Downturn to cost billions in aid to world’s poor

LONDON, (Reuters) – The cost to aid budgets of the  world economic downturn is headed for billions of dollars,  slashing assistance to the world’s poorest people just as it  becomes harder for them to make money for themselves.
In the United States, the heads of more than 50 groups in  the InterAction coalition, whose 175 members manage a total of  $9 billion annually, say they expect donations from individuals,  businesses and foundations to fall by about $1 billion this  year.
“If this (recession) goes into 2010, we will be seeing a  significant reduction in delivery of programmes in the world’s  poorest areas,” InterAction president Sam Worthington told  Reuters, adding weaker organisations may fall by the wayside.
British-based charities are suffering additionally from the  pound’s decline, making their money worth less abroad.
The squeeze has come as the needs of many crisis-hit  communities, such as those in Zimbabwe, Sri Lanka and Sudan’s  war-torn Darfur region, are rising.
“The problems in Darfur haven’t changed one iota because of  Western bank failures. If anything, it’s just gone off the  agenda,” said John Low, chief executive of the Charities Aid  Foundation (CAF), which helps charities manage money.
A CAF survey in January of 322 British charities —  including groups working on overseas aid — found half expected  their income to fall in the next year and 41 percent had seen  their income drop in the previous three months.
Groups in Africa, which receive much of their funding from  international charities and government donors, are worried about  the effect on their work.
They include Uganda’s National Guidance and Empowerment  Network of People Living with HIV/AIDS.
“With HIV, the major effect of the global financial problems  is fear: fear that there might be less funds committed to the  campaign and fear that there might be a shortage of essentials  like drugs and condoms,” said director Major Rubaramira Ruranga.

More Relaxed
In South Asia, the mood is calmer, partly because most  countries are less reliant on international donors than in  Africa, where aid makes up close to half some national budgets.
Agencies in India told Reuters they had secured resources  for the coming year but were cautious.
“It is important to ring those alarm bells of concern at  this time because across South Asia there are people who are  already teetering on the edge and a sustained wound to the head  would be fatal,” said Sarah Crowe, regional head of  communications for the U.N. Children’s Fund.
The World Bank has warned that almost 40 percent of 107  developing countries are highly exposed to the effects of the  credit crunch and up to 53 million more people are being trapped  in poverty as economic growth falters.
The British-based agency Oxfam points out that a fall in  remittances from migrant workers will have a huge effect in  countries such as Bangladesh, where one family in every village  is dependent on them.
Experts say it is hard to predict how far the global  downturn will cut into aid budgets. Italy has halved its 2009  assistance and Ireland has cut 17 percent from its overseas aid  in three reductions since July.
“We realise that the government finds itself in extremely  difficult circumstances with tough choices to make, but it is  shocking that the option taken has hit at the poorest and most  vulnerable,” said Tom Arnold, chief executive of Dublin-based  agency Concern Worldwide.
Aid contributions from European Union countries, which had  been expected to top $92 billion in 2010, could be $15 billion  to $25 billion less because of currency weakness and lower  growth, according to Nick Highton of the London-based think-tank  Overseas Development Institute.
“Just when poor countries are most going to need it is when  rich countries draw in their horns,” he said.

Pound’s Weakness
British charities working overseas say the most harmful  effect of the crisis so far has been the weakness of the pound.  The CAFOD agency estimates the dollar value of British  government aid may fall by as much as $41 billion between 2008  and 2014.
Groups funded by CAFOD in developing countries have already  seen the dollar value of their sterling grants drop 25 to 30  percent compared with the middle of last year. “We’re basically  passing on the pain to our partners with profound apologies,”  said policy adviser George Gelber.
In Kenya, Charles Mwangi Waituru, country coordinator for  the Global Call to Action Against Poverty, says the financial  crisis will slow progress towards U.N. benchmark targets for  reducing extreme poverty, which have a deadline of 2015.
“We are going to see drawbacks in key campaigns against  poverty, disease and the new burden of climate change,” he said.  “In the long run the Millennium Development Goals will not be  achieved in the stipulated time frame.”
In the country’s Rift Valley, 24-year-old Michael Ole Sayo  runs a small agency that runs projects for Maasai nomads.
They have funding requirements of a few thousand dollars  each, a tiny drop in the multi-billion-dollar aid industry. They  are Ole Sayo’s life’s work.
“Most of the programmes are donor-funded. So if the donors  don’t get money we, who are the last kind of grassroots people,  are not getting funding either,” he said.
One of a new generation of educated young Maasai equally at  home in their parents’ remote huts and the internet cafes of  Nairobi, Ole Sayo has given up several job opportunities in the  city to stay and work with the community.

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