Archive for the Debt Category

To coincide with the UN General Assembly gathering to assess and (hopefully) accelerate progress on the Millennium Development Goals, the Guardian newspaper has created a new Global Development site, which is jam-packed with MDG discussion, dissection, analysis and argument. Including a very useful clearing-house of the most recent MDG reports.

The site is co-sponsored by the Bill & Melinda Gates Foundation – which seems to be finding good ways to voluntarily redistribute some of Bill’s wealth. Nice to see a billionaire’s cash being spent in a big way in the fight against poverty.

However, I suspect it means that you won’t read any articles on the site questioning whether major sector-specific donors and global funds (like the Gates Foundation) distort global poverty spending and development priorities or undermine national health systems and integrated whole-of-government approaches to tackling poverty.

ODI has a new site up as well – Development Progress. The site aims to document national success stories in development and poverty reduction, so I’ve bookmarked it to read when I need encouragement and inspiration.

So, it’s over, according to Bill Easterly, writing at his aidwatch blog. The Millennium Development Goals (still 6 years away from their 2015 target date) will not and can not be achieved. The source for his prophecy? The 2009 Millennium Development Goal progress report, which is available here (5mb pdf).

Sure enough, the report makes sobering reading for campaigners who have been calling on governments to “spare no effort” to achieve these 8 anti-poverty goals – as they promised to do. Very few of the goals are on track to be achieved at the global level, though there is progress on several – for example, increasing primary education (88% children of children worldwide enrolled in 2007, up from 83% in 2000), reducing child mortality, and halving the proportion of people without access to safe drinking water (which the world is on track to achieve).

Dishearteningly, the global financial crisis and food price rises already are reversing, or threaten to reverse, progress against the targets of Goal 1, to reduce extreme poverty and hunger.

Now Easterly makes some good points about accountability and the need for a clearly defined theory and strategy for change in policy advocacy and campaigning. All of this needs to be taken seriously. Refreshingly, he also makes his critique in a way that isn’t entirely negative. For example, he writes some nice things (albeit, in “silver lining” mode) about the global plan, and advocacy campaign, for large-scale poverty reduction…

The inspirational enthusiasm and increased efforts surrounding the MDGs probably did contribute to progress on specific efforts and some partial success stories (mainly in health and education), as pointed out in the UN MDG 2009 report. That can give some hope for the future and some solace to the hard-working and deeply committed participants.

But overall, his contention is that we should give up on the MDGs and focus on something else that may bring some good – he describes the (sure, still 6 years away but, to his mind, inevitable) failure of the MDGs as a “tragedy” for all who contributed to campaigns for the achievement, and a greater tragedy for the world’s poor.

I take issue with his analysis. First, there’s the principle of giving up on a project half-way through (doing a Palin?) because it appears likely that not all of the goals will be achieved in full. Clearly, on current progress, many of the goals won’t be achieved in full, though I don’t see that Easterly really makes a strong case that they can’t be. For example, his assertion that “the MDGs’ attainment depended all along on global and national economic growth” (and supporting assertion that this is beyond any government’s control) seems pretty bald. All of the goals were dependent entirely on global and national economic growth? In every region?

Second, his call for focused and strategic advocacy that identifies who is responsible for an injustice, why it is a problem that needs to be addressed, and what they should do about it, is a good one, but I don’t actually see it as a criticism of the Millennium Development Goals themselves. I certainly don’t see it as a criticism of the civil society campaigns that have developed around them.

Campaigns like Make Poverty History in Australia, and scores of other national campaigns around the world, have taken the shared vision and inspiration of the MDGs, they’ve used analysis and information from MDG efforts and they’ve heaved mightly on the strategic lever of a widely-publicised international commitment to seriously tackle global poverty. That is to say, MDG campaigners haven’t, as far as I can tell, remained vague and unfocused about who can deliver change, why they should and what they should do to deliver the change. In each national context, they’ve developed focused advocacy campaigns and asked their governments to act on things that were in their power. They broke the goals down, they got specific, they adapted their policy asks to their national contexts, and they applied pressure to get what they were asking for. These campaigns have, I would say, genuinely influenced discussion and action for pro-poor development at the international level and at the national level – in countries both rich and poor.

