"Bad aid" slammed at ECOSOC session, calls made for review of effectiveness, new sources

06 July 2012

The Third Development Cooperation Forum taking place at the current ECOSOC session in New York was asked to recommit to global development partnership, rethink current practices and jointly reenergize global development cooperation, as focus was directed to aid effectiveness and development financing.​

Reviewing some of the key findings of the UN Secretary-General's report on Trends and progress in international development cooperation (document E/2012/78), Mr. Sha Zukang, Under-Secretary-General for Economic and Social Affairs, said that in spite of renewed commitment to the Millennium Development Goals, there were wide gaps in advancing Goal 8, the global partnership for development. 

Against the 0.7 per cent official development assistance (ODA) target, the gap between what was promised and what was being delivered stood at $167 billion per year; only a few development partners had honoured their commitments and maintained their levels of assistance thus far.

After the formal opening of the Third DCF, the Council then held an interactive panel discussion led by two presenters: Mr. Heikki Holmås, Minister of International Development of Norway, and Dr. Supachai Panitchpakdi, Secretary-General of UNCTAD.  It was moderated by Ms. Joanna Kerr, Chief Executive Officer of Action Aid International.

According to a UN Department of Public Information press release, in opening the discussion, Ms. Kerr said that the most recent resolutions taken by the G-8 and the G-20 were failing, among other things, to ensure food security for nearly 1 billion people.  “It is a worrying trend”, she said, noting that in Rio, while the United States and Europe had had “great things to say”, they had been silent when asked to put forward the money to ensure the implementation of the very ideals they had espoused.  Moreover, without “real money” on the table, sustainable development, poverty eradication and gender empowerment would never be a reality.
 
ECOSOC Panelists
                             ECOSOC Panelists

As “where is the money?” had, therefore, become a common refrain, she noted, for instance, that a small tax on financial transactions could raise billions for development and sustainability.  Her organization, Action Aid — an international non-governmental organization working in 50 countries — had taken a clear stand on the need to reform development cooperation.  Last year, it had published a report entitled “Real Aid”, which called for such reform and for civil society to play a key role in avoiding aid dependency.  It was critical for all developing countries to become more self-reliant.

 
“We need quality assistance that builds quality capacity”, she said in that respect; however, that would only be possible if tax payers — both individuals and corporations — played their role.  Additionally, “bad aid”, or those types that were self-interested and perpetuated unhealthy power dynamics, should be swiftly ended, and mutual accountability frameworks “putting developing countries in the driver’s seat” were needed.

“Aid still matters”, she said, agreeing again with the UN Secretary-General’s report.  In addition to a focus on policy coherence, gender empowerment must be a central component of aid, and its “catalytic role” must be utilized. 

Minister Heikki Holmas responded that one of the main challenges was distribution of wealth — not just between rich and poor countries, but also within countries.  Ten times more money leaked illegally out of developing countries than the total amount of aid to those countries, and the current economic system actually encouraged such illicit flows.  Money flowed from the poor to the rich and hampered growth and investments in developing countries.  In that respect, he was glad that illicit flow was mentioned — for the first time ever — in the Rio+20 outcome document.

There were also security and economic reasons for reducing those flows, he said, citing crime, uprisings and other concerns.  For Norway, a steadily larger part of aid was concentrated on such issues.  He recalled, in that respect, a recent meeting with a Tanzanian Government official, who had stressed that renegotiating the country’s deals with its mining industry would be more important than all the ODA it was currently being given.
 
He said a currency transaction levee was a reasonable option.  In many countries, 70 per cent of assistance once came from ODA, while 30 per cent came from foreign direct investment; now it was the reverse ratio in that outside investments needed to focus much more on development.  Additionally, the way investment was going needed to be followed by policies to ensure that they were translated into stronger development.


Sharing his thoughts on how development cooperation could best support a global development agenda in the current trade environment, Dr. Supachai said sustainable development was a “highly loaded” phrase.  It involved more than growth.  It involved equity, women, job creation and environmental stewardship — a huge agenda.  Given that, he highlighted three major issues that would determine the future of development cooperation — coherence, effectiveness and assessment — saying that the dialogue must move beyond aid approaches to cover investment, technology transfer and capacity-building.

In coherence, he said the 2012 OECD assessment of donor countries found that they had a problem with coherence.  Climate policies, for example, should not become another form of “green protectionism”.  Countries were using them to close their markets to poor nations that did not meet standards, which themselves had been set by the private sector and not assessed by the WTO.
 
On effectiveness, he said he had not seen the specification required for determining effectiveness criteria.  One instrument for determining effectiveness was capacity-building.  There could be no open trade regimes, for example, without the capacity to compete.  Development cooperation must lead to capacity-building in such areas as health and information technology.  He highlighted the Nagoya Protocol to the Convention on Biodiversity in that regard, which was crucial because it gave developing countries the capacity to compete in the use of genetic resources and in the benefit sharing of those resources.

 

Assessment was also needed to review aid effectiveness, he said, not just by donors like the OECD, but by recipients to ensure that assistance met national strategy requirements.  Was assistance, for example, being used to help countries facilitate regional integration?  Often it was not.

 
In the interactive dialogue that followed, delegates from least developed, developing, middle-income and industrialized countries alike outlined their priorities for the changing development cooperation landscape.  Key questions hinged on how to ensure that the new cooperation architecture would produce results on the ground and bring about the needed coherence among a diverse set of stakeholders — from Governments and the private sector, to civil society, philanthropists and academics.

 

Even with new cooperation modalities, ODA was still very much needed, said several speakers representing developing countries, and further, they warned that it could not be replaced by South-South cooperation.  Civil society and the private sector were important, some said, but such assistance should be channelled through Governments, since they were responsible for translating development plans into reality.

 

Dr. Supachai agreed that there were many issues outside of assistance that were equally critical for development.  Among those, trade was one of the most powerful instruments, but there was a lack of effort to ensure an equitable and balanced trade environment.  In the stalled Doha Round of trade negotiations, countries should demand an “early harvest” for those matters that related to development.  Another issue was that of investment.  Borrowing was not always easy, and more heavily-indebted poor countries were not needed.  Investments, however, needed to be responsible.  A set of responsible investment principles were needed.

He agreed with other speakers that ODA was not going to be sufficient in the future, adding, “we have to be realistic”.  To achieve the same level of official development assistance, or see it increase in the coming years, was indeed “dreamlike”.  The world must consider the next-best option, he said, and it needed to be serious about reducing aid dependency.  Finally, he said, the issue of accountability was critical.
 
Arrow Arrow