Let's start the discussion here.
Please let me introduce my country UAE Regarding Development aid. The UAE is internationally recognized as one of the world’s top donors to humanitarian response and sustainable development. The UAE Foreign Aid sector is comprised of a number of development, humanitarian and charitable foundations. Nowadays, there are more than 30 organizations engaged in foreign aid activities, including a number of ministries, and government entities and departments. The UAE’s foreign aid sector has made significant progress in recent years, as established humanitarian, development and charity organizations aim to meet emerging needs and challenges. Some organizations were established to tackle specific issues; for example, the Abu Dhabi Fund for Development gives loans and grants towards infrastructure projects in developing countries, the UAE Red Crescent Authority provides humanitarian aid, Dubai Cares supports the Millennium Development Goal of achieving universal primary education, Noor Dubai aims to eliminate some of the causes of blindness, among others.
In 2011, UAE donor organizations disbursed a total of 2.11 billion $ in grants and loans to development, humanitarian, and charity programs in 128 countries. In addition the Abu Dhabi Fund for Development (ADFD) committed another 183.7 Million $ to development programe beyond 2011
In my openion to make sure that Aid to development is working properly we should be aware of these points
1- Effective Partnerships Proactive communication with donors and international organizations
2- Accuracy and Transparency In reporting about aid flows
Please Check these links for more details
http://www.ocfa.gov.ae/ResourcesGuidelines/UAE_Foreign_Aid_2011_EN.pdf
http://www.adfd.ae/media/publications/Annual%20Report%2020072008/ADFD%20Brochure%202011%20English.pdf
In my opinion, and by the knowledge that I gained in my work as a collaborator in the Ministry of Foreign Affairs and Cooperation of the Government of Spain,i can say that development assistance can be both effective and ineffective .
I can't speak to the specific examples that I know, but if i can say that in many occasions by directly transferring the development aid to the budgets of developing countries, which in most of the times has led to the complete loss of aid.
Corruption is the most serious problem of the development aid; in multitutd of occasions the money disappears or is not used for the project for which it was granted; in others, it is done a wrong approach to the projects and in many other are not taken into account the local customs and traditions, the projects failed to be developed from the western mindset.
Therefore see to it that the aid to development effectiveness and get to where you need, it is necessary maximum transparency, knowledge of the field and of the idiosyncrasy of each nation to which you want to help, and especially establish mechanisms for monitoring project by project to prevent the occurrence of fraud or embezzlement.
I agree with the need for effective partnerships and proactive communication, for transparency and accurate reporting.. but how do you ensure that it happens in the midst of corruption and institutions that cannot properly fulfill their goals? One of the issues with aid is that it helps government institutions shirk its obligations, why look for ways to become more efficient or even self-sufficient if aid is going to step in anyway and unburden that load? I believe in aid, I believe help is deperately needed in many places, but unless aid results in sustainable and long term change it causes more harm than good.
There is no denying the evidence regarding international cooperation, that after many years of development aid the gap between rich and poor is growing, the GDP of poor countries hardly undergoes changes due to this help. Many technicians and politicians dedicated to international cooperation see this as a theoretical failure because donating countries never take their investments in the development of their underpaid raw material suppliers seriously. "The Lost Decade" referred to the eighties in Latin America, it was a phrase that between development technocrats and political scientists, summarizes the feeling of failure of development aid.
On the other hand, cooperation has been crucial to support basic social services in much of Africa, as in the case of the countries of Mozambique, Burundi and Tanzania, not to mention reducing the impact of humanitarian crises.
There is a gradual progress in universal primary education, verifiably achieved in Burundi, Tanzania, Rwanda, Togo and Benin: reducing malaria deaths by 20% and reducing HIV-AIDS infection by 21% and death from HIV-AIDS by 19% according to the data. The strategy for TB control has also saved six million lives.
There seems to be the eternal debate that the medicine is worse than the disease, but like all strategies, development cooperation has positive and negative parts
Working at the Ministry of Foreign Affairs, the impression is that Development Aid (DA) is a direct link towards poverty reduction and development because one in good faith assumes a series of variables, according to Ministerial regulations, and you presume that everything will go smoothly.
However, the ipso facto assumption of this direct link is a mistake and can prove to be deceitful (e.g. major surveillance and careful screening, before and after it is done, is necessary). As was said at the start of the audio/podcast, “good ideas with bad motivations” can end up badly, thus hindering this relation. Conditionalities and hidden purposes deeply undermine the direct link.
