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IBON PrImer on Oda and development
effectivenessCan aid be a key contribution
to genuine development?
IBON International
ISBN Copyright© IBON International 2009Some Rights Reserved
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Table of Contents
INTRODUCTION 1
PART I. AID IN PRACTICe 3
What is the History of Aid? 3
What is Wrong with Aid? 7
PART II. Two Generations of Aid effectiveness Reforms 17
How have donors attempted to “rethink” aid and development? 17
What was the first generation of aid effectiveness reforms? 20
What was the second generation of aid effectiveness reforms? 23
What was the outcome of the third High Level Forum in 2008? 24
What are some of the criticisms to the Accra Agenda for Action ? 28
PART III. DeveLOPmeNT eFFeCTIveNeSS – THe WAy FORWARD FOR INTeRNATIONAL DeveLOPmeNT COOPeRATION 29
What do we mean by “development”? 29
What do we mean by democratic development? 31
What do we mean by Development effectiveness as a framework
for international development cooperation? 31
What are the principal elements of the development effectiveness
framework applied to aid and development cooperation? 34
How can the international aid architecture be transformed? 42
CONCLUSIONS 44
BIBLIOGRAPHy 45
ANNeXeS 49
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1
INTRODUCTION
In 1996, development ministers, heads of aid agencies and other senior officials responsible for development cooperation, meeting as the Development Assistance Committee of the Organisation for economic Cooperation and Development (DAC/OeCD) looked back at 50 years of Official Development Aid (ODA) and judged it a success. “Development assistance has been an essential complementary factor in many achievements: the green revolution, the fall in birth rates, improved basic infrastructure, a diminished prevalence of disease and dramatically reduced poverty. Properly applied in propitious environments, aid works.” (DAC/OeCD, 1996: 1)
However, considering the fact that at the time the DAC/OeCD wrote this, the number of absolute poor was estimated by the World Bank at 1.3 billion (in 1993) and rising; one-fifth of the world lived in countries where living standards actually fell in the preceding decade; 1.5 billion lacked access to safe water; 2 billion lacked safe sanitation; and more than 1 billion were reported illiterate, including half of all rural women 1 -- then one may legitimately ask, “aid works for whom?”
This primer begins and ends with that question.
Part 1 reviews the history of ODA since World War II and identifies the major problems with the aid system. It reveals the yawning gap between aid rhetoric and aid practice. It shows that donor states still wield real ownership of aid and use it for their strategic purposes.
Part 2 reviews recent attempts to improve the quality of aid. The section covers the two generations of “aid effectiveness reforms” led by the DAC/OeCD. It argues that this agenda fails to grapple with the real issues underlying aid ineffectiveness because it adopts a technocratic and depoliticized approach to reforming the aid system.
Part 3 attempts to reframe aid effectiveness in terms of development effectiveness by challenging the premises, priorities and the configuration of aid partnerships at present. It unpacks the principles that underpin democratic development in the South and the role that international development cooperation can play in supporting this process.
1 Figures from Our Global Neighborhood: The Report of the Commission on Global Governance. Oxford University Press, 1995, p. 139 cited in DAC/OECD 1996.
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The primer concludes with a transformative agenda for international development cooperation. It identifies six major thrusts for transforming the international aid architecture from one that serves the interests of elites in the North and South, to one that ensures the progressive realization of the human rights of the poor and the marginalised.
A critical discussion of international aid and development cooperation is especially relevant amidst the raging global economic and financial crisis. Low-income developing countries are now facing falling revenues as demand for their raw materials and low-value added manufactured exports to the North contracts. Foreign investments and private capital flows are also in decline due to the global credit crunch while remittances are shrinking for some of the most remittance-dependent developing countries. Donor countries are also scaling back their foreign aid budgets as corporate bailouts and fiscal stimulus programmes take up huge fiscal resources.
At the same time, critical voices are recharging the debate on the legitimacy of the aid system. economists and development experts such as yash Tandon (2008) and Dambisa moyo (2009) are now calling for aid exit rather than aid reforms, rejecting the current aid system as a vehicle for promoting development in the South.
examining aid and development cooperation is therefore more urgent than ever.
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PART 1Aid in PracticeWhat is the history of Aid?Aid or Official Development Assistance (ODA) refers to resources made available by governments on concessional terms primarily to promote development and the welfare of developing countries.1 This can take the form of grant funds, grants in kind, services or concessional loans that have at least 25% grant component. It can come from a single donor country or from many donor countries that course aid through multilateral institutions such as the World Bank, the european Commission or United Nations (UN) agencies. The former is referred to as bilateral aid while the latter is known as multilateral aid.
Colonial Legacy
ODA emerged during the late colonial period of the 1940s. It was borne out of the economic and political realities of that period -- the ruins of World War II, the onset of the Cold War, and the legacy of colonialism in the newly independent countries of the “Third World”.
In 1944, the UN monetary and Financial Conference at Bretton Woods created the International Bank for Reconstruction and Development (IBRD) and the International monetary Fund (ImF). The IBRD, which later evolved into the World Bank Group, was originally mandated to make loans for the rebuilding of war-torn countries in europe and for the development of unindustrialized countries in Latin America and the newly-independent countries in Asia and later, Africa and the Caribbean. It started its formal operations in 1946 and disbursed its first loans in 1947 -- to France, the Netherlands, Denmark, and Luxembourg. (World Bank n.d.)
The US-sponsored economic Recovery Programme for europe was also launched in 1947. Better known as the ”marshall Plan” after US Secretary of State George Marshall, this massive programme is considered the first major foreign aid initiative in history. It amounted to US$ 13.3 billion of highly concessional loans to 16 countries in europe -- equivalent to around 10 percent of the combined gross domestic product (GDP) of the recipient countries and 4 percent of US GDP at the time (Sogge, 2002: pp.
1 According to the DAC/OECD, ODA refers to “Grants or loans to countries and territories on the DAC List of ODA Recipients (developing countries) and to multilateral agencies which are: (a) undertaken by the official sector; (b) with promotion of economic development and welfare as the main objective; (c) at concessional financial terms (if a loan, having a grant element of at least 25 per cent). In addition to financial flows, technical co-operation is included in aid. Grants, loans and credits for military purposes are excluded. Transfer payments to private individuals (e.g. pensions, reparations or insurance payouts) are in general not counted.” (DAC/OECD)
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1-2). This was meant to accelerate the reconstruction and stabilization of the crippled economies in europe, particularly those on the periphery of the “Communist bloc” of that era out of fear that they may be swept into the orbit of the Soviet Union.
Outside europe, the US also boosted its foreign aid during the 1950s within the framework of its “mutual Security Act” (Fuhrer 1996). This meant channeling money to foreign governments that it wanted to enlist in its global anti-communist crusade including South Korea, Taiwan (Formosa), viet Nam, the Philippines, Thailand, India, Iran, Jordan and Pakistan.
Around the same period, the old colonial powers in europe were reconfiguring their economic and political relations with their colonies in reaction to the success of national liberation movements and anti-colonial struggles in the latter. What used to be imperial funds established to facilitate capital investment and accumulation from the colonies were reorganized to deliver aid to the newly independent states. As such the British Colonial Development Corporation established in 1948 became the Commonwealth Development Corporation in the mid-1960s, while the French Fonds d’investissement économique et social des territoires d’outre-me” (FIDeS) set up in 1946 became the Fonds d’Aide et de Cooperation (Aid and Cooperation Fund) in 1960 (Sogge 2002; The economist 2001). This was meant to ensure that the former colonies would remain dependent and within the political and economic sphere of influence of the old imperial centers. The British led the Commonwealth of Nations while the French led the francophonie.
From Cold War to War on Poverty
Together, the foreign aid programmes of the US, France and the UK accounted for over 75% of total ODA from 1950s to 1960s (DAC/OeCD n.d.). Foreign aid was driven primarily by the foreign policy interests of these imperialist states, rather than the development needs of poor nations. Indeed, cold war imperatives continued to dominate the aid agenda throughout the 1960s with the US alone accounting for over half of all bilateral ODA during this period. It also held a commanding position in the multilateral Bretton Woods institutions as well as in the Development Assistance Group (DAG), a forum for consultations among aid donors on assistance to less-developed countries created in 1960, now called the DAC of the OeCD.
See Annex 1. Top Recipients of ODA from major donors, 1960s-2008
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In the 1970s, the oil-exporting countries joined the ranks of major aid donors, particularly for transport and energy projects in Asian and African countries with large Islamic populations (Sogge 2002). The international financial institutions also began lending generously to developing countries from the mid-1970s in an era of easy lending. The international financial system was awash with surplus petrodollars from the oil-exporting countries whose earnings rose spectacularly during this period of record-high oil prices.
This financed huge infrastructure projects in many developing countries which were not accompanied by meaningful redistributive measures such as employment and social welfare expansion in europe during the marshall Plan, or land reform in Taiwan and South Korea during the 1950s to 1960s. Hence more aid during the 1970s did not result in broad-based development. Rather, this eventually contributed to the build-up of Third World debt which became unserviceable when the US Federal Reserve tripled interest rates in 1979 to stem inflation in the US.
Box 1. International Development Strategy for the Second United Nations Development Decade,
“In recognition of the special importance of the role which can be fulfilled only by official development assistance, a major part of financial resource transfers to the developing countries should be provided in the form of official development assistance. 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 net amount of 0.7 per cent of its gross national product at market prices by the middle of the Decade.”
“Financial aid will, in principle, be untied. While it may not be possible to untie assistance in all cases, developed countries will rapidly and progressively take what measures they can … to reduce the extent of tying of assistance and to mitigate any harmful effects [and make loans tied to particular sources] available for utilization by the recipient countries for the purpose of buying goods and services from other developing countries.”
“… Financial and technical assistance should be aimed exclusively at promoting the economic and social progress of developing countries and should not in any way be used by the developed countries to the detriment of the national sovereignty of recipient countries.”
“Developed countries will provide, to the greatest extent possible, an increased flow of aid on a long-term and continuing basis.”
UN General Assembly Resolution 2626 (XXV), October 24, 1970, para. 43, 45-47
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Structural Adjustment
The resulting Third World debt crisis became the basis for attaching policy conditionalities to much of ODA since the 1980s in line with the new Washington Consensus on the primacy of private capital and market liberalisation. In order to access more funds to pay for older debt, sustain imports (mostly from the advanced capitalist countries) and paper over chronic deficits due to unequal trade and capital flight, developing countries were forced to adopt neoliberal policies. These meant opening up their domestic markets to imports; orienting domestic production towards more exports; privatising public assets and the provision of public goods; liberalising the entry and operations of multinational corporations; allowing the freer entry and exit of portfolio capital in the economy; minimizing public spending; and tightening credit to keep inflation low.
With the Cold War over and donor countries propagating the belief that access to foreign markets and private capital flows rather than aid would finally bring development to the Third World, total ODA fell by almost 12% in the 1990s in real terms (German and Randel, 2002 p. 145). Only the former socialist countries in eastern europe received increased aid in this period in support of privatisation, market liberalisation and the entry of foreign capital from the West.
