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Africa: "Aid" Reality Checks
AfricaFocus Bulletin
Jun 28, 2005 (050628)
(Reposted from sources cited below)
Editor's Note
The world's richest nations greatly exaggerate the amount they
spend on aid to poor countries, says a study released by ActionAid
International. The report says that between 60%-90% of aid funds
are 'phantom' rather than 'real' with a significant proportion
being lost to waste, internal recycling within donor countries,
misdirected spending and high fees for consultants.
The ActionAid report "Real Aid," released early this month, agrees
with calls for massive increases in "aid" to developing countries.
But it also calls for going beyond the hype and reforming the
official aid system to decrease the proportion of "phantom aid."
This can be done, the report says, only if the funds going as "aid"
are recognized as obligations to fulfill basic human rights rather
than as charity, and if there is real mutual accountability rather
than one-sided conditionality.
This AfricaFocus Bulletin contains the executive summary, the
introduction, and the table of contents from the "Real Aid" report.
It also includes the text of another report, released on June 27 by the
Brookings Institution in Washington, on "U.S. Foreign Assistance to
Africa: Claims vs. Reality." While focused on quantity rather than
quality of aid, the Brookings report debunks President George
Bush's repeated claims to have "tripled" aid to sub-Saharan Africa.
At most, the report shows, U.S. official assistance increased by
56% from Fiscal Year 2000 to Fiscal Year 2004.
These two reports touch only part of the widening debate about the
responsibility of rich countries to act on Africa, which
encompasses not only "aid" but also debt, trade, and other policies
and structural ties that affect the continent. But they do serve as
partial reality checks to help separate hype from substance as
political pressure continues to grow for political leaders to be
seen as taking action.
For a more extensive critical report on The Reality of Aid, from a
non-governmental coalition including groups in both North and
South, see
http://www.realityofaid.org/roa2004/2004report.htm.
Chapters from this report on Africa and on different "donor"
countries can be downloaded in zipped PDF format.
Official statistics from the OECD's Development Assistance
Committee, including reports through 2004 by donor and recipient,
are available at
http://www.oecd.org/dac/stats/statlinks.
++++++++++++++++++++++end editor's note+++++++++++++++++++++++
Real Aid: An Agenda for Making Aid Work
Action Aid
http://www.actionaid.org/461/real_aid_report.html
Executive Summary
We live in an age of unprecedented prosperity and technological
progress, yet the most basic social and economic rights are
routinely violated on a massive scale. Each day, 30,000 children
die from easily preventable disease. 100 million children see their
right to a primary education denied. 800 million people go to bed
hungry each night.
Aid has a critical role to play in achieving these rights. It is
not a magic bullet. But experience shows that where aid is deployed
effectively as part of a wider development strategy, it makes a
lasting difference in helping people to lift themselves out of
poverty. It is equally clear that more aid is urgently needed.
Estimates of the financing needs of the poorest countries vary, but
they all point to the same conclusion - that current donor efforts
are grossly inadequate.
Yet increasing aid by itself is not enough. Put simply, the aid
system is not geared to achieving the poverty reduction goals that
were agreed in 2000. Donors must radically improve the quality of
their aid if it is going to make a fully effective contribution to
the fight against poverty. At present, two thirds of donor money is
'phantom' aid that it is not genuinely available for poverty
reduction in developing countries.
Failure to target aid at the poorest countries, runaway spending on
overpriced technical assistance from international consultants,
tying aid to purchases from donor country's own firms, cumbersome
and ill-coordinated planning, implementation, monitoring and
reporting requirements, excessive administrative costs, late and
partial disbursements, double counting of debt relief, and aid
spending on immigration services all deflate the value of aid.
