What does the rapidly changing face of UK and global aid look like, and what is at stake? 

November 29, 2017

     By Duncan Green     

Oxfam aid wonk Gideon Rabinowitz reads the tea leaves of the latest UK aid stats

Anyone following aid discussions in recent years will have sensed the mood music changing. They have been increasingly dominated by an emphasis on economic development, the role of the private sector, securing results (including for taxpayers) and addressing donor strategic interests (e.g. in relation to migration). This contrasts somewhat with the aid agenda during the 2000s – spurred on by the Millennium Development Goals (MDGs) – in which human development, basic services, the role of the state and country ownership were strong themes.

This changing aid agenda clear from trends in UK aid reported in detail last week in “Statistics on International Development 2017”.

SID 2017 dissects UK aid in unprecedented detail – a step forward in UK aid transparency. It points out that, in order to hit the aid target of 0.7%, the UK Government had to increase the aid budget by 10% during 2016 (required largely as a result of a new internationally-agreed methodology for calculating national income).

Digging deeper, there are five aid trends that emerge from the report:

Firstly, increasing levels of aid are being delivered through other government departments (OGDs) outside of DFID. The OGDs’ slice of the cake has been rising since 2014, and accelerated in 2016, when aid delivered outside of DFID increased by 48% to £3.5 billion, taking it to 26% of total UK aid. These increases have taken place despite growing concerns being raised by scrutiny bodies around the transparency, poverty focus and management of much of the aid being delivered by OGDs.

Secondly, DFID is placing an increasing emphasis on economic development. This trend has been apparent for some time – aid to economic development doubled to £1.8bn during 2012/13-2015/16 – but has continued during 2016, with aid to economic development reaching record levels of around one-fifth of the UK bilateral aid budget.

Thirdly, there has been a stalling/decline in DFID’s ambitions on public services, such as health and education. Following significant increases pre-2013, UK bilateral aid spent on health fell by almost 20% during 2013-2015 and stagnated in 2016; as a share of UK bilateral aid it declined even more sharply during 2013-16 from 19% to 12%. Although UK aid for education went up by almost 50% in 2016, this increase largely compensated for major cuts during 2012-15 and the share of education in UK bilateral aid remains some way below its 2013 peak (11.3% vs 13.5% of total spending).

Fourthly, during 2014-16 there was a sharp decline in the share of UK aid to Least Developed Countries (LDCs, from 57% to 49%) and major increases in UK aid to Middle Income Countries (MICs, from 36% to 46%), especially to upper MICs. These changes can largely be attributed to DFID’s increased humanitarian support to the millions of vulnerable Syrian refugees in Jordan, Lebanon and Turkey (all upper MICs). However, this is not the whole story and the fact that other Government Departments beyond DFID spend three quarters of their aid in MICs and 37% in upper MICs also contributes.

Finally, hidden away down a long list of annexes, is data showing that “recipient country Governments” are declining as a partner for the UK Government in managing aid, as the share of aid they manage fell by 15% during 2015-16 (from £0.68 billion in 2015 to £0.58 billion in 2016). Amongst countries, Bangladesh, Mozambique, Rwanda, Sierra Leone and Tanzania saw their government-led programmes cut by a third or more. Multilateral organisations seem to have picked up management of much of this.

Overall, therefore, UK aid is becoming notably more focussed on economic development, MICs and non-governmental partners, and less focussed on public services, LDCs and supporting Government-led programmes. DFID’s control over the UK aid budget is also rapidly weakening.  This all adds up to arguably the most radical year of change in UK aid in modern times, with similar trends also apparent in global aid stats.

So, what questions do these trends highlight for UK aid and the changing nature of aid globally?

Support for economic vs social development

A rebalancing of aid towards economic development and away from social sectors is not a trend to be concerned about per se, especially as many developing countries have been demanding more economic support and face enormous challenge in generating jobs for their fast-growing populations. However, it poses questions about donor ambitions for addressing significant global health and education needs, and how donors will ensure that human development constraints don’t continue to limit the benefits of growth for the poorest. It also poses challenges for maintaining public support given that the public commonly view issues such as health and education as priorities for aid.

Support for LDCs (and low income countries) vs MICs

In recent years donor efforts to support LDCs have understandably been deflected by the very significant humanitarian and refugee crisis unfolding in Syria and the surrounding region. There are also significant poverty and inequality challenges in some MICs which UK aid is rightly addressing. However, cuts in aid to LDCs also signal an increasing appetite from donors to redirect aid to address strategic interests in relation to refugees, security and economic cooperation – usually most relevant to MICs. This raises questions about whether donors are really serious about eradicating extreme poverty and the goal to Leave No One Behind (LNOB) by 2030.

Support through partner country governments vs other development partners 

Donors’ increasing unwillingness to channel aid through governments seems to have been driven in part by domestic political challenges to aid. However, principles on aid effectiveness learnt over decades suggest that such a response fails to recognise that working through Governments builds vital local institutions and promotes local leadership and ownership, while bypassing them can create inefficiencies and risks.

November 29, 2017
Duncan Green