Institute Notes: A Dialogue on Overcoming Hunger and Poverty

What do we mean by "poverty alleviation?"

Almost everyone agrees that poverty alleviation should be the paramount goal of development assistance. But what do we mean by poverty alleviation? Is it helping the very poorest of the poor achieve a better quality of life? Or is it enabling the largest number of people to get above the poverty line? Does it mean helping to improve people’s lives now, or laying the conditions for future improvements?

Owen Barder, of the Center for Global Development, has performed a useful service in a recent paper, What is Poverty Reduction? In it, he points out the implicit trade-offs between tackling current and future poverty, between helping as many poor people as possible versus focusing on those in chronic poverty, and between measures that tackle the causes of poverty and those which deal with the symptoms. In fact, notes the author, “poverty reduction actually encompasses many goals, some of which are contradictory.” If donor agencies do not explicitly recognize and account for these differences at the outset – unless it’s clear what measure for poverty reduction is going to be employed – confusion and disillusionment can and does ensue.

Addressing Lugar-Casey Legislation Criticisms

A piece of legislation amending the Foreign Assistance Act (FAA), co-sponsored by Senators Lugar and Casey, that recognizes and attempts to reverse a decades-long decline in funding on the part of the US government for global agricultural development has come under fire from two sides: the techno-sceptics who see the bill as a trojan horse that would enable the US agribusiness industry to expand its sway, particularly in the area of plant genetics, and those who view the bill as evincing insufficient regard for the experience and potential for the NGO community in advancing global agricultural development.

The most vociferous critics assert that the bill “mandates” research on GMOs – genetically modified organisms. The legislation would amend the original (1961) FAA language to include wording to the effect that agricultural research carried out under this act should include research on biotechnological advances “including genetically modified technology.” However, it’s important to note that there is no specified level of funding for agricultural research in general, nor for biotechnology in particular, and the directive is qualified by specifying that the work be “appropriate to local ecological conditions” and by including among the legislation’s objectives “support (for) conservation farming and other sustainable agricultural techniques to respond to changing climatic conditions and water shortages.”

The fact, frequently pointed out by critics, that GMOs have not yet led to major benefits for the world’s smallhold farmers is largely true. Genetically modified (GM) cotton and soybeans are being grown in some parts of the developing world – and would not be if farmers did not see some benefit to doing so. But more significantly, GM research to date has focused almost exclusively on rapid commercial returns, which means the large markets in the developed world. There has been little attention to the crops and crop production issues (e.g., drought, disease and salinity tolerance that are going to be increasingly important with changing climate) most directly relevant to farmers in the developing world.

Dead Aid?

Unique among the many recent books about African development, Dead Aid is by an African woman -- Dambisa Moyo, a native of Zambia -- which automatically raises its interest value. It complements, and raises a lot of the same points, as another recent book – an anthology of writing by Africans about development, Missionaries, Mercenaries and Misfits, edited by Rasna Warah. Both are worth reading, or at least skimming, by those deeply interested in the subject of foreign aid and, especially, foreign aid in Africa.

I’ll confine my remarks here to the former, which has received the greater media buzz. The author’s thesis, in a nutshell, is that not only has development aid not improved the lives of Africans, but it has actually made them worse – through encouraging corruption, repression and a culture of dependency. There is considerable substance to her argument: Some countries that have received large amounts of foreign aid have gone nowhere in terms of real development, while countries like Vietnam and China, which have received essentially no foreign aid, have made enormous strides in terms of ending hunger and poverty. Certainly, when not done right, foreign aid can undermine economies, empower and perpetuate corrupt elites and sap the initiative on which development ultimately depends: commodity food aid can undercut local farmers; massive cash transfers can drive up the value of the currency and discourage exports.

The author distinguishes three basic types of foreign aid: humanitarian or emergency aid “mobilized and dispensed in response to catastrophes and calamities;” charity-based aid, “disbursed by charitable organizations to institutions or people on the ground; and “systematic aid” – i.e., aid payments made directly to governments, either on a bilateral basis or through multilateral institutions such as the World Bank. 

