2.mod1 ae aidco


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  • [Welcome and introduction of trainer. Roundtable introduction of participants – ask them to say who they are, where they’re from, and what they actually do – can be done as a “present the person next to you” ice-breaker.]
    One of the key things we need to do to make aid more effective is to challenge one big assumption a lot of people have. Which is that if you give money to developing countries, then there’s no need to worry about how you do it – you’re doing good full stop. It’s bound to work. And the beneficiaries should be thankful for your kindness. However history has shown that there are less good, and even bad, ways to give money away. So, just because you’re doing good, it doesn’t mean you’re doing it well.

  • [Participants asked to each take a card and complete the statement “Aid Effectiveness is….” with their personal definition in one sentence. Inform them that optimism, cynicism and above all common sense and a lack of jargon are very welcome. Collect cards and read out and post them on a board, commenting as necessary. 5 mins to complete, 10 mins to read out].

  • This Introductory Module will take a look at four things.
    (1) What aid is and, briefly, how it’s changed over the last 50 years.
    (2) What the Millennium Development Goals are all about.
    (3) Where this concern with the effectiveness of aid came from and what it means.
    (4) What’s coming up in the rest of this course.

  • First, we’ll look at the idea of aid. Something we’ve been doing a lot of for a long time. What would you do with 50 years and 1.5 trillion euros?

  • So what do we actually mean by aid? Let’s look at a few definitions:
     The OCED basically says that aid is money we give to help out the poor and defines Official Development Assistance (ODA) as “flows of official financing administered with the promotion of the economic development and welfare of developing countries as the main objective.”
     Wikipedia on the other hand tells us it’s money to help the poor, but only to some extent, defining it as “a voluntary transfer of resources from one country to another, given at least partly with the objective of benefiting the recipient country.” It then usefully clarifies that “it might have other functions as well, such as acting as a signal of diplomatic approval, strengthening a military ally, acting as a reward to a Government for good behaviour desired by the donor, to extend the donor’s cultural influence, or to provide commercial access to the country for the donor.”
     Moving on to the cynics, there’s an old cartoon which defines it as something that doesn’t actually help the poor at all: “when you take money from the poor people in a rich country and give it to the rich people in a poor country”.
    And we’ll finish at the extreme with a quote from Dambisa Moyo, a Zambian lady and former World Bank and Goldman Sachs employee who wrote the book “Dead Aid”, now on the New York Times Bestseller List. She claims that aid isn’t only not helping the poor, but it’s actually harming them, defining it as: “the billions that have hampered, stifled and retarded Africa’s development.” And people are taking notice – she’s been named as one of Time magazine’s “World‘s100 Most Influential People.”

  • If we look at the history of aid, we can see several trends in what it’s been spent on and how it’s been spent over the years. An optimist might explain this as evolution, with aid becoming more efficient and effective over time. A cynic on the other hand might say it’s been a case of donors stumbling in the dark, jumping from one new imaginary magical solution to the next.
    After the War: as World War II ended, the winners said they wanted to ensure a prosperous and stable world and were particularly concerned about the damage done to Europe during the war. The World Bank was therefore set up with the aim of getting in the capital for reconstruction and the International Monetary Fund was established to manage the international financial system. Meanwhile the Marshall Plan was agreed and subsequently injected 13 billion dollars of aid between 1948 and 1952 to try to fix Europe. This seemed to work and, having seen this, policy makers started to champion the idea of giving aid to other parts of the world with problems, especially now having colonies was going out of fashion. US President Truman said in his inaugural address in 1949 that poor countries needed to modernise and industrialise to solve their problems and that the West would help the Rest with aid to do this. Another lesson of the Marshall Plan was that aid is a useful way for a donor to maintain influence and opportunities in the countries it gives money to. An interesting prospect when you’re losing your colonies and the Cold War has just broken out.
    The Sixties: in this decade, the prevailing view was that development should be led by the state. And channeling aid funding to large-scale industrial projects became particularly popular. Big roads, big railways, big dams, and big power plants were put forward as the key for development and something that poor countries wouldn’t finance themselves due to the high costs and long time periods involved which meant having to wait a long time for the pay back. So donors would pay for them and Governments would implement them. This would lead to growth and growth was held to be synonymous with development. These kind of expenditures also provided a nice tangible representation for the donors of where their taxpayers’ money had ended up. As the decade wore on, helping out the agriculture sector also came into fashion with the recognition, that until industrial-led growth really paid off, we might need some employment generation and income redistribution. The prevailing wisdom was that, like with the Marshall Plan, countries would only need assistance for 10 years.
    The Seventies: there was a recognition by now that aid wasn’t quite delivering the results that were planned and we weren’t getting it done in a decade. Growth didn’t seem to be the answer to everything so there was an increased focus on poverty alleviation, meeting basic human needs. Less infrastructure and more health and education. But as oil prices quadrupled after the Arab-Israeli war of 1973 and interest rates shot up, the world entered recession. A lot of aid money had been given as loans rather than grants and poor countries now found themselves unable to pay back their debts. At the same time, demand for the products they exported was plummeting.

