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Donors, recipients discuss aid effectiveness

NewsNotes, November-December 2008

From September 1-5, ministers from over 100 countries, heads of donor agencies, and representatives of more than 100 civil society organizations met in Accra, Ghana, to discuss aid effectiveness: “ways in which rich nations can help developing countries and marginalized people in their fight against poverty, by making aid more transparent, accountable and results-oriented.” At the end of the week, ministers of both the developed and the developing “partner” countries signed an agreement called the Accra Agenda for Action.

The Accra conference was the third high level forum on aid effectiveness following on the 2002 Monterrey consensus; the first was held in Rome in 2003, the second in Paris in 2005.

From 2006 to 2008, consultations were held around the world, and evaluations of the implementation of the Paris Declaration were brought to Accra. One important addition from these consultations was the recognition that more actors/agents of development, such as civil society organizations (CSOs), should be included in the process.

Robert Fox (Oxfam) said, “The outcome of this conference was much better because of the active participation of civil society over the past 18 months, in which they identified a whole series of issues that were reflected in the accord.”

Donors pledged to move away from prescriptive conditions to taking into closer account partner (i.e. recipient) countries’ own aid objectives. Donors also agreed to use partner country systems as the first option to manage aid programs rather than setting up parallel structures. They committed to longer-term three to five-year aid programs and to share more information about donor funding with partner countries.

On their part, partners agreed to improve their dialogue on aid issues and to improve management of donor funds by building stronger institutions. As a result, partners expect to have more say in monitoring aid.

The five guiding principles of the Paris Declaration and the Accra Action Agenda are:

  • Ownership: Partners will exercise effective leadership over development policies and strategies, and coordinate development outcomes.
  • Alignment: Donors will base their overall support on partner countries’ national development strategies, institutions and procedures.
  • Harmonization: Donors’ actions will be undertaken collectively, and be more harmonized and transparent.
  • Managing for results: Decisions will be targeted for results and resources managed accordingly.
  • Mutual accountability: Donors and recipients will both be accountable for development results.

Although these principles are agreed on, some analysts from partner countries have reservations about certain aspects, for instance that harmonization may increase the donors’ collective power, that ownership could enable donors to deny responsibility when a project fails, that performance assessment indicators are quantitative and do not reflect civil society concerns for qualitative evaluations, that partner governments lack adequate human and technical capacity to properly review the process, that there is a power imbalance between donors and partner governments, and that partner governments will end up having to be more accountable to donors than to their own populations.

The Accra Agenda is a sincere attempt to move away from the Cold War purposes of foreign aid, but African countries remember the Cold War-era political purposes of aid: seeking compliance by friendly governments to engage in military operations, enlisting allies in the fight against terrorism, promotion of strategic or commercial interests, advancing the donor country’s culture or language, giving economic aid for ideological purposes, and continued giving of aid to corrupt, venal military rulers (the prime example being Mobutu Sese Seko of Zaire, the CIA’s favored anti-communism military dictator).

The United States, Europe, and now China, India and Brazil all have strategic interests in Africa in order to a) fight terrorism (U.S. especially), b) promote free-market economic policies (again primarily the U.S., but also some European countries), and c) gain access to Africa’s energy and strategic mineral resources. None of these interests are priorities for African nations, but offers of large amounts of aid to very poor countries can be quite tempting.

With regard to the connection between security interests and aid, Shastry Njeru (Midlands State University, Zimbabwe) recommends a major paradigm shift in the conceptualization of security in Africa. The former paradigm was state or national security, in which African militaries received huge amounts of aid in order to deter invasions from neighboring countries. However, militaries in Africa have been used almost entirely against their own citizens protesting corrupt, non-democratic rule or rebel armies within national borders, with the exception of the regional war in Zaire/Congo 10 years ago. The need for militaries in Africa to deter aggression from outside is today either minimal or in fact nonexistent.

State security has received disproportionate attention, and must be replaced with the legitimate concerns of ordinary people who seek security in their daily lives. The modern paradigm for security is human security. Threats to life in Africa are disease, hunger, unemployment, crime, social conflicts, political repression, environmental hazards, and climate change. Legitimate aid to Africa should address these priorities. Unfortunately, the U.S., the UK and other European countries have made aid a major component in their fight against terrorism. As President Bush said in September 2001, “We will direct every resource at our command to the disruption of the global terror network.”

Yash Tandon’s new book Ending aid dependence takes into account the above critiques of foreign aid, and adds that, even in financial terms, much of aid helps the donor nation as much or more than the recipient. Products and services must be bought from the donor country, which can actually cost more than if the poor nations borrowed commercially and bought freely. Technical assistance makes up almost half of all aid flows, and almost always comes from the donor country. This cost and high payments to expensive consultants, who also come from the donor country, bloat the expense, with the money actually remaining in the donor country. Often the advice from these consultants is of dubious quality and questionable utility. Also administration costs are counted as part of aid, as is money disbursed to foreign non-governmental organizations (NGOs) working in the poor country.

If aid comes in the form of a grant, there is no loss to the recipient country. But if it is a loan, even a concessional loan, then the poor country is expected to pay back the whole loan, even though less than half was disbursed within the country.

Although Tandon, executive director of the South Centre (Geneva, Switzerland), does not advocate the immediate suspension of all aid, he writes that “developing countries can liberate themselves from the aid that pretends to be developmental but is not. Exiting aid dependence should be at the top of the political agenda of all countries.”

His book consists of seven steps that developing countries must take. “The most difficult step is the first – overcoming the psychology of aid dependence,” he writes. “This has not only occupied the mindset of many if not most leaders in developing countries, but has also taken roots in mass psychology. This is an agenda that has to be captured by the people ... at community and grassroots levels. It also requires an enlightened and visionary leadership at national, regional and continental levels.”

In his foreword to Ending aid dependence, Benjamin Mkapa, former president of Tanzania, urges “developing countries to formulate strategies to exit from the aid dependence bandwagon.”

Mkapa points out that aid was never a strong component in the development of either India or China. They have been reliant on their own domestic savings, the development of a domestic market, the protection of local enterprises and local innovation. They engaged in the challenge of globalization and foreign competition only after ensuring that their own markets were strong enough. More recently, Brazil and Malaysia have ended their aid dependence through strong nationally oriented investment, trade and monetary policies.

Tandon mentions other resources that developing nations can use, such as remittances from nationals working abroad, putting a stop to private transfers that flow back to wealthy countries, minimizing profit transfers of multinational corporations, eliminating other forms of legal expatriation of funds from poor countries (called legal theft), doing a critical analysis of poor nations’ budgets to focus on necessities of development, and cracking down severely on corruption and corporate kickbacks to political leaders.

He summarizes his argument in the following words: “The present aid and development architecture at the international level is an obstacle to the realization of the national project. Three power asymmetries – economic power, political power and knowledge power – are deeply embedded in the existing structures. It is a continuing battle for the developing countries to try and secure policy space within the constraints imposed by these asymmetrical structures.”


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