By the end of that decade, it became undeniably clear that the prosperity and peace promised by neoliberal globalisation was an illusion for most. Rather, the Washington Consensus imposed on developing countries by international financial institutions (IFIs) and donor countries undermined their agricultural base and wiped out domestic manufacturing industries except those in export enclaves. As a result, the new century dawned with billions of people still mired in deep and grinding poverty, hunger and insecurity; and inequalities between and within countries widened.
From War on Poverty to War on Terror
Faced with the persistent reality of underdevelopment, world leaders adopted the millennium Declaration in 2000, committing nations to the millennium Development Goals (mDGs). These consist of a series of time-bound targets aimed at reducing extreme poverty by 2015. This is reflected in the increase in ODA going to health, education, water and sanitation projects and programmes since 1998.
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Despite this, there is very little evidence that the world can indeed attain even the modest mDGs that governments committed to in 2000 (Bissio, 2008). moreover, of the USD 148.2 billion new aid resources allocated by donor countries between 2000 and 2006, close to one-third went to just three countries – Iraq, Afghanistan and Pakistan. This does not yet include USD 18.4 billion worth of debt relief granted to Iraq and Afghanistan. These ODA flows are clearly driven by the foreign policy and security interests of donor countries in the aftermath of the 9/11 bombings in the US. On the other hand, only 28% of new aid money was left to honour pledges of increased aid for poverty reduction and mDGs (Tomlinson, 2008: p. 206)
With more than USD 2.3 trillion of aid money spent over the last half a century, the world is nowhere closer to realizing ODA’s professed aim of eliminating poverty, famine, disease and war in the world (easterly, 2006). even the rare instances when aid was a success in terms of development outcomes – the marshall Plan for europe in the 1940s, and aid for South Korea and Taiwan in the 1950s to 1960s – it was given primarily in the service of the donor (US) state’s geopolitical objectives.
Sogge (2009) concludes, “It is important to recall that throughout most of its history, fighting poverty was never among foreign aid’s main purposes. Rather, its purposes have been mainly mercantile and political. During its first 40 years, its main job was to contain communism. Indeed in the 1990s it was tasked with helping demolish the Soviet economic and social system. Foreign aid continues to be a political tool, an instrument of statecraft. In those respects, it has enjoyed considerable success.”
What is wrong with Aid?
Aid is given to countries according to the economic, political and 1. security interests of donor states.
even today, old colonial ties, commercial interests and strategic geopolitical ambitions of donor countries, particularly the US, determine the global distribution of ODA rather than the needs of poverty eradication or sustainable development. This is evident in the list of top aid recipients from each of the top donor countries listed in Annex 1.
ODA from the US, the biggest contributor in absolute terms among the DAC donor countries, appears to be based on its strategic interest in
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securing access to oil and energy resources in the middle east, Central Asia and West Africa even though this is presently justified in the name of the so-called “War on Terror”. ODA from France and Britain goes chiefly to their former colonies where they maintain significant trade, investment and other commercial interests. Japan allocates more aid to its neighbors in east and Southeast Asia which are also its main trade partners and the principal destinations of its foreign investments.
even the World Bank (1998: p. 16) laments that “an undemocratic former colony gets about twice as much assistance as a democratic non-colony, and the same is true for a closed former colony compared with an open non-colony.”
While the most populous countries -- China, India and Indonesia -- are among the biggest recipients of aid, the amounts are not significant if measured on a per capita basis. China and India received approximately USD2 per capita of ODA between 1990-99 compared to USD 340 for Israel -- which is neither populous nor poor (Sogge, 2002: pp. 212-215). The least developed countries as a group have received barely one-third of cumulative ODA resources since 1960 even though poverty eradication is consistently invoked as the principal motive for foreign aid. The top 10 recipients of ODA from 1960-2008 account for over 32 percent of the total for 181 countries. Of these top ten, only two belong to the category of “least developed countries” (LDC).Figure 1. Total ODA received, 1960-2007 (in million USD)
Source: OECD-DAC; http://www.oecd.org/dataoecd/50/17/5037721.htm
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more recently, the top 10 recipients of ODA from DAC donors are notably concentrated in West and Central Asia, and West and Central Africa -- regions which happen to be rich in oil and gas reserves and considered important to secure the North from terrorism. In fact, Iraq and Afghanistan together received close to USD 12 billion in 2008 or 10% of the total, with the US supplying almost half of this amount.
Indeed, in the post 9/11 era, “terror” has seeped into the development vocabulary of the DAC. This is evident in the increasing movement towards the legitimisation of military interventions in the name of development and redefining the criteria for ODA in order to include an increasing gamut of military and security expenditures to legitimate a blurring of the line between development and security (Thede 2009).
Figure 2. Profile of DAC ODA, 2006-2007
Source: OECD - DAC; www.oecd.org/dac/status
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In short, since 2001, national security has been the foremost foreign policy objective of Northern states and ODA has become one more instrument in the arsenal of weapons against terrorism. In the words of Andrew Natsios, USAID administrator in 2004, “Aid is a powerful leveraging instrument that can keep countries allied with US foreign policy. It also helps them in their own battles against terrorism.” (Quoted in ROA 2008, p. 10) Likewise for the eU, cooperation on counter-terrorism has become an essential element to qualify for eU aid. (ibid.). Counter-terrorism has been adopted as an explicit aim of the aid policy of Australia, Denmark, Japan, Canada, the Netherlands and other states (Reality of Aid, 2006).
Aid is given with policy conditionalities to favour the commercial 2. interests of donors.
Aside from favouring certain countries over others in order to advance their strategic geopolitical agenda, donor countries also attach policy conditionalities to their ODA in order to promote their commercial interests. Since the 1980s, these consist mainly of liberalising trade and investments, liberalising financial markets, privatising social services and down-sizing governments, removing subsidies for the poor, fiscal austerity, etc. These favour multinational corporations (mNCs) from the North who have been able to take advantage of greater access to cheaper labor, raw materials and export markets. As such donors continue to impose these conditionalities even as evidence of their anti-poor implications continue to mount.
These policy conditionalities can take the form of prior actions that the recipient governments must undertake in order to qualify for ODA; performance criteria that governments must meet in order to trigger the release of aid money; or structural benchmarks which are used by donors to evaluate country performance and for the basis for allocating more aid resources to “good performers” (IBON International, 2007).
The ImF and the World Bank play a crucial role in this. The ImF-WB duopoly is singled out for standing as the gatekeepers of ODA because the aid allocations of other donors are heavily influenced by the macro-economic assessments made by these Washington-based institutions and even aid disbursements are subject to their express approval. Bilateral donors align their own policy conditionalities with those of the ImF and WB (even though they do not necessarily apply these
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same policies in their own countries, such as the pro-cyclical monetary and fiscal policies prescribed by the IMF). They also have a policy of cross-conditionality whereby ImF funds are dependent on progress towards meeting WB conditions and vice versa (Oxfam, 2005).
These IFIs have promised to reduce the number of conditions and ensure that policy reforms are drawn from nationally developed poverty reduction strategies and programmes (PRSP). But a recent eURODAD study (2007) concluded that 71% of loans and grants from the World Bank’s International Development Association (IDA) still have sensitive policy reforms attached to them as conditions. The majority are privatisation-related. Similarly, a more recent EURODAD study concluded that the ImF has not decreased the number of binding conditions attached to their lending, a quarter of which are liberalisation and privatisation measures (molina and Pereira, 2008).
PRSPs are supposed to be the products of participatory planning. In practice, donors negotiate with recipient governments outside the framework of the PRSP -- and behind closed doors, with terms unavailable to the public or even to elected parliaments (Oxfam 2005). The ImF and WB also introduced the Poverty and Social Impact Analysis (PSIA) process which was supposed to provide independent analysis of potential impacts of proposed policy reforms. But these are also conducted largely in secret and are focused on different ways of implementing or sequencing reforms already agreed.
The PRSP and the PSIA have thus become ways of generating additional studies to back-up the policy advice of the ImF and WB (ibid.). Donor influence over policy-making, through technical assistance and conditionalities, makes a mockery of the principle of “country ownership” of aid and national sovereignty over development policy.
Among bilateral donors, the US does not even pretend to respect the policy space of its aid partners. The Bush administration launched the “millennium Challenge Account” in 2002, committing USD 5 billion per year to poor countries that are “ruling justly, investing in their people, and establishing economic freedom”. In order to determine which countries are eligible for mCA support, they are evaluated based on 16 criteria relating to good governance, market liberalisation, and human capital development. But the measures used are generated by the World Bank, the World Bank Institute, the ImF, Transparency International, Freedom House, the Heritage Foundation, USAID, etc.
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In other words, these pro-market, pro-business institutions that are the chief advocates of the neoliberal project are also the arbiters of which countries deserve aid (Clancy 2006).
Aid comes with strings attached and aid has been so broadly 3. defined that much of the money counted as aid never even enters the recipient country.
Aside from policy conditionalities, a significant portion of ODA is provided as tied aid. This refers to aid that requires the recipient to purchase exports from the donor country or a select group of countries.
Nearly one-third of ODA from the G7 countries is tied to the purchase of goods and services from the donor countries. (Oxfam Intl. 2005, p. 50)
For instance, according to Njoki Njoroge Njehu, director of the 50 years is enough coalition, “the United States makes sure that 80 cents in every aid dollar is returned to the home country’’ (quoted in Deen 2004). In providing food aid US law requires that commodities be produced in the US and shipped via US-owned ships or aircraft.
As a result, the use of closed procurement practices diverts a significant percentage of aid away from intended beneficiaries. According to Transparency International (2008), “estimates for the mark-up from tying aid vary between 15 and 40 percent. In many countries, including Italy (92 percent tied), the United States (72 percent tied) and Canada (47 percent tied), aid remains a highly protected sector. Where supplier communities are small, tying induces further procurement risks, such as bidder collusion and non-competitive contracting practices.”
It has been clearly documented that tied aid inflates the cost of goods, services and works by 15% to 30% on average, and by as much as 40% or more for food aid (Clay et al 2008).
The DAC reports that donors are increasingly untying their aid. Whereas only 30% of total bilateral aid was reportedly untied in 1985-1987, the proportion has steadily increased to 73% by 2006. Four donor countries already claim to have untied all of their bilateral aid as of 2006: the UK, Ireland, Luxembourg and Norway (Clay et al, 2008). Canada has announced recently that its aid will be fully untied by 2010. However, many countries continue to insist that a
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high percentage of aid be used to purchase exports from their own producers (UN eCOSOC 2004).
moreover, the DAC estimates of the proportion of untied aid do not cover technical assistance which accounts for nearly one-fourth of all bilateral ODA. Technical assistance projects remain largely tied to donor country consultants and contractors, and are subject to donor control (ActionAid 2006). These consultants are able to influence country priorities and policies, as well as set standards for procurement of goods and services which usually favour foreign TNCs and expertise.
If one were to deduct around 80% of the value of technical assistance, 15% of tied aid, debt relief grants, imputed student costs, support for refugees in donor countries, humanitarian assistance, and donor administration costs – all of which do not actually enter the recipient country -- then approximately less than a third of all that is reported as bilateral ODA is actually available for programmes in developing countries to meet development priorities that they themselves determine. The Reality of Aid (ROA) refers to this as “country programmable aid” which has been falling, from 49% of total bilateral
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
1985 19
62.1%
4
990 1995
48.9%
43.7%
2000 2001
43.8%41.2
1 2002 2
2%39.3%
3
003 2004
30.0%34.1%
2005 200
30.2%32.