  • The Eighties: in the West we had Gordon Gekko’s famous speech in the movie Wall Street proclaiming that “Greed is good” while in the South donors translated the new-found love of the private sector into the idea that Big Government was at the heart of many of the developing world’s problems. They should instead liberalise and not subsidise. The private sector needed to be supported as it held the key to creating wealth and jobs and therefore lifting people out of poverty. Follow the free market, went the mantra, and we can all be Asian Tigers. As developing countries were struggling to pay back their huge loans at this point, there was an easy way to get the new ideas of free-market led development implemented - the IMF and World Bank came up with the Structural Adjustment Facility, which gave new loans and/or better terms on existing loans to countries at risk of defaulting on their debt. But only if they changed their polices in line with the institutions' prescriptions, which included things like deregulation and privatisation. By 1988, developing countries were paying back to rich countries $15bn more per year in loan repayments than they were receiving in aid. Not to judge, but this has also become known by some as “the lost decade for development.”
     The Nineties: this decade saw the focus shift again, this time on to how countries were being run. The main cause of limited development was now put forward as bad governance – autocratic, incapable and corrupt politicians and institutions were causing of poverty. Clean up Government, build the capacity of state institutions, enforce the rule of law and introduce free and fair elections and you’ll solve the problem. We need a good state to reap the benefits of the market. There was also an influential study published by Burnisde and Dollar in 1997 saying that aid only works in places that have good policies – so we should only help you if you don’t really need it said the critics. This chimed with frustration about the effectiveness of aid in general in the rich world and we saw aid flows start to weaken.
    The Noughties: the present decade has seen several different trends. Pushed on by the pop stars, politicians have committed to “scaling up”. For example at the Gleneagles G8 meeting of 2005, rich countries pledged to increase total aid by $50 billion by 2010 as well as to write off an additional $50bn of debt owed by some of the poorest countries. Thankfully there has also been a recognition that, while more might well be better, a lot of money has already been thrown at the problem and so we also need to change how we spend it. Some long overdue concrete social goals were set for aid, the MDGs, moving us on from a myopic focus on GDP growth. Donors have also sat down with developing countries and agreed on ways to make aid more effective - the Paris Commitments - which we’ll come to later. One key component of these though has been the idea of ownership, letting developing countries control how aid money is used. This has led to some donors favoring budget support – paying aid money directly into the Treasuries of developing countries to use as part of the national budget along with the revenue they get from their taxpayers. We’ve also seen the rise of Celebrity Aid, with pop stars telling us how to make aid work. This has certainly raised the visibility of poverty but has also led to a popular conviction that we just need to throw more money at the problem. And finally there has been an increasing tendency to mix aid with military interventions for example to “fix” failed states and “restore democracy”.
    Today: moving on to the present day, one interesting and perhaps worrying phenomenon lately has been a backlash against aid. As times have become tougher for the West, aid is often the first item on the list of spending cuts for a Government in fiscal trouble. Barack Obama’s speech in Ghana in July 2009 asserted that “Africa’s future is up to Africans” and that the West’s commitment to it should not be measured in terms of dollars spent. This came on the back of increasingly critical recent assessments of the aid business in books such as “The White Man’s Burden”, “Why Foreign Aid Isn’t Working” and “Dead Aid”. These writers - incidentally all of whom are ex World Bank staff - so we’re long overdue a book from an EC official - are providing fuel for those in favour of radically changing, cutting, or even totally getting rid of, foreign aid.
  • So which celebrity do you think had this to say about aid. [Ask for guesses, which are likely to concentrate on figures from the last decade or so.]
    In fact it was US President Harry Truman, back in 1949. Yet the statement doesn’t look at all out of place 60 years later – which has to make us ask how effective over half a century of aid has actually been?

