Reengineering Aid: A Bold Agenda for the 21st Century
Professor Sir Richard Feachem (With Solomon Lee, Sam Manning, and Hyun Woo)
Director, Global Health Group University of California, San Francisco
The Aid Industry Bilaterals Multilaterals
George C. Marshall Secretary of State: 1947-1949
3 The Colonies: 1946
Reported Cases
Official Development Assistance (ODA)
Total $4.03 trillion from 1960-2016
160 0.6
140 0.5
120
ODA (USD) 0.4
100
ODA (% GNI)
80 0.3 ODA (% GNI) (% ODA 60
0.2 ODA (USD Constant 2014 billions)2014 Constant (USD ODA 40
0.1 20
0 0 1960 1970 1980 1990 2000 2010 2020 Year
Source: OECD International Development Statistics % GNI Spent on ODA Australia Denmark Germany Japan Netherlands Sweden United Kingdom USA
1.6 Total $142.6 billion in 2016 1.4
1.2
1
Sweden
0.8
(% GNI) (% Denmark
ODA ODA UK 0.6 Germany Netherlands
0.4
Australia Japan 0.2 USA
0 1960 1970 1980 1990 2000 2010 2020 Year
Source: OECD International Development Statistics The Conventional Wisdom
“Aid is a vital investment with big returns for the world as a whole.”
Ángel Gurría OECD Secretary General, 2010 Spectacular Successes in Recent Decades
Poverty Life Expectancy Fertility HighLow Mortality & Fertility Because of aid? Irrespective of aid? Despite aid? The Aid Debate
Aid is good. The Umpires Aid doesn’t work. The Voices of Africa
More aid is better. Aid does harm.
Steven Radelet
Paul Collier Dambisa Moyo John Githongo Jeffrey Sachs William Easterly “Extreme poverty is a trap that can be released through targeted investments”
Jeffrey Sachs The End of Poverty, 2005 “The cause of poverty is the absence of political and economic rights.” William Easterly The Tyranny of Experts, 2014 “Aid has been, an unmitigated political, economic, and humanitarian disaster for most parts of the developing world” Dambisa Moyo Dead Aid, 2009 “Worried westerners, who so often seem to fall prey to a benign form of megalomania when it comes to Africa, would do well to accept that salvation is simply not theirs to bestow.” John Githongo It’s Our Turn to Eat, 2009 “We need to narrow the target and broaden the instruments.” Paul Collier The Bottom Billion, 2007 Inconvenient Truth: 1 The Econometric Evidence “We find little robust evidence of a positive (or negative) relationship between aid inflows and economic growth.
We also find no evidence that aid works better in better policy or geographical environments, or that certain forms of aid work better than others.
Our findings suggest that the aid apparatus will have to be rethought.” Rajan and Subramanian Review of Economics and Statistics 90(4), 643-665, 2008 Inconvenient Truth: 2
The Global Health Supermarket Fallacy Inconvenient Truth: 3 Where Does the Money Go?
Rajan andBelow Subramanian are the top 5 recipients of economic aid in 2014 – Total $35 billion Review of Economics and StatisticsIsrael: $3.15 billion 90(4), 643-665, Egypt:2008 $1.5 billion Afghanistan: $1.1 billion Jordan: $1.0billion Pakistan: 0.9 billion Source: Howmuch.net
Inconvenient Truth: 3 Foreign Aid to India • Largest recipient of UK aid (7% of total bilateral, £280 million) Note: UK aid to India ending in 2015 • Largest recipient of all aid for health
But is aid to India necessary?
• Public health expenditure was <1% of GDP in 2015 • India’s defense expenditure: US$50 billion in 2015 • No shortage of local knowledge, science, or management skill to solve Indian problems • Aid to India not additional
Sources: World Bank (2013); Cowshish, A. India's Defence Budget 2013-14. India Strategic, Mar 2013. “We do not require the aid... It is a peanut in our total development exercises.”
Pranab Mukherjee India Minister of Finance, 2012 President of India since 2012 Inconvenient Truth: 4 Inconvenient Truth: 4
Source: Wolf et al. China’s Foreign Aid and Government-Sponsored Investment Activities. Rand Corporation, 2013. Inconvenient Truth: 4 Wikileaks “China’s fast, efficient, ‘no strings attached’ bilateral approach is popular in Africa, as is the Chinese preference for infrastructure. African officials fear that U.S. or European interference will slow down assistance and tie conditions to Chinese aid.”
