The Future of Aid: The DAC’s View

In February, the Development Assistance Committee (DAC) of the Organisation of Economic Cooperation and Development published its annual report.

In addition to providing a comprehensive review of the distribution and allocation of the major donors’ development finance, it also promotes a new development paradigm to guide aid expenditures into the next century. In view of the importance of the DAC, and its direct relevance to agencies working in the relief and rehabilitation field, we summarise these financing and policy trends and assess their implications for future policy and practice.

Human Security and Sustainable Development: A New Aid Paradigm?

The DAC report identifies instability, and related migration, as a major impediment to sustainable development. It argues that rather than seeing relief responses as being in competition with longer term development responses, there is a need to see both in relation to their relative contribution to human security.

To what extent can and do both relief and development interventions enable people to become more resilient to environmental, economic and political shocks and threats? This is the key question asked by the human security approach developed by UNDP, and subsequently promoted by OECD.

This approach challenges the historical divisions which have separated relief from development activities, and raises an explicit role for aid in conflict prevention and management.

A rethinking of security is therefore taking place: no longer is the primary concern about relative military advantage, but attention is now being focused on addressing the underlying causes of conflict, including poverty, inequality, environmental degradation and ethnic tension.

In the post-Cold War era, the report argues, new space has been opened to develop consensus between donor and recipient countries on the goals of development. This consensus, it suggests, is embodied in the concept of sustainable development, which can be achieved by promoting increased human security.

Overall Trends in Official Development Assistance (ODA)

This new aid paradigm is being promoted at a time when overall oda is declining. Figure 1 shows total oda between 1980 and 1993. An absolute decline in resources of approximately US$5 billion was noted in 1993/4 in comparison with the previous year.

The relative share of the aid budget allocated to relief is rising (Figure 2). Measuring relief expenditures remains difficult, and Figure 2 needs to be interpreted with some caution, since definitions of relief expenditure remain inconsistent. It is important to emphasise that the increase in relief expenditure has been financed largely through contingency funds and has not impacted necessarily on the overall availability of development finance. However, given the increase in the volume of relief aid, pressures to ensure its effectiveness and efficiency are rightly increasing.

The volume of food aid for relief operations has also increased over the same period, rising from less than 1 million tons in 1979/80 to almost 4.5 million tons in 1992/3. The share of UN resources allocated to emergency and refugee operations rose from 25% in 1988 to 45% in 1992. For the WFP the shift toward emergencies and increasingly protracted refugee operations has been even more marked. In 1986 WFP allocated 75% of its resources to development activities, the remainder supported relief and refugee operations. In 1993/4 more than 85% of its resources went to humanitarian emergencies and refugee needs.

Within the European Union, the trend for increasing relief expenditure was even stronger than global figures suggest (see Figure 3).

While different sources confirm a strong trend for dramatic increases in the volume of humanitarian aid, what remains less clear is whether this has been fuelled primarily by increasing need or by other factors. The need for emergency assistance has been increasing: the number of people affected by both natural and man-made disasters rose from an estimated 44 million in 1985 to over 175 million in 1993. But other factors such as the need for donors to secure political visibility and to be seen to respond to media pressure for action in specific emergencies, also seem to be important in determining shifts in the allocation of international aid. It is important to emphasise that despite the considerable growth in relief budgets, this has not corresponded to the increase in the numbers of people affected by natural and man-made disasters. Thus, the increase in the proportion of aid allocated to relief should not be seen primarily as being at the cost of development assistance. Instead of seeing competition between relief and development budgets, it will be important to identify means of reducing the growing deficit in overall overseas aid. This will be particularly important in the light of sweeping aid cuts and foreign policy shifts in the US and other major donor countries.

Aid Policy in Transition

The DAC report raises a number of important issues which deserve further debate among relief and development practitioners.

The aid policy agenda is being extended at a time when the resource base is contracting. Relief budgets are being stretched to meet the competing demands of ever larger numbers of disaster-affected communities.

At the same time, development agencies are being asked to extend their activities beyond the conventional spheres of social and economic intervention into an increasingly political domain, including good governance and conflict management. The question emerges as to whether the aid system has both the mandate and the capacity to implement this new agenda.

Overcoming the resource constraints will depend in part upon increasing the effectiveness and efficiency of the aid response.

As the DAC report comments, this will imply improving the linkages between relief and development, and a reexamination of the criteria used to guide these respective areas of aid policy.

It is unclear whether the current rate of growth in humanitarian budgets can and will be sustained: it is likely, however, that the numbers of people in need of such relief will continue to rise. This suggests the need for careful consideration of the costs and benefits associated with relief expenditures, and the need to invest in preventive action.

The question remains whether the development system can adapt itself to the new demands of conflict management. Of concern in the DAC report is the assumption that there is a sufficient understanding of the nature of conflict, and that existing models of development are appropriate to prevent conflict.

Many commentators are less convinced than the DAC appears to be on this question: indeed, it has been argued that development processes may actually increase conflict.

It is unlikely, therefore, that simply carrying out more development will necessarily contribute to reducing conflict: there is a need to examine whether and how international assistance promotes or alleviates violent conflict.

Finally, there is a need for discussion and debate concerning the opportunities and threats posed by the changing financial environment of the aid system. The expansion of relief budgets is encouraging NGOs to grow rapidly, often increasing their dependency on official donor assistance to finance their expansion. Questions emerge as to the sustainability of this growth and its implications for NGO autonomy.

From a donor perspective, overcoming the constraints imposed by budget lines which separate relief, rehabilitation and development will be an important challenge in order to encourage greater linkage and coherence.

For the aid system as a whole, the DAC report raises questions of mandate and capacity. How should the boundaries of political, military and humanitarian action be defined? To what extent can/should the aid system per se take on a role in conflict management? Finally, will it be able to fulfil this role in the context of declining resources?

The 1994 DAC report, Development Cooperation, is published by the Organisation of Economic Cooperation and Development in Paris.

Additional information for this article was taken from an article by P. Webb: A Time of Plenty, a World of Need: The Role of Food Aid in 2020, 2020 Brief, International Food Policy Research Institute, February, 1995.