UN report urges changes in aid to Africa

Addis Ababa, 21 September 2006 - A UN report has called for a new approach in overseas aid to Africa, saying that not only should it be dramatically increased but it should also be depoliticised and distributed multilaterally.

The ‘Economic Development in Africa 2006' report, issued by the UN Conference on Trade and Development (UNCTAD), is sub-titled ‘Doubling Aid: Making the “Big Push” Work'. Launched on 21 September 2006, the report notes that aid is currently released in a chaotic manner, with too many different donors pushing too many development projects that sometimes compete with each other.

“This has in turn stretched the administrative capacities of the recipient countries to breaking point and undermined any pretence of local ownership of development programmes,” the report says.

The Millennium Development Goals are being used as a reference point and timeframe for judging progress on aid policies in Africa. “However there are already clear signs of slippage,” says the report, listing issues such as the concentration of aid flows on a relatively small number of countries.

“There are also very clear signals that security concerns and energy politics are again shaping the policy debates on aid and development,” it stresses. “There are, most worryingly of all, growing concerns about the effectiveness of NEPAD [New Partnership for Africa's Development] as a reliable development framework, along with persistent worries about whether African elites are willing to forsake short-term, rent-seeking behaviour for longer-term commitments to productive investments.”

The report calls for a new “aid architecture”, drawing partly on the Marshall Plan that helped revitalize European economies after the Second World War. This entails releasing funds in predictable tranches, through grants rather than loans. The report says the grants should come with limited conditionality and should help strengthen public sector management.

“The time is perhaps right to revisit the idea, first broached in the 1950s, of a UN funding window for African development,” it says.

“Africa is often held up as a prime example of wasted aid…One reason why aid has not always succeeded in accelerating growth and development is that these have not always been among its objectives.”

According to the report, part of the problem lies in the “tendency to polarize the aid debate in which sceptics continue to return to a series of basic issues…questioning the absorptive capacity of recipients, and raising issues of incentive distortion, including those associated with ‘Dutch Disease' and fungibility problems.”

The report believes that many of these concerns are legitimate but “often exaggerated”.

The “miracle economies” in Asia show that “large amounts of well-targeted aid have produced some remarkable success stories in terms of growth and overall development,” the report adds.

Warning that African economies will need a sustained growth of 8 percent per year to meet the MDGs, the report stresses that major reforms in institutions and in current practice are essential “if a ‘big push' for African development is to be really successful, putting an end to aid dependency”.

Click here for full report.