Breaking down foreign aid engagement with Myanmar

Encouraged by Myanmar’s transition to democracy, foreign aid donors across the board have been increasing both the scale and scope of their assistance to the Southeast Asian country. According to Devex analysis of data from the Organization for Economic Cooperation and Development, programmable official development assistance to Myanmar has increased tenfold since 2009, reaching $3.8 billion in 2013. Counting debt relief, ODA to Myanmar in 2013 exceeded $7.6 billion. Myanmar has recorded rapid growth in recent years — an estimated 7.7 percent in fiscal 2014 — and the country’s business climate continues to improve. The Asian Development Bank forecasts that growth will accelerate to 8.3 percent in fiscal 2015. Despite the resource-rich country’s economic strides, Myanmar remains one of the poorest countries in the world. Recording only mixed progress toward the Millennium Development Goals, Myanmar ranked 150th out of 187 countries in the United Nations’ 2014 Human Development Index. Social indicators are especially dire in the country’s northern Rakhine State, a key factor driving the migration of thousands of Rohingya refugees. Even Myanmar government officials concede that predictable and sustained assistance from Myanmar’s foreign aid donors will be critical to improving development outcomes, while at the same time maintaining the country’s growth trajectory. In 2013, 54 percent of total programmable ODA to Myanmar was channeled toward general budget support, well ahead of the government and civil society sector, which claimed 19 percent, and the health sector, which garnered 6 percent. Landmark elections slated for November 2015 will test the government’s commitment to political reform and could impact donor engagement and planning. Top donors analysis Multilateral and bilateral donors alike have converged on Myanmar, pledging aid commitments and attempting to coordinate priorities, programs and projects. Below, Devex takes a closer look at the top donors of programmable ODA to Myanmar in 2013, the latest year when official OECD figures are available. Japan ($2.2 billion) One of a handful of bilateral donors to provide support to Myanmar under the military junta, the Japan International Cooperation Agency has only recently diversified its foreign aid portfolio in the country beyond addressing basic human needs. Infrastructure development has since become a heavy focus for JICA in Myanmar, mirroring the Japanese aid agency’s engagement elsewhere in Southeast Asia. In March 2015, JICA agreed to provide up to 35.2 billion yen ($282.2 million) in ODA loans for two infrastructure projects in Myanmar: the first phase of the National Power Transmission Network Development Project and the Communication Network Improvement Project. JICA is currently accepting proposals for a preparatory survey in support of the second phase of its Poverty Reduction and Rural Development Project in Myanmar. Asian Development Bank ($513 million) Resuming its lending operations in Myanmar in 2013 after a nearly three-decade pause, ADB has extended its interim country partnership strategy with the country through 2016. Over that period, transport (31 percent), energy (26 percent) and water and other urban infrastructure (24 percent) are slated to garner the majority of ADB’s grant and concessional loan envelope for Myanmar. ADB plans to gradually increase the sector focus and selectivity of its portfolio in its first full country partnership strategy for Myanmar, which is expected to be approved by the bank’s board in 2016. Currently, ADB’s largest commitments in the country include $75 million for the Irrigation Command Area Development Project and $60 million for the Power Distribution Improvement Project. World Bank ($421 million) In April 2015, the World Bank approved its first full country strategy for Myanmar in 31 years, two years after it resumed lending operations in the Southeast Asian nation. Effective through 2017, the World Bank’s new Myanmar country strategy provides up to $1.6 billion in assistance to the country and focuses the bank’s lending on three areas: reducing rural poverty, investing in people and effective institutions, and supporting private sector job creation. The World Bank’s largest active commitment to Myanmar is $140 million for the Electric Power Project. The World Bank is currently accepting consultancy proposals for the Modernization of Public Finance Management Project, which is principally financed through $30 million in credit from the bank. World Bank activities in Myanmar also address four crosscutting themes: gender, conflict, governance, and climate change and disaster risk. United Kingdom ($114 million) The U.K. Department for International Development’s Myanmar program is focused on five key areas: peace building and conflict resolution, democratic governance and accountability, economic transformation and job creation, development of a dynamic and resilient rural population and economy, and developing human capital. While Myanmar was named as one of DfID’s 28 focus countries in 2011, the U.K. aid agency had maintained a bilateral program in the country even under the military junta. DfID’s largest bilateral programs in Myanmar are the 29.8 million pound ($45.6 million) Support for Conflict-Affected People and Peace-building Program and the 25 million pound Program for Democratic Change. Citing Myanmar’s democratic transition, DfID stresses that none of its aid programs is currently provided through the central government, but instead through U.N. agencies, nongovernmental organizations and at the township level. United States ($83 million) Reopening its mission in Yangon in 2012 after a 24-year absence, the U.S. Agency for International Development has four priorities in Myanmar: democracy, human rights and rule of law, peace and reconciliation, food security and health. USAID also manages programming for U.S. presidential development initiatives Feed the Future, the Global Health Initiative, the U.S. President’s Emergency Plan for AIDS Relief and the President’s Malaria Initiative. USAID’s largest active programs in Myanmar include the $55 million “Shae Thot The Way Forward” humanitarian