Designing our foreign aid future

29 April 2011

By Dr Michael Wesley, Executive Director of the Lowy Institute

What do Australians want and expect from their government’s foreign aid program?

What should be more, less or different to make it a better program as it continues to expand now and in the future?

Four months ago, as part of the consultation process informing the team reviewing Australia’s aid program, we invited you to submit your blogs on what the program should be focusing on. The review team has finished its report which means this dedicated Lowy aid blog is also coming to an end.

During its brief life, Interpreting the Aid Review has shown very clearly that there is a disparate lot of views on what, how and where our aid program should be operating. The blogs included pieces on the familiar see-saw argument between encouraging macro-economic growth and focusing on grass roots and civil society. There was advice on how to scale up; what to do and what not to do and suggestions on innovative ways for delivering a bigger aid program.

Surprisingly, there was limited discussion about specific sectors which are almost synonymous with aid programs such as health, education and rural development. Even the discussion on women and gender issues seemed to be encouraged more by the coincidental timing of International Women’s Day in early March than a powerful, abiding concern that gender considerations should be at the centre of Australia’s aid policy. As for the Millennium Development Goals which have been the core tenet of the current government’s aid philosophy, they received scant attention.

What did attract the most words and blogs were two essentially geo-strategic issues: one was the geographic focus of the aid program (which expanded as we blogged) and the second was the emergence of non-traditional state donors, particularly China.

In the case of the geographic focus, there were strong arguments put forward warning about the risk of fragmentation and the advisability of keeping the program geographically focused and in sync with Australia’s broader national interests. The degree to which the approach to aid by non-traditional donors and notably China was covered reminds us that the operating rules for international aid programs as determined by the OECD’s long standing “aid club”, the Development Assistance Committee, are no longer the final, or at least, only word.

It’s true that a blog hosted by the Lowy institute is likely to attract contributions from people with a strong interest in geo-strategic issues. However, the breadth and depth of the topics covered by the contributions since the blog started in January were much broader than this. Overall the range and quality suggest that thinking on aid and development has moved to a new level where there is a deeper comprehension of the complexities associated with foreign aid. This is to be welcomed and encouraged.

As we move into the second phase of the review process – the release of the report and the government’s response – the Lowy Institute will continue to find ways to provide a forum for informed discussion and debate on the issues which are shaping our aid program and the policies guiding its implementation. This will be an equally important opportunity for those interested in the quality of Australia’s aid policy framework to inform the aid discussion.

Image by flickr user madhavaji.

On the precipice of change

29 April 2011

By Archie Law, Chief Executive Officer of ActionAid Australia

We are at a remarkable moment in the global struggle for a more just and sustainable world. The world is changing rapidly but not rapidly enough for the billions of people who live daily with the profound injustice of poverty.  This is the context in which the Australian Government is conducting the most significant review of its development assistance program in 15 years. The findings of the review will shape the future of Australia’s aid program and, more importantly, the future of poor and excluded people around the world – for better or worse.

There’s been a lot written about what the future of the aid program should be, but when you’re designing for the future, you must consider the future context.

So what will the future look like, and what does this mean for the Australian aid program?

Crystal ball gazing is never easy, but one certainty in the coming years is that dramatic shocks and crises relating to food, fuel, finance, climate change and conflict will occur. These shocks are likely to increase human vulnerability and insecurity, but they also offer unparalleled opportunities in that the present systems and structures that create or maintain poverty are likely to be discredited by their failure cope with these shocks.

Climate change is now an inevitability and will lead to massive challenges for people living in poverty, who will find it hardest to adapt – but as the world faces up to natural resource limits the case for ecological justice and new development models, premised on achieving fair shares for all, will be powerful.

The rapid growth of the middle class and unsustainable consumption patterns around the world will certainly put new pressures on our planet and its dwindling natural resources, but global communications, new forms of activism and emerging philanthropy also create great potential for solidarity action from hundreds of millions of people across regions, ages and classes, who want to contribute to a more equal and just world.

In the coming years, we will witness power shifting away from the United States and Europe, towards a more multi-polar world, with the rise of emerging economies. This creates new opportunities to challenge the dominant, market-led-model of development and potentially build alternative global relations where Southern countries have greater control over their future. The challenge is to ensure that these countries pursue more democratic and sustainable paths and offer a more equitable and ecologically-just model of development.

Over the next decade the currently dominant macro-economic models will continue to be used to advocate for purely market-oriented solutions which imply the retreat of the State and privatisation of public services, further disadvantaging those living in poverty. Fortunately, many governments are offering alternative paths, increasing progressive tax revenues, pursuing redistributive policies and targeting public spending towards those in greatest need.

The past three decades of liberalisation and deregulation have allowed some multinational corporations to accumulate unprecedented market power and political influence, but the financial crisis of 2008 has exposed the dangers to economies and societies of allowing such a concentration of power.

Many enlightened businesspeople and politicians are now recognising the need for governments to regulate markets and facilitate inclusion of all groups. While some corporations continue to abuse their power, exploit workers, pollute the environment and avoid tax, the resistance to such abuses is growing and will become ever stronger.

People are exploring alternatives, challenging dependency on commodities, promoting more diverse and just domestic economies, asserting the importance of sustainable small and medium-sized businesses, and developing innovative social enterprises.

In many countries we will continue to witness an active shrinking of democratic space, with governments enacting reactionary legislation to constrain citizen engagement, but there is also a remarkable flourishing of people’s movements, coalitions and platforms that will make their voices heard.

Almost half of the people in the world are under 25 years old, and within the next few years, in many parts of Africa, half the population will be under 20 years old. This could lead to millions of children growing up as disaffected youth, contributing to instability and the potential failure of States - but this could also be a catalyst for the transformation of societies if investments are made now, for example in quality education and job creation. Youth can be powerful drivers of social and political change.

Processes of urbanisation will continue, creating new faces to poverty: slum-dwellers, often living without legal tenure, having limited access to services, productive resources or employment and lacking the traditional social security networks of rural communities.  But this is truly an opportunity for change, building awareness of unjust distribution of resources, of corruption, inefficiency and the mis-use of power, and being able to mobilise in large numbers, close to power centres and visible to the media.

Another certainty is the avalanche of technologies, which may exacerbate inequalities, further empowering the powerful and deepening divides, but which may also be utilised to alter present systems of power and control.


Aid & development linkage

29 April 2011

By Danielle Cave, Editorial Team, Interpreting the Aid Review

Today is the final day of the Lowy aid blog. In just 3 months the blog has recorded between 1,000-1,600 visits per day (and this continued to rise). This clearly shows a serious appetite for more domestically-generated discussion on the Australian aid program, international development news, and most importantly, further analysis of Australia's foreign aid program as an increasingly integral part of how Australia interacts with the rest of the world. As the aid program speeds towards a $8-9 billion program (by 2015-16) this will be matched by greater appetite and increasing public curiosity about Australia's role as an international donor - how will informed public discussion & debate keep up? 


  • The conclusion of the Lowy aid blog is being slightly overshadowed by the Royal Wedding of Prince William and Kate Middleton. Likely Prince William was unaware that when he was in 'proposal-stance' he was kneeling in the centre of one of Africa's land-grab hotspots in northern Kenya.



