Aid and beyond

Yesterday, a bill that protects the United Kingdom’s commitment to spend 0.7 percent of gross national income on aid passed its final parliamentary hurdle and is finally on its way to becoming a legally binding act of Parliament.

It’s a great success — and one politicians and nongovernmental organizations can and should be proud of. But the battle isn’t over yet.

Despite this success, there is still a persistent and sometimes virulent anti-aid tone to the debate. And even in the development sector, we talk increasingly of an ever wider and more complex range of development challenges and less about things like aid or what role it has to play in a new and ambitious development framework for post-2015. But the one thing we can all agree on is that practically financing this new agenda will require more and new sources of funding than can be found in aid budgets from traditional donor countries.

So why is the development sector in the U.K. so excited about this bill?

Maybe first and foremost because, whatever the rhetoric and wherever the political focus may be, aid is and will remain a vitally important source of funding for many countries. There have been real development successes in the past 15 years, including halving the number of people living in extreme poverty but there is still much more to do if we want to end extreme poverty for the roughly 1 billion people still living on less than $1.25 per day.

While many of the world’s poorest people live in middle-income countries, which will arguably be more able to finance their own development in the future — though aid and other forms of concessional finance are likely to remain an important and necessary source of funding for MICs — that still leaves hundreds of millions living in countries much less able to mobilize sufficient domestic resources or appropriate investment to meet development needs.

Realistically, more and better aid will be needed for many years to come if we hope to deliver on the ambition of the sustainable development goals. As the International Development Select Committee recently reflected in their Beyond Aid report from our submission, “increased awareness of the range and scope of development challenges must not come at the expense of effective aid policy particularly in those countries which need it most.”

Aid is also a pretty unique form of financing in the international context. It can help build resilience and capacity to help countries become more self-reliant, is targeted solely at poverty eradication and sustainable development, and supports the delivery of vital social and global public goods, many of which are unlikely to be financed through alternative sources — or unlikely to be financed in ways that prioritize the needs of people.

To be clear, there is obviously an important role for other forms of public or private finance in development but they don’t have the same objectives and incentives, and may not necessarily produce the same development outcomes. A simple example of this is addressing the relative lack of infrastructure in some countries. Building this infrastructure requires substantial investment and upfront capital, which could in theory be sourced from global capital markets or other forms of investment, but those forms of finance could come with potentially crippling and unsustainable debt. Aid can help finance those sorts of investments without creating problems for the future.

So aid is going to remain an important part of the development landscape for the foreseeable future. But we also know that achieving and maintaining substantial levels of (ideally effective) aid is a challenge. Donors committed to the 0.7 percent target more than 40 years ago in 1970 at the United Nations and yet, to date, only five have met it; one of those subsequently cut their aid budget again.

The U.K. is the first G-7 country to meet the target and looks likely to be the only new member of the 0.7 percent club ahead of the 2015 EU deadline — so protecting this commitment is vitally important. Legislation helps to take it somewhat beyond politics and allows the focus to shift to improving the impact of U.K. aid in keeping with the U.K.’s aid and development effectiveness commitments. Legislation also introduces a much greater degree of certainty and predictability about how much aid will be provided which improves planning and thus results here and in partner countries. In addition, the bill clearly demonstrates the U.K.’s strong and lasting commitment to continuing to meet this target and reinforces our credibility on the global stage as partners in development.

Aid on its own will never be sufficient and, as we finalize the new SDGs, it will be necessary to move beyond mobilizing more and better aid to more and varied forms of finance alongside tackling systemic issues and problems like tax dodging for example. But tackling these beyond aid issues and a continued focus on more and better aid should not be mutually exclusive — rather they are mutually reinforcing and interdependent.

The U.K.’s continued leadership in this area should send a positive signal to development partners and put much-needed pressure on other donor countries. An ambitious development agenda will require ambitious financing commitments and goals too — on aid and everything else.

The battle over aid predictability in the United Kingdom may now be over, but questions over the quality of U.K. aid remain. What should be next in U.K. aid lobby groups’ agenda? Let us know by leaving a comment below.

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