How the changes in the OECD’s definition of aid continue to undermine global efforts against poverty. A statement by African civil society.
Not even half a year ago, world leaders adopted the Agenda 2030, the latest global agreement towards transforming our world for the betterment of all humankind. With its bold pledge to leave no one behind, and a new set of urgent goals and targets which came into effect at the beginning of 2016, the Agenda represents an ambitious and universal programme to bring the world together for the purpose of addressing pressing and enduring global social, economic and environmental challenges in an integrated way.
Yet last week, the OECD’s Development Assistance Committee (DAC) – the body which oversees the OECD’s aid policy and spending – met in Paris to review progress in its “ODA modernization process” and consider the role of development cooperation in the refugee crisis. This meeting caused big concerns that new agreements would be at cross-purposes with the collective effort, and the role and integrity of ODA as espoused in the post 2015 development agenda are at severe risk.
Too many issues still not resolved
As had been feared, the outcomes were largely disappointing, knocking back the credibility of aid and severely undercutting the potential that ODA holds towards realisation of a truly transformed world by the target date of 2030.
As members of African civil society, we are fully conscious that despite the hope held by the Agenda 2030, key global talks held in 2015 left several issues unresolved: the failure by countries of the global north to meet their climate financing responsibilities, the north-south divide on an effective international tax system, and the need to secure adequate levels, as well as preserve the integrity, of aid in the new global development agenda.
Aid for Sub-Saharan Africa is decreasing
Despite a global upward trend in ODA, figures for 2014 show that aid to Sub-Saharan Africa fell for the second consecutive year - back to levels they were a decade ago. This is happening against a background of a long history of developed countries’ failure to meet the UN target for development aid of 0.7% of GNI, recouping on odious debt and decades of turning a blind eye to the scandal of illicit financial flows which continue to bleed Africa of billions of dollars in much needed development finance.
It would have been the DAC’s obligation to make conscious efforts to consolidate the gains made in the series of meetings in 2015 rather than seeking to widen existing fault lines and detracting from the collective vision, less than two months into the life of the Agenda 2030.
Subsidies for the private sector instead of funds for essential public services
Instead, against widespread pressure from civil society and citizens of both the global North and South, the DAC failed to preserve the integrity of ODA, agreeing to expand what can be reported as ODA to include costs whose primary purpose is not directly linked to ending poverty. Agreements reached have opened the door for greater donor abuse of ODA by allowing the spiriting away of aid from deserving public programmes towards subsidising the private sector and supporting ambiguous security-related uses.
The private sector is one of the biggest beneficiaries of the DAC decisions last week. Despite the risks of deploying scarce public finance to prop up the private sector, the agreements open the way for greater use of aid in subsidies to private companies. While the moves in this direction are in part supposed to “ensure efficient use of scarce public funds and targeting (of) projects with high expected social returns, without creating market distortions”, it is worth noting that, thus far, the deployment of public funds in aid of private sector-led development projects in Africa has had mixed results.
The committee’s agreements in this area are littered with loopholes and a series of critical, but yet to be defined, provisions. There is, e.g. the requirement for any aid funds used to support the private sector to be additional to what the private financial sector would have provided anyway. However, it still needs to be defined how to measure this 'additionality'. Also remaining unanswered is how to account for ODA when the public donor money is ‘blended’ with private money or used to subsidise a loan. In addition, donors will be allowed to count public guarantees – the money public entities agree to pay private investors in the event of a failed investment – as ODA.
Rules widely open for interpretation
While a wholesale capitulation may have been averted in relation to greater spending on military and security costs with the retaining of broad language that excludes the financing of military equipment or services from ODA reporting, we remain on a steep and dangerous course. New rules on eligibility of spending ostensibly to prevent violent extremism are problematic. Although couched in the language that such activities would be led by partner countries and be of developmental import, the rules and the purpose for which such monies can be spent is widely open to interpretation, and therefore opens the door for donors to manipulate aid for narrow geopolitical interests at the expense of global development and poverty reduction.
