Whose aid is it anyway?

Too many targets, and flexible rules risk devaluing development aid [Department of Foreign Affairs and Trade/Flickr]

To the generation brought up on the LiveAid and Live8 concerts, development aid is a moral obligation as well as a policy tool.

That sense of moral purpose was behind the UN’s Millennium Development Goals in 2005 and their 2015 successors, the Sustainable Development Goals. But the UN’s target for wealthy nations to spend 0.7% of their gross national income on aid has become a modern political shibboleth. Everyone agrees to it, but almost nobody plans to ever meet it.

Since the target was set in 2005, only four EU countries have consistently hit the target. The EU average is currently 0.43%. That is unlikely to change significantly in the coming years.

The guiding purpose behind LiveAid, debt relief and the UN targets was the eradication of extreme poverty, but it was surely not intended to become a self-fulfilling prophecy. The EU, and other donors, are tired of doling out cash.

Developing countries, for their part, resent the tight political and economic conditions that are attached to it.

In December, Ghanaian President Nana Akufo-Addo used an official visit by his French counterpart Emmanuel Macron to complain that relying on European development assistance “has not worked and it will not work.”

“Our responsibility is to charter a path which is about how we can develop our nations ourselves. It is not right for a country like Ghana—60 years after independence—to still have its health and education budgets being financed on the basis of the generosity of European taxpayers,” he said.

Foreign aid totalled $146.6 billion in 2017, according to the Organisation for Economic Co-operation and Development last week. For many European countries, however, the drop was merely the result of lower spending on accommodating refugees on their own soil. Donor countries reported spending $14.2 billion on domestic refugee costs, 9.7% of total aid, against 11% in 2016.

Most of the problem lies in the flexibility of the rules that govern what can be classified as aid.

“We have seen an increasing perversion of the system,” said Jeroen Kwakkenbos, policy and advocacy manager at the European Network on Debt and Development.

“There has been a lot of pressure to meet the targets and that has led to a watering down of aid,” he added.

When it comes to blurring the lines, and watering down the aid targets, many of the worst offenders are EU countries and the institutions.

EURACTIV understands that the European Commission is planning to use the next seven-year EU budget programme – the multi-annual financial framework – to expand its External Investment Fund, which uses cash from the EU budget to attract matched investment from private finance institutions.

Whether loans to the private sector should be allowed to count as overseas development aid (ODA) is one of the most contentious issues among donor countries.

“This is where the disconnect between what ODA is about. Some countries are very uncomfortable about it, others say that it is the new development paradigm and others are just thinking with naked self-interest,” Kwakkenbos told EURACTIV.

The European Union and UK were among the countries to support a proposal pushed by Japan, France and Germany – the biggest users of private finance initiatives in development – at November’s meeting of the Development Assistance Committee in Paris. In the absence of any consensus, the issue ended up being kicked into the long grass.

So if donor countries are using ODA to cook the books, how much actual aid spending is there?

Country Programmable Aid is the portion donors can allocate to specific countries or regions, and over which partner countries have significant control.

“This is the money that actually goes to developing countries,” says Kwakkenbos.

He estimated that roughly 50% of the total that goes to projects and programmes is most likely used for development purposes. A further 30% of aid spending is directed via multilateral organisations.

“However, there is roughly 15-20% that is not linked to the welfare and well-being of partner countries at all and its inclusion undermines the reporting exercise,” he said.

If the plethora of targets and figures was not already confusing enough for the layperson, there are more acronyms in the pipeline. The OECD and United Nations have spent the last three years working on a new measurement known as Total Official Support for Sustainable Development (TOSSD). The stated purpose of TOSSD is not to supplant ODA but to provide transparency on the financing for the UN’s recently agreed Sustainable Development Goals (SDGs).

“The danger is that some donors want to use it as an alternative to the 0.7% target,” one delegate at the Paris meetings in November told EURACTIV

If development policy making becomes awash with targets and acronyms that are meaningless to the man and woman in the street, it is hard to see how it can be done effectively.

“There is a legitimate public discourse to be had about what we are trying to do with aid, but we are in almost a zombie state on the target,” said Kwakkenbos.

“We don’t want to reach a state where this becomes a purely box ticking technocratic exercise that is divorced from reality, we really need to cherish it. For us the quality of aid is what matters.”

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