Third, there are more positives from the campaign than Easterly makes space to credit in his post. One story that he doesn’t mention is the unprecedented commitment (and investment) to increase aid among the world’s donor nations. Where aid flows from OECD countries had declined in the 1990s, last year they reached their highest ever level of USD 119.8 billion.

And as for debt, sure, there is still plenty of unfinished business to deal with the debt burden of the world’s poorest countries, but by the end of 2008, 35 countries had received USD 102.6 billion (400 kb pdf) of debt relief, and poverty-reducing expenditure was increasing among these countries as a group. I think it’s likely that these  commitments, along with the new levels of public interest in and support for aid and debt cancellation, have been driven to a very large extent by campaigning around the Millennium Development Goals.

Finally, some of his reasonable points about accountability and the likelihood of being able to hold all governments accountable for the achievement (or not) of the MDGs, seem to build on the assumption that it is better for nations to wear their indifference to poverty on their sleeve rather than hypocritically hide it behind an international agreement they have no intention of honouring. It’s a fair point in a way, I guess…

But… what if 189 countries did sign up to an agreement to “spare no effort” to free a billion men, women and children from abject and dehumanising poverty… What if millions of people from across the world joined together in a global campaign to demand that those countries keep their promises…

I’ve just finished reading From Poverty to Power*, Duncan Green’s recent book, whose tagline gives you the book’s big idea:

How active citizens and effective states can change the world

Expounding the theme he regularly returns to, he says, “states that can guarantee security and the rule of law, and can design and implement an effective strategy to ensure inclusive economic growth” are essential for driving and managing the development process and “people working together to determine the course of their own lives, fighting for rights and justice in their own societies, are critical in holding states, private companies and others to account.”

It’s a chunky book, aiming at a pretty comprehensive look at different dimensions of power and their interactions at different levels to either advance or inhibit the capacities and opportunities of the poor. It is full of argument and insight (as well as stories of outrage and hope), and is well worth a read.

What’s great about the book is that it takes power (and powerlessness) seriously in all its dimensions (personal, inter-personal, social, political, financial) as it relates to human development and the protection and promotion of human rights. It argues that the redistribution of economic, social and political power, or the creation of new centres and forms of power among the poor, are vital for overcoming inequality, tackling poverty, defending human rights, and calling for –and supporting – responsive, accountable and effective governance.

Looking at national and international policy issues, and following the work of economists like Ha-Joon Chang and Dani Rodrik (and incorporating environmental and gender concerns), the book argues that “economic growth is everything” approaches are not sufficient to tackle poverty and inequality, and that countries (particularly poorer, developing ones) need to retain “policy space” and flexibility when dealing with the trans-national corporations of developed countries, or the architecture of global trade and finance (such as the World Trade Organisation, International Monetary Fund and World Bank). The work isn’t geared to bashing these institutions, and it certainly isn’t anti-market or anti-business. On many occasions it acknowledges the vital role that small and medium, and even large, enterprises can play in creating wealth, generating employment and opportunity, contributing to gender empowerment, and driving economic growth and development. But it takes the rights and flourishing of the poorest as the benchmark for assessing policy, or the behaviour of an institution, or set of governance arrangements – a stance that leads to sharp critique of corporations, international financial institutions, and governments at times.

Along the way, there is plenty of material to fuel your ire, or fire some arguments – for example the discussion of the behaviour of pharmaceutical companies in relation to Africa’s AIDS crisis, the slow-burning tragedy of the crippling debt burden still borne by the world’s poorest people, or the “rigged rules and double standards” of WTO agreements. There are plenty of “killer facts” as well sprinkled throughout to bring out the sharp edge of the topic under discussion.

I really only have one complaint , which is that the book’s strength seems also to be its weakness. Examining so many different forms of power and tools of empowerment (education, citizenship, land and property rights, social protection, cash transfers,…), so many forms of risk and vulnerability faced by the poor (finance, health, food security, conflict and violence, climate change…) and examining stories at so many different levels (the personal, local, national and international) means that, inevitably, many of the sections are really only introductions to the topic at hand, with not quite enough detail to do justice to the issue (though the treatment of issues like the international trade and finance systems, or community organising for political change are very good introductions). Nor do they properly back up the few prescriptive passages in the book. For example, it’s not clear to me what would actually be done differently if we heeded Green’s call for a “new economics for the 21st Century”. He’s probably right about the ascendency of a certain, very blunt, form of neo-classical economics in political decision making. But when he says,

Decision-makers will always need to consult, identify trade-offs, and agree priorities: such discussions are the stuff of politics, which in the end should be served, and not ruled, by economics

I really can’t imagine that decision-makers currently do otherwise.

