Post on 07-Aug-2018
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Foreign Aid 101
The Story of a Bottomless Basket
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What is Foreign Aid?
• Official development assistance by developed
countries and multilateral institutions
• Unofficial aid through non-governmental and
charitable foundations
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Rationale of Aid
• Gap between revenue
and expenditure
•Natural or man-madedisasters
Recipient Country Donor Country
• Foreign policy objectives
• Global peace and prosperity
• Trade and economicinterests
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Forms of Aid
• Grants
• Loans
•
Supplier’s/Buyers’ Credit
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Types of Aid in Bangladesh
• Food Aid
• Commodity Aid
•
Project Aid
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Types of Development Partners
• Bilateral
• Multilateral
•
Private charitable organizations
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Some of the Major Development
Partners in Bangladesh
• World Bank
• ADB
•
JICA• DFID
• AUSAID
• CIDA• GIZ
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Development Partner’s Commitments &
Disbursements in 2011-12 ($M) –Bilateral
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
Japan UK USA Germany Canada
Commitment
Disbursement
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Development Partner’s Commitments &
Disbursements in 2011-12 ($mil) – Multilateral
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
4,000.00
4,500.00
World
Bank (IDA)
ADB UN
System
EC UNICEF
Commitment
Disbursement
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Non-aid Group Sources’ Commitments
& Disbursements in 2011/12 in $ M
0
200
400
600
800
1,000
1,200
Commitment
Disbursement
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Total Amount of Aid from 1972/73-
2011/12Year Amount in US$ M
1972/73 551
1982/83 1,177
1992/93 1,675
2002/03 1,585
2011/12 2,126
Total 54,723
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Reasons for low level of disbursements
• Lack of resources
• Low absorptive capacity
• Corruption
• Bureaucratic hurdles
• Discrepencies in procurement guidelines ofdevelopment partners and GOB
•
Conditionalities• ADP used for “unusable” projects ( eg bridges
without connecting roads)
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Impact of low disbursements
• Slow ADP implementation
• Increased domestic (bank) borrowing
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Genesis of Bilateral Aid in Bangladesh
• 1970s: Post-war rehabilitation andinfrastructure; NGOs
• 1980s: Infrastructure and technical assistance;
NGOs; Community based development;service delivery
• 1990s: Sector-wide approach in health,
education; service delivery; democraticdevelopment; institutional development;governance
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Trends in Bilateral Aid
• 2000s: Sector-wide, and multi-donor joint
funding for service delivery, move away from
infrastructure; governance
• 2010s: Sector-wide, multi-donor, supporting
government programs, move away from NGOs
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Changing Patterns of Aid
by Purpose (% of total aid)
0
20
40
60
80
100
120
1972/73 1982/83 1992/93 2002/03 2011/12
Project Aid
CommodityAid
Food Aid
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Changing Patterns of Aid
by Type (% of total aid)
0
20
40
60
80
100
120
1972/73 1982/83 1992/93 2002/03 2011/12
Grant
Loan
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Changing Patterns of Aid
by Source (% of total aid)
0
20
40
60
80
100
120
1972/73 1982/83 1992/93 2001/02 2011/12
Bilateral
Multilateral
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Disbursement of Project Aid by Sector
Comparison between 1972/3 – 2011/12US$ Million
Sector 1972/73 1982/83 1992/93 2002/03 2011/12
Power 7.2 65.2 290.6 186.2 398.5
Public
Admin
- - 17.9 101.5 344.5
Education &Religious
Affairs
0.2 10.9 84.9 107.5 279.8
Health, Pop.
