Select Committee on International Development Minutes of Evidence

Memorandum submitted by Development Initiatives

  Development Initiatives is pleased to have the opportunity to present evidence to the International Development Committee on the Financing for Development process. This memorandum aims to present some statistics on aid from the UK and other DAC donors.

  Development Initiatives is an independent research organisation that monitors aid, development and poverty reduction policy and works on NGO—government relations.

  For the last 10 years Development Initiatives has edited the annual Reality of Aid report. In 2000 Development Initiatives produced the Global Humanitarian Assistance Report. Judith Randel was part of the team that produced the December 2000 Africa Partnership Report for Downing Street.

  Development Initiatives is a partner in the Chronic Poverty Research Centre.

  The paragraph numbers below relate to the graphs which follow.

  1.  Between 1960 and 2000, UK GNP per capita rose from $11,246 to $24,882—from about £7,500 per person to about £16,600. Aid per capita rose from $67 to $78 between 1960 and 2000—from about £45 each per year to about £52. So while personal wealth has more than doubled, aid per person is only 60 pence a month more than it was 40 years ago.

  2.  In 2000 the UK was the world's 4th largest donor providing aid worth $4501.

  3.  Against the UN 0.7 per cent target, the UK gave 0.32 per cent GNP in 2000, compared to a weighted DAC average of 0.22 per cent and an unweighted average of 0.39 per cent.

  4.  Most of the fall in global aid that has taken place since 1992 is the result of cuts by G7 donors. The UK and Japan are the only G7 donors to have increased aid over the period 1992 to 2000.

  5.  In real terms, UK aid in 2000 almost equalled the level reached in 1979.

  6.  As a percentage of GNP, UK aid will grow on current (pre budget 2002) expenditure plans. But UK commitments made at FfD to match the EU 0.39 per cent figure for 2006, would leave UK aid well below the headline figure for 1979, and somewhat below the real level achieved in 1979 if distortions caused by disbursement timing are taken into account.

  7.  Whilst DFID currently plans substantial spending increases, the experience of other DAC donors is that sustaining commitment to increase aid over several years is very difficult in the context of both economic and political pressure. Donors such as the Netherlands set a fixed GNP percentage for aid, which somewhat protects their aid budgets from cyclical pressures and ensures that spending keeps pace with growth. The establishment of a mechanism such as a UK Council for International Cooperation could also help to promote both a cross party consensus on aid spending and public commitment to the UK playing an increasingly positive role on both poverty reduction and international relations.

  8.  The UK spends less on aid as a percentage of public expenditure than the donors who meet the UN 0.7 per cent target—but more than any other G7 donor.

  9.  Aid spending as a share of total UK government expenditure has risen over the last four years.

  10.  If the increased aid pledged at FfD is projected to the year 2006, total ODA would be around $66 billion. Based on DAC estimates of GNI growth, this would be around 0.24 per cent of DAC GNI. In 1992, aid was $63 billion and 0.33 per cent of DAC GNI. So the increases promised at FfD will restore the aid cuts of the 1990s—but will fall very far short of the additional $50 billion a year required to finance the Millennium Development Goals.[11].

  11.  Even if the Millennium Development Goals are achieved, around one billion people will remain in poverty in 2015. Current global development policies do not really address the issue of Chronic Poverty or how the needs of this billion people can be addressed—though at the 1995 Social Summit governments pledged themselves to eradicate absolute poverty. The 0.7 per cent target must be seen therefore not as an end in itself, but as the minimum requirement which would do half the job of eradicating poverty. The doubling of planned UK aid spending, in line with the Zedillo recommendations, would effectively reach 0.7% within the likely lifetime of the present parliament and would send a powerful signal to both other G7 donors and the UK's developing country partners.

Tony German and Judith Randel

Development Initiatives

April 2002

11   Assuming the figure of $50 billion a year in extra aid-the amount that the Chancellor said was needed, in his speech to the Federal Reserve on 16 November 2001. Please note that these projections are approximate and assume planned increases spread evenly. Back

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