Is ‘aid exit’ or ‘catalytic aid’ a new development strategy for poor countries?
You might think so judging by comments buzzing around about ‘catalytic aid’ or ‘aid to end aid’ from leaders of some of the world’s poorest countries – for example, the President of Rwanda in the FT a while ago (here) and more recently President of Liberia (here) and not a low income country (yet), the UK Prime Minister, David Cameron visiting Nigeria recently (see here) said:
…we can spend aid in a catalytic way to unleash the dynamism of African economies…
…kickstarting growth and development…
…and ultimately helping Africa move off aid altogether.
Added to this are the recent related report from international NGO, ActionAid on ending aid dependency which notes:
…the proportion of government spending that comes from aid and over the last decade it has fallen on average by a third in the poorest countries. In Ghana aid dependency fell from 47% to 27%, in Mozambique from 74% to 58% and in Vietnam from 22% to 13%. Although aid levels increased, economic growth and the countries’ ability to mobilise their own resources increased faster…
Reading all this you might say hey, what happened to the 0.7 thing? So, what does it all mean for foreign aid and poor countries development strategies?
Sesame Street is addressing head on the issues of 50m Americans living with hunger (see Alex post here on the staggering data in the Economist recently) by introducing a new character.
Lily, who doesn’t know where her next meal is coming from debuts on Sunday… Sounds political for a kids show?
Or perhaps a face saving reaction to the parody of the OccupyWallStreet protests (see also map of spreading protests here) that developed on twitter’s OccupySesameStreet – see comment by Mother Jones here).
Lily is sponsored by Wal-Mart Stores Inc.
The ‘traditional’ foreign aid donors (aka the OECD DAC) released it’s latest report (here) and stats on aid (here) this week. This is of course amid different debates each side of the Atlantic (the UK’s 40% increase in aid amid major public spending cuts and the US aid cuts that the NY times reported on here with infographic here).
So, what does this week’s report and new data say on who spends what on aid?
A very quick ‘3 take-ways’ run down:
First, who get’s most OECD DAC aid?
A rather strange top 10 rather unevenly linked to poverty or income levels:
Turkey, Pal, Afghanistan, Ethiopia, Serbia, Morocco, Sudan, DRC, Ukraine, Egypt…
What kind of countries get aid most?
55% goes to low income countries; 45% to middle-income countries.
Finally, which countries are aid dependent?
Surprisingly, not as many as you’d think if one takes 5% or 10% of GNI (gross national income) in ODA (overseas dev assistance) for medium and high aid dependency.
What to make of all this? How closely are poverty and aid linked?
The world’s poor live in 3 places:
1. Half of world’s poor are in China and India – these countries (arguably) have sufficient resources and in fact are both foreign aid donors themeselves – aid to China and India is probably in the shared endeavour of global public goods, possibly concessional loans.
2. A quarter of poor live in other lower middle income countries (MICs) – again plenty of domestic resources here so no real need for lots of aid but many of these are also fragile states or have governance issues – Pakistan and Nigeria – that no one knows quite how to intervene (see some thoughts here).
3. And a quarter of worlds poor are low income countries (LICs) who unequivocally need aid but most LICs will be lower MICs in next decade so what happens to aid after that?
This all leaves aid in need of an overhaul I think (see aid 2.0 post here).
Maybe aid needs a rethink with objectives related to insuring against new global risks – climate adaptation, financial instability for example or tried and tested poverty interventions such as conditional cash transfers direct to the poor?
Happy to hear views below…
I just finished a fantastic and provocative book – a wake up call to the aid and development ‘industry’ (of which I am a part so good to be woken up once in a while)…
The book is ‘Delivering Development ’ by rising star of the blogosphere Edward Carr (see his blog Open the Echo Chamber and good posts on all sorts of stuff). He’s part of what seems to be a growing group of people who have academic backgrounds, blogs and work in policy or what Nora Lustig calls the ‘scholar-practitioner’. In fact he is currently on secondment to USAID from University of South Carolina, working on issues at the intersection of development and climate change.
Ed has an interesting background. He went to Ghana to do an archeological dig, became more interested in events in the present, and ended up a social scientist mashup of geographer/anthropologist/aid and development policy wonk, focused on understanding how the global poor manage economic, environmental and other challenges in their everyday lives.
Given Ed’s book draws on his work in Ghana, it illustrates many of the contradictions of globalization that were in various headlines last week in the business press on Ghana’s incredible oil boom. The size of the Ghanaian economy grew by a third in just one year and there’s been a massive expansion of mobile communications in a country where average incomes are still only about $3/day per person (exchange rate conversion) and 1 in 5 live under the poverty line of $2/day (PPP$s) (see data here and there’s a reasonable but mixed picture on the UN poverty goals in Ghana – see here).
Just back from a lot of discussion on scarcity, resilience and crises at a conference convened by the Development Studies Association and European Association of Development Institutes.
The basic rationale for the conference are outlined well here and here. Crudely – lots of interlinked crisis and a need to think how to build adaptive institutions, ideas, and political coalitions. The conference blog is worth a look (here).
In short – global shocks in economics, food security and fuel prices, together with chronic stressors relating to demographic pressure, climate change and resource scarcity – aka ‘the long crisis of globalisation’ or the ‘perfect storm’ of problems – are combining to produce complex, shifting configurations of vulnerability as experienced by households and communities. And all of this is leading to more interest in the ideas of resilience.
Understanding these complexities and vulnerabilities in global development, and navigating global volatility for resilience-building purposes, is not straightforward (surprise). Together with Rich Mallet at the Overseas Development Institute, we review (and published by UNDP’s International Policy Centre for Inclusive Growth in Brasilia) represents one attempt to make sense of this problem. Reviewing the inter-disciplinary literature on vulnerability, we found that existing definitions of the concept largely fail to capture the multidimensional and complex nature of vulnerability in the twenty-first century. Vulnerability tends to be viewed narrowly by discipline or sector, which obstructs the kind of broad, holistic analysis needed to understand how patterns of vulnerability occur, how they shift, and what can be done to strengthen people’s capacities to respond. We call for a new analytical approach that is able to manage complexity and recognise the many faces of vulnerability…