  • So how much money are we talking about? Global ODA increased steadily from the 60s to reach $68bn in 1992. Then it fell sharply to $55bn by 1997 as aid fatigue set in. It rebounded however, particularly after the terrorist attacks of 9-11, up to $92bn in 2004 and $120bn – that’s about 80bn euros – today. The latest rise though has a lot to do with debt relief being counted as aid and with huge amounts of money going to Afghanistan and Iraq.
  • Here we see the bilateral donors and what they’re giving, with the US clearly in the lead, just short of $25bn. Then come the UK, Germany, Japan and France.
    But ODA as measured by the OECD also includes multilateral aid – i.e. aid from institutions like the EC and the UN - which makes up 25% of total ODA.
    The EC for example gives about $13bn a year (9% of its total budget)
    and the UN about $3.8bn.
    Incidentally, if you look at the EU, i.e. all the member states and the EC together, you get a figure of around $50bn, so it becomes the world’s biggest aid donor.
    But a lot of aid is not measured by ODA, for example that provided by private foundations (e.g. the Melinda & Bill Gates Foundation, the Clinton Initiative),
    vertical funds (e.g. the Global Fund to fight AIDS, Tuberculosis, and Malaria), and NGOs. And the picture is complicated by the fact that aid from one source may be channeled through another. And in addition to aid, there’s also of course remittances from citizens of developing countries now living overseas. Before we leave this slide, just note here the size of the Gates’ contribution vis-à-vis the UN budget.
  • So, this seems like a lot of money, but how about in relation to donors’ GDP? You can see on this graphic that on average each bilateral donor is spending about 0.3% of their total national income on aid. The most generous donors by percentage of GDP are Norway, Denmark, Luxembourg, the Netherlands and Sweden – giving 0.79-0.92% of GDP. The US gives just 0.22%.
    But the members of the UN, you will be pleased to hear, have made a commitment that donor countries will dedicate 0.7% of their Gross National Product to ODA. I quote from the commitment made at a UN General Assembly Meeting “Each economically advanced country will progressively increase its official development assistance to the developing countries and will exert its best efforts to reach a minimum of 0.7% of its gross national product by the middle of the decade”. A commitment made this decade? No. Last decade? No.
    It was in fact made back in 1970. And you can see how far off they are – all but five donors are still the wrong side of the 0.7% line on the graphic.

  • One of the more recent promises for more cash came at the Gleneagles G8 meeting in 2005 which promised total aid flows would be up to $130bn dollars per year by 2010. Rich countries also promised to double aid to sub-Saharan Africa by 2010 and triple it by 2015. So are we going to meet this one? The graphic shows by what percentage donors would have to increase their aid in order to do so. That big bar in the middle is Italy which needs to increase its aid by 340% in order to meet the target.

  • So where does all this money go?
    The OECD DAC list of beneficiary countries of ODA contains 151 countries, a mix of low and middle income ones. On the graphic, you can see the biggest chunk of OECD DAC members’ aid goes to Africa - over a third. Then comes South and Central Asia with 12% which is interestingly only slightly more than the Middle East – think Afghanistan and Iraq - which get 10% of the global total.

  •  As for the EC, we can see the bulk of the money going to the ACP counties, followed by the Neighbourhood ones and then Asia.

  • If we look now at EU aid, we can see that the top recipients are again mostly in Africa, with Iraq and Afghanistan being notable exceptions. In Asia, we can see India and China standing out. And remember that India, despite its much touted explosive growth, still has more poor people than the whole of sub-Saharan Africa.

  • As you might have guessed, the decisions on who gets the money aren’t made just on the basis of who needs it most. Instead we can identify darling and orphan countries – places with similar national GDP per person that get vastly different amounts of aid, depending on whether they are favoured or not by the donors. So we see Madagascar and Mozambique, with the same income per head but Mozambique getting more than twice as much aid. We can see Guinea and Tanzania and it’s a similar story and with Ecuador and Jordan, Jordan is 8% poorer but it gets 450% more ODA.
     Historical, political, economic and security considerations all have a role in deciding where aid gets spent.

  • So is all this aid working? What are we achieving?
    On the left graphic we can see world GDP over time, looking very healthy.
    On the right we can see the percentage of people living in extreme poverty (i.e. on below $1 per day). Again, progress looks very good. But such aggregate figures don’t tell the whole story.

  • If we break down the number of people living on under $1 a day by region for example, we can see that it’s the declines in places like East Asia and the Pacific which have driven the aggregate improvement. In South Asia things have stayed constantly bad. In sub-Saharan Africa they’ve been getting worse.