Related to this is that the kaleidoscopic view of power explored here ends up reading, at certain points, like a change of topic every 20 pages or so, which gets a bit tiring when read at one sitting (or, in a 6-hour stretch in an overcrowded minivan winding its way through the hills of Far Western Nepal!). It would probably have been better to dip in and out of several of the sections according to interest and my ability to concentrate.

Oh, and a minor gripe is that Oxfam’s marketing team seem to have been allowed pretty free play in the text. I have no issue at all with sentences like, “Oxfam has learned that…” or “In the experience of Oxfam’s partners…” The book, after all, was written by Oxfam GB’s head of research and these lessons confirmed by personal and organisational experience provide much of the book’s strength and authenticity.

What started to irk me a little though was that whenever the words “International Non-Governmental Organisations…” cropped up, they were almost invariably followed by the words “… like Oxfam.” Now I know Oxfam is an example of one kind of INGO, and it’s probably worth pointing out once or twice on the way through, but surely not every time. First, it gets tedious and, second, you’d have a slightly warped view of INGOs if every time you thought about them you had to think of Oxfam (whose work, and staff, I really do like and admire).

Funnily enough, though, the words “like Oxfam” didn’t make it into the sentence that reads:

While activists from many developing countries appreciate the support that their organisations receive from INGOs, they often complain that INGOs are domineering…

But that’s definitely enough snark. You can see video of Duncan Green discussing the book here.

* From Poverty to Power is also the name of his excellent blog

Up #1

The biggest unambiguous positive in the aid budget for mine was the $300 million over 3 years announced for additional investment in water and sanitation programs. Policy-wise it’s a vital area of development concern that has been largely neglected, and which offers enormous human and economic benefits.

Unsafe drinking water and inadequate sanitation and hygiene causes around 90% of the 1.8 million deaths from diarrhoeal disease that occur in developing countries each year. Missing out on these basic rights causes illness, increases the labour burden for women (who spend much of their time collecting water and caring for sick children), and degrades human dignity for the more than 1.1 billion people who don’t have safe drinking water, and more than 2.5 billion who don’t have even basic sanitation.

Achieving the MDG targets to halve the proportion of people without access to safe drinking water and basic sanitation (MDG 7) would not only save lives and improve public health, but would increase female participation in education (girls are more likely to attend schools where there are adequate and private toilets), and enhance economic productivity. In fact, the World Health Organisation estimates that every $1 invested in the provision of water and sanitation leads to $8 in costs averted and productivity gained.

All the citizen lobbyists who were at Micah Challenge’s Voices for Justice lobbying event in Canberra last year made this a key policy ask, so I’m particularly glad to see the Government acting on this commitment early.

Up #2

The Government announced $200 million over 4 years for “UN partnerships for the Millennium Development Goals”. This amounts to an increase in the core funding provided to 6 UN agencies with key responsibilities for coordinating efforts on gender equality, sustainable human development, HIV/AIDS and other health challenges, and humanitarian emergencies. I’m sure the additional funds will be very welcome ($50 million a year on average, shared between 6 agencies) and it will lift our core funding for some of these agencies from very, very low levels.

Up #3

Pacific partnerships will get some significant new money soon ($268 million over 4 years for land related programs, infrastructure development and public sector administration improvement) though only $18 million is spent in 2008/09.

Down #1

Half of the increase from last year’s budget is accounted for by the third and final tranche of Iraqi debt cancellation. I have no argument with cancelling debt in order to promote development and/or humanitarian reconstruction. In fact, I think we should do more. But this cancellation for the third year makes up close to the bulk of the aid increase, overshadowing development of new programs or greater investment in current programs.

Down #2

The budget announced “increased attention to the global challenge of climate change” which sounds great – though the attention deficit left in this area by the previous Government made that a pretty easy call you would think. However, the $150 million over 3 years for research into vulnerabilities and impacts and implementation of high priority adaptation needs translates into $35 million this year. That’s just a shade above last budget’s $32.5 million for climate partnerships which, at the time, I described as derisory.

