This occasional paper focuses on China’s and the EU’s aid policies towards Africa by examining their different approaches to aid and the internal logic behind these differences in order to facilitate mutual understanding. It points out that, due to their different development stages, different development models and different aid co-operation experiences in Africa, China and the EU have developed different aid principles, priorities and modalities with different logics. China advocates more ‘co-operation’ than ‘aid’ itself, so the country’s main principles guiding the way in which it manages aid are no political conditions attached to aid provisions, two-way co-operation and a win-win formula. The EU considers aid as a one-way instrument to promote Africa’s good governance and sustainable development, so the key principles that it applies are conditionality, one-way benevolence and co-responsibility. However, the paper highlights that these different logics behind the EU’s and China’s policy approaches are not necessarily contradictory. It proposes that both sides should shift perspective, putting aside the perception of ‘competing models’, to study the points of overlap and thus open a new window for co-operation. Considering the wide perception gap that exists between the two sides, the author recommends that a practical and pragmatic way to advance co-operation may be through focusing initially on second track approaches.
Resource allocation and health financing
Members of the Organization for Economic Co-operation and Development's (OECD) Development Assistance Committee (DAC) gave US$121.5 billion in bilateral aid in 2009, reaching a historic high, but the gap between commitments and promises made in 2005 is widening, according to this report. In 2005 DAC external funders collectively promised to commit 0.56% of gross national income to aid by 2010, but reached just 0.31% in 2009. Though aid commitments have continued to increase, the rate of increase has dropped off in the past few years, making external funders increasingly off-track. DAC external funders gave US$27 billion to Africa in 2009, an increase of 3% on 2008, but this is still less than half of the extra aid they promised at Gleneagles in 2005. Norway, France, the UK, Korea, Finland, Belgium and Switzerland all increased their aid commitments, while Japan, Greece, Ireland, Spain and Portugal, among others, reduced theirs. The largest external funders by volume were the USA, France, Germany, the UK and Japan, but just five countries met or exceeded the UN overseas development aid target of 0.7% of national income: Denmark, Luxembourg, the Netherlands, Norway and Sweden. External funders pledged to increase aid to US$130 billion by 2010; but the report predicts they will fall short by US$78 billion (both figures in 2004 US dollars).
This paper looks first at the relevance of sector approaches and their overall effectiveness, then on the systemic challenges that they entail. This is followed by a closer look of the links between sector approaches and global agendas, and of sector approaches in fragile situations. Operational aspects, the particular challenges related to policy/political dialogue, accountability, monitoring and quality assurance are presented, and the issue of modalities – budget support, pooled funding and/or projects – is touched upon. Finally, the changing roles played by embassy staff are discussed. Although external funders are expected to respect sovereignty and not to interfere in internal affairs, this paper argues that in reality they do interfere, no matter what they do – the money they bring to the table will, no matter what, modify power structures and strengthen some actors while weakening others. The challenge is therefore to intervene in a way that does not enter into big (party) politics, but aims at strengthening the domestic sector system of politics, policies, knowledge and institutions that can bring the sector forward in a direction that fits both donor objectives and the objectives of domestic stakeholders.
The focus of this report is on sub-Saharan Africa because this region appears to be particularly lagging behind in the sphere of the provision of social protection, being at the same time more vulnerable than other developing areas. More people live below the poverty line, more people die of HIV or malaria, income distribution is very unequal, more people depend on volatile agriculture, the climate changes threaten to bring about more dramatic natural disasters, state institutions are often unrecognised or illegitimate, economies are less diversified and violent conflict is rife. In the aftermath of the three crises (food, fuel and financial), which in a short time span have hit the world economy, sub-Saharan Africa has little resources to react. The European Union, together with other external funders, this paper argues, should pursue a development policy that reinforces social protection and, in particular, can help sub-Saharan African countries to build resilience through social protection, and break out of vicious circles and poverty traps. However, the paper cautions that any action can interfere with ownership; furthermore, overseas development assistance can itself become a source of vulnerability if the initial commitments in terms of amounts, targets and time horizon are not fulfilled.
Is the sector approach still relevant to development assistance and aid given the track record and the rapidly changing global context? Or is it time – again – to look for something new that might work better? This paper argues that the sector approach continues to be relevant, but that it needs to become a 'sector approach version 2.0'. This requires significant – and difficult - changes in how external funders work. The new approach has to make where connectivity, collaboration, communication and horizontal knowledge acquisition central to its aims. This entails addressing five closely linked challenges: accepting the complexity of the task; working proactively with the new global interconnectedness; paying more attention to knowledge, dialogue, quality and results; adapting the sector approach to the specific context and sector, particularly in fragile situations; and gaining leverage as 'brokers' of knowledge and agendas.
