29 March 2013

A Changing Aid Landscape

A new aid landscape is emerging that increasingly involves a smaller role for traditional donors like the US government and the World Bank.
Headlines were made when the UK met its aid spending target of 0.7 percent of Gross National Income and Canada ‘restructured’ its aid agency. At the same time, emerging economic giants such as Brazil, Russia, India, China and South Africa (aka the BRICS) just wrapped up their summit in Durban, South Africa. The traditional donors are undergoing changes and there are some new kids on the block.
Dave Barger
Romilly Greenhill of the Overseas Development Institute (ODI) commended the progress of the UK, but warned that aid is declining.
“Total aid from traditional donors is now falling, and is likely to fall further in the years to come, while large BRIC economies such as China are increasing their engagement with developing countries, including by providing aid,” said Greenhill to Humanosphere.
“These recent events confirm the trends that we have identified in the report –non-traditional assistance is growing much faster than traditional aid and is likely to continue to do so.”
Developing countries are entering an ‘age of choice’ says a new paper authored by Greenhill and ODI. That choice means that competition is increasing between donors and giving an increasing amount of control to countries over their development paths.
The paper goes on to argue, “These new forms of financial assistance will have a game-changing effect on aid.”
An irrigation project in Tanzania involved the installation of new irrigation pumps with the technical support of Japanese experts. Initially, the project led to increases in incomes for the farmers, but that changed when the experts left, the pumps broke down and nobody could fix them.