6
4%
Figure 3. Trend in Country Programmable Aid* as a Percentage of Total Bilateral Aid, 1985 to 2006
*Country Programmable Aid is Bilateral Aid, Less Debt Relief Grants, Imputed Student Costs, Support for Refugees in Donor Countries, 80% of Technical Assistance, 15% Cost of Tied Aid, Humanitarian Assistance and Donor Administration Costs.
Source: Tomlinson 2008
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aid in 1990 to 44% in 2000 to 32% (about USD 25 billion) in 2006 (Tomlinson 2008).
Aid finances a huge and expensive aid industry.4.
The substantial amounts of funds that are not used for development purposes in programme countries are used to finance a huge and expensive aid industry. Tied aid guarantees huge contracts for mammoth construction, engineering, utility and other infrastructure-related conglomerates in the US, Japan, France, Germany, and other major donor countries.
It also helps bankroll a vast bureaucratic complex. This includes not only the bilateral and multilateral donor agencies, but also export credit agencies (eCA); investment insurance agencies (IIA); a host of quasi-non-governmental organizations, public foundations, private foundations, NGOs, universities, for-profit consultancy firms, and academics who are awarded contracts for their research and technical advice. These include economists, managers, financial analysts, engineers, information technology specialists, environmental scientists, foresters, agronomists, educators and social scientists, to name a few.
The World Bank alone has a staff of more than 10,000 from over 160 countries, two-thirds of whom are based in Washington, DC. (World Bank n.d.) The International Development Association (IDA), the World Bank’s arm for providing interest-free loans and grants to the world’s poorest countries, had a total funding of USD 32.6 billion for fiscal years 2006-2008, of which only USD 21.6 billion was spent on net disbursements to programme countries.
Aid is owned and managed by donors. 5.
Donor control over aid extends even to its management. Too often donors insist on their own complex procedures and do not coordinate properly with recipient governments or other donors.
Complying with donor-set procedures and technical requirements eats up valuable time of overloaded civil servants and overstretch the administrative capacity of government agencies in developing countries. It can even result in the fragmentation of national bureaucracies, with different sections of a single ministry planning and coordinating with different donors for their own projects (OECD 2007).
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In Mozambique, to cite one instance, “in addition to the projects already being sponsored by the 49 aid agencies working in the country, the government has to deal with about 845 new projects and programmes each year. This may translate into thousands of new reports and more than 1,000 new missions to appraise, monitor, and evaluate. And each mission asks to meet with key officials, and asks the government to comment on its reports.” (mizrahi, 2003).
Donors often delay the release of funds when recipient governments cannot comply with their numerous requirements or due to their lengthy vetting process. A survey conducted by Oxfam in 2004 found that in 25 percent of cases reported, aid disbursements arrived between six and twelve months late. In the case of the eC, 20% of its aid is said to arrive more than a year late (Oxfam 2005: p. 56). moreover, financing is often provided on a short-term project basis, making it difficult to undertake effective and coherent long-term planning and implementation of national programmes, especially in countries where foreign aid is a major source of public finance.
This reality is possible because there is no real national ownership of aid from the side of receiving countries. moreover, donors lack accountability to both their citizens and the recipient countries in which they operate. While the recipient governments are held accountable to donors under the threat of aid being withheld, the inverse relationship is currently not possible (ROA 2008). And neither donor nor recipient governments are accountable to the citizens and communities who are supposed to be the intended beneficiaries of aid.
In recent years, there has been some improvement in aid management due to better donor coordination, increased donor support for sectoral programmes and budget support (coursed directly through government treasuries). However, this actually weakens the negotiating position of recipient countries vis-a-vis donors who are now better coordinated and united in their policy frameworks (Tandon 2008). Hence, the more fundamental problem of lack of democratic ownership and public accountability remains.
Aid benefits are captured by domestic elites at the expense of the 6. poor and marginalised.
even when aid is formally aligned to development strategies chosen by recipient governments, where these strategies are developed without
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democratic participation from below, aid tends to reinforce rather than remedy structural inequities in developing countries. For instance, more aid goes to infrastructure or projects with tangible economic returns but with unclear anti-poverty impacts. Less aid is devoted to social services such as health or education, let alone redistributive measures such as land reform. The bulk of infrastructure support typically goes to areas of the country with high-value economic activity especially those linked to the global production chains of TNCs rather than to remote or less accessible areas where government support is most needed (Africa 2008).
Budget cuts, privatisation and deregulation policies implemented by developing countries under pressure from IFIs and bilateral donors weaken domestic oversight and accountability mechanisms. This creates greater opportunities for corruption, further robbing the poor of resources for their basic needs and development. The lack of transparency and popular participation in drawing up and implementing foreign-assisted projects and development policies more generally invites graft, cronyism and all sorts of official abuse. Aid-dependent governments court and cater to donors rather than their own citizens, further disempowering, hence perverting,democratic governance.
In short, aid contributes to the dysfunctionality of client states. The history of international aid is replete with kleptocrats who were financed by external donors because they helped advance the geopolitical interests of major powers. Foreign economic and military aid propped up many a despot who looted the nation’s coffers while terrorizing the people. years of looting and donor indifference to this plunder and oppression have contributed to the persistent maldevelopment, indebtedness and democratic deficits in many of today’s least developed countries. In the name of development cooperation, many donors in effect finance kleptocrats due to a combination of their own country foreign policy interest considerations and indifference to democracy and aid effectiveness.
The increasing militarisation of aid since 9/11 has also become a way of justifying support for the military and security apparatus of states waging internal wars to preserve domestic elite interests, such as in Colombia and the Philippines.
For all the foregoing reasons, foreign aid to developing countries has been summarily described as a “disguised subsidy to monopoly capitalists from the advanced capitalist countries and a bribe to puppet governments.”
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PART 2 Two generations of Aid effectiveness ReformsHow have donors attempted to “rethink” aid and development?In the early years of ODA, the investment-gap theory of underdevelopment was still prevalent, suggesting that the provision of external resources would spur development in the Third World. This had little to do with the determination of aid flows which was overwhelmingly based on the cold war calculus of the major powers. But it did provide the rationale for what kinds of activities aid money was to be spent on such as big infrastructure projects.
In the 1980s, it became increasingly clear that the US was winning the cold war at least in the economic sphere. The Washington Consensus became ascendant in the international development establishment and propagated throughout the developing world by way of Structural Adjustment Programmes (SAPs) under World Bank tutelage. By the 1990s the Washington Consensus came under heavy criticism from civil society organisations (CSOs) not just for failing to deliver intended results but for worsening the conditions of the poorest and marginalised sectors. Developing country governments were also increasingly critical of SAPs and policy conditionalities from donors because these constrained the policy space available to them for pursuing alternative development strategies.
In 1990, the UN launched the Human Development Index as an alternative measure of development progress beyond the narrow indicator of economic growth and trade openness preferred by the advocates of neoliberal globalisation. The index confirmed many of the arguments of CSOs that neoliberal structural adjustment had led to very poor development results, and on occasions even impoverishing the poor.
The UN attempted to reconcile SAPs with the “basic needs approach” which focused on the provision of basic services, namely food, health, education, shelter and water and sanitation. These have been the staples of UN development interventions since the 1970s and the UNICEF publication, “Adjustment with a Human Face” published in 1987, documented how SAPs adversely affected health and education. Throughout the 1990s, the UN held a series of high-profile international
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conferences addressing particular aspects of development including education (Jomtien, 1990), children (New york, 1990), the environment (Rio de Janeiro, 1992), human rights (vienna, 1993), population (Cairo, 1994), social development (Copenhagen, 1995), and women (Beijing, 1995) (FRIDe 2008)
These multilateral fora, attended by UN member states that included developing countries, elaborated on the theme of human development and formulated specific goals -- in the fields of economic well-being, social development, peace and security, and environmental sustainability -- that measure the progress of development in particular fields. These are now collectively known as the “Internationally Agreed Development Goals (IADG)”. These include the narrower but better known mDGs which were formally launched at the UN millennium Summit of 2000 and have been actively promoted by the UN system since then.
Critics maintain that the mDGs are disappointingly modest goals that focus on the worst symptoms of poverty but avoid the critical structural issues for global economic justice such as debt cancellation, fair trade and democratic governance and participation in global institutions, not to mention domestic social institutions.
Parallel to these developments within the UN system, there was also “rethinking” inside the IFIs in response to accusations that these were advocating market fundamentalism and imposing this on developing countries through SAPs. The 1997 World Development Report of the World Bank, “The State in a Changing World”, claims to argue against reducing government to a minimalist state. The report avers that development, in fact, requires an effective state to encourage and complement the activities of private businesses and individuals. This means that state reforms must be aimed at strengthening the state’s ability to enforce the rule of law, protect property rights and enhance human capital formation. In so many words, the state’s role is to support the market and private enterprise.
The Bank also lays down the role of ODA under this “new thinking” in the publication, “Assessing Aid: What Works, What Doesn’t and Why”, published in 1998. The report examines five decades of aid history and concludes that “development assistance is more about supporting good institutions and policies than providing capital.” “The evaluation of development aid should focus on the extent to which financial resources have contributed to sound policy environments. It should focus on the
19
extent to which agencies have used their resources to stimulate the policy reforms and institutional changes that lead to better outcomes.” This means putting in place “growth-enhancing, market-oriented policies (stable macroeconomic environment, effective law and order, trade liberalisation, and so on) and ensure the provision of important public services that cannot be well and equitably supplied by private markets (infrastructure services and education, for instance).”
These two Bank publications became highly influential in official development circles and the donor community. They served as the ideological mooring for a second-generation of policy conditionalities under the banner of “good governance” to complement the first-generation of neoliberal macroeconomic policy reforms. 1
But these policy conditionalities were no longer imposed in the old manner of SAPs since “new thinking” within the IFIs also stressed that development strategies must be “owned” by the countries implementing these in order to be effective. Thus, the Bank’s Comprehensive Development Framework CDF), launched in 1999 enjoined developing countries to draft their own national development plans, which would then be the basis for ImF and WB concessional lending. These plans came to be known as “Poverty Reduction Strategy Papers (PRSP) which later also became the basis for qualifying for debt relief under the Highly-Indebted Poor Countries (HIPC) initiative. These also heavily influenced the funding decisions of bilateral donors.
Critics describe the PRSP process as actually practiced is a mechanical way by which developing countries assume formal ownership and leadership in drawing up development plans while the IFIs maintain control over the content of policy reforms. PRSPs must be approved by the board of the Bank and the ImF, donor-led “technical assistance” often has an overwhelming influence on policy makers in developing countries and various forms of ex-post conditionality (as discussed in the previous section) keep donors in the drivers seat of policy reforms.
The parallel shifts in official thinking about development and aid (as well as debt, trade and investments) converged at monterrey where donor and developing countries met in 2002 for the Financing for Development Conference organized by the UN. Monterrey officialised the policy convergence around the so-called post-Washington Consensus which meant that neoliberal policies remained the hard core of policy prescriptions, “good governance” and the mDGs became their soft shell,
1 This is sometimes referred to as the “post-Washington Consensus” although it must be emphasised that these second generation conditionalities are intended to augment or reinforce the first generation conditionalities and remain chiefly championed by the IFIs based in Washington.