  • Is AusAID ready for the iPAD era? No, and neither are most international donors:


"With 15 million iPADs currently in use around the world after only one year of availability, the iPAD is one of many technological advancements that has created an entirely new way people access information and interact, as well as a new market for selling all kinds of content and applications...These policy and business innovations – often driven by technology – are improving lives around the world, but foreign aid institutions such as the World Bank and the U.S. Agency for International Development have found it challenging to integrate innovation in their programs".

Despite this:

"Today, a community health worker in India can test a drop of blood using a cell phone-sized instrument from Nanobiosym in order to diagnose HIV; a patient in Nigeria can purchase medication knowing it’s not counterfeit by texting its serial number to a service called Sproxil; and in Mexico, the Opportunidades program founded just 14 years ago now provides cash to one quarter of the national population – but only in exchange for regular school attendance, health clinic check-ups, and nutritional support". (h/t Lou)



  • An interesting blog on the lack of public knowledge in the UK about their role as an aid donor. Below, if you switch 'UK' with 'Australia', the same could be said:


"Of course, the public’s views on aid are held in the context of little or no knowledge of how much aid the UK gives to developing countries, how it is spent and where. This unawareness highlights the need for aid proponents, and especially the government, to engage more actively and effectively with the public on development issues and the role of UKaid".


  • Many readers would have seen this Hans Rosling video (which is nearing 4.5 million views), it's truly fascinating and is worth watching again:


In our national interest - effective aid to the Pacific

28 April 2011

By Jenny Hayward-Jones, Program Director of the Myer Foundation Melanesia program, Lowy Institute

I’ve written before on the geographic focus of the aid program and argued that it was important we maintain our focus on our neighbourhood. 

In exploring that theme a bit further, I found there was no shortage of support for a strong focus on aid to the Pacific. 

Debate about Australian aid to Pacific Island countries draw a diverse range of views. They tend to fit into distinct schools of argument but all of them add up to a conclusion that increasing aid to the Pacific is in Australia’s national interest.

1. The national security argument
The national security arguments for aid to the Pacific were recently prosecuted by the think-tank ASPI (in this report). Some would argue the national security-aid nexus is a new one, having seemingly just been discovered by President Obama and the coalition government in the UK. But there is little that is new about this nexus – it’s just different people talking about it. A reminder that every government needs to make its own case for foreign aid spending rather than relying on the accepted orthodoxies of its predecessor.

In fact, those who argue aid should support Australia’s national security interests held sway in Canberra throughout the Howard government’s time in power – at least since 11 September 2001. Significant aid allocations to Iraq, Afghanistan, East Timor and Solomon Islands and the development of arguably a model 'whole of government' approach to deal with security challenges in our neighbourhood are proof of this. 

Despite a new focus on the Millennium Development Goals when the Rudd government came to power, Rudd himself (both as Prime Minister and now as Foreign Minister) has continued to define aid in terms of Australia’s national security interests. In March 2008, he said:

“a failure to act on the development challenges of the South Pacific Island states will result long term in rolling Australian military interventions, together with the risk of a large-scale influx of refugees from the region.” 

In February this year Mr Rudd said in a speech in Tasmania that national security interests were central to Australia’s aid.

2. The moral argument
Driven primarily by NGOs, this argument says that Pacific Islanders need Australian aid to lift them out of poverty or to use the correct terminology, to "assist Pacific Island countries meet the Millennium Development Goals".

3. The geography argument
Australia can’t change its geography. Australia is unusual in being a developed country surrounded by developing and in many cases fragile states. Australia has the greatest capacity to assist. Other donors expect Australia to take the lead in delivering aid to the Pacific because of our geography.

4. The demography argument
The predicted consequences of the youth bulge in Melanesia, referred to in this Graeme Dobell article, are increasingly being used to call for specific attention from the aid program.

5. The sceptics
This argument, promoted by Helen Hughes AO says aid has failed the Pacific. Others argue that Australian aid is maligned because behind every Australian aid dollar or Australian initiative, there is a demand from the Australian government for a quid pro quo.  Opposition to the Australian government’s support of PACER Plus trade negotiations is a case in point. But even these arguments acknowledge that Australia has a vital role to play in the region.

6. The diplomatic argument
The Pacific Islands region offers rich pickings for countries seeking UN votes, which we have written about and debated on The Interpreter at length. I would really like to argue that Australian international diplomatic objectives are pursued very effectively through the aid program. AusAID’s position in the Department of Foreign Affairs and Trade portfolio and the fact that Kevin Rudd is the Minister for Foreign Affairs with responsibility for international development assistance suggest this should be true. Bilateral diplomatic objectives are mostly well supported by the aid program, if not actually fully realised in every case, but the same is not true of international diplomatic objectives. 

Australian diplomats, long outsmarted at the ‘aid in return for a vote at the UN’ game by much smaller spenders, might well say “if only.” Many an Australian diplomat has wondered what they have to do when major beneficiaries of Australian largesse vote against Australian interests in international forums, despite sincere promises in capitals to support Australian initiatives.  Although Pacific Island countries have agreed to support Australia’s candidature for the UNSC, the reality is that their actual support on the day of the vote will depend on how persuasive Australian diplomats are compared to their competitors – it will have little to do with the $1 billion of aid Australia spends in the region. 

All these arguments – national security, moral, geographic, demographic and even diplomatic – all contribute to the conclusion that increasing aid to the Pacific is in our national interest. While it may be necessary to keep convincing Australian taxpayers that this is the case, Pacific Island governments tend to understand this very well. They know they can rely on Australian generosity and expect that it will continue. For me, the question is not “how do we justify increasing our aid to the Pacific” but “how do we meet the increased expectations of Pacific Islanders and of Australian taxpayers for better development outcomes?” 

Australia is the dominant player in the Pacific. If we are successful in making a substantial and measurable difference to the future prosperity of Pacific Islanders we can then make a claim, alongside highly regarded donors such as the UK, to be one of the world's most effective donors. This should rightly be one of the key objectives of Australia's aid program.

Images by Flickr users afagen and United Nations Photo.

G20 & development - why bother?

28 April 2011

By Michael Gaskin, currently completing a PhD on the G20 and international legitimacy at the University of Sydney and an Intern in the Myer Foundation Melanesia Program at the Lowy Institute

Development has become an increasingly important item on the G20 agenda. For an organisation with its roots in fiscal and monetary policy, the natural question is to ask ‘why bother with development?’ But if you look at where the G20 came from, it becomes clear that it is a natural fit for their discussions. What might be a little more surprising is how the G20’s idea of development has changed over just the last three years. But first, for the uninitiated, a brief history of the G20.

The G20 is a direct descendant of the G7/G8 system. The G7 was established as an informal consultation mechanism for a group of finance ministers and central bank governors to discuss difficult fiscal and monetary policy issues and to share lessons. There was no formal founding document, no particular mandate and certainly no permanent bureaucracy. As some of the finance ministers went on to become leaders, they carried the consultations through to a leaders’ forum, which eventually went on to invite Russia to form the G8 (the finance ministers chose not to invite Russia, and remained the G7). 

