Is foreign aid helping Africa prepare for disaster?

Aid has been crucial in humanitarian crisis
Picture source: postconflict.unep.ch

Recent months have seen a flurry of meetings on disaster risk reduction and ways to increase the resilience of communities against hardship. But is development cooperation truly able to make a difference? Ahead of a highly anticipated meeting of African officials on the issue, a Red Cross official told Devex he’s skeptical.

“It’s fair to say the architecture of the aid industry and the way it is funded and the way that is broken up into areas of sectoral expertise is not particularly conducive for some of these long-term challenges around risk reduction,” said Alexander Matheou in a far-ranging interview conducted in preparation of a major disaster risk reduction conference in Tanzania in mid-February.

While the amount of international aid money for DRR is increasing, the “quality” of that money, as Matheou phrased it, is not always such that it addresses humanitarian needs properly.

“The money still tends to be quite short-term, even though the challenges are huge,” said the regional representative in southern Africa for the International Federation of the Red Cross. “We need to think in terms of 10, 15, 30 years, but the grants are for 12 months or if you are lucky, 24 months, and impact is expected within that short time.”

The tendency of donors or their implementing partners to earmark money by sector creates further limitations on the use of funds, he added.

Matheou’s conclusion: “The money isn’t particularly suitable for the challenge.”

These aren’t new concerns – in fact, they reflect a growing consensus among humanitarian officials about the international community’s track record and challenges in making a difference. That self-reflection tends to start with the realization that, despite a call within the Hyogo Framework for Action on countries to create national budget lines for DRR, poorest countries are the least able and willing to invest – and thus need help from the international community.

And yet, outside funding for DRR ”is very weak indeed,” as Jan Kellett and Dan Sparks observed when they reviewed money spent in the top 40 humanitarian recipient countries between 2000 and 2009.

“Funding for DRR does not appear to be directed logically to those countries that need it most; it is not based on the number of disasters, the risk of mortality or the proportion of people affected each year,” they wrote in areport by the Global Humanitarian Assistance initiative published in March. “Neither does funding for DRR seem to be obviously related to country revenues, with some of the richer countries receiving considerable funding and many of the poorest ones receiving almost nothing over an entire decade.”

Overall, in the 2000s, donor investments in DRR totaled $3.7 billion for the top 40 humanitarian recipients, representing 1 percent of all official development assistance. Four countries received 75 percent of all DRR financing; only one of the top ten countries for DRR financing – Bangladesh – made it into the top 10 for number of people affected, number of disasters and mortality risk. Meanwhile, only two of the top 10 countries ranked by people affected were also among the top recipients of DRR financing. Only five of the top 10 ranked by number of disasters and four of the top 10 ranked by mortality risk were recipients of DRR financing.

“Clear international policy and coherence on DRR spending by aid donors will help in terms of setting the direction,” Margareta Wahlström, the U.N. secretary-general’s special representative for disaster risk reduction, wrote in response to the report last year. “But ultimately, ODA spending on DRR will have little sustainable impact unless beneficiary countries are convinced of the value of a risk management and risk reduction approach. The funding criteria of ODA donors are particularly important in countries where there is a high degree of state budgetary dependence on ODA.”

Matheou agrees.

“When we talk about the whole issue of why some countries are at a high risk, we will certainly broaden the dialogue away from aid organizations to the governments and to the private sector and focus on the country at large,” he told Devex from Harare, Zimbabwe.

A large portion of DRR funds are now being funneled through multilateral mechanisms like the World Bank’sGlobal Facility for Disaster Reduction and Recovery and the U.N. Central Emergency Response Fund; manydonor governments also direct bilateral aid toward risk reduction. Red Cross and Red Crescent societies around the world have long been among the leading implementers.

But in countries like in Rwanda, Kenya, Ethiopia and South Africa, a shift in funding patterns has become evident, Matheou noted.

“You are definitely seeing new forms of funding in these parts of Africa, in the way different development and humanitarian challenges are being addressed and who is taking responsibility for them,” he said. “You are definitely seeing growing confidence among these governments, quite rightly, and more sophisticated analysis coming from governments about what needs to be done.”

The will to act tends to go hand in hand with the ability to mobilize more resources domestically through taxes and other means, which can then be invested in long-term projects like the upgrading of dams and roads.

The Red Cross itself decided last year to rely more on local partnerships in Africa and less on international funding. In some of the most vulnerable countries, though, the dependence on foreign assistance remains.

“Take a place like Somalia, which is in desperate need of funding and it is very difficult to fund it because you don’t have stable institutions to work with,” Matheou said.

