Aid Effectiveness

I would like to address some of the concerns raised in the blog about an email on Dead Aid that we sent to a small number of people who we have worked with in Africa. I’d also like to flesh out our thoughts on the book – what we agree with and what we don’t. We welcome this debate about the book and more broadly about the role aid has to play in combating poverty in Africa.

In terms of the email, my colleague Tyler Denton contacted Iris Mwanza, who he met on a trip to Zambia last year, to ask if she wanted to comment on the book and on how she has seen aid working in Zambia, particularly given that she oversees an AIDS program funded by US aid. Why did he do that? Dambisa is saying that aid doesn’t actually reach people in Africa and they would not suffer if it were cut off. We know that is not true. We could simply state our belief and back it up by verifiable statistics, but we thought it would be more impactful to hear from people working on the ground in Africa who could speak to their personal experiences with aid. It wasn’t an attempt to shut a conversation down, but an effort to open one up. And that’s succeeded! We welcome a vigorous debate on the book and more importantly on how we can all work together to help those living in extreme poverty. On that front, our concerns with the book will be no surprise to Dambisa. We have met with her several times. Our executive director Jamie Drummond even met with her before her book was published and gave her statistics about the positive difference aid was making – in fighting AIDS and malaria and putting kids in school, for example – but she did not include them. He spoke to her again in the past week. We are in a dialogue with her and we agree with her on the importance of trade and investment in fighting poverty in Africa, two things we have actively supported ourselves. We also agree with her that not all aid is spent well and that many many africans have concerns about aid, because in certain cases if delivered inappropriately it can weaken the accountability of government to citizens. That kind of aid needs phasing out and reform. We’re for the kind of smartaid that delivers results and actually strengthens the accountability linkage. But we part ways when she says that aid is not getting to people and that Africans won’t suffer if it’s all cut off in 5 years. What about the 2 million Africans with HIV who are alive today because they take ARVS paid for by aid? What would happen to them if aid were completely cut off? Or what about the millions more who are still dying of HIV because there is actually too little aid to pay for medicine for everyone who needs it?

I also want to address the comments some have made on “humanitarian aid.” In her interviews and in the book, Moyo says she believes in an exception for humanitarian aid, which she explains to mean the kind of aid provided after a disaster like an earthquake or the tsunami. If Moyo has been misunderstood and also believes in the importance of funding critical poverty reducing programs for combating AIDS and malaria that would be great news and we would be happy to amend our statements on the book. But when you look at her interviews and the book itself there is no evidence that she intends exceptions for these vital programs. In fact, see her comments on health related aid in an interview with Australian Broadcasting Corporation (excerpt below.)

Let’s keep the conversation going! We all have a common goal in wanting to save lives and see a healthy and prosperous Africa. We welcome a constructive debate and suggestions for how to keep doing better.

-Edith Jibunoh

ABC Transcript 3/17/09 (excerpted)
Reporter: Philip Williams

WILLIAMS: And you’re absolutely confident that removing that aid is not going to leave at least some people without food and medicine?

MOYO: I think the ones that will be effected most will probably be the African elite as opposed to the broader population.

WILLIAMS: What will they lose?

MOYO: I think they will lose possibly their bank accounts in Geneva in the worst-case scenario. But, I think beyond that they would also lose the ability to have leisure time and they’ll be required to actually go out and start to work hard to find money to support their social programs in Africa.

WILLIAMS: If you cut off aid within 5 years, surely that’s going to leave millions of people without the support they are now dependent on – food aid, medical aid – aid that really keeps people alive.

MOYO: I don’t believe that’s the case. Most Africans do not see any of the aid that you are alluding to. It’s…. again, their best case scenario on some projects is 20 cents in the dollar that actually makes it to an African – and that’s best case. Effectively, if we continue down this path, we will have many more Africans living in poverty in many… in a few years to come, and that is really the problem – that there are no jobs coming out of an aid model.

In late January, you heard from us about a group of global development-focused NGOs across the United States who have been advocating for the U.S. to update the way it administers its development programs. This group of organizations—collectively called the Modernizing Foreign Assistance Network—has gone public once again, and together with other development organizations and interested individuals, has issued an open letter to President Obama and Congress asking for quick action to make U.S. global development efforts more effective. This letter urges our President and Congress to make modernizing foreign assistance a top U.S. foreign policy priority, along with diplomacy and defense .

Your voice can add strength to this letter. Please click here to read and sign this request.

