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Aid in Times of Crisis Duncan Green Head of Research Oxfam GB June 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 …..

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Aid in Times of Crisis

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Aid in times of crisis l.jpg

Aid in Times of Crisis

Duncan Green

Head of Research

Oxfam GB

June 2010


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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 …..


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Aid after previous financial crises


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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?


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The current crisis: Channels of transmission

Aid budgets?

Government spending…?

Informal economy

Remittances

Trade

Finance


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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?


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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


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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)


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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


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Thank you!

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

The Global Economic Crisis

And 21st Century Aid

dgreen@oxfam.org.uk


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