2000
Reality of Aid 2000
Reality of Aid
The reality of aid at the dawn of a new millennium is that it is not helping to eliminate poverty—more than four million children born in the year 2000 will die before they reach the age of five. The facts of global poverty in the year 2000 are an indictment of the global political, economic and social order. More than four households out of ten in the whole of South Asia remain in absolute poverty. Absolute poverty is likely to have risen to 1.5 billion people by the end of 1999—one quarter of the world’s population.While economic globalisation has increased wealth for many and opened up opportunity and choice for people in both rich and poor countries, it is taking a severe human toll in both developed and developing countries.
The gap between rich and poor countries, and between rich and poor people within even the richest countries, has continued to grow. This gap reflects not just extreme inequalities of income but structural, social and political inequalities that entrench a growing number of people in poverty. The poverty gap is mirrored by the growing distance between the per capita income of the members of the Development Assistance Committee of the OECD and the aid they give. Put bluntly, the OECD countries have taken the conscious decision to neglect the needs of people living in poverty, despite overwhelming rhetoric to the contrary.
Crises
in Angola, Somalia and Central America have cost thousands of lives in the past
year without provoking essential shifts in the volume and nature of aid.
Meanwhile, the financial crisis in Asia generated a swift and significant
response from governments and institutions. Clearly
aid continues to be more of a political than a humanitarian tool.
The
World Bank has declared the Asian crisis over, but its social impact, both
within and beyond the region, is deepening. Worldwide, poverty is getting worse.
Some countries have fallen two decades behind in development; and, even in the
richest countries, the poorest people are becoming poorer.
Most
major agencies have conceded that the previous, growth-driven model of aid and
development has proved inadequate. The proposition that economic growth alone
will solve long-term needs while emergency programmes will fill the gaps in the
short-term has been widely acknowledged as false. It is agreed that the strategy
for poverty eradication and aid must be reviewed. Growth is a necessary but
insufficient condition for poverty reduction and the same is true of aid.
During
the past year, most donor governments have made Shaping the 21st
Century (S21C) and its goal of poverty eradication the centre of their aid
policy. Many have taken steps toward a more coherent and transparent aid policy
with improved monitoring of aid flows and impact and have pledged to make aid
more effective. The rhetoric around this, however, has not been matched by
contributions at a level that can realise the S21C goals.
In
any event, the focus on S21C has tended to usurp the responsibility of donors to
address seriously the broader agenda for achieving global social development set
out at the Copenhagen Social Summit. The follow-up by donor countries to the
Social Summit needs to ensure that S21C is an integral part of, not an
alternative to, that broader agenda.
While
making aid more effective is important, it is a relative concept. Aid is merely
one element in a poverty eradication strategy; its effectiveness depends on
other contextual factors—trade, investment and fulfilment of human rights
among others. The bigger picture is enabling governments and people directly
affected by poverty to solve the problems that cause it.
This
requires redistribution of wealth and changed power structures, both within the
poor countries and between North and South. The concept of development and its
objectives need to be challenged, discussed and reshaped. A clarification of
where the agenda is set and by whom is important to ensure transparency and
allocate responsibility.
Development
strategies need to be linked first and foremost to ensuring basic human
rights—including dignity—and creating employment and livelihood
opportunities. They also need to be linked to genuine efforts to shift
decision-making and responsibility—and the resources to make these
meaningful—to the countries and the people experiencing the worst effects of
poverty. Multilateral donors, governments and NGOs alike need to ask themselves:
Do marginalised people really feature in
the development process—or only in funding proposals? Is true partnership
achievable when large segments of society suffer exclusion due to their poverty,
ethnic origin or gender? Whose definition of development counts?
Donor
and recipient country governments alike have signed on to the global commitment
to eradicate poverty. Both need to be held accountable to this. Yet
‘partnership’ is hardly possible in the face of growing inequity, with
developing country governments being asked to accept conditions rather than
consensus. In this climate, an honest dialogue about a new model for poverty
eradication might be more realistic than a false partnership in the old model.
