The UK’s battle to make poverty history: Aid targets still to be met

Despite years of spending in the name of development, deep and widespread poverty has persisted in the vast majority of developing countries. The Broker online published an article highlighting UK’s fight against world poverty. The abridged version is presented here.

Immediately after the general election in 2007, the new UK government implemented its manifesto pledge to transform the foreign affairs ministry’s aid wing, the Overseas Development Administration, into a new Department for International Development (DFID), led by a cabinet minister and dedicated to ‘leading the UK’s fight against world poverty’. In the autumn of 1997, DFID published its first white paper with the ambitious title Eliminating World Poverty. Two more white papers – one issued in 2000 and the other in 2006 – reinforced the message of poverty elimination. A law was passed in 2002 to ensure that the purpose of the UK’s aid programme is poverty reduction, and that aid cannot be tied to UK goods and services.

Gordon Brown, as Blair’s finance minister and, since 2007, as prime minister, has consistently pushed for global action on debt relief and, more recently, on the economic crisis and its potential impact on the world’s poorest countries.

Increasing aid
DFID spent £5.3 billion on official development assistance (ODA) in the 2007–2008 fiscal year. Over half of that (58%) went to developing countries, either directly or through an international body. And over a third (37%) went to international bodies – notably the European Commission, the World Bank and the United Nations – to support their development activities, such as healthcare, education and economic growth.

The UK ranks third in the world, behind the US and Germany, for its total aid contribution. But in terms of ODA as a proportion of gross national income (GNI), the UK ranks tenth out of the 22 members of the OECD’s Development Assistance Committee (DAC).

DFID’s budget is scheduled to increase to £7.9 billion by the fiscal year 2010–2011, rising by an average of 11% a year, and the government has pledged to increase aid to the equivalent of 0.7% of the UK’s GNI by 2013. Whether that will be possible in view of the economic crisis and the particularly weak state of the UK’s public finances is questionable. But according to a recent DFID statement, ‘in the face of economic downturn, international commitments to aid need to be maintained’.

Development and the crisis
The worldwide recession that has followed the global financial crisis is having a deeply damaging effect on the developing world. Demand for its exports of commodities and manufactures have been dramatically reduced, and capital flows are far lower, including direct and portfolio investment and remittances.

The Overseas Development Institute (ODI), one of the UK’s leading research institutions in the field of development, estimates that by the end of 2009 developing countries will experience an income reduction of at least US$750 billion – of which US$50 billion in sub-Saharan Africa alone. This will mean rising unemployment, poverty and hunger. In mid-June 2009, the UN Food and Agriculture Organization (FAO) announced that the total number of people suffering from hunger had risen by 100 million in the previous year – the steepest increase ever – to a total of just over 1 billion.

ODI researchers are tracking the spread of the recession. In a March 2009 report entitled A Development Charter for the G20 they call for a ‘global poverty alert system’ to monitor the economic impact of declines in trade, financial flows, remittances and aid. This system would also track the impacts of the recession on people’s lives, including the loss of jobs, lower incomes and falling investment in health and education.

DFID itself has continued to stress the importance of maintaining the fight against poverty, but that purpose has increasingly been framed in a way that suggests the benefits for the donors as well as the recipients.

Aid and trade
UK Ministers announced a boost in funding for ‘Aid for Trade’ to £800 million – an increase of 60% since 2005. This is meant to provide support for African countries in improving access to markets, upgrading transport and infrastructure and making borders more efficient. They also launched a new website to collect evidence of countries adopting protectionist policies to counter the global recession. Global Trade Alert is an independent initiative run by the Centre for Economic Policy Research (CEPR). It draws on economic expertise from independent research institutes in seven regions of the world, and monitors not just tariff barriers – which are heavily constrained by World Trade Organization (WTO) rules – but also non-tariff barriers and national crisis measures.5 Global Trade Alert is intended to complement and surpass the WTO and World Bank’s monitoring initiatives by identifying countries’ trading partners that are likely to suffer because of new measures.

Climate change and development
Another area in which development has been ‘joined-up’ with other policy concerns is the environment. Sir Nicholas Stern (now Lord Stern) led the work of both the Commission for Africa and the highly influential Stern review, The Economics of Climate Change. His work on climate change has undoubtedly encouraged a greater commitment to action, the impact of which will become apparent at the UN Summit on climate change in Copenhagen in December 2009. He is also looking to shift the debate on development: ‘As we look forward to the challenges the developing world faces beyond 2015 … I think that our targets for support from the public budgets of rich countries are likely to be closer to 1% of GDP than 0.7% for the coming two decades. With the private flows that could come with them and the growth and poverty reduction they could help foster, I think that these flows would constitute very wise investments for the world as a whole as well as being our duty as citizens of the world’.

Doubts about aid effectiveness
There seems to be broad public support for the UK’s commitment to development. But is today’s renewed optimism that aid policy can make a difference in ending world poverty supported by tangible evidence? There are still considerable questions about whether aid works.

One skeptic is Peter Boone argues that to have a real impact on extreme poverty, aid needs be much more carefully targeted, allocated on the basis of good scientific evidence of its effectiveness and delivered through well designed institutions.

The next UK government
By June 2010 at the latest, there will be a general election in the UK. It is likely that the current government will be replaced by one led by the Conservative party. Is this going to make a big difference to UK policy on development?

The Conservatives promise to focus on improving three key areas of international development, all of which are reasonably closely aligned with the current government’s goals: ‘Aid: we are committed to achieving the United Nations target of spending 0.7% of national income as aid by 2013… Trade: we will put maximum effort into achieving an ambitious, pro-development global trade deal, because trade will do more to eliminate poverty than anything else‘. The third area they emphasize is conflict resolution: ‘We will give much greater importance to conflict prevention and resolution – because a nation mired in conflict remains vulnerable until the fighting stops, no matter how much aid or trade it receives’.

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