Overview of Development Assistance

Antonio Tujan Jr

Aid and the right to development  Post-war context and national struggles for independence and liberation  Post-war reconstruction and war reparations  Right to independence and development  International community responsibility for peace and development, end disease, famine and war

Development cooperation and aid  Based on common goals to end famine, disease and poverty and against war  Based on common principles of equality, mutual cooperation, and benefit  Based on shared values and goals of cooperating parties  Covers a wide range of activities

Official Development Aid

 To compensate for temporary or consistent lack of resources for development  Different from humanitarian aid, military aid  Material, services or financial form  Loans or grants?

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Development Cooperation and Aid

Development cooperation and ODA as essential contribution to support poverty reduction and development UN resolution 2626 of October 1970 to increase aid to 0.7% of GNP by mid 70s Monterrey commitments MDG and Millennium Declaration Aid quantities remain seriously deficient

DAC members' net ODA 1990-2005 and DAC Secretariat simulations of net ODA to 2006 and 2010

Components of net DAC ODA, 2000-2005

Development Aid and Debt

 Grants are preferred form of financial assistance  Grants are essential in context of antipoverty  Loans as forms economic cooperation  The issue of compounded interest

Neocolonial debt crisis

 To finance BOP deficits due to neocolonial trade and investment  To finance misprioritized development loans  Compounded interest  Neocolonial debt crisis and new loans for refinancing/debt service

Debt crisis and development finance

 Debt crisis as counterforce in destroying development in general and for highly indebted countries  Debt crisis as determining factor in development finance strategies and management  Debt cancellation as essential strategy accompanying increasing aid and reforming aid effectiveness

Aid relationship Is aid achieving development?

Only 32% of aid is available to recipient countries in 2004, from 39% in 2000 Problem? The bulk goes to donor-directed technical cooperation, refugees in donor countries, foreign student costs in donor countries, the cost of tied aid, emergency relief and administration costs

 Development strategy and implementation Is aid reducing poverty and achieving development?

Development strategies and program effectiveness – Human rights based and empowered development  Aid management and delivery – Free for all competition, weak country ownership, transaction costs and duplications, etc.

Tied Aid

     Estimates that reduced aid tying to only 9% in 2004 from 41% in 1990 But figures do not reflect US which is estimated at 72% Tying aid to foreign consultants ensures results plus employment of donor staff Tying aid to donor country supplies – a system of export, subsidizing donor country production Impact of tied aid

Conditionality

     Conditionality is contrary to ownership Conditionality is contrary to human rights and sovereignty of people Distinguish fiduciary responsibilities and policy conditionality Benchmarking as another form of conditionality Common cso position on removal of conditionalities

Structural Adjustment Conditionality    Promotion of neoliberal strategies in 1970s – Monetarism – Export promotion from import substitution model Washington consensus – Financial prescriptions – Neoliberal policy prescriptions Post Washington consensus – PRSP, PRGF, PSI – Consultation – governance

Redefining ownership

 Country ownership and not government only  Implies accountability of government to citizens  Ownership means leadership of government in aid partnership  Capacity building for ownership

Accountability

 Accountability mechanisms  Peoples participation as key element  transparency

Development finance and ODA Advocacy  Debt repudiation and cancellation   ODA policy to increase aid – Monterrey commitments – Millennium Development Goals ODA reform or effectiveness – Development effectiveness – Aid effectiveness – Paris Declaration

Development finance and ODA Advocacy  OECD aid effectiveness process to Ghana 08 HLF III  UN Monterrey process (Doha meeting)  UN MDGs process  UN Development effectiveness forum