Is Development Cooperation Still Relevant in Africa? Lessons from - PowerPoint PPT Presentation

Is Development Cooperation Still Relevant in Africa? Lessons from UNU-WIDER Research on Aid Effectiveness A presentation to Finnish Ambassadors 22 August 2014

Four questions asked • Because of economic growth in Africa, aid is no longer needed. Development can be financed through other means (including income from natural resources). • Aid is only needed in fragile states or situations. • Development co-operation is a waste of money, because it is very difficult to show results. • Developing countries don’t care about tax collection as long as they know donors are always there. Therefore we should put more demands on countries collecting more taxes, and introduce that as a condition for our own funding.

Net Official Development Assistance (disbursements in constant prices 2010) 160 140 120 In 1960, 36.4 billion 100 USD of aid allocated. Billion USD 80 By 2011 aid flows had multiplied by 60 four to 146 billion USD per year 40 20 0 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Total ODA Bilateral Multilateral

Financial Flows to African Countries 250 20% 18% Remittances 200 16% Current USD, billion 14% 150 12% Official Development % GDP 10% Assistance 8% 100 Portfolio investments 6% 50 4% 2% Foreign direct 0 0% investments -2% -50 -4% % GDP 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (e) 2014 (p) 4

ReCom - Overview • How effective is aid? • Multiple goals for aid + country variety • Delivery of aid is complex – many actors • Aid is just one element of development • Community action, private sector, state-building • Many bold statements – but nobody can speak with authority on every facet of development, nor aid • ReCom – Research & Communication in Foreign Aid • Large network: 300+ people from 60 countries (since no single person knows everything about aid)

http://recom.wider.unu.edu/

ReCom – Aid Impact Analyzed under 5 Themes • Social Sectors • Growth & Employment • Gender Equality • Environment & Climate Change • Governance & Fragility All relate to the MDGs & the post-2015 development debate. Today focus on first three. Will assume clear that aid needed in fragile circumstances and with reference to climate change.

Aid & Social Development Health Care, Education, Water & Sanitation, Social Protection

2.6-3.0 million fewer under 5 child deaths annually Reduction in global U5MR by disease, 2000 to 2010 Deaths per 1,000 births 73 >30% decline from 2000 to 2010 20-30% decline from 2000 to 2010 ~50% of the reduction <20% decline from 2000 to 2010 comes from pneumonia, diarrhea, and measles 0 57 Pneumonia Diarrhoea Measles Neonatal Pneumonia Neonatal diarrhea 2000 Preterm birth complications Intrapartum related events Other conditions AIDS Meningitis Neonatal Tetanus Malaria Other conditions neonatal Neonatal sepsis/ meningitis Congenital abnormalities injury 2010 SOURCE: CHERG 2012, Lancet 2012 9

Aid to Social Sectors Aid to Social Sectors Aid to Social Sectors as % of (billion USD constant 2010) total aid flows 30 20 25 15 Education Education 20 Health 15 Health 10 10 Water and Water and Sanitation 5 Sanitation 5 0 0 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011

Aid is effective in social development • ReCom shows that: an annual inflow of aid of 5% of GDP: • Augments schooling (enrolments up, but quality problem remains) • Helped reduce infant mortality by 7 per 1000 births • Reduced poverty BUT depends on inclusiveness of growth • Many innovative & successful interventions – but problems too (e.g. in Global Fund to Fight AIDS, TB and Malaria) • & too many children are still hungry & unschooled (especially girls)

Aid & Economic Development

Economic Growth: ReCom finds: • Over the long run, aid inflow of US$ 25 per capita adds an additional 0.5 percentage point to annual per capita growth (incl. by raising public investment) • Impact is cumulative – e.g. nourishing a child today has a growth impact later • By investing in an economy’s supply-side – aid can avoid Dutch Disease • Helps reconstruction – e.g. Mozambique, Uganda (BUT aid cannot do the job of peace-keeping alone e.g. Afghanistan, south Sudan)

UN High-Level Panel report on the post- 2015 development agenda • Calls for: • “..A quantum leap forward in economic opportunities and a profound economic transformation to end extreme poverty and improve livelihoods…” • How can aid help? • Aid to social sectors builds human capital BUT being educated & healthy is not enough

What will happen to aid allocation post-2015? 45% Social Sectors 40% 35% Economic 30% Infrastructure 25% Production Sectors 20% 15% Environment, 10% Gender, Rural-Urban Development 5% 0% 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

MDGs & Post-2015 • Aid helps economic growth (overall). BUT: • To achieve the HLP ‘quantum leap’ it must support: • Structural transformation – industrial policy & don’t just focus on SMEs (“East Asia’s donors do it better?”) • Creation of ‘good jobs’ – donors pay too little attention to employment – fragmented livelihood projects • Gender equity at scale – rhetoric, but too-small-scale • Aid to agriculture – slumped & still too low (esp. crop research). IFAD & AfDB ‘going to scale’ • Infrastructure – use aid to leverage private capital (e.g. AfDB Africa50 fund). Recall Climate change challenge

Aid & Gender Equality • No inclusive growth if it does not fully incorporate ability of citizens, regardless of gender • DAC has monitored commitments to gender equality since 1991 – about 15% of all screened aid pursues the objective • ReCom concludes that 15% is too low • Highest in education: 30% of all screened aid. Health mixed: maternal health now a high priority but family planning too low • Aid for gender equality languishes in productive sectors: in agriculture aid for gender equality fallen to 15% • Small livelihood projects; little at scale

Nearly concluded: building bridges

Remittances help build this:

But we also need to build this:

Climate change could overwhelm development

Conclusions: is the aid job done?

Need: research not rhetoric • Ask an engineer: do bridges work? • Bridges work - when well-designed & built • Ask a development expert: does aid work? • Aid can work – when well-designed & implemented • Instead of rhetoric – nothing works in development, nor in aid, & we can never know what works & why (= “all bridges fail, & will continue to fail”)… • … find out: what works? What could work? What is scalable? What is transferrable?

The four questions asked • Because of economic growth in Africa, aid is no longer needed. Development can be financed through other means (including income from natural resources). • Aid is only needed in fragile states or situations. • Development co-operation is a waste of money, because it is very difficult to show results. • Developing countries don’t care about tax collection as long as they know donors are always there. Therefore we should put more demands on countries collecting more taxes, and introduce that as a condition for our own funding.

www.wider.unu.edu Helsinki, Finland