1 Presentation to the Overseas Development Institute Friday, 30 January 2004 London Development Cooperation Report 2003 Presentation by Richard Manning, Chair of the Development Assistance Committee to the OECD

2 Report Highlights Aid in Context Aid in Context Aid volume Aid volume Aid allocation Aid allocation Aid effectiveness Aid effectiveness Aid policy controversies Aid policy controversies

3 Aid in Context (1) Significant progress in poverty reduction, notably Asia Significant progress in poverty reduction, notably Asia Serious shortfalls in health and environment Serious shortfalls in health and environment Mixed picture on education and on gender Mixed picture on education and on gender Progress towards Millennium Development Goals

4 MDG Charts

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10 Data sources: Sudhir Shetty s study, September Potential impact of additional ODA on MDGs achievement

11 Aid in Context (2) Development first and foremost the responsibility of developing countries. Development first and foremost the responsibility of developing countries. Their policies and institutions critical to progress. Their policies and institutions critical to progress. Roles for Governments, Parliaments, Private Sector, Civil Society. Roles for Governments, Parliaments, Private Sector, Civil Society. But OECD policies also critical in setting enabling environment: But OECD policies also critical in setting enabling environment: - trade/ agriculture/ debt/ migration/security. - trade/ agriculture/ debt/ migration/security. Need policies as if development mattered. Need policies as if development mattered. The Importance of Policies

12 Aid in context (3) Aid and private flows Chart 2.2: DAC members' resource flows to developing countries, Share of DAC GNI (%) Other Private Direct investment Net Grants by NGOs Other Official Flows ODA

13 Evolution of Aid Flows

outcome depends crucially on five donors Net ODA 2002 Anticipated ODA 2006 Increment United States United Kingdom France Italy Germany Sub-total All other DAC members TOTAL US$ billion (at 2002 prices and exchange rates) Table 1.1 Anticipated ODA

15 Aid Allocation more performance-linked more performance-linked Aid is becoming:

16 Aid Allocation more allocated to governance and health more allocated to governance and health

17 Aid Allocation at the expense of production sectors, including agriculture and energy at the expense of production sectors, including agriculture and energy

18 Aid Allocation food and commodity aid are down but humanitarian aid up ; debt relief fluctuates food and commodity aid are down but humanitarian aid up ; debt relief fluctuates

19 Aid Allocation the share to least developed and low-income countries is little changed the share to least developed and low-income countries is little changed Share of total ODA to least developed and low-income countries 0% 10% 20% 30% 40% 50% 60% but some evidence of shift towards Africa but some evidence of shift towards Africa

20 Aid Allocation - multilateral share is little changed

21 Aid Allocation - the share to the UN system and to the EC has risen slightly

22 Aid Allocation - but concessional spending by multilateral development banks has risen because of recycling of repayments - European Commission the third largest source of funds after US and Japan

23 Aid Effectiveness (1) Crucial issue and central to DAC role Crucial issue and central to DAC role Hard to assess : need for better evaluation Hard to assess : need for better evaluation Surprising range of aid and activities Surprising range of aid and activities

24 Aid effectiveness (2) Some progress around Some progress around - Poverty Reduction Strategies - Medium Term Expenditure Frameworks - Harmonisation and Alignment Important Work of DAC Aid Effectiveness Working Parties Important Work of DAC Aid Effectiveness Working Parties - turning principle into practice - predictability - financial management and procurement - managing for results Tackling the problems of weak states, post-conflict, and poor performers Tackling the problems of weak states, post-conflict, and poor performers From Rome to Paris From Rome to Paris

25 Constructive Policy Dialogue Growth or poverty reduction? Growth or poverty reduction? Public or private? Public or private? Social sectors or production and infrastructure? Social sectors or production and infrastructure? Projects or programmes? Projects or programmes?

26 Aid at least USD 75 billion (at 2002 prices and exchange rates). Significant increase in proportion to least developed and other low income countries, and particularly to the good performers. Well-considered interventions in the poor performers. Declining proportion of emergency and humanitarian aid. Increase in untied aid. Developing countries improving services to the poor but also mobilising greater domestic resources. Much more aid aligned to local priorities, programmes and systems, and shown in recipient budgets. Much more harmonisation. Bulk of increased aid involves a genuine transfer of resources and Technical Cooperation demonstrably more efficient. More progress towards MDGs, especially in Africa, as a result. My hopes for 2006