20
and the PRSP process served as the delivery mechanism, together with unequal trade and economic partnership agreements.
The outcome document, known as the monterrey Consensus, is a compact between donors and recipient countries “to mobilise and increase the effective use of financial resources and achieve the national and international economic conditions needed to fulfill internationally agreed development goals, including those contained in the millennium Declaration.” In terms of international financial and technical cooperation, the MC affirms that “effective partnerships among donors and recipients are based on the recognition of national leadership and ownership of development plans and, within that framework, sound policies and good governance at all levels are necessary to ensure ODA effectiveness.” (United Nations 2003)
After monterrey, the OeCD-DAC took the lead in promoting greater aid effectiveness which it defines as “improving the management, delivery and complementarity of development co-operation activities to ensure the highest development impact.” In 2003, the DAC established the Working Party on Aid effectiveness (WP-eFF) to assess and support “the harmonisation of donor practices and alignment with country-owned poverty reduction strategies and other development frameworks, systems and processes.” Since then, the WP-eFF has organized a series of High-Level Forums which have served as focal points for discussion and debate on how to reform the international aid system. (OeCD-DAC n.d.)
What was the first generation of aid effectiveness reforms?In February 2003, some 150 senior officials of over 20 multilateral and bilateral development organisations and about 50 countries gathered in Rome for the High-Level Forum on Harmonization (HLF-Rome) organized by the DAC WP-eff. The forum’s agenda took off from the observation that “donor aid, however well-intentioned, has come to levy a high toll on recipients in terms of transaction costs.” (World Bank 2003)
At the time of the Forum, the OeCD-DAC reported that “more than 50,000 aid projects are now underway in the developing world, often with different reporting policies, different procurement regulations, different auditing requirements and different environmental assessment procedures.” In a single country, this may translate into thousands of
21
Figu
re 4
. Fr
om th
e M
illen
nium
Sum
mit
to A
ccra
: Re-
shap
ing
the
inte
rnat
iona
l aid
arc
hite
ctur
e
FfD
foll
ow
-up
Co
nfe
ren
ce (
Do
ha,
20
08
) Rea
ffirm
s th
e M
onte
rrey
Con
sens
us,
adop
ts
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a D
ecla
ration
on
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ls f
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ence
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ct o
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sis
on
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len
niu
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ork
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Wor
ld le
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ille
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t G
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201
5: (
1) E
nd p
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ty a
nd h
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r; (
2) U
nive
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cation
; (3
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r eq
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4) C
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lth;
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bat
HIV
/AID
S;
(7)
Envi
ronm
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l sus
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ty;
(8)
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bal p
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ersh
ip.
The
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Gs
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ide
a bl
uepr
int
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l dev
elop
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t.
20
08
2
00
3
20
02
2
00
0
Hig
h L
eve
l E
ven
t on
th
e
MD
Gs
(NY
, 2
00
8)
Ren
ews
com
mitm
ents
to
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eve
the
MD
Gs
and
to
set
out
conc
rete
pla
ns a
nd
prac
tica
l ste
ps f
or a
ctio
n.
Hig
h-L
eve
l E
ven
t o
n t
he
MD
Gs
(NY
, 2
00
8)
Ren
ews
com
mitm
ents
to
achi
eve
the
MD
Gs
and
to
set
out
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rete
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ns a
nd
prac
tica
l ste
ps f
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ctio
n.
MD
G R
evi
ew
(N
Y,
20
05
) Con
solid
ates
the
inte
rnat
iona
lly
agre
ed d
evel
opm
ent
goal
s,
incl
udin
g th
e M
DG
s, a
nd e
stab
lishe
s th
e D
evel
opm
ent
Coo
pera
tion
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rum
.
Mil
len
niu
m D
eve
lop
men
t S
um
mit
(N
ew Y
ork
, 2
00
0)
Wor
ld le
ader
s ad
opt
eigh
t M
ille
nn
ium
Deve
lop
men
t G
oal
s (M
DG
s) t
o be
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by
201
5: (
1) E
nd p
over
ty a
nd h
unge
r; (
2) U
nive
rsal
edu
cation
; (3
) G
ende
r eq
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4) C
hild
hea
lth;
(5)
Mat
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l hea
lth;
(6)
Com
bat
HIV
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(7)
Envi
ronm
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l sus
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(8)
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bal p
artn
ersh
ip.
The
MD
Gs
prov
ide
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uepr
int
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inte
rnat
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l dev
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t.
MD
G R
evie
w (
NY
, 2
00
5)
Con
solid
ates
the
Int
erna
tion
ally
Agr
eed
Dev
elop
men
t G
oals
, in
clud
ing
the
MD
Gs,
and
est
ablis
hes
the
Dev
elop
men
t Coo
pera
tion
Fo
rum
.
Fin
anci
ng
fo
r D
evelo
pm
en
t (F
fD)
Co
nfe
ren
ce (
Mo
nte
rrey,
Mexic
o,
20
02
) Ado
pted
the
Mo
nte
rrey
Co
nse
nsu
s fo
cusi
ng o
n: (
1) M
obili
sing
dom
estic
finan
cial
re
sour
ces
for
deve
lopm
ent;
(2)
Mob
ilisi
ng in
tern
atio
nal r
esou
rces
for
dev
elop
men
t; (
3)
Inte
rnat
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l tra
de a
s an
eng
ine
for
deve
lopm
ent;
(4)
Inc
reas
ing
inte
rnat
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l fin
anci
al
and
tech
nica
l coo
pera
tion
for
dev
elop
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t; (
5) E
xter
nal d
ebt;
(6)
Add
ress
ing
syst
emic
is
sues
.
FfD
Foll
ow
-up
Co
nfe
ren
ce (
Doh
a, 2
00
8)
Rea
ffirm
s th
e M
onte
rrey
Con
sens
us b
y ad
opting
Doh
a D
ecla
ration
on
FfD
. Cal
ls f
or
a U
N C
onfe
renc
e on
the
impa
ct o
f th
e w
orld
fin
anci
al a
nd e
cono
mic
cri
sis
on
deve
lopm
ent.
Ro
me
Hig
h L
evel
Foru
m o
n
Harm
on
isati
on
(2
00
3)
Hea
ds o
f m
ultila
tera
l and
bi
late
ral d
evel
opm
ent
inst
itut
ions
and
rep
rese
ntat
ives
of
the
IM
F, o
ther
mul
tila
tera
l fin
anci
al in
stitut
ions
, an
d pa
rtne
r co
untr
ies
adop
t th
e R
om
e D
ecl
ara
tion
on
H
arm
on
isati
on
. Th
is p
aves
th
e w
ay f
or s
igni
fican
t re
form
in
the
aid
arch
itec
ture
.
Pari
s H
igh
Leve
l Fo
rum
on
A
id E
ffect
iven
ess
(20
05
) Fo
cuse
s th
e ai
d re
form
age
nda
on a
id e
ffec
tive
ness
cen
tred
on
five
key
prin
cipl
es o
utlin
ed in
th
e P
ari
s D
ecla
rati
on
on
Aid
Eff
ect
iven
ess,
whi
ch w
ill
expi
re in
201
0:
(1)
Ow
ners
hip
(2)
Alig
nmen
t (3
) H
arm
onis
atio
n (4
) M
anag
ing
for
resu
lts
(5)
Mut
ual a
ccou
ntab
ility
Acc
ra H
igh
Lev
el
Foru
m o
n A
id
Eff
ect
iven
ess
(2
00
8)
The
outc
ome
docu
men
t of
the
m
eeting
, th
e A
ccra
Ag
end
a f
or
Act
ion
(A
AA
), g
oes
beyo
nd t
he
Paris
Dec
lara
tion
in s
ome
aspe
cts,
bu
t fa
ils t
o de
liver
rea
l pro
gres
s in
ot
hers
, pa
rtic
ular
ly o
n th
e vi
tal
issu
es o
f ow
ners
hip
and
cond
itio
nalit
y.
20
05
22
new reports and thousands of missions to appraise, monitor and evaluate. Each mission asks to meet with key officials, and expects the government to comment on every mission report. This places a heavy burden on developing countries, which lack the administrative capacity to handle these demands. (ibid.)
Amidst this tangled web of administrative transactions, multilateral and bilateral donor agencies and partner countries resolved to simplify the process involved in delivering and managing aid by harmonizing policies, procedures, and practices. Donors pledged to alleviate the problem by doing more to coordinate their efforts, harmonise (and thus reduce) their multiple requirements, and assist partner countries to take charge of their own development process.
The forum’s concluding statement, The Rome Declaration on Harmonisation, resolved to (aidharmonization.org 2003):
ensure that harmonisation efforts are adapted to the country • context, and that donor assistance is aligned with the development recipient’s priorities.
expand country-led efforts to streamline donor procedures and • practices.
Review and identify ways to adapt institutions’ and countries’ • policies, procedures, and practices to facilitate harmonisation.
Implement the good practices principles and standards • formulated by the development community as the foundation for harmonisation.
The Rome Declaration on Harmonisation constitutes the first generation of aid effectiveness reforms adopted by the donor community.
CSOs criticized this outcome for being narrowly focused on the technical and procedural aspects of aid, rather than the more critical problems associated with ODA such as policy conditionality, tied aid and ownership. Although donors consistently paid lip service to respecting and supporting “country-led” strategies and priorities as concocted through PRSPs, there were already criticisms of these during this time.
Moreover, the Forum failed to provide specific and time-bound targets for donor countries to fulfill their long-standing pledge to provide 0.7% of their gross national incomes (GNI) to ODA. This was especially relevant
23
at a time when the post-9/11 trend towards the national security capture of aid was already evident, resulting in even lower aid resources available for poverty eradication and sustainable development.
most importantly, even if successful, improving donor harmonisation actually strengthens the collective influence of donors vis-a-vis aid recipients and therefore exacerbates the power asymmetry between the two sides which has been at the root of many of the problems associated with ODA (Tandon 2008).
What was the second generation of aid effectiveness reforms?A second HLF was held in Paris in 2005 to take stock of the progress that had taken place since the HLF in Rome and to identify areas in which further work was needed. The Paris forum was attended by development officials and ministers from ninety one countries, twenty six donor organisations and partner countries, representatives of civil society organisations and the private sector.
On march 2, 2005, the participants issued the “Paris Declaration on Aid effectiveness,” in which they committed their institutions and countries to continuing and increasing efforts in improving aid effectiveness in terms of five core principles -- ownership, harmonisation, alignment, managing for results, and mutual accountability. The Declaration also specifies indicators, timetables and targets for actions by donor and recipient governments and has an evolving agenda for implementation and monitoring progress, up to 2010. Signatories include governments from 141 developing and developed countries, the european Commission and 27 international donor organisations.
The Paris Declaration (PD) constitutes the second generation of aid effectiveness reforms. While the first generation focused on donor harmonisation, the PD expands the scope of reforms while stressing the principle of country ownership as the overarching principle of aid effectiveness. Donors commit to respecting developing countries’ choices of policies, and to help strengthen their capacity to implement those policies.