I haven’t changed my mind on that with a change of government. I acknowledge that there are not yet clear mechanisms for delivering massively scaled-up adaptation funding. But climate change is already affecting the poorest communities in our region. Subsistence farmers are struggling to cope with changing rainfall patterns, small-island and coastal populations are being displaced, or facing heightened risk of displacement because of rising sea levels, and climate-related disasters have increased in frequency and intensity.

Australia could easily increase this spending by an order of magnitude, and if specific proposals are needed, how about making contributions to the disgracefully underfunded adaptation funds that already exist? Or working with the Least Developed Countries in our region to fund and support the development of their National Adaptation Plans of Action (NAPAs) and the implementation of the highest-priority adaptation responses identified in those plans?

Neither-up-nor-down #1

Overall, the budget didn’t really add any new resources or strong new focus in the fight against global poverty. The sectoral spending increases are fairly minor. Here’s the sectoral breakdown:

Aid budget breakdown by sector

When inflation is factored in, this is a slight real decline in education spending (-0.5%), and a very modest real increase in health spending (0.9%) which should surely be two priority areas to accelerate progress on the MDGs.

The budget has been handed down – an expression, incidentally, that I love. It’s a bit Charlton Heston as Moses in The Ten Commandments really. Well, if Moses had begun each commandment with “Mister Speaker, in order to support working families…”

I’ll leave it for others to opine on how Swan and/or the Rudd Government have passed their “first big test” with the budget overall. I don’t do tax cuts or infrastructure funds or baby bonuses, just the aid budget… In a nutshell:

  • Aid increases to $3.66 billion in 2008/09 – up $505 million from the 2007/08 budget (an increase of 9% in real terms)
  • $238 million of this increase is accounted for by the Government cancelling the final tranche of debt owed to us by Iraq
  • So, not counting Iraq debt, the real increase is 4.9% on last year’s budget
  • Aid will reach 0.32% of Gross National Income (a level it was last at in 1995/96) – up from 0.3% GNI last year, but still less than half the internationally-agreed aid target of 0.7% GNI Australia has committed to
  • The budget begins to deliver on the Government’s pre-election commitments to increase funding to water and sanitation ($300 million over 3 years), eliminating avoidable blindness in the region ($45 million over 2 years), and establishing Pacific partnerships for development ($127 million over 4 years for a regional infrastructure facility and $54 million over 4 years for a Pacific Land Program to address land reform challenges)
  • There are some further, modest increases in funding for UN agencies and other multilateral bodies

My first response is that this is quite underwhelming. Is the aid program getting bigger? Yes, but sloooowly. Is it getting better? Yes, but sloooowly. And any of the fresh thinking or new leadership focused on the urgent task of accelerating progress towards the MDGs will have to wait.

I recognise that the Government must have faced serious challenges developing the budget while still to a large extent developing the policy and planning the programs it wants to invest in. But anyone who heard the Prime Minister say:

Today I announced that Australia would be signing on to Prime Minister Brown’s Millennium Development Goals (MDG) Call to Action.
We support its aim of working for accelerated progress towards the MDGs.

could justifiably be disappointed.

More shortly.

And here’s what I fired off to the Interpreter in response to the CIS piece. I don’t know if they’ll publish it, so you can read it here first, or at all…

.7 the right target

Aid campaigners do not promote aid spending of 0.7% GNI on a whim, or as a random figure plucked from the air, but because it is the long-standing international target appropriate for developed countries to contribute to international development needs.

Morally, giving a small fraction of our wealth to support development and reduce poverty is the right thing to do. In a world where over 30,000 children die each day from preventable causes, where every 30 seconds a poor woman dies in pregnancy or childbirth, an aid commitment of 70 cents for every $100 of national income doesn’t seem like a big ask. (Though Australia currently falls well short at around 33 cents in every $100).

Practically, too, it is the right thing to do, as well-utilised aid is demonstrably effective in reducing poverty and contributing to stability and growth.