Another problem with DA is that it is still majorly based on a “colonial powerful-weak equation”, on economic principles that do not include freedom and welfare in the majorly economic growth-biased and stereotypical definition of development, on the New Economic Order and on the following phrase: “Without aid, it is impossible to escape the poverty trap”. The depressive development indexes, the economic stagnation of some countries within the African continent,… have questioned the value (or rather de-value) of DA. Its effectiveness is more complex and some insincere economic interests for both certain members of recipient countries’ government officials and governments/companies from donor countries unfortunately complicate this a priori simple equation. When talking about the possible worsening of conditions of DA (e.g. armed conflict), Ballentine (2003) starts explaining in Chapter 10 that “economic incentives and opportunities have not been the only or even the primary cause of (…) armed conflict, (…) they interacted with socioeconomic and political grievance”. The necessity to carefully analyze the situation of the country, where the DA will be given, is crucial (e.g. in the past and nowadays, DA has served as a succulent reward that encouraged armed conflict).
In this context, the document from the German Federal Ministry for Economic Cooperation and Development adds the concept of Human Rights (HR) and how HR violations “in a given context are often a primary reason for conflict and violence, both latent and manifest”. During these past few weeks, we have acquired and grasped to a certain the concept of Development and the 1986 RtD, hence its holistic framework and above all its highly beneficial HR inclusive nature. As a result, when talking about DA, one cannot only talk about Free Trade, for it doesn’t focus primarily on Human Rights and because it is blatantly obvious that there are certain conditionalities involved. In this sense, DA (especially in terms of Aid for Trade, AfT) is used, in my opinion, as a Soft Power “false flag” foreign policy, for it does not address what it is supposed to. If anything, they have proven to be an elaborate system to implement “arm-twisting policies”, in terms of trade and finance, on some developing and LDC countries, that render them utterly helpless upon the cruel fate of what Mojo (2009; page 13 PDF) calls “the vicious cycle of aid” and “the silent killer of growth”.
“Peer-to-peer” relations, in my opinion, and the avoidance of aid dependency by empowering nations to acquire the “DA toolbox”, are essential for the future implementation of “policy lessons” (Ballentine, 2003; page 13 PDF), which should include “holistic policies of conflict prevention and resolution that integrate economic, political, military, and diplomatic measures”. Not just economic ones.
Moyo (2009) criticizes quite rightly the lack of effect of the $1Tr of aid (page 5 PDF) from rich countries to the African continent, but with some points signals that we must not let our hopes down: “Marshall Plan” (could a new one be implemented for a post-colonial Africa and have the same effect? It would definitely be worth a try, in my view), “IDA graduates” (how aid dependent countries are no longer so), “conditionalities” (DA should reflect Development and recipient priorities, not donor interests), the importance of establishing “good policy environments” and the aid effectiveness following the “micro-macro paradox” (here, we could include the concept of “poisoned gifts” to the discussion).
I'm not very convinced on a new type of "Marshall Plan" for developing nations. Moyo also writes that each country that recieved aid in the Marshall Plan never averaged recieving more than 3%of their GDP while currently some nations foreign AID makes up more than 20% of their GDP. This creates a situation where loan repayment is impossible. Also, europe already had an established social and human infastructure. There were already doctors, lawyers, firemen, teachers etc... And instututions such as police and judicial systems' framework already existed and people respected them.
I have to disagree with some of you; more accountability and transparency mechanisms are not something new in development that nobody has tried. This is too simple of an answer to a very complex problem.
The approach to development is what is flawed. A way to make sure that development aid actually goes towards development would be a focus on a human rights based approach (HRBA) in development instead of economically based. Economic based aid has been the main tool for too long and Moyo outlines some of the reasons why this aid does not go to actual development. When there is lots of financial capital readily available in bank accounts it is possible for many people to steal this money at any time they please; but a politician cannot steal human or social capital. The good thing about a HRBA to development is that its goals indirectly include physical infrastructure and economic development.
A simpler example would be financial aid donated to buy mosquito nets, vaccinations, and pesticides will fight malaria in the short term but it will not do anything for the sustainable development. And what is worse is that that money can be stolen at any time by officials. On the other hand, training a local population to build mosquito nets will create jobs, workshops on how to prevent mosquitos from breeding will prevent spread and training doctors to deal with sick persons will all help create a sustainable development solution. A HRBA is more of a long term process even though Africa is already behind 50 years, it’s still not too late to start. Development aid will be used for development if the money targets individuals instead of governments.
