I recently attended a very interesting congressional briefing titled “The Global Financial Crisis and Africa: How to Avoid a Renewed Debt Crisis?” hosted by partner organizations Jubilee USA Network, the Evangelical Lutheran Church of America, the American Jewish World Service and the Episcopal Church. The conversation focused around how to preserve the achievements that many African countries have made over the last five or so years (with help from debt relief and increased trade) in light of the current global financial crisis. One of the measures suggested was that the International Monetary Fund (IMF) direct revenue from its upcoming gold reserve sales to developing countries.

As explained by Matthew Martin, Director of Debt Relief International, countries freed from odious debt have been able to invest in national poverty-fighting strategies such as lowering the barriers to healthcare and education by reducing user fees and improving infrastructure. In turn, debt relief empowers countries to be less dependent on foreign assistance in the future. Hon. Timothy Thahane, Minister of Finance and Development Planning for Lesotho, shared how when Lesotho received debt relief from the United Kingdom, they immediately redirected monies previously spent on debt relief service to vulnerable populations by providing free primary education, school feeding programs, and antiretroviral drugs for persons living with HIV/AIDS.

All this was somberly put into context when Thahane explained that the gains in employment and revenue due to debt relief and increased trade vis-à-vis the African Growth and Opportunity Act (AGOA), are currently threatened by the global financial crisis. The World Bank has estimated that an additional 53 million people will be forced to live on less than $1 per day as a result of the global economic downturn. The decline in commodity prices, remittances, and demand for exports has already had a dramatic effect throughout the continent. For example, the downward trend of car manufacturing in the U.S. has led to a significant decline in steel exports, which has impacted steel-producing African countries such as Guinea, Liberia and South Africa. Similarly, the sudden decline in demand for textile exports, led to a loss of 12,000 jobs in Lesotho, which impacts 40,000-50,000 lives.

Vitalis Meja, Program Director of African Network on Debt and Development (Afrodad) warned that the economic situation will make it very difficult for African countries to achieve the Millennium Development Goals (MDGs) and called on donor countries to resist reducing Official Development Assistance (ODA). Meja called for the reform of lending practices and joined the other panelists in asking the IMF to allocate revenue from its gold sales for debt relief and grants for the world’s poorest countries, which would help them weather the current economic crisis and avoid falling back into another debt crisis. Lesotho would be one of the countries that would directly benefits.

More information about the IMF gold sales and its potential to help low-income countries can be found in briefings prepared by ONE and Jubilee USA.

-Margaret McDonnell, US NGO Partnerships & Faith Relations Team

A report released this morning shows that the world is falling short of the promises it made to developing nations.

Each year in early April, the independent nonprofit Organization for Economic Co-operation and Development (OECD) reports on each donor nation’s contributions to the world’s poorest people. This year’s report shows that the world is not keeping pace with what’s needed to make good on their promises to help countries out of extreme poverty by 2015.

The United States has the ability to be the shining beacon of hope for the world’s poorest people. Right now, that beacon needs a voltage boost. Not counting debt relief (looking at the figures like this keeps everyone from overstating the cost to the donor or assistance provided to developing countries), United States foreign assistance to the world declined 3.55 percent last year, in big part because of a drop in aid to Iraq. For sub-Saharan Africa, American assistance last year increased by 8 percent. The United States spent $5.7 billion (2006 prices) on assistance to Africa last year.

The United States promised in 2005 to double foreign assistance to Africa by 2010. This would help end needless suffering across the continent and provide hope and opportunity for millions. While projections indicate that the U.S. is likely to meet its pledge to Africa by 2010, the pace has been slower than expected.

Looking ahead for the rest of this year, the United States is poised to increase aid through the Millennium Challenge Corporation, President’s Emergency Plan for AIDS Relief (PEPFAR), and President’s Malaria Initiative (PMI). These relatively new initiatives are expected to scale up in the years to come.

The ONE Campaign applauds Congress and President Bush for boosting funding that targets diseases like HIV/AIDS, malaria, and tuberculosis. Just this week, the House of Representatives voted by an overwhelming majority to reauthorize America’s HIV/AIDS program, PEPFAR, for another 5 years. This vote signals a commitment to build on the early successes of the program with the goal of saving millions more lives. Based on this Congressional action and what we already know about funding for initiatives already underway, future foreign assistance levels are promising. But there is a long way to go to meet America’s promise to double assistance to Africa by 2010.

Learn more about the OECD’s new statistics, or check out the stats for yourself. Many of ONE’s partners are talking about the OECD report as well. Our sister organization, DATA, offers its analysis of the numbers. Check them out here.

-Sara Rogge, ONE Senior Trade Advisor

Early tomorrow morning, the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) will release preliminary foreign aid, or “official development assistance” (ODA) numbers for 2007 for the 22 member countries of the committee. The release will estimate how much each of these governments gave to poor countries in 2007.

Right after the DAC numbers are published, check to the ONE Blog tomorrow for our initial findings on how donor countries are doing on their promises to increase foreign aid, and more specifically, double aid to Africa by 2010.

In June, before the G8 Summit in Japan, we’ll release the 2008 DATA Report, which is a full analysis of how the G8 countries are doing on their aid promises to Africa.

Some more background on the DAC nummbers:

As part of their membership in the OECD/DAC, donor countries must report these figures each year and allow the OECD to release them. Each year, the DAC releases preliminary numbers in April for the previous year (in this case 2007) and then releases final numbers in December.

The members of the Organization for Economic Cooperation and Development (OECD) include all G8 countries as well as other wealthy countries. They full list:

Australia
Austria
Belgium
Canada
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Japan
Luxembourg
Netherlands
New Zealand
Norway
Portugal
Spain
Sweden
Switzerland
United Kingdom
United States

-Sara Rogge, ONE Senior Trade Advisor