Global Policy Forum

Record Donor Aid, Record Costs


Development Initiatives, an aid watchdog organization, released a report analyzing the relationship between aid donations and aid costs. In 2010, countries donated a record number of monetary aid, but the report recommends that countries invest in long term disaster prevention. Otherwise, given that the cost and frequency of disasters has increased significantly, countries risk paying repeatedly for short-term disaster relief. Moreover, the report argues that NGO aid reporting needs to be “standardized” in order to see who is donating aid money and where it is going. Several countries, particularly the US, spend significant amounts of money in military aid, yet the money is rarely reported.

July 20, 2011

Institutional donor aid in 2010 was at its highest-ever level - US$16.7 billion - but so were aid costs, says aid watchdog Development Initiatives in its annual Global Humanitarian Assistance (GHA) report, released today.

The report, which looks at aid year-on-year over the past decade, also shows that disaster preparedness is consistently sidelined; and that emergency aid is spent in the same countries year-on-year, begging the question: is it the right solution to the problem?

Largely responsible for the boost in aid were the USA, Canada and Japan, according to the GHA. Their increases offset the declining aid budgets of a number of donors, including the Netherlands, Austria, Denmark, Greece, Korea, Portugal and Ireland - all of which watched their aid budgets shrink for the second year in a row.

Donors outside the Organisation for Economic Co-operation and Development’s Development Assistance Committee (DAC) also gave more: between 2005 and 2009 their foreign assistance more than doubled from $4.6 billion to $10.4 billion, according to a second Development Initiatives report by Kerry Smith: Non-DAC Donors and Humanitarian Aid: Shifting Structures, Changing Trends.

But the additional funding does not go as far as it used to: price rises in food and fuel have “put pressure on the system and reduced buying power”, said GHA programme leader Jan Kellett. Fats and cereal costs more than doubled between 2007 and 2008, and continued to rise throughout 2010, while the cost of delivering them also continued to rise, according to Development Initiatives and the UN.

The UN estimates international food prices reached an all-time high in February 2011.

This and other factors meant the unmet needs in UN emergency appeals “worryingly” grew from 30 to 37 percent, according to Kellett. UN appeals for the occupied Palestinian territory (oPt), Chad, Central African Republic and Uganda all experienced a widening in their funding gaps in 2010, according to the report.

Another area of unmet need was disaster preparedness and risk reduction, which received just 75 US cents out of every $100 spent on aid, according to Development Initiatives, reaching just $835 million in 2009.

“We return to lots of these same situations every 3-5 years - everyone knows a disaster will occur in East Africa, and yet we are still not ready for it,” said Kellett.

“Not what it says on the box”

A striking finding from the report is that humanitarian recipients are relatively predictable: the top five aid recipients - Sudan, oPt, Iraq, Afghanistan and Ethiopia - have remained among the top 10 aid recipients over the past decade.

Rather than aid being a short-term life-saving measure, the statistics indicate it is being used to deliver basic services year on year, according to Kellett, and in this sense, the divide between humanitarian and development aid may be far weaker than many think. “It’s not what it says on the box,” he surmised.

This is not necessarily an indictment of humanitarian aid, he added, but it begs the question: is humanitarian aid always the right solution? “I would question whether it makes sense to spend the same amount every year in Darfur… Should we try to be achieving conflict resolution, peace building, other issues? These are difficult discussions but they are worth posing,” he said.

This points to the oft-repeated false division between humanitarian and development aid, said UK Overseas Development Institute (ODI) Humanitarian Policy Group researcher Sarah Bailey. “The reality is that our efforts to make a clear division between `humanitarian’ and `development’ are not well suited to the complexity of these contexts… We know that humanitarian assistance is not the best tool to address long-term vulnerability and the absence of basic services, so why isn’t development assistance doing more to tackle these problems?”

A common misconception about humanitarian aid is that it is mainly short-term and life-saving, she stressed. “Humanitarian assistance is rarely short-term because crises are not short-term. If ones lists major crises in the last decade, from Darfur to Afghanistan to DR Congo, these are not temporary situations where lives get back to normal quickly.”

Pooled funds

Other findings indicate funding for collective or `pooled’ humanitarian funds such as the Emergency Response Fund (ERF) and the Central Emergency Response Fund (CERF) rose in 2010, with the UK government the biggest supporter. Support for pooled funds is “generally a good thing”, said Kellett, though little analysis yet exists comparing the respective impact of pooled and bilateral funds, he said.

In 2010 the top 10 recipients of the CERF, which purports to respond to neglected emergencies, were Pakistan, Haiti, Niger, DR Congo, Sudan, Chad, Kenya, Ethiopia, Sri Lanka and Yemen.

Pooled funds have also enabled “non-traditional”, or non-DAC, donors to more easily contribute to emergencies: They often do not have an aid infrastructure in place to do so in other ways, according to Development Initiatives.

The top two donors giving to the Haiti emergency response fund were non-DAC: Saudi Arabia ($50 million) and Brazil ($8 million); while India was the largest donor to the Pakistan ERF, giving $20 million. Non-DAC donors are far less predictable than DAC donors - Saudi Arabia is the 11th largest donor, according to the GHA, but gave large amounts in 2001 and 2008 but far less in other years.

While a record number of non-DAC donors reported to the official UN humanitarian aid Financial Tracking System, more transparency is needed from all donors to decipher exactly where aid is going, said Kellett. Information about where military aid that is spent on humanitarian response goes - a channel used most by the US government - is rarely reported, for example. And NGO aid reporting needs to be standardized as currently each NGO categorizes its aid differently - using different regions, and different definitions, said Kellett.

“It’s hard to know how much money NGOs are bringing to bear - and these are large sums, said Kellett. “We need more calls to improve this area. It would be great if they could consider reporting to the International Aid Transparency Initiative to improve reporting in this area.”

The rest in figures:
alt Humanitarian aid has more or less doubled in the first decade of the 21st century.
alt The three largest institutional humanitarian aid donors in 2009 -the most recent figures available - were the USA ($4.4 billion), the European Union ($1.6 billion) and the UK (US$1 billion).
alt In 2009 more than 65% of all humanitarian assistance went to conflict-affected and post-conflict states; and nearly 70% was spent in the 26 `long-term affected’ countries. Africa received 46% of official humanitarian response and Asia 24% over the past decade.
alt Humanitarian aid to oPt has increased dramatically from US$863 million in 2008 to US$1.3 billion in 2009, making it the second largest recipient.
alt UN appeals called for a record high of US$11.2 billion in 2010 and received $7.1 billion, resulting in a higher-than-usual proportion of unmet needs.
alt Spain doubled its humanitarian aid since 2000 rising from 15th largest donor to the fifth largest in 2009.
alt China’s foreign assistance is reported to have reached $2 billion in 2009. Aid from the BRICs [Brazil, Russia, India and China] grew from US$1.5 billion in 2005 to $3.7 billion in 2009.
 alt The floods in Pakistan and the Haiti earthquake were the biggest targets of non-DAC donor aid, bringing in $356 million and $170 million respectively.
 alt NGOs receive 17.3% of institutional humanitarian aid; but private funding is estimated to be at US$4 billion in 2010. MSF took in $1.1billion in private donations in 2010 (or more than the UK government’s 2010 aid budget).
 alt Private funding was higher than institutional donors in Haiti 2010 and the Indian Ocean earthquake/tsunami in 2005.
 alt National aid responses are often more significant than international - India committed $6.2 billion to disaster response over five years - much higher than the $315 million it received from international donors.


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