Australia has repeatedly endorsed international commitments to reach or make progress towards the 0.7% target. When the target was first adopted, on October 26, 1970, member states of the United Nations (including Australia) agreed that the 0.7% target was the appropriate level of additional financing to contribute to economic growth and poverty reduction efforts in impoverished nations. Since that time, the target has been repeatedly reaffirmed, internationally and domestically. Even the former Foreign Minister said in Parliament in August 2005 that,

Australia supports the UN target of 0.7 per cent ratio of Official Development Assistance to Gross National Income (ODA/GNI). The Australian Government endeavours to maintain our ODA at the highest level consistent with the needs of partner countries, Australia’s capacity to assist and other priorities for Australian Government expenditure.

In signing on to the Millennium Development Goals (MDGs) – 8 global anti-poverty goals with time-bound and measurable targets and indicators – the Australia Government committed to “spare no effort to free our fellow men, women and children from the conditions of abject and extreme poverty, to which more than a billion of them are currently subjected.”

The best analysis of the monetary cost of meeting these goals, developed by the UN Millennium Taskforce, led by Columbia University’s Professor Jeffrey Sachs, highlights that donor commitments of 0.7% would be enough to achieve the MDGs and meet other global challenges in sustainable development.

Of course more than money is required. Which is why the MAKEPOVERTYHISTORY campaign in Australia has a 5 point campaign platform, calling for:

  • an increase in quality aid,
  • debt cancellation where the debt burden is an impediment to development and poverty reduction,
  • international trade rules that are fairer and more free,
  • improvements in governance and support for community-led anti-corruption efforts, and
  • sustained effort to tackle climate change.

For it’s part, aid works. Coordinated vaccination and immunisation efforts by donors and governments led to the number of child deaths from measles in Southern Africa falling from 60,000 in 1996 to just 117 in 2000. The Thai Government’s “100% condom” campaign, supported by the World Health Organisation and other donors, led to that country seeing 80% fewer new HIV cases in 2001 than in 1991, with around 200,000 new cases being prevented over that time.

Targeted in the right way and delivered through the right mechanisms, Australia can and should increase its aid budget to 0.7% of Gross National Income, confident that it would be effective in helping lift people out of poverty, and contributing to a more just and sustainable world.

The Interpreter (Lowy Institute blog) has had a discussion about aid that seemed to be about to wrap up with this post by Maree Nutt from Results. Good post, Maree.

However, her entirely reasonable call for Australia to increase its aid program to 0.7% GNI in line with our international commitments was red rag to one of the bulls at the Centre for Independent Studies, whose post is entitled, not-at-all-provocatively, “Aid: one zany scheme after another“.

I agree that we need to focus on what works (and I’d argue that there’s a lot of good evidence for aid that does work. For example, check out the Center for Global Development’s Millions Saved initiative.) But the author’s over-emphatic reliance on Bill Easterly’s anti-aid arguments just strikes me as dumb*.

The author, following Easterly, pits “planners” (bureaucratic, unresponsive, ineffective and unaccountable) against “searchers” (pragmatic, entrepreneurial, accountable and effective), but I can’t for the life of me see why these are mutually exclusive categories. Good aid, focused on outcomes, and sensitive to feedback mechanisms and accountable to the communities it seeks to serve, surely must (and does) make use of both searchers and planners.

He reheats Easterly’s line that:

Over the last forty years about $3 trillion has been spent on aid worldwide — much of it in Africa. Yet most African countries with few exceptions are poorer today than at independence.

which might seem like a devastating blow, but in fact is a pretty limp slap. Arguing that aid has not been used well in the past in no way demonstrates that it can not be used well in the present, particularly when aid spending in most of the 20th Century was distorted by cold war political imperatives and was not focused on sustainable poverty reduction. The aid effectiveness debate has moved a long way on from generalisations and shoddy analysis like this.

Blaming aid for failing to help Africa grow economically is also absurd. Africa is now achieving fairly decent rates of economic growth (5.3% across the region in 2006 according to the World Bank) while at the same time aid flows to Africa have increased. Will this additional aid now receive credit for contributing to economic growth if it is expected to take the blame for earlier failure to grow? No, and nor should it, because it is, in fact, trying to do other things, like reduce the incidence of disease, assist in infrastructure and administrative development, contribute to the provision of education and the development of education systems, and so on.

