Moving beyond established ideas of donors and aid

Development Policy02 Nov 2011Denis Burke

As the preparations for the HLF4 gather pace, read here a reflection on the lively Busan debate so far. 

The Broker’s Busan debate continues as the preparations for the Fourth High-Level Forum on Aid Effectiveness gather pace. In early September we began inviting expert writers to contribute to the discussion. We are taking this midpoint in the debate as an opportunity to reflect on some of the ideas shared so far.

Beyond traditional donors

In discussing ‘new’ donors, contributors have pointed to the lack of incentives for emerging donors to adopt traditional ODA rules. The need for greater transparency and more local ownership was stressed repeatedly in our discussion of a broader aid agenda.

Dweep Chanana outlined the current mechanisms and priorities of some of the ‘new’ donors. He touched on the point that while traditional aid is – at least in theory – apolitical, new donors tend to have explicitly political or economic aims. Anthea Mulakala, among others, pointed to new donors’ self identification as both donor and recipient. This dual status facilitates a whole new approach to aid where the baggage of colonial history and paternalistic approaches to aid are usually and mercifully lacking. In other words, it is precisely because these donors are not traditional donors that they enjoy a different relationship with recipient countries. Subscribing to traditional donor ideas would affect both the positioning of ‘new’ donors and recipient countries’ expectactions of them. Meeting the OECD-DAC’s monitoring and evaluation standards can be costly for countries with lower capacities and less experience in this field.

Peter Konijn, referring to both Chanana and Mulakala’s postings, described the differing relationship of emerging powers to recipient countries as a ‘competitive advantage’. This competitive advantage has meant success in bolstering trade and investment relations with new partners. It has opened up new markets and access to resources which were, until very recently, dominated by western or local companies. Where Konijn specifically expands on Chanana and Mulakala’s arguments is in his discussion of declining powers. Indeed little mention has been made elsewhere in the discussion of the specific current economic status of long standing members of the OECD-DAC. The relative impotence of traditional donors in forums such as Copenhagen goes some ways towards confirming this waning influence.

Aid effectiveness conversations may take stock of emerging powers but fail to account for declining powers. Some attempts by Europe – in particular – to bring new donors into existing aid effectiveness frameworks have caused resentment. Such a shift in relative position, efficacy and power means that the voices of traditional donors have occasionally been ignored and resented.

There are also questions around mechanisms. Mulakala mentions that both India and China deliver a lot of aid through concessional and interest free loans. Michael Hubbard and Pranay Sinha expand further on this argument but instead point to a need for greater transparency and untying of aid in such arrangements. However, they also note that this need is not purely a new donor phenomenon. Considering the range of public flows to recipient countries that donors – including traditional donors – do not describe as aid, it is difficult to get a full picture of the full extent of flows that are actually used for development assistance.

There are then few incentives for new donors to adopt established practices and advantages to be gained by operating outside of existing frameworks. It is nevertheless crucial to achieving real aid effectiveness that certain core principles be agreed upon between new and traditional donors. Sven Grimm and Christine Hackenesch argue that a few key elements must be agreed upon at Busan. Among the highest priorities where agreement is needed is the improvement of transparency and accountability to actors in developing countries. Philippa Brant demonstrates how some elements of Chinese style South-South Cooperation are beneficial to other developing countries. The challenge, she says, is to find a path that protects the positive elements of both Chinese-style aid and the tried and tested traditional donor practices, without neglecting the needs and desires of all actors, especially communities and governments in developing countries.

Simon McGrath also comments on the need for meaningful national ownership. He highlights the absence of internationally established ‘best practices’ in the practices of traditional donors. McGrath looks to the idea of capacity building, as suggested by UNDP, as a realistic, if complicated alternative. It needs to be constructed iteratively, he says, by an active learning process that seeks to learn how to make good national policies by engaging stakeholders in making policies and reflecting on them.

Beyond aid

While the conversation around new donors included a wide range of topics, our discussion around expanding the aid agenda was even broader. Climate finance, education, conflict, migration, democratic institutions and civil-society were all carefully analyzed by contributors from a broad range of professional backgrounds.