The two births of the G20
The G20 arose out of the Asian Financial Crisis (AFC). For the first time, the AFC demonstrated the true reach of global markets. What happened in developing countries no longer stayed in developing countries. Events in Indonesia, Thailand and South Korea had large effects on markets in the United States, the United Kingdom and Germany. This was a clear signal that the G7 countries needed to broaden their membership to include what they labeled as ‘systematically important’ emerging economies in their consultations. After brief experiments with the G22 and G33, the G20 met for the first time in Germany in December, 1999. 

This was the first birth of the G20. It was an extension of the G7, that is, a meeting of finance ministers and central bank governors from member countries (with the President of the World Bank and Managing Director of the IMF in tow). Development was certainly on the agenda, but in a very traditional form. The G20 Finance communiqués did a lot of reaffirming: reaffirming support for the Millennium Development Goals (MDGs), reaffirming commitments to increases in official development assistance, reaffirming an intention to conclude the Doha Development Round of trade negotiations and reaffirming alterations to voting arrangement in the international financial institutions (IFIs).  Given this was occurring around the same time as the Monterrey conference on Financing for Development, this was hardly a surprise.

The second birth of the G20 occurred in November 2008. In the wake of the collapse of Lehmann Brothers and the massive bailout of several significant financial services firms that spread throughout the world, President George W Bush called the leaders of the G20 countries to Washington DC for the first G20 leaders’ summit. With the greatest financial meltdown for around 80 years in full swing, there was pressure on the G20 Leaders’ summit, dubbed ‘Bretton Woods II’ in some corners, to deliver a significant and coordinated response. 

The first G20 Leaders’ declarations from the Washington and London summits again focused on development in the traditional sense. They talked in terms of increasing facilities and altering governance arrangements at the IFIs, concluding trade agreements and supporting the Millennium Development Goals. This reflects the idea that development is about what ‘we’ can do for ‘them’. We can give them money, we can trade more with them and we can provide more health care to them. 

Something changed in Pittsburgh
In the Pittsburgh declaration, the references to the MDGs and increases in development financing remained, but the language shifted from a transaction between ‘us’ and ‘them’ towards a partnership between equals. Having just set out a series of actions that should be taken, the G20 Leaders Declaration from Pittsburgh states ‘These policies will help us to meet our responsibility to the community of nations to build a more resilient international financial system and to reduce development imbalances’. The Toronto declaration followed suit with phrases such as ‘it is important to work with Least Developed Countries (LDCs) to make them active participants and beneficiaries of the global economic system’ and ‘narrowing the development gap and reducing poverty are integral to our broader objective of achieving strong, sustainable and balanced growth and ensuring a more robust and resilient economy for all’. 

This language is indicative of the effect the leaders of emerging economies are having on the G20. Far from acting as legitimising window-dressing, the leaders of emerging economies are making a significant difference.  In an analysis of the G20 Leaders’ Declarations between the Washington and Toronto summits, the Global Economic Governance unit at the University of Oxford concluded that ‘the inclusion of emerging economies has been crucial to agreements on several core issues’. Interestingly, the paper concludes that the one area the emerging country leaders were yet to make a mark was in development. However, this was forecast to change with the Seoul summit approaching. 

Beyond aid    
The Seoul Summit produced the Seoul Development Consensus for Shared Growth. It maintains the language of ‘shared growth’ and focuses the G20 development agenda of six principles: focus on economic growth; global development partnership; global or regional systemic issues; private sector participation; complementarity; outcome orientation. This continues the change in focus from aid, as discussed in this short video below: More...

China releases first White Paper on Aid

27 April 2011

By Philippa Brant, recipient of the Prime Minister’s Australia Asia Endeavour Award, completing a PhD on China’s development assistance and the implications for the international aid regime, currently based in Beijing

The Chinese Government has just released its much-awaited White Paper on foreign aid, marking the most comprehensive (official English) collation of information and an important step in China’s efforts towards greater transparency in its aid policy.

Although the White Paper itself is not long, what follows is a summary of the salient elements and some brief initial thoughts. Those of us who closely follow developments in Chinese aid will not find many surprises, although changes in language choice and reference to some components of international development discourse are significant to note.

The White Paper frames China’s provision of aid as operating within the context of China’s position as a developing country but also as part of fulfilling its international responsibilities. In what can perhaps be regarded as the stated overall objective, China is providing foreign aid to:

“help recipient countries to strengthen their self-development capacity, enrich and improve their peoples’ livelihood, and promote their economic growth and social progress”.

There is a clear declaration that Chinese aid is a “model with its own characteristics”.

Up until the release of this White Paper, the Chinese Government would refer to three stages of Chinese aid provision: 1950-1978, 1978-mid 1990s, and 1990s-onwards, reflecting shifts in China’s own development situation and strategies. Of note, then, is the statement that “China’s foreign aid (has) entered a new stage”, marked particularly by expanded resources available for aid from 2004 (reported as increasing on average by 29.4% between 2004-2009) and a National Conference on Foreign Aid in August 2010, coinciding with the 60th anniversary of Chinese aid provision.

Chinese aid has traditionally been guided by the ‘Eight Principles for Economic Aid and Technical Cooperation to Other Countries’ espoused by Premier Zhou Enlai in the 1960s. This White Paper articulates related features that guide Chinese foreign aid today, and clearly states that China’s aid “falls into the category of South-South Cooperation”. The second last feature (below) is particularly notable in its reference to responding to changes in the development landscape.

Basic features of China’s foreign aid policy:

  • Unremittingly helping recipient countries build up their self-development capacity
  • Adhering to equality, mutual benefit and common development
  • Remaining realistic while striving for the best
  • Keeping pace with the times and paying attention to reform and innovation
  • Imposing no political conditions…respect(ing) recipient countries’ right to select their own path and model of development


Chinese foreign aid is provided in three forms: grants and interest-free loans (through state finances) and concessional loans administered through China EXIM Bank. To the end of 2009 China had provided a total of 256.29 billion yuan (US$ 39.3 billion) in aid, with approximately 41% grants, 30% interest-free loans and 29% in the form of concessional loans. These are the most authoritative figures available to date.

In what seems to be an attempt to help dispel the accusation that it is providing aid primarily for access to energy resources, the White Paper clearly states that:

“Of China’s concessional loans, 61% are used to help developing countries to construct transportation, communications and electricity infrastructure, and 8.9% are used to support the development of energy and resources such as oil and minerals.”

In terms of the forms of aid, China classifies activities into eight categories: complete projects; goods and materials; technical cooperation; human resource development cooperation; medical teams sent abroad; emergency humanitarian aid; volunteer programs in foreign countries; and debt relief. At present, 40% of China’s foreign aid expenditure is in the form of ‘complete projects’.

China has been accused of lacking transparency in the details of its aid program. Whilst still sparse in detail, the White Paper does provide a breakdown of Chinese aid resources according to the geographical distribution (Figure 1), and distribution according to income-level (Figure 2) for the year 2009. Interestingly, the latter figures differ somewhat from the figures provided at the official exhibition of 60 Years of China’s Overseas Aid.

