Institute Notes: A Dialogue on Overcoming Hunger and Poverty

The President Gives Birth to a bouncing $3.4 T Budget

It was a busy day here in Washington as details on the budget were announced. The newspapers have tended to focus on the topline numbers - a $3.4 trillion dollar budget with cuts of about 17 billion in programs deemed inefficient or ineffective.

The attention at Bread for the World has been on the budget accounts that matter for hungry and poor people. My colleague Sophie Milam pointed out that the budget includes $5 million to implement the Hunger Free Communities Act, a piece of legislation Bread worked hard to ensure was included in the last Farm Bill. The HFCA will provide small grants to local groups seeking innovative solutions to hunger in their own communities. After all of the hard work put in by Bread members and staff to get the program authorized, it was a delight to see the program get funding.

For my part, I spent some time combing through the international affairs portion of the budget.

Surprising Success at the G20

The conclusion of the G20 seems, at first blush, to provide a great deal of positive news for developing countries. The official Communique begins with the recognition that

prosperity is indivisible; that growth, to be sustained, has to be shared; and that our global plan for recovery must have at its heart the needs and jobs of hard-working families, not just in developed countries but in emerging markets and the poorest countries of the world too; and must reflect the interests, not just of today’s population, but of future generations too.

To achieve financial stability and promote a return to trade and economic growth, G20 leaders had to act boldly, and it appears they have.

Building Momentum for an Anti-Hunger Agenda

It's been a busy week here in DC. On the domestic side, the release of the President's budget is being scrutinized in detail for spending on domestic nutrition programs such as the Supplemental Nutrition Assistance Program (SNAP) and The Special Supplemental Nutrition Program for Women, Infants and Children (WIC).

The President's Budget proposes funding for WIC to serve 9.8 million participants in 2010, an increase above the 9 million people currently enrolled in the program. WIC is instrumental in supporting pregnant and new mothers and young children who fall below a minimum income threshold. The large increase is intended to meet the needs of a growing pool of applicants particularly in this period of economic recession.

The President also requests an additional $5 billion over the next five years to strengthen Child Nutrition programs in the upcoming reauthorization. Congress is due to reauthorize the School Breakfast and Lunch Programs and programs that provide meals and snacks to children afterschool and during the summer. Bread for the World supports the administration's goal of expanding program access and participation so that more vulnerable children have the food assistance they need. My colleague here at Bread, Sophie Milam, noted that while the proposed increase is positive, more is needed:

"The President's budget blueprint is titled "A New Era of Responsibility." In it, President Obama calls on Congress to lay a new foundation upon which we can "renew the promise of America," with the Budget as the first step in that journey.

 

"The "promise of America" must be a place where no child goes to bed hungry. The President's budget includes $1 billion per year in new investments for Child Nutrition Programs. While it is a good start, this level of funding is not adequate to meet the President's goal of ending child hunger by 2015"

Meeting this ambitious goal requires an investment of $4 billion a year.

Another Run at Boosting Agricultural Development Assistance

Senators Lugar (R-Indiana) and Casey (D-Pennsylvania), the ranking member and chairman, respectively, of the Senate Foreign Relations Committee, have re-introduced legislation, the Global Food Security Act, which would significantly increase funding for long-term agricultural development and poverty alleviation while making possible a more efficient and flexible U.S. emergency response mechanism. The legislation and attendant statements reinforce the message of the 2009 Hunger Report, to the effect that we need to restore the balance in U.S. foreign assistance by reversing the past several decades’ decline in support for agricultural development.

The press release quotes Senator Lugar, who notes that hunger is both a humanitarian and security challenge for the United States: roughly one billion people in the world already suffer from food insecurity. By 2050, it is projected that food production must double to meet demands generated by population and income growth. Increases of this magnitude require a sharp increase in investment, both by donors and developing countries.

The bill has four major components: First, it creates a special coordinator for global food security located within the executive office of the President who will be responsible for developing and implementing a “whole of government” global food security strategy: second, it authorizes significant increases in authorized levels for agriculture, rural development and nutrition, beginning at $750 million in FY 2010 and increasing to $2.5 billion in 2014 ( FY 2008 funding, by comparison, was under $300 million); third, it creates a new program for the development of higher education capacity in the field of agriculture; and fourth, it creates an emergency food assistance fund, administered by USAID, with the authority to use up to $500 million dollars for local and regional procurement of commodities to meet emergency needs.

While it’s possible to quibble over details of the legislation, overall it constitutes a major step forward. A companion bill is currently being prepared for introduction in the House. Senators Lugar and Casey deserve kudos for their initiative.

The Mother of All Stimuli – II

My colleague, Todd Post, wrote last week about the economic stimulus package being considered by the Congress and new administration, and the opportunity this may provide to tackle some of this country’s fundamental economic weaknesses and inequities. I would just like to highlight the scale of what is being considered relative to the government’s foreign aid budget. The economic stimulus package unveiled by House Democrats last week calls for $550 billion for new investments. This is incremental, on top of what the government is already spending. By contrast, the government’s TOTAL foreign assistance budget for 2008 was $32.8 billion. When the various politically-oriented and humanitarian relief programs are subtracted, poverty-focused development assistance – that portion of foreign aid on which Bread for the World concentrates its advocacy – came to $15.4 billion. Yet, when looking for areas where government spending could be reduced, it’s foreign aid that’s usually identified. (Even Vice President Biden, when pressed during the campaign for areas in which spending could be reduced, reflexively fell back on this tried and true response.) The problem is that this only feeds the public perception that foreign aid is a big piece of the federal budget. It isn’t. Poverty-focused development assistance amounts to less than 0.5 percent of the total federal budget.

