Making poverty history: empty promises or real possibility?

In 2005, trade rules, aid and debt relief will be discussed at the summit of the G8 group of industrialised states, the United Nations Special Session on the Millennium Development Goals and a ministerial conference of the World Trade Organization. It remains to be seen if world leaders will deliver on their promises to tackle poverty.

Rich countries aregiving less and less in aid to developing countries as a proportion of their nationalincomes. Once donors pay off the consultants they employ, deduct debtrelief and administration costs, only about 40 percent of total aid budgetedactually reaches developing countries. Seventy percent of American aid is spenton US goods and services. Many donors’ priorities are still determined by theirown strategic interests.

Time for action to meet the Millennium Development Goals (MDGs) is running out. A report from Oxfam in the UKwarns that unless aid is dramatically increased to developing countries andtheir debts are cancelled the MDGs will not be met. On current trends, only onegoal – halving income poverty – has any chance of being met, and then only in ahandful of countries. Oxfam calculates that without a major change in donorpriorities by 2015, 247 million more people in sub-Saharan Africawill be living on less than US$ 1 a day.

The working methods of many donors often create difficultiesfor the governments they are trying to support. AnOxfam survey across 11 developing countries finds:

• In over half of the cases complex donorprocedures, especially that of the World Bank and the USA,led to government officials spending excessive amounts of time reporting.
• Only one in three aid packages arrives on time:one fifth of the European Commissions’ aid arrives morethan a year late.
• Aid is often short term and uncertain: over 70percent of aid packages are committed for three years or less.

The authors also note that:

• The United Nations target of allocating 0.7percent of national income to aid would generate US$ 120 billion, but only 5 ofthe 22 major donors meet the target.
• Programmes such as those to help developingcountries achieve universal education and fight HIV/AIDS have serious shortagesof cash.
• Low-income countries may pay more on theinterest of their debts than what they receive in aid: between 1970 and 2002,African countries received US $540 billion in loans, and despite having paidback US$ 550 billion, and still have a debt burden of US$ 210 billion.

Oxfam recommendsthat:

• donors increase finance for poverty reduction by:cancelling the poorest countries’ debts where this is necessary to reach the MDGs; providing at least US$ 50 billion immediately; settingbinding timetables to reach the 0.7 percent aid target by 2010
• donors support mechanisms such as theInternational Finance Facility and international taxation for immediate andsustainable development financing
• donors implement commitments on improved deliveryof aid and limit conditions attached to aid
• developing country governments meet the UnitedNations recommendation to spend at least 20 percent of the public budget onbasic social services, targeting poor people
• developing country governments formaliseparliamentary and civil society participation in policy making and guaranteecivil and political rights.

Making financial resources available is not simply an act ofcharity but a moral obligation. It is also an overdue recognition of the roleof rich nations in creating the debt crisis that threatens the prospects of poorcountries.