To make the argument that Africa has received a lot of aid, but people are still poor, therefore aid doesn’t work, you really have to ignore a lot of other factors. Like the impact of diseases such as HIV and malaria, or the weighting of international trade rules against low-value agricultural producers, or the constraining burden of debt, or the impact of colonial and post-colonial political problems and conflict…

By the way, the $3 trillion dollars spent on aid over 40 years sounds like a lot. But it works out to be around about 4 or 5 cents per capita for the 3 billion poor living on less than USD 2 per day. What sort of miracle do you expect to buy for that money? And this aid contribution, of course, pales in comparison to military expenditures over that period. In fact, $3 trillion happens to be what Joseph Stiglitz estimates to be the true economic cost of just the Iraq war so far.

So, I say to the CIS: Get a decent argument of your own, and start taking all the evidence seriously, rather than pushing your ideological anti-aid barrow!

* You can see a very fair review of Easterly’s book by Amartya Sen here. And a useful debate between Easterly and Steve Radelet from CGDev here.

A new, multi-author blog on international development issues. I particularly recommend Kemal Dervis’ post on Growth, Inequality and Global Development, for a concise summary of global income and distribution trends, and why inequality matters.

Hat-tip to Emmanuel for the link.

The United Nations Millennium Development Goals Report 2007 was released recently.

Recalling the commitment of world leaders in the Millennium Declaration of 2000 to,

Spare no effort to free our fellow men, women and children from
the abject and dehumanizing conditions of extreme poverty,

the report poses the question, “Are we on course to look back, in 2015,
and say that no effort was spared?” It finds that there has been substantial progress:

  • The proportion of the world’s population living in extreme poverty fell
    from nearly a third in 1990 to less than one fifth in 2004.
  • World-wide, primary school enrolement rates rose from 80% in 1991 to 88%
    in 2005, thanks mostly to debt cancellation and education-focused aid.
  • The number of child deaths is declining globally, through basic interventions,
    such as vaccinations, provision of insecticide-treated bednets and treatment
    of diseases such as measles (though this progress is not rapid enough to achieve the target of reducing the under-five mortality rate by two thirds by 2015).

However, there is much that remains to be done:

  • Over 500,000 women still die each year from preventable and treatable complications in pregnancy and childbirth.
  • HIV infections and deaths from AIDS continue to increase in all parts of
    the world.
  • 2.5 billion people still do not have access to basic sanitation, and the
    Goal to halve the proportion of people in this situation will be missed on current rates of progress.

The report makes clear that rapid and large-scale progress is possible, where
there is strong government leadership, policies that target the poor, and sufficient
financial and technical support from the international community. It challenges
wealthy nations to substantially increase aid, reform international trade rules,
and tackle climate change in order to maintain and accelerate Millennium Development Goal progress.

Update: David notes the time and the challenge as well.

I was at the Jubilee Australia planning day yesterday, which included a session with Robert Filip, head of innovative financing at the Global Fund to fight AIDS, TB and Malaria. He (along with Jurgen Kaiser, the head of the German Jubilee campaign) were in Australia for a meeting with officials from Treasury, Foreign Affairs and AusAID to discuss a ‘debt-for-health’ swap with Indonesia.

Under the Paris Club rules, there’s nothing to stop Australia engaging in this kind of debt swap, which would mean that instead of continuing to make repayments on a portion of the bilateral debt Indonesia owes Australia, it would direct the funds into Global Fund approved projects at the community level to combat AIDS and TB.

Indonesian ministries are ready to go. The German government is fully in support and likely to go ahead by the middle of 2007. However, the response from Australian officials was disappointing: “Australia does not have a policy to engage in debt swaps.”

Australia’s annual contribution to the Global Fund is onlly $19 million (our fair share for our economy’s size would be about $160 million), so this would be a good way to boost our support for the Fund.

The impact of AIDS in Indonesia is still small, but growing – with 110,000 people living with the disease. The burden of TB is more serious (around 1.5 million TB sufferers and almost 150,000 deaths annually) and the overlap of the two diseases is a deadly combination. So a debt for health swap would be a useful way to address these critical health issues.

Indonesia spent almost 40% of its federal budget in 2004 servicing debt. So a debt for health swap would be a useful way to reduce this burden and strengthen the bilateral relationship.

Australia doesn’t have a policy of engaging in debt swaps? Time for policy change, I say.