Judy Cheng-Hopkins, UN Assistant Secretary General for Peace Building, highlighted the vital importance of effective conflict resolution in development. Post-conflict states are not a significant enough part of the development conversation. Incorporation of a set of peace building goals alongside the MDGs can only help to boost both peace-building and development effectiveness efforts. More conversation around transparency, self-reporting of peace-building and state building, and greater inclusion of civil-society is essential if conflict – and post-conflict situations – are not to continue to sideline and diminish development efforts. Civil-society strengthening was a recurring theme among authors on this topic. Jennifer Lentfer argued that donors need to put local organizations at the heart of their development strategies. Local indigenous organizations already fill gaps in government and international aid during peace time, war time and following disasters. Local organizations have vital expertise on how poor people cope day-to-day. They have capacities and skills that even the largest aid organizations lack, such as familiarity with local communities and intimate knowledge of local culture, politics and values. She outlines the counter-argument to this line of thinking, namely that channeling funding into local organizations can cause difficulties with monitoring which has, in the past, led to concerns about where aid flows go. She invites readers to consider the relatively small losses associated with some local organizations absconding with the cash, versus the wastage involved in existing aid systems.

Hans Zomer also commented on the need to put civil-society and NGOs at the centre of an effective aid architecture. He argues that empowering and investing in NGOs is the best way to make a real difference. It seems that when it comes to NGO work, donors want to pay for “life saving” projects, but not for the type of programmes that bring about real, lasting change for poor people. Poverty is not just about lack of money or economic growth, but also about making lasting changes to a people’s overall welfare. xxx Touching on the conversation about new donors, Akemi Yonemura also argues that national development plans and local priorities need to be given top priority. Both traditional and new approaches, she argues, are not necessarily needs-based. Ideas often come from donors. Recipients provide the information that donors want to hear and implement projects that donors recommend (or exclusively fund) until the donor money is exhausted. Thus some local concerns remain neglected, a sentiment echoed by Sundar Kumar Sharma. Both the donors and recipients are uncomfortable with the extent to which development is donor-driven, but phasing out this relationship is remarkably difficult once it has been established. Furthermore, she argues that the flow and utilization of new donors’ aid that is not currently included in the OECD-DAC’s system, must be incorporated in a single system.

Where mutual accountability mechanisms are put in place they need to demand more from donor countries than ODA transparency, Rob Annandale said. A serious analysis of the impacts of the self-interest of donor countries on those who do not belong to their electorates is sorely needed and overdue. Privileged people have a negative duty not to harm the world’s poor, he says, that is greater than the positive duty to provide them with aid.

Stephen Yeboah describes the extent of this problem when he describes the leverage he perceives aid giving over local politics. He maintains that aid is not working and is serving to make the rich richer and the poor poorer. He cites the UK’s threats to cut aid to recipients with anti-homosexuality laws as proof that donor countries are prepared to use aid as a tool of foreign policy.

Jeff Balch also argues that an emphasis on strengthening democratic institutions is vital for success at Busan. Sincere, pragmatic exit strategies must leave development decisions in the hands of those elected to protect the citizens’ interests. David Ellerman examined the effects of the migration of high-skilled and low-skilled people from less-developed countries to the developed world on economic development. Is the loss of talented and energetic people in the developing country more than counter-balanced by the reverse flow of remittances and returning emigres with financial and human capital gained in the developed world? He further discusses the challenge posed by migration’s potential to undermine cooperative approaches in developing countries: How can national policies effectively build cooperative approaches that offset the far larger pay offs to those who do not cooperate because it is far more worth their while to move to the developed world on a permanent basis? Jiesheng Li brought together many of the threads of this conversation in his article ‘We’ll always have Paris‘ (if there was a prize for best title in the discussion…). He points to securing fragile states, climate change and migration as interconnected development issues that donors need to get serious about tackling. He proposes funding for each, believes that climate change needs to be part of every country’s development plan and suggests that donors and stakeholders see remittances as a possible future financial resource if developed countries begin to reduce their ODA. A further contribution covering climate and finance mechanisms came from Nicholas Rosellini. Climate change is huge and growing. The stipulations, conditions and requirements tied to that finance are also huge and growing. Busan will deliver high level agreements on taking forward development effectiveness principles. It is essential that these principles are relevant to climate finance. The high level meetings of the United Nations Framework Convention on Climate Change taking place a few days later in Durban, should aim to agree on the next steps in the climate financing architecture, a common approach to development effectiveness principles and a commitment to exchange and learn across climate finance and development effectiveness communities.

We will continue this debate until the Busan Forum begins at the end of November. We hope you will join us!