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Africa: "Aid" Promises Unmet

AfricaFocus Bulletin
Jun 5, 2007 (070605)
(Reposted from sources cited below)

Editor's Note

"The record so far indicates that apart from debt reduction, African countries haven't realized the benefits promised at the G-8 Summit two years ago, during the Year of Africa," John Page, the World Bank's chief economist for the Africa Region.

Except for representatives of rich countries themselves, now making new promises in advance of the G-8 summit, the verdict appears to be a consensus. The World Bank itself is joining World Bank critics in chiding rich countries for failure to live up to their promises to Africa. And the official Development Assistance Committee statistics, released earlier this year, show a drop in aid from 2005 to 2006.

This conclusion holds whether debt relief deals are counted as aid or not, a controversial issue. According to the latest World Bank data, net official flows of aid and debt to African countries dropped to $35.1 billion in 2006 from $35.8 billion the previous year.

This AfricaFocus Bulletin contains press releases from the World Bank and from the Development Assistance Committee of the OECD, as well as a news report on a conference and statement in Johannesburg by African Monitor (http://www.africanmonitor.org).

For previous AfricaFocus Bulletins on economic issues, see http://www.africafocus.org/econexp.php

For a general review of the G8's record on Africa, see Henning Melber, "The G8, Africa and Nepad: A critical appraisal," in Pambazuka News http://www.pambazuka.org/en/issue/303

In a recent related article in the New York Times Magazine (http://www.nytimes.com, article accessible free with login), journalist Tina Rosenberg comments on "Reverse Foreign Aid," She notes that in 2006, the net transfer of capital from poorer countries to rich countries in 2006 was $784 billion, up from $229 billion in 2002.

According to the midyear UN report on the World Economic Situation (http://www.un.org/esa/policy/wess/wesp.html), the African continent registered a negative net transfer of $95 billion, including $10 billion from sub-Saharan Africa, excluding Nigeria and South Africa. See press release at http://www.un.org/News/briefings/docs/2007/070530_Ocampo.doc.htm

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G-8 Commitments to Africa Are Behind Schedule

World Bank finds donor nations lag on promises on greater aid, freer trade

World Bank Press Release No:2007/419/AFR

For more information, please visit: http://www.worldbank.org/africa and http://www.worldbank.org/gmr2007

Contacts:
In Washington:
Tim Carrington, (202) 473 8133, tcarrington@worldbank.org; Ana Elisa Luna, (202) 473 2907, alunabarros@worldbank.org

Washington, June 3, 2007 - Two years after pledging a doubling of aid for Africa and new opportunities for African exports, donor nations are falling behind in fulfilling their promises, according to the World Bank. The assessment comes ahead of a meeting of the G8 in Heiligendamm, Germany, from June 6 to 8.

With Africa's economic prospects high on the G8 agenda, the World Bank noted that despite the 2005 Gleneagles Summit, resulting in pledges to increase Africa's development aid to $50 billion by 2010, foreign assistance for development programs in many African countries remains essentially flat.

Meanwhile, the faltering trade talks under the World Trade Organization's Doha Round have been another disappointment.

"The record so far indicates that apart from debt reduction, African countries haven't realized the benefits promised at the G-8 Summit two years ago, during the Year of Africa," said John Page, the World Bank's chief economist for the Africa Region.

"Many donor countries have increased support for special humanitarian assistance and debt reduction over four decades, but, unfortunately this does not translate into additional resources for African countries to rebuild their infrastructure, train teachers and combat HIV/AIDS and malaria."

Obiageli Ezekwesili, World Bank Vice President, Africa Region, noted that for their part, African countries are increasingly taking the lead in pushing improved governance, and in many cases have established significantly more attractive environments for investment. "The question is less about whether the African partners are delivering on their promises, than whether the wealthy industrial nations are honoring the commitments they all boldly made in Gleneagles," she said.

While donor aid is lagging, the World Bank said that progress in lowering debt burdens for Sub-Saharan Africa has moved ahead somewhat faster. Multilateral debt relief undertaken by the World Bank, the International Monetary Fund and the African Development Bank will bring about the full cancellation of $50 billion of debt over 40 years. Beginning in July, 2006, when the initiative took effect, 16 African countries have benefited. Another 17 will become eligible once the reach the completion of debt reduction programs under the World Bank's Heavily Indebted Poor Countries Initiative.

Overall the lagging resource flows come on top of an earlier decline in African assistance: excluding debt relief and emergency food aid, assistance to sub-Saharan African fell by 2.1 % in real terms from 2004 to 2005. According to estimates in the World Bank's 2007 Global Development Finance, net official flows of aid and debt to African countries dropped to $35.1 billion in 2006 from $35.8 billion the previous year.

African countries that have posted solid record of economic growth, and have established macroeconomic stability through years of reform, have seen little or no increases in donor resources for financing development. Many of these countries - despite the recent history of growth - need external help to rehabilitate roads, extend access to electricity, and improve education and health systems.

