Even as the global financial crisis began to brew last year, donors in developed countries were delving deep into their collective pockets and doling out aid at unprecedented levels. According to statistics released by the Organisation for Economic Cooperation and Development (OECD) last week, development aid was at its highest level ever in 2008; the official dollar figure being US$119.8 billion.
This seemingly overwhelming generosity flowed from efforts by the G8 and G20 countries to keep pledges they had made years ago at the time the Millennium Development Goals were conceived and at subsequent summits. Prior to last year, it had seemed that none of the donors, though they had increased spending, would manage to do their part to spend down poverty.
Last year, in the face of the public disapproval of the international anti-poverty movement and mild criticism coupled with urgings particularly from United Nations Secretary-General Ban Ki-moon, donors ramped up bilateral aid. The United States led the way with an unparalleled US$26.9 billion, the bulk of which would have gone to Africa, that continent being the primary target of the Make Poverty History campaign and indeed the neediest. The second biggest spender was Japan with US$17.4 billion, followed by Germany, France and the United Kingdom, which contributed US$15.9 billion, US$12.4 billion and US$11.8 billion respectively to the pot.
Based on the commitment donors made five years ago to increase annual aid to US$130 billion by 2010, more spending is necessary. However, back then there was hardly a hint of the current crisis enveloping the world. Even as recently as early last year, the United States, for instance, would not have imagined itself embarking on trillion-dollar bailouts to salvage its own economy. While perhaps the other donors might not be spending such huge sums to try and keep recession at bay, none of those mentioned above, or any of the others for that matter, are in much better shape than the US financially.
While none of the international financial pundits have actually expressed the view that it might come to the point where donors have to weigh between meeting commitments to their own nations as against helping to lift the developing world from the doldrums, one can hope, but cannot assume that it will never get that far. The clarion call by the UN, and which is being echoed by the World Bank and the International Monetary Fund, is for increased aid funding. OECD Secretary-General Angel Gurria has stressed that aid cuts would place a dangerous additional burden on developing countries which are already faced with restricted sources of income and burgeoning poverty.
But, it must be disheartening for donors that on the face of it alone, the huge dollar leap in aid from US$103.4 billion in 2007 to US$119.8 billion last year, appears to have had little impact. Where is the concomitant 10% reduction in the number of children dying of hunger, or of people living below the poverty line? Perhaps if the beneficiary countries were looked at individually, and based on the amount of aid they drew down, there might be positive signs of change in some areas. Surely though these meagre gains were not what was envisaged when the figures were budgeted and agreed to.
It must be noted too that apart from the now bleak outlook on aid, the downturn has already hit some developing countries through unwise investments made by their indigenous financial institutions as well as branches of international banks operating in those countries. Not much, if any, relief will come from foreign direct investment (FDI) since everyone else is feeling the crunch in some way. The fallout is that the anti-poverty campaign is likely to take a huge hit that could likely be extremely devastating. It would mean also that the Millennium Development Goal on poverty would not be met and since several of the other goals are linked to poverty reduction, the campaign could be in jeopardy.