Although the PD expanded the scope of the aid effectiveness reforms, it does not go far enough. CSOs point out that it remains focused on improving the delivery of aid rather than addressing and improving the
24
conditions for the effective reduction of poverty and inequality. The PD fails to put the core development goals of human rights, social justice, equality and sustainability at the heart of aid and development policy. Hence it is possible for donors and country governments to implement these principles without realizing core development goals and probably even exacerbate development problems among the poor.
The PD fails to address the underlying political, economic, and social causes of poverty and social injustice. This is because, as the ROA 2008 Report concludes, “The PD springs from a technocratic and depoliticised vision of development, with no accountability to intended aid beneficiaries. The power in aid relationships is still heavily weighted on the side of donors, and the Declaration does nothing to check this imbalance. The aid effectiveness being promoted remains essentially donor-centred.”
While the PD stresses “country ownership”, it reduces this to the executive department of recipient governments. It does not even involve parliament much less other democratic actors and stakeholders such as CSOs. Neither does the PD properly consider the critical role of CSOs in democratic development.
Lastly the understanding, promotion and implementation of the key principles in the PD have been very uneven and slow. The rhetoric has not fundamentally changed the reality of aid relationships.
Table 1 summarizes the CSO critique of the Paris principles.
What was the outcome of the third HLF in 2008?The Third High Level Forum (HLF 3) on Aid effectiveness took place in Accra, Ghana, in September 2-4, 2008. Its intent was to assess progress on the Paris Declaration commitments and targets. This was the biggest aid conference ever -- attended by over 1700 participants including more than 100 ministers and heads of agencies from developing and donor countries, emerging economies, UN and multilateral institutions, global funds, foundations, and 80 civil society organizations.
25
Table 1. CSO Critique of the Paris Declaration
ParIS PrINcIPle ISSUeS
OWNERSHIP: Partner countries should exercise effective leadership over their development policies, and strategies and co-ordinate development actions.
Real ownership includes, but cannot be limited to government leadership over development policies. The people and communities must have ownership over them. This means not just ‘ownership’, but ‘democratic and local ownership’.
ALIGNMENT: Donors should base their overall support on partner countries’ national development strategies, institutions and procedures.
It is not enough that donors link aid to countries’ national development strategies; it must also be clear that these strategies have been developed independently by recipient countries in the context of democratic and local ownership. The ‘behind-the-scenes’ impact of advisers, consultants and informal pressures from donors are key issues.
HARMONISATION: Donors’ actions should be more harmonised, transparent and collectively effective.
Unfortunately, a serious adverse effect of harmonisation is to reduce aid competition and limit the choices for recipient countries. It reinforces the position of the IFIs as the principal arbiters of aid policy.
MANAGING FOR RESULTS: Decision-making and resource management should be improved towards a results-focused approach.
Managing for results can only be effective when the results being targeted are poverty reduction and the promotion of human rights and gender equality. This requires consultation of local actors in evaluating results and use of gender-disaggregated information.
MUTUAL ACCOUNTABILITY: Donors and partners should be mutually accountable for development results.
The principle of mutual accountability requires the development of specific mechanisms by which aid recipients can hold donors to account. Once again this must not be limited to recipient governments, but must also include the communities most affected by aid expenditure.
Source: Reality of Aid
26
Donors meant for the HLF3 to be a stock-taking exercise. The HLF3 sought to review the progress in implementing the Paris Declaration based on evidence collected by a monitoring Survey applied in 54 countries. In addition, a more detailed evaluation of 8 recipient and 11 donor country experiences in implementing the Paris principles contributed to identify where more actions are needed to invigorate the aid effectiveness agenda and achieve the targets set for 2011. An overall progress report provided an overview of work on the 56 commitments in the Paris Declaration, and a consolidated analytic overview of major “workstreams” intended to take stock, share experience, and disseminate good practices.
Discussions and negotiations among countries and development partners at Accra focused the aid effectiveness agenda on the main technical, institutional, and political challenges to full implementation of the Paris principles. This resulted in the Accra Agenda for Action (AAA) adopted on September 4.
The Accra Agenda for Action attempts to respond to three major challenges:
Country ownership;1.
Building more effective and inclusive partnerships; and2.
Achieving development results. 3.
To strengthen country ownership over development, the AAA commits donors to broad country-level policy dialogue on development, strengthen the capacity of developing country partners to manage development; and use country systems. It also commits them to work more closely with parliaments and local authorities, civil society organisations, research institutes, media, and the private sector.
To build more effective partnerships, the AAA reaffirms donors’ pledge to increase aid while reducing aid fragmentation. It also promises to work with all development actors including CSOs, and to pay particular attention to countries in fragile situations and those that receive insufficient aid. Donors also pledged to “elaborate individual plans to further untie their aid.”
In order to achieve better development results, the AAA promises to improve accountability and transparency through better information management and alignment with country information systems. It opens up to parliamentary oversight, regular disclosure of aid information
27
and mutual assessment reviews by 2010 in all countries. It also aims to strengthen existing international accountability mechanisms. To increase the predictability of aid, donors commit to providing full and timely information on aid commitments and actual disbursements, and strive to provide three- to five-year expenditure plan.
The HLF3 called on developing countries to design country-based action plans to implement the PD and AAA and directs the WP-effectiveness to continue monitoring and report on the progress on the implementation of the PD and AAA at the HLF4 on Aid effectiveness in 2011.
In sum, the AAA outcome document enriches the Paris principles by adding more key commitments. It broadens country ownership to include civil society and parliamentarians. It introduces new language recognizing that aid will be effective insofar as it demonstrates development impact: “Gender equality, respect for human rights, and environmental sustainability are cornerstones for achieving enduring impact on the lives and potential of poor women, men and children. It is vital that all our policies address these issues in a more systematic and coherent way.” [AAA, para 3] The AAA also recognised for the first time the importance and distinctiveness of South/South cooperation and its unique approaches and contributions to development.
The Accra HLF also differed in terms of process. many have remarked that its inclusion of a wider range of stakeholders, such as parliamentarians and CSOs before and during the conferences represents a step forward compared to the traditional processes for international agreements on aid, most of which take place within the exclusive confines of the OECD. eighty civil society representatives were allowed as full participants at the HLF itself compared to 14 CSOs who witnessed the signing of the PD. This number is of course still miniscule when confronted with over 900 official delegates from donor and developing countries and international agencies.
Those CSO delegates were guided by a parallel CSO Forum attended by more than 600 other CSO delegates. It was the interventions of CSOs together with some key donors and governments before and during the Accra-HLF that expanded the agenda on the table to expanded the discussion of aid effectiveness principles. These are reflected in the political outcomes of the HLF 3 which deepened the second generation of aid reforms contained in the PD.
28
What are some of the criticisms to the AAA?
Nevertheless, while the AAA included some improved language, it still failed the overarching principle of ownership since it does not do away with tied aid and donor conditionality.These conditionalities still consist of “free market” policies that have gravely harmed Third World agriculture, stifled industrial progress, and worsened poverty and unemployment.
Donors still refused to eliminate tied aid completely. They have steered clear of making concrete, measurable and time-bound commitments to building democratic ownership of aid and development policies. And donors have completely avoided the vital issue of crushing debt burdens even as debt service by the Third World is many times the amount they receive in ODA.
The final, consensus-based AAA replaces earlier, more ambitious versions (one of which, for instance, stated unequivocally that “donors will not impose conditions”). This is partly because it is a negotiated agreement, arrived at by consensus, and accommodating the positions of the least progressive, but most powerful actors (such as the US, Japan and the World Bank). Hence, the final AAA can only be seen as a disappointment. There is little improvement in areas that are of great concern to developing country governments and their citizens and it does not even live up to the rhetoric of the Paris Declaration which promises to allow developing countries to finally take ownership of their development.
See Annex 2. CSO Position Paper on Accra and Annex 3. ROA Critique of AAA.
CSOs remain critical of the entire aid effectiveness reform agenda so far adopted by donors and recipient governments for being narrowly focused on improving the management and delivery of aid. According to this approach, aid effectiveness is measured in terms of the efficiency of its delivery rather than on its demonstrable impact on the lives of the poor and marginalized.
CSOs are therefore demanding the adoption of a third generation of reforms that reframes aid effectiveness in terms of development effectiveness. Development effectiveness places human rights, social justice, gender equality and ecological sustainability at the core of aid relations and the development process more broadly. This framework challenges all development actors – donors, country governments, CSOs and communities -- to promote sustainable change that addresses the root causes as well as the symptoms of poverty, inequality and marginalisation.
CSOs hope that the development effectiveness of aid will be at the center of discussions during the fourth HLF to be held in Korea in 2011.
29
PART 3 Development effectiveness – the way forward for international development cooperationWhat do we mean by “development”?Development is about enhancing people’s well-being. This has numerous dimensions including physical, biological, mental, emotional, social, educational, economic and cultural. In the words of the mahbub ul Haq, Founder of the UN Human Development Report,”The basic purpose of development is to enlarge people’s choices. These choices can be infinite and can change over time. People often value achievements that do not show up at all, or not immediately, in income or growth figures: greater access to knowledge, better nutrition and health services, more secure livelihoods, security against crime and physical violence, satisfying leisure hours, political and cultural freedoms and sense of participation in community activities. The objective of development is to create an enabling environment for people to enjoy long, healthy and creative lives.” (UN n.d.)
For these choices to have any meaning in substance, people must have the capabilities and the freedom to exercise their choices, and the authority to influence decisions that affect their lives.
These are not controversial propositions.
The problem arises in specifying the means towards these ends, and then in formulating development strategies and policies accordingly. The World Bank, the ImF and other neoliberal policy advocates including most major donor governments regard economic growth as the principal means by which to promote development. Furthermore, they uphold market liberalisation policies as the best strategy to promote economic growth. ergo, to promote development is to promote market liberalisation.
They take exception to the criticism that they are advocating market fundamentalism, citing their promotion of “good governance” and “sustainable development” as proof. But examining the actual policy prescriptions of these institutions confirm that they deem governance as good so long as political institutions support property rights and the market. The means, therefore, are held up as the ends of development policy. It should not be surprising therefore, to witness that the economic growth
30
promoted by this neoliberal development paradigm -- which has also dominated donor thinking over the last three decades – has failed to deliver its promise of enhancing people’s well being and expanding freedoms. Rather, it has widened inequalities, reinforced poverty and has now led to the food, climate and financial crises that the world is currently confronting.
Since the mid-1990s, as these failures became much more evident, the UN has championed a “human rights based approach” to development. As such, the UN has tried to support human development by “enhancing the capacities of rights holders, mainly those whose rights are violated, and of duty bearers, who have obligations to respect, protect, promote and fulfill these rights.” These include not just civil and political rights but also economic, social and cultural rights – all of which are deemed indivisible and interdependent. (ibid.)