  • And if we challenged the $1 a day measure itself, we again get a different story. If you’re living on $2 a day or $4 or $6 or $8, you’re probably still very poor. And if you start looking at poverty in those terms, the facts get quite shocking. This graphic shows the percentage of the world’s population living below different amounts. We can see that nearly 50% live on less than $2.50 per day. And a massive 80% of the world live on less than $10 per day.

  • However, a better measure of poverty than GDP or dollars-per-day is the Human Development Index which looks at a number of different factors – including life expectancy, literacy, and educational attainment – to arrive at an overall measure of a country’s development. On the graphic, the darker colours – red and orange – denote countries with lower scores. So again we see a concentration of poverty across the Heart of Africa and South Asia.

  • But maybe the Human Development Index itself is also a bad indicator. Some are measuring poverty, or its lack, in very different ways – in Bhutan for example they measure not Gross National Product but Gross National Happiness. Which has four components as far as the Bhutanese are concerned.
    Sustainable development
    Preservation of traditional cultural values
    Conservation of the natural environment
    And good governance.
  • So what is the overall verdict on whether aid works?
     You can find people telling you empathically that aid is good and it works. They’ll pull out examples like Botswana, Indonesia, Korea and Tanzania with their impressive records of growth, poverty reduction and increasing prosperity and stability.
     Then you’ll find others saying no, aid clearly doesn’t work and they’ll bring forward the Democratic Republic of the Congo, Haiti, Papua New Guinea and Somalia: huge amounts of aid and still failed states.
     So we can turn to the economists, surely they’ve done the econometrics and worked out if aid leads to growth at least. Well they have. And some say yes, some say no, and some say maybe. Although the latest research tends to put the answer in the yes camp, albeit with diminishing returns. However of course we should remember that growth is not the end goal, we also have to look at whether this growth leads to poverty reduction.
    Overall then, we have to say it depends. It depends on the policies of the country – the famous study by Burnside & Dollar even said we should only give aid to countries with good policies - what we do and how we do it - aid is not one, homogenous thing - and on assessing the combined effects of aid - a given intervention will have its direct effects but may also influence policy, local institutions and macro-economic stability. So you could have, for example, positive direct effects but negative effects overall.
  • In any case, we can pull out all kinds of statistics and pretty charts to justify different opinions about how well, or not, aid is working. Regardless of this, the current state of affairs is unarguably a cause for concern, as the figures you can see now show: percentage of the world’s population that lives in developing countries: 84. Number of people worldwide who will die today due to poverty: 20,000. Number of children who will die this year from easily preventable diseases: 10,000,000. Number of people without enough to eat today: 840,000,000

  • Now we’ll have a look at the Millennium Development Goals. A quote here from Jeffrey Sachs, a famous and influential development economist: “There is no magic bullet. These are just basic problems requiring basic work.”

  • The MDGs are eight goals for development signed up to by 192 UN Member States and a number of international organizations in 2001. They aim to half world poverty by 2015,
    Number 1 is to eradicate extreme poverty and hunger.
    Number 2 is to achieve universal primary education.
    Number 3 is to promote gender equality and empower women.
    Number 4 is to reduce child mortality.
    Number 5 is to improve maternal health.
    Number 6 is to combat HIV/AIDS and other diseases.
    Number 7 is to ensure environmental sustainability.
    And number 8 is to forge a global partnership for development.
    Each has specific quantitative targets which are supposed to be achieved by 2015. As you can see they’re ambitious. They’re also notable for not being about economic growth or dollars per day. So, for the first time, we have specific common goals that multilateral and bilateral donors, NGOs, global funds and philanthropists can all rally around and work together to achieve.