I agree with some statements and disagree with others. And I haven't finished all readings and listening yet. Anyway, here I will try to point out some topics which are, in my opinion, key issues to take into account when talking about how making foreign aid work effectively for development. I hope it is not too long, so I will try to explain them schematically.
1) A multi-level approach is absolutely necessary in order to increase aid effectiveness and to assure accountability and transparency.
a) We cannot work only with citizens without taking into account governments: we would give non-sustainable solutions, on a non-democratic basis, and we would not produce any structural change at all: for example, we would transfer resources to citizens who are still living under the control of a badly-governed state, which would eventually keep on stealing or violating Human Rights, etc. Or - another example - we would allow a discriminating using of aid resources to help just people of one religion, or with one specific political belief, etc.
b) And this is valid the other way round too: we cannot work only with governments without taking into account citizens: high risk of corruption, bad using of aid funds, resources dispersal within public (and often corrupted) institutions, etc.
2) There already are big efforts from international community: the Aid Effectiveness Agenda, which has been developed throughout several international summit (mainly Rome 2003; Paris 2005; Accra 2008; Busan 2011). In this agenda, 5 main criterias were highlighted as necessary in order to increase aid efficiency: Ownership, Alignment, Harmonization, Results-oriented management and Mutual accountability. The content of the Agenda is not perfect, but there are still some points which have to be remarked within the overall trend:
a) 'Alignment' means a gradual shift from "helping poor countries" to "Partnership with developing or less-developed countries": we're talking about an association of states which undertake the committment to work together. It was meant, among other, to reduce conditionalities in aid for development and to start putting an end to the neo-colonialistic approach to international cooperation for development. In a few words: the aid receiving countries must be given the right to decide (together with donors) how to use the funds available from donors. Let's say that low developed countries are not beggars.
b) 'Results-oriented management' refers to an effort to set up priorities and to reduce the fragmentation of interventions (both geographically and sectorially) through a better coordination. For example, the Millennium Development Goals set up a range of concrete goals and indicators in order to measure to which extent the aid to development is being used effectively.
c) 'Mutual accountability' means transparency, mutual communication both among states and with citizens from the all countries (donors and recipients)
d) 'Ownership' means that the recipient countries become de facto co-owners of the aid flow. It implies, for example, that aid is given within a co-financing framework: the donors give one part, the recipient give the other part to finance a big development process. This help to avoid the creation of a sense of dependency and the 'entrepreneurship killing' in poor countries.
3) We cannot blame the aid inefficiency of the worldwide underdevelopment. Surely foreign aid to developing countries has not been the best solution in many cases, or even - in a few cases - it may have affected development processes. But we must remember at least these important points:
a) Very few countries have reached the 0.7% of GDP in aid, which is the committment that all developed countries have assumed before the UN. In other terms, foreign aid has never been enough to fight against poverty and underdevelopment.
b) The IMF and the WTO has much more power (and money, of course) than the aid institutions. So, if developed nations give - let's say optimistically - 0.3% of their GDP to foreign aid to development, but at the same time through the IMF they impose heavy cuts over developing countries welfare state; and then, through the WTO they oblige the less-developed countries to maintain slavery-like salaries for their workers, in order to keep on being competitive.
So, is the aid for development still to be blamed for underdevelopment? Maybe we do need to better connect and to make the whole foreign policies of developed countries more coherent and international developement-oriented.
This has been a fascinating discussion, and I think, has been helped a lot because of the signicificant practical experience that some of you bring in from your work with your governments. Fortunately, we can continue this discussion because of the weekend. The first thing that I would like to comment on is the special nature of humanitarial or disaster relief aid, which we all can agree, is absolutely vital whatever be the circumstances. When we are discussing about Development Aid here in the context of the course, that is more of the systemic type - the aid that is purportedly aimed at development of the recipients.
Now, from your discussions, it is quite clear that development aid is not a bad idea per se - in fact, there is a lot of potential good it can do. Unfortunately, the strategies are worng. Sometimes, lack of trasparency, accountability, multi-stakeholder approaches etc. are big problems. But let me throw in a more systemic problem to this excellent discussion. As I mentioned in my presentation, development aid is, at the end of the day, taxpayers money in the developed countries. I frankly don't know how it works in the UAE (is it from the taxes or from central reserves or royal foundations), maybe Khalifa can help us with that, but in most other donor countries, it is the taxpayers money. Corporations and businesses are some of the biggest taxpayers. Now, if that is the case, it would appeal to logic that donor governments would expect something in return from the aid that benefits the taxpayers as well. There is nothing wrong really in that expectation in principle. Yet, what this means is that the recipient countries hardly have a say in where the development aid goes. The sectors where they go are usually chosen by the donor countries based on their interests (such as the case of Ugandan highway that I mentioned in the presentation). Plus, if there is a sort of quid pro quo expectation, is it really 'development aid'? One classic, and indeed quite revealing case of this systemic problem is here or http://www.guardian.co.uk/global-development/poverty-matters/2012/feb/06/old-british-aid-policy-rears-head.
