Volume 24 1997 Issue 71

Review of African Political Economy No.71:3-10 © ROAPE Publications Ltd., 1997 ISSN 0305-6244; RIX#7101 NGOs & the Development Industry Mike Powell & David Seddon In his anthropological critique of 'development' Mark Hobart points out that, above all, 'it is useful to remember that development is big business' (Hobart, 1993:2). In his notorious onslaught on The Lords of Poverty (p. 42) , Graham Hancock refers to the 'development industry', as a fantastically complex, diversified and devolved industry ... financed largely by the official aid of rich countries, mandated to •promote 'development' in the poor ones, it is an industry that employs thousands of people around the world to fulfil a broad range of economic and humanitarian objectives. The Wall Street Journal once referred to it as 'the largest bureaucracy in history devoted to international good deeds'. I prefer to think of it as 'Development Incorporated'. Like all big businesses, the development industry not only responds to global demand but has a way of shaping the world and its 'needs' in its own interests. Indeed, there are grounds for arguing that the development industry has now become a monstrous multinational alliance of global corporations, a kind of juggernaut. 'Juggernaut' is defined by the Concise Oxford Dictionary as follows: Hindi, Jagganath; Sanskrit, Jagannatha (jagat = world + natha = lord). The idol of Krishna, eighth avatar of Vishnu, at Puri, dragged every year in procession on a huge car, under the wheels of which devotees are said to have formerly thrown themselves; and, by derivation, as an institution, or notion, to which persons blindly sacrifice themselves or others. In common usage 'juggernaut' may refer to any enormous and irresistible force or institution. The juggernaut of the development industry is dominated by the giant national (bilateral) agencies operating under the direction of the governments of the developed industrial capitalist states (which are, in effect, the parent companies of their 'aid' agency subsidiaries), and by the international (multilateral) agencies linked for the most part to the United Nations, but also including the major conglomerates of the European Union, OPEC and so on (in which the interests of the national governments are represented through various forms of voting rights). In more recent years, the industry as a whole has come to be dominated, both in terms of strategy and lending policy, by the so-called Bretton Woods International Financial Institutions (IFIs), notably the International Monetary Fund (IMF) and the World Bank. Ten years ago, in 1986, official aid flows totalled $46bn. Of this, roughly $37bn came through the so-called 'bilateral agencies' from 18 Western industrial states - led by the USA ($10bn), Japan ($6bn), France ($5bn), West Germany ($4bn), Italy ($2bn), the Netherlands ($2bn), the United Kingdom ($2bn), Canada ($2bn) and Sweden ($lbn). If 'Development Incorporated' had been a private sector corporation, it would have ranked as one of the largest in the world, outranking even Standard Oil of California, Unilever or IBM, and vastly larger than BASF, Bayer, Siemens, Phillips, Nestle, Hitachi or Volkswagen. By the end of the 1980s, annual aid flows had reached an annual total of around $50-60bn. • 4 Review of African Political Economy In 1995, the total official development aid provided by the 18 Western industrial states amounted to about $54million billion - led now by Japan ($14bn), with France ($8bn), Germany ($7bn), the USA ($7bn), the Netherlands ($3bn), the United Kingdom ($3bn), Sweden ($2bn), Denmark ($2bn), Italy ($2bn), Spain ($lbn), Norway ($2bn), Switzerland ($lbn), and Belgium ($lbn) as the major players. Despite the reality of cuts in aid budgets by the governments of the Western industrial states during the 1980s and 1990s as a percentage of GNP, the development industry is larger and more extensive than ever. Over the last decade or so, however, the industry has been undergoing a significant restructuring. The development industry consists not just of the bilateral government agencies, but also of the multilateral agencies of the UN (including the World Bank), the European Development Fund and the regional banks, through which increasing flows of funds are channelled and which have come to exercise enormous power and influence over governments and people of 'the developing countries'. During the latter part of the 1980s in particular, the scale of operations of the multilateral agencies increased significantly, although during the 1990s they have increasingly suffered from the general reduction in 'aid' budgets of the richer countries. The World Bank's lending commitments alone increased from $2.1bn in 1973 to $8.8bn in 1981 and $10.3bn in 1982 (according to Hayter & Watson, 1985); by 1987 the total loan commitments of the World Bank amounted to nearly $20bn (Hancock, 1989). This dwarfs the other UN specialised agencies which, by the end of the 1980s, were spending around $6bn a year on official development assistance or 'development- related