"Our biggest concern right now is that we help Africa extend the gains that we have seen in the past five years," said Ms. Ezekwesili. "Only visible impact of growth in the standard of living of citizens can strengthen and guarantee their sustained support for reforming governments and this requires massive financial resources which the continent lacks."


Aid Set to Drop, Warns Monitoring Group

http://allAfrica.com

31 May 2007

Cape Town - Aid flows to Africa have remained static for two years and are set to drop, in spite of donor promises to increase giving, a monitoring group has found.

Moreover, donor support to agriculture and rural development has decreased, while African governments are failing to meet their target of increasing agricultural spending to ten percent of their budgets.

These findings have been released by the African Monitor, a South African-based NGO which has been established to ensure that donors meet their promises and aid recipients spend the money properly.

Archbishop Njongonkulu Ndungane of Cape Town, president of the NGO, told a media briefing that although Africa's growth rates had been impressive in the last few years, this did not automatically lead to improvements in the socio-economic conditions of the poor.

"Aid has remained static to Africa since 2005, and has decreased overall if debt relief to Nigeria and Iraq is excluded," Ndungane said. "Donors who promised to double aid to the continent are largely not fulfilling that promise. In 2007 and 2008 aid is expected to drop even further."

Ahead of the G8 Summit in Germany in June, the World Economic Forum's forthcoming Africa meeting in Cape Town and the African Union Summit in July, Ndungane called on world leaders "to prioritize delivery for the grassroots."


Development aid from OECD countries fell 5.1% in 2006

Development Co-operation Directorate (DCD-DAC)
Organisation for Economic Cooperation and Development (OECD)

http://www.oecd.org/dac

April 3, 2007 - The 22 member countries of the OECD Development Assistance Committee, the world's major donors, provided USD 103.9 billion in aid in 2006, down by 5.1% from 2005, in constant 2005 dollars. This figure includes USD 19.2 billion of debt relief, notably exceptional relief to Iraq and Nigeria. Excluding debt relief, other forms of aid fell by 1.8%.

Sixteen of the DAC's 22 member countries met the 2006 targets for ODA that they set at the 2002 Monterrey Conference on Financing for Development. However, aid to sub-Saharan Africa, excluding debt relief, was static in 2006, leaving a challenge to meet the Gleneagles G8 summit commitment to double aid to Africa by 2010.

Total official development assistance (ODA) from members of the Development Assistance Committee (DAC) fell by 5.1% in 2006 to USD 103.9 billion. This represents 0.30% of members' combined Gross National Income (see Table 1 and Chart 1). In real terms this is the first fall in ODA since 1997, though the level is still the highest recorded with the exception of 2005.

The fall was predicted. ODA was exceptionally high in 2005 due to large Paris Club debt relief operations (notably for Iraq and Nigeria) which boosted ODA to its highest level ever at USD 106.8 billion. In 2006, net debt relief grants still represented a substantial share of net ODA (see Table 2), as members implemented further phases of the Paris Club agreements, providing a little over USD 3 billion for Iraq and nearly USD 11 billion for Nigeria. Excluding debt relief, ODA fell by 1.8%.

Preliminary data show that bilateral net ODA to sub-Saharan Africa rose by 23% in real terms, to about USD 28 billion. However most of the increase was due to debt relief grants. Excluding debt relief for Nigeria, aid to sub-Saharan Africa increased by only 2%.

The only countries to reach or exceed the United Nations target of 0.7% of GNI were Sweden, Luxembourg, Norway, the Netherlands and Denmark. The largest donor in 2006 was the United States, followed by the United Kingdom, Japan, France and Germany. The combined ODA of the fifteen members of the DAC that are EU members accounted for 57% of total net ODA.

In 2006, net ODA by the United States was USD 22.7 billion, a fall of 20% in real terms. Its ODA/GNI ratio also fell to 0.17%. The fall was mostly due to debt relief which was exceptionally high in 2005 as the United States forgave all its outstanding debt with Iraq in 2005 rather than spreading it over several years. US disbursements to Sub-Saharan Africa (USD 5.6 billion) reached a record high mainly due to debt relief (USD 1.4 billion, of which Nigeria was USD 0.6 billion) and increased disbursements for education, HIV/AIDS and malaria programmes. Net ODA flows to Iraq remained substantial (USD 4.8 billion), to Afghanistan increased (USD 1.6 billion) and to the least developed countries were at their highest level ever (USD 5.5 billion).

Japan's net ODA was USD 11.6 billion, representing 0.25% of its GNI. The 9.6% fall in real terms since 2005 was partly due to exceptionally large expenditures in 2005, including humanitarian relief for the Indian Ocean tsunami and debt relief grants to Iraq. Japan's net ODA has been on a downward trend since 2000, except for an increase in 2005 due to debt relief. The 2006 ODA total includes an increase in Japan's contributions to the International Financial Institutions.