-Chandler Smith

As we wrote about yesterday, some ONE staff are currently traveling through Ghana and Nigeria to see firsthand some of the extreme poverty and development issues currently taking place in Africa. Today Chandler Smith brings us this account about the Millennium Challenge Corporation. Click here to read more about this ongoing series on the ONE Blog.

Working in the development community, I’ve heard a lot about the Millennium Challenge Corporation (MCC). I’ve heard about how it’s a “different kind of program” and how it works with other countries to make sure that U.S funds are used for projects that are country-owned and will be sustainable in the future.

Today, I saw a lot of that talk put to action. We drove east of Accra on Highway 1–the most visible MCC project in Ghana. Basically, the MCC is a U.S. government mechanism that provides large-scale, long-term funding for developing countries who have met a specific set of indicators reflecting good governance, economic investment, and investment in people. Once selected for MCC funding, for example, Ghana had to develop a compact proposal explaining the initiatives they would like funded, and agreeing to transparency and careful accounting during implementation of the projects. The U.S. not only provides the funds for the projects – like the highway – but the MCC helps Ghana establish an on-the-ground group to manage the projects. Compacts run for five years – making funding predictable and allowing longer-term projects – like highway building – to take place.

Highway 1 feeds from the rural areas into Accra and is the major transportation artery in the country. When it is finished, its six-lanes will enable workers to commute to Accra and goods to be transported to the airport for export in a timely manner.

We travelled on Highway 1 to a farm where as many as 50 farmers have been trained by the Millennium Development Authority – the local group that helps implement all of the MCC projects in Ghana. The farmers have learned how to and improve their access to seed and fertilizer, and received other vital training. There, the farmers told us a little bit about how this training has improved production on the farm. For more on that, check out this video:

The highlight of today’s visit was without a doubt the Jei River pineapple farm. Jei River was started with funding from the MCC. With this start-up money, the farm has grown to be one of the largest in Ghana and specializes in four different types of pineapple. My favorite kind was the Sugar Loaf pineapple. It is white both on the inside and outside, and is very sweet (just as the name suggests). This farm was an example of how a small loan and proper training can become a sustainable farm with as many as 400 workers.

These are just a few of the places we visited today, and each time we arrive somewhere new, I am struck by the resourcefulness and diligence of each individual. I’ve also learned how important it is that we listen to people on the ground to make sure that whatever the United States does to provide aid ensures sustainability for the future. The Millennium Challenge Corporation appears to be a pretty good start.

-Chandler Smith

On Tuesday, the Transatlantic Taskforce on Development released their first-ever report. The Taskforce – the only one of its kind – brings together individuals from the United States, Canada, and Europe, representing governments, NGOs, and the private sector, to discuss global development issues. The Taskforce was assembled by the German Marshall Fund (GMF) of the United States and the Swedish Ministry of Foreign Affairs; ONE’s Executive Director, Jamie Drummond, is a member of the 24-person Taskforce.

The Taskforce’s report presents policy ideas on which North America and Europe can collaborate in order to pursue a broad development agenda, even in the face of the current global financial crisis. The authors laud past moments of international consensus around development – like the Millennium Development Goals (MDGs) – but are adamant that without spurring economic growth in developing countries, and meeting Official Development Assistance (ODA) and trade commitments, recent gains in combating poverty are likely to be reversed.

Meeting the funding commitments previously made to developing countries – and demonstrating that aid does work – is particularly essential in light of the global financial crisis and the threat of decreased development assistance. As the report notes, “It will be increasingly vital to continue to demonstrate that aid actually works, and to show results and impact. A clear message of how the development agenda is linked to the interests of those in developed countries must be repeated and reinforced.”

The Taskforce report provids policy recommendations in four areas in which transatlantic cooperation is necessary for achieving global development goals. It emphasizes that the policy environment in which development takes place must be based on trust and inclusion among developed and developing countries, and encourages policy coherence between North America and Europe. The following is from the GMF press release on the Taskforce meeting:

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For the last several months, a number of global development-focused NGOs across the United States have been advocating to update the way the U.S. administers its development programs. ONE is asking Congress and the Obama Administration to elevate development as a national priority and update the Foreign Assistance Act of 1961 (the legislation that governs how foreign assistance works). By streamlining and updating the channels through which US contributions are distributed, we can ensure that U.S dollars are put to use more quickly and more expansively.

For an overview of why modernizing foreign assistance is necessary, check out this Reuters article. The authors draw from the perspectives of Howard Berman, a senior Democrat who heads the House of Representatives Foreign Affairs Committee, World Bank President Robert Zoellick, Steve Radelet, a senior fellow at Washington’s Center for Global Development, and the Modernizing Foreign Assistance Network (MFAN – of which ONE is a member).