Figure 1: Geographical distribution of China’s foreign aid funds in 2009


Channeling aid through Multilaterals

27 April 2011

By Andrei Xydas, former Intern, World Bank

Admittedly, for many of us in the development sector, we eagerly await the release of the Australian Aid Review to see the future role of our organisations in Australia’s aid program. With the release of the UK’s Multilateral Aid Review, a discourse has emerged on the proportion of government aid that should be channeled through multilateral organisations.

A key message from the UK’s review is that the multilateral system remains a critical component of the UK aid program. The review highlights that the traditional benefits of multilateral organisations persist; multilaterals have technical expertise, they pool together large funds, encourage innovation, play pivotal leadership roles with donors, have legitimacy and competence in conflict situations and work in every country in the world. The report did, however, find that the performance of multilaterals varies greatly and many are not “value for money”.

Like any organisation, for multilateral organisations to remain effective they continually need to be finding ways to do things better. This is a central value at The World Bank and underpins why the International Development Association (IDA) was given the highest rating of "very good value for money” in the UK review. In particular, the Bank has been applauded for its increased transparency, through a shift in its Access to Information Policy to a presumption of full disclosure, even by one of its harshest critics, William Easterly. In my brief time here at the World Bank, I too have felt this culture with exposure to these reforms and also to World Bank innovations in disaster management.

Ultimately, actions speak louder than words; the UK has announced it will increase funding to the IDA by 25% (Taking-Forward the Multilateral Aid Review) and this is consistent with the Bank’s receiving a growing share of multilateral development aid over the last decade (2010 DAC Report).

'Energizing the Pacific' aims to provide sustainable energy to the Pacific Islands

The UK review also repeated the commonly complained of weakness of the multilateral system, that poor coordination between organisations is undermining the effectiveness of programs. This has been recognised in the Pacific, and the Pacific Region Infrastructure Facility, a joint initiative of several multilateral and government agencies, including AusAID and the Bank, was established to overcome this problem. As yet, the initiative has been a great success, with projects such as Energizing the Pacific in operation.

Australia already allocates over 30% of its aid budget to multilateral organisations. Despite this, in light of the fast-growing aid budget and the value-add of multilateral organisations to government aid programs, it is appropriate for multilateral organisations to play a more significant role in Australia’s aid program.

Image by Flickr user Snurb.

Australian aid blog provokes surprising response

21 April 2011

By Joanna McCarthy, journalist at Radio Australia, ABC

Last month on Pacific Beat we heard from the Lowy Institute for International Policy... which was urging people in the Pacific to contribute to a blog about Australia's aid program.

The blog was established in January with the aim of sparking a public debate ahead of the release of the independent review into the effectiveness of Australian aid.

That review is due out before the end of the month and so we thought we'd check in with Lowy to see what kind of response they've had.

Lowy Research Fellow Annmaree O'Keeffe, says she's been surprised by the issues that provoked the most discussion.

Presenter: Joanna McCarthy
Speaker:   Annmaree O'Keeffe, Research Fellow at the Lowy Institute for International Policy


The full interview can be heard here.

China - the real story in Africa

21 April 2011

By Danielle Cave, Editorial team, Interpreting the aid review

The Lowy Institute paper 'China in the Pacific: the new banker in town' has generated much discussion and debate since its release a few weeks ago. As Fergus discussed in this blog; China has pledged more than $US600 million in concessional loans to the Pacific. In the case of Tonga, for example, loans from China are worth the equivalent of one third of its GDP.

Such research shines a spotlight on the capacity of Pacific Island countries to absorb lots of aid from lots of different donors - with each donor having varying expectations on their 'return on investment' and/or 'value for money'.

In the case of China's aid to the Pacific, the emerging issues include (and are not limited to) the capacity of the Pacific Island region to continue to service these concessional loans, in addition to, their ability to be able to maintain infrastructure (built by primarily Chinese labour), years and decades into the future. It should be recognised that China now allows some Pacific workers to participate in building a few Chinese sponsored infrastructure projects. This is a welcome move, however, where the local labour is available this should be the rule - not the exception, especially in a region with few employment opportunities.

It's not unexpected that a similar but much larger debate exists on China's booming aid program in Africa (and in Latin America), pulled into sharper focus due to recent remarks by a number of African Ministers who insist their countries need Chinese aid because it is increasingly difficult to get assistance from traditional donors and that criticism of China's Africa aid program is unfounded.

There is some research floating around on Chinese aid to Africa. However, due to the Chinese Government's lack of transparency and a lack of access to individual African country aid programs, much of it comes down to guesswork, personal relationships and vigorous research into what you do know (which usually amounts to aid outputs in-country).

The Center for Global Development in Washington houses a 2007 paper on 'the Chinese aid system'; the US Congressional Research Service cautiously put forward worldwide estimates of $25 billion of Chinese aid delivered to Africa, Latin America and Southeast Asia from 2001 to 2008 (with Africa being the primary recipient); the Council on Foreign Relations has looked at China's huge oil investments in Africa and the aid packages on offer for signatories of such oil deals.  

In 2010, a book authored by Deborah Brautigam,  argued that traditional aid donors too often focus on the negative aspects of Chinese aid and that in fact China offers real opportunities for development in Africa. Brautigam (who runs a blog here - h/t Fergus) outlines a number of the "myths" of Chinese aid, neatly outlined in this blog and touched on in the following interview: 

Duncan Green's recent blog titled 'What can we learn from Chinese aid?', is worth reading in full. As all good blogs do, it hyperlinks you to additional relevant information, in this instance, a  recent paper by the OECD which contains an interesting discussion on Chinese aid and points to the positives of Chinese aid (as opposed to the overwhelming negative coverage). Duncan Green pulls out the 4 potential advantages of Chinese aid (listed in the paper), including that Chinese aid:

  1. is more targeted;
  2. is less bureauctratic with lower transaction costs;
  3. is more efficient with lower costs, and faster;
  4. and allows more policy space (i.e. lower conditionality) and increases the bargaining power of African countries vis-à-vis other donors.


China's aid programs across these developing regions are only a small part of their 'total economic engagement' package and there is certainly a "blurring of the lines" when it comes to distinguishing aid from foreign direct investment. This article reports that China’s investments in Africa’s infrastructure have increased at an average rate of 46 percent a year over the past decade. At the same time, Africa’s exports to China have doubled, with crude oil making up about 70 percent of African exports to China (most of it from two countries, Angola and Sudan).

An Economist article published this week captures the crux of the issue for recipients of Chinese aid:

Most loans and payments are “tied”—ie, the recipient must spend the money with Chinese companies. (Japan, Spain and others followed a similar model until fairly recently.) But tied aid leads to shoddy work. With no competition, favoured firms get away with delivering bad roads and overpriced hospitals. Creditors and donors often set the wrong priorities. Worse, the Chinese government is anything but transparent about its money...China Exim Bank and China Development Bank, the main lenders, publish no figures about their vast loans to poor countries.  