These challenges will be front and center Feb. 13-15 at the Fourth Africa Regional Platform on Disaster Risk Reduction in Arusha, Tanzania. There, IFRC will join government and civil society representatives from more than 50 countries to discuss the extended program of action for the implementation of the Africa Regional Strategy for Disaster Risk Reduction.

Red Cross officials plan to highlight the importance of hygiene and sanitation, the need to improve early warning systems, and best practices for first responders.

But this is one small part of the larger picture, Matheou said. At least as important will be to better align funding with the reality of hard-hitting natural disasters and prolonged, dramatic seasonal changes.

Source: Amy Lieberman, Devex. Janaury 28, 2013

Link: https://www.devex.com/en/news/is-foreign-aid-helping-africa-prepare-for-disaster/80204?mkt_tok=3RkMMJWWfF9wsRouvqTJZKXonjHpfsX86e4tXKC1lMI%2F0ER3fOvrPUfGjI4ETcFnI%2FqLAzICFpZo2FFcH%2FaQZA%3D%3D

The cost of remittances to Africa

Remittances contribute to growth of African economies

The World Bank estimates that African Migrants Could Save US$4 Billion Annually On Remittance Fees

African migrants pay more to send money home than other migrant groups

 

Bringing remittance prices down to five percent from the current 12.4 percent average cost would put US$4 billion more in the pockets of Africa's migrants and their families who rely on remittances for survival.

Africa's overseas workers, who sent close to US$60 billion in remittances in 2012, pay more to send money home than any other migrant group. According to the World Bank's Send Money Africa database, Sub-Saharan Africa is the most expensive region to send money to, with average remittance costs reaching 12.4 percent in 2012. The average cost of sending money to Africa is almost 12 percent- higher than global average of 8.96 percent, and almost double the cost of sending money to South Asia, which has the world's lowest prices (6.54 percent).

The G8 and the G20 established 5 percent as the target average remittance price to reach by 2014.  High transaction costs are cutting into remittances, which are a lifeline for millions of Africans, said Gaiv Tata, Director of the World Bank's Africa Region and Financial Inclusion and Infrastructure Global Practice. Remittances play a critical role in helping households address immediate needs and also invest in the future, so bringing down remittance prices will have a significant impact on poverty. Lower cost remittances also advance financial inclusion, since they are often the first financial service used by recipients, who are then more likely to use other financial services including bank accounts.

Remittance prices are even higher between African nations. South Africa, Tanzania, and Ghana are the most expensive sending countries in Africa, with prices averaging 20.7 percent, 19.7 percent, and 19.0 percent respectively, due to several factors including limited competition in the market for cross-border payments.

Governments should implement policies to open the remittances market up to competition, said Massimo Cirasino, Manager of the Financial Infrastructure and Remittances Service Line at the World Bank. Increased competition, as well as better informed consumers, can help bring down remittance prices.

 Send Money Africa also finds that banks, which are the most expensive remittance service providers, are often the only channel available to African migrants. A regulatory environment that encourages competition among remittance service providers can help bring down remittance prices. Migrant workers can also benefit from more transparent information on remittance services.  

Source: The World Bank (sendmoneyafrica.worldbank.org) January 28, 2013

Rethinking Urban Poverty

Source: IRIN (humanitarian news and analysis), December 17, 2012 (http://www.irinnews.org/In-Depth/97058/102/)

NAIROBI, 17 December 2012 (IRIN) - Efforts to end urban poverty are failing because policymakers at aid agencies and in governments do not always understand it, asserts a new book by experts from the International Institute for Environment and Development. 

Drawing on 20 years of research, Urban Poverty in the Global South: Scale and Nature documents how the scale and depth of urban poverty in Africa, and much of Asia and Latin America, is greatly underestimated due to “inappropriate” definitions and measurements. 

“The use of inappropriate poverty definitions that understate and misrepresent urban poverty helps explain why so little attention has been given to urban poverty reduction by aid agencies and development banks,” say the book’s authors. 

Redrawing poverty lines

One of every seven people on earth lives in urban poverty; many of them reside in overcrowded informal settlements with inadequate water, sanitation, healthcare and social amenities.

But simplistic income-based and nutrition-based poverty lines - including the widely used US$1 per day poverty line - yield a poor understanding of this issue, according to authors Diana Mitlin and David Satterthwaite 

“If we are to use a monetary measure for defining and measuring whose income or consumption is insufficient… this measure has to reflect the cost of food and of non-food needs,” Mitlin told IRIN via email.