This approach assigns a central role to states rather than to markets to ensure development outcomes. From a human rights perspective, the government is under a minimum obligation to establish a regulatory and policy framework that ensures access to essential services even to those who will otherwise be unable to pay for such services if these were solely available on commercial terms. (Office of the UN High Commissioner on HR n.d)
However, critics point out that the UN’s human rights approach ironically places the onus of duties on Southern country governments while glossing over the human rights obligations of Northern governments, international institutions such as the Bretton Woods Institutions, and TNCs. This is doubly ironic in the context of neoliberal globalisation since economic resources as well as policy instruments are now very much controlled by Northern elites through these institutions. (Uvin 2002)
This allows the World Bank and other donors to embrace the language of rights even as they continue to push for the privatisation of essential services such water, reduce public spending on social services, or extract debt service payments that rob Southern countries of their domestic resources for development. This allows TNCs to wear the veil of corporate social responsibility without being held accountable for their violations of fundamental workers rights or the ecological damage wrought by their operations.
moreover, a human rights based approach that emphasizes the procedural elements of human rights instruments and the legal remedies that duty-
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bearers can resort to risks reinforcing the disempowerment of poor and marginalised individuals, households and communities who are forced to rely on mediators, lawyers and the courts in pursuing their claims.
What do we mean by democratic development?Poverty, social exclusion and underdevelopment are rooted not in scarcity per se but in unjust societal relations wherein economic and political power is concentrated in the hands of elites who wield their power to preserve their privileges at the expense of the majority. This means that the realization of human rights, including the right to development, requires the democratic transformation of power relations within countries as well as between countries.
But that democratic transition will not occur without mobilisation and pressure from below. For the poor and marginalised to claim their rights, they must challenge existing power relations and the institutions that enforce those relations. For civil society organisations such as IBON, human rights and development advocacy is therefore a matter of enhancing the collective capacity of poor and marginalised groups in society to assert their rights vis-à-vis those who benefit from denying them those rights.
International development cooperation should therefore not just be a matter of providing more financial resources and technical knowhow for poor countries. It should be about supporting conditions in which the people can exercise sovereignty over their own process of development. It should be in support of ordinary people striving to create new economic, social, political and cultural institutions that are inclusive, participatory and democratic. It should also be in support of shared goals and the provision of global public goods such as peace, security and sustainable development.
What do we mean by Development Effectiveness as a framework for international development cooperation? International development cooperation, as promoted and practiced by international governmental institutions and most donor countries, has so far failed to promote democratic development. Current attempts to improve the “effectiveness of aid” have likewise failed to yield better development outcomes.
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This is because aid effectiveness is defined in a technocratic and depoliticized manner and without sufficient consideration to the process and outcomes in terms of development goals. In this framework, poverty alleviation and the promotion of human rights as the content and purpose of aid is uninterrogated; even as the reality of aid has been starkly different throughout its history. Because the development purpose of aid is unexamined and unproblematised, improving aid effectiveness is reduced to “improving the management, delivery and complementarity of development cooperation activities”. Conditionality, tied aid and the geopolitics of aid are swept under the rug or treated as departures from the real orientation of aid rather than the norm. Therefore these are not regarded as the principal targets of aid reforms.
more fundamentally, this technocratic approach to aid reform in effect puts primary focus on the development cooperation relationship rather than on the country development process as the principal concern and development cooperation as secondary support to the development process. While aid effectiveness promotes ownership, alignment, and mutual accountability, it glosses over power asymmetries between donor states and recipient governments.
The aid effectiveness reform agenda, thus far, fails to address the basic failures of the international aid system and the principles of international cooperation to rectify them.
The development effectiveness framework challenges “international development cooperation” today in three ways:
First – it challenges the premises by which the effectiveness of development cooperation and assistance are measured – from results due to management and delivery reform, to results and achievement of development goals due to reform in development cooperation process – therefore moving from technocratic reforms in the management process to political reforms in the development cooperation process.
Second – it rebalances relationships and priorities in international development cooperation by focusing on the development of the country as the main concern, and international cooperation and assistance as subordinate with the responsibility to support such particular development goals of the country. This is unlike the situation in technocratic aid effectiveness where the role of aid and development cooperation is not contextualised and thus either places inordinate importance on external
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assistance or allows the continued dominant role of external partners. By rebalancing relationships and priorities, the principles of international cooperation can be better upheld.
Third – this rebalancing and reconfiguration of aid partnerships focusing on development goals of human rights especially of the poor, social justice and sustainability challenges and requires the reconfiguration of aid architecture. As it assumes the dominant or central focus on development of countries, then a truly multilateral system requires the radical overhaul of current international financial institutions and further reform of the UN system as well. Accountability of development partners must be institutionalized internationally and a rebalancing of relationships between bilateral donor interests and multilateral interests must be made institutionally and financially.
The development effectiveness approach to aid starts from a critical understanding of the development process and based on this, the examination of the content and purpose of aid and the political nature of aid relations. It recognizes the yawning gap between aid rhetoric and aid practice. It recognizes that the vast asymmetries -- in terms of political clout, economic resources and technical capacities -- between donors and recipients can easily distort ownership in development assistance, and is central to the problem of conditionality, tied aid and overall aid ineffectiveness.
This means that ensuring the development effectiveness of aid goes far beyond improving aid delivery and management with the poor in mind. It is a political project that requires redressing existing power asymmetries between donor and recipient countries, between states and their citizens, between local elites and the poor. It is a struggle to transform the current aid system -- from one that serves the interests of elites in the North and South, to one that ensures the progressive realization of the human rights of poor and marginalised groups in society.
Development effectiveness of aid is not a quick fix, not simply because it is difficult to change behavior of bureaucracies as is assumed in aid effectiveness,but because it is a continuing political process of improving international relations and development cooperation North-South and South-South, of building democracies and participatory governance and of empowerment of citizens especially for the poor.
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This approach necessarily relates aid and development cooperation to other determinants of development (and maldevelopment) including debt, trade, investments, migration, governance, and security. Indeed, this approach challenges the still dominant neoliberal development paradigm which frames ODA and aid effectiveness reforms even as evidence of its anti-poor outcomes continue to mount.
The development effectiveness approach also examines the role of other development actors including CSOs, local governments, parliaments, and so on, both in relation to the aid system and as development actors in their own right whose actions impact on the lives of the poor and marginalised.
What are the principal elements of the development effectiveness framework applied to aid and development cooperation?
Empowerment - Development cooperation should help empower 1. people to claim their rights and promote social inclusion.
Poverty is a multi-faceted phenomenon. According to Amartya Sen’s definition, it is a situation in which a person lacks the necessary capabilities and entitlements to satisfy his or her basic needs and aspirations. Following this concept, the fight against poverty consists in establishing entitlements that will allow the poor access to the material, social, and spiritual means to develop their capabilities.
But this fight requires the empowerment of the poor and marginalised. Indeed, mass poverty is so intractable because the advantaged defend their privileges and the prevailing order. This means that the strongest and most reliable impetus to combat poverty will spring not from the beneficence of the rich but from the collective assertions of the poor. Only when the poor are, collectively, the principal agents of change, can a lasting solution to poverty and hunger be realised.
empowerment is a process of enabling people, in particular the least privileged, to: (a) have access and control over productive resources -- land, technology, financial resources and knowledge -- that enable them to meet their needs and develop their capabilities; and (b) participate and lead in the development process and the decisions that affect them. These two aspects are integral; one without the other is not empowerment.
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Among the poor there are also those who are subject to even more discrimination and oppression. Women make up at least half the poor but suffer, in addition, the double burden of unpaid caregiving roles, more limited access to education and other services, discrimination in the workplace and in political life, sexual exploitation and physical violence.
National minorities face bigotry, national chauvinism and national oppression. Indigenous peoples are frequently dispossessed and displaced from their traditional sources of livelihood and cultural identity to make way for mining, logging, corporate plantations or large infrastructure projects that do not benefit them. Migrants confront racism, xenophobia and physical violence as they are often used as scapegoats for rising unemployment or declining wages in host countries. Dalits or scheduled castes suffer profound discrimination and prejudice due to deep-seated cultural beliefs and customs.
Therefore a development strategy that seeks to empower the poor must also be socially inclusive. It must respond to different experiences and needs of women and other marginalised groups in society. It must promote the voice and participation of women, youth, minorities and other excluded groups in identifying needs and priorities, formulating policies, and designing, implementing and evaluating programmes, including those assisted by international agencies.
Likewise, if aid is to make a meaningful impact on development, then it must be principally in support of the empowerment of the poor, especially women and other marginalised sectors in society. They must be able to hold their governments and donors to account through participatory governance mechanisms.
Justice - Development cooperation should help countries transform 2. their societies for equity and social justice.
Mass poverty in the midst of global plenitude is rooted in unjust social relations between groups in society, and between countries. Under the current global political economy, the accumulation of wealth and power of some is predicated on the impoverishment and oppression of the many. In 1980, the median income in the richest 10% of countries was 77 times greater than in the poorest 10%; by 1999, that gap had grown to 122 times. By 2000, the richest 1% in the world own 40% of
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global assets, the richest 2% own 51%, while the poorest half of world population own barely 1% of global wealth. (UN Wider 2002)
Through their ownership and control of the productive assets and resources on which people’s livelihood depend, a tiny fraction of the population, in effect, controls production and the distribution of income in society as a whole. Those without such means, especially those with no special skills or training, are forced to compete for jobs in the marketplace. As a consequence they are under constant pressure to produce more in exchange for lower shares of income.
The wealthiest elites from the North, through international trading, financial transactions and the overseas operations of their corporations, are able to take advantage of even cheaper labor and other inputs from the South. In most of these countries, this combines with the age-old problems of feudal land concentration, patron-client relations, indentured labor, usury and other semi-feudal modes of exploitation that still shackle vast swathes of the population in the countrysides and keep them in destitution.
Therefore if aid is at all to address poverty, it needs to help redress social injustice and rectify the inequitable access and control over resources. Aid should support redistributive reforms such as genuine agrarian reform, the expansion of social entitlements, and universal access to essential goods and services. At the very least, ODA (and the terms attached to it) should not contribute to further dispossession, deprivation and exclusion of the poor and the marginalised.
Indeed, much of aid should take the form of compensatory finance to redress existing or historical inequities -- slavery, colonialism, wars of aggression, support for local despots or oligarchs, neocolonial trade and production relations, ecological damage -- inflicted by wealthy countries in partnership with Southern domestic elites on much of the global South.
Donors can and should start by cancelling all illegitimate debt. This includes money lent to authoritarian regimes; loans used for graft and corruption or for political repression; debts incurred by undemocratic means, without transparency or participation by civil society or representative branches of government; debt that cannot be serviced without violating basic human rights; and debt incurred under predatory repayment terms, including situations where original interest rates skyrocketed and compound interest has made repayment impossible (ROA-Asia 2006).
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Sustainability - Development cooperation should support building 3. sustainable societies.
The current global economic system is based on the overexploitation of natural resources, overconsumption, and excessive pollution. This breaches the regenerative capacity of the natural environment and compromises the ability of future generations to meet their needs.
In their singular pursuit of profits and capital accumulation, those who control production and distribution constantly attempt to dump their costs on to the rest of society, including the ecological damage directly or indirectly caused by their actions. mining TNCs deny responsibility for the consequences of the deforestation that is entailed by their operations; agro-chemical companies do not shoulder the costs of poisoned land and waterways from the accumulated use of their pesticides and fertilizers; electronics companies turn a blind eye to the mountains of electronic waste resulting from their continuous production and marketing of these goods; and the petroleum majors do not even begin to account for the damage wrought by the greenhouse gases pumped into the atmosphere as a result of oil consumption.