The combined ODA of the fifteen DAC-EU members rose slightly by 2.7% in real terms, from USD 55.7 billion in 2005 to USD 58.9 billion in 2006. This represented 0.43% of their combined GNI, surpassing the EU collective ODA/GNI target of 0.39%. The increase in 2006 was mainly due to debt relief grants.

Aid rose in ten DAC EU member countries as follows:

  • Ireland (33.7%), reflecting increasing bilateral aid as well as large multilateral contributions,
  • Spain (20.3%), due to a large increase in contributions to the UN and other multilateral, organisations, as well as an increase in disbursements by AECI, the Spanish Co-operation Agency
  • Sweden (15%), due to general scaling up of its aid and debt relief,
  • United Kingdom (13.1%), due to a substantial increase in contributions to international organisations,
  • Aid also rose in Denmark (2.9%), France (1.4%), Germany (0.9%), Luxembourg (4.9%),
  • Netherlands (4.2%) and Portugal (0.6%).

Falls were noted in Austria (-6.0%), Belgium (-2.7%), Finland (-9.9%), Greece (-4.1%) and Italy (-30%, mainly due to the timing of its contributions to international organisations).

Aid provided by the European Commission rose by 5.7% to USD 10.2 billion reflecting increased budget support and improved disbursement capacity from the higher level of commitments made in recent years.

ODA from other DAC countries rose, or fell, from 2005 to 2006 as follows:

  • Australia (22.8%), primarily due to debt relief, notably to Iraq and the Multilateral Debt Relief Initiative,
  • Canada (-9.2%), due to the decline in debt relief and lower levels of humanitarian aid compared to the extraordinary response to the Indian Ocean tsunami in 2005,
  • New Zealand saw no change (0.0%),
  • Norway (-2.2%),
  • Switzerland (-7%), due to the lower volume of debt relief grants provided.

Net ODA data reported by seven non-DAC economies rose, or fell, from 2005 to 2006, as follows:

  • Chinese Taipei (3.6%),
  • Czech Republic (6.4%), due to increased contributions to the EC,
  • Iceland (55.3%), due to a general scaling up of Iceland's contribution to development cooperation,
  • Korea (-44.6%), due to lower contributions to the World Bank and regional development banks,
  • Latvia (-1.0%),
  • Lithuania (15.2%), as it increased its contributions to the EC,
  • Slovak Republic (-9.1%), as bilateral aid fell.

Gross ODA in 2006

On a gross basis, ODA represented about USD 116 billion. The largest donors were the United States (USD 24 billion), Japan (USD 18 billion), the United Kingdom (USD 13 billion), Germany and France (USD 12 billion each), the Netherlands (nearly USD 6 billion), Spain and Italy (just over USD 4 billion each) representing 80% of the total.

Did members meet their 2006 targets?

In 2002, DAC members made various announcements before or during the Monterrey International Conference on Financing for Development to increase their aid in 2006 from the levels in 2000 (see Table 3).

In Barcelona, the then fifteen EU members committed to collectively reach an ODA level of 0.39% of their combined GNI, with a minimum country target of 0.33% by 2006. Most members reached the country target, except for Greece, Italy and Portugal. Spain just missed on these provisional data due to recent changes in its national accounting system. The combined result in 2006 was 0.43%, well above the target of 0.39% set in 2002, mainly due to debt relief grants.

Since 2002, some EU members have set, and reached, even higher goals for 2006. Belgium set an ODA target of 0.5% of GNI; Sweden has surpassed its target of 1%; Denmark committed to maintain a minimum ODA/GNI ratio of 0.8%; and Ireland to attain a level of expenditure of EUR 734 million in 2006 (and to reach an ODA/GNI ratio of 0.5% in 2007 and 0.7% in 2012).

Net ODA from the United States in 2006 reached higher levels than expected due to large debt relief programmes and increased aid to sub-Saharan Africa, Afghanistan and Iraq. Due to severe budget restrictions, Japan did not make any announcement of a target for its ODA in 2006. Norway's strong growth in GNI in recent years made it impossible to meet its target of 1% ODA/GNI by 2005.

Future Prospects

ODA is expected to fall back slightly again in 2007 as debt relief for Nigeria and Iraq tapers off. It is expected that other types of aid should then increase as donors fulfil their more recent pledges (see Chart 2).

The EU agreed in 2005 to scale up its aid further to provide 0.56% of its members' combined GNI by 2010, or a minimum target of 0.51% for DAC EU members. The overall EU target takes into account commitments of some DAC EU members to increase or maintain aid levels beyond the minimum country target, as well as pledges by the non-DAC EU countries to participate in the scaling up of aid by moving to specified minimum aid levels.

Australia has announced that it will double its ODA to about 4 billion Australian dollars by 2010. Japan has indicated it will increase its ODA volume by USD 10 billion in aggregate over 2005-2009, compared to its ODA levels in 2004. Switzerland is to determine a new goal for 2009 and thereafter.


AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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