Parade Intelligence Report

This past Sunday’s Parade magazine actually performed a valuable public service in its Intelligence Report section by listing top U.S. foreign aid recipients by amount and type.  The story serves to underscore two points consistently made by Bread for the World regarding this country’s foreign aid: 1) Its distribution is heavily skewed in favor of countries at the top of our political/security agenda (Israel, Egypt, Pakistan, Jordan); 2) for the two actual development cases listed -- Kenya and South Africa – the distribution by program area is totally off balance, with a vastly disproportionate share of US aid resources going to combat HIV/AIDS (85 percent in the case of Kenya, 97 percent in South Africa). 

The article performs a further valuable service in putting before the mass American audience that fact a large portion of U.S. “foreign assistance” in fact consists of defense and military aid – mostly military sales credits to buy weapons and training. This is not assistance to the world’s poor and hungry.

So, kudos to an unlikely source for some good information. 

To Build a Tower

“For which of you, intending to build a tower, does not first sit down and estimate the cost, to see whether he has enough to complete it? Otherwise, when he has laid a foundation and is not able to finish, all who see it will begin to ridicule him, saying, ‘This fellow began to build and was not able to finish.’” (Luke 14: 28-30)

Development is, in certain ways, not unlike to building a tower. It takes planning and sustained commitment. A prudent government will not start something that it can’t finish – will not make a major investment in building schools and hiring teachers in one year, for example, if there is not assurance that funding will be forthcoming in future years for maintenance and salaries.
 
Yet, according to a recent report by the Millennium Development Goals Africa Steering Group, “Most African countries do not know how much aid they will receive in coming years and therefore they cannot expand key public services with needed personnel and infrastructure, both of which require confirmed multi-year financing.” Development assistance flows are erratic, fluctuating with the economic status, political priorities and the development “flavor of the day.” After financial crises, in particular, a country’s foreign aid often declines.

Risk and Opportunity

Over at the Overseas Development Institute Simon Maxwell has posted an interesting blog titled Can We Move From a Risk Framework to an Opportunities Framework in International Development? Maxwell begins by citing economic risk analysis which looks at the likelihood of a given event/catastrophe and its economic cost. Some events such as severe inland flooding are fairly costly, but also fairly unlikely. Other events such as a commodity collapse are more likely and carry far higher costs. Economic risk analysis helps provide a picture of what planners should be prepared for. Maxwell goes on to observe,

... risk analysis is only half the story. We are missing the opportunities. A sensible guide to making decisions and spending money should take account of risks, but also of opportunities. Where is the opportunity analysis?

Perhaps there is no better example of opportunity analysis than the Copenhagen Consensus.

Financing Development Amidst an Economic Crisis

The slide into global economic panic accompanying the meltdown of the US financial markets has gotten some people thinking about the impact on global development. Charles Uphaus wrote recently about some of the likely impacts of the crisis in terms of slowing global economic growth. Some of these same issues are also raised in a new blog authored by the Chief Economist of the World Bank, Shanta Devarajan. In a post entitled “Is Africa Growing Too Fast” Devarajan questions whether growth rates in sub-Saharan African countries are sustainable. He cites evidence that some of the steadiest and fastest growth has been among resource-rich countries. A global economic slowdown that reduces the demand for raw commodities could certainly wreak havoc on the economies of these countries. (This excellent post provides a broader analysis of the possible consequences of the economic downturn on developing countries).

Neither of these posts contemplates what is likely to be the other likely impact of a slowdown in the U.S. economy: shrinking development assistance budgets. Even before the full onset of the current economic crisis, Simon Maxwell, Director of the Overseas Development Institute, wrote in a recent ODI Opinion Brief that “support for international development is broad but shallow.” As in the UK, in the U.S. support for international development may weaken as the economy suffers and the U.S. directs resources in other directions.

Accra Aftermath

In early September I blogged on the upcoming Third High Level Forum on Aid Effectiveness (More Effective and Efficient Aid - A Realistic Goal?) in Accra, Ghana, September 2-4. The goals for the forum were to review progress relative to the Paris Declaration on Aid Effectiveness, adopted at the 2005 High Level Forum, and to adopt measures designed to bring about quicker and more complete compliance. The dust has now settled and it’s possible to take a measure of how closely the assembled dignitaries in Accra came to achieving those goals.

The Accra Agenda for Action (AAA) is the statement approved by the assembled ministers of both developing and developed countries, committing themselves to accelerate and deepen the implementation of the Paris Declaration. There are some positive features:

• Donors agreed to strengthen and use developing country systems “to the maximum extent possible,” with commitments to provide 66 percent of aid in the form of program-based disbursements, and to channel 50 percent or more of government-to-government assistance through recipient country systems;
• Donors agreed to reduce the fragmentation of aid, with a commitment to start a dialogue on international division of labor across countries by June 2009;
• Donors agreed to deepen their engagement with civil society organizations;
• Donors agreed to increase the medium-term predictability of aid, and to make amounts and implementation procedures more transparent.

For their part, developing country governments agreed to take on stronger leadership of their own development policies, to broaden country-level dialogue on development and to strengthen their own leadership and management capacity. So far, so good.