I encourage you all to go through this short article and let me know what you all think. Is this a systemic problem that defeats the very foundational purpose of development aid? An alternative view could be that there is nothing wrong with mutually beneficial aid policy - where everyone benefits - the recipients as well as donors. Your views?
Thanks alot Dr. Mihir for the question, and it is very good question
In UAE we dont have taxes, there is Private charities where everyone could donate in it, Royal foundations and the government.
Reading over the discussion I think we all failed to mention the point that you raised about the donor countries deciding how the aid is used as seen in the Ugandan Highway example.
One of explanations of the failure the failure of development aid is often corruption or that donor states still haven’t figured out how to help develop states properly; This argument that nations are corrupt and the donor states are some sort of altruistic being that just hasn’t cracked the development lock yet is dangerous because it puts the blame on developing states’ corruption problems and never on the donor nations. As Langan and Scott point out, aid actually helps European and North American corporations more than it helps the developing communities in which they are operating in and can often be used to keep the poor, poor.
Aid pays for road building and other types of infrastructure, but who is really profiting from this development? To no surprise, there are very few Malian, Congolese, or Ugandan corporations that have enough knowledge and resources to carry out a large scale infrastructure project. What happens instead is that the contract is given to a European firm creating what Langan and Scott call a ‘boomerang-aid’ effect where the large portion of the money from development banks ends up staying in Europe and the developing nations are only left with pennies, and often roads that don’t even benefit human development.
The Kenyan roads that Langan and Scott write about portray the donor country investing in itself example very well. Where in Kenya, development aid is given to European firms to build roads, but one of the problems is that the roads built are to connect farms, which export agriculture to the EU, to the ocean ports. This example can be interpreted as what is really happening in the development industry where the interests of development are not the local community interests but rather the donor nations.
If we want to make sure that development aid actually gets used for development, instead of the easy answers of transparency and reporting we need to be smarter. For example, a stipulation in aid that says X percent of this money must be given to be used by local companies. Or when designing the aid purpose Y amount of members from the local communities must be given the opportunity to provide input and have the power to reject the plan. Something more along the lines of the criteria written by Aram would be much better than what is in place now where developed nations actually benefit more than developing nations from aid money.
Does the EIB, WB, or IMF have the records online of who actually gets paid when development loans are given?
Great post Alex. I think you have raised several excellent points here and if I were to identify one starting point for change, I would say - ask the recipients what their development priorities are and then grant aid for those priorities! But again, that is only a starting point and actual change would require several simultaneous paradigm shifts.
The writings from this theme, especially the Langan and Scott one, show us that "donor" nations are actually just "investor" nations where they invest based on the percieved returns they will recieve.
I think the possible solution you bring up creates political problems:
"ask the recipients what their development priorities are and then grant aid for those priorities!"
Why would a donor nation invest in something that they percieve is the idea of a corrupt government in some cases? Or why would an intvestor invest in an area that they are not 100% sure will bring financial returns to them? We have to remember that the donor nations and banks are not some sort of altruistic beings; they are actualy looking for some sort of profit.
Aid recipient nations, knowing that the aid is often dictated to them, must find ways to convince donor nations that investing in other sectors is also financially beneficial. For example, Langan and Scott point out that the majority of aid projects is spent on physical infastructure, mainly roads; why could this be? Just from speculation, it is probably because it presents the most investment returns for donor nations because they will be the ones benefitting the most from the building contracts, and then those same developed nations will benefit in the long run from cheaper products that the roads connect to sea ports
We need to convince donor nations that other sectors are equally or more profitable and promise sustainable returns for developed as well as developing nations. An alternative to connecting every agricultural community to the ocean could be telecommunication infastructure investing with a promised X year contract to the donor nation. This way, the developing nation benefits from development in this sector, the donor nation is convinced that their investment will have returns, and at the same time local workers are being trained and learning how to run a telecomunications network and when X years are over the handling of the telecomunications system is handed over to the developing nation to run.
