Giving more and better aid

By Ari Schwartz

Date: 14/07/05

Goals: Reduce by half the proportion of people living on less than a dollar a day; reduce by half the proportion of people who suffer from hunger.

The European Commission yesterday (13 July) approved a statement on development policies in an attempt to improve the EU's performance. While the EU is already established as a significant player in funding development projects, the Commission's aim is that the EU should increase spending and improve both delivery and effectiveness.

The focus in increasing aid is on the target of 0.7% of gross domestic product (GDP), a level which is deemed necessary to achieve the Millennium Development Goals (MDGs). Figures from the Organisation for Economic Co-operation and Development suggest that in 1994, only the Netherlands (0.74%), Sweden (0.77%), Denmark (0.84%) and Luxembourg (0.85%) were above this target. The EU's biggest economies, Germany (0.28%), the UK (0.36%) and France (0.42%) were all well below. Italy's performance was a woeful 0.15% of GDP. The EU's interim target is 0.56% by 2010.

Thinking on development aid is perpetually changing. There are constant discussions about the merits of making aid conditional.

The campaigning non-governmental organisation ActionAid argues that the tying of aid to conditions exaggerates the true size of the aid. A donor country can also attach heavy administrative burdens and costs to money it gives, so reducing the effective aid.

There is a growing tendency for the EU to give developing countries budgetary aid instead of seeking to micromanage all development projects: that is, to give money directly into the control of national treasuries. The Commission's statement yesterday (13 July) says: "General or sectoral budget support will play an increasingly predominant role in the implementation of European aid."

But not everyone applauds this move. Mark Baillie of the free-market International Policy Network says that: "There should be no role for governments in Africa's development." He believes that national administrations are part of the problem given that "$400 billion (@329bn) has gone to Africa in aid and people are poorer now than they used to be".

His is an extreme position, but public private partnerships (PPPs) are becoming increasingly popular. Ohleoma Obibi, director of the Alliances for Africa charity, agrees that public private partnership is important for achieving overall development. The UK's department for international development is among the national administrations that has embraced PPPs. But whatever the private sector involvement, there is still a need to devote more taxpayers' money to overseas aid. If the EU states are to meet the MDGs, they will have to increase the share of their budgets that they devote to development, albeit against a background of constrained public finances.

Article looks at what the EU does to achieve the Millennium Development Goals concerning poverty reduction and the fight against hunger: 'Reduce, by 2015, by half the proportion of people living on less than a dollar a day; reduce by half the proportion of people who suffer from hunger'. Author comments on levels of development spending across the EU and about European Commission plans to increase spending and improve both delivery and effectiveness.