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Africa: Oxfam Poverty Report
AfricaFocus Bulletin
Dec 14, 2004 (041214)
(Reposted from sources cited below)
Editor's Note
In one of the first reports from a global coalition to make 2005 a
year of action against poverty, Oxfam International has issued a
report calling on rich countries to live up to their promises to
provide resources and opportunities to achieve the "Millennium
Development Goals" adopted unanimously by the United Nations in September 2000. Making
this finance available, Oxfam noted, is "both a moral obligation
and a matter of justice."
This AfricaFocus Bulletin contains excerpts from the summary of the
Oxfam report "Paying the Price: Why rich countries must invest now
in a war on poverty."
For earlier Bulletins on related issues, see
http://www.africafocus.org/econexp.php
This Bulletin also includes a brief update and references to
several other sites with related reports released this year.
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Related Update and References
Easily lost in the plethora of debates about strategies to reduce
poverty is the common-sense notion that providing resources to the
poor, including direct cash transfers as well as investments in
government programs directly benefitting the poor, does actually
tend to work. Of course, the political will to pay for effective
programs - and who should pay - is key to determining how much
impact such programs actually have.
Reports this year making this point from a variety of perspectives
include:
- A report just released by South Africa's Department of Social
Development on "The Social and Economic Impact of South Africa's
Social Security System." (
http://www.epri.org.za/papers.htm) shows
that despite the debate about ongoing poverty in South Africa (see
http://www.africafocus.org/docs04/big0411.php), that country's
existing programs of old-age insurance, disability, and child
welfare grants have significant impact on reducing poverty,
"regardless of which methodology is used to quantify the impact
measure or identify the poverty line."
- The Chronic Poverty Report 2004-05, produced by the UK-based
Chronic Poverty Research Centre (http://www.chronicpoverty.org) and
including detailed studies on Africa as well as other world
regions, noted that "prioritizing livelihood security" for
chronically poor persons must take priority in order to insure that
they have the minimum resources necessary for survival and taking
advantage of economic opportunities.
- The Shanghai conference of the World Bank in May 2004 on "Scaling
Up Poverty Reduction" emphasized case studies of successful
interventions in Asia, Africa, and Latin America, most featuring
effective use of public investment rather than the macroeconomic
prescriptions most commonly stressed in Bank prescriptions for
African countries. See http://www.worldbank.org/wbi/reducingpoverty
- A July 2004 paper from the Center for Global Development,
"Counting Chickens when They Hatch,"
(
http://www.cgdev.org/Publications/?PubID=130) showed that many
studies of the effects of aid failed to show impact because they
incorrectly included aid for non-developmental or long-term goals.
Limiting the study to short-term development aid that could
plausibly be expected to have such impact, the study showed
significant impact in increasing growth.
Paying the Price: Why rich countries must invest now in a war on
poverty
Oxfam International
December 2004
[Excerpts from report summary. A press release and the full report
are available at
http://www.oxfam.org/eng/pr041206_MDG.htm.]
In 2005, the leaders of rich countries have the opportunity to lift
millions of people out of poverty. At the G8 Summit, at the UN
Special Session on the Millennium Development Goals (MDGs), and at
a ministerial conference of the World Trade Organisation (WTO),
trade rules, aid, and the unsustainable debt of developing
countries - issues critical to the future of the world's poorest
people - will be up for discussion. But will world leaders deliver
on their rhetoric? In 2000, rich countries made a commitment to
play their part in ensuring that the MDGs are met - but their
promises remain unfulfilled. Five years later, they should ensure
that a new round of international summitry becomes a platform for
action.
The Millennium Development Goals, chosen on the grounds that they
were realistic and achievable, are a commitment by global leaders
to halve poverty and hunger, provide education for all, improve
standards of health, halt the spread of major diseases such as
HIV/AIDS, and slow down environmental degradation by 2015.
A vital aim of these goals is that the poorest countries will have
the finance needed to achieve them. To do this, rich countries have
promised to provide a very small fraction of their wealth - just
0.7 per cent of their national income - and to improve the way in
which they give aid, to make it work best for poverty reduction,
and to end the burden of debt which means that low-income countries
must pay out $100 million every day to their creditors. For
rich-country donors, making this finance available is not simply an
act of charity: it is a both a moral obligation and a matter of
justice - born of a collective duty to guarantee the rights of all
citizens, and the responsibility of rich countries to recognise
their role in creating the debt crisis which continues to threaten
the prospects of poor countries. A failure to meet these
obligations also has consequences for rich countries themselves,
with global poverty threatening the prosperity and security of the
entire international community.