For more information on MFAN, please see www.modernizingforeignassistance.net.

-Sara Rogge

After heading back from the Financing for Development conference in Doha, ONE’s Berlin-based Policy Manager Andreas Huebers pulled together an analysis of what the final outcomes could mean for Africa and other developing countries. Some excerpts of his analysis are below and the full policy brief is available here.

Although the final outcome document from Doha was not as ambitious as ONE had hoped, the “Doha Deal” struck on the last day of the conference does contain some important language on ONE’s core issues and opens the way towards a strengthened follow-up-process for financing the Millennium Development Goals.

Some positive outcomes of the deal include the following:

• Aid promises: Pledges on aid quantity and quality were weakly reaffirmed. The historic commitments made in Gleneagles to increase ODA by $50 billion globally (with $25 billion of that increase dedicated to Africa) were repeated in a contorted way, by welcoming the Hokkaido-Summit declaration that the G8 are “firmly committed to working to fulfill these commitments”.
• Innovative finance: The outcome document mentions existing mechanisms such as Advanced Market Commitments (AMCs), IFFIM and the air ticket tax.
• Trade and investment: The final document recognizes that development assistance can play a catalytic role in mobilizing private flows. On trade, it reaffirms “special and differential treatment” of developing countries and urges countries to reach agreement by the end of the year on modalities for the Doha Development Round of trade negotiations. It also calls for timely and full implementation of aid for trade commitments as a complement (not a substitute) to the conclusion of the Doha Round.
• Tax evasion and capital flight: The outcome document requests that the UN’s Economic and Social Council make a proposal on this issue. The World Bank’s Stolen Asset Recovery Initiative (StAR) is mentioned in general language and the document calls for additional measures to prevent transfer of stolen assets from developing countries to accounts in the developed countries.
• External debt: The “Doha Deal” mentions a “debt restructuring mechanism based on existing frameworks and principles,” (which can be interpreted as the continuation of the debt negotiations in the creditor-driven Paris Club) and also speaks of “joint responsibility for debt sustainability.”
• Role of developing countries in shaping a global response to the financial crisis: Participants agreed to hold a high-level UN conference in 2009 on the financial crisis and its impact on development. Many other decisions (such as a strengthened follow-up mechanism) were pushed to spring 2009, and a follow-up conference in 2013 is being considered.
• Role of emerging donors: The document includes very general language on South-South cooperation and calls on “new donors” to adhere to principles of aid effectiveness.

The conference was also used to kick off a couple promising new initiatives- the UK launched its Aid-for Trade Strategy and announced that it will spend £400 million annually on aid for trade by 2010. The international task force on innovative financing for health met for the first time and decided to have the next meeting in the spring in London. Germany, Pakistan and the Global Fund also signed a debt2health agreement, through which Germany will cancel $40 million of Pakistan’s debt and Pakistan will contribute $20 million to the Global Fund. Subsequently, the Global Fund will increase their financing of health programs in Pakistan by that amount.

-Andreas Huebers

There is a final document! We don’t have to reschedule our flights. And there seem to be quite some people who think that this is a good outcome.

We are not too overwhelmed by the results. Clearly: this was a difficult environment for such a conference with one of the biggest financial crisis since decades going on and the US as most important player in-between two administrations.

In the final communiqué donors gave a weak reaffirmation of existing commitments. Interesting is the language on timetables encouraging all donors to present by the end of 2010 timetables how they want to reach their aid commitments. This is particularly relevant for the EU countries. They will have to tell their population and development partnershow to reach the famous 0,7% by 2015, the fraction of GNI which is supposed to go to development. It also includes detailed language on aid effectiveness, without explicitly endorsing the Paris declaration.

What we think is positive is that it is acknowledged that adaptation to climate change in the developing countries will demand additional funds – but not specifying who has to contribute those additional resources (which is not so positive). The climate change conference in Poznan will have to confirm that it is the polluter (i.e. developed countries) that should pay.

The main thrust in the area to tackle corruption came through a number of side events. This topic was clearly on the top of the list of many NGOs and was muched talked about in the hallways. The document mentions “effectively combating tax evasion” but unfortunately does not name measures against tax havens explicitly. It also urges all states to “consider ratifying” UNCAC.

It is quite a success for the developing countries that they managed to have a UN-conference in 2009 on the highest level about the impact of the financial crisis on development. This was something they and many NGOs fought for very hard because the concern was that the poorest countries would not have a say in the new financial architecture if it would be only discussed among the G20. Other language on trade and debt relief were rather general.

