Is African aid set to rise again?

Pledges of greater financial assistance delivered at a UN-sponsored summit in Monterrey, Mexico, may finally reverse the long decline of aid to Africa (see graph) and other developing regions -- if the promises are actually fulfilled. In recent years, Nigerian President Olusegun Obasanjo reminded the 18-22 March International Conference on Financing for Development, there has been a "significant diversion of funds from development purposes, especially for Africa, to the financing of programmes in other parts of the world."

In Monterrey, however, the European Union announced that it would begin to raise its annual expenditure on official development assistance (ODA). The Union's level currently averages around 0.33 per cent of its gross national product (GNP), a proportion it plans to increase to 0.39 per cent by 2006. This will mean the disbursement of another $20 bn by 2006, on top of current levels.

Prior to the conference, British Prime Minister Tony Blair, who has declared Africa a top priority of his second term, pledged to get the industrial nations' Group of Eight and Organization for Economic Cooperation and Development to be better partners with Africa. The international community has "the best chance in a generation" to alleviate poverty in Africa, he said just before a tour of several West African countries in February.

In Monterrey: South African President Thabo Mbeki, UN Secretary-General Kofi Annan and Nigerian President Olusegun Obasanjo.

Photo : ©United Nations

The US, for its part, has said that it will progressively increase spending on ODA from the current level of little more than $10 bn per annum to $15 bn by 2006. The increases, which would go into a "Millennium Challenge Account," will produce a total of $10 bn in extra funds between late 2003 and the end of 2006, according to an explanation by US Treasury Secretary Paul O'Neill at a Monterrey press briefing.

Moreover, US President George W. Bush referred specifically to support for Africa and funding to combat AIDS in his announcement of the plan a few days before the conference opening. He cited successful marriages of aid and strong national policies in countries such as Mozambique and Uganda. Both President Bush and Treasury Secretary O'Neill stressed that aid would be forthcoming only to countries that met US criteria on good governance, transparency and fiscal probity.

Limits and conditions

At the Monterrey conference, South African President Thabo Mbeki welcomed the EU and US announcements. But he, President Obasanjo and Assistant Secretary-General of the Organization of African Unity Vijay Makhan all noted that the agreed international target for aid is 0.7 per cent of donor country GNP. In comparison, the EU increases, if fulfilled, would still fall short of 0.4 per cent of GNP, and the US plan would bring its share of GNP devoted to aid to only 0.15 per cent.

UN Secretary-General Kofi Annan repeated his call for doubling current worldwide aid levels from $50 bn to $100 bn a year. This would bring an increase in ODA as a share of donor country GNP from 0.25 to 0.5 per cent.

There was also concern in Monterrey about increased conditionality -- using the promise of aid, or its threatened withdrawal, to influence policy decisions within recipient countries. The US insistence that the Millennium Challenge Account would only be accessible to countries meeting stiff US standards appeared to many observers to contrast with the statements from European development cooperation ministers that aid only works well when there is full local "ownership" in its design and delivery.

However, at least one senior development official in Monterrey noted that the US emphasis linking aid to development and poverty eradication is now similar to that of the World Bank, EU and other donors. Since much US aid was previously provided for geopolitical purposes, the US guidelines presented in Monterrey represent a step in the right direction, the official felt.

Accepting responsibility

Developing countries accept responsibility for their own social and economic development, Mr. Trevor Manuel of South Africa stressed in his address at the opening session. They also acknowledge the importance of sound national policies and good governance as prerequisites for poverty reduction and sustained national growth. (Mr. Manuel appeared in Monterrey in a triple capacity: as his country's finance minister, as chair of the joint Development Committee of the World Bank and International Monetary Fund, and as the UN Secretary-General's special envoy on financing for development.)

Those principles, Mr. Manuel observed, are in fact an integral part of the New Partnership for Africa's Development (NEPAD), currently being promoted by Presidents Mbeki, Obasanjo, and a dozen others. In effect, Mr. Manuel said, the consensus reached in Monterrey embodies a North-South partnership, in which developing countries agree to promote sound national policies and developed countries agree to support them with the necessary resources, including aid.

Part of that consensus, he added, implies a bigger voice for developing countries in international economic decision-making. "Reform of international financial governance is critical to ensuring that developing countries benefit from globalization through participation."

While congratulating donors on their pledges of more aid, the UN Secretary-General also called for improving developing countries' trade prospects. "We can no longer continue to give with one hand," he said, "and take away with the other," specifically by setting unfair trade barriers to developing countries' exports to Northern markets.

Mr. Annan's remarks dovetailed with those of African leaders, who stressed the importance of reducing agricultural subsidies in the North, as well as high tariffs on potentially crucial African exports, such as textiles.