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Sunday, November 27, 2011

Moving Beyond Foreign Aid

How do you get African economies on a firm trajectory of sustained growth without dependence on large outlays of foreign donations? In a sense, how do you break the cycle of aid dependence among the so-called “poor African” nations?

This I think is the most engaging question for those who think about global socio-economic sustainability. Preeminent scholars notably, Jeff Sachs, William Easterly and Paul Collier have advanced competing ideas. Contestations on models, approaches and the necessity of foreign aid persist.

In 2000, 193 heads of states signed the Millennium Development Goals (MDG). The MDG represents, in my opinion, the largest official sanctioning of massive capital flows from the developed world. I think the universal endorsement of the MDGs essentially signaled the triumph of foreign aid.

The Commission for Africa was initiated by British government in 2004 to examine and advance an impetus for Africa’s development initiated the Commission for Africa also known as the Blair Commission for Africa. The G8 summit in 2005 in Gleneagles pledged what the Commission report asked for – doubling of aid and significant extension of multilateral debt relief.

But the dominant perception of the place and role of aids is changing. Tony Blair, the most fervent advocate for increased aid inflow in Africa is now more nuanced about his position. He now argues that governance capacity –making governments more capable – is needed to transform Africa.

In article published in the Washington Post yesterday, Tony Blair make s the point that there is a need for “broadening our thinking beyond aid to strengthen states and markets, and developing a new set of global relationships to tackle global issues”. He further argues that the “issue of governance, how to get things done, is the biggest single challenge for governments worldwide”.

Tony Blair has also asserted that "without building effective capacity, without Governments capable of delivering practical things and on a path to release from
dependency on aid, then aid can only ever be a palliative – vital to many, but not transformative of a nation".

Here is the full version of Tony Blair’s article. Tony Blair is the founder of Africa Governance Initiative.

Ending global aid in a generation
By Tony Blair, Published: November 26
Fifty years ago, the scene in Busan, South Korea, would have been a familiar image of international aid: sacks of grain stacked precariously on a crumbling dockside. The backdrop would have been a country emerging from war and dependent on outside assistance to meet the most basic needs. But when national and development leaders gather in Busan this week to discuss the future of aid, they will see a very different place: the fifth-busiest commercial port in the world, transporting advanced technologies around the globe. This, writ small, is the Korean miracle — the transformation of a country from aid-dependent to aid donor.

The international goal must be to make sure many more countries are transformed. This will require building on the success of aid, broadening our thinking beyond aid to strengthen states and markets, and developing a new set of global relationships to tackle global issues. Each challenge is, of course, hard in itself — but they are also clear and achievable. I believe that within a generation no country need be dependent on aid. This matters around the world but especially to Africa, the continent most dependent on aid and a focus of my own work.

Things are already moving in the right direction. While the West has experienced a decade of sluggish growth, emerging economies have taken up the slack — 19 economies, including eight in sub-Saharan Africa, more than doubled in size from 2000 to 2010. Meanwhile, health and education are improving. In just one example, 10 times more people were receiving treatment for HIV-AIDS from 2003 to 2008 than was the case a decade earlier. And while the Arab Spring has rightly received the world’s attention, the steady political change south of the Sahara could be as significant in the long term. In the 1980s there were three truly free elections in sub-Saharan Africa. In the past decade there were 25. A new generation of democratically elected leaders is emerging, eager to take their countries forward.

Aid has played a significant role in this progress, particularly the improvements in health and education through the Millennium Development Goals. The first challenge is for the richer countries to deliver on their aid commitments. Bill Gates estimates that meeting existing aid promises would generate an extra $80 billion a year for development. That translates into millions of lives saved and children educated.

But aid alone is not enough. Ultimately, development progress depends on governance and growth. All societies, no matter how wealthy, need governments that can deliver tangible improvements in the lives of their citizens and be held to account for the results. They need economies that generate wealth and improved living standards for all. This requires a new approach.

To strengthen governance, we should help governments to develop the capacity they need to deliver for their citizens. This issue of governance, how to get things done, is the biggest single challenge for governments worldwide. Since leaving office, I have focused on this issue through the Africa Governance Initiative, which works alongside political leaders to help them reform and build their systems so they can implement development plans and tackle poverty.

Supporting economic growth requires action on all sides. Leaders of emerging economies must ensure that they are able to attract high-quality, sustainable investment; that the rules are clear and followed; and that they work together to remove regional trade barriers. But the rich world has a role in opening up its markets and ensuring that global trade rules are fair.

This theme of shared responsibilities brings me to the third challenge — building a new set of global relationships. Even as we address the first two challenges, we need to fundamentally rethink the way rich and poor countries interact and begin moving from thinking in terms of rich countries helping poor countries to an understanding of how everyone can contribute to shared goals. The world has changed; the emergence of China and India as economic powerhouses makes the old distinctions increasingly irrelevant. And the big issues today need global action. Security is one issue that no country, rich or poor, can tackle alone. Others include climate change and how we manage scarce resources such as water or oil. And we all share a common interest in achieving a more stable financial system. These global issues have a huge impact on development, and we need to build international systems that can handle them.

In recent years, I have visited the West African ports of Freetown, Sierra Leone, and Monrovia, Liberia, many times. Both were at the center of brutal conflict in the past decade, and their destruction symbolized what was broken in their societies. But as they are rebuilt and revitalized, they are becoming a different kind of symbol for their people: beacons of progress, openness to the wider world and self-determination. If the international community acts boldly at this week’s meeting in South Korea to set out a new plan for development, the port of Busan can itself become a symbol of where Freetown and Monrovia are heading.

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