But, in fact, the distinction between what the author describes as “charity-based” and “systematic” aid is not at all clear. The former may be strictly from one private group to another, or it can involve governments: PEPFAR (the President’s Emergency Plan for AIDS Relief) and, presumably, similar programs working with people “on the ground” are grouped with charity-based aid, although they are programmed by donor governments in consultation with recipient governments. It’s just that the bulk of it is implemented outside of traditional government channels. In fact, most U.S. development assistance is delivered in this way, whether for health, education, economic growth or democracy and governance.

Debt Relief Update

According to a recent GAO (Government Accountability Office) study, the United States has not fully funded its share of multilateral debt relief -- i.e., that offered through four international financial institutions (IFIs): The International Monetary Fund (IMF), the World Bank’s International Development Association (IDA), the Asian Development Bank, and the Inter-American Development Bank. Collectively, these four IFIs are projected to provide $58 billion in total debt relief to 41 countries.

The U.S. contribution does not fully fund its multilateral debt relief commitments because it is in arrears on its IDA replenishment, and the World Bank requires that a country’s IDA commitment be fully met before it uses any funds for debt relief. The reason that the U.S. is in arrears on its IDA replenishment is that we have been delaying payments pending certain transparency reforms required under U.S. law. To fully fund the U.S. debt relief commitment, (1) the Treasury needs to certify to Congress that the reforms have been made, and (2) Congress will need to appropriate a further $49 million.

This imbroglio points up once again how our foreign assistance system so frequently gets crosswise with itself. Clearly, the intent of Congress was to fully fund our debt relief commitments. But other legislative provisions – not unreasonable ones, in and of themselves -- make it impossible to do so. Fragmented legislative and administrative responsibilities make it difficult to implement consistent, mutually reinforcing policies, giving the impression that no one is in overall charge – yet another argument in favor of a foreign assistance reform package that would simplify and align responsibilities and authorities.  

Does More Aid Mean Less Poverty?

Could increasing aid to Africa do more harm than good? This is the provocative question posed by Jonathan Glennie in a recent article, “The Trouble with Aid in Africa,” in Monday Developments, the monthly journal of InterAction. Glennie, who has authored a book of roughly the same title (“The Trouble with Aid: Why Less Could Mean More for Africa”), is a development veteran who speaks from experience. One of his main points is that the major advocates for increased aid are African governments – not African civil society, who see their influence with their own governments undercut by outside donors. It is hard, he notes, to find a single example of an African NGO that is actively campaigning for aid increases.

Among the problems he cites are the conditions commonly attached – even in this post-Washington consensus era – which have great consequences for the way in which governments spend aid money. But what may be even more important, according to Glennie, is that dependency on aid from foreign donors undermines the development of the basic institutions (his emphasis) needed to govern and the vital link of accountability between state and citizen. Finally, receiving large amounts of aid has major macroeconomic consequences, since large inflows of money (or commodities) affect prices and incentives. 

This is not to say that aid is never effective and should be discarded, simply that more resources are not necessarily the answer. If we’re serious about ending poverty and providing poor countries the opportunity to get ahead, we need to look beyond aid to the full range of policies and programs pursued by advanced countries – trade, migration, domestic subsidies that distort markets, arms sales that destabilize governments, illegal capital flows (more money flows out of Africa each year than arrives in aid).

As we enter the new year, which will be marked by a major push for foreign aid reform, this article helps remind us that more is not necessarily better and that, if we’re serious about aid effectiveness, we cannot confine our attention to aid alone.

Hillary at State: What Does it Mean for Development?

President-elect Obama this morning confirmed what had been widely speculated over the past several weeks, nominating Hillary Clinton to be the next Secretary of State. I see a couple of positive facets to this development, along with one nagging question.

First, the nomination is an affirmation of the role of women in directing our foreign policy, continuing a line that began with Madeline Albright and continued with Condoleezza Rice, and is consistent with the vision of America as a meritocracy, where gender, race or religion do not serve as barriers to high-level public service. The president-elect has made it clear that she has his full confidence as the right person to carry out the administration’s foreign policy agenda, including the restoration of badly frayed alliances and restoring our tarnished international image.

Second, Hillary Clinton brings with her a wealth of knowledge about development. As First Lady she traveled widely, visiting developing countries from Bolivia to Botswana to Bangladesh. And in the course of these visits she did not confine herself to protocol functions in the capital, but made a point of getting out in the countryside to visit USAID projects -- schools, clinics, micro-enterprises and farms. As a result, she has a good understanding of how foreign assistance works in the field – its accomplishments, strengths and limitations.