In this report, we show the extent to which the official aid
figures exaggerate rich countries' generosity. By discounting for
phantom aid, we establish the amount of 'real aid' that is
promoting basic rights in the poorest countries. The results
highlight the urgent need for reform by the donor countries:
- In 2003, real aid was only $27bn, or just 0.1% of the donor
countries' combined national income
- For the United States and France, two of the world's largest aid
donors, almost 90% of their contributions are phantom aid
- The G7 countries are the worst performers when it comes to real
aid. On average, the world's seven largest economies give just
0.07% of national income in real aid. In other words, they must
increase real aid tenfold to reach the UN target of 0.7%
- In real aid terms, the Norwegians are 40 times more generous per
person than the Americans, and 4 times more generous than the
average Briton.
The problems underlying the gulf between official and real aid are
not new. Donors have signed up to numerous international agreements
to improve the quality of their aid. Yet this agenda has made
little headway. At the heart of this failure there lies a lack of
accountability on the part of donors for either the amount of aid
they commit, or the quality of that aid. Meanwhile, donors continue
to make excessive demands on recipients for 'upward'
accountability, attaching rafts of intrusive policy conditions to
their aid, and restricting the ability of developing countries to
plot their own development paths.
This report argues that the share of real aid in official aid flows
is unlikely to increase unless this 'one-way' accountability is
replaced by a system of genuine mutual accountability, which
balances the legitimate interests of donors, recipients and, most
importantly, poor people.
ActionAid is calling for a new International Aid Agreement to make
aid real and accountable, with four key elements:
- Clear policies from developing countries on the criteria for
accepting aid
- Mutual commitments in place of one-sided conditionality, that are
monitored transparently at the country level
- National and international forums where donors and recipients can
review progress on an equal footing, overseen by a UN Commissioner
on Aid
- New mechanisms to substantially increase the volume and
predictability of aid.
Introduction
International aid is in the spotlight as never before. The 'aid
pessimism' of the 1990s has been supplanted by widespread agreement
that significantly more aid is needed if poverty is to be reduced
and basic rights protected. In the wake of the UN summit on
Financing for Development in 2002, G7 countries are competing to
push for their own proposals for financing development.
Yet aid increases will not help to reduce poverty in the absence of
major improvements in the quality of that aid. At present, far too
much aid is driven by geopolitical and commercial objectives rather
than by efforts to protect the rights of poor people. If aid
currently has a mixed record in terms of its impact on poverty
reduction, that is because it is often not what it is designed to
do. Poor quality aid from unaccountable donors is a blunt
instrument in terms of its impact on poverty. As this report
argues, farreaching changes are needed by donors to make aid a
sharp tool in the fight to realise basic rights for all.
Recipient governments also need to reform. Accountability,
transparency, democracy and the protection of human rights must all
be improved. But where donors promote these changes, they need to
happen in the context of genuine mutual accountability between rich
and poor countries. Donors must support and encourage developing
country efforts to reduce poverty by meeting their international
commitments to provide more and better aid. They must reach these
commitments, not as they are currently measured, but in terms of
real aid that is truly available to support poor countries' efforts
to protect basic rights.
Aid donors fall far short of meeting the official international aid
target of 0.7% of national income. ActionAid's new 'real 0.7%
rankings', presented in this report, show that when it comes to
'real' aid they are falling even further behind. According to our
analysis, more than 60% of aid flows are 'phantom'; that is they do
not represent a real resource transfer to the recipient. For the
worst performing G7 donors, the figure is as high as 89%. Real aid
stood at only US$27 billion, or 0.1% of donor national income in
2003, with G7 donors at an average of only 0.07%.
In other words, despite political grandstanding on the issue, G7
donors are only one tenth of the way towards meeting the 0.7%
target. And this paltry contribution pales in comparison with the
value of reverse flows from South to North, in the form of
ecological debts, unfair trade rules and South-North financial
flows, which stood at US$710 billion in 2003.
This report argues that for aid to be fully effective, it can no
longer be treated as a voluntary, charitable transfer from North to
South. Instead, aid must be part and parcel of a wider
redistributive agenda designed to protect basic rights. For this to
happen, poor people's voices, needs and priorities must be put
front and centre in the design of aid programmes.
