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Press Release
2 March 2005
Benn unveils new approach to aid
A change in the way UK aid is delivered and spent in developing countries was unveiled by International Development Secretary Hilary Benn today.
In a new policy paper, “Partnerships for Poverty Reduction: rethinking conditionality”,
(146
kb) the Government has announced that it will not in future make its aid conditional on specific policy decisions by partner governments or attempt to impose policy choices on them, including in sensitive economic areas such as privatisation or trade liberalisation.
Instead, the UK Government will agree benchmarks with partner countries which look at the impact of the decisions they take on reducing poverty and improvements in health and education.
Hilary Benn said:
“This paper represents a significant step towards supporting developing countries’ own priorities in reducing poverty, rather than imposing a ‘one size fits all’ approach.
“We are moving away from conditions set by donors towards agreed benchmarks for measuring progress on countries’ poverty reduction programmes as a whole.
“At the same time, the Government will continue to take into account decisions on human rights and international obligations and will ensure that money is spent on the purpose for which it was intended and that there is no corruption involving aid.
“The right kind of partnership must have reducing poverty and improving people’s lives at its heart, alongside upholding human rights and strong financial management. The paper also highlights the importance of good economic and social policies, and of a strong commitment to transparency, accountability and good governance.”
Mr Benn was attending a meeting of the Development Assistance Committee in Paris involving development ministers from the world’s richest countries, and representatives from 60 developing countries, and institutions. The meeting is expected to agree an important set of new commitments by aid donors to improve the way aid is delivered, along with a new monitoring mechanism to ensure that these commitments are implemented.
Mr Benn also urged donors to do more in a number of areas by:
- Providing longer-term aid commitments;
- using developing countries’ own systems rather than set up their own parallel structures. By 2007/8 the UK will provide more than half of its country programme resources via a country’s own budget for reducing poverty;
- working more closely together, to limit the burden on developing countries of dealing with many different donor systems. The UK will increase the proportion of its aid delivered through pooled funding arrangements, and will agree joint strategies with other donors and partner governments (such as the Joint Assistance Strategy led by the government in Tanzania).
- untying their aid, so that partners do not have to spend it on goods and services from donor countries. The UK has untied all its aid since 2001; and
- improving the allocation of aid, to give a higher proportion to low income countries. From this year the UK is allocating 90% of its bilateral aid to low-income countries.
- Simplifying the systems for aid delivery can have great impact on aid effectiveness. For example, in 2003, a dozen donors came together with the Government of Bangladesh to underwrite a 5-year programme of basic education, and agreed to put funds through a single channel, thus reducing costs dramatically. Last year 16 donor countries made a similar agreement with Mozambique to pool their aid and support the government’s own poverty reduction goals.
Partnerships for Poverty Reduction: rethinking conditionality
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Notes to Editors:
1. The paper outlines changes in four key areas:
- Developing country ownership – The UK will support countries’ own poverty reduction plans that take account of the views and concerns of poor people – based on solid evidence and wide consultation. It will not use its own conditions to influence the policy choices made by partner countries. It will instead agree benchmarks with partners to assess progress in reducing poverty.
- Predictability – Developing countries can use aid most effectively if they can rely on it as part of their long term budget plans – for example to recruit more teachers and health workers, or to put more people on anti-retroviral treatment for HIV/AIDS. The UK will move to long term aid commitments The UK will seek to make aid more predictable by being clear in advance about how much aid will be given and the basis on which funds will be reduced or interrupted – for example, if countries move away from agreed poverty programmes, abuse human rights or misuse the funds through corruption.
- Accountability – This changed approach to aid – with transparently agreed benchmarks rather than conditions imposed by donors – means that developing countries and donors will both be accountable to each other for their contribution to the shared effort on poverty reduction. It also means that developing country governments will be more accountable to their own citizens for the way they reduce poverty; while donor governments can still be properly accountable to their citizens for the way aid is spent.
- Harmonisation – The UK will press the World Bank and the IMF to monitor and streamline their combined terms and conditions, and will work with donors to limit the overall burden of conditions. Developing countries do not want to be swamped by different donors with different procedures and requirements.
2. The High Level Forum of the Development Assistance Committee (DAC) in the Organisation for Economic Cooperation and Development (OECD) included the world’s 24 richest nations along with the leaders of 60 developing countries and the main international institutions. They are meeting in Paris to agree commitments to make international aid more effective in helping developing countries to reduce poverty and inequality.