It's Obama!

The election of Barak Obama unquestionably marks a new day for the U.S. in the world. But will it mark a new day for U.S. global development assistance as well? While history is an imperfect guide, U.S. foreign aid has generally done better under Republican administrations, both in terms of overall resource levels and management. The Bush administration can be criticized on numerous grounds, but President Bush did oversee a massive increase in overall foreign aid, much of that dedicated to combating some of the worst diseases afflicting poor countries – HIV/AIDS, malaria. The Bush administration can also be credited with launching the Millennium Development Corporation, one of the most innovative approaches in foreign aid since the Marshall Plan.

Democratic administrations, by contrast, have generally come to power with large domestic agendas that tend to crowd out attention and funding for global development. And the straitened financial circumstances that will face the new administration will make it even more difficult to create policy and financial space for global development.

That said, what do we know at this point about the direction an Obama Administration might take regarding international development and poverty alleviation?

More Effective and Efficient Aid – A Realistic Goal?

The Third High Level Forum on Aid Effectiveness got underway this morning in Accra, Ghana, and will continue through Sept. 4.  This represents the first attempt by the global community to assess the practical effect of the Paris Declaration on Aid Effectiveness, adopted at the 2005 High Level Forum, which committed the international development community – donors and recipient countries – to a set of specific actions that would promote more effective use of aid funds:
• Ownership: Partner countries exercise effective leadership over their development policies and strategies, and coordinate development actions.
• Alignment: Donors base their overall support on partner countries’ national development strategies, institutions, and procedures.
• Harmonization: Donors’ actions are more harmonized, transparent, and collectively effective.
• Managing for results: Managing resources and improving decision making for development results.
• Mutual accountability: Donors and partners are accountable for development results.

However, in the intervening years the record is decidedly mixed. Some major donors – the multilateral institutions and the EU countries – have moved to coordinate, pool funding and defer more to host country leadership. The World Bank, for example, reports that nearly 70 percent of its aid to surveyed countries now is aligned with national priorities, up from 62% in 2005, and that 54 percent of its aid is disbursed through common arrangements or procedures.

Still, real harmonization, alignment and mutual accountability are the exception rather than the rule. The above cited World Bank story, notes that Vietnam – a major “aid magnet” – attracted 752 donor missions in 2007, or more than three per day. The growing number of aid organizations (230 and counting), funds and programs is taxing low income governments with limited capacity and hurting these countries’ ability to take control of their own development.

Aid Accountability -- It's About Time

According to a story in today’s Washington Post, G-8 leaders are expected to endorse a document that actually assesses, in some detail, how well individual countries are doing in meeting their commitments for development assistance. If true, this is an important and long overdue step in the direction of responsible behavior on the part of the G-8, which is noted more for its promises regarding development assistance than for carrying them out. Each summit has turned into a showcase of extravagant (or sometimes, not so extravagant) commitments of additional money to address the urgent needs of the world’s poor countries, but with no mechanism or procedures to see that commitments are met. And, in fact, many are not. Adding further insult to injury, the G-8 then reliably goes on to perpetuate those commercial and environmental practices (farm subsidies and trade restrictions, unrestrained greenhouse gas emissions) that further impede poor countries’ development prospects.

Time to Reinvent the Wheel?

In a recent article in the Foreign Service Journal (“Don't Reinvent the Foreign Assistance Wheel;” FSJ, March 2008), Gordon Adams, professor of international relations at American University and former OMB associate director, lays out the case for continuing with the “F Process” (shorthand for the transformational diplomacy initiative of the current administration), maintaining that, “The F process is half a loaf, and only half-baked at that,” but was still an important first step toward meshing U.S. foreign assistance spending with our strategic goals. He argues that in order to preserve civilian control of foreign assistance, the government needs to revise and reinforce this initiative. In his view, a separate, cabinet-level Department for Development would isolate development from its political support and confound the current problems of coordination and consistency.

As Adams notes, the F process does have some positive features:  It has made planning and budgeting more transparent, and forced a greater degree of strategic program integration in foreign assistance. However, his assessment is flawed by some fundamental misconceptions: