development
Simon Maxwell

Seeing the wood for the trees: why Busan must raise its sights to shape the future of aid

Good news. Ministers from rich and poor countries will meet in Korea in November, to discuss the future of aid, at the High Level Forum on Aid Effectiveness. This will be the best-attended and most important meeting on aid since  - well, since the High Level Forum last convened, in Accra, in 2008.

Bad news. There is little indication in the preparatory work that Ministers recognise the scale of the challenge facing the aid community, nor the extent of change that will be needed in coming years. The Busan process is well led by two co-chairs, former Dutch Minister, Bert Koenders, and the distinguished Egyptian academic, Talaat Abdel-Malek. But Busan will fail if they cannot persuade Ministers to lift their eyes from a technocratic debate about country ownership, donor coordination and results-based management. The global context is changing. Either aid changes too, or it will lose public support and wither on the vine.

The context is shaped by extraordinary success in lifting developing countries and their people out of absolute poverty. It goes without saying that the job is still unfinished and that grinding, desperate poverty remains an affront, the well-spring of our commitment to international development. But consider this: in 1970, in poor countries, typically one child in five died before the age of five; today, the figure has fallen to about one in twenty. That figure is too high, and many children, especially in Africa, still face a higher risk. But falling child mortality is the result of higher income, better maternal health, improved nutrition, more widespread vaccination, increased coverage of health care, better education and improved communications – all successes for which people themselves, and their governments, and aid donors, can claim some credit. International development as a project has not been a failure. It has been and is a success.

Success has a corollary. In 1970, most poor people lived in very poor countries, with no resources. That is no longer true. Most of the poorest, about three quarters, now live in middle income countries. China is a middle income country, so is India, so are Vietnam, and Bangladesh and Ghana and Brazil. These are countries which have large anti-poverty programmes of their own, variably successful, but funded from their own resources. As a group, the middle income countries are growing faster than the rich countries, have large foreign exchange reserves, and are newly assertive on the world stage. Many have aid programmes of their own. India, for example, has just announced a new $US 5bn aid programme for Africa, to be spent over the next three years. Do countries like India need aid from their traditional donors? Perhaps, but on a smaller scale, on different terms, and in a different form. Blended finance, comprising both grants and loans, will play a large part. Partnership with the private sector will be prominent. NGOs could play a really valuable role in supporting civil society.

The priority for aid, however, must surely be the very poorest countries, fewer in number than they were, and, in the majority of cases, beset by political instability which makes it difficult to spend aid other than through humanitarian channels. In Sudan, or Burundi, or Burma or Haiti, the challenge facing aid donors is to make aid more political and combine aid with foreign policy and even military instruments: to make and keep the peace, invest in good governance, and help makes states capable, accountable and responsive. In these countries more than others, the need for legitimacy demands that donors work through the multilateral system, privileging the United Nations and the multilateral development banks over their own bilateral efforts.

While the focus narrows for country-based aid, it widens on the global stage. National well-being – for rich countries as well as poor  – is increasingly shaped by what happens at global level. Financial crises affect all countries. Resource scarcities shape all economies. Climate change is a challenge everywhere. Security threats leak across borders. To paraphrase John Donne, no country is an island. Even islands are not islands in this sense. The global commons are where action is most needed, for example at the G20 and at the climate talks. Global investments also represent the future of aid. Again, the challenge is multilateral in scope. Individual donor ministers cannot abstain from collective action.

These points do not let donors who have let aid volumes fall behind their pledges off the hook. Indeed, a focus on global issues helps make the case for aid to publics sceptical of the need to maintain aid when fiscal pressures are strong. David Cameron made this point at the G8.

And quite apart from the intrinsic value of spending in this field, rich countries made promises on aid volume which some have not kept. They will destroy trust, a vital ingredient in international relations.

Ministers need to tackle these issues head-on at Busan. The High Level Forum will succeed if:

  • Rich countries reaffirm aid pledges and commit to timetables for meeting them;
  • Emerging countries also make aid pledges, and commit to working with other donors within the multilateral institutions;
  • Middle Income Countries and their donors agree an algorithm for reducing aid as economies grow, for example reducing the overall volume, increasing the share of loans, and developing new partnerships with the private sector and NGOs;
  • Donors old and new agree a new approach to aid in fragile states, combining traditional aid with new instruments to secure stability and improve state performance;
  • Specific commitments are made to funding global public goods with aid;
  • Progress is made in delivering the pledge made at Copenhagen to provide ‘new and additional finance’ for climate change.
  • All countries commit to channelling a greater share of resources through the multilateral system, reducing overlap and duplication, and at the same time increasing the international legitimacy of aid;
  • Countries also agree on the importance of reforming the multilateral system, and preferably a timetable to improve the accountability and performance of the Multilateral Development Banks and the UN.
  • A strong link is made to the G20 agenda, not just the so-called ‘development agenda’, but also global imbalances and other aspects of global regulation.
  • Oh, and Ministers leave, as advertised, with renewed enthusiasm for results-based approaches, predictability, accountability, donor coordination, and recipient country ownership.

Is any of this likely to happen? On present form, the odds are long against a radical change of direction. The technocratic agenda takes pride of place. But both Bert Koenders and Talaat Abdel-Malek are experienced operators in the international system. They know a new vision is needed. Can we help them deliver?

 

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