The end development aid as we know it?
Norway must continue to provide high levels of aid, prioritise, and contribute to reform of the multilateral aid system. Those were the main messages from a panel of experts discussing declining aid volumes, the new Trump administration, and changing foreign policy priorities by major donor countries at a CMI seminar.
Development aid as we know it has come under increasing pressure with declining aid budgets, shifting aid disbursements from developing countries to Ukraine and refugees in Europe. The big European countries have announced dramatic cuts in their aid budgets. And in the US, providing 30% of all aid, the Trump administration has closed down its main aid agency and suspended nearly all of its aid.
On 22 May, CMI organised a debate on aid in the context of declining aid resources, evolving geopolitics and Norway’s role. Panelists Elling Tjønneland, senior researcher at CMI, Jon Lomøy, former Director of Norad and the OECD’ Development Cooperation Directorate, and Trine Østereng, International Advisor at the think tank Agenda, were tasked with answering the question: Is this the end of development aid as we know it?
Jon Lomøy focused on multilateral aid and Norway’s role. He argued that the global aid system and the UN system has grown too complex, is inefficient and badly in need of reform.
- Over the years, we have seen the emergence of a conglomerate of different funds and initiatives that channel money from donors to recipients. There is a need to cut out the middlemen in disbursing aid to make it more efficient.
He called for increased channeling of aid through the World Bank’s concessional lending facility for low-income countries (IDA). This facility has emerged as the most efficient instrument in channeling resources to low-income countries in Africa.
Lomøy urged Norway to show leadership and to press for reforms of the UN system, among them helping the UN to consolidate on its core functions and reduce the middlemen and duplication of functions in channeling aid.
- Currently, the aid system has an underdeveloped bottom and an overgrown top. This should be shifted, with less employees working on aid management in cities like New York and Oslo, and more employees working on aid in locations close to where the practical work is being done.
Trine Østereng voiced concerns for the erosion of democracy and increasing inequality. She argued that a smaller group of super rich individuals, big companies and strong lobby organisations in the face of weakened institutions are seizing the opportunity to grab power.
- The power of a voter is much smaller than the power of a lobbyist, she said.
She argues that strong redistribution systems are needed to attain inclusive growth, and that civil society organisations can play a crucial role in tackling growing inequality. But for that to happen, they must be given space.
- We see that civil society organisations are operating in a shrinking space. Norway has an important role to play in standing up for democracy and free speech.
With Europe and the USA decreasing their aid budgets, other actors like China, Turkey, Saudi-Arabia, Qatar and the UAE are emerging as significant financial resources for development outside the traditional system.
Elling Tjønneland outlined the role of Chinese and how its role in multilateral aid through the UN remains limited. Its primary contribution lies in its sizeable mandatory membership fees and contribution to the UN’s regular budget, including peacekeeping and of the specialised UN agencies. The size of China and its expanding economy has made China the second biggest contributor of mandatory contributions after the US. Its role in providing funding to the main UN development agencies and funds are marginal.
China’s preferred approach is bilateral. Most of its aid is provided directly to individual countries. It remains small – comparable to the size of the Norwegian aid budget - but it has made important contribution in some areas. China has become a major provider of loans for infrastructure development in Africa. They also provide grants through deployment of medical teams, opportunities for training education in China, and technical support to agriculture.
Chinese bilateral aid is undergoing significant changes. The role of loans is decreasing with more assessment of sustainability and ability to service the loans, and grant aid to health, agriculture and higher education is emphasizing more results and sustainability. In some respects Chinese aid is becoming more similar to aid from Western countries.
Hilde Selbervik, senior researcher at CMI and Director of its U4 Anti-Corruption Resource Centre moderated the discussion and asked the panelists what message they have to the coming Norwegian Minister of International Development. Their feedback was clear:
Provide high levels of aid, simplify and prioritise, and take the lead in badly needed reforms of the aid system.
The event was organized in honour of CMI senior researcher Elling Tjønneland who is retiring after more than 40 years in development research.