The authors also criticize the emphasis on “income poverty”.

“A focus only on income poverty can mean that a low-income household with a secure home with good quality provision for water, sanitation and drainage and with their children at school and access to health care is considered just as poor as a low-income household with none of these,” they write in a book summary.

Dialogue needed

“Almost all official measurements of urban poverty are also made with no dialogue with those who live in poverty and who struggle to live with inadequate incomes,” the summary states.

“It is always experts’ judgment that identifies those who are ‘poor’ who may then ‘targeted’ by some program; at best, they become ‘objects’ of government policy, which may bring some improvement in conditions, but they are rarely seen as citizens with rights and legitimate demands who also have resources and capabilities that can contribute much to more effective poverty reduction programs.”

Cleaning the mess in the aid industry: Oxfam’s faux pas

Cleaning the mess in the aid industry is critical
Picture source: winningprogressive.org

Let me start with my own recent experience. I opened my letter box upon returning home after a day’s hectic activities on December 2012. One of the two letters I received was from Save the Children, a leading non-governmental organization seeking lasting change in the lives of children based in the UK. I entered my apartment to see what the surprise is this time. And indeed I was surprised. A stereotypical starving-looking face of a child incontestably of African origin lied on top of the package in the envelope to solicit for financial support. Why this picture? I repeatedly asked myself. I wasn't too surprised either. The use of images is so common a strategy for several international organizations and NGOs to raise money for projects and programmes in developing countries. I was rather surprised this approach of getting aid to help the poor has taken a door-to-door, house-to-house form.

This approach described above – showing ‘damaging’ images and videos of hungry-looking, poverty-stricken people to court public sympathy for increased donations – is nothing new. It has existed for centuries in the aid industry. Pictures of people ravaged by war, poverty, hunger and diseases have found their way into websites, reports and campaigns of international organizations and NGOs that are into development and poverty reduction.

The recent survey by UK-based Charity Oxfam on the perception of Africa only justifies the degree of damage that has been caused so far. In a randomized selection of 2009 people, according the Oxfam, almost half (47%) of the people identified hunger. The survey suggests over-exposure to negative media and advertising portrayals of Africa and developing countries in other parts of the world may be contributing to this sense of disempowerment. Respondents described this portrayal as ‘depressing, manipulative and hopeless’, with 43% of respondents saying it made them feel that conditions for people living in the developing world would never improve.[1] In another poll by Oxfam this time online, over half (55%) of 1295 respondents mentioned issues relating to “hunger”, “famine” and “poverty”, when they were asked “the first things that come to mind when you think of Africa”.

The causative is missing

These findings are of course behind Oxfam’s new campaign – with the mantra “Let’s make Africa famous for its stunning countryside, not hunger” – to display images of landscapes and waterfalls in Africa across newspapers, outdoor and digital media. These perceptions developed largely as a result of exposure to despicable images and documentaries are not limited to the UK only but have turned a phenomenon in several developed countries. What has been the nature of this? I tend to bring to the fore the reality that is neatly misinterpreted not only by Oxfam but several other international organizations, NGOs and philanthropic agencies seeking to improve the lots of the poor in Africa. The issue at hand largely goes beyond what Oxfam has started doing. Surprisingly missing in the discourse is the cause of this act. What contributes to the spread of these images? Who contributes to spreading these images and for what purposes?

For the past decade, the aid industry has seen incessant proliferations of images portraying hunger and poverty from the digital media to the print media. It is today part of the social media. These stereotyping images depicting helplessness have increased for three main reasons. First, images of poverty and hunger have been used to court the sympathy of the public to donate. Second, these images have been adopted as evidence to prove to donors that their monies are being put to good use. Lastly, the growing challenges and threats of poverty and hunger across developing countries especially those in Africa have inspired different and sometimes harsh measures to solve and reverse the gloomy trend.

The question is that have these images and videos been capable of getting the sympathies of the public, international organizations and philanthropists to contribute. Yes, they have worked in raising huge funds but with remarkably negative implications. Oxfam’s surveys have uncovered have one element of the implications.

There are more questions than answers. There is a question of contradiction. The rhetoric of this campaign to dignify “damaging” images contrasts sharply with the sobering reality. It is a fact that several reputable international organizations and non-governmental organizations have engaged in the use of images that portrays hunger and poverty as part of their fundraising campaigns. Oxfam, I can throw this challenge, cannot absolve itself of this act. It’s now commonplace. This narrative portrays another stark mess that has characterized the aid industry. Organizations today work with these images and videos, so a counter-campaign to refocus on images of Africa’s countryside is at best contradictory. These stereotype images unfortunately define the modus operandi of aid organizations and donors today.

