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DEVELOPMENT: Towards an 'Aid-Free' World?

Analysis by Ramesh Jaura

BERLIN, Aug 30 2008 (IPS) - Imagine the dawn of a day when development aid ministries in Europe are shut down because there are no countries left in the 'South' that depend on financial assistance from the 'North'.

It sounds rather utopian. Nevertheless, more than 1,000 officials from 'donor' and developing countries and heads of multilateral and bilateral development agencies are looking to take collective ownership of that utopia when they gather in Accra next Tuesday for the Third High-Level Forum on Aid Effectiveness (HLF3).

Launched by the Organisation for Economic Cooperation and Development (OECD, a grouping of 30 wealthy nations), the World Bank, the African Development Bank and hosted by the government of Ghana, the Forum will bring together ministers, heads of development agencies and civil society organisations from more than 100 countries.

They will scrutinise the results of development aid and suggest what needs to change and how the international aid system can deliver the "best bang for the buck", helping build sustainable economies that lift people out of poverty.

Using as benchmark the 2005 Paris Declaration on Aid Effectiveness, participants will evaluate how well donor and recipient countries are working in partnership to meet their development commitments.

"The Paris Declaration promotes a model of partnership that improves transparency and accountability on the use of development resources. It recognises that for aid to become truly effective, stronger and more balanced, accountability mechanisms are required at different levels," says a briefing note by the OECD.

At the Accra Forum, the participants will ask whether donors (of the OECD) are providing long-term and predictable funding; coordinating development efforts within and between national governments including their developing partners; and are further untying aid.

"They will also ask whether recipient countries are taking ownership of their own development needs, working with their parliaments and civil society to set development goals and build the capacity to meet them," says a background note by the organisers.

An important paper senior officials and experts will find in the bunch of conference documents is the Accra Agenda for Action (AAA). If all goes well, they will adopt this document unanimously on Sep. 4, the last day of their deliberations.

The final paragraph of this 31-point, six-page document says: "Today, more than ever, we resolve to work together to help countries across the world build the successful future all of us want to see – a future based on a shared commitment to overcome poverty, a future where no countries will depend on aid."

This pledge will be part of the package that UN Secretary-General Ban Ki-moon will take to the world leaders that gather for a high-level event in New York on Sep. 25 and to the Financing for Development Review meeting in Doha Nov. 29-Dec. 2.

It will be accompanied by a message stressing the need to translate the "aid-free" world utopia into reality.

But there are miles to go before that happens.

Judging by a comment in the 'Business Daily' from Nairobi, Yash Tandon, the executive director of the South Centre, has serious doubts whether an aid-free world will ever be ushered in. The South Centre is an intergovernmental policy think-tank of developing countries based in Geneva.

"The issue of aid effectiveness was put on the global agenda primarily for three reasons. One was the need to simplify and rationalise the complex system of aid administration and to reduce transaction costs," says Tandon.

Second, he says, citizens of donor countries are asking why their governments are giving "so much money" to, for example, Africa in spite of rampant corruption, human rights violations and very little progress in fighting poverty.

"Third, the present aid architecture is dominated by the rich countries of the OECD and thus suffers from a serious democratic and legitimacy deficit," says Tandon in the article published on Aug. 1.

These are only some of the troubling implications of the "aid effectiveness" project.

"The conclusion is unavoidable: under the pretext of making aid more effective the Paris Declaration project is a form of collective colonialism by Northern 'donors' of those countries in the South that (because of their weakness and vulnerability and psychology of 'dependency') may allow themselves to be subjected to it at the Accra September Conference," writes Tandon.

Though not arguing the same way as the South Centre executive director, the Brussels-based European NGO Confederation CONCORD says: "Politicians made high level political promises to make aid better for poor people, but lack of progress on these commitments means their credibility is now at stake."

Official data from the OECD's Paris Monitoring Survey shows that there has been little or no progress in meeting the Paris Declaration targets. Donors have improved their coordination in doing joint research and joint missions, but aid has actually become less predictable, and there has been less use of country systems. There is virtually no change in using country procurement systems or aligning aid to national priorities, notes CONCORD in an analysis.

