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Foreign aid in Asia not going to where it is needed most

Asian anti-poverty campaigners urge aid should be grants, not loans

August 07, 2007

Press Release - August 9, 2007

Official Development Assistance (ODA) or foreign aid, identified as critical to achieving poverty reduction in Asia, is not going to where it is needed most because reducing poverty is not the priority of major donors. If it was, then aid would be in the form of grants instead of loans, which form the bulk of multilateral aid and hurt recipient countries more than it help them. This was asserted in the Quezon City Declaration on ODA, the outcome of the recently concluded “Building an Asian Peoples’ Agenda on Aid: A Conference on Official Development Assistance” held in Manila, Philippines.

The international conference brought 89 delegates representing 69 organizations and 15 countries from both aid recipient and donor countries in Asia to critique aid policies and assess aid effectiveness in Asia. It called on governments and donors to make aid as grants and not as loans because loans pull aid recipient Asian countries deeper into debt and, in many cases, worsen poverty and inequality.

The declaration states that the magnitude of aid money in Asia is hardly going to improving education, health, water, and sanitation. Worse, aid adds to a recipient country’s indebtedness and intensifies poverty.

“We see that the largest aid money is not going to the countries that need it most in Asia, and that not enough is going to social development. The fact is, for several years now, the share of education and health in ODA has not budged beyond 15 percent. Since last year, we are seeing a much reduced aid money as donors cut aid allocations. The way things are going, donor countries will not be able to meet the 0.7 percent of GNI commitment sealed at the Monterrey Consensus. What do these tell us? It tells us that foreign aid is not meeting the needs of its recipient countries contrary to its avowed intention of making an impact on poverty reduction and economic development,” said Maria Victoria Raquiza, Co-Convenor of the Global Call to Action against Poverty – Asia (GCAP-Asia), one of the main conference organizer.

Aid-giving, according to the Quezon City Declaration on ODA, largely reflects donors’ national interest and agenda as donors determine volume, allocation and modalities of ODA. And sadly, the interest and agenda of donors oftentimes have nothing to do with eradicating poverty.

The Declaration states that “the bulk of multilateral aid is in the form of concessional loans. Although interest rates are low, these loans eventually add up to increased indebtedness of developing countries. Debt payments take resources away from essential services for poor and marginalised communities.”

ODA has dropped to 103.9 billion dollars in 2006. In 2005, debt relief operations for Iraq and Nigeria boosted ODA artificially to its highest level ever at 106.6 billion dollars, according to the Organisation of Economic Cooperation and Development (OECD) - Development Assistance Committee (DAC), a grouping of 30 rich nations.

The Asian participants in the conference said that much higher budgetary allocation for military aid over development aid indicate the interests that DAC countries prioritize, especially after 9/11. There is also a trend towards aid-giving as contingent on the recipient country’s position in war on terror

The conference Declaration also points out that aid conditionalities and the of lack people’s participation in aid projects contradict donors’ commitment to helping the poor. It said aid projects in many parts of Asia have exclusively been a government to government transaction. There is no space for people’s participation in the process and that therefore there is no people’s ownership of the project. Furthermore, many of these projects are privatization-enabling projects, such as big dams, which have caused environmental destruction and displacement of people from their communities and livelihoods.

“Countries of the South need ODA in the form of grants -- not loans -- that address the structural roots of poverty and inequality.” states the Quezon City Declaration on ODA. Raquiza averred “ODA flows should be more effectively aligned with the United Nations Millennium Development Goals. “

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ABOUT THE ODA CONFERENCE

‘Building an Asian Peoples’ Agenda on Aid: A conference on Official Development Assistance (ODA) reviewed the key trends in ODA flows in Asia and the world, assessed the impact of aid across recipient countries and identified the prospects and challenges for both donor and recipient countries. The conference was held from July 25 to 27 at the Imperial Palace Suites, Timog corner Tomas Morato Avenues, Quezon City, Philippines.

ABOUT THE CONFERENCE ORGANIZERS

The Global Call to Action against Poverty (GCAP) is a global alliance of trade unions, community groups, faith groups, and campaigners working together across more than 100 countries. GCAP is calling for action from the world’s leaders to meet their promises to end poverty and inequality. The other conference organizers include the Asian Forum for Human Rights and Development (Forum Asia), Sustainability Watch, JVC-ODA Reform Network (Japan), ODA Watch Philippines, Social Watch Philippines, Jubilee South-Asia Pacific Movement on Debt and Development (JS-APMDD), Citizens Coalition for Economic Justice (CCEJ), and the Asian South Pacific Bureau for Adult Education (ASPBAE).