This means that current patterns of accountability must change. At
present, donor agencies hold recipients accountable, and are in
turn accountable to their own taxpayers. But donors continue to use
unfair, undemocratic and inappropriate policy conditionality in a
way that skews recipient accountability away from the citizens of
poor countries. Meanwhile, neither governments nor poor people in
recipient countries are able to hold donors properly to account for
the quality or quantity of aid they provide. This must change.
ActionAid is proposing a new international aid agreement to make
aid more accountable, and effective.
This report falls into three parts. Firstly, we show why aid must
be provided as an entitlement based on rights. Secondly, we present
our assessment of 'real' aid by donor, and show how far donors are
falling short of meeting the real 0.7% target, and compare this
with the extent of South-North flows. And finally, we present our
proposals for a new aid architecture based on mutual accountability
between donors and recipients. Our focus is primarily on
government-to-government development aid - although important, we
do not discuss aid from NGOs, or humanitarian aid, or aid in kind.
Our findings are based on deskbased research, new analysis of donor
aid flows and new country case study research in Vietnam, Cambodia,
Uganda and Ethiopia.
Table of Contents
[full report available at
http://www.actionaid.org/461/real_aid_report.html]
Chapter 1 Aid and Rights
1.1 International Aid Can Work to Protect Basic Rights
1.2 The Case for More Aid
1.3 Much More Aid Is Needed
1.4 Aid and Net Resource Flows
1.5 Conclusion
Chapter 2 Real Aid
2.1 Measuring Real Aid
2.2 Calculating Real Aid
2.3 Real and Phantom Aid - the Donor Rankings
2.4 Conclusion
Chapter 3 Accountable Aid
3.1 Donors Are Not Accountable
3.2 The Case of Aid Conditionality
3.3 An International Aid Agreement
3.4 Conclusion
Chapter 4 Conclusions and Recommendations
U.S. Foreign Assistance to Africa: Claims vs. Reality
The Brookings Institution, June 27, 2005
Susan E. Rice, Senior Fellow, Foreign Policy Studies
[Text only. The full report, including tables, is available on the
Brookings Institution website at
http://www.brookings.edu/views/articles/rice/20050627.htm]
"Over the past four years, we have tripled our assistance to
Sub-Sahara Africa." President Bush, Press Conference with Prime
Minister Tony Blair, the White House June 7, 2005
The Bush Administration has significantly increased aid to Africa,
but that increase falls far short of what the President has
claimed. U.S. aid to Africa from FY 2000 (the last full budget year
of the Clinton Administration) to FY2004 (the last completed fiscal
year of the Bush Administration) has not "tripled" or even doubled.
Rather, in real dollars, it has increased 56% (or 67% in nominal
dollar terms). The majority of that increase consists of emergency
food aid, rather than assistance for sustainable development of the
sort Africa needs to achieve lasting poverty reduction.
President Bush has thus far rejected Blair's call to double aid to
Africa, as well as the benchmark set by the OECD and signatories to
the Monterrey Consensus, which called on developed countries to
devote 0.7% of their gross national income to overseas development
assistance by 2015. In declining to commit to either of these
targets, President Bush frequently states that his Administration
has "tripled" U.S. assistance to Africa over the past four years to
$3.2 billion. On June 7, 2005, the President also announced that
the U.S. will spend an additional $674 million, which consists of
previously appropriated emergency humanitarian food aid. The U.S.
recently agreed with G-8 partners to cancel the multilateral debt
owed by 18 Heavily Indebted Poor Countries, a positive step
forward.
As G-8 member states prepare to meet from July 6th to 8th in
Gleneagles, Scotland, they will have to confront the challenge
posed by their host, British Prime Minister Tony Blair, to double
aid to Africa to $25 billion by 2015, preferably through the
creation of an International Finance Facility. Part of a sweeping
agenda set forth by Blair and his Commission for Africa to
alleviate poverty and improve prospects for African security,
democracy and sustainable development, this proposal includes
scaled-up commitments by the G-8 to assist Africa with increased
aid, trade opportunities, investment, debt relief as well as
conflict prevention, conflict resolution and peacekeeping capacity.
The Gleneagles Summit poses an historic opportunity for the United
States to lead the international community in providing increased
development and other assistance to Africa. The Bush Administration
should join the UK, France, Italy and Germany and twelve other
developed nations and commit to devote up to 0.7% of U.S. gross
national income to overseas development assistance by 2015. This
commitment would place the U.S. in the forefront of international
efforts to alleviate global poverty.
Global poverty undermines U.S. national security by facilitating
the emergence and spread of transnational security threats,
including disease, environmental degradation, crime, narcotics
flows, proliferation and terrorism. First, poverty substantially
increases the risk of conflict, which in turn creates especially
fertile breeding grounds for such threats. Second, poverty erodes
weak states' capacity to prevent or contain transnational threats.
Key Findings
- U.S. aid to Africa from FY 2000 to FY 2004, the period to which
the President referred, has not "tripled" or even doubled. Rather,
in real dollars, it has increased 56% (or 67% in nominal dollar
terms).
- An analysis of actual U.S. appropriations from FY 2000 (the last
full budget year of the Clinton Administration) to FY2004 (the last
completed fiscal year of the Bush Administration) reveals a
different reality about U.S. aid to Africa than President Bush has
maintained.
- In nominal dollars, total United States aid to Sub-Saharan Africa
increased from $2.034 billion in FY 2000 to $3.399 billion in FY
2004.
- In nominal dollars, of the $1.365 billion overall increase,
$728.9 million, or 53%, consists of emergency food aid rather than
overseas development assistance, which contributes to sustainable
development. The remainder of the increase is comprised primarily
of funding for the President's HIV/AIDS initiative (distributed
between two accounts, Child Survival and Global Health) as well as
emergency and post-conflict assistance to Liberia and Sudan.
- Actual development assistance, excluding food aid and security
assistance, increased only 33% from FY 2000 to FY 2004 in real
dollar terms, or 43% in nominal dollars. In nominal dollars, less
than $450 million of the increased foreign aid to Africa is
official development assistance.
- Official Development Assistance to Africa (aid programs directed
at sustainable development) increased by 43% from FY 2000 to FY
2004. Of these programs (in nominal dollars):
+ Funding for the Child Survival and Health Programs Fund
increased by 70%, primarily for HIV/AIDS.
+ Development Assistance funding increased 1% over FY 2000.
+ Global Health and HIV/AIDS Initiative, which did not exist
as a separate program in FY 2000, received $263.8 million for
Africa in FY 2004.
+ Peace Corps funding increased by 19%.
+ African Development Bank funding increased by 24%.
+ African Development Foundation funding increased by 31%.
+ African Development Fund decreased by 12%.
+ The newly-created Millennium Challenge Account did not exist
in FY 2000, and its entire FY 2004 budget went towards
administrative expenses rather than country programs.
+ The Heavily Indebted Poor Countries debt relief funding
decreased by 32%.
- The only programs that both existed in FY 2000 and more than
doubled by FY 2004 were Foreign Military Financing, which increased
by 109%, and emergency food aid (PL 480 Title II), which increased
by 159%.
- From FY 2000 to FY 2005 (estimated), U.S. aid to Africa will have
increased by 78% in real dollar terms or 93% in nominal dollars not
quite a doubling, much less a "tripling" of aid. Of this increase,
50% consists of emergency food aid (PL 480 Title II).
- Actual development assistance, excluding food aid and security
assistance, will have increased an estimated 74% from FY 2000 to FY
2005 in real dollar terms, or 89% in nominal dollars.
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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