The
fact that more than a billion people are living and dying in poverty is not a
tragic twist of fate, but a deliberate turning of heads. The goal of absolute
poverty elimination remains affordable and within reach. Most governments have
committed themselves to this goal. If it is to become reality, there is an
urgent need for a concerted and creative approach to replacing the old
donor-driven model of aid. This must involve governments, civil society and
donors. It must include channelling adequate resources to practical poverty
eradication efforts. Above
all, however, it must focus on ensuring that people living in poverty have the
power to challenge the forces that create
poverty.
The
cost of globalisation
The
United Nations Development Programme notes the human impact of the Asian
financial crisis: 13 million people losing their jobs, and real wages down by
40–60% in Indonesia alone. In Brazil at the end of 1998, 50% of the people who
had risen out of poverty since 1994 fell back below the poverty line.
The
African continent is entering the new millennium with 44% of the population of
sub-Saharan Africa still living under the poverty line. Yet although sub-Saharan
Africa has 80% of the poorest and most indebted developing countries, only
Mozambique was among the top 10 recipients of Official Development Assistance in
1996/97.
The
world is not only entering the year 2000 with the majority
of its population struggling on less than USD 2 a day. It is also entering the
new century prepared to accept that almost a billion will still live in poverty
in 15 - 20 years’ time.
If
the globalisation of finance and labour markets, communication and commerce are
inevitable, the globalisation of rights and responsibilities should be
imperative in international development policy.
The
failure of political leadership
Of
course, aid alone cannot eradicate poverty. It can contribute effectively to
this goal, however, if it is integrated into a comprehensive approach to
development that addresses the inequalities both between and within countries.
Giving political priority to reducing poverty is meaningful only where equal
priority is given to overcoming the causes
of poverty, which include unequal access to education, information and
decision-making, as well as material resources.
Aid
is a proxy for the political commitment of the North to greater global justice.
What is required is the political momentum that makes overcoming poverty not the
purview of a middle ranking government department, but one of the key priorities
guiding overall government policy in donor and developing countries alike. The
challenge is for political leaders, and especially those in the North, to go
beyond aid and work for deeper and more comprehensive approaches to intractable
poverty.
Winners
and losers in the globalisation race are inevitable. But it is a fairly safe bet
that the small élite and expanding
middle class who set the rules of the race are going to be the winners and a
vast number of poor people, mostly living in developing countries, are going to
be the losers. At the moment, key questions, such as how to ensure that the
process of economic globalisation enhances, rather than reduces, human security
are barely being asked—let alone answered—in global trade forums and in
government ministries.
It
took a woefully long time for official donors to acknowledge that World Bank/IMF
structural adjustment programmes have often made the most vulnerable people
worse off. The transparency and free market solutions being offered to poor
countries share many characteristics with adjustment models. Just as aid has
been used to mitigate the social costs of structural adjustment, it now seems
that it is being used to mitigate the costs of rapidly globalising. It is
critical that the social impact of structural change be assessed prior to
decisions being made, to ensure that restructuring itself builds in positive
measures to enhance the well-being of people living in poverty.
The
approach of donor countries to the burden of debt also illustrates the failure
of political leaders to engage with poverty as an issue and to take into account
the human impact of their decisions. The daily denial of education and health
care to children in Africa, to pay debts for which they and their families have
no responsibility, to people and countries who are at worst comfortably off, is
a fundamental injustice which cannot continue.
The
importance of equity
A
decade after publication of the World Bank’s 1990
Poverty Report, it is being recognised that profound inequality of income
and social access is a cause, as well as a consequence, of poverty. An
increasing number of economists suggest that income inequality in itself
inhibits growth and poverty reduction—and that growth plus increased social
spending may be an insufficient answer where social, political and economic
systems channel power and resources inexorably to those who already enjoy them.
