Reviving Dead Aid: making international development assistance work

1. Reviving Dead Aid: making international development assistance work Lowy Institute for International Policy | 4 August 2010 JOEL NEGIN | LECTURER IN INTERNATIONAL PUBLIC HEALTH

2. Objective of the Policy Analysis and Presentation • To provide an overview of global and Australian aid trends highlighting why and to whom Australia gives aid and assessing what works and what doesn’t work in international development assistance.

3. Recent media headlines

4. In general, level of awareness about aid is low

5. What is Aid? • Most of emphasis is on funding by government • In Australia in particular, NGOs play a very large role in how the Australian people interact with and understand the aid arena. The 72 members of the Australian Council for International Development together contribute approximately A$1 billion per year of which A$800m comes from public donations.

6. ODA has increased dramatically especially since 2000 US$ Millions

7. Along with most other countries, Australia has increased its official aid budget over the past few years

8. Official Development Assistance 2007

9. Australian Overseas Development Assistance by region (2009-10)

10. Why do we give aid • 1. clear need: Stephen Smith states that “our commitment to development assistance is fundamentally based on our desire and responsibility to help those in poverty.” • This has the support of the Australian people – 58% of whom believe that reducing poverty should be the top priority for Australia’s aid endeavours.[ • 2. international security • 3. economic growth of our neighbours boosts us – rising tide lifts all boats • 4. foreign affairs: Stephen Smith ““our commitment to development assistance is not separate from our foreign policy, it is a critical element of our foreign policy.”

11. Recent Developments in Aid – the MDGs • Improve maternal health • Combat HIV/AIDS, malaria and other diseases • Ensure environmental sustainability • Develop a global partnership for development • Eradicate extreme poverty and hunger • Achieve universal primary education • Promote gender equality and empower women • Reduce child mortality

12. Recent Developments in Aid – New Actors • New actors • Taiwan – US$435m • Turkey – US$802m • Korea – US$892m • Saudi Arabia – US$5564m (double that of Australia) • Brazil, Iran, Malaysia; Cuba in Pacific • China... • Bill and Melinda Gates Foundation - $16 billion disbursed • Global Fund for AIDS TB Malaria - $19 billion approved

13. Recent Developments in Aid Proliferation of Actors

14. Recent Developments in Aid Proliferation of Actors and Complexity

15. Recent Developments in Aid • 1. Developing countries driving their own development agenda • 2. The Global Fund aid model – demand-driven foreign assistance (not decided in Canberra or Washington) • 3. Emergence of micro-finance (eg. Muhammad Yunusand BRAC) and deeper engagement by the private sector

16. Current Debates in Aid Bill Easterly - $2.3 trillion on foreign aid since 1945 with no evidence that it has worked Jeff Sachs - the amount of foreign aid has been too low to achieve stated goals – it needs to double The “Bottom Billion” are limited by conflict, a natural resources trap, have bad neighbours and are landlocked. Aid is not effective in causing a “turnaround” in a failing state

17. Current Debates in Aid Dambisa Moyo

18. Aid Failures • 1. ODA as recorded by the OECD includes for example debt relief which constituted a significant percentage of the 2004-2007 increase in aid • 2. aid directed based on politics rather than need • 3. Boomerang aid: While Australia has untied its aid in 2006 and is making efforts to reduce its reliance on contractors, it still spends more (46%) on such external technical assistance than other OECD countries. Source: OECD DAC (USD million, 2006/7)

19. AusAID reliance on contractors • Corporations get the majority of Australian aid contracts and nearly 85% of the value of those contracts • Big six contractors took in more than A$2.2 billion from 2007-2010 (Cardno, Coffey, GRM, Hassall & GHD, HK Logistics, JTA) • A dramatic shift from NGOs to corporates took place over the Howard years -- before 2003, NGOs got a larger share of contracts Source: Crikey analysis

20. Food Aid Delivered Fertilizer, Hybrid Seed Local Purchase $77 to produce an extra ton of food $670/ton $240/ton

21. Why should Japanese cows enjoy a higher income than Africans? Source: David Sanders, University of the Western Cape, , WHO workshop, May 29 2008; Kaiser Family Foundation, Donor Funding for Health in Low- & Middle- Income Countries, 2001–2006

22. Despite some failures, aid has also been successful • Countries • Vanuatu • Ghana • Rwanda • Malaysia • Projects • Agricultural growth in Malawi • 100% condom usage in Thailand • Mobile banking in Kenya

23. Taiwan: A Development Success 1960-2000: 7% per annum economic growth HOW? Foreign aid Emphasis on education Good infrastructure (roads, railways, ports) Land reform High rates of saving and investment Effective government policies

24. Reductions in Child Mortality 1990: 12.7 million child deaths 2006: 9.7 million child deaths Source: World Development Indicators Online

25. Number of people receiving ARV therapy in low- and middle-income countries, 2002—2007

26. Security Council and Africa Source: OECD DAC (USD million, 2008)

27. The road ahead • The aid budget is increasing – up to $8 billion • And warrants scrutiny and a deeper conversation about where aid goes and how it is spent • AusAID is in the process of changing its systems to reflect changes in the aid world, decentralising decision making, being more responsive to country needs • AusAID has a unique challenge: big player in some regions (Pacific), niche actor in others (Africa and South Asia)