Public Statements

The Aid Agenda
There is widespread evidence of public support for increasing foreign aid, and the channels for effective aid delivery are clear. So why is it so difficult for our government to live up to its international commitment?

By Steve Mason

This week, world leaders are gathering in Monterrey, Mexico, for the United Nations' International Conference on Financing for Development. Their goal: to promote international cooperation in reducing world poverty.

The need is clear: 4.6 billion of the world's 6 billion inhabitants live in developing countries. The challenges facing this majority are huge - almost a billion are without adequate nutrition, 2.4 billion do not have access to basic sanitation and 325 million children who should be in school are not.

The Financing for Development Conference presents a real opportunity for addressing these disparities by focusing on several key areas including the mobilization of financial resources within developing countries, the mobilization of foreign direct investment, improving the equitability of international trading regimes, debt relief and increasing official development assistance (ODA).

This last focus has been the subject of particular debate in Canada and other donor countries. In 1970, the international community agreed to a target of annually contributing 0.7% of GDP to foreign aid. For the most part, donor countries have come nowhere near this target and in almost all cases the amount of aid that has flowed from rich countries to poorer ones has decreased dramatically during the last decade. Canada's aid to developing countries was 0.44% of GDP in 1990; in 1999 it was only 0.28% of GDP - about $55 per person - placing Canada's development assistance a sorry 17th out of the 22 OECD countries.

The two arguments most commonly used to justify this dismally low amount of ODA are a lack of public support in donor countries and a lack of evidence that the aid is actually effective. Both arguments are without a solid basis.

In a survey recently cited by Unicef, respondents in the US indicated that while they thought their government spent too much on foreign aid, they estimated the amount to be 20% of the federal budget. When asked what they considered to be a reasonable amount, the average answer was 14%. The actual amount spent by the US on foreign aid is 0.3% of the budget.

Some detractors have attempted to paint a picture of low support for aid by surveying Canadians on their spending priorities, lumping ODA in with such hot domestic issues as health care and education. The comparison is not fair. It should not surprise any of us that Canadians care most about the issues which affect us most directly and which are most dwelled upon by domestic media. What counts is that Canadians do support foreign aid, regardless of the fact that it may not be one of their top priorities.

In terms of aid effectiveness, the World Bank has conducted several detailed studies which show that when aid relies on policies that recipient countries' governments and civil societies have helped formulate, it can have a strong direct impact on reducing poverty.

The statistics which tend to support the argument that aid is not effective are often misleading. For example, while child mortality rates may not appear to be decreasing in developing countries at anywhere near the rate at which they are falling in developed countries, such figures often ignore the much higher rate of population growth in developing countries. This skews the results and makes accurate comparisons difficult. As another example, recent figures indicate that one dollar of assistance targeted to rural development raises rural development spending by only 11 cents. But this is not because of corruption or misuse of funds, but rather because aid frees up the government to use its other resources as it wishes. Thus, aid funds the public sector in general.

In fact, some of the obstacles which hamper aid effectiveness actually originate in donor countries. These include the widely criticized practice of tying aid to the condition that delivery must draw on firms in the donor country, and the highly complex and confusing reporting requirements which compel recipient countries to incur heavy administrative costs.

In fact, the groundwork and systems for ensuring aid effectiveness have been largely put into place by the United Nations, which has been carefully monitoring and evaluating the delivery of aid for years. Its research suggests that nearly two billion people in dire poverty live in countries where more aid would speed poverty reduction, and that ODA remains crucial for the 49 least developed countries.

In Mexico this week, donor countries will have the opportunity to make significant progress in reducing world poverty by committing themselves decisively to meeting the agreed-upon 0.7% ODA target. The need, public support, available funds and channels for guaranteeing aid effectiveness are all in place. It is now incumbent upon governments - including our own - to translate intentions into actions.

Steve Mason is the Executive Director of the United Nations Association in Canada.