Latin
America is the region with the most unequal distribution of wealth and income.
Extreme poverty could be eradicated in countries such as Argentina, Brazil,
Chile and Mexico through redistribution, without foreign aid.
Aid
needs to be spent both on interventions that benefit poor people directly and on
supporting a wider policy environment for poverty elimination, in which poor
people can voice their interests. In both cases, the chain of causation between
the spending of each aid dollar and benefit to poor people needs to be evident
and plausible.
The
Reality of Aid 2000 report highlights NGO concerns in all OECD countries
that donors translate the poverty orientation of their policy into practice. The
India chapter points to donors shifting priorities and concentration of their
programmes in this country. Despite the rhetoric of poverty reduction, the
Department for International Development has shifted programmes to Indian states
where “this shift is likely to open up considerable business opportunities
for corporations . . . given that states like Andhra Pradesh, Orissa and Gujarat
are in the forefront of market-led reforms in India”.
Poverty
reduction and basic education
Widespread
access to quality education is necessary before the full poverty-reducing impact
of other social services, such as improved health care, can be unlocked. But 40%
of children in developing countries grow up without completing four years of
primary school, the minimum needed to have a chance of acquiring basic literacy
and numeracy.
During
the 1990s, donors and governments recognised the crucial importance of
increasing access to basic education. The target the international community set
itself for achieving universal primary education, however, has already been
shifted from 2000 to 2015. And, even if the meaning of ‘education’ is
reduced to ‘enrolment’, the prognosis on current trends is that an estimated
75 million children will still be out
of school in the year 2015.
Donors
and governments could do much more to improve the strategic effectiveness of
development cooperation as a catalyst for education reform. Increasing the
volume and improving the poverty targeting of aid is one part of what is needed
to reinvigorate the ‘education for all’ movement, but even more important is
harnessing the energies and capacities of civil society organisations as actors
in the process of change.
In
many of the world’s poorest countries, both coverage and quality of basic
education have deteriorated badly in the past quarter-century, and gains made
over the 1960s and 1970s have been wiped out. Almost all developing countries
face growing gaps in completion and achievement between rich and poor, and
between men and women. Latin America’s universal primary enrolments, for
example, are drastically undercut by the fact that 4 in 9 pupils fail the first
grade. In Burkina Faso, the richest children are 12 times more likely than the
poorest to complete secondary school.
Perhaps
the biggest failure of education policy during the 1990s has been the failure to
overcome the growing trend towards two-tier education systems: one for the rich,
another—underfunded, mismanaged and ineffective—for the poor.
In
many countries, both poor and rich are choosing to abandon failing public
schools; the non-poor by putting their children into a rapidly growing number of
private schools, the poorest by withdrawing their children (particularly girls)
from school altogether.
A
coherent plan to make education serve poor and marginalised people better
requires, on the one hand, an enabling macro-economic environment (debt
repayment burdens alone can cripple government’s ability to plan and sustain
investment in improved education) and, on the other hand, a participatory and
transparent national process of reform.
Ownership
and partnership
The
importance of developing country ownership and leadership is frequently asserted
as a principle for development cooperation and a condition for
progress—largely because aid efforts are unlikely to succeed if recipients
have programmes forced upon them. In practice, ownership is too often nominal.
Frequently, so-called ‘government plans’ are likely to have been drawn up
using (sometimes national) consultants working within largely donor-designed
terms of reference.
Donors
need to look at the bigger picture, beyond their nationally defined development
priorities to globally agreed commitments on development and poverty reduction.
Governments in the South are party to such commitments through the various UN
agreements reached in the 1990s. Calling both sides to account for
implementation of international agreements (for example, in the fields of gender
equality and investment in basic social services) would be less patronising and
more effective than donors imposing a conditionality.
In
a context of falling official aid, donors have referred to increased private
investment as though this is an alternative. In Latin America, growth founded
largely on the influx of foreign capital, without institutional reform or public
policy designed to increase employment, quickly proved unreliable growth.