  • Progress towards reaching the goals though has been uneven. Overall we won’t meet them all by 2015.
  • Some countries have already achieved many of them, but others are far off course to meet any of them by 2015. We’ve seen plenty of progress in Asia – China for example has reduced its number of poor people by 200m. But in sub-Saharan Africa on the other hand, most countries look unlikely to meet the targets.
    As we get closer to 2015 and it becomes more obvious to more people that we’re going to miss the MDG targets, criticism of them as a tool is growing. Setting arbitrary global targets on development has no doubt focused some attention and resources on what are pressing needs. But setting the bar is of course the easy part, the real work is in working out how to jump over it.
     So we’re seeing increasing interest now in aid effectiveness issues and focusing more on finding out what is actually working on the ground and replicating it as opposed to devising yet another Grand Plan or set of goals.
  • So, we’ve looked at aid and the MDGs. Now we’ll move on to the subject of aid effectiveness. We mentioned celebrity aid earlier, and in fact pop stars giving advice on development started way before Bono and Bob Geldof – Elvis hit the nail on the head back in 1968 regarding one of the keys to making aid more effective: “a little less conversation, a little more action please.”
  • Some definitions of what we mean by aid effectiveness first of all:
    “Spending aid on the right things and through the most effective channel”
    “Ensuring that all aid has the maximum possible impact on poverty reduction”
    “Ensuring that the financial resources provided by rich countries to poor nations actually improve the daily lives of millions of people and move the world closer to achieving the MDGs.”
  • In the last 5 years or so, ideas on how to make aid more effective, at least among donors, have come to be concentrated around a handful of specific ideas:
     Putting Partner Governments in the driving seat to decide on what aid is spent on and how.
    Cutting down on the gaps and overlaps in donors’ work.
    Improving the predictability and transparency of aid.
    Focusing more on results, and donors and Governments’ accountability for them.

  • The idea is that if you do this you can get rid of some of the bad effects of ineffective aid. Now a small quiz for you to show you some examples:
    No. of indicators the island of St Vincent has been asked to monitor on HIV/AIDS?
    No. of donor missions to Ethiopia in 2007?
    Percentage of aid projects that are for less than $1m?
    No. of NGOs working on health in the west coast of Aceh?
    No. of bank accounts the Mozambique Gov has to have to meet donor requirements?
  • So what have we agreed to do about it? Of course a lot of people have been worried about the effectiveness of aid for a long-time. But it only emerged onto the international conferences and commitments circuit as a key concern after the UN Millennium Declaration in 2000, made in New York. 
     The Conference for Financing on Development took place in Monterrey 2002 and brought together more than 50 Heads of State and Government and over 200 ministers of foreign affairs, trade, development and finance. It resulted in the Monterrey Consensus. Along with pledging more money to meet the MDGs, including a reiteration of the famous commitment to give 0.7% of GDP, it also emphasised alternative ways of raising more financing for development such as mobilising domestic resources and foreign direct investment, making use of internal trade, tackling debt, and reforming international monetary, financial and trading systems to support development. It also made a number of commitments on aid effectiveness. These included more Government ownership of aid with donors providing capacity building support to Governments to help them manage; more aid given as budget support, direct to Treasuries; more untying of aid; more flexibility in how aid is delivered; more use of local rather than foreign technical assistance; better predictability; more and better measurement of the results achieved by aid, and harmonisation of donors’ procedures. The EU followed up on Monterrey with a meeting in Barcelona where they signed up to 8 commitments on scaling up and improving aid effectiveness.
     After Monterrey it was over to Europe for the Rome High Level Forum of 2003. This was was focused on aid effectiveness (though back then it was more narrowly referred to as harmonisation) and concluded that donors needed to simplify their policies and procedures for planning, delivering & monitoring aid and also to better coordinate these with partner country Governments. Donors committed to use partner countries’ own infrastructure to deliver aid, helping to strengthen it where needed to ensure it was robust enough to manage. Budget support also again got the thumbs up. There were some new issues on the agenda too – including streamlining the conditionalities that donors attach to aid, cutting down on the number of separate missions which donors make to partners countries, and setting out individual harmonisation action plans at the country level.
     Next came the big one, the Paris High Level Forum of 2005. Paris set out 5 separate commitments on aid effectiveness: Ownership, meaning Governments should be in charge of aid to their country; Alignment, meaning that donors should get behind the Government to help it achieve its poverty reduction goals and use its systems to deliver aid; Harmonisation, meaning that donors should join their work up with one another; Managing for results – well that’s always seemed to me a little obvious and begs the question, if we weren’t managing for results before 2005 then what exactly did we think we were managing for?; and finally Mutual Accountability, the idea that Governments and donors should be accountable to one another for their promises and actions. The EU set the bar higher for itself on a number of the targets which were established. We’ll come back to look at the Paris Commitments in more detail in the Commitments module.
     2005 also played host to the G8 Summit at Gleneagles in Scotland. This pledged $50 billion in extra aid to developing countries by 2010 and wrote off the same amount in debt owed by poor countries. The 0.7% pledge appeared yet again, this time promised for 2015 – which, if it happens, will mean it’s exactly 40 years late vis-à-vis the original pledge to achieve it by 1975.
     In 2008, donors and partner countries met in Accra, Ghana to check on progress on the Paris Commitments. They agreed that we’re making some progress on the Commitments but at this rate we won’t achieve the targets by 2010. They also couldn’t resist issuing yet another statement, the Accra Agenda for Action, about what they planned to do in the future. This thankfully basically reiterated what had been said in Paris rather than setting out yet another big plan. It did however emphasize a few new things including widening the idea of partner country ownership to include NGOs, installing better management information systems, getting donors to specialise in different sectors, getting donors to delegate more authority down to their country-level offices, and bringing non-traditional donors – think India and China – and NGOS into the aid effectiveness club.
     2008 was a busy year and saw two more big events. The UN held a “High Level Event on the MDGs” in New York which made new commitments to meet the existing commitments. The UN say that an additional $16 billion was pledged to make sure we will meet the MDGs by 2015.
     This was followed by a meeting in Doha which led to the Doha Declaration on Financing for Development. This reaffirmed the Monterrey Consensus and called for a United Nations Conference to examine the impact of the world financial and economic crisis on development.
    So there’s certainly been a lot of conversation.