activities'. The UNDP, with 132 field offices and an annual budget of $1.7bn in 1995, is one of the largest of the UN specialized agencies and in many countries serves to coordinate the interventions of the other multilateral agencies. In the 1990s, however, after a period in which an increasing proportion of public funds allocated to overseas 'aid' was distributed through the multilaterals, there has been a systematic effort to regain control over 'aid' allocations by national governments (and also to increase the 'conditionality' of lending), while at the same time reducing as far as possible overall levels of spending. This has resulted in a 'cash crisis' for the multilaterals - all of which complain of not having sufficient support from their funding agencies (which include most importantly the governments of the major capitalist states). The UNDP, for example, as the largest of the UN specialized agencies, saw its core resources dwindle in absolute terms from just over $lbn in 1991 to $928mn in 1995 and as a percentage of overall contributions from 80 per cent of total funding to 55 per cent. Another important and related change in the overall structure of the industry has been the increasing role of the Northern NGOs (again particularly in the last few years) in the disbursement of public funds for 'aid'. When Graham Hancock published his sweeping critique of the international 'development industry', Lords of Poverty, in 1989, he explicitly 'refrained from mounting an offensive against the voluntary agencies - for example, Oxfam, Save the Children Fund and Band Aid in Britain, or Catholic Relief Services, Operation California and Africare in the United States'. He did have criticisms of such organisations, but believed that, by and large, their staff were well motivated and their efforts worthwhile. 'Furthermore', he remarked most pertinently, 'they are funded on a voluntary basis by contributions from the general public and thus are under considerable pressure to use properly the money they receive. They rarely do significant harm; sometimes they do great good' (p. xiii). The same, he argued - throughout his book - could not be said for the official Editorial: NGOs & the Development Industry 5 aid agencies, whether multilateral (like the World Bank or the other UN specialised agencies) or bilateral (like the British government's ODA). Over the last decade, however, the international 'development industry' has come, increasingly, to involve and indeed in some ways to incorporate the so-called voluntary agencies or NGOs - both in the North and in the South - in such a way as to change dramatically the context within which they operate and for many within as well as outside 'the NGO sector' to give rise to increasing concern as to their ability to safeguard their traditional independence and to maintain their traditional role as partners in development with Southern NGOs and local communities. It is no longer the case that Northern NGOs are funded only 'on a voluntary basis by contributions from the general public'; most are also funded - and have been to an increasing degree over the last few years - by bilateral and multilateral agencies. Since 1970, and more dramatically since the mid-1980s, the proportion of government funding for 'aid' channelled through non-government organisations (NGOs) has increased substan- tially. 'Aid' funds channelled through the NGOs increased from $2.7bn in 1970 to $3.6bn in 1983 and then to $7.2bn in 1990; during the 1980s as a whole, the rate of growth of official development aid to NGOs outstripped almost five-fold the growth in ODA itself (Fowler, 1992). The OECD estimated total Northern NGO spending at $9-10bn a year in the early 1990s (considerably more, if the figures are to be believed, than the UN specialised agencies); by the mid-1990s this figure must have increased. Marcussen suggests that 'on average it is estimated that NGOs today account for about 13 per cent of total ODA (official development assistance); this may well be an underestimate'. The increase has been especially remarkable (as Marcussen has pointed out in ROAPE No. 69, p. 406) in the case of the Scandinavian and other 'like minded' agencies, which now allocate up to 25 per cent of aid through NGOs. But, at the 1994 Copenhagen Summit, US Vice President Gore announced that 'nearly half of the^aid from ... USAID would within five years be provided to private organisations not direct to the poor world's governments' (quoted in The Economist, 18 March 1995, p. 15.). And it is not only in the West that the growth of NGOs as agencies for 'development' and as part of 'the development industry' has taken place. In Japan also (see the Briefing on Japanese aid in this issue), the recent growth in the number of development NGOs has been dramatic. This reflects both the growing importance of Japan as an 'aid-giving' nation and the extent to which the Japanese government has been explicitly directing funds for 'development' through NGOs, since 1989 in particular.

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