From
1990 to 1997, foreign capital was flooding into emerging markets. Barely had the
flows of capital begun to diminish as a result of the international financial
crisis, however, when we saw the precariousness and weakness of the foundations
underlying macroeconomic balance. Erratic, short-term capital flows have led to
volatility and precariousness in developing-country economies.
Gender
equity no longer “an optional extra”
A
number of chapters in Reality of Aid 2000
report substantial developments in the treatment of gender equality issues in
official approaches to poverty reduction. In countries that have not prioritised
this area in the past, there is evidence of some change. However, this leads
straight back to the issue of equity and structural change. Women are
over-represented among the most vulnerable and marginalised groups. Until power
relations and access to information and resources are challenged and changed,
the volume and direction of aid will have little impact on their quality of
life.
Concentration
policy not practised
As
part of the effort to increase aid effectiveness and to focus on countries that
are likely to show results, a number of donors are reasserting their intention
to concentrate ODA. Earlier Reality of Aid
reports have noted the gulf between donor rhetoric on concentration and reality.
Looking at recent data, we see less not more aid concentration. In 1986/7, 30%
of DAC aid was concentrated on the top 15 countries. In 1996/7, that had fallen
to 25%.
Spending
not focused on the poorest countries
Official
Development Assistance to low income and least developed countries (LICs and
LLDCs) fell by USD 3.6 billion in 1997—more than 12%. While it is true that
the share of total aid allocated to
LICs and LLDCs increased by one percentage point in 1997, the world’s poorest
countries—with an average income of less than USD 2 a day—are getting
lamentably low percentages of reduced aid.
Allocation
of aid to countries where poor people live may be a crude measure, but it is
also a pretty fundamental first step on the road to poverty eradication. Aid can
be a catalyst but its role is always going to be subsidiary to the major
influences on poverty, which include government policy, economic and social
stability, global trade and financial conditions as well as the efforts of poor
people themselves.
In
terms of eliminating poverty, two important points need to be made here:
·
Foremost,
aid cannot be a substitute for other action. Richer countries cannot think that
they are taking meaningful action on poverty if they give aid but fail to
address some of the structural inequalities that consign one quarter of the
world’s people to live in absolute poverty. Equally, poor countries should not
focus only on the failure of OECD donors to meet their international
commitments, when reform of domestic policy is also an area of unfulfilled
obligations.
·
Secondly,
aid must be seen by all governments as a scarce and precious resource not to be
wasted on projects that enhance the prestige or suit the convenience of donor or
recipient but have little relevance to the poorest people. Where
governments—donor and recipient—know that programmes are not working well
even though they meet technical criteria for targeting basic needs, they should
not continue to support them for the sake of exerting influence over
constituents or clients.
Another
major trend in aid visible in the 1990s—which can be both positive and
negative in terms of poverty elimination—is the increasing integration of OECD
government approaches to aid, development co-operation, foreign affairs, and
trade and security policy. On one hand, this improves coherence; on the other,
dwindling aid resources are being asked to do more and more each year.
Towards
a new framework for global human security
A
global human security agenda, whose first priority is ensuring that people are
able to enjoy economic, social and political stability, is surely one around
which an effective public and political consensus can be built.
Economic
growth, according to theory, should have a direct effect in the alleviation of
poverty. The benefits of economic
growth in the 1990s, however, did not lead to improvement in the unequal
distribution of income in developing countries. The instability caused by
volatile capital flows has made the establishment of a new international
financial framework the order of the day.
There
is recognition—even within the World Bank—that the neoliberal recipes linked
to the Washington Consensus have not worked. Nevertheless it is clear that the
alternatives are being put forward only at a rhetorical level and are not worked
through in practice. There is an important role for initiatives such as Reality
of Aid and Social Watch in discussing and reshaping development and aid policies
and proposing concrete steps towards the achievement of global human security.
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