Climate Change, Development & Aid, Economy & Trade, Environment, Financial Crisis, Global, Global Geopolitics, Headlines, Poverty & SDGs

FINANCE: Aid Losses Prompting “Development Emergency”

Haider Rizvi

UNITED NATIONS, Sep 17 2009 (IPS) - A new U.N. report warns that the world is likely to suffer more economic and environmental disasters if the richest countries fail to shoulder their share of development aid to poorer nations.

“Without strong and concerted international responses, the [current financial] crisis could become a development emergency,” said U.N. Secretary-General Ban Ki-moon.

U.N. researchers who carried out the 72-page report, released Wednesday, say they fear that due to the lingering financial crisis, many donor countries could scale back promised levels of aid for poorer countries.

Entitled “Strengthening the Global Partnership for Development in a Time of Crisis”, the report comes a week ahead of a major summit on climate change at U.N. headquarters and the meeting of the G20 most industrialised nations in the U.S. city of Pittsburgh.

The report says that despite some increases in the recent past, the level of aid to poor countries remains dismal, failing to reach a minimum benchmark of 0.7 percent of Gross National Product (GNP).

In response to a question from IPS, a senior U.N. official identified the United States as one of the major economic powers that has consistently fallen behind in fulfilling its pledge to aid poor nations.

The official said some of the small countries in the industrialised world, mainly those in Scandinavia, were fully in line with their commitments on development aid to Africa and other poorer parts of the planet.

According to the report, last year total aid from the Organisation for Economic Cooperation and Development (OECD) countries amounted to 0.3 percent of their combined gross national income, which is not even half of the U.N. target of 0.7 percent.

“Enormous efforts will be needed to fill this gap,” said Jomo Kwame Sundaram, the U.N. assistant secretary general for economic development, who spoke on behalf of the under-secretary-general for economic and social affairs.

In his view, it is time for the world community to make “enormous efforts” to fill that gap. “New commitments made at the G8 summit in L’Aquila in response to the food crisis demonstrated that the international community can rise to challenges in a concerted way,” he said.

Sundaram and colleagues cautioned against protectionist tendencies as a response to the crisis. Noting that from April 2008 to 2009, global trade has fallen up to 20 percent, he said that even if this trend reverses a little in the coming months, the losses for most developing countries have been severe.

At the World Trade Organisation (WTO) in Hong Kong in December 2005, governments agreed to give duty-free and quota-free access to 97 percent of exports from the poorest countries, but Sundaram concluded “there has been no progress” toward this goal.

According to the U.N. MDG Task Force, by the first quarter of this year, as many as 35 out of 40 countries, most of them in Africa, had qualified for debt relief. But due to the global financial crisis, many are newly vulnerable.

“Many [of them] are likely to take on more debt to survive the economic downturn,” said Sundaram. “The international community should accelerate and broaden debt relief initiatives to prevent distress.”

The report explains in detail the coverage gap in official development assistance (ODA) distribution. It shows that since 2000, development aid has been largely focused on a handful of post-conflict countries, such as Iraq and Afghanistan.

In contrast, according to the report’s authors, many of the poorest countries in Africa “have seen very little increase in aid”.

The report finds that even after the success of two major debt relief initiatives, high prices for imported fuel and food combined with falling demand for export commodities have forced poor countries to pay their external debts.

The report’s authors note that just as the purchasing power of the poor is under threat, the cost of many essential medicines is rising. Their findings suggest that people in developing countries now pay three to six times more than “international reference prices for three cheapest genetic medicines”.

The report also raised concerns about uneven access to information technologies between the developed and developing worlds and how it shapes economic conditions.

According to the report, while more than 65 million mobile phone subscribers signed up in Africa in 2007, the penetration rate is still less than a third of the population, as compared to nearly 100 percent in developed countries.

A number of African countries are also becoming increasingly vulnerable to the adverse impacts of climate change and are in dire need of technological and financial aid to fight global warming.

Asked why certain nations from the rich and industrialised world have been so slow in delivering promised aid to Africa and other poor regions, Sundaram said, “It’s a difficult question.”