President Paul Kagame has called on donors to embrace a paradigm shift on aid policy, if developing countries are to use aid effectively to meet their development goals.
The Head of State made the call, yesterday, while addressing delegates at the 4th High Level Forum on aid effectiveness in Busan, South Korea.
He observed that it would be futile to talk about competent use of aid without addressing impediments to its effectiveness:
“As the history of Asia amply illustrates, it is sound economic policies and investment capital that propelled millions of Asians to prosperity,” President Kagame said.
“We should, therefore, be talking about aid effectiveness in tandem with trade and investment – and I would add, a fair framework with clear rules and proven best practices.”
The President pointed out that in spite of the many aid commitments always made and periodically reviewed, Africa is not getting the desired results.
“It is most relevant that we are having this conversation in Korea which, in the last half a century, has moved from an aid recipient country to an industrial nation that is now supporting others to develop,”
“Other countries in Asia have made a similar transition. Over the same period, about one trillion US Dollars in development aid has been transferred to Africa,” President Kagame said, adding;
“But real per capita income today is less than it was in the 1970s and more than half the population – about 500 million people – still live in poverty. At this rate, most African countries may not meet many of the Millennium Development Goals,”
President Kagame, however, pointed out that in the last two decades or so, African countries have registered average annual economic growth of between 5-8 percent despite low foreign investments and the global economic crisis, saying that it is evidence that Africa has great promise:
“These two contradictory realities are pertinent to our discussion on aid effectiveness and beg serious questions,”
“Why has massive aid been largely ineffective and little investment productive? How can we translate aid commitments into effective development outcomes that will drive our graduation to self-sufficiency?” pondered Kagame.
The Head of State emphasized that there was no contention, whatsoever, on the principles of aid effectiveness, as adopted during previous forums.
He noted that there is need for global leaders to overcome structural and attitude-related barriers that hinder the realisation of what should otherwise be obvious.
“For instance, in Paris we committed, and reaffirmed in Accra, to channel aid through country systems so as to strengthen national capacity to execute development plans, to budget efficiently and deliver services,”
“It was also meant to build the foundation for enhanced capacity and accountability towards development results. In practice, the status quo still prevails,” the President said.
President Kagame observed that there is still resistance on the part of some donor countries to channel their aid through national systems, which raises important issues of effectiveness and accountability.
“While donors may not be entirely to blame for bypassing these systems where they are weak, or non-functional, why not use aid to build up and strengthen such critical systems?” the Head of State wondered.
President Kagame reminded that when multiple and parallel execution modalities and systems are employed, there is a significant impact on the effective allocation and use of public resources, which he said may undermine the relationship between governments and their citizens if they are not seen to be credible or responsive to people’s needs.
With regard to accountability, President Kagame said that although there has been agreement on the crucial importance of mutual accountability in the development effectiveness agenda, this very principle has not been applied, equally or fairly.
“While there are more demands on developing countries to account, there has been reluctance from some donors to do the same. And often this is accompanied by the introduction of issues unrelated to aid performance either as an excuse not to act or to delay commitments,” he said.
The President noted that there is real danger that the huge industry that has been built around aid can become a permanent feature of the development process and perpetuate dependency, directly undermining the very national systems that should instead be strengthened.
“Developing countries spend more time and energy agreeing on procedures and accounting to donors and an ever-increasing number of related non-state actors than in actual development work, often responding to endless questioning that no answers can fully satisfy,” he said
President Kagame called for a shift in the aid regime to broaden beyond traditional donors to emerging economies as countries that have recently achieved prosperity understand what it takes to get out of poverty and have relevant lessons for developing countries and donors alike, regarding what works best.
“This shift inevitably means strengthening South-South Cooperation and bringing it from the margins to the centre of international development frameworks. This should shape future development discourse and could be the lasting legacy of Busan”.
President Kagame reiterated that aid can be effective in achieving development objectives if greater trust in partnerships is allowed and recognized as a shared responsibility, built on common values and goals.
The Head of State urged the Busan forum to come out with clear commitments, actions, and targets to enhance mutual respect and inclusive global partnerships, by building on previous commitments on aid and development cooperation.
The President of South Korea, Lee Myung-bak called on advanced nations to deliver on their aid commitments to developing nations, stressing that less well-off nations are not a burden, but key partners for sustainable growth of the global economy.
“We are living in an era where various difficulties each nation faces cannot be resolved by any country alone but can be overcome when all of us living in the global community unite in strength,” Myung-bak said.
“All of us around the world live in the era of globalization, where each and every country is closely interconnected to one another.”
The United Nations Secretary General, Ban Ki Moon called on governments to empower their private sectors through skills development and investment in innovations, citing Rwanda as an example.
“The skills of the private sector, ideas and dynamism can make a difference; through working together,” the UN Chief said.
“I have seen in Rwanda, the Government is setting trends in Gender empowerment, education, and ICT as key components of the development process.”
The US Secretary of State, Mrs. Hillary Clinton said the United States is working to remove many of the requirements tying aid to U.S. companies, recognizing that it frees recipients to choose from a wider range of partners, and it maximizes impact by increasing competition and driving down costs:
“We should recognize the accomplishments that have occurred, in some places quite dramatically, as we have heard not only about Korea but also about Rwanda,”
“But let us also acknowledge honestly the challenges and the problems that we must address if we expect to see greater progress. We need to continue shifting our approach and our thinking from aid to investment, targeted to produce tangible returns.” Mrs Clinton said.