistan: 0.9 billion

Where Does the Money Go?


Foreign Aid to India • Largest recipient of UK aid (7% of total bilateral, £280 million)

Note: UK aid to India ending in 2015

• Largest recipient of all aid for health

But is aid to India necessary?

• Public health expenditure was <1% of GDP in 2015

• India’s defense expenditure: US$50 billion in 2015

• No shortage of local knowledge, science, or management skill to solve Indian problems

• Aid to India not additional


Sources: World Bank (2013); Cowshish, A. India's Defence Budget 2013-14. India Strategic, Mar 2013.

“We do not require the aid... It is a

peanut in our total development

exercises.” Pranab Mukherjee

India Minister of Finance, 2012 President of India since 2012



Source: Wolf et al. China’s Foreign Aid and Government-Sponsored Investment Activities. Rand Corporation, 2013.

Wikileaks

“China’s fast, efficient, ‘no strings attached’ bilateral approach is popular in Africa, as is the Chinese preference for infrastructure. African officials

fear that U.S. or European interference will slow down assistance and tie

conditions to Chinese aid.”


US Embassy, Beijing, Reporting to Washington


25

Inconvenient Truth: 5 Source and Focus of DAH, 2015

26

Inconvenient Truth: 5 Source and Region of DAH, 2015

$1 of DAH to government

$0.43 to $1.14 reduction in government health expenditures from domestic resources


Aid Fungibility

Source: Lu et al. Public financing of health in developing countries: a cross-national systematic analysis. Lancet. 2010 Apr 17;375(9723):1375-87.


Aid does not buy hearts and minds

Source: Al-Shabab fighters, Huffingtonpost.co.uk

“Aid is not the most important driver of growth

and development; it is secondary to capable

leadership, good governance, peace and stability, and sensible

economic and social policies.”

Steven Radelet Emerging Africa, 2010

Source: World Bank, World Development Indicators; data for South African Reserve Bank

Emerging Africa: Average Growth Rates per Capita, 1996-2008

The Radelet Conclusion

1. Democratic and accountable government

2. Sound economic policies

3. End to debt crisis

4. Spread of new technology

5. New generation of leaders: in government, private sector, and civil society

Aid played a secondary role in the successful countries and did not rescue the rest.

The record of aid shows no evidence

of any overall beneficial effect.

Angus Deaton The Great Escape, 2013

Aid Doesn’t Work

That dedicated and ethical people are doing harm to people who are already in such distress

is not the least of the tragedies of aid.

Angus Deaton The Great Escape, 2013

Aid Does Harm

“To reduce poverty and

promote development,

just give money to the poor.”

- Hanlon, Barrientos, and Hulme 2010

Gregory Mills Why Africa Is Poor, 2010

“Aid programmes are by and large antithetical to economic development since they are mostly led by those who apparently do not either understand or especially like business.”

“The main reason why Africa’s people are poor is because their leaders have made this choice.”

Gregory Mills Why Africa Is Poor, 2010

Personal Diagnosis Aid has done much:

• To create focused, irreversible change: smallpox eradication

• To create focused, but reversible change: HIV treatment, child immunization, malaria control

Aid has done little: • To drive economic growth or long-term broad and deep

improvements in welfare

Aid has done harm: • By encouraging and/or perpetuating dysfunctional governance

and policies

http://www.usaid.gov/stories/jordan/ss_jor_water.html

Only Three Innovators

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A New Aid Paradigm

1960s: • Supply-driven, input focused

Today: • Demand-driven, outcome focused

Plus: • Purchaser provider split • Pro-private sector • Dual accountability • Extreme transparency • Longer-term and more predictable aid flows

Humanitarian Disasters

• Separate humanitarian disaster relief from development assistance

• Develop more coordinated and rapid response

• Make full use of Military hardware, logistics, supply, and peace keeping capacity

• Be clearer and tougher on responsibilities of host countries, when to engage, and when and how to exit

A Bold Aid Reform Agenda: 1

Humanitarian Disasters

“Aid is not the most important policy tool rich

countries have to influence growth and development.

Much greater influence comes through trade and

investment policies.”

Steven Radelet Emerging Africa, 2010

Focus on Non-Aid Development Agenda Focus on Non-Aid Development Agenda


• More equity, less debt

• More blending of public and private investments

• More PPPs


Innovate Financially

Scale Down Aid to Countries:

Scale Up Aid to Global Public Goods

• New science, technology and knowledge

• Attenuating existing global threats: - Drug resistance

- Food scarcity and distribution

- Climate change

• Preparing for new global threats: - Pandemics

- Water scarcity


Scale Down Aid to Countries:

Scale Up Aid to Global Public Goods

Public Goods Non-rival. Non-excludable

Global Public Goods

Global Public Bads

Find New Ways to Support

Very Poor, Small Countries

• Burundi

• Central African Republic

• Eritrea

• Gambia

• Guinea

• Guinea-Bissau

• Liberia

• Malawi

• Niger

• Rwanda

• Sierra Leone

• Togo

• Zimbabwe

2011 GNI per capita <$600 : Population <20 million


Note: GNI in current USD Sources: World Bank (2013), UN Population Division, WPP (2012)

For example:

• Polio Eradication

• Childhood Immunization

• HIV/AIDS Prevention and Treatment

• Malaria Control and Elimination

• NTD Eradication

With renewed concern for sustainability


Maintain Momentum with Key Initiatives Maintain Momentum with Key Initiatives

Support the Next Generation of Leaders

• Invest in African Universities

• Create well-funded, long-term, co-managed marriages between northern and southern medical, engineering and management schools

• Open more development related fellowships, with support for return


Support the Next Generation of Leaders

Radical Aid Reform Recruits Wanted

Ernest Shackleton Imperial Trans Antarctic Expedition

The Times, December 29, 1913

Thank you for listening.

Be BOLD and, above all,

Act.

Documents

Reengineering Aid: A Bold Agenda for the 21 Century