& Family
Planning
9.6 27.1 34.4 90.5 274.1
Physical
Planning,
WS &
Housing
3.6 10.6 48.3 383.1 245.4
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Disbursement of Project Aid by Sector
Comparison between 1972/3 – 2011/12
US$ Million
Sector 1972/73 1982/83 1992/93 2002/03 2011/12
Transport 51.2 63.6 155.0 188.6 114.3
Industries 2.5 52.9 31.9 21.0 81.6
Water
Resources
14.1 50.4 156.2 54.3 63.5
Social
Welfare, WA
& YD
- 0.2 0.7 4.9 50.8
Agriculture 0.7 56.9 72.8 7.6 49.6
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Aid by sector at a glance in 1972/73 &
2011/12
8%0%
11%
4%
57%
3%
16%
1% 1972/73
Power
Education & Religious Affairs
Health, Pop. & Family Planning
Physical Planning, WS & Housing
Transport
Industries
Water Resources
Agriculture
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Aid by sector at a glance in 1972/73 &
2011/12
21%
18%
15%
14%
13%
6%
4%
3%
3%3% 2011/12
Power
Public Admin
Education & Religious Affairs
Health, Pop. & Family Planning
Physical Planning, WS & Housing
Transport
Industries
Water Resources
Social Welfare, WA & YD
Agriculture
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Issues
• Tied versus untied
• Policy Coherence
•
Aid versus trade• Donor Coordination
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Critique of Foreign Aid
• Donor dependency
• Lack of ownership
• Duplication
• Unpredictability
• Lack of policy coherence
• Corruption
• Distortion
• Poverty Business
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1st High Level Forum on Aid
Effectiveness Rome 2002
• Recipient countries’ priorities & timing
• More delegation among field staff
•
Strengthen capacity in recipient countries toenable them to set their own agenda for
development
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2nd HLF Paris Declaration on Aid
Effectiveness, 2005
• Ownership
• Alignment
•
Harmonisation• Results
• Mutual Accountability
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3rd HLF Accra Agenda for Action (AAA)
• Ownership
• Inclusive partnership
•
Delivering results
• Capacity development
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Fourth High Level Forum on Aid
Effectiveness at Busan 2011
From effective aid to cooperation fordevelopment
• Strong, sustainable, inclusive development
• Government’s own revenues to financedevelopment
• State and non-state institutions design and
implement• Developing countries integrate, regionally and
internationally
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Fourth High Level Forum on Aid
Effectiveness at Busan 2011 (contd.)
• South-south cooperation
• Private sector and development
•
Combating corruption and illegal flows
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Joint Cooperation Strategy
2010 GOB and 18 donors sign JCS
• Ownership and coordination
•
Alignment• Accountability and predictability of aid flows
• Common agreement on expected outcomes
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Millenium Development Goals (MDGs)
• 8 international development goals established
following Millenium Summit of the UN in 2000
• 193 UN member states and 23 international
organizations signed on to it
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Bangladesh and Millenium
Development Goals (MDGs)
MDG 1 : Eradicate extreme poverty and hunger
• Poverty declined from 56.6% in 1990 to 31.5%
in 2010, expected to be 29% in 2015 – on
track
MDG 2: Achieve universal primary education
• 95% Primary school enrolment, but high drop
out rate, so low completion rate; progress in
adult literacy (58% in 2010)
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Bangladesh and MDGs
MDG 3: Promote Gender Equality (GE) and
Empower Women
• Primary and secondary enrolment parity
gained and on track to achieve % of women
employed in agriculture
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Bangladesh and MDGs
MDG 4: Decrease child mortalityIndicator 1990/91 2010 2015
U5 mortality
rate
146 50 48
IMR 92 39 31
Children
immunised
for measles
54 85 100
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Bangadesh and MDGs
MDG 5: Increase in maternal health
Indicator 1990 2010 2015
Maternal
Mortality Rate
574 194 143
Child birth by
skilled
attendant
5% 26.5% 50%
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Bangladesh and MDGs
MDG 6: Combat HIV/AIDS, malaria and other
diseases
• 776 cases per 100,000 in 2008 to 512 in 2010
MDG 7: Ensure environmental sustainability
• Access to safe drinking water and sanitary
latrines in urban areas significantly improved,
challenge in rural areas; wetlands, bio-
diversity still a challenge
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Bangladesh and MDGs
MDG 8: Develop global partnerships for
development
Telephone and internet connection, esp cell phonesincreased, youth unemployment persists
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Post-MDG Discussions
• UN High Level Panel on Post-MDG
• 5000 people in 121 countries consulted
• Report released in May 2013
• Calls for 5 transformative shifts
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Post-MDG
• Leave no one behind- ensure no one is denied
basic economic opporunities
• Put sustainable development at core – arrest
pace of climate change and environmental
degradation
• Transform economies for jobs and inclusive
growth – harness innovation, technology andpotential for business
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Post MDG
• Build peace and effective, open, accountable
institutions for all – peace and good
governance a core element of well-being
• Forge a new global partnership – inclusive and
respectful
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Emerging trends
• Pulling out of NICs (China, India, South Africa)
• Trade and economic interests of donor
countries
• New kids in the block
• Regional groups
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Way forward for Bangladesh
• Regional partnerships mostly trade related
• South-south cooperation
• Strengthening voice
• Good governance
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Thank You!