Changing Aid Landscape

• Author: Stefano Curto
• Position: World Bank
• Pages: 20-21

Page 20

Despite donors' commitments to scale up aid in line with the 2002 Monterrey Consensus and the 2005 Gleneagles Declaration, the response has been mixed. Official development assistance (ODA) declined by roughly 5 percent in real terms in 2006-the first drop since 1997-and a slight decline is expected for 2007, according to recent OECD estimates. Moreover, ODA as a percent of gross national income dipped to 0.3 percent in 2006, after inching up to 0.33 percent in 2005, still well short of the UN target of 0.7 percent.

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Exacerbating matters, of the aid that was given, debt-relief grants totaled one-fifth of total ODA during 2005-06, dominated by Paris Club settlements with Iraq and Nigeria. In sub-Saharan Africa, debt relief took one-third of ODA, raising additional questions about whether donor countries will be able to meet and sustain their promised doubling of aid as debt relief fades out.

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Furthermore, despite some signs of improvement in the short-term predictability of aid in the better-performing countries, the pattern is uneven. In a sample of 13 countries with relatively large aid inflows, volatility of aid components in the budget declined between 1993-99 and 2000-05, but almost one-third of aid still did not arrive on time. Even among the better-performing countries, the predictability of budget aid regressed for Ghana and Uganda and stagnated for Tanzania.

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Page 21

Over a longer period, the number of aid channels in the development arena has soared-from 65 in 1950-60 to 287 in 2000-05. Many new donors have announced ambitious plans to scale up their engagement in the aid arena, and private organizations, in particular, have rapidly expanded their activities. While statistics are notoriously incomplete, estimates of private philanthropy directed to developing countries are as high as $60 billion, of which about half comes from the United States-whose contribution has increased over fourfold since 1990.*

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But the proliferation of donors also brings challenges, including...