Again, is there not a question of morality? With the growing knowledge, awareness and openness of the direction of global development, governance and cooperation, there are very serious moral and ethical questions if donors still need images and videos to get convinced to contribute to development of the poor or an economy. For me, the decision to hold on to the supposedly Western belief of helping the poor should have nothing to do with “damaging” images and videos.

Allure of Oxfam’s Campaign

The campaign by Oxfam to reverse this trend is a good start but dangerously simplistic and misleading. I doubt this quick-fix campaign to be the solution to reverse this old pattern that has crept into aid industry. Oxfam’s campaign approach rather confuses the causes and effects. While it focuses on the effects, it is dead silent on what causes the use of these images and documentaries and those behind. There have been implications. We have the ‘aid fatigue syndrome’ at hand. Unless of course the argument is that of Dambisa Moyo’s “Dead Aid” (that aid is not working), this syndrome should be a cause of worry. The public is tired of making donations not driven by their own knowledge to expand the prospects of development but an image or a video of poor and hungry-looking people. As Oxfam’s survey suggests, “three out of five of those polled said they were or had become desensitised to images depicting issues such as hunger, drought and disease and almost 1 in 4 (23%) admitted they turned away when confronted by such images.” The damage has been done. Is this campaign the right solution? Absolutely not!

If this habit of showing images of and video documentaries on poverty, hunger, diseases and drought persists, one can easily predict irreversible destruction of the aid industry. Perversely, this poses a challenge to the agenda of aid effectiveness. Continuous exposure to images means one thing; that aid money is not achieving its intended purpose. The right call should be a complete change of tack. There should rather be a massive and radical clean-up of the aid industry. This architecture of aid premised on “images” needs urgent rethinking. This campaign style must stop! Oxfam, to say the least, is at fault. This is why in my opinion their campaign is prima facie a faux pas and contradictory. The campaign is a gravely misinformed. The solution is never the sheer lamentation or quick fix image-restoring campaign of Oxfam. The mechanisms of raising funds should change.

Nonetheless let me hasten to add that I am not in any way downplaying the contributions Oxfam is making in enhancing livelihoods in developing countries. They are up to task and incredibly achieving results in their humanitarian activities. But the time has come for a sweeping change. It is now or never!

And to those with somewhat prejudiced perceptions and misinformed judgments of the state of Africa because of pictures and videos of mostly “exaggerated” hopelessness, they can continue live in that state of distasteful ignorance. Those bent on generalizing an image or video to mean the condition of Africa can continue to live in their own yet-to-be-discovered planet. They might be missing out. Africa two decades ago is different from Africa today. Progress has been made and is continuing unabatedly regardless of the challenges we see now. I am optimistic of a change possible to make far-reaching human development and economic growth happen in Africa.

I end with a quote of reasoning from the two renowned MIT economists, Esther Duflo and Abhijit Banerjee in their book “Poor Economics: A radical rethinking of the way to fight global poverty”, “To progress, we have to abandon the habit of reducing the poor to cartoon characters and take time to really understand their lives, in all their complexity and richness”.

This article marks the start of a campaign dubbed “Cleaning the mess in the aid industry” that will be happen right here on this blog “Rethinking Poverty and Development”, “The harsh truth and revealing reality of global development and governance”.

BY: Stephen Yeboah [profstephenyeboah@gmail.com]

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[1] Oxfam Press Release (December 28, 2012), “Show Africa’s potential not just its problems”. http://www.oxfam.org.uk/media-centre/press-releases/2012/12/show-africas-potential-not-just-its-problems-says-oxfam (Accessed January 11, 2013)

Counting the benefits: Ghana’s oil wealth and development

Ghana must dispel the resource curse

The extraction of oil and gas generates enormous wealth. It creates powerful incentives that lift economies out of poverty to growth and development. Conversely, oil and gas and largely other natural resources have attracted the perverse phenomenon dubbed the “resource curse”, where the large wealth generated undermine the economic growth of most countries like Gabon, Nigeria, Chad, Sierra Leone, Azerbaijan, among others. The International Monetary Fund (IMF) projects that revenues from Ghana’s oil production will reach $1.3 billion per year by 2013 and remain at or slightly above that level until 2022. Again, under projections on Government revenue from Phase I of Jubilee Field production, the World Bank estimates the maximum available for budgeting to be US$250 million on average between 2011 and 2029. Ghana’s transition to an oil-producing status, therefore, represents a challenge for its economic, social and political compositions. If used well, revenues from oil and gas could generate greater prosperity and promote equitable development for both current and future generations.

