Questions & Answers
11.26.07
Q: Why should we give development assistance to Africa? Wouldn't private investment and trade be better for poor countries?
A: Development assistance is necessary if Africa is going to beat extreme poverty; but it will not work on its own. Africa must have a combination of targeted and well-structured development assistance, savvy investment, sound trade policy and strong leadership to put poor countries on the path to sustainable growth.
Just as development assistance won't work on its own, for the very poorest countries, trade and investment won't work on their own either. There is a role for the public sector and for now the developing countries' public sector needs extra investment - where we can be more sure those investments will be well spent. Business in Africa needs healthy, educated workers. It needs banking and finance systems that work. It needs legal systems to enforce contracts. It needs infrastructure. All this takes money and expertise.
Q: Some people say that development assistance does not affect growth at all. Does assistance improve economic conditions in poor countries?
A: Most forms of development assistance are humanitarian and geared towards keeping people alive - not generating economic growth. So we can't say that assistance isn't delivering outcomes it wasn't designed to deliver.
Of the studies that have looked at the link between development assistance and economic growth, some say there isn't a link but more studies say there is.
But beyond the academic papers- it comes down to using your common sense. There are 18 countries in Africa showing sustained growth of on average 5.5% over the past 10 years-and these countries are not even the oil producers. Most of these have received debt cancellation, more than half are electoral democracies and on average, development assistance per capita has increased 66% between 2000 and 2005.
Good governance, strong economic policies, trade, investment-all of these play a huge part in generating growth - but then it's hard to imagine development assistance didn't play some part as well.
Q: Doesn't the pressure on donors to increase their budgets and spend more on aid mean aid quality suffers?
A: DATA advocates just as hard on aid quality as aid quantity. We argue for something we call "SMART aid": aid that is Sustainable, Measurable, Accountable, Responsibly managed and coordinated and Transparent.
The principles of the Paris Declaration are just as important as the principles of doubling aid as agreed at the 2005 G8 summit in Gleneagles. We want aid to be more entrepreneurial and with more feedback systems that inform the recipients on what's being done in their name. Top-down aid "pushes" must be balanced with bottom-up development "pulls".
Q: Some say one of the big problems is that African countries simply can't absorb the development assistance already allocated. Hundreds of millions of dollars remains unspent every year. What is the point in constantly ramping up our spending on development assistance if there is nowhere for it to go?
A: Often donors call this a problem of absorptive capacity but developing countries and advocates like ourselves see it as an issue of distributive capacity.
For example, Malawi was having trouble implementing its Global Fund HIV grant so the donors took a look and realized the country had lost half its health workers in the 1990s due to migration and AIDS-related deaths. The Global Fund recognized this and worked with DFID (the U.K.'s development agency) and the World Bank to develop a strategy and financing to address this constraint so that Malawi could get its HIV program back on track.
The health systems constraint is a common one in Africa which is why donors are now getting together with recipient countries under an International Health Partnership - a great initiative, announced recently in London by British Prime Minister Gordon Brown. They're trying to do what donors did for Malawi: look at the resources already there and figure out what are the missing pieces to effectively getting over those problems of distribution.
But sometimes the case is that an African finance minister, unsure if a flow of funds is going to be sustainable over many years, would rather be conservative and keep the money in a bank account than, for example, put teachers and nurses on salary one year if next year the money won't come through to keep them on salary.
Lack of predictably in development assistance undermines efficiency in these cases. Also the IMF often forces conservative spending on these same finance ministries, which contributes to their reluctance to program the assistance.
In the end, improving those systems means more money should flow to the people who need it, not less.
Q: What about corruption?
A: Corruption disproportionately hurts the poorest people and is a major problem in some African countries, just as it is in some rich countries.
Sub-Saharan Africa is made up of some 48 countries, each with its own record on this issue. In some countries, corruption continues to slow development and progress. But in other countries, good governance is on the rise and all sorts of people - from community leaders and journalists to church volunteers and parents of schoolchildren - are holding their governments accountable for their spending.
The United States must consider good governance when deciding where and how to provide development assistance. But corruption cannot be used as an excuse to fail the African people. In countries with good governance structures we can and should work with the government as a partner. In countries where governments are corrupt or their systems are not transparent, we can find other ways of delivering needed development assistance, such as providing funding through local organizations and the private sector.
