Liaison Newsletter > LIAISON-Canada Electronic Newsletter #4

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The Reality of Aid

A recent report compiled by an international coalition of non-governmental organizations charges donor governments with failing to live up to their promises to eradicate poverty and promote social development. In the last five years, all but one of the world’s wealthiest 21 donor nations (with the United States the sole exception) reaffirmed their commitment to the UN aid target of 0.7% of GNP. Despite the promises, says The Reality of Aid 1996, these countries have allowed their aid budgets to fall to just 0.3% of GNP, the lowest level since the early 1960s. And further cuts are on the way.

The Reality of Aid, which was released in Ottawa on June 17, also shows that donor nations are still a long way from devoting 20 per cent of total aid budgets to basic needs, an idea which was endorsed, however weakly, at last year’s World Summit for Social Development. Recent OECD figures show that basic education accounts for just 1.2 per cent of total aid spending, and basic health for just 1.3 per cent of OECD members’ combined aid budgets.

OECD countries also continue to devote much of their aid budgets to large infrastructure projects and programmes contingent on purchases being made in the donor country, making it even more difficult for aid to reach the neediest of the needy. Some 45% of Canada’s aid agreements, for example, require some purchases be made in Canada. Said Betty Plewes, President-CEO of the Canadian Council for International Cooperation: "Northern governments must recognize the ineffectiveness of aid when it is used for political and commercial purposes out of line with their citizens’ desire to see aid used to reduce poverty around the world."

The report also tackles the notion that private investment flows to developing countries can replace foreign aid. Private investment tends to favour certain trade partners such as China and other growth centres in Asia and Latin America, and tends to ignore the world’s least developed countries, many of which are in sub-Saharan Africa.

In Canada, as in all other OECD countries, the preoccupation with deficit reduction and fiscal responsibility has had devastating effects on foreign aid budgets. While a 1995 government-sponsored National Forum on Foreign Policy recommended that Canada stop cutting development assistance and begin to move towards the 0.7% benchmark, the movement is still in the opposite direction. In real terms, Canadian development expenditures will have declined by 45% between 1991 and 1998.