  • The EU has also been busy and we’re not short of EU Commitments to improve aid effectiveness. There are in fact undertakings to work better together dating back to the 1970s, but we’ll start in 2004.
    The “Ad Hoc Working Party on Harmonisation” in 2004 recommended a joint EU approach for programming, common implementation procedures, the decentralisation of decision making, and also working more closely with other, non-EU donors.
     The EU Consensus on Development in 2005 was a landmark in setting out a common goal – to eradicate poverty and achieve the MDGs - and principles for EC and EU MS’ aid.
    In 2006 we saw an EU commitment “Delivering More, Better, Faster”. This argued that we need to map better what we’re doing to cut down on gaps and overlaps, work better together, and monitor the implementation of our promises more closely.
    It was followed by the Joint Framework for Country Strategy Papers which mapped out a road to achieve joint EU strategies for each developing country.
    Then came the commitment on Financing for Development: more cash, more budget support and more working together.
     In 2007, the Strategy for Africa and Action Plan was published and included a variety of familiar commitments on Government ownership and joint working in Africa.
    The EU Code of Conduct on Division of Labour also came through in 2007 and made specific commitments on working together. The key idea was that each donor should specialise and concentrate their work on a limited number of sectors and that all donors working in a sector should do so together with one taking the lead. It set down some specific targets for this which we’ll come back to in a dedicated module on the subject.
    In 2008 the Commission came up with the Backbone Strategy which aims to change the way we use technical cooperation and make it more effective, in particular to make it more Government and less donor driven. Again we have a dedicated module on this in the course.
  • So, enough about the conversation, what about the action? Here are some examples of the kind of initiatives being taken by donors and Governments around the world to make aid more effective on the ground:
    In Mozambique they’ve made ODA Moz, an online, searchable database on aid flows with all donors uploading their data in the same format. This helps improve transparency, makes it easy to check on predictability, allows Government and donors to see where gaps and overlaps lie, facilitates tracking of the MDGS, and much more besides.

  • In Lao PDR, ownership, harmonisation and alignment have all been tackled with the establishment of Government-Donor Sector Working Groups in eight sectors. These allow sectoral priorities and joint actions to be agreed and results to be examined and help to get everyone working together.

  • In Ethiopia, Government and donors have been trying take forward division of labour, starting with an analysis of what donors do on the ground and what changes need to be made if they are to meet their international commitments to streamline and specialise. This has also given Government the opportunity to take more of a lead role in deciding which donor does what.
  • In Georgia, the Government is working to lay out explicit sector strategies giving detailed statements of public objectives, policy, activities and funding and then identifying where gaps exist which donors could fill. This will go a long way to improving ownership. They’re also starting work on a donor compact, a kind of code of conduct for donors working in the country which will ask them to follow the Government’s sector strategies, channel a certain percentage of their funding through budget support and joint initiatives, and limit their involvement in the country to a restricted number of sectors.