Over the next few years it will be interesting to see how the impact of China's current approach will shape its relations with other donors, such as Australia, and whether the continued international push to increase aid donor transparency will result in more details of China's aid program finally being revealed. Currently, because Chinese "aid figures are treated as state secrets", this is unlikely to happen anytime soon.

Image by flickr user ..Yardley..

Over the horizon: 5 trends for the future of development

20 April 2011

By Peter Zoller, former Australian and British diplomat and aid official who continues to write on aid matters.

There have been several efforts to look over the horizon in order to identify future events that may or will affect development co-operation.  NGOs have contributed to this, realising that their forward strategies need to do more than simply assume everything will always stay the same.  ActionAid International, for example, commissioned work from Alex Evans which identified a series of “Aid uncertainties for 2020” to be used in developing its new Strategic Plan.

Following on from that, ActionAid Australia asked me to carry out a similar exercise focusing specifically on issues that should be anticipated in developing its own Strategic Plan. What follows are my own conclusions, offered here in the hope of attracting comments, helpful suggestions etc. that could contribute to further improvement of the draft.

1. More information will be available to the poor and excluded and will potentially empower them. The information revolution reaches poor and excluded people. NGOs need to recognise the implications for poor people of lower transaction costs for information dissemination – and the reduced ability of leaders to control access to it.

Commitment to aid effectiveness is developing a strong momentum. The Paris Declaration and the follow up from Accra, including the International Aid Transparency Initiative, have created momentum. NGOs must both help to ensure this continues and help poor people to use the resultant transparency to hold donors and recipients accountable for the use made of aid intended for them. NGOs must also make sure their own transparency is adequate.

2. Demographic trends will change the profile of poverty and exclusion and require some adaptation of strategies. Some often-mentioned demographic trends – the youth bulge and increases in urban poverty – do not need to be repeated – but two issues have specific relevance for an Australian perspective.

The location of the bulk of the poor and excluded is shifting. Location of the “bottom billion” is a global issue but there is a specific dimension in Australia’s neighbourhood.  Andy Sumner put the focus on middle income countries but we need to distinguish between the needs of poor and excluded people in countries with broad-based development and those in two-tier economies.  Juxtaposition of resource extraction industries and subsistence livelihoods can create problems including poor governance and the “Dutch disease”.  These can create or exacerbate the fragility of states, some of which are located in the Asia/Pacific region.

The middle classes in poorer countries are expanding. Their countries will in many cases become donors and the role of the middle classes in lobbying their governments to ensure effective use of their aid will become vital, especially if such donors remain outside the new disciplines of aid effectiveness and transparency.  More generally, they provide the basis for a strong NGO sector that could take over leadership of many of the roles currently undertaken by “northern” NGOs.

3. Emergency needs will grow. Humanitarian needs challenge the viability of strategies for longer-term development. Growth in the frequency and intensity of emergencies – natural and man-made – must be anticipated. Climate change will drive the former; several  factors can generate conflict, leading to more vulnerability.  Handling the interface between emergencies and longer-term development is already problematic. More emergencies will also shift the balance of funding more away from development.  Australians tend to give more for emergencies; they also tend to give more for appeals to address emergencies at home. These factors could challenge the viability of NGOs to operate independently without relying on government funding.

Incorporating a rights-based approach to humanitarian assistance will face severe challenges. The dominant humanitarian model is fundamentally top-down.  Needs of victims are assumed and there is little attention given to participation. The key role played by actors such as security forces with little experience of a rights-based approach exacerbates this problem. With the likelihood of some situations of virtually permanent emergency, especially in fragile states, efforts to establish a rights-based approach to aid will therefore be set back.

Priorities for the poor and excluded will continually shift. Continually evolving priorities of the poor reinforces the need for a rights-based approach that allows them to lead on stating those needs. It also points to the need to update the MDGs to reflect new approaches and priorities. The existing targets go some way towards reflecting needs beyond income but they are the outcome of a top-down approach. They use aggregate measures at a global level that provide no scope to address regional challenges, inequality, put human rights at the heart of development co-operation or to go beyond the issues of percentages to reflect issues of quality. Considerable effort will be needed to ensure more relevant new targets after 2015.

4. Aid will become increasingly complex. New funding and aid delivery theories and mechanisms will proliferate. We are already seeing a proliferation of theories on why aid has “failed”. A range of “new” approaches is already being touted. Failure to achieve some of the MDG targets could encourage further exploration of approaches such as more use of market forces (even though the poor lack effective demand) and delivery tools that create more incentives, such as the Cash of Delivery approach being touted by the Center for global Development. Each must be considered on its merits and simplistic approaches that ignore rights of the poor need to be challenged. More...

Don't forget the small things

19 April 2011

By Dr Wendy Jarvie, Visiting professor, School of Business, UNSW at the Australian Defence Force Academy, Canberra. Former Deputy Secretary, Department of Education Science and Training and Education, Employment and Workplace Relations.

I’m a big supporter of this aid review. And delighted it has got this blog. I know the importance of the big questions being canvassed – objectives, geographic focus, sector, gender (and yes of course aid should be heavily focused on women!)

But, thinking back to my own international work, at both the World Bank and in the Australian government, sometimes I think the biggest impact I had was in the small things.

Take China for example: in the early 2000s we were heavily  engaged with the Chinese government in education. We had lots of interaction - regular policy dialogues, bringing ministry officials over to look at our quality assurance systems and, through AusAID, trialing our vocational education  system in Chonqing. But the most excitement I ever saw was after one particular policy discussion. We’d been talking all day. We’d gone through just about everything – where we could work together in schools, higher education and vocational education.

After the meeting, the Vice Minister came around the table eagerly to talk more with me. He was a wonderfully impressive person. He’d studied at Harvard in the 1980s, was very intelligent, imaginative and visionary. However, there was one thing he really wanted to talk to me about. He’d been looking at my meeting notes. The ones I’d been working from all day. You know the sort if you have ever worked in government – the huge 2-ring folder, with the official meeting papers on white paper on the right-hand side and the talking points for me and background information in green paper on the left-hand side. Something you used to learn on week one of any job in the Australian public service. In contrast his notes  were the meeting papers with handwritten notes down the side. He wanted his people to learn about these things – in fact he wanted someone to come and see how our department worked. “We have a lot to learn from you”, he said.

So the moral is: don’t forget the small things, particularly the impact of public servants and their personal interactions. In this case, it is the importance of simple regular policy/practical interaction between ministries. We need to build into our aid program, not just the dollars, but the personal interaction of Australian public servants with foreign ministries.

Want to help build capacity in other governments? Forget the formal training. Expose them to how we work. Not just with AusAID and DFAT, but with our education, health, justice, industry and other departments. The Australian public service is a great public service. Why not use it systematically in this way?

Image by Flickr user businessroundtable.

E-aid: Digital opportunities for AusAID

18 April 2011

By Fergus Hanson, Director of Polling and Research Fellow, Lowy Institute

Cross-posted with The Interpreter.

While writing on e-diplomacy one thing I've noticed is how many innovations in this field touch on development and security issues as well.

