18/01/2005 - Aid can and must be used more effectively to provide healthier and more secure lives for the 1.1 billion people in the world who live on less than a dollar a day and to achieve the Millennium Development Goals (MDGs) , according to the OECD’s annual Development Co-operation Report, published by the 22 nations and the Europe Union that provide the bulk of the world's development aid.
In 2003, these countries provided development aid totalling a record USD 69.0 billion, up from USD 58.3 billion in 2002 (see final 2003 figures). However, inflation and exchange rate movements, notably the weakening of the dollar, accounted for the bulk of the increase. Figures for aid disbursements in 2004 and expected disbursements in 2005 are not yet available. However, if donor countries follow through on their promises made in Monterrey in 2002 , aid is expected to rise to about USD 88 billion in 2006.
The Development Co-operation Report is issued by the OECD’s Development Assistance Committee (DAC) which co-ordinates the development aid policies of the world’s principle donors . It stresses that human security – democratic and accountable governments, the protection of human rights, and respect for the rule of law – is crucial for development. Citing the example of the Solomon Islands’ request for assistance from its regional neighbours, the Report notes that a combination of donors’ security assistance, combined with a programme of longer-term institutional reform and development assistance, can help countries regain political and economic stability. Development and security agendas must work better together, while at the same time respecting their proper mandates.
The DAC encourages donors to both increase and reallocate aid to ensure that the poorest countries receive more funding. As some countries, notably China, Malaysia and Thailand, are growing at a rapid rate, aid they received is now distributed elsewhere. The proportion of aid going to poor countries is rising, but more could still be done.
This reallocation would go some way to assisting progress on the MDGs. To date, the only goal likely to be met is that of halving the proportion of people living on less than $1/day by 2015, and then only in much of Asia and North Africa. Sub-Saharan Africa in particular on present trends cannot hope to attain that goal, nor those for gender equality, education, child health, or maternal mortality. Overcoming poverty will require a quantum leap – more nationally-driven strategies and policies supporting broad-based growth, trade and international policies that support development, more investment and more aid.
Improving aid procedures, practices and policies can also achieve better development outcomes. Looking, for example, at countries like Nicaragua with about 40 different donors, it is crucial that donors simplify and harmonise their efforts. In Mozambique, for example, 15 donors are funding the budget through a single mechanism, and in Bangladesh a dozen donors have switched their support for schools from separate projects to a united programme. To make the aid more effective, it must enhance the development goals of the recipient countries who are the ultimate owners of the plans and projects. These good practices have yet to become general practice.
There are signs of progress. Public/private collaboration has reduced the price of antiretroviral drugs for HIV/AIDS patients by 95 % in the last few years. And access to communications tools like telephones and the Internet has soared. In 1990, just over 500 million people had fixed or mobile phones. That number is now more than 2 billion. Growth has been robust in Africa, where there are now more mobile phones than fixed lines.
The Development Co-operation Report contains a special focus on the need for more aid directed towards supplying water and sanitation. Overall, donors are committing less to the water sector than in past years, and more still goes to fund urban infrastructure in middle income countries than to marginalised communities which suffer most from lack of clean water.
The Report also notes the need for better development information, including the gathering and interpretation of statistics. For example, recent research highlights the importance of workers’ remittances, estimated at some USD 34 billion /year from DAC member countries (almost half the amount of their official aid), which flows largely to India, Mexico, the Philippines and Turkey. Flows to Sub-Saharan Africa were negligible – about USD 1 billion compared to USD 20 billion in official aid. Most of the remittances – USD 22 billion - come from the U.S., with another USD 7 billion from Europe. This information is allowing policy makers to better assist workers to send remittances ‘home’ and to promote their use for developmental purposes.
Better information is also being sought on emergency aid. The Report notes that the huge global response to the Indian Ocean tsunami disaster is likely to raise both official and private aid considerably in 2005. The OECD is already working with the UN Office for the Co-ordination of Humanitarian Affairs to improve tracking of disbursements for tsunami relief, so that accurate data will be available to assess the extent to which pledges are ultimately fulfilled.
To receive a copy of the Development Co-operation Report, journalists are invited to contact the OECD’s Media Relations Division (tel. 33 1 4524 9700).