  • So, finally, we’ll give you a taster of what’s coming up in the rest of the modules. First a nice quote for you: “If you give a man a fish he will eat for a day. If you teach a man to fish he will always have food. If you teach a woman to fish, the whole family will always have food. And if you just talk about fishing, you’re called a consultant”
  • The rest of the course is split into seven modules.
    Ideas: here we’ll look at some of the main ideas of aid effectiveness – things like ownership, transparency, predictability, conditionalities, and transaction costs – and what they actually mean in theory and in practice.
    Commitments: then we’ll look at the commitments which donors and partner countries have made to act on them, including the Paris Commitments, the Accra Agenda for Action, and the EU Consensus on Development. We’ll also see how well - or not - we’re doing on actually implementing what we’ve committed to.
    Delivery: then we’ll look at the different ways aid is delivered and what this means for its effectiveness.
    Technical Cooperation: we’ll look at the how and why of the EC’s technical cooperation reform.
    Division of Labour: we’ll see what it means, what we’ve agreed to do about it and how it’s working out.
    The Others: we’ll look at what organisations like the UN and the World Bank are doing on aid effectiveness, and at other players such as non-traditional donors, vertical funds, and philanthropists.
    On the ground and outside the box: finally we’ll challenge some of the ideas with some not-so-common sense and look at what some of the big thinkers on the subject have to say about what we really need to do to shake things up.
  • This Introductory Module will take a look at four things.
    (1) What aid is and, briefly, how it’s changed over the last 50 years.
    (2) What the Millennium Development Goals are all about.
    (3) Where this concern with the effectiveness of aid came from and what it means.
    (4) What’s coming up in the rest of this course.