This report examines the evidence for and against foreign aid, and finds that, while there is much room for improvement, good quality 21st century aid not only saves lives, but is indispensable in unlocking poor countries’ and people’s ability to work their own way out of poverty. It makes a number of recommendations. Countries and stakeholders should ensure aid is channelled to help support active citizens, build effective states as a pathway to reducing poverty and inequality, and support diverse forms of financing to contribute to development. They should deliver aid through a mix of models, including increasing budget support wherever possible, and ensure that a percentage of aid flows are channelled to civil society organisations, to enable people to better hold their governments to account. Also, there is a need to dramatically improve the predictability of aid, by increasing the proportion of aid that is general budget support where possible and by sector support where general budget support is not an option, and limit conditions attached to aid to mutually agreed poverty indicators. Rich countries should give at least 0.7% of their national income in aid, and set out how this target will be reached, with legally binding timetables. Furthermore, the global community should reject a culture of corruption, uphold human rights standards, and act in ways which are transparent and open to scrutiny. It should also provide legal environments in which civil society organisations monitoring government activities can flourish and respect the independence of non-government bodies like audit offices and the judiciary.
This article argues that, as a result of the current financial crisis, there has been a resurgence of commitment to transparency in overseas development aid (ODA) in all areas and greater focus on the effectiveness of spending. It notes that progress on ODA transparency can occur swiftly and the impacts can be significant. Eighteen donors are reported to have signed up to the International Aid Transparency Initiative (IATI), including major multilateral and bilateral donors like the World Bank and the United Kingdom’s Department for International Development (DFID). The process of defining the standards is ongoing, calling for common standards of transparency, including publication of what is funded. One of the consequences of lack of transparency on ODA resources is the issue of donor ‘orphans’ or ‘darlings’ - where aid flows disproportionately to a particular region, sector, issue or ministry. Greater levels of information and transparency is needed on ODA benefits to civil society, including non-governmental organisations, parliamentarians and direct beneficiaries. This is a prerequisite for not only holding donors and service providers accountable over commitments they have made, but also for citizens to hold their governments to account over discrepancies between ODA received and spent on behalf of beneficiaries.
The academic literature on budget institutions in low-income countries is scarce, and originates to a large extent from the field work of donors and development agencies. This study is intended to fill that research gap. It has developed a composite index of the quality of budget institutions for 72 low-income and middle-income countries drawing upon empirical studies, budget survey databases and assessment reports, supplemented by case studies and other reports and data from the International Monetary Fund (IMF), the World Bank and donors engaged in capacity building in low-income countries. It found that, in general, budget institutions in low-income countries are much less developed than in developed and emerging market countries, and display widely different characteristics that reflect country-specific factors, such as colonial heritage, and a variety of cultural and administrative traditions and practices. Evidence suggests that weak capacity, ineffective civil society institutions and political/economic factors act as a severe constraint on the progress of modernising budget institutions. In low-income countries, numerical targets and formal constraints on spending and fiscal deficit that exist on paper may not be binding in practice because mechanisms that make adherence to budget rules and procedures transparent, and hold government ministers and officials accountable for their decisions, are usually not well established. Therefore, this study argues, enhancing the transparency and comprehensiveness of the budget process, and public dissemination of budget documents, even in the absence of formal rules, may be particularly important.
This study's main objective was to estimate the cost to the health system of obstetric complications due to female genital mutilation (FGM) in six African countries. A multistate model was used, which depicted six cohorts of 100,000 15-year-old girls who survived until the age of 45 years. The risk of obstetric complications was estimated based on a 2006 study of 28,393 women. The annual costs of FGM-related obstetric complications in the six African countries studied amounted to I$ 3.7 million and ranged from 0.1 to 1% of government spending on health for women aged 15–45 years. In the current population of 2.8 million 15-year-old women in the six African countries, a loss of 130,000 life years is expected owing to FGM’s association with obstetric haemorrhage. This is equivalent to losing half a month from each lifespan. Beyond the immense psychological trauma it entails, FGM imposes large financial costs and loss of life. The cost of government efforts to prevent FGM will be offset by savings from preventing obstetric complications.
The goal of this paper is twofold. First, the paper extends the analysis evaluating the performance of aid agencies by creating several best and worst practices indices, including an overall aid agency index. It does so by relying on a newly available dataset and draw from the benchmarks established in the previous literature where different measures of aid transparency, specialisation, selectivity, ineffective aid channels and overhead costs are utilised. Secondly, the analysis attempts to explain agency behaviour, addressing why agencies behave the way they do. This section relies on bureaucracy theory to address the capability of agencies to achieve best practices, highlighting both economic and political constraints.