This is just an idea from the top of my head. Does anyone else have any ideas that could bring sustainable development and are financially attractive to donor nations as well? (preferably non infrastructure related)
As I have said in my previous post, there are no universal recipes to guarantee the aid for development is used in a proper way. Nevertheless, there is a clear trend in international community for development. The Aid Effectiveness Agenda, as I said, clearly states that:
- Official Development Assistance (ODA) must be managed by recipient states. The recipients, when democratically elected, have the right to decide where to invest and how to use the funds from donors. It's called "Alignment" and "Ownership".
- Transparency (expressed by the concept of "Mutual accountability" within the Aid Effectiveness Agenda) guarantees a descendant rate of corruption. For this reason, evaluation and monitoring are a 'must' before, during and after the aid programmes are carried out.
As we can see, both "Alignment" and "Transparency" are needed, in order to increase aid effectiveness and good usage. Believe me or not, this approach is COMPULSORY for who of us which work in international development (at least, at the lower or middle level, such as within NGO or bilateral aid programmes). In practice: without having the official approval from the recipient government, the donor will never support (neither financially nor technically) certain aid programme.
Yet, it is hard to decide if we can use the aid for development without the approval from the recipient government. That should not be a decision made by donors. An example: Do you think Venezuela nowadays is a corrupted regime rather than a democratically elected government? No clear answer exists, as 50% of population thinks one thing, whereas the other 50% thinks the other way round. Democracy works like that: we assume that a population have the right to decide how to be governed - like it or not.
Moreover, another important point is related to "aid for trade". It's been a largely criticized WTO's strategy (besides the professor Mihir suggestions, listenings and readings, have also a look at: http://www.guardian.co.uk/global-development/2013/mar/15/aid-for-trade-effective-reducing-poverty ). Despite the Aid Effectiveness Agenda clearly states that 'conditionalities' for aid should be eliminated and even should not exist anymore, the "aid for trade" seems to recover the idea of conditionalities. From my point ofview, the aid for trade is based on (at least) two controversial assumptions:
1) "Free trade is a conditio sine qua non of development". Surely we can say that trade is an engine of development, but it is not the only one; furthermore, we know that free trade, as it has been implemented up to now, causes lots of problems: very low salaries and slavery-like work conditions in developing countries, etc.
2) Aid for trade deeply interferes in domestic legal framework on trade: aid is given by donors in change of structural adjustments in return for liberalizing markets. It is clearly a "condition", and thus, it is desrespectful of the right of states of making decisions themselves about their own development strategies.
Surely, aid for trade might be seen as a "win-win strategy" (the recipients as well as the donors) strategy. But in practice, there are no clear mechanisms to establish how the benefits are equally shared between the parts. As a result, very often the biggest benefits are enjoyed by developed countries, whereas just a small portion are left for the recipients.
So, maybe we should ask ourselves again: why have such wonderful principles within the Aid Effectiveness Agenda been established, if governments do not respect them?
We can not deny that too many times, international development aid is finally not used for its original purposes. What does this politically correct phrase means? It means what we are afraid to said, we are afraid to shout what we had to shout: Sometimes there is corruption in the development aid.
It looks like we were afraid to focus in the management of the “aid for development”. It looks like if we criticize the management, if we expose the reality of the bad management, if we denounce the corruption, somebody will attack us for denying aid to the development. Nobody denies help for development, only a few we denounce the corruption there is in the bad and corrupted management for development aid.
So, the first step for making everybody sure that development aid works is to fight against corruption. Against corruption in the donors and against corruption in the recipient. It is difficult to fight about the natural human being, who desires more and more at any price; and for me, in a country under an infinite corruption, it is difficult to speak about politically correct measures to fight against the corruption, nevertheless the action of free mass media which are not paid by the res publica is always positive against the corruption. And also, if the recipient is corrupted, the donors should work over the terrain and not giving the recipient corrupted administration any cent.
So, just a few points points: Not be afraid to denounce that good intentions are not working, to fight against the corruption, free mass media, direct participation of the donors over the terrain, and not too much collaboration with corrupted administrations.
I agree with Francisco. When there is corruption that leads to the loss of the full economic contribution, or to which the project is not deploy properly, produces an effect of distrust in the donors which causes no longer donate in total form or to drastically reduce their contributions with the consequences on the population of developing countries generates this fact.
Official Development Assistance may be financing corrupt practices or policies to combat corruption in developing countries that receive it. Spain, in line with other international donors, not worth it - liza to the most corrupt countries when locates their aid flows depriving them of this financial instrument.
The conditionality, the pipe through local NGOS and the transparency and publicity of the amounts for the ultimate beneficiaries, are recommendations that can reduce the adverse effects mentioned above.