  • 2.mod1 ae aidco

    1. 1. EuropeAid Introduction Just because you’re doing good, doesn’t mean you’re doing it well.
    2. 2. EuropeAid “Aid Effectiveness is…?”
    3. 3. EuropeAid Overview
    4. 4. EuropeAid Overview What would you do with 50 years and 1.5 trillion euros?
    5. 5. EuropeAid Helping the poor, to some extent: “a voluntary transfer of resources from one country to another, at least partly given to benefit the recipient country” “acting as a signal of diplomatic approval, strengthening a military ally, acting as a reward for good behaviour desired, to extend cultural influence, or to provide commercial access.” Helping the poor: “flows of official financing administered with the promotion of the economic development and welfare of developing countries as the main objective.” Harming the poor: “the billions that have hampered, stifled and retarded Africa’s development.” Not helping the poor: “when you take money from the poor people in a rich country and give it to the rich people in a poor country.”
    6. 6. EuropeAid A Very Brief History After the War: What works for Europe… World Bank, IMF, Marshall Plan (‘48-’52: $13bn). Aid to fix the ex-colonies (and maintain influence). Modernise & industrialise…The Sixties: All we need is industry. State-led. Roads, railways, dams = growth = development but too big and long-term for Gov’s. Plus help the agri sector in the meantime. We’ll be done in a decade. The Seventies: Maybe not… Basic human needs as well as growth.  Roads,  Schools & hospitals. Oil prices & interest rates  = recession = loan payments , commodity prices  Evolution as we learn…or stumbling in the dark?
    7. 7. EuropeAid The Nineties: It’s the Government, stupid Greed is only good in the private sector.  corruption, rule of law,  capacity. Aid if you have good policies (Burnside & Dollar). Aid fatigue = volumes  The Noughties: More is Better, Better is Better $50bn by 2010?) MDGs, AE (ownership, budget support), Celebrity Aid, Military Aid. The Eighties: Greed is good Bring on the market, less Big Government, liberalise don’t subsidise, follow the Asian Tigers. Structural Adjustment in return for a loan to help with your loan. $15bn a year from poor to rich. The lost decade for development? Today: The Backlash? First on the cuts list, “Africa’s future is up to Africans”, The White Man’s Burden, Why Foreign Aid Isn’t Working, Dead Aid…
    8. 8. EuropeAid “More than half the people of the world are living in conditions approaching misery…For the first time in history, humanity possesses the knowledge and the skill to relieve the suffering of these people.” Guess Which Celebrity Said… US President Harry Truman, 1949
    9. 9. EuropeAid How Much Are We Talking About?
    10. 10. EuropeAid 10 Bilateral = 75%, Multilateral = 25% EC - $13bn (9% of budget) UN – $3.8bn EU - $50bn Gates - $3bn Global Fund - $1.2bn How Much Are We Talking About?
    11. 11. EuropeAid UN General Assembly: Each economically advanced country will progressively increase its official development assistance to the developing countries and will exert its best efforts to reach a minimum of 0.7% of its gross national product by the middle of the decade. 1970
    12. 12. EuropeAid Do We Give What We Promised? By 2010: •$130bn / year •Aid to sub-Saharan Africa doubled
    13. 13. EuropeAidWho is it Spent On?
    14. 14. EuropeAidWho is it Spent On (EC)?
    15. 15. EuropeAid Who is it Spent On? (EU)
    16. 16. EuropeAid Orphans and Darlings? Country Income per Person ODA per Person Madagascar 320 19 Mozambique 320 43 Guinea 400 12 Tanzania 400 30 Ecuador 3,080 14 Jordan 2,850 64 Historical, political, economic, security…
    17. 17. EuropeAid Does it Work? Global GDP per head Living on < $1 per day
    18. 18. EuropeAid Does it Work? Getting by on less than $1 per day…
    19. 19. EuropeAid Does it Work?
    20. 20. EuropeAid Does it Work? Human Development Index
    21. 21. EuropeAid Gross National Happiness?  Sustainable development  Cultural values  Natural environment  Good governance
    22. 22. EuropeAid Yes it works! Botswana, Indonesia, Korea, Tanzania… No it doesn’t!! DRC, Haiti, Papua New Guinea, Somalia… Let’s ask the economists, does aid lead to growth? Yes, no, maybe. And what about growth & poverty? It Depends…Policies (Burnside & Dollar), what we do & how, combined effect (direct, policy, institutions & governance, macro-economic stability.
    23. 23. EuropeAid Does it Work? Percentage of the world’s population that lives in developing countries: 84 Number of people worldwide who will die today due to poverty: 20,000 Number of children who will die this year from easily preventable diseases: 10,000,000 Number of people without enough to eat today: 840,000,000
    24. 24. EuropeAid Overview “There is no magic bullet. These are just basic problems requiring basic work.” Jeffrey Sachs
    25. 25. EuropeAid What are they? 2001: 192 UN MS + international organisations agree 8 development goals (not growth!). Aim: halve poverty by 2015.
    26. 26. EuropeAidAre we achieving them?
    27. 27. EuropeAidAre we achieving them?Some doing well: e.g. Asia (Chinese poor  by 200m) Some not doing well: Sub-Saharan Africa. Growing criticism: arbitrary targets, focus on setting instead of jumping the bar. Has led to: increased interest in effectiveness of aid & what works on the ground rather than goal- setting.
    28. 28. EuropeAid Overview “A little less conversation, a little more action please.” Elvis Presley
    29. 29. EuropeAid What’s the idea?
    30. 30. EuropeAidWhat’s the idea? Government Driving Predictability, Transparency Results, Accountability Donors Joined-up
    31. 31. EuropeAid What We’re Trying to Get Rid Of No. of indicators the island of St Vincent has been asked to monitor on HIV/AIDS? 191 No. of donor missions to Ethiopia in 2007? 221 Percentage of aid projects that are for less than $1m? 80 No. of NGOs working on health in the west coast of Aceh? 22 No. of bank accounts the Mozambique Gov has to have to meet donor requirements? 1,000 Number of aid coordination forums in Senegal? 82
    32. 32. EuropeAid International Commitments 2000 : MDG s 2000 : MDG s2002 : F4D 2002 : F4D 2005 : PCs 2005 : PCs 2008: AAA 2008: AAA 2005 : G8 2005 : G8 2008 : F4D 2008 : F4D 2008 : MDG s 2008 : MDG s 2003 : Rom e HLF 2003 : Rom e HLF
    33. 33. EuropeAidEU Commitments 2004 – Ad-Hoc Working Party on Harmonisation 2005 – EU Consensus on Development 2006 – More, Better, Faster 2007 – Strategy for Africa 2007 – Code of Conduct on Division of Labour – Joint Framework for Country Strategies – Financing for Development 2008 – Backbone Strategy on Technical Cooperation
    34. 34. EuropeAid What It Means on the Ground Mozambique - ODAMoz
    35. 35. EuropeAid What It Means on the Ground Lao PDR – Government-Donor Sector Working Groups
    36. 36. EuropeAid What It Means on the Ground Ethiopia – Division of Labour
    37. 37. EuropeAid What It Means on the GroundGeorgia – A Donor Compact
    38. 38. EuropeAid Overview “If you give a man a fish he will eat for a day. If you teach a man to fish he will always have food. If you teach a woman to fish, the whole family will always have food. And if you just talk about fishing, you’re probably a consultant.”
    39. 39. EuropeAid Ideas Delivery Commitments Technical Cooperation Division of Labour The Others On the Ground & Outside the Box
    40. 40. EuropeAid Overview
    41. 41. EuropeAid