Time for action to meet the MDGs is running out, yet progress has
been unforgivably slow. Only one goal halving income poverty
has any chance of being met, but even this is due to progress in
just a handful of countries. The first target - enrolling all girls
in primary and secondary school by 2005 - is certain to be missed.
The poorest people will pay the price for this failure. If the
world fails to act to meet even these minimal goals, and current
trends are allowed to continue,
- 45 million more children will die between now and 2015
- 247 million more people in sub-Saharan Africa will be living on
less than $1 a day in 2015
- 97 million more children will still be out of school in 2015
- 53 million more people in the world will lack proper sanitation
facilities.
Tackling global poverty requires more than money: poor countries'
prospects are also undermined by unfair trade rules, the violent
consequences of the arms trade, and the impacts of global warming.
Poor-country governments must also fulfil their commitments to
fight poverty. But, without finance, these countries will not be
able to take advantage of global trade and investment
opportunities, or protect their citizens' basic rights to life,
good health, and education.
The sums that rich countries invest in global poverty reduction are
shamefully small. At an average of $80 per person per year in rich
countries, the sum is equivalent to the price of a weekly cup of
coffee. What is more, the wealthier these countries have become,
the less they have given in aid. Rich countries today give half as
much, as a proportion of their income, as they did in the 1960s. In
1960-65, rich countries spent on average 0.48 per cent of their
combined national incomes on aid. By 1980-85 they were spending
just 0.34 per cent. By 2003, the average had dropped as low as 0.24
per cent.
It is no surprise that vital poverty-reduction programmes are
failing for lack of finance. Cambodia and Tanzania are among the
poorest countries in the world, yet they require at least double
the level of external financing that they currently receive if they
are to achieve their poverty-reduction targets. Global initiatives
to support poor countries to achieve universal education and combat
HIV/AIDS are starved of cash. Despite the fact that HIV infection
rates are rising in sub-Saharan Africa, the Global Fund to Fight
AIDS, TB, and Malaria is assured of only one quarter of the funds
that it needs for 2005. And poor countries continue to pay out more
to their creditors than they spend on essential public services.
Low-income countries paid $39 billion to service their debts in
2003, while they received only $27 billion in aid. As a result,
countries such as Zambia spend more on debt servicing than they
spend on education.
The price is small
Meeting the UN target of allocating just 0.7 per cent of national
income to aid - a target set in 1970 - would generate $120
billion, enough to meet the MDGs and other vital poverty-reduction
goals. But only five of the 22 major donors - none of them from the
seven most powerful nations (the G7) - are meeting that target. In
the last year, the UK and Spain have set themselves firm timetables
to reach the target of 0.7. But 12 donors still have no timetable
to get there ...
Rich countries can easily afford to deliver the necessary aid and
debt relief. For rich countries, spending 0.7 per cent of their
national income on aid is equal to a mere one-fifth of their
expenditure on defence and one half of their expenditure on
domestic farm subsidies. The USA (at just 0.14 per cent, the least
generous donor in terms of aid as a proportion of its national
income) is spending more than twice as much on the war in Iraq as
it would cost to increase its aid budget to 0.7 per cent, and six
times more on its military programme.
Nor is 0.7 per cent very great when compared with the priorities of
global consumers, who spend $33 billion each year on cosmetics and
perfume - significantly more than the $20 25 billion required for
Africa to meet the MDG targets.
Cancelling the debts of 32 of the poorest countries would also be
small change for the rich nations. The cost to the richest
countries would amount to $1.8 billion each year over the next ten
years or on average a mere $2.10 for each of their citizens every
year. If Italy and the USA were to pay their fair shares, it would
cost each of their citizens $1.20 per year. Meanwhile, the IMF
holds the third-largest gold reserve in the world - a reserve that
is neither needed nor used in full. Revaluation or sale of the gold
could raise more than $30 billion - more than would be needed to
cancel the remaining debts to the IMF and World Bank of all the
countries eligible for relief under the Highly Indebted Poor
Countries initiative.
