Emerging countries: key at Busan, critical to Africa

Development Policy01 Nov 2011Violaine Beix

As the High Level Forum on Aid Effectiveness, to take place in Busan approaches, it is difficult to ignore that the global context has shaped the world of aid into a new ball game. Six years after the Paris Declaration – which promised to improve the quality of aid and its impact on development‘ – and three years after the Accra Agenda for Action of 2008 – which sought to accelerate progress towards the Paris Declaration principles – we find ourselves at a point ridden by new questions and challenges.

The Forum will inevitably be a key opportunity to review what has been accomplished, identify best practices which can be replicated and strengthen Paris and Accra‘s commitments. But more importantly, it will also be an opportunity to explore, debate and hopefully decide on how to respond to new developments and situations that have taken more relevance in the past years.

Take for instance the fact that some countries seen as traditional aid recipients, are now also acting as donors. China is a leading contributor to Africa‘s development but is also an aid recipient of the OECD-DAC. The rise of South-South cooperation and its implications on aid flows should be discussed and better understood because whether the OECD measures these flows or not, they are altering the global financial balances. BRIC countries are at the forefront of this movement, and the time has clearly come to find a way to include them not only in the debate but in the overall tracking of aid and development flows. This is what Jonathan Glennie and Andrew Rogerson of ODI argue and they are right when they say that: we must ―reach out globally‖ and extend the mandate of the Paris Declaration.

The Paris Declaration also does not account for aid derived from new and innovative sources of funding, such as climate change finance. These new cross-border financial flows are playing an increasingly important role in development, but we must guard against them being treated as traditional ODA – a risk that is heightened by the pressure of the continuing global economic crisis. Because these new financial flows are often fragmented, complex and confusing, it is more important than ever to ensure greater transparency and find ways to monitor them in line with the Paris Declaration.

So, what does this mean for Africa?

The Addis Ababa Statement on Development Effectiveness issued by the AUC and NEPAD in September is clear on Africa‘s position: Aid is necessary to end aid. Its recommendations to African leaders range from increasing policy coherence and improving national resource mobilisation to building strong and transparent institutions that can improve budgeting, managing and reporting. Crucially, it calls for accelerated regional integration to strengthen aid effectiveness and harness the full impact of the BRICS. This is vital as their presence on the continent grows stronger and generates new sources of funding for African development.

Africa must have a stronger and more unified voice during the discussions. In particular, African negotiators need to request clear and transparent guidelines for climate financing and other financial flows from emerging markets. This will help to ensure that contributions are fair and appropriate and that, preferably, they take the form of grants rather than loans.

It is also becoming ever more evident that a wider range of stakeholders need to be consulted when drawing up national and regional development strategies. National government strategies can become distorted by a desire to fulfill donors‘ requirements or simply a shortfall in reliable information on what is required. The result is that the policies do not match the needs of the very people they aim to assist. The Paris Declaration is clear that effective ownership of development policies must include greater involvement of the private sector and civil society. The Busan Forum can lead the way on this important consideration.

If the Busan Declaration focuses solely on ensuring that DAC donors continue to deliver on their ODA promises, it runs the risk of becoming less relevant. Busan needs to pay special attention to the increasingly important contributions to development assistance from emerging markets themselves, the shape new financial flows are taking and what this means to all stakeholders. If anything, Busan should be a great opportunity to raise these critical aspects of development effectiveness that were largely overlooked in the Paris Declaration. As for Africa, yes ―it will take more aid to end aid, but the role of remittances, foreign direct investment and other financial flows may be even more important. At least that is what could be happening in some places. With better monitoring of development effectiveness, we may know for sure.