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

• wn funding.

Net Official Development Assistance (disbursements in constant prices 2010)

20 40 60 80 100 120 140 160

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

Billion USD

Total ODA Bilateral Multilateral In 1960, 36.4 billion USD of aid allocated. By 2011 aid flows had multiplied by four to 146 billion USD per year

Financial Flows to African Countries

4

• 4%
• 2%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

• 50

50 100 150 200 250 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (e) 2014 (p) % GDP Current USD, billion Remittances Official Development Assistance Portfolio investments Foreign direct investments % GDP

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

9

Other conditions Intrapartum related events Preterm birth complications Measles Diarrhoea Pneumonia 2000 Meningitis Neonatal Tetanus Malaria Neonatal Pneumonia Other conditions neonatal Neonatal sepsis/ meningitis Neonatal diarrhea injury Congenital abnormalities AIDS 2010 73 57

<20% decline from 2000 to 2010 20-30% decline from 2000 to 2010 >30% decline from 2000 to 2010

~50% of the reduction comes from pneumonia, diarrhea, and measles Reduction in global U5MR by disease, 2000 to 2010 Deaths per 1,000 births

SOURCE: CHERG 2012, Lancet 2012

2.6-3.0 million fewer under 5 child deaths annually

Aid to Social Sectors

5 10 15 20 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011

Aid to Social Sectors

(billion USD constant 2010)

Education Health Water and Sanitation

5 10 15 20 25 30 1971 1975 1979 1983 1987 1991 1995 1999 2003 2007 2011

Aid to Social Sectors as % of total aid flows

Education Health Water and Sanitation

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
• pportunities 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?

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Social Sectors Economic Infrastructure Production Sectors Environment, Gender, Rural-Urban Development

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

• bjective
• 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

• wn funding.

www.wider.unu.edu

Helsinki, Finland