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European ODA: It's Not Only About Money

Article no: EN20080601-Article-3.4-2008

European ODA: It's Not Only About Money

2008 is a critical year for evaluating how aid is helping tackle global poverty and inequality. The Doha conference on Financing for Development at the end of the year will review how well the world has done in its global response to confronting the challenges of financing for development agreed in Monterrey in 2002. Donor credibility is on the line as the world waits to be convinced that they will deliver on their many promises made to both increase aid and make it more effective. Lucy Hayes reports

Aid is only one part of the package, but an important one particularly in the poorest countries. The numbers do not inspire much confidence. In 2007 ODA figures fell by over 8% and only five countries in the world have reached their target of spending 0.7% of GNI on development aid. Most countries are also way off target for reaching their commitments made at the Gleneagles G8 and the UN Millennium +5 summit in 2005.

* ?75bn is missing

At the European level, NGOs estimate that at the current rate of progress, developing countries by 2010 will have missed out on ?75bn that they have been promised. According to a recent study, No time to waste, to make their commitments credible, European governments urgently need to put in place timetables that show how they intend to increase their resources each year in order to meet their targets.

But of course it is not only about the money ? it is also about how well that money is being allocated and spent. Aid effectiveness is high on the political agenda this year. Government ministers from around the world will meet at a High Level Forum in Accra in September to discuss what needs to be done to ensure that the 2005 Paris Declaration on Aid effectiveness, translates into sustainable development. This Declaration puts on the table concrete commitments for making aid more responsive, nationally owned and effective ? all issues highlighted as extremely important when the Monterrey consensus was agreed.

Another new joint NGO report, authored by the European Network on Debt and Development (Eurodad), Turning the Tables: aid and accountability under the Paris framework, examines what has been done to improve the quality of aid. Based on seven case studies in Africa, Asia and Latin America, the report reveals that the world?s rich countries have only made patchy progress in making aid more effective for helping the poor.

* Budget support: Potential undermined by conditionality

Ownership ? or developing countries being in the driving seat of their own development ? is widely accepted as being crucial for aid to work. But this NGO report found that aid policies and programmes are still largely being driven by northern capitals. And although there has been a small shift to channelling more money through developing country systems, such as by using budget support, the potential of budget support is being undermined by the continued use of policy conditions attached to that aid. For example the ex-secretary for external cooperation in Nicaragua said that ?in the two years that we have received budget support what has been created is a collage of conditionality that we do not managed to reduce or minimise?.

Reforming conditionality is one of the six priority areas that developing county governments think urgently needs to be tackled to improve the quality of aid. What CSOs are calling for is that donors phase out their use of policy conditions by 2010 ? i.e. that they move away from dictating which policy they think should be adopted in order for the country to receive aid. In Mali for example, the World Bank continues to attach conditions such as privatisation of the public sector (telephone, electricity, cotton, railways) for Mali to receive aid. Conditions should be limited to transparency and accountability areas to ensure that the money is well spent and aid contracts between donors and recipient governments should be developed that clearly state upfront the steps that donors would take if there was a breach of agreed underlying principles such as respect for human rights and integrity, accountability and proper management of public affairs and public property.

Ownership and accountability in aid relations tend to be looked at through a narrow prism which crowds out citizens from decision-making processes. An increasing number of forums for discussing implementation of poverty reduction strategies have emerged where a small cadre of development officials ? from the donor and the developing country government ? sit down to discuss the intricacies of different poverty reduction plans. Donors still need to do more to release control of the policy process. Whilst they can claim a place at the table, they should not choose the menu. Eurodad?s research also illustrates that in most cases, these increasing discussion spaces are either exclusive of civil society voices, or they are managed in a way which does not facilitate real dialogue and input from civil society.

* Technical assistance comes back to donors

Some potentially good processes for improved citizen participation include the setting up of poverty observatories in Mozambique and Honduras for monitoring and evaluating poverty reduction strategies. A recent evaluation of the process in Mozambique highlighted that while ?it is a legitimate first step and tool for citizen participation in (PRSP) implementation and monitoring, (it) has not evolved into an effective participatory mechanism, chiefly because it has been restricted to a consultative body with no channels for feedback?.

Another area which developing country governments have said must be tackled is technical assistance. Despite the fact as much of half of all aid is spent on technical assistance nobody really knows if, where and under circumstances it has contributed to sustainable development. The majority of technical assistance comes back to donor countries through the use of expensive northern consultants. Too often the skills and experience parachute in and out without leaving a lasting impression. A recent report by the European court of auditors found that only ?one-third of the [European Commission?s] projects have been, or are likely to be successful in reaching their objectives.? One man interviewed for the Niger case study went as far as to say that ?after more than 40 years, technical assistance is more part of the problem than the solution?.

Although donors are progressing in some areas in some countries, all can improve their operations. The need for better donor transparency and accountability in developing countries was a recurrent theme in the case studies for Eurodad?s report. It is simply not enough to report aggregated figures in the north for expenditures in the south. Citizens in developing countries need to know what money is being allocated for what sectors, and under what conditions if they are to engage in policy debates. Governments in developing countries also need this information if they are to be able to plan effectively. One Sierra Leonean government representative was having difficulty finding out what donors were spending where on health said ?we want to know what comes into the country. If we have that information, we would be able to rationalise and plan better rather than duplicating things?. The High Level Forum in Accra is the perfect opportunity this year for donors to agree concrete actions to improve their transparency.

* Call for more and better aid

Civil society organisations around the world are mobilising this year around the call for more and better aid. The Financing for Development Summit in Doha at the end of the year will be the culminating moment for the world?s governments to prove to their citizens that they are serious about living up to their promises. The High Level Forum on aid effectiveness in Accra and the UN MDG summit in September will be two crucial stepping stones to getting there. Many of the problems have been identified. The credibility of our leaders is at stake ? they need to take concrete actions to solve them.

* Concord et al., No Time to Waste: European governments behind schedule on aid quantity and quality, 52 pp, Brussels, May 2008. Available at:
* Eurodad, Turning the Tables. Aid and accountability under the Paris framework. A civil society report, 60 pp, Brussels, April 2008. Availably at:

Posted: 1 Jun 2008

Recommended citation: Hayes, Lucy (2008), ?European ODA: It's Not Only Abaout Money?, World Economy & Development In Brief, Issue 3/May-Jun (at