assistance program, the $40 million Project for Local Empowerment and the $36 million Behavior Change Communication for Infectious Disease Prevention Program. While USAID plans to count Myanmar toward its 30 percent local spending target for fiscal 2015, as of last year, less than 1 percent of USAID spending in Myanmar was directed to local organizations. The Global Fund to Fight AIDS, Tuberculosis and Malaria ($79 million) In 2013, the Global Fund to Fight AIDS, Tuberculosis and Malaria selected Myanmar as among the first batch of countries to become eligible for financing under its new funding model. Myanmar has been a major recipient of Global Fund financing since the fund’s ninth grant-making round in 2009. Back in 2005, the Global Fund terminated its grant agreements with Myanmar citing travel and other restrictions imposed by the military junta. HIV and AIDS programming has garnered 47 percent of the Global Fund’s cumulative financing for Myanmar, followed by 29 percent for tuberculosis and 24 percent for malaria. The Global Fund is working to strengthen the capacity of the Myanmar government to become the principal recipient of its financing in the country, a role currently fulfilled by Save the Children and the U.N. Office for Project Services. European Union ($72 million) Opening a fully fledged delegation in Yangon in 2013, the EU recently signed off on its 2014-20 multiannual indicative program for Myanmar. Rural development, agriculture and food security (35 percent) and education (35 percent) claim the vast majority of the MIP’s 688 million euro ($773.1 million) financing envelope. Previously focused on education, health and livelihoods, EU aid to Myanmar had been principally channeled through multidonor trust funds until 2012. EuropeAid is currently soliciting proposals for the Institutional Strengthening and Policy Dialogue Support Project valued at 14 million euros. Other major EuropeAid projects in Myanmar include the 5.5 million euro Strengthening Capacities for Policy Development to Meet MDGs Project and the 2 million euro Improving Food Security Governance in South and South East Region Project. Australia ($70 million) Early in 2013, Australia and Myanmar signed their first-ever memorandum of understanding on development cooperation, paving the way for enhanced engagement in the areas of education, agriculture, governance, peace building, health and humanitarian assistance. The Australian Department of Foreign Affairs and Trade’s largest commitments to Myanmar are in the education sector, including 27.5 million Australian dollars ($21 million) toward the Quality Basic Education Program and AU$25 million toward the School Grants and Stipend Program. After initially sparing Myanmar from its sweeping aid cutbacks, the Abbott government last month revealed a 40 percent cut to DFAT’s 2015-16 aid spending for Myanmar, along with five other East Asian countries. The previous Labor government, which was in power until September 2013, had pledged to double Australian aid to Naypyitaw by this year. Procurement opportunities analysis Devex analysis of funding and procurement opportunities from more than 30 agencies and foundations active in Myanmar offers insight for current and prospective development implementers. Donor procurement opportunities have increased markedly each year since the country embarked on its democratic transition. In 2010, Devex recorded only 24 donor tenders, but by 2014 that number increased to 197, representing a whopping 721 percent increase during that five-year period. The U.N. continues to play a central role in aid delivery as well as the procurement of development support services in Myanmar. The Western regime of sanctions meant that for years, prominent donors, such as the United Kingdom and the EU, required their aid to be channeled largely through the U.N. system. Bilateral donors continue to work through multidonor trust funds and other pooled mechanisms. Five donors accounted for 79 percent of all solicitations: ● UNOPS (107) ● JICA (105) ● U.N. system (76) ● ADB (63) ● World Bank (53) According to Devex data, the top five sectors of donor investment in Myanmar from 2010 to 2014 were health, infrastructure, economic development, governance, and information and communications technology. These sectors accounted for 70 percent of all published tenders. To help reduce Myanmar’s disease burden, health solicitations largely focus on addressing the high incidence of HIV and AIDS, tuberculosis and malaria. Tenders typically call for the provision of lifesaving medical equipment and medicines to improve the quality of treatment and care for these infectious diseases. Infrastructure development has increasingly become a priority of donor procurement opportunities in Myanmar. With the heavy donor focus on building economic foundations to spur sustainable growth, the majority of tenders called for the construction and rehabilitation of roads, bridges, ports, power plants and transmission lines. Aligned with national priorities, donors are actively supporting Myanmar’s efforts to ensure sustainable and inclusive development. As such, the bulk of economic development solicitations focused on project management services in the areas of trade facilitation, improving the environment for doing business, livelihood programs and microfinance. Governance is a priority area of donor programming in Myanmar. To help ease the newly opened country’s transition to democracy, procurement opportunities largely concentrated on strengthening local governance and civil society, institutional strengthening, public financial management, human rights, rule of law, and peace and reconciliation. Myanmar is a late entrant into the ICT market. Working to rapidly develop one of the world’s least developed telecommunications sectors, the majority of donor procurement opportunities are geared toward sector reform and low-cost technology innovations for rural communities. Ezekiel Carlo Orlina, Dorcas Juliette Ramos-Caraig and Anna Patricia Valerio contributed reporting. Check out more insights and analysis for global development leaders like you, and sign up as an Executive Member to receive the information you need for your organization to thrive.