A research report by a CONCORD member Eurodad, 'Turning the Tables: Aid and Accountability under the Paris Framework' based on case studies from seven developing countries, points to a patchy picture.

Eurodad offers a few examples where things have worked out as desired: 100 percent of Britain's aid to Mozambique is reflected in the government budget; Ireland is providing direct support to civil society organisations for social auditing in Honduras and Nicaragua; and the European Commission now makes commitments over longer time periods to improve the predictability of its aid.

But the list of lapses is rather long:

– Only one-fourth of the World Bank's aid to Mozambique is given as programme aid (the rest is through individual projects), and only one quarter uses the country's own financial and procurement systems.

– France finances aid to Mozambique by recycling Mozambique's debt service.

– The European Court of Auditors found that "only one-third of the European Commission's technical assistance projects have been or are likely to be successful."

– Spain has tied its debt relief to Honduras to implementation by Spanish companies, institutions, or organisations.

– In Malawi, donors have set up 69 project units parallel to government systems, and 30 of these are run by the United States Agency for International Development (USAID).

– Donor transparency is still poor – both USAID and France were found not to be transparent about their aid in Sierra Leone and Mali respectively.

– In Mali, the World Bank conditions its aid on privatisation of the public sector (telephones, electricity, railways and cotton). This is turn influences other donors.

According to CONCORD, too much aid remains driven by donors' priorities and interests, which can undermine democratic accountability in countries receiving aid, and sideline the needs of the poor.

"Donors take decisions which affect the lives of real people in poor countries, yet they are almost completely unaccountable to them. One key first step towards making aid more effective and accountable would be for donors to sign up to international best practice transparency standards in Accra," says Jesse Griffiths of ActionAid's aid policy team.

Despite donor commitments for reform, the majority of aid still undermines developing country systems by setting up parallel donor structures and enforcing damaging policy conditions which are used to promote donor economic and foreign policy interests.

"We know that donors have the power to unblock many of the obstacles to improving aid. If donors do not make concrete commitments to change the way they do business when they meet in Accra, the outcome will be more inaction and more ineffectiveness," says CONCORD president Justin Kilcullen.

Kilcullen is of the view that the European Union (EU) has the responsibility to ensure that concrete actions are agreed in Accra which improve the transparency of both donors and developing country governments, end the practice of attaching policy conditions to aid, and ensure aid is effective in meeting the needs of those for whom it is intended.

With this in view, the international civil society organisation steering group (ISG) coordinating the 'CSO Parallel Process to the Ghana High Level Forum Network' has prepared a position paper that will be presented to participants at the Accra Forum.

While CSOs welcome many aspects of the Paris Declaration, they reiterate that the 2005 Declaration has very little to say on crucial questions: aid effectiveness for what purpose, for whom and as measured by whom? How much aid actually reaches the poor and mobilises them to address their own problems?

The Paris Declaration actually sets out an unfinished and narrow agenda for reform. It ignores the role of citizens and CSOs as development actors in their own right who have a long history in organising economic, social and political initiatives with and on behalf of the poor, says the position paper.

CSOs involved in the aid effectiveness debate propose change in four areas to achieve real impact on poverty with aid resources:

– Understanding the role of civil society as development actors related to efforts by poor and marginalised peoples to claim their rights.

– Aligning donor approaches with a more complex understanding of aid modalities to support the poor.

– Resolving the tension between local ownership and donor conditionalities.

– Assuring independent assessments of progress for improved development results.

CSOs consider aid effectiveness as a triad of key issues in development financing – the other two key issues being 100 percent debt cancellation to end the debt crisis in developing countries, and for rich countries to meet their commitments to give 0.7 percent of gross national income as official development assistance (ODA).

Rich countries first committed to increase their ODA to that level in 1970, and this commitment was reaffirmed in the Monterrey Consensus of 2002. But very few donors have fulfilled their promise, the position paper points out.

The upshot is that before an aid-free world can be ushered in, aid provided by the world's rich nations should not only be effective but also ample enough for the developing countries to set up adequate structures and build necessary capacities.

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