'The Donors’ Dilemma' - From Charity to Social Justice

This column by Dhananjayan Sriskandarajah is part of Global Policy’s e-book, ‘The Donors’ Dilemma: Emergence, Convergence and the Future of Aid’, edited by Andy Sumner. Contributions from academics and practitioners will be serialised on Global Policy until the e-book’s release in the first quarter of 2014. Find out more here or join the debate on Twitter #GPfutureofaid.

There is no denying that foreign aid has been and will continue for some time to be an important source of finance of ending absolute poverty and promoting economic development. But the days of the Official Development Assistance (ODA) paradigm as we know it are numbered.

Aid is the manifestation of a peculiar historical context. We have built a world order in which there are unprecedented and unacceptable levels of socio-economic inequality. These extreme disparities have led to the creation of our current system of ODA, in which rich countries allocate a relatively small amount to alleviate the extreme manifestations of poverty around the world. We have developed guidelines, rules, norms and systems to regulate what counts and what doesn’t count as aid, all for very sensible reasons.

The reasons why aid is unlikely to survive much longer in its current form are well-rehearsed; five stand out. First, input-based measures have limited value. When David Cameron promised to address the problems caused by flooding in the UK in February 2013, he said “money is no object” in helping those affected by extreme weather; he didn’t say “we aim to set aside 0.x% of GNP to activities that we hope will help”. In almost every other area of public policy, we are seeing the emergence of results-based metrics, and there is no reason to think aid will escape. Secondly, the ‘us and them’ nature of ODA will continue to be under attack by public confidence in the aid in the rich world, especially as there will be new pressures to reduce government direct spending in. I accept that aid is a tiny fraction of public spending, but the current framework is easy to cast in zero sum terms. The emergence of novel match-funding schemes may be welcome innovations but they also signal a shift in the idea that there is a collective public commitment to ODA. Thirdly, there is the widely recorded relative decline in the importance of aid in the context of other flows that impact development, coupled (fourthly) with the fact that there are middle income countries who seem reluctant to participate in the ODA system. The current situation in which the ‘fight’ against poverty relies centrally on ODA and a specialist cadre of aid-workers seems antiquated, if not outright neo-colonial. Finally, even amongst established donors, there seem to be growing frustrations about an overly-restrictive ODA system that ties their hand (perhaps rightly) when it comes to allocating expenditure. For example, development in the Horn of Africa might best be helped through investments in security infrastructure not ODA-ble expenditure, and the climate-development nexus creates all sorts of new challenges about what should count as aid or not.

Of course, there are several short term process questions that will need to be addressed in the immediate future. There is an on-going need for aid to become more transparent, adaptable and smarter. ODA needs to be able to reach citizens in need and respond to their needs, as opposed to donor priorities taking precedence. Civil society actors need to be engaged in more meaningful ways, across the life-cycle of aid from design to delivery to monitoring.

However, in long-historical terms, I am convinced that the commitment by some rich countries to allocate 0.7% of GNP to alleviating poverty in the poorest parts of the world will be seen not as the high point of a global commitment to equality but instead as the low point of a system desperate to find policy bandaids to fix structural flaws.

However, my argument here is not some reactionary protest against the need for serious public investment to promote sustainable development but rather it is to point out that we need a radical transformation in the nature of aid and development cooperation to reflect emerging 21st century realities. It is a progressive’s plea that we need a new system, with additional resources, to tackle poverty and inequality.

By 2030, we need several fundamental shifts in the way the development sector works if we are to make a meaningful impact on poverty, inequality and sustainability. For a start, I hope we will have seen a shift to output measures, such as those likely to be embodied in the post-2015 sustainable development goals. For better or worse, the Millennium Development Goals ushered new focus in development finance. Now we need MDGs 2.0 that make ‘money is no object’ sort of commitments to addressing major sustainable development challenges, that obviously involve donor commitments but also involve a range of other actors, not least business, civil society organisations and developing country governments. Despite the limitations of a goal-based approach, it could nevertheless help shift the focus of development from inputs to outcomes, and broaden involvement beyond established donor governments.

I hope that in 2030 the core focus of the development community will be as much about inequality as it is about ending extreme poverty. Sadly it seems likely that even in the most optimistic scenario, there will still be large numbers of people living in extreme poverty, thus the focus on improving the lives of these people must be retained. However, as economic inequality risks spiralling out of control, both within countries and at a global level, an equally important focus of the development community should be on promoting equality. With the world’s richest 85 people already controlling more wealth than the poorest half of the world’s population, we may well be winning the ‘fight’ against poverty but we are losing the war against inequality.

This will require a fundamental shift from thinking of aid as charity from to the rich to the poor, to seeing these issues through a social justice lens. Nowhere is this need more evident, than with climate change. Protecting the world’s poor from the disastrous impacts of climate change – something that they had the least to do with – cannot be a question of what is a reasonable allocation of public funding to set aside, but one of doing what it takes to adapt and mitigate. If David Cameron thinks money is no object when it comes to flood victims in the UK, he and his fellow world leaders (including business leaders) have to think along the same lines for all people impacted by extreme weather.

Finally, I hope that by 2030, we won’t be talking about ‘donors’ anymore. I have been in countless conversations in recent years where the word ‘donors’ has been unhelpfully bandied around, used variously to mean things like ‘development cash-cows’, ‘knights to the rescue’, or ‘neo-imperialist forces’. Already, it is possible to see the limitations of this category. As new development actors emerge and new flows thicken, the term will become even more outdated. Perhaps the best indicator of a successful transformation in the development sector will be if the term ‘donor’ becomes as meaningless a grouping in international affairs in 2030 as say the ‘Communist bloc’ or ‘British Empire’ seem to today.

To get to anything like the scenario described here, we will need an equally radical transformation of the institutions and processes we have at our disposal. Today, we have a set of international economic institutions that were designed in the 1930s, that hardly reflect contemporary geopolitics and that are overly statist in their approach. These archaic institutions were created on an assumption of rich superiority and poor inferiority, and need urgent reform. Similarly, the rules governing ODA need to be overhauled or ditched altogether (though I see the risks of the latter). Initiatives like the Global Partnership for Effective Development Cooperation (GPEDC), with its multi-stakeholder approach, signal a step in the right direction. But we need more radical change, more quickly.