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Finance

Background

Real Aid

Towards an end to aid dependency?

23 September 2011

Notes of a panel discussion, Washington DC, 21 September 2011

Sponsor: ActionAid

Panelists: Lucia Fry (Policy Adviser, ActionAid UK), Barbara Lee (Head, Aid Effectiveness Team, World Bank), Matthew Martin (Director, Development Finance International), Barbara Lee (Manager, Aid Effectiveness Unit, World Bank), Richard Ssewakiryanga (Executive Director, Uganda NGO Forum), CHAIR: Neil Watkins (Director of Policy and Campaigns, ActionAid USA)

With much of the rich world in recession and aid budgets under threat, it’s more critical now than ever to ensure that scarce foreign assistance dollars are dedicated to help impoverished countries to move away from aid dependency. A new report from ActionAid, Real Aid 3, reveals good news: Developing countries are getting less dependent on aid. In the past decade in Ghana aid dependency fell from 47% to 27%, in Mozambique from 74% to 58% and in Vietnam from 22% to 13%.

The kind of aid that helps support dramatic decreases in aid dependence like this is what ActionAid calls real aid – that’s aid which empowers poor women and men to realize their rights, and reduces inequality. This event will launch ActionAid’s new Real Aid 3 report and engender a discussion about aid effectiveness and how more effective aid can best help end aid dependency.

Neil Watkins:

  • aid is facing alla kinds of challenges and political threats.
  • Importance of effective aid that delivers results is important.
  • Report looks at where things stand currently.

Lucia Fry:

  • What’s the situation vis a vis aid dependency.
  • Poor countries becoming less dependent on aid.
  • Concept of aid as bottomless pit is being tested.
  • Aid dependency down by 1/3 in most developing countries.
  • Countries increasingly mobilising domestic resources.
  • Important to end aid dependency because dev countries want to aid dependency.
  • Important to end aid to increase national autonomy.
  • Important to end aid to improve accountability.
  • To improve predictability of government expenditure.
  • Aid dependency can be ended by designing strong development strategies and aid policies.
  • Governance and accountability.
  • Aid for tax systems and domestic mobilisation.
  • More real aid.
  • What is real aid
  • Pro poor aid
  • Only counted once
  • If tied purchases from donor should not cost more than local
  • Technical assistance that is wanted by the recipient and appropriately priced
  • Supports country leadership and national strategies
  • Value for money
  • Tying aid reduces its value,
  • Eliminating volatility would increase value
  • Technical assistance problematic
  • Over half of all aid can be considered real aid 66 billion
  • Increase since 2005
  • Share of real aid has nit increased th5 much based on percentage
  • Breakdown of substandard aid
  • Poorly targeted aid 7%
  • Debt cancellation double counted as aid
  • Poor quality technical assistance
  • Policies that don’t support country ownership
  • Poorly targeted aid, etc.

Recommendations

  • Aid donors should increase real aid
  • Ensure aid benefits women
  • Increase value for money and results of aid by making aid more predictable
  • Focus on true policy coherence for development
  • Aid receiving governments should
  • Take leadership
  • Mobilise domestic resources
  • Improving systems for m and e corruption and procurement
  • Gender equity
  • Donors should
  • Design country systems
  • Give preference to local procurement
  • Accelerate delivery

Matt martin:

  • Few extra points
  • Papers have huge influence on policy makers.
  • Aid vital to development
  • Countries growing by themselves
  • Aid plays catalytic role through providing public goods
  • Countries need to have their own aid policies
  • People in countries need to hold governments and donors accountable
  • Lots of initiatives going on worldwide
  • Aid is getting better at achieving goals
  • More assertiveness on part of dev governance to engage in effective taxation
  • Little progress in mutual accountability
  • Focus on aid effectiveness has been about process but results and process are linked.
  • At bus an should focus on targets that show more real aid will be delivered in the future.
  • Gender equality still problematic
  • New focus on best practice positive.
  • On national level need to lobby national governments to make sure aid gets better.
  • Loads of money wasted on technical assistance
  • Loads of money wasted on parallel systems

Richard:

  • Call for real aid commendable
  • Aid dependence for social revenue problematic
  • How much aid actually going in to social investments.
  • Disaggregated budget does not show the same progress as aggregate report
  • Increasing real aid sharply is desirable but need to see that sustainable processes are put in place so that aid is sustained.
  • Need to deal with global patriarchal conspiracy
  • Need to look at how much leaders actually respect gender macroeconomic models
  • Openness of systems is key
  • Need clearer leadership but need to focus on rights based approach
  • Discourse of privileges is discourse of disempowerment
  • Most leaders in dev countries are patrons.
  • Need more rights for people to contribute to running of their states.
  • Aid in Uganda called gifts but that is dangerous.
  • Citizens need to engage in national accountability processes.
  • Mutual accountability needs to be about in country systems with parliamentarians.

Barbera Lee:

  • Love catchy title and language.
  • Important to focus on bilateral aid.
  • Good to give simple explanations on aid and avoid aaa language.
  • It Is important to name and shame.
  • Traditional measure of aid quality such as Paris declaration is outmoded.
  • Multilaterals don’t have same constraint as bilateral aid.
  • Need to focus on reducing aid dependency.
  • World Bank does not consider itself an aid oriented organisation.
  • Need to look beyond aid.