These were interesting days, talking to delegations and journalists and following the negotiation process. The special envoys of the Secretary General, the German Minister Heidemarie Wieczorek-Zeul and the South African Minister Trevor Manuel did a good job in pushing for more and better aid and encouraging progress on innovative financing for development. The story will continue next year in London at the G20 conference. Until then we say “over and out” from Doha! Thanks for following us through these days!

-Sergius Seebohm

This past Tuesday, a group of African finance officials met in Tunis to discuss the impacts of the global financial crisis on the continent and strategize about how to address the likely consequences. The meeting was a call to action from the African financial community to the leaders attending the G20 summit to put the concerns of the developing world on the agenda for the meeting, which begins tomorrow in Washington, D.C., and to consider Africa’s dire situation when addressing the financial crisis. As we’ve outlined in previous posts, for many African countries the financial crisis could mean an increase in poverty and inflation, a decrease in economic growth, and a deepening of the food and fuel crises already gripping the continent.

ONE’s Edith Jibunoh in Nigeria has sent along a few highlights from the communiqué issued at the meeting which detail important points for this weekend’s G20 summit and the upcoming Financing for Development conference in Doha.

• Ministers said that the financial crisis is undermining Africa’s progress made in the last ten years and, along with the impact of climate change, will hamper countries’ abilities to achieve the Millennium Development Goals. They also expressed concern for the impact the crisis would have on trade and investment.
• On trade, the ministers urged a successful conclusion of the Doha Round of global trade negotiations, especially considering the spillover of the financial crisis to trade. They promised do their part by taking steps to improve the supply capacity in African countries through enhancing competitiveness, building infrastructure, and promoting greater economic integration within Africa. Ministers also promised to deepen their economic reforms and strengthen structures of governance and accountability.
• The Ministers also emphasized the importance of the international community keeping their commitments to Africa to improve aid quality, consistent with the Paris Declaration and Accra Call to Action. They asked that the F4D conference in Doha endorse these issues and reiterate their commitments.
• Finally, the participants asked South Africa to convey their views at the upcoming G20 meeting, although they stressed that one country representing the continent was not a substitute for inclusive African participation. They called for “new multilateralism” that fully reflects current realities and ensures the proper representation of all countries.

ONE will be bringing you information about the outcome of the G20 summit next week, so be sure to check back here.

-Beth Adler

The 3-day negotiations in Accra between developed and developing countries have delivered a better result than we expected, especially on aid transparency, which we asked ONE members to push for in emails and calls to the World Bank and US government.

At the end of day two, it looked as though the result of the negotiations would be pretty soft; fine words, but few specifics. But on the third and final day the politicians arrived and the Europeans decided that the final text was not good enough!

They reopened negotiaitons and, as a result, all major donors have agreed to take a number of positive actions on transparency and predictability. They have agreed to provide regular and timely information on 3-5 year expenditure plans, making it much easier for recipient governments to plan.  Donors have also made specific commitments to use developing countries’ own systems for delivering aid. 

This is really important because at the moment almost half of all aid is spent without the government in those countries being involved. The aid goes direct to non-profits, charities, local authorities, hospitals etc. While central governments are not always the best channel for aid, the lack of information-sharing makes it very hard to make the most efficient use of resources. By making a bigger effort to use country systems for aid delivery, donors will also help to build up a country’s internal financial controls. By-passing those systems tends to undermine them.

In addition to these measures, donors have acknowledged the problem of donor ‘orphans.’ In other words, (more…)

Hello from Accra, Ghana, where ONE is taking part in major meetings about aid effectiveness this week.

A team from our London and Nigeria offices is here, joining hundreds of others from government and civil society from around the world, to make aid work harder in the fight against poverty.

We know that effective aid is improving the lives of millions of people, but a slowing global economy and rising food and fuel costs makes it all the more important that every cent is spent well.

There are many ways to improve aid effectiveness. ONE, as part of a new group called “Publish What You Fund,” is concentrating on improving the quality of information on aid spending.

Without good information, planning for schools, hospitals, roads, sanitation and the other elements of development is extremely difficult. Citizens also find it very hard to hold their governments accountable. And without good information, it is impossible to be sure that resources are being used well.

In many very poor countries, up to half of spending on donor-funded development projects is done outside government. This is sometimes necessary if local systems aren’t in place, but this can also lead to a lot of duplication and waste of resources.

At the High Level Forum on Aid Effectiveness in Accra this week, (more…)