The market-led profit-oriented development strategy promoted by Northern elites and the institutions they control, including IFIs and donor agencies, encourage these kinds of ecologically destructive and unsustainable modes of production and consumption.
On the other hand, the communities that are most dependent on natural resources and the commons for their survival are the ones most adversely affected by the unsustainable practices of these dominant economic actors. This is a double tragedy since many of these communities have traditional knowledge and customs that are less harmful to their surroundings and more compatible with the sustainable use of natural resources.
Donors should stop promoting and subsidising ecologically damaging projects such as fossil-fuel extraction and consumption, deforestation, industrial agriculture, land-use conversions, and so on. Instead, they should support remedial measures to ecological degradation, climate change adaptation and mitigation, and shoulder the cost of transitioning to a low-carbon and ecologically sound development path that ensures productive and sustainable livelihoods for all, including future generations. They should also support public ownership
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and control of science and technology; strengthen the capacity of communities to respond to ecological risks and “natural” disasters; and respect people’s sovereignty over common resources.
Box 2. Put climate Funds in the People’s Hands
The current donor-controlled climate funding mechanisms preserve the injustices that inhere in the overuse and the lopsided use of the planet’s common resources. It represents not only the North’s continued command over global resources, but also their power to define Southern agendas and direct Southern economies according to their needs.
In the place of corporate profits and unbridled growth, social justice and people’s sovereignty must be at the center of the global climate change financial regime. Financing must redress the historical and social origins of the current climate crisis, and address the needs of those most affected.
Funding should be compensatory. The provision of funds by developed countries and corporate elites should be over and above the longstanding ODA commitment of 0.7 per cent of GNI. These funds should come in the form of outright fund transfers, not grants, loans, or any funding instruments that create debt. Financial flows should be sufficient, reliable, and mandatory.
Southern governments and peoples should have sovereign control over funds. Access to funding should not be tied with fulfilling policy conditions. The locus of funding decisions must be devolved to lowest level possible, where funding priorities and strategies can be formulated with the democratic participation of affected communities, scientists, CSOs, elected officials and other stakeholders.
Affected and vulnerable communities must be able to access funds directly through their own organisations. This should ensure that local needs are identified and prioritised, and existing local knowledge and initiatives are recognised and incorporated.
This requires transparency in the entire funding process and serious efforts at mass information to enable marginalised groups to participate meaningfully and make informed decisions.
Equality and solidarity - Development cooperation should be based on 4. the principles of equality and solidarity among the community of nations
The international political and economic order should reflect the universal aspirations and common interests of the peoples of various countries including peace, security, prosperity, equality and sustainable
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development. The UN Charter and other international norms and conventions try to capture these universal aspirations. As such, they form a basis for equality and mutuality among the community of nations.
But the reality of uneven development and unequal relations among nations is pervasive and undeniable. In this context, the principle of solidarity between nations should prevail and aid or development assistance should be a concrete expression of this principle. This means aid should be directed according to the needs and priorities of less developed countries, not the short-term or strategic interests of donor countries. Development cooperation should preclude an economically and politically strong development partner from taking advantage or dominating a poor and weak country.
Indeed, ODA should be seen as the historical obligation of wealthy countries towards the people of the South who have long-suffered impoverishment, indebtedness, ecological degradation and war as a result of the policies and actions pursued by Northern elites in the past and up to the present.
Box 3. Southern perspectives on international cooperation between states
During the 1950s, South-South cooperation emerged in the context of the common struggle of former colonies to attain genuine independence and development. In 1954, Premier Zhou Enlai of China articulated the Five Principles of Peaceful Coexistence in the course of settling a dispute between the Chinese and Indian governments over territory during that time.
These Five Principles are:
1. Mutual respect for each other’s territorial integrity and sovereignty
2. Mutual non-aggression
3. Mutual non-interference in each other’s internal affairs
4. Equality and mutual benefit
5. Peaceful co-existence
In 1955, the Asia-Africa Conference held in Bandung, Indonesia brought together 29 countries from the two regions to promote economic and cultural cooperation
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“on the basis of mutual interest and respect for national sovereignty.” The Bandung Conference issued a 10-point “declaration on promotion of world peace and cooperation,” expanding on Zhou Enlai’s Five Principles and incorporating the tenets of the United Nations Charter.
The 10 principles unanimously adopted were:
R1. espect for fundamental human rights and for the purposes and principles of the charter of the United Nations
Respect for the sovereignty and territorial integrity of all nations2.
Recognition of the equality of all races and of the equality of all nations large 3. and small
Abstention from intervention or interference in the internal affairs of another 4. country
Respect for the right of each nation to defend itself, singly or collectively, in 5. conformity with the charter of the United Nations
(a) Abstention from the use of arrangements of collective defence to serve 6. any particular interests of the big powers
(b) Abstention by any country from exerting pressures on other countries
Refraining from acts or threats of aggression or the use of force against the 7. territorial integrity or political independence of any country
Settlement of all international disputes by peaceful means, such as 8. negotiation, conciliation, arbitration or judicial settlement as well as other peaceful means of the parties own choice, in conformity with the charter of the United Nations
Promotion of mutual interests and cooperation9.
Respect for justice and international obligations.10.
These 10 principles affirmed in the Bandung Declaration are still very much pertinent to the current international system. These provide important norms not just for South-South cooperation but for international relations more generally.
5. Sovereignty - Development cooperation should encourage and respect independent democratic development.
To be effective, country development must be democratic and sovereign. This is an autonomous process essential to success and effectiveness in every country. Development cooperation must assiduously respect people’s sovereignty and national independence.
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National independence means freedom from foreign interference, territorial integrity, and the capacity to face other countries as equals. People’s sovereignty entails direct and meaningful citizen participation in decision-making over issues of public interest. This gives a deeper meaning to national sovereignty and democracy which, in most countries today, simply means elected officials making decisions in behalf of the public while citizens’ participation is confined to voting every four years or so.
Independent democratic development is the country process that includes identification of needs and priorities, formulation of policies and implementation of plans and programmes that is achieved with broad and meaningful citizen participation. It requires transparency and public access to all relevant information in a timely manner and accessible form. It requires independent studies of the potential social implications of different policy options that are made available to the public. It entails independent audits of the actual outcomes and impacts of programmes and projects. It requires functioning mechanisms for the redress of grievances that can hold higher authorities to account.
For all externally-supported initiatives, all terms and conditions of ODA must not only be open to public scrutiny but actively disseminated to affected communities, the media, parliament and all other interested parties. This must begin from the negotiation stage, to implementation and evaluation phases. Donor-supported technical assistance must be strictly demand-driven. ODA should be untied and free of policy conditionalities.
6. Self reliance and Autonomy - Development cooperation should promote national self-reliance.
Development cooperation is premised on the secondary, non-pervasive role of external partners based on the principle of equality and mutual benefit. Even in situations of dominant or even extreme reliance on massive external funding, the principle of self-reliance is preeminent as an element of sovereignty. external assistance, therefore, can never be predominant, and should always play a secondary role. Aid dependence is a political condition created by donor dominance. And in countries where aid is materially dominant in development financing, the ultimate goal is to achieve the conditions where it will no longer be necessary.
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Developing countries still need to rely primarily on their own internal resources -- the labor and talent of its workers, peasants, farmers and entrepreneurs; and the accumulation of resources and capabilities based on the contributions of its own people. Based on this, a programme of autonomous economic development addresses the issues of promotion of jobs and livelihood, entrepreneurship promotion, agriculture and industrial development, savings and investment growth, trade and finance institutions rules and mechanisms, services and utilities development, and public finance growth.
This core of economic development should address the principles of development effectiveness and is the focus/premise of development cooperation.
One of the most important ways by which the developed countries can support developing countries today is to respect the democratic right to self-determination of people, communities and nations. Unfortunately, the neoliberal globalisation pushed so aggressively by developed countries through lopsided international agreements and policy conditionalities attached to loans and ODA severely constrain the policy space for developing countries. Instead of policy coherence according to the Washington Consensus, donor policies must be aligned to development objectives and strategies set by developing country partners.
Aid and development cooperation should complement the efforts of people in developing countries to foster their own comprehensive development.
How can the international aid architecture be transformed?Once the principles and goals of international development cooperation is recast in terms of supporting independent democratic development in the South, aid reforms can then focus on building a more democratic governance system A transformative agenda for the international architecture for development cooperation can have the following major thrusts:
First, there must be a rebalancing of aid relationships to tilt the weight of ownership and control to the side of developing countries rather than towards donors.
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Second, the aid system must be primarily multilateral in character rather than bilateral. This is in recognition of the idea that development – like peace and security -- is a global pubic good which, in the final analysis, serves the interests of all of humanity. In more pragmatic terms, given the power asymmetries between donor countries and aid recipients, a new multilateral aid governance system where developing countries can exercise their majority influence helps tilt the balance in the latter’s favour. This is not the case with the existing multilateral donor institutions such as the World Bank and the regional development banks which are still dominated by donors according to the one-dollar-one-vote principle.
Third, bilateral and regional initiatives may still play a vital role in the international aid system but this should be in pursuit of shared concerns such as the development of transborder common resources for mutual benefit. Moreover, bilateralism and regionalism should complement and strengthen commitments to global multilateral goals and efforts.
Fourth, the aid architecture must reflect the responsibility and accountability of all countries to universally accepted norms and conventions such as the UN Charter, the Universal Declaration on Human Rights and other international conventions. At the same time, donors should be accountable to their developing country partners while aid recipient governments should be accountable to their own citizens for the development policies and programmes that they implement.
Fifth, the democratisation of the international aid architecture should be pushed alongside the democratisation of the global governance of finance, debt, trade and transnational corporations. There must be policy coherence in the global governance of these institutions in support of internationally agreed development goals while respecting the democratic right to self-determination of peoples, communities and nations.
Sixth, global governance mechanisms of the international aid architecture must ensure effective accountability by external development partners including multilateral institutions to peoples and nations including mechanisms for redress of grievances for communities in the context of externally assisted development programmes and projects.
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CONCLUSIONS
Development is essentially a political process whereby the poor are empowered to claim their rights. This empowerment is not just the summation of individuals claiming their human rights but a social process of developing the collective capacities of poor and marginalised groups in particular, and of peoples’ power in general as a key feature and requirement for the progressive transformation of society. The role of governments and other democratic stakeholders is therefore to provide the enabling conditions for the unfolding of this process.
However, the reality of grossly unequal power relations and colonial legacies continue to hinder genuine development. In the sphere international development cooperation this has engendered numerous problems including the instrumentalisation of aid and its subordination to donor country’s commercial and geopolitical interests. This has resulted in greater aid dependence and external control rather than fostering self-reliance, people’s empowerment and democratic development in poor countries.
Donor-led efforts at reforming the aid system have not succeeded in making aid more effective precisely because they reinforce rather than resolve these power imbalances between countries and within countries.
If international development cooperation is to play a truly positive and constructive role in the world, it needs to be premised on solidarity, shared values and social justice. It must be faithful to the principles of mutual respect, non-interference, equality and mutual benefit.