Aid works
And aid works. Millions of children are in school in Tanzania,
Uganda, Kenya, Malawi, and Zambia, thanks to money provided by debt
relief and aid. For the same reason, Ugandans no longer have to pay
for basic health care, a policy which resulted in an increase of 50
to 100 per cent in attendance at Ugandan health clinics and doubled
the rate of immunisations. Roads built with foreign aid mean that
Ethiopian farmers have the potential to reach local and
international markets to sell their crops more easily, while
children in rural areas can travel to schools more easily, and
people can reach hospitals more quickly which is often a critical
factor affecting maternal and infant mortality rates. ...
History also shows that aid has been vital in eradicating global
diseases. From the late 1960s, more than $100 million was targeted
to eradicate smallpox a feat achieved worldwide by 1980. And aid
has been essential in rebuilding countries shattered by war. In
Mozambique, financial support from UN agencies, bilateral donors,
and NGOs facilitated a process of national reconciliation,
peacefully repatriating nearly two million refugees, disarming
96,000 former soldiers, and clearing landmines.
Countries now considered 'developed' would not enjoy their current
standards of living if it had not been for aid. After World War II,
16 western European nations benefited from grants from the USA
worth more than $75 billion in today's terms - grants which
underpinned their economic recovery and hence created today's peace
and prosperity. US aid also financed mass education and imports of
essential goods to South Korea and Taiwan, laying the foundations
for their rapid future growth, while European Union Structural
Funds have supported growth in Spain and other southern European
countries.
But today's poorest countries - even those where it has been shown
that aid can be used productively - have yet to see the necessary
aid extended to them. Meanwhile, marginalised from the global
economy, their access to other forms of external finance is
limited. For the foreseeable future, aid will and should be the
means to offset the lack of finance available for the poorest
countries and communities. ...
and it could work even better
However, rich-country donors need to make aid work better if
poverty is to be significantly reduced. Increases in aid budgets
can and must go hand-in-hand with improvements in the way that aid
is delivered.
When aid-giving becomes politicised, poor people lose out - but
many donors' priorities are still determined by their own strategic
interests. Two top recipients of French aid - French Polynesia and
New Caledonia - and one top recipient of US aid - Israel - are
high-income countries. The 'war on terror' threatens to divert aid
away from those who need it most. Aid is again being used as a
political tool, with one-third of the increase in aid in 2002
resulting from large allocations to Afghanistan and Pakistan. ...
Too often domestic interests take precedence: almost 30 per cent of
G7 aid money is tied to an obligation to buy goods and services
from the donor country. The practice is not only self-serving, but
highly inefficient; yet it is employed widely by Italy and the USA.
Despite donors' agreements to untie aid to the poorest countries,
only six of the 22 major donor countries have almost or completely
done so.
The management burden and uncertainty of aid delivery that many
donors create weakens the effectiveness of the governments that
they aim to support. In Tanzania in 2002-03, the government
received 275 donor missions, 123 from the World Bank alone,
demanding time-consuming attention by scarce skilled personnel. An
Oxfam survey of donor practices across 11 developing countries in
2004 found as follows.
- In 52 per cent of reported cases, donors' procedures mean that
government officials spend 'too much' or 'excessive' amounts of
time in reporting to donors. The World Bank and the USA were named
as the worst donors according to this criterion.
- Developing-country governments should expect delays. Only in one
in three cases does aid arrive on time - and the European
Commission is rated the worst offender, with one-fifth of its aid
arriving more than one year late.
- Aid may be here today, but it could be gone tomorrow. In 70 per
cent of cases, donors commit aid for three years or less - even
though, in order to guarantee a complete primary education for one
generation of children, funding would be needed for six years.
The administrative problem is compounded when donors attach large
numbers of detailed conditions to their funding. Oxfam's analysis
of World Bank loan conditions, for instance, found that the Bank
requires governments of countries such as Ethiopia to carry out
approximately 80 policy changes per year. Tanzania's donors between
them dictate that the country should carry out 78 policy reforms in
one year. This practice undermines countries' ability to choose
their own reform paths, meaning that aid money is less likely to
support sustainable reforms, adapted to suit local circumstances.
Such conditions are rarely based on independent assessments of
their impact on people living in poverty. ...
