Donor aid plunges: Promises to support poor nations crumbling

Millions of poor people will go without life-saving food and medicines as donor aid pledges to poor countries are breached, Oxfam warned today.

The international agency was responding to figures from the OECD  that showed aid from rich countries was $125.586 billion in 2012 - a real terms fall of $5.36 billion. Aid as a share of national income fell from 0.31per cent to 0.29 per cent, shattering promises by rich countries to give 0.7 per cent of their national income to the poorest.

The biggest cuts were made by Spain and Italy, with Belgium and Germany also slashing aid budgets. Australia's economy and public finances are better than most OECD countries, but its contribution to poor countries remained relatively stagnant last year after promised aid increases were delayed. Its contribution to poor countries is at half what the UK will reach this year.

A matter of political will

Oxfam called on rich countries not to abandon promises to the world’s poorest. The UK has budgeted to meet their 0.7 target this year despite being in economic recession, demonstrating that keeping aid promises to the poorest countries is a matter of political will, and cutting it a political choice rather than a fiscal necessity.

$61 million could provide more than 1 million people access to clean drinking water in Mozambique, where just 5 per cent of the rural population have access to clean water  - the same amount that Barclays bank paid nine senior executives in bonuses this year.

Cuts costs lives

Jeremy Hobbs, Executive Director of Oxfam International, said: “This cut in aid is going to cost lives. Poor countries’ reserves have been depleted by the global economic crisis, and they’re struggling with high food prices and huge costs of the impacts of climate change. This is not the time for rich countries to drop long-standing commitments.”

“The fact that the UK has kept up its aid shows that other donor countries could stick to their pledges if they cared. Aid builds hospitals, pays doctors’ salaries and buys textbooks and medical equipment. Countries such as Japan and Belgium which are making cuts in their aid must consider the human cost and immediately reverse their decisions.”

Aid is an investment

“Aid is not charity, it’s a tiny but crucial investment to build a better, safer world. These cuts mean too many farmers won’t get the help they need to grow more food, too many children won’t get the education for better jobs, and too many women won’t get the doctors’ visits for healthy babies. This wholesale disinvestment means that poor countries will suffer more from the mess made by rich country bankers, and have less to contribute to helping drive the world economy forward.”

Denmark, Sweden, Luxembourg, Netherlands and Norway continue to meet their pledge to give more than 0.7 per cent of national income in aid.

In relation to the size of its economy, the US is in 19th place amongst other major donors. Americans spend more on soft drinks - $77 bn last year – than the US government spends on aid.

At $125,586 billion, total global aid spending is dwarfed by the wealth that the one-hundred richest people in the world control: $1.9 trillion.

New and innovative financing needed

Today's figures confirm that financing principally directed to climate change adaptation fell in 2011 to $1.8 billion from $3.3 billion the year before. Figures for 2012 have not yet been confirmed but initial signs are that this decline looks set to continue. While it should be considered separate from traditional aid, climate finance is needed by developing countries to deal with the increasing climate impacts of severe weather events, water shortages, and declining crop yields.

Against the backdrop of the crumbling of the 0.7 per cent aid goal, new sources of development financing are absolutely critical. Oxfam is calling for a financial transaction tax (FTT) to help poor people hit by the economic crisis, and a crackdown on tax dodging that drains billons out of poor countries annually. The European Commission estimates that the FTT by 11 European countries could raise €35bn. Recent research by the German Institute for Economic Research (DIW) estimated the potential revenues at €37bn a year.

Hobbs said: “Innovative ways of raising additional revenue are now needed more than ever to help tackle poverty and climate change. There is absolutely no barrier to donor countries pursuing an FTT which costs nothing and raises billions. France, even this is a timid step, has shown this is possible and now up to them to lead the way so more donors apply the tax and use it to finance development.”