Financing the Millennium Development Goals and Beyond: The Challenge in 2005 Arabella Fraser, Policy Adviser, Oxfam GB Research Team.

Financing the Millennium Development Goals and Beyond: The Challenge in 2005

Arabella Fraser, Policy Adviser, Oxfam GB Research Team

The price of failure

45 million more children under five will die between 2005 and 2015

247 million more people in sub-Saharan Africa living on less than $1 a day in 2015

97 million more children still out of school in 2015

53 million more people without proper sanitation facilities

1. The case for aid2. Increasing aid to meet the MDGs and

beyond3. Making aid work better for poverty reduction

Structure

1. The case for aid

Econometric studies, case study evidence Economic marginalisation of the poorest

economies Evidence for productive use of aid in many

low-income countries

Fig. 1 Aid levels up, but generosity downNet ODA, $ million and as a percentage of GNI, 1960-2004, OECD countries, 2003 prices

0

10000

20000

30000

40000

50000

60000

70000

80000

1960 1965 1970 1975 1980 1985 1990 1995 2000

0.00

0.10

0.20

0.30

0.40

0.50

0.60

Net ODA $ Million

ODA as a % of GNI

Fig. 2 Progress on meeting the 0.7% targetNet ODA as % of GNI, OECD donors, 2004 preliminary data

Fig. 3 Projected donor shortfalls in aidVolumes of ODA under different scenarios, based on 2001-2005 average growth rates

259665

203415

130625

72241

0

50000

100000

150000

200000

250000

300000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

US

$mn

0.7 in 2010

MDG Needs

Total of current commitments

Fig. 4 Developed country expenditure priorities

22.5

22

120

245

616

0 100 200 300 400 500 600 700

Additional money estimatedto be required for Africa to

reach the MDGs

US, UK, French spending onarms exports

Additional money required for0.7

OECD country farmsubsidies

OECD country defencespending

$ billion

A Debt Relief Deal

HIPC too limited to meet the MDGs Importance of additional finance Current proposals inadequate: UK ‘debt

holiday’ and US ‘bold plan’

Fig. 5 ‘Effective’ aid volumesNet ODA by purpose, 2002

Making aid work better for poverty reduction

The DAC process Aid allocation criteria Conditionality: undercutting ownership

Fig. 6 Bound in red tapeResponses to the question ‘How much of your ministry’s time is spent in reporting to the donor?’

0

10

20

30

40

50

60

70

80

90

100

US World Bank Japan Germany EC UK

%

Don't know

Acceptable

Too much

Excessive

Fig. 7 Expect delays in aid deliveryResponses to the question `Generally speaking, how late do the donor’s aid disbursements arrive?’

35

20

25

3

14

21

29

21

0

5

10

15

20

25

30

35

40

ON TIME 1-6 MONTHS 6-12 MONTHS OVER 1 YEAR

All otherdonors

EC

The DAC process

Monitorable, ambitious, relevant targets Robust accountability mechanisms Integration into the MDGs process

Real aid allocationsAverage income per capita (PPP, 2003 estimates) of the top three recipients of gross aid (ODA and Official Aid (OA)) in absolute terms, 2002

Aid conditions: undercutting ownership

Ongoing administrative burden of conditions

Undermining domestic accountability mechanisms and ‘ownership’ of policy reform

Need greater independent impact assessment

Conclusions and recommendations:

Cancellation of multilateral debt for countries that require it to meet MDGs; resources available from additional contributions and use IMF gold reserves

Immediate $50 billion and binding timetables to meet 0.7 by 2010

Full implementation of Rome and Paris commitments; strong targets and monitoring mechanisms

Focus on poorest countries and communities Restriction in use of conditions to financial

accountability and poverty reduction; respect national processes and independent impact assessment

Financing the Millennium Development Goals and Beyond: The Challenge in 2005

Arabella Fraser, Policy Adviser, Oxfam GB Research Team