Aid in Times of Crisis

Duncan GreenHead of Research

Oxfam GBJune 2010

Current aid promises

EU has pledged to reach 0.56% of GNI by 2010

2010: aid levels expected to fall €11bn short

Main shortfalls in Italy, Germany and France And the pressures on aid budgets will only

increase …..

Aid after previous financial crises

The costs of breaking those promises

Harming poor people Damaging the implicit social contract

between rich and poor countries Undermining Europe’s moral authority Why should emerging powers then trust

Europe’s promises on anything else?

The current crisis: Channels of transmission

Aug-08

Jan-09

Jun-09

Jan-10

Jun-10

Jan-11

Finance

Trade

Remittances

Informal economy

Government spending…?

Aid budgets?

Oxfam’s research on the current crisis

• 12 countries/2,500 households + lit review• So far, countries and households dealt better with

the economic crisis than we expected;• Families supported each other, shared food,

information, money, kept kids in school;• But $65bn fiscal hole a major concern (aid grants

only cover 13% of that so far)• What are the limits of resilience – for families and

nations?

Lessons for governments and donors

Build resilience before a shock, replenish it afterwards (before the next one)

Volatility matters as much as average flows/stocks

Startling gap on real-time impact monitoring and genuine dialogue with affected communities

Social protection needs extension – especially into the informal economy, and automatic instruments

Gender matters in terms of impact and response

Countercyclical spending in good times and bad

That needs support from aid system

Good v Bad Aid Do: fund watchdogs, fund long-term, support state

capacity, put government in the driving seat, ensure downwards accountability

– Measles vaccines save 7.5m lives 1999-2005– Education for All– Rise in General Budget Support (but still tiny %)– MDG contracts a model of good aid

Don’t: overcomplicate, impose conditions, support parallel systems, poach staff or tie aid

– Over 2 year period, Uganda had to deal with 684 different aid instruments from 40 donors, (just for central government funding)

Beyond Aid

Coherence is a double-edged sword Effective states learn by doing (and sometimes

failing), so defend policy space and pluralism One ray of light: innovative financing, eg financial

transaction taxes; bank levies Do No Harm agenda:

– Climate Change did not end in Copenhagen!– Migration is a Good Thing– Corruption needs supply and demand– Tax havens steal money from poor countries

Thank you!

For more information, see Oxfam’s new reports on:

The Global Economic Crisis And 21st Century Aid

dgreen@oxfam.org.uk