SCHOOL OF PUBLIC HEALTH

Reviving Dead Aid: making international development assistance work Lowy Institute for International Policy | 4 August 2010

JOEL NEGIN | LECTURER IN INTERNATIONAL PUBLIC HEALTH

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.

Recent media headlines

In general, level of awareness about aid is low

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.

ODA has increased dramatically especially since 2000

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

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0.6ODA in constant 2009-10 AUD millions - left axis

ODA as % of GNI - right axis

Official Development Assistance 2007

Australian Overseas Development Assistance by region (2009-10)

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.”

Recent Developments in Aid – the MDGs

1. Eradicate extreme poverty and hunger

2. Achieve universal primary education

3. Promote gender equality and empower women

4. Reduce child mortality

5. Improve maternal health

6. Combat HIV/AIDS, malaria and other diseases

7. Ensure environmental sustainability

8. Develop a global partnership for development

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

Recent Developments in Aid Proliferation of Actors

Recent Developments in Aid Proliferation of Actors and Complexity

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 Yunus and

BRAC) and deeper engagement by the private sector

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

Current Debates in Aid

Dambisa Moyo

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)

Iraq 4266

Afghanistan 1459

Sudan 725

Colombia 562

Egypt 541

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

Food Aid Delivered

Local Purchase

Fertilizer, Hybrid Seed

$670/ton $240/ton $77 to producean extra ton of food

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

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

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

Reductions in Child Mortality

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Deaths per1,000 live Births

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1990 1995 2000

2005 2006

Source: World Development Indicators Online

1990: 12.7 million child deaths2006: 9.7 million child deaths

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

Security Council and Africa

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Source: OECD DAC (USD million, 2008)

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)