Rich-country and multilateral donors have committed themselves to
change their practices. In 2003 they signed the Rome Declaration:
a clear statement of intent to reform the delivery of aid. Some are
making progress, mostly by collaborating to deliver joint funds
directly to sector ministries or government treasuries; but others
lag behind, as demonstrated by the Oxfam survey. While donors are
quick to hold governments to account for their use of aid, there is
as yet very little done to hold donors to account for their
management of aid. Initiatives such as independent monitoring or
recipient-government reviews of donor practice occur largely on an
ad hoc and voluntary basis.
Ensuring that Southern governments deliver development
Developing countries, as well as donors, have a responsibility to
meet the MDGs. And well-functioning and poverty-focused governments
can of course make the best use of aid. This means combating
corruption, building strong and accountable public sectors which
have the necessary staff to deliver vital services, and ensuring
that parliaments, civil society, and the media can monitor public
spending and act as watchdogs against corruption.
There has been substantial progress in the performance and
accountability of many poor-country governments. Democracy is
taking root in sub-Saharan Africa, for instance, with elections
held in 44 out of 50 countries in the past decade, while
independent TV and radio stations are being established across the
continent. And civil-society groups are increasingly calling
governments to account: in Malawi, education groups now check
whether schools receive the textbooks and chalk promised to them in
the government budget, and they report their findings in the media
and in parliament.
But obviously in many countries there is a long way to go:
developing-country governments, for instance, must increase the
amount of money devoted to basic social services, in line with a UN
recommendation to spend at least 20 per cent on these sectors. The
practice of charging user fees for basic education and health
services should be abolished.
Donors can play their part in furthering these developments. This
includes not ignoring corruption, but tackling it by investing in
a strong and efficient public sector and removing the global
incentives tax havens and weak regulation that allow corruption
to flourish. Creating donor-led structures outside governments, or
avoiding certain countries altogether, can be counter-productive
merely serving to weaken them further. And such strategies risk
diverting money away from those in the global community who need it
most.
In 2005, Oxfam will form part of the 'Global Call for Action
Against Poverty' coalition, aiming to make poverty history. The
call unites a huge range of groups from South and North, including
national and regional civil-society networks, trade unions, faith
communities, and international organisations. It is a chance for
millions of people to tell world leaders that poverty is an
injustice that is not inevitable. 10 This report is part of Oxfam's
call to action in 2005. In it, Oxfam's key recommendations in
relation to aid and debt are as follows:
All donor members of the OECD's Development Assistance Committee
(DAC) should adopt the following measures.
Increase finance for poverty reduction:
- Cancel 100 per cent of the debt of the poorest countries where
relief is needed to enable them to reach the MDGs: both bilateral
debt, and the debts owed to the World Bank and African Development
Bank.
- Provide at least $50 billion in aid immediately, in addition to
existing aid budgets, and set binding timetables in 2005 to ensure
that the 0.7 per cent target is met in all donor countries by 2010.
- In addition to giving 0.7 per cent of national income as aid,
support innovative mechanisms such as the International Finance
Facility (IFF) and international taxation to ensure immediate and
sustainable development financing.
Make aid work best for poverty reduction:
- Fully implement Rome Declaration commitments to improve the
delivery of aid and completely untie aid, including types of
assistance omitted from DAC recommendations, namely food aid and
Technical Assistance.
- Restrict the use of conditions to requirements for financial
accountability and broadly agreed goals on poverty reduction and
gender equity.
The World Bank and IMF should take the following actions.
- Cancel 100 per cent of the debts owed to them by the poorest
countries where relief is needed to enable them to reach the MDGs;
finance this measure by revaluing IMF gold reserves and using the
resources thus generated.
-
Restrict the use of conditions to requirements for financial
accountability measures and broadly agreed goals on poverty
reduction and gender equity.
Developing-country governments should take the following measures.
- Demonstrate their commitment to poverty reduction by meeting the
UN recommendation to spend 20 per cent of public budgets on basic
social services, and transparently directing the money to benefit
poor people.
- Institutionalise, through legislation if necessary, parliamentary
and civil- society participation in the making and implementation
of policies that will benefit poor people, also guaranteeing civil
and political rights to free and fair elections, freedom of
expression, and the rule of law.
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.
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