The meeting chose to kick the can down the road on the urgent issue of reigning in the massive amounts of ODA that are being diverted to cover in-donor country refugee costs. The DAC has agreed to set up a process to clarify reporting rules regarding the use of development aid for in-donor refugee costs, and promises that this will be done in a clear, transparent and inclusive manner. We look forward to these consultations and the provision of space for the effective participation of civil society organizations in this future work.
Civil society organisations in Africa are already facing slashed budgets from donors
As the DAC dithers on this issue, it is worth noting that many countries have stepped up the diversion of their aid budgets to cover the costs of refugee reception in the current crisis, primarily in the EU. Impacts are already being felt. Civil society organisations in Africa are already facing slashed budgets from donors, and there is growing uncertainty on the sustainability of current and future development programmes. Estimations from the OECD seem to confirm our fears, as around $10 billion of ODA are expected to be spent on in-donor country refugee costs in 2016.
In this regard we call for quick and decisive action, and reiterate longstanding calls that in-donor country refugee costs should not be reportable as ODA. These expenditures serve to support the economies of donor countries and have no tangible benefits or linkages to the objective of improving the welfare of poor people in their own countries.
Aid can work – and it is needed!
It is worth reminding the OECD, if needed, that aid is still larger than any other external resource flow in 43 countries - most in Sub-Saharan Africa. ODA will therefore continue to be vital for development in most African countries in the short- to medium-term, particularly when it is targeted and administered well, helping more people to access healthcare, education and other essential services, and tackle widening inequality, where governments lack the capacity to extend public services to all.
Invested well, ODA provides people in developing countries with life choices and opportunities that help reduce some of the push factors behind the current refugee crisis. It is therefore a paradox of momentous proportions that funds that could be put in service of poverty reduction, building of capacity for developing countries to mobilise their own resources for development, entrench democratic governance, support the development of local economies and provision of decent work, should be diverted to meeting the needs of citizens of these countries only after they have become refugees in rich countries.
Lastly, we believe that developing countries and civil society organisations – being the ones primarily impacted by how ODA is used – should have a say on what counts or doesn't count as ODA, on further rules-setting, and on operations of the DAC in general. The DAC making such critical decisions behind closed doors is contrary to principles of transparency and accountability. We therefore call on the DAC to move speedily in exploring ways of opening up its work in the future.
- 1. Fanwell Kenala Bokosi, PhD, Executive Director, African Forum and Network on Debt and Development (AFRODAD)
- 2. Akhator ODIGIE, Coordinator Human and Trade Union Rights, African Regional Organisation of the International Trade Union Confederation
- 3. Edward Chileka-Banda, Executive Director, Eye for Development (EFD ), Lilongwe, Malawi
- 4. Rola Badran, Programs Officer, Arab Institute for Human Rights (AIHR), Tunis, Tunisia
- 5. Osai Ojigho, Coordinator, State of the Union Coalition (SOTU)
- 6. Dinah Musindarwezo, Executive Director, African Women's Development and Communications Network (FEMNET)
- 7. Achieng Akena,, Executive Director, Centre for Citizens' Participation on the African Union (CCPAU)
- 8. Hannah Forster, Executive Director, African Centre for Democracy and Human Rights Studies (ACDHRS)
- 9. Martin Tsounkeu, General Representative, Africa Development Interchange Network (ADIN), Chair of the Commonwealth Civil Society Advisory Committee (CSAC), CPDE Focal Point, Cameroon (Development Effectiveness), Coordinator, Global Social Economy Group (GSEG)-Cameroon
- 10. James Njoroge Gitau, Chairman, Kariobangi South Welfare & Slums Housing Association (KASWESHA)
- 11. Corlett Letlojane, Executive Director, Human Rights Institute of South Africa
- 12. Kenneth Nana Amoateng, Chief Executive Officer, Abibiman Foundation
- 13. Yves Niyiragira, Executive Director, Fahamu
- 14. Vitalice Meja, Coordinator RoA Africa Secretariat Reality of Aid Africa Network (ROA Africa)
What you can do now
This entry was posted on 29 February 2016.