Official production and commercialization of Ghana’s oil started in December 15, 2010. But the burning question; is the country, three years of being a Petro-state, now better positioned to prudently invest its oil revenues. Needless to say Ghana could benefit from prudent utilization of petrodollars. These benefits to accrue to the country in the upstream, midstream and downstream sectors of the oil economy could be economic, social and technological.

To begin with economic benefits, the country stands to gain from increased growth of its Gross Domestic Product. Revenues from oil are expected to be sizable, being estimated to average US$1 billion per year from 2011 to 2029, or about 5 percent of GDP (Bell, Heller and Heuty 2010). Through the Annual Budget Funding Amount (ABFA) as stipulated in the Ghana Petroleum Revenue Management Act, 2011 (Act 815), revenues will be made available to finance the development of sectors like agriculture, health and education for a diversified economy that supports poverty reduction efforts. These objectives are however not without challenges. According to the Public Interest and Accountability Committee (PIAC) – a major body created by the Petroleum Revenue Management Act, 2011 (Act 815) in ensuring transparency and compliance with accountability in managing oil wealth – in its 2011 report, “not all payments expected to go into the Ghana Petroleum Holding Fund [a dedicated wealth fund for accrued petroleum revenues set up under the Petroleum Revenue Management Act, 2011 (Act 815)] were reported on”. The report indicates that surface rentals were paid into Government of Ghana Non-Tax Revenue Account in 2011 and not accounted for in the Petroleum Holding Fund. This is a gap. This means some revenues had gone missing.

With social benefits, the oil income will finance and invest in basic and higher-level public infrastructure. Ghana’s oil income could finance scientific research into threatening diseases, environmental protection, and basic infrastructure like roads, alternative power, urban water and sanitation, health and education. The World Bank Report “World Bank on the Economy-Wide Impact of Oil Discovery in Ghana, 2009” estimates that Ghana’s infrastructure financing gap ranges between US$ 350 and 800 million. This means the provision of public infrastructure through increased budgetary allocations complemented by oil revenues could serve as an enormous boost to meeting the development needs of the country. The provision of infrastructure has spillover benefits for the entire society in the form of enhanced political stability and increased access to basic human needs. Present and future citizens can be made better off by having a significantly larger share of revenues invested in domestic infrastructure while saving to cushion the economy against volatilities in oil prices. The oil find could attract private investors. As an example, India's state-owned Rashtriya Chemicals and Fertilizers signed an agreement to build a $1.5 billion gas-based fertilizer plant at Shama in the Western Region of Ghana. The proliferation of investments from multinational companies would benefit the country in terms of employment and foreign exchange generation.

In the downstream sector, there could be extensive technological benefits. Ghana’s oil and gas resources have the potential to create local value premised on the use of technology. This is particularly important in terms of job creation, income generation, business expansion, and ensuring industrialization drive. This will, however, materialize when Ghana adopts an effective local content strategy. In Brazil, Petrobras through its local content strategies with the government agency, Sabre, have resulted in the participation of 2,300 small and micro companies. In the same vein, Ghana through its local content and participation policy could benefit immensely from transferred industrialization should Ghana National Petroleum Corporation (GNPC) seek the growth and integration of local businesses. The technological benefits could be evident in operationalization of local industries specializing in fertilizer production for agriculture modernization and LNG for domestic and industrial purposes.

In conclusion, oil and gas revenues have the potential to finance rapid economic progress for the country. Ghana will benefit immensely from the downstream sector and should be developed through effective local content policy to create ancillary services like welding and transport. The revenues generated could be prudently managed when there is a long-term development framework that mainstreams the needs and aspirations of the people to the utilization of revenues. In essence, these are the benefits available to an economy on the basis of sound and effective medium to long term development strategy. It is important to stress however that the benefits enumerated above are strongly conditional upon understanding of and readiness to enable basic trappings of transparency and accountability to work in the oil and gas sector. It is on this ground that the role of the civil society remains very crucial. Also, the existence of the PIAC is important in complementing the oversight responsibilities of Parliament. It is imperative for the central government to resource the PIAC in carrying out its duties effectively.

Reference

• Bell Joseph C, Patrick R.P. Heller and Antoine Heuty. 2010. Comments on Ghana’s Petroleum Revenue Management Bill. New York: Revenue Watch Institute
• Public Interest and Accountability Committee (PIAC). 2011. Report on Petroleum Revenue Management for 2011— Annual Report. PIAC, Accra.