For some time AusAID has been experimenting with social media but there are a range of other ways it could be using new IT platforms to achieve development objectives.

Here are a few examples I've come across, but I'd be interested in any others readers might be aware of.

Image by Flickr user Gates Foundation.

In Afghanistan, the US State Department has experimented with the payment of Afghan police officers via mobile phone. This bid to circumvent graft has taken advantage of a technology (mobile phones) that has spread rapidly throughout the developing world. In Mexico, where thousands have been killed in recent drug wars, State harnessed the same technology by developing a free short code to allow people to report crime anonymously to get around their fear of reprisals from drug gangs.

Ushahidi, a non-profit tech company, has developed a whole range of promising development-related tools. It was used to map violence after the Kenyan elections in 2008 (via text message reporting), but it now offers software that can be used for a range of purposes including responding to natural disasters.
In Australia's own immediate region, the uptake of mobile phones has been rapid with the entry of companies like Digicel. This presents opportunities for the Australian aid program.
As The Economist highlighted in an article earlier this year, the uses for mobile phones in the developing world are staggering: checking market prices, learning English, transferring money, verifying the authenticity of medicines, translation services. All can be done by mobile phone. As it concluded:

Talk of a “Development 2.0”—meaning a mobile-driven transformation of how poor countries develop—thus seems premature. But the potential of mobile services should not be underestimated. If they take off, they could transform lives and livelihoods, not just by connecting the world’s poor to the infrastructure of the digital economy, but by allowing them to become digital producers and innovators.

The end of an era...

15 April 2011

By Annmaree O'Keefe, Lowy Institute Fellow and Editorial team, Interpreting the aid review 

As Todd Moss from the Center for Global Development noted during his recent presentations to audiences in Canada and Australia, the “doubling aid” era is probably finished. The race to the top of the donors list which characterised much of the last decade is over, as many of the contestants deal with the continuing fallout of the financial crisis. But there are some exceptions and Australia is among the shrunken list of donors that are sticking by their commitments.

Looking back over the 50-plus years of international development assistance, this retreat by donors is not unique. Global commitment to official aid and the reduction of poverty has a chequered history.

The international commitment to aid started well enough in the early 1960s when together State donors provided between 0.51 and 0.55 per cent of their country’s income to the developing world. After that, the decline set in and despite occasional blips and international promises to meet the overseas development assistance (ODA) goal of 0.7% of gross national income, the trend has continued downwards. From 1964 to 1973, the percentage dropped by half to 0.27%; from 1974 to 1992, it made a modest recovery to the low 0.30 percentage points but then with the collapse of the Berlin Wall, the end of the Cold War and the global recession of the early 90s, it plummeted to the low 0.20s. The early 2000s saw another recovery in the wake of 9/11 combined with a turn of the millennium surge in support for aid which saw it climb back to .32% in 2005.

But the commitments made in 2005 at the Gleneagles G8 and later that year at the UN MDG Leaders Summit have not eventuated in the wake of the global financial crisis with the same enthusiasm as they were made. The average ODA/GNI ratio dropped again to 0.27% in 2007 although it has subsequently climbed back to 0.31%. The OECD’s projections for 2010 are 0.32% of ODA/GNI or US$108b. But this in itself is a disappointing 16 per cent less than the 2005 commitments which promised a global aid pool of $126 billion by 2010.

Those same OECD projections show that only two of the 11 EU members that committed to reach 0.7% by 2015 are on target. Exceptional in this crowd is the UK which is standing by its commitment and which this year will reach 0.6% on its way to the 0.7% target by 2013 – despite the government’s cuts to other parts of the national budget. In part, this steadfastness is linked directly to domestic considerations. As noted by the UK Foreign Secretary, William Hague, during his talk at the Lowy Institute in January (blogged on by Danielle here), there is a strong relationship between a foreign aid program and wider foreign policy and global interests such as national security.  

The US aid budget appears to be faring less well as Congress battles behind party lines on how to reduce the federal budget deficit. The fate of the aid budget has not been helped by a recent Bloomberg National Poll which found that 7 out of every 10 Americans think that Congress could find major savings by slashing the aid budget.

What do these trends mean for Australia’s future aid program?

It contains the lesson that aid programs remain hostage to external events and pressures – domestic and international. This was reinforced when in the wake of Queensland’s floods earlier this year, the Opposition Leader, Tony Abbott, identified savings in the foreign aid budget to offset the costs of what is basically the domestic aid budget.

At the moment, there are international and domestic political imperatives which will probably protect Australia’s aid budget and 0.5% ODA/GNI commitment in the short term. But as a discretionary item in the Federal Budget, its future bounty is likely to remain tightly linked to its continued direct relevance to core national interests. Fortunately for the world’s poor, that relevance is still clear.

Image by Flickr user damaradeaella.

Aid & development linkage

15 April 2011

By Danielle Cave, Editorial team, Interpreting the aid review

  • We are blogging on for another few weeks. We are always on the look out for content so if you have any views on the future policy direction of Australia's doubling aid program (or something to share with readers) send it through and take advantage of this unique online discussion on the future of Australia's aid program, before it disappears...



  • India's sex ratio: where have all the girls gone? A cultural preference for sons and the increasing availability of prenatal screening have helped contribute to a worsening in India's sex ratio. Such imbalances are not confined to India. Last year the Chinese Academy of Social Sciences warned that by 2020 one in five young Chinese men would be unable to find a bride because of the dearth of young women.


  • Amnesty International analyses the human costs of the 'social media revolution'. Mark Colvin looks at the revolutionary development of social media from a journalist's perspective: "Social media is like a really big wave for journalists. If you get on it, and ride it skilfully, it'll carry you a long way. If you miss it, it'll dump you."


  • Last week, USAID head Rajiv Shah warned congress that at least 70,000 children around the world could die if funding for USAID's global health programs were to be cut under the Republican budget proposal. His remarks weren't popular with this blogger. (thanks Raoul)


Image by Flickr user US Mission Geneva.

Blog on

14 April 2011

By Danielle Cave, Editorial team, Interpreting the aid review.  

Just a quick post to let readers know that we will be blogging on until the end of April (in line with the completion of the independent aid review) later this month.  

After last week's attempt at a 'call-out' we were inundated with blogs, however, the more blogs we receive, the more blogs we will post, so please keep them coming.

If you have any views on the future policy direction of Australia's doubling aid program or something to share with interested readers (from podcasts to videos to word clouds, etc) this is your last chance to send it through and take advantage of this unique online discussion on the future of Australia's aid program, before it disappears...



Image by Flickr user cambodia4kidsorg.

Is giving the greatest moral challenge of our time?

14 April 2011

By Weh Yeoh, co-founder of and advisor with Handicap International

It has been a tumultuous couple of months. We've had massive earthquakes in not one but two countries. We've seen huge amounts of flooding in Brazil and Sri Lanka. In Australia alone, we've had unprecedented amounts of flooding and bushfires.

At a time when many of us are feeling the pressures of the cost of living, it is clear that the need to give to others is greater than ever now.

