Is it time for a rethink on the definition of aid?

Crushed by my humiliation at the hands of Claire Melamed, it would just make matters worse to come back for another round of post-2015 jousting, so let’s move on. I actually quite like blogging about meetings held under Chatham House rules, as they allow me to write about the discussion without worrying about who said what. And to take the credit for anything clever, of course. So last week, I found myself in a heated debate on the future of aid, with a bunch of NGOs and aid boffins. The topic was ‘is it time for a re-think?’ Why? Because the aid world is changing: –          New donors, such as foundations, philanthropists and emerging economies such as China and India are starting their own aid programmes, oftenChina-aid-Cambodian-flood-007 outside the traditional donor club of the OECD DAC –          Increasing diversity of sources of ‘financing for development’, from domestic taxation to remittances to private investment –          Austerity driving many traditional donors to cut aid, either overtly or sneakily, by trying to count lots of non-aid flows as aid, or both (see FT letter here). A reminder that in terms of its increasing aid budget, the UK is really an outlier these days – ‘we are talking in the vicarage, here’. –          The post-2015 discussions raising lots of questions about sustainable development goals and collective action on everything from climate change to tax havens, which have been traditionally fenced off from the aid discussion. Underlying all this was a sense that the definition of aid corresponds to an old order (rich northern countries give cash for big push in the South to get public services functioning and the economy humming). That world has little to do with many of the preoccupations of modern development – fragile states and conflict, climate change, leaky financial systems, migration etc etc. But does that mean aid needs to be overhauled? All were agreed that the current levels of aid, running globally at around $130bn a year, are a precious achievement, the only flow of resources aimed specifically at helping poor people, with a reasonably tight definition, making it easier to defend from dilution. Lots of talk of not throwing babies out with bathwater. (And tanks on lawns, heads in sand – mixed metaphors threatened to get seriously out of control.) Which brought us to the political context – the march of the Austerians means that any decision to open up discussions on the definition of aid (which governments such as Netherlands and Germany are already doing) is much more likely to lead to a watering down/dilution of aid, with lots of other stuff being included – I pointed out that, in contrast to Pandora’s Box, the nasties will fly in when this one is opened. Broadly, aid donors will want ‘what allows you to reach your aid target without spending any more money’, while aid recipients will want to keep everything separate, so additional cash for things like climate finance is not counted as aid. One old hand said ‘and the donors will win.’ Which made me line up on the ‘conservative’ side of the table – the risks are largely downside, so try and resist efforts to redefine aid and defend what you’ve got. Others felt that the debate was already happening, and we had no option but to engage. Everyone was for improved data and transparency (who isn’t?) on non-aid flows, so that donors, governments and others could see what is already happening before allocating their cash (lots of praise for the new DFI/Oxfam Government Spending Watch database of how much poor countries are spending on the MDGs, with seasoned aid officials saying they had spent years trying to get this data out, without success). Another piece of good news is that Development Initiatives are working on an annual report on Investments to End Poverty, which documents all resources available for poverty eradication – watch out for it in September and see some of the material here. [caption id="attachment_14488" align="alignleft" width="300" caption="you sure about this?"]you sure about this?[/caption] Lots of discussion on the 0.7 target, with the technocrats seeing it as arbitrary and weird, and the advocates seeing its use in driving government action, even in countries that haven’t endorsed it, like the US. Interesting suggestions that 1% of government spending (a penny in the pound) might make a more sensible and communicable target than 0.7% of Gross National Income. As for the new southern aid donors, the wonks reckoned that they are not interested in targets, but are interested in what counts as aid – one cited Turkey which, when obliged to count it, found it was giving much more aid than it had realised, partly because it had assumed a narrower. Other interesting discussions on ‘fair shares’ – how you could modify the 0.7 target to take account of a country’s stage of development, perhaps using the UN formula for assessing members’ contributions to its budget. Anyone done that? Overall, I did feel that there is an institutional problem here – at some point the aid discussion needs to be taken out of the OECD, even though it’s been doing a pretty good job so far. Otherwise, it risks being seen as a project of the declining North, with minimal buy in from others. But would the UN (the obvious alternative) do a better job? My conclusion? At this political moment, I think there is a real danger in trying to stretch the debate on aid to include everything that contributes to development (we wonks always like to do this – look at post-2015). Right now the test of any proposal should be ‘what is most likely to increase rather than reduce funds going from rich countries to poor countries for good purposes?’ For example, stretching ‘aid’ to include most peacekeeping fails that test badly  –   irrespective of all the good sense about security and development reinforcing each other. Better to try and keep the aid definition (and debates) tight and work on the rest in other fora – Government Spending Watch, tax havens, climate change etc. We won’t win them all – for example there is clearly substantial overlap between climate finance and aid, so insisting on ‘additionality’ is very unlikely to succeed, but I see little benefit in helping others prize open the Pandora’s Box of aid.]]>

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3 Responses to “Is it time for a rethink on the definition of aid?”
  1. Penny Lawrence

    I agree Duncan but we mustn’t use this as an excuse not to change our thinking or business models within aid agencies. ‘The external context is changing’ is a key driver for change internally …whatever weve tried in fragile states, we have to admit we need to rethink…. but aid is likely to be needed in much like its present ‘grants’ form for a few decades to come….in emerging Middle Income countries and BRICS our model needs to be very different … where aid as grants can potentially get in the way of more sustainable business models. What our partners are asking for is continued support but in getting governments to focus on policies that deliver more for poor people, in convening disparate groups to solve intractable problems, linking to global opportunities and networks, sharing learning on holding large businesses to account etc. This ‘segmentation’ conversation is very active across Oxfam at the moment.

    • Duncan

      Interesting Penny, so the question is how you pick your battles given that a) aid needs improving/adapting to a changing world and b) a lot of bad guys are out to get it. I guess the answer is choosing the right mix of defensive and offensive strategies – defend where you think the downside risk predominates (for example, I would argue, on definition) and offensive where you think the risks are upside (engaging with private sector, new forms of ‘crowding in’ finance, convening discussions between non-usual suspects). But while we are usually aware of (some of) the potential allies, we also have to get better at knowing how our opponents think, and factoring that into our power analysis.

  2. kieran

    I also wonder if from INGO perspective we need to distinguish between Aid per se and role of INGO’s? what the role of an INGO should be in 21C might be different to role of Donors or NGO’s or private sector etc. I can see that INGO’s can become very embroilled in the “corportae” MDG thinking and perhaps lose sight of our own niche and role. I think the Oxfam broker model is a good one and I look forward to learning more.
    Plus as someone who works in LAC I can see on a daily basis how AID and INGO debates do need to develop to take account of MIC realities and that increasingly these realities are wrapped up in politics of “inequality and tax ansd spend policies”

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