There must be genuine democratic ownership of ODA. This means adhering to the principle of people’s sovereignty in the determination of aid and development policies, the design and implementation of aid programmes, and the delivery and evaluation of plans and programmes. But the democratic ownership of aid must be appreciated not just in terms of technical and administrative requirements but as a political exercise that redresses the imbalances that are the historically determined starting point of development cooperation today.
A new multilateral aid architecture that upholds these principles needs to be built if international cooperation is to truly and effectively contribute to development of, for and by the people.
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ANNexes
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ANNEX 1. Table 1 and Table 2
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ANNEX 1. Table 3 and Table 4
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ANNEX 1. Table 5 and Table 6
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ANNEX 1. Table 7 and Table 8
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ANNEX 2. Civil society statement in Accra warns urgency for action on aid
1st September 2008
Introduction
2008 is an important year for development financing and an opportunity to move the international community to a more equitable, people-centred and democratic governance system. Today 1.4 billion people live under the new poverty line of US$1.25, and the majority of them are women. The current financial, food, energy, and climate change crises make evident the urgency for action.
Accra is an opportunity to advance towards a broader agenda of development effectiveness. The High Level Forum in Accra will be followed by major United Nations meetings in New York and Doha that will confirm the huge gap between what has been promised and the lack of progress in the achievement of the internationally agreed development goals.
Development aid is only one part of the equation, and has to be analysed in the broader context of its interactions with trade, debt, domestic and international resource mobilisation and the international governance system. When donors and governments met in Paris three years ago, technical debates masked deeper political differences around the broader vision for aid. Some donors wanted to hand a lot more power, a lot more quickly to developing country governments. Other donors didn’t. What was achieved was a compromise and has been criticised for its narrow technical approach.
It is urgent that human rights, gender equality, decent work and environmental sustainability are made explicit objectives of aid.
We call on officials present in Accra to respond with urgency. What we need in Accra are clear time-bound commitments to deliver real results for people on the ground, towards the eradication of poverty, inequality and social exclusion. This is a political not a technical challenge, and should be treated as such.
What is our ‘bottom line’ for Accra?
So far, the Paris process looks like a failure. The 2008 Paris Survey shows that donors in particular have a long way to go in delivering what they pledged. Accra must deliver a major change in implementation and change how “effectiveness” is measured by setting new targets and indicators. All donors must set out detailed plans and individual targets showing how they will meet their commitments.
But the Accra High Level Forum must also deliver real measurable and time-bound commitments to address some of the problems which are not adequately dealt with
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in the Paris Declaration. Donors must take responsibility for improvements which only they can deliver (e.g. untying aid and improving medium-term predictability of aid) and all governments must increase the democratic accountability and transparency of their use of aid resources, policies and activities. If the Accra High Level Forum is to be seen as a credible response to the serious challenges of making aid more effective, the Accra Agenda for Action must at a minimum:
Commit to broadening the definition of ownership so that citizens, civil · society organisations and elected officials are central to the aid process at all levels.
Set time-bound and monitorable targets to:·
Stop short-term aid and commit to ensuring that 80% of aid is o committed for at least 3-5 years by 2010.
Reduce the burden of conditionality by 2010 so that aid agreements o are based on mutually agreed objectives.
Set a more ambitious target to make all technical assistance demand-led · by 2010.
Commit to end tied aid, including food aid and technical assistance, by · 2010.
Commit donors and recipients to make the aid system more accountable · by developing and implementing new standards for transparency by 2009 which ensure that accurate, timely, accessible and comparable information about aid is proactively communicated to the public.
Commit to improve the monitoring of aid effectiveness by adapting existing · Paris indicators and by integrating new indicators from the Accra Agenda for Action by 2009; by supporting independent and citizen-led monitoring and evaluation systems and by agreeing an inclusive evaluation process to assess the impact of Paris on poverty reduction, gender equality, human rights and environmental sustainability.
Who are we?
Over 600 representatives from 325 civil society organisations and 88 countries have met here in Accra to debate what actions must be taken to reform aid. 80 civil society representatives have participated for the last two days in roundtables at this Forum to communicate those messages and ensure that our voices are heard. Civil society organisations (CSOs) have engaged energetically with the preparatory processes for Accra – organising consultations in every region, attending meetings of the Working Party on Aid Effectiveness and commenting on drafts of the Accra Agenda for Action. Although we have welcomed these opportunities, we are very disappointed that our views on previous drafts have not been taken into account, and that the Accra Agenda for Action as it stands promises little change.
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As development actors we are committed to making all aid activities more effective in addressing poverty and inequality. We recognise the need for continual improvement in our performance and our own responsibility for this. To this end, we have initiated the Open Forum for CSO Development Effectiveness, which is an inclusive, CSO-led, multi-stakeholder process. The Open Forum will create a space for agreement on principles to guide the effectiveness of CSOs, on guidelines for applying such principles and for documenting and sharing good-practices. We appreciate the acknowledgement of this process in the Accra Agenda for Action and we expect its outcomes to be based on a vision of development effectiveness that is relevant to all actors.
However, our effectiveness is also shaped by the environment in which we work, which is often determined by donors and developing country governments. Appropriate financing, democratic and effective states and enabling environments, including legal frameworks based on human rights, are crucial to our work being more effective with the most marginalised communities.
Our vision for change
Our vision is of a world where aid is no longer needed; where poverty is no longer a daily reality for billions of women and men; where decent work is a reality for all; where global resources are fairly distributed; where social and gender inequalities are ended; where indigenous populations are respected; where strengthened democratic states fulfil economic, social, and cultural rights; and where global public goods including environmental sustainability are secured by multilateral international institutions with equal participation of all countries.
We believe that aid can play an important role in moving us towards this vision, and that more and better aid is urgently needed to respond to the scale of the challenges of poverty, inequality and exclusion. Aid will be effective when it can be clearly demonstrated that it is indeed addressing those challenges. The effectiveness of aid should be assessed under a universal, more democratic and representative platform than the OECD/DAC, such as within the Development Cooperation Forum at the United Nations.
Effective aid must be based on the principle of democratic ownership and have poverty reduction, the fulfilment of human rights, gender equality, environmental sustainability and decent work as its objectives. When donors impose their own policies, systems and priorities, they drown out citizens’ and recipient communities’ voices, and they undermine the principle of alignment with developing countries’ priorities and systems.
Effective aid should support democratic accountability between citizens and their governments. Democratic institutions are the result of national processes for social and political dialogue and donors should not undermine these efforts or the need for policy space. Rural development, regional integration and decentralisation processes in developing countries should be supported by donors when defined as national priorities.
Effective aid supports the development of transparent and accountable systems. It needs to be predictable to allow recipient countries to make medium and long-
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term plans, and then be aligned to those plans. It needs to be untied. Yet many donors continue to deliver aid in order to promote their own interests – tying aid to the purchase of goods from their own national firms, or setting conditions which promote their own economic interests.
At the heart of many of these problems is a lack of accountability and transparency. There is not enough reliable and timely public information about aid flows, or the policies and conditions associated with them. There is not enough independent evaluation of donor performance or the impact of aid on the ground. There are not enough opportunities for citizen, and civil society organisations to make their voices heard in decision making processes. This constitutes a systemic obstacle for citizens to hold governments in donor and recipient countries to account.
The Paris Declaration recognises many of these problems in principle, but donors have proved unwilling to resolve them in practice. Even where developing country governments have improved their performance, donors have not met their side of the bargain. The slow progress in implementing the Paris principles should be a source of acute embarrassment and concern for the governments represented here in Accra.
Both donors and developing countries have responsibilities to make aid work. However, the process of improving aid effectiveness needs to move away from conditionality, and not introduce new ways of imposing conditions, which undermine the right to development and democratic ownership.
Accra is an opportunity for you, ministers of donor and recipient countries and high-level representatives of donor agencies, to demonstrate your commitment to poverty and inequality reduction through effective aid, and a test of your credibility in living up to your commitments.
Your decisions tomorrow are important to set the stage for a more ambitious agenda for change towards real development effectiveness. As civil society organisations we will continue to work energetically to improve our own development effectiveness. We will continue to work – hopefully closely with you – to improve the impact that official aid has on poverty and inequality. Aid will ultimately be judged on the extent to which it contributes to positive change in people’s lives. Only then will we really be able to talk about aid being effective.
See also the following statements:
Putting Decent Work at the Heart of Sustainable Development •Effectiveness, ITUC.
Women’s Forum Statement: Recommendations for Action on •Development Effectiveness in Accra and Beyond, 30th August 2008.
Joint Ecumenical message and policy briefs for the Accra High Level •Forum on Aid Effectiveness.
Civil Society Statement on Aid Effectiveness and the Debt Crisis.•
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ANNEX 3. Statement of Reality of Aid (ROA) at the Conclusion of the 3rd High Level Forum on Aid Effectiveness
by Reality of Aid (RoA)
05 September 2008
Here in Accra, CSOs held a parallel forum on aid effectiveness with 700 partici-pants from over 80 countries and there were 80 CSO participants in the official high level forum.
CSOs, and many present in Accra from the Reality of Aid Network, are deter-mined in making human rights, gender equality, decent work and environmental sustainability explicit and central to the aid effectiveness agenda. We have con-sciously set the bar high in recognition of the urgency for immediate and concrete action if the AAA is to make any progress towards improving implementation of the Paris Declaration (PD) and genuinely realizing its principles by 2010. To this end we have come to Accra with a CSO position paper that puts forward 18 clear and definite recommendations.
Although CSOs have been intensively engaged in the process of drafting the AAA and have influenced the debate on various issues, we are nonetheless disappointed that our views and proposals have in the main been ignored in the final AAA. We have advanced clear, time-bound and realistic commitments on policy conditionalities, tied aid, predictability, transparency and debt. However in the final AAA we see only limited or no progress at all on these vital issues. This is deeply disappointing for us.
The AAA recognizes the poor performance of donors and countries in many areas of aid reform and unfortunately uses this poor performance to justify conservative targets. On the contrary, we believe that the AAA should have been made more ambitious if the PD’s targets for implementation by 2010 are to be achieved.
We also acknowledge that the AAA in some respects introduces progress beyond the PD. The rigorous process of debate and consultation in its preparation which saw the active participation by developing country governments and CSOs has been productive. There has been significant progress in terms of greater commit-ment to be inclusive of CSOs, parliamentarians and other actors. As noted, there has been also some limited but important movement on the issues of mutual ac-countability, transparency, predictability and conditionality. Although falling short of delivering time-bound reforms this is a good starting point. We also appreci-ate the active efforts by some donors and developing country governments who have persisted in pushing for reforms to be put in place and in thwarting efforts to water down what has already been achieved.
The hallmark of the High Level Forum and the AAA is the intensive process of preparations and engagement by CSOs and governments. The CSO Parallel Forum and the Better Aid open platform for CSO voices are particularly important achievements. However the official HLF itself still leaves a great deal of room for improvement. Notwithstanding greater CSO participation compared to the past,
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this still cannot yet be fully celebrated by CSOs. We need to take advantage of new opportunities for comprehensive aid reform posed by the increased involve-ment of new donors and other actors.
An unprecedented array of development actors is now engaged on the vital issue of aid and aid effectiveness and there have also been some unambiguous gains. Much remains to be done. The challenge is how to build on the gains achieved towards a new multilateral High Level Forum in 2011, framed by the core issues of aid and development effectiveness.