Unfortunately, according to rhetoric at a national level, the simple of act of giving has never been so complicated. Let's say you're a charitable person. You give regularly to the Salvos at train stations. You may have even read Peter Singer's excellent book 'The Life You Can Save' and taken the pledge on his website to donate a considerable part of your wealth every year to charity. You've identified that, as a result of these events, there are many people who need your help. Where then should your money go?

If you're like Tony Abbott, you believe that your money should stay in Australia. You believe that, as his often repeated tagline goes, "charity begins at home". Allegedly borrowing this idea from One Nation's Queensland State Director, Ian Nelson, Abbott questions the need to spend hundreds of millions of dollars on overseas aid, when the amount proposed by the government for flood victims was much less.

Or perhaps you agree with Abbott's insinuation that donating to flood victims is unnecessary, considering you're going to be slugged with a flood levy to help pay for the damages anyway? In that case, you may prefer to give to the New Zealand Earthquake Appeal, because of our proximity and long tradition of close ties with this country. As an audience member on ABC's Q&A program stated, we have a responsibility to help our "ANZAC cousins" in their time of need, and should be diverting money away from programs such as those set up to build Islamic schools in Indonesia. How could we possibly offer up money for Muslims, an ideology so far removed from that of our own country, when there are others suffering who we fought alongside with almost 100 years ago?

Perhaps, though, you were shocked by the enormity of the earthquake in Japan, and feel that that is where your donation should go. After all, the earthquake was the 7th biggest of all time, and it moved the entire country's coastline by up to 4m. Surely the magnitude of this disaster demands a response.

On a personal level, there are many different ways of looking at the same problem.

On a national level, the Australian government is investing a lot of time and effort into determining where and how we, as a nation, should best be giving. To their credit, they called for submissions from the public to canvas a wide range of opinions on the matter. This is crucial, considering the Australian government has previously been criticised for not having a plan for foreign aid, despite plans to steadily increase it.

Research has consistently shown that, in the USA at least, people tend to over-estimate the proportion of the budget spent on foreign aid. Most people think that the US government spends 25% of its budget on overseas assistance, when in reality the figure is 0.21% (as a % of GNI). When asked what an acceptable amount should be, the answer is closer to 10%. Put another way, most US citizens would be happy if their government spent fifty times more than what they currently do on foreign aid.

In Australia, we are looking at increasing our commitment to foreign aid to 0.5% of GNI by 2015-16, up from our current level of 0.33%. Despite our inability to reach the internationally agreed target of 0.7% that 5 other countries have attained, we continue to strongly promote programs that benefit us as a nation. The previously mentioned Indonesian schools program, the legitimacy of which was questioned on Q & A recently by an audience member, only has the support of the government because it promotes "moderate Islamism", and hence has been argued to reduce the threat of regional terrorism. As tenuous as this logic is, it highlights, as our own Foreign Minister did, how we justify the existence of foreign aid when we can get something out of it, not because we actually want to help others.

The question therefore should be, given that 99.67% of our GNI is allocated to further our country's interests, is it too much to ask to give 0.33% for purely altruistic causes?

The message we are being told by both major political parties is unequivocally - yes.


ODE Talks aid, development & effectiveness

12 April 2011

By John Davidson, Office of Development Effectiveness (ODE), AusAID

Some contributors to this blog have referred to publications by AusAID’s Office of Development Effectiveness (here and here). In addition to our papers, ODE contributes to the development conversation via our podcast, 'ODE Talks', which readers may be interested in.

In our latest edition, Johannes Linn from the Brookings Institution talks about the challenges of bringing activities to scale, as the aid program itself rapidly scales up. In the past decade, global aid flows have increased from 80 billion US dollars to 130 billion, but the average size of aid activities is shrinking. Internationally, more than half of all donor projects amount to less than 100 thousand US dollars. Johannes explains how donors can grow small activities in order to reach more people and reduce burden on partner governments.

As fellow Brookings contributor Lawrence Chandy noted on this blog, the total number of global poor may have fallen to 900 million in 2010. He argues it may become feasible to create a global safety net to provide the poorest with the $1.25 per day it would take to lift them out of poverty. On ODE Talks, Todd Moss from the Centre for Global Development argues the case for cash transfers and suggests that they may become the standard against which other donor and NGO programs are measured. 

And Professor Paul Collier, author of The Bottom Billion, spoke with us about how to manage natural resources for development in fragile stages so that they contribute to prosperity, not plunder. He sees Australia’s experience with natural resource management – and in dryland agriculture – as areas of comparative advantage as the aid program expands in Africa.  

We at the Office of Development Effectiveness have been following the 'Interpreting the Aid Review' blog with interest. It’s exciting to see the quality of the debate and commentary coming through. As this blog draws to a close later this month, we hope you’ll listen in to the podcast as we talk more with international experts on aid, development and effectiveness.

Image by Flickr user derrickkwa.

Aid effectiveness for whom? (part 2)

12 April 2011

By Marc Purcell, Executive Director of the Australian Council for International Development (ACFID)

Part 1 of this blog can be found here.

Three examples: Indonesia, Burma and the Solomon Islands
Civil society in all its manifestations is a critical component to human development and essential part of human freedom. In Indonesia, student and CSO agitation led to the fall of the declining Suharto dictatorship in the wake of the 1997-98 Asian economic crisis. Since then there has been an explosion in the variety of civil society organisations and social service providers and a more vibrant media. This forms a critical social component of the stable, prosperous middle-income country that has emerged today.

So, do Australian aid policy-makers recognise the essential role of Indonesian civil society and seek to foster it as a compliment to the bilateral aid given? To some extent, they have begun to—with funding to Islamic social service organisations— but a coherent approach to CSOs is still wanting as AusAID staff are often too stretched to liaise with civil society or Australian NGOs and their partners in Indonesia.

In authoritarian states, such as Burma, changes in the ways citizens are organising are often disguised by the overt conflict or stasis at the national level. In Burma it is estimated that there are over 214,000 CSOs assisting citizens with a multitude of social needs at a local level.  In the wake of Cyclone Nargis in 2008, it is argued by some that the unofficial assistance flowing into the country from the diaspora, and outreach of indigenous organisations, equalled official donors’ programs. CSOs have developed and proliferated in the twenty two years since the failed 1988 democracy uprising and the collapse of the previous military dictatorship. Can donors like Australia factor in strategies to support this trend and foster greater human development in coming decades?

In the Pacific, and as an example the Solomon Islands, the role of churches as CSOs serves to further highlight the importance of community organisations in effective aid and development. The mainline churches’ involvement in education and health service delivery is significant throughout the Pacific. In the education sector, both formal and non-formal, churches provide about 27% of educational services, and in the health sector they provide about 13%.

These short examples highlight that the role of civil society in achieving development outcomes for the poor cannot continue to be considered peripheral by the Australian government’s aid program.

What does all this mean for the AusAID scale-up?
The premise that foreign aid is an effective tool to reduce poverty via support for economic growth in developing countries is under increasing pressure globally. The need to better demonstrate the positive impact of Official Development Assistance (ODA) on poverty reduction has re-emerged following the impact of the global financial crisis on developed countries, the patchy progress of fifty years of investment in economic growth in low-income countries, new security risks, continuing governance and corruption issues in aid recipient nations, and calls for greater emphasis on the benefits of trade and private investment.