US Embassy, Beijing, Reporting to Washington Inconvenient Truth: 5 Source and Focus of DAH, 2015 Inconvenient Truth: 5
25 Source and Region of DAH, 2015 Inconvenient Truth: 5
26 Inconvenient Truth: 6 Aid Fungibility
$1 of DAH to government
$0.43 to $1.14 reduction in government health expenditures from domestic resources
Source: Lu et al. Public financing of health in developing countries: a cross-national systematic analysis. Lancet. 2010 Apr 17;375(9723):1375-87. Inconvenient Truth: 7
Aid does not buy hearts and minds
Source: Al-Shabab fighters, Huffingtonpost.co.uk “Aid is not the most important driver of growth and development; it is secondary to capable leadership, good governance, peace and stability, and sensible economic and social policies.”
Steven Radelet Emerging Africa, 2010 Emerging Africa: Average Growth Rates per Capita, 1996-2008
Source: World Bank, World Development Indicators; data for South African Reserve Bank The Radelet Conclusion
1. Democratic and accountable government 2. Sound economic policies 3. End to debt crisis 4. Spread of new technology 5. New generation of leaders: in government, private sector, and civil society
Aid played a secondary role in the successful countries and did not rescue the rest.
Aid Doesn’t Work The record of aid shows no evidence of any overall beneficial effect.
Angus Deaton The Great Escape, 2013 Aid Does Harm That dedicated and ethical people are doing harm to people who are already in such distress is not the least of the tragedies of aid.
Angus Deaton The Great Escape, 2013 “To reduce poverty and promote development, just give money to the poor.” - Hanlon, Barrientos, and Hulme 2010 “Aid programmes are by and large antithetical to economic“The main development reason sincewhy they Africa’s are mostly people led by arethose poor who is apparentlybecause do theirnot either leaders understand have or especiallymade this likechoice.” business.” Gregory Mills Why Africa Is Poor,Gregory 2010 Mills Why Africa Is Poor, 2010
Personal Diagnosis
Aid has done much: • To create focused, irreversible change: smallpox eradication • To create focused, but reversible change: HIV treatment, child immunization, malaria control
Aid has done little: • To drive economic growth or long-term broad and deep improvements in welfare
Aid has done harm: • By encouraging and/or perpetuating dysfunctional governance and policies Only Three Innovators
38 A New Aid Paradigm 1960s: • Supply-driven, input focused
Today: • Demand-driven, outcome focused
Plus: • Purchaser provider split • Pro-private sector • Dual accountability • Extreme transparency • Longer-term and more predictable aid flows
A Bold Aid Reform Agenda: 1 Humanitarian Disasters • Separate humanitarian disaster relief from development assistance • Develop more coordinated and rapid response • Make full use of Military hardware, logistics, supply, and peace keeping capacity • Be clearer and tougher on responsibilities of host countries, when to engage, and when and how to exit
A Bold Aid Reform Agenda: 2 Focus on Non-Aid Development Agenda
“Aid is not the most important policy tool rich countries have to influence growth and development. Much greater influence comes through trade and investment policies.”
Steven Radelet Emerging Africa, 2010 A Bold Aid Reform Agenda: 3 Innovate Financially
• More equity, less debt
• More blending of public and private investments
• More PPPs A Bold Aid Reform Agenda: 4 Scale Down Aid to Countries: Scale Up Aid to Global Public Goods
• New science, technology and knowledge
• Attenuating existing global threats: - Drug resistance - Food scarcity and distribution - Climate change
• Preparing for new global threats: - Pandemics - Water scarcity
Public Goods Non-rival. Non-excludable Global Public Goods Global Public Bads A Bold Aid Reform Agenda: 5
Find New Ways to Support Very Poor, Small Countries
• Burundi • Guinea • Rwanda • Central African • Guinea-Bissau • Sierra Leone Republic • Liberia • Togo • Eritrea • Malawi • Zimbabwe • Gambia • Niger
2011 GNI per capita <$600 : Population <20 million
Note: GNI in current USD Sources: World Bank (2013), UN Population Division, WPP (2012) A Bold Aid Reform Agenda: 6
Maintain Momentum with Key Initiatives
For example: • Polio Eradication • Childhood Immunization • HIV/AIDS Prevention and Treatment • Malaria Control and Elimination • NTD Eradication
With renewed concern for sustainability A Bold Aid Reform Agenda: 7
Support the Next Generation of Leaders
• Invest in African Universities • Create well-funded, long-term, co-managed marriages between northern and southern medical, engineering and management schools • Open more development related fellowships, with support for return Radical Aid Reform Recruits Wanted
Ernest Shackleton Imperial Trans Antarctic Expedition The Times, December 29, 1913 Thank you for listening.
Be BOLD and, above all, Act.