How Do We Help?: The Free Market in Development Aid

Official bilateral cooperation: fractions and fragmentation

99 Official bilateral cooperation: fractions and fragmentation Official bilateral cooperation is actually the hub of international cooperation. It still represents two-thirds of all aid flows. It is on the basis of this bilateral cooperation that relations with recipient governments arise, that a donor country acquires experience in the field and that ideas grow up about possible strategies for dealing with the numerous obstacles and problems encountered on a daily basis in development cooperation. Experience of bilateral cooperation also predisposes a donor country to deal in a certain way with its own NGO sector and determines the amount of resources and the importance it attaches to the multilateral institutions. Small players and institutional pluralism However, most bilateral donors are small players. The following graph summarises the efforts of just over 50 donors. Overseas Development Aid Source: OESO DAC Aggregate Aid Statistics. As the graph makes clear, Europe is the biggest donor: around 58% of all aid comes from the Old World. The fact that Europe stands out in this way today 0 20.000 40.000 60.000 80.000 100.000 120.000 140.000 160.000 1999 2007 2009 Million USD Japan USA Europe Other DAC Non DAC How do we help? 100 is not just to do with the growth in the aid portfolio of virtually every European country, but also with the accession of generous and slightly less generous member states (Sweden, Finland, Austria in 1995; Central and Eastern European countries in 2004). But, as we will see, individually the 27 member states contribute relatively limited resources. Only Germany is responsible for more than 10% of global ODA. France and the UK contribute around 8.5%, the Netherlands 5% and Belgium 1.8%. The biggest donor, the USA, provides 20%, while for all its wealth Japan contributes only 7.3%. However, not only do the donors contribute individual fractions of ODA, but the landscape is also highly fragmented. The traditional donor countries all set up specialist development agencies or ministries in the 1960s and 1970s to carry out and/or coordinate aid actions. There has been constant institutional tinkering, but one or more institutions have always taken a leading role at any given time. In the USA, for example, the United States Agency for International Development took firm control of development policy, and the Overseas Development Administration (ODA) did the same in the UK. USAID quickly became the largest (and most powerful) bilateral aid institution in the world, but since the Bush administration it has faced many other ministries and state agencies which have competed with or overshadowed it. Meanwhile, the successor to the British ODA, the Department for International Development (DfID), became the trendsetter and the leading bilateral donor under the Blair government (Morrissey, 2005). Other very important agencies which appeared on the aid scene and still play a prominent role are the Japan International Cooperation Agency (JICA) and the German Federal Ministry for Economic Cooperation and Development (BMZ). But in every donor country we can see a growing trend towards institutional pluralism. Other ministries and government departments (such as national banks and parastatal agencies) are also entering the aid sector. The DAC and specialist aid institutions are very concerned about this fragmentation of cooperation , which has already assumed substantial proportions in a number of countries, as the following table makes clear. Official bilateral cooperation: fractions and fragmentation 101 Table: Fragmentation of aid Country Number of government departments involved Most important department(s) % ODA controlled by most important departments in 2009 US 50 USAID 56.66 Sweden 4 Sida 77.53 Germany 15 GIZ 57.67 Canada 9 CIDA 73.59 Belgium Nearly all ministries DGD 69.09 France 14 Secr. d’Etat à la Coopération 85.94 Ireland 6 DCD Irish Aid 85 Switzerland 5 SDC and SECO 71.22 The Netherlands 8 Minbuza 99.22 Source: Budget4Change; OECD-DAC, DAC country peer review reports In a number of countries an attempt has been made to gain coherence in the multiplicity of official development initiatives. There are good reasons for this. The ministries of employment, public health, the environment, security, finance, economic affairs, trade and foreign affairs have their own reasons for engaging in development cooperation, but these are not necessarily compatible with, for example, the Millennium Development Goals. They also have their own approaches, and again, these do not automatically coincide with the approach suggested by the Paris Declaration. Things become...