We warn against defining effectiveness and efficiency from the point of view of domestic media concerns and that contractual risk alone is self-defeating, and will lead to a loss of confidence in the aid program by the Australian public.

We also argued to the Review Panel that a better frame for measuring our work is not just increases in income, but also the reduction of inequality and insecurity over time, and this can be best assessed against objectives and accepted benchmarks in the Millennium Development Goals and internationally agreed human rights standards.

Finally, ACFID believes that Australia must redefine the core objective of the aid program to one of assisting developing countries to reduce poverty and achieve sustainable development, as has been recommended in previous reviews of the aid program. This will focus the program on effectiveness in the longer term, and make it more resistant to attempts to harness ODA to other government foreign policy or defence goals without reflection or evaluation of human development impacts. Only then will a clear message about Australian aid effectiveness emerge.

These issues are also critical to the review of the Paris Declaration and Accra Agenda for Action that will take place at the High Level Forum in Busan at the end of 2011.

This post is based on the ACFID submission to the Aid Review Panel. ACFID is the peak council for 70 Australian not-for-profit aid and development agencies, and the regulator of the ACFID Code of Conduct. Image by Flickr user Horia Varlan.

The World Bank as a Foundation?

11 April 2011

By Todd Moss, Vice President for Programs and Senior Fellow at the Center for Global Development

The World Bank as a Foundation? Why I’m Scratching My Head Over the World Bank’s New Vision…

Rapid changes in the world, especially the remarkable growth of so many once-poor countries and the revolutions sweeping across North Africa and the Middle East, will have tremendous consequences for institutions like the World Bank. The Bank-Fund Spring Meetings start next week and it’s a chance for shareholders and Bank management to check-in and throw issues on the table. Among the many big trends and questions about the future of the Bank, here are a few on my mind:

  • The New Bottom Billion? With most poor people now living in middle income countries, how is this changing the Bank and its work? How is its relationship with the big emerging markets—as active shareholders rather than just clients—really going to change Bank strategy and governance?


  • What’s to become of the Bank’s soft loan window? As Ben Leo and I project, the World Bank’s IDA is about to lose more than half its client countries as they become too rich. What is the Bank’s thinking on what to do? (Stay the course? Shrink? Change IDA’s business model?)


  • What about global public goods? The development frontier is increasingly moving from narrow country programs to broader regional and global public goods, especially clean energy, technology, and infrastructure. What’s the Bank’s role here?


  • The oil revenue problem? So many countries are heavily commodity dependent, yet the Bank and other development partners really do not have good answers to the problem of how to (1) mitigate harmful effects of resource income or (2) effectively leverage revenues for diversification. This is especially relevant for North Africa and the Middle East where so much attention is likely to focus.


That’s why I was excited to attend Bank President Bob Zoellick’s speech last week in anticipation of a major new announcement ahead of the Spring Meetings. What vision for the future of the Bank was going to be put to the shareholders? What was the Bank going to do to respond to the demands on the streets of the Arab world?

It started well, with Zoellick pointing out the frustration in the Middle East and the nugget that the region’s non-oil exports accounted for just 16% of GDP. But then—in what presumably is supposed to be the newsworthy bombshell of the speech—was this:

In 1944, the World Bank was established by governments to lend to governments. In 1956, our shareholders established the IFC to invest in the private sector. Now it may be time to invest in the private, not-for-profit sector – civil society –  to help strengthen the capacity of organizations working on transparency, accountability, and service delivery….

I suggest it is now time for the World Bank to examine, with its Board and shareholders, whether the Bank needs new capabilities or facilities that could leverage support from countries, foundations, and others to strengthen the capacity of [civil society organizations] working on accountability and transparency in service delivery. We could give priority to countries in the Middle East and North Africa, and in Sub-Saharan Africa.

Huh? Now, I’m all for helping to create popular demand for accountability and transparency, but is this really the comparative advantage of the World Bank? Isn’t this exactly the kind of “mission creep” Jessica Einhorn (wisely) warned against a decade ago? Isn’t direct support for civil society better handled by foundations and organizations like the Open Society Institute than a huge international financial institution without the same on-the-ground links and legitimacy? The Bank’s mission to promote growth and reduce poverty may be broad, but the Bank should—I would think—still avoid trying to be all things to all people. This latest idea leaves me scratching my head.


This blog was re-published from the Center for Global Development (CGD) blog, 'Global Development: Views from the Center', and was re-published with permission from CGD.

Rethinking Burma

11 April 2011

By Zetty Brake, Campaign Coordinator, Burma Campaign Australia

Until there are significant changes to AusAID’s Burma program, the effectiveness of Australia’s aid program to Burma will be questioned. AusAID’s website states:

“Australia has for many years sought to help the Burmese people through a program of humanitarian assistance targeting Burma’s poor and most vulnerable.”   

In eastern Burma 13.8% of children die before their fifth birthday nearly double Burma’s national average of one in 7.1% and one in 138 women in eastern Burma die from pregnancy or child birth,  a rate 3 times higher than the national average of one in 417. These health statistics indicate the poverty and vulnerability amongst communities in eastern Burma, as well as a higher proportion of need. One would assume that AusAID’s Burma program would target communities in eastern Burma.

Unfortunately AusAID’s current program does not, and in fact it fails to reach the most vulnerable and in need in Burma – internally displaced persons and other vulnerable populations located along Burma’s borders. 

Thai-Burma border

AusAID’s Burma program will provide almost $50 million in aid (2010-11) to Burma and to Burmese refugee communities living in neighbouring countries. However, due to restrictions on aid and aid workers in Burma imposed by the military regime this aid does not reach communities who need it the most.

Humanitarian aid can reach these communities, through an aid delivery method called cross border aid. Utilising such a delivery method, could see life-saving aid reach 2.5 million extremely vulnerable and needy people in eastern Burma, who are currently receiving no support or assistance from AusAID.

Moreover, by not providing cross border aid to Burma AusAID is undermining the effectiveness of its program. 

For example, addressing infectious disease in Burma is a part of AusAID’s Burma program. Burma has a very high Malaria rate and the rate of infection amongst populations in eastern Burma is much higher than the national average. Until the malaria situation in eastern Burma is addressed, it will continue to undermine efforts to reduce infection rates in Burma, as it has done in Thailand. Thailand’s Tak province, which abuts Karen State in eastern Burma, consistently has the highest rate of Malaria in the country, with over 8,260 cases in 2009. Effective Malaria prevention and treatment programs in eastern Burma can only be delivered via cross border aid.

AusAID’s inclusion of aid to Burma’s border regions within its aid program would strengthen existing multilateral aid efforts and ensure the program targeted the most vulnerable in keeping with the Principles of Good Humanitarian Donorship.

By introducing cross border aid as a complementary aid mechanism to existing humanitarian relief efforts Australia would achieve its goal of a strategic, comprehensive and effective aid program for Burma, not to mention the huge impact it would have on the men, women and children receiving the assistance. 

Image by Flickr user jamesonwu