When future generations look back on this second decade of the 21st century it could well be marked as the ‘plateau of global compassion’ – that is, if generosity is measured through trends in international development and humanitarian assistance.
For now, the rich countries of the world muster around US$25 billion to pay for the essential ‘humanitarian relief’ that is provided in the shadow of conflicts and other acute disasters. Already in 2016, the United Nations has estimated that amount to be about 40% – or US$15 billion – short of meeting current acute emergency needs. Many of the same donor countries provide additional annual support, currently totalling about US$150 billion, in the form of ‘official development assistance’ (ODA): this is the financing provided to the most needy countries of the world to help them escape poverty, develop in sustainable ways and build their resilience against future shocks. Both types of support are traditionally given by the world’s wealthiest countries, in particular the 28 member countries of the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC). These include many economies that are now reeling from their own fiscal downturns and bail outs, as well as social and political upheavals.
It is therefore of no great surprise to see that international aid spending has levelled off in recent years, and has almost certainly peaked. Even though levels of ODA are higher today than at any time in the past, real decreases in the actual amounts of money reaching countries in most need may be concealed by several factors:
- Latest available data suggest that almost one-fifth of funds recorded as ODA never make it to poor countries, but are instead spent in donor countries or put towards debt relief.
- Several European countries are currently spending large segments of their ODA on refugee services in their own countries. In 2015, for example, the Netherlands spent 27% of its ODA on refugees and Sweden spent 30%, making the Swedish Migration Agency its largest beneficiary of funds.
- OECD-DAC member countries are currently considering a proposal to include some security and defense spending in their formal definition of aid.
Notwithstanding recent announcements by the governments of Canada and Japan of their intention to increase funding to the Global Fund to Fight AIDS, Tuberculosis and Malaria, most indications suggest that declines in the level of international assistance money reaching countries are not only inevitable, but could be rapid. ODA levels will be largely determined by any future waves of continuing global recession, and the sentiments of OECD political constituencies, which in times of austerity and self-interest do not bode well.
One lingering hope has been that emerging market economies (EMEs) would take up positions through which they might make significant contributions to ODA. Although the aid programmes of EMEs are certainly growing in numbers, they are developing at precisely the same time that the weaknesses of the traditional aid system are becoming more evident, and as many post-war multilateral institutions are undergoing forced management and governance reforms. It is therefore of little surprise to see EME aid programmes adopting quite different business models to those of traditional OECD-DAC donors. In particular they are adopting approaches that emphasize development ‘spin-offs’ of large infrastructure projects, the benefits of South–South collaboration and mutual learning between countries. The divergence of development models is exemplified by the recent establishment of the BRICS (Brazil, China, India, Russia and South Africa) Development Bank, in direct ‘competition’ to the OECD-DAC-dominated Bretton Woods institutions (World Bank and International Monetary Fund). For the foreseeable future, the old and the new development models will continue running on separate tracks.
As if that wasn’t enough cause for concern, the rapid pace of economic change in some low- and middle-income countries (LMICs) may itself be creating a completely new and urgent form of financing gap. In recent years, while some wealthy countries have watched their historical economic privilege slip away, in relative terms others have been on the climb. The number of ‘low-income’ countries has been roughly halved in the past 15 years, with about 30 previously aid-dependent nations ‘graduating’ to middle-income status. Because aid eligibility is often based on purely economic determinations made by the World Bank – this leaves many of the ‘new’ middle-income countries suddenly ineligible for development assistance, even though we know full well that the majority of the world’s poorest and most vulnerable people live within their borders.
So what’s the bottom line here?
While old and new donors cling to their respective development business models, the new framework of the Sustainable Development Goals (SDGs) is clear in giving far greater responsibility to all countries for determining their own national development priorities between now and 2030.
Rapidly changing economic and political environments place an immediate responsibility on many middle-income countries to not only prioritize national actions across a whole range of social and development challenges, but also creates an abrupt obligation to pay for tackling those priorities, primarily from public and private domestic resources.
A very grey line separates greater self-determination by national governments in setting their own